By STEVEN VIERA
Staff Writer
SOUTH RIVER — As part of an ongoing investigation into South River, New Jersey’s Division of Taxation held a public hearing at the Veterans of Foreign Wars (VFW) building on Aug. 17 for residents to discuss their experiences paying property taxes in the borough.
South River is under the microscope — along with East Newark, Harrison, Westfield and Winfield — to determine if the Division of Taxation, acting under the authority of the New Jersey Department of the Treasury, should order a property revaluation in the borough. South River’s last revaluation occurred in 1986.
Earlier this year, following similar investigations, the state ordered Jersey City, Dunellen and Elizabeth to conduct revaluations.
“Typically, in a revaluation, one third of the property owners’ taxes will go up, one third will stay the same and one third will go down,” said Joe Perone, director of communications for the Department of the Treasury.
Inaccurate property valuations can lead to an unequal distribution of the tax burden on residents. One indicator of the accuracy of valuations is a municipality’s director’s ratio, which measures the relationship between the true and assessed value of a property.
While a ratio below 85 percent is considered outside the state constitution’s mandate of uniform taxation, South River has a director’s ratio of 30.82 percent — one of the lowest in New Jersey.
If the Division of Taxation does order a revaluation in South River, the borough would be responsible for bearing the associated costs, which Business Administrator Frederick C. Carr estimated at $500,000.
When investigating whether or not to order a revaluation, the state is required by law to hold a public hearing for residents of the municipality to share their experiences paying property taxes. Nearly 20 people addressed the pair of senior personnel from the Division of Taxation who conducted the meeting, and many were critical of a potential revaluation for fear that their taxes would increase.
Mayor John Krenzel also spoke, and he argued that ordering a revaluation now would be detrimental to the town. He explained that the state has lost more than 60 homes due to the state’s Blue Acres Program to buy homes affected by superstorm Sandy, thus reducing the number of taxable properties in the borough, and that South River stands to lose a similar number of homes in an upcoming second buyout round.
“Now is not the time to reassess — that time is after the second round of buyouts, and if the state does order a reassessment now, it must not occur until after that second round of buyouts,” he said. “Otherwise, you can’t get proper valuation.”
At a South River Borough Council meeting on Aug. 8, Krenzel circulated a letter opposing a revaluation on the grounds that it would “place undue and unnecessary fiscal pressures on the remaining homeowners” in light of the damage caused by superstorm Sandy in 2012 and the buyout of homes through the Blue Acres Program. Krenzel and all six councilmen signed it and sent it to Acting Director of the Division of Taxation John J. Ficara.
According to Perone, the state is stepping into South River because of a failure on the part of a county organization.
“We’re doing this because the Middlesex County Board of Taxation has demonstrated an astonishing lack of competence in overseeing its taxing districts,” he said. “Middlesex County has the only tax board in the state — we have 21 tax boards — that has not ordered an involuntary revaluation in 20 years.”
According to Middlesex County officials, the Board of Taxation “guides and recommends but does not compel” municipalities under its jurisdiction with regard to revaluations because of the associated costs, which could exceed $1 million for certain towns, and put services and programs in jeopardy in order to cover the expense.
Contact Steven Viera at [email protected].