City to Undertake First Reval in 22 Years

In a letter submitted to the county Board of Taxation, Mayor Healy has announced that his administration will soon begin the process of a citywide property revaluation. If the board approves the plan, it will be the first revaluation in Jersey City since 1988.

According to city spokeswoman Jennifer Morrill, “barring any unforeseen scenarios,” the first step in the process — accepting and evaluating proposals from valuation firms — is set to begin in June of this year. After a contract with a firm is approved, property inspections are expected to get rolling around November and last through the end of April 2012. Taxpayers’ new assessments will kick in at the start of 2013.

City tax assessor Eduardo Toloza has set up an informational page on the city’s website that explains the purpose and process of a reval and anticipates a number of questions that residents may have about the process. In addition, taxpayers will receive a brochure in the mail along with their quarterly tax bill.

The assessor’s office has also implemented a Reval Hotline at 201-547-4538 to answer residents’ questions and to meet needs that may come up during the process, such as scheduling property inspection appointments and verifying the identity of inspectors. Morrill also noted that representatives from the city and from the valuation firm may attend block and neighborhood association meetings and that city-owned cable access station JC1TV will carry information about the reval.

The purpose of a revaluation, according to the assessor’s explanatory website, is “to redistribute the existing tax levy so that it is more fairly distributed among all property owners in the city.” Morrill explains that “revaluation is revenue neutral”: It does not directly impact the tax levy — the total amount of money the city seeks to collect in taxes — but attempts to ensure that each property owner’s share of the tax levy is calculated according to the current market value of their property.

“While all property revaluations are different,” the website notes, “the general ‘rule of thumb’ for a property revaluation is that one-third of the municipal properties will see their share of the tax burden go down, one-third will see their share of the tax burden go up, and one-third of assessed municipal properties will see no change at all.”

The 1988 reval was marked by controversy when property owners protested that it was not conducted properly. Claims that properties were grossly over- and under-assessed resulted in the filing of thousands of tax appeals in 1988, and a sharp drop in property values at the beginning of the 1990s touched off even more appeal filings.

According to resident and perennial budget watchdog Mia Scanga, the “botched” reval in 1988 spurred increased “spending and bonding due to the city’s new assessed value,” but after the tidal wave of successful appeals “we weren’t that [much] further ahead.” In May 1989 the New York Times reported that the city’s overall assessed value “had soared to $5.6 billion from $800 million” in 1972, the date of the previous reval.

Scanga was one of the founding members of the Jersey City Coalition for Fair Taxation, which organized around the protests against the 1988 reval. Although the coalition was unsuccessful in its attempts to get then-Mayor Anthony Cucci to invalidate the reval, it was able to raise a significant amount of money to that end — reportedly over $100,000.

Barely after the close of a bruising budget season that saw residents up in arms over a property tax increase of nearly 25 percent, the administration may be gearing up for another fight if property owners are unhappy with their revised assessments. Esther Wintner, who has recently made a name for herself as the public voice of a grassroots coalition that seeks to minimize tax increases and make the budget process more efficient, tells JCI via email that she has concerns about the impending reval.

“A revaluation might be a necessary evil to level out the playing field,” she says, but is quick to add that she is worried “some property owners that are already struggling will feel the final nail in the coffin.”

“Historically, revals in Hudson County [have] always translated to higher taxes,” Wintner says. “Collateral damage from a reval is something that needs to be taken into account.”

Good-government activist and 2009 mayoral candidate Dan Levin says that “while it’s fair” to conduct a reval, “because it’s done so infrequently, it’s disruptive.” He is urging the administration to “take extra care” when selecting a valuation firm and to implement a “quality assurance program or auditing of the vendor.”

According to Morrill, “ten years is a more ideal and typical amount of time” between revals than the 22 years that have elapsed since Jersey City’s last one, but she did not comment on what precipitated the Mayor’s decision to request a reval now. While a recent spike in tax appeals appears to indicate that many assessments are higher than current market values, the length of time since the last reval has given the market ample time to push assessed values well below prevailing rates.

As county Tax Administrator Don Kenny noted last month, the majority of tax appeals are originating from residential property owners who “bought in the last five to seven years,” when the housing market was at its most recent peak. So while property owners who bought during that period may welcome a reval, residents who have owned for longer could be looking at a significant increase in their tax bills.

According to data from the county tax administrator’s office, the city’s current assessment ratio — the percentage of true market value that the average property is assessed at — is at 26.75 percent, which Morrill says is “far from the ideal 85 percent assessment ratio.” This means that the city’s aggregate assessed value, currently $5.9 billion, would need to rise to nearly $22 billion to align with the aggregate true value of property in Jersey City.

Council gadfly Yvonne Balcer was the only resident to speak about the reval at this week’s City Council meeting, when the mayor’s letter to the county tax board was entered into the public record. As is her wont, Balcer took the opportunity to point a finger at tax-abated properties and affordable housing developments, casting them as freeloaders that pay less taxes while the rest of the city picks up their share.

“The waterfront will not be taxed; they’re abated. Affordable housing will not be taxed; they’re abated, and public housing will not be taxed,” Balcer told the council. “We could never have a fast and fair revaluation because you gave away the city.”

Although tax-abated properties will not see their payments in lieu of taxes (PILOTs) rise or fall as a direct result of the reval, the assessor’s office has stated that they will be revaluated “so that when the tax abatements expire, they will be taxed according to their correct assessment value.”

Balcer was a vocal opponent of the 1988 reval; it was widely reported that her yearly tax bill went from about $3,100 to $11,000 at that time. On Wednesday, Balcer said that the last reval “cost Mayor Cucci his job” and warned the sitting council that they “can kiss [their political] careers goodbye” after this one.

The City Council members JCI asked to comment on the proposed reval all wished to reserve their statements until more information becomes available. Ward B councilman David Donnelly, Ward C councilwoman Nidia Rivera Lopez and Ward E councilman Steven Fulop all cast votes against the adoption of the final budget last Wednesday. Lopez cited a “lack of responsibility and leadership” when casting her nay, and Fulop echoed Lopez when he placed the blame for tax increases and financial mismanagement squarely on the administration.

“To blame the economic times, or to blame Chris Christie, or to blame anything outside this building, that’s being disingenuous,” Fulop said last week. “It’s a very tough argument to say this [budget] is the best you can do.”