N.J. Says These Union County Towns Must Reassess - And Could Have Much Higher Tax Bills

The New Jersey Division of Taxation has issued - or plans to send - letters to a number of municipal governments informing them that it will investigate to determine whether to order a revaluation of the properties within their boundaries.

Based on preliminary data, the division has determined that three municipalities appear to be the most dramatically out of compliance with constitutional and statutory provisions requiring fair and uniform property tax assessments, according to a news release.

Revaluations can be unpopular, and property owners can get higher tax bills after the value of their properties is reassessed.

Those include Jersey City in Hudson County, Elizabeth in Union County and Dunellen in Middlesex County – the only three counties in the state in which tax boards have consistently failed to require towns to uniformly and fairly assess properties.

These three investigations are the beginning of a larger effort to address issues of noncompliance by municipalities in these three counties in the absence of action by the county tax boards.

Other municipalities that could be in trouble include:

• Westfield
• South River
• East Newark
• Harrison
• Roselle
• Winfield Township

The release suggests that other towns could be added to the list as the investigation contiunues.

As an example of the apparent failure to comply with state law, the Elizabeth has not updated its assessments in 39 years. Based on an analysis of current data, Elizabeth’s 2015 True Value of property exceeds its assessed value by approximately $5.7 billion, the release said.

As a result, Elizabeth has one of the lowest director’s ratios in the state at 13.4 %. The director’s ratio represents the average ratio of assessed value compared with true value, which means that homes in Elizabeth are assessed at only 13 percent of the true market value for real estate in the city.

“A director’s ratio of 85 percent or lower generally denotes noncompliance,” said Dennis Shilling, Acting Director of the Division of Taxation, which is part of the Department of the Treasury. “Based on this and other available data, the division will conduct an investigation and convene public hearings for taxpayers so it can determine whether to order the three municipalities to conduct a revaluation.”

Jersey City has not conducted a revaluation or reassessment in 27 years, and its true value of property exceeds its assessed value by approximately $15.6 billion. Its director’s ratio is 27.63 percent.

Dunellen has not conducted a revaluation or reassessment in 33 years, and its true value of property is over four times greater than its current assessed value. Dunellen has a director’s ratio of 24.61 percent.

The Division is issuing notices of the commencement of an investigation to the mayors and clerks of the respective municipalities. Notice of public hearings in those municipalities will follow at a later date.