Orange Transcript

Thursday, October 19, 2006

Orange’s revaluation is based within a long history

By Patrick Justin Fahey

Staff Writer

The uproar over Orange’s first revaluation in 42 years continues and some residents are fighting in an effort to reverse or correct the reassessments.

In a recent meeting of the group formed to change the tax situation, the group’s leader, Patricia Weston Rivera, said the court order which forced the city to revalue its properties was a “consent judgment,” which means that city officials agreed to comply with the order rather than pursue further legal action.

“They didn’t even try to fight it,” Rivera said, referring to the 2001 judgment in which the city agreed to the revaluation.

Marvin Braker, Orange’s city attorney, said that was the case, but added that city officials did not have much of a choice.

“Yes, it was a consent judgment,” Braker said, “but the judge made it clear: enter a consent order or we’ll do it. This way, at least we had a little control over the process.” Braker added that an original order in 1986 was not a consent judgment.

The original order for the city to revalue properties came 20 years ago. The city had been in non-compliance until the 2001 consent judgment.

According to a July 31, 1986, letter from the state Department of the Treasury, the court orders were approved by then-Director John R. Baldwin.

Nine years later, in 1995, the Essex County Board of Taxation passed a resolution requesting that then-Deputy Attorney General Julian F. Gorelli take legal action to force Orange to comply.

The resolution cites both the city’s 1994 “director’s ratio,” and “coefficient of deviation,” as proof that the revaluation was necessary.

A “director’s ratio” is a measure of the assessed value of a property in comparison to what the property is actually worth. City officials said a ratio of less than 85 percent indicates a revaluation is necessary. In 1994, Orange’s director’s ratio was less than 18 percent. In 2005, that number had dropped to less than 8.5 percent. The “coefficient of deviation” measures the difference between the director’s ratios of properties. If one home has a director’s ratio of 10 percent and a similar home has one of 8 percent, that is considered a large deviation.

In 1994, Orange’s coefficient of deviation was 35.92 percent. City officials said anything more than 15 percent indicates a need for revaluation.

Rivera also said she would like to see a five-year phase in of the tax increase. Braker said that although it is not illegal, in all probability, the courts would not allow it.

“And when Lisa Love negotiated the settlement, she tried to include that but it wasn’t allowed,” Braker said, referring to the former city attorney.

Another problem many property owners have that the tax burden has shifted significantly from commercial properties to residential properties since the last revaluation.

According to Jack Kelly, chief financial officer for the city, business properties are assessed on potential rent.

“What is looked at is how much rent will be paid on that commercial property. If White Castle’s rent increased astronomically, they’d just move across the street, because the rent will be cheaper there,” Kelly said. In all likelihood, another business would not be willing to take over that property at a high rent.

White Castle has been a particular bone of contention for some property owners its taxes dropped close to $30,000 after the revaluation.

City Council members have stressed that some property owners’ tax bills have decreased, which has been met with disbelief by many.

According to public information, the owners of a condominium unit along Lincoln Avenue had their taxes decrease from more than $2,500 during fiscal year 2006 to just less than $1,500 in FY 2007. The fiscal year began July 1 and concludes June 30, 2007.

A home on Vose Avenue had a decrease of approximately $300,while there has been $3,000 decrease in Council Vice President Donald Page’s taxes, which he confirmed during the Oct. 3 council meeting.

There also have been moderate tax increases to city residents. A home on North Day Street had taxes increase about $1,000, from $3,500 to $4,500; and a home on Tremont Avenue went from $4,660 to $4,951, an increase of less than $300.

However, claims of taxes increasing dramatically do bear out. The owners of a home along Tremont Avenue, in the Seven Oaks section, experienced a tax increase from $8,724 to $13,160 and a home along Berkeley Avenue had taxes increase from $12,800 to $18,300.

Most of the largest tax increases are in the Seven Oaks section. One of the worries some property owners have stated is that the homes, some of which were revalued for more than $500,000, will not attract those prices at market. However, in some cases, the sale prices have exceeded assessed values. According to several real- estate sources, the Berkeley Avenue home, which had been reassessed at $658,600, sold in June for $680,000. The Tremont Avenue home was revalued at $473,400 and sold for $575,000 in October 2005.

A Heywood Avenue home was revalued at $512,000 and sold for $550,000 in February, while another Heywood Avenue home revalued at $418,000 sold for $480,000 in November 2005.