Feeling brunt of revaluation’s pain
Analysis: Property taxes skyrocket for Orange homeowners
BY KEVIN DILWORTH AND ROBERT GEBELOFF STAR-LEDGER STAFF
With housing prices going through the roof in the summer of 2003, Richard Constable figured he had snagged a bargain.
For
$405,000, Constable had landed an elegant, historic home on a
quarteracre of property in the City of Orange’s Seven Oaks section, the
type of house that would go for twice as much in a suburban community.
Less than four years later, however, Constable is angry.
His property taxes were hiked more than $2,500 last year, and are now pushing $14,000.
‘‘If
the property taxes were affiliated with a home in an upscale suburban
surrounding such as Montclair or Short Hills, it would make more
sense,’’ he said. ‘‘But I live in Orange. So why am I paying these
outrageous taxes?’’
Constable is not
alone among homeowners in Orange — or New Jersey, for that matter — in
his frustration about property taxes.
Yet what happened to homeowners in Orange last year is unique.
THE BURDEN SHIFTS
The
city had its first townwide property revaluation in 42 years. And while
such occurrences routinely upset homeowners in other New Jersey towns,
the fourdecade delay has exacerbated the controversy in Orange by
shifting the property tax burden to residential properties, whose value
has increased at a faster rate than commercial properties and apartment
complexes.
‘‘If the assessments have
stayed flat for more than 40 years and residential properties have gone
up in value more than commercial properties, then when you bring
everything to 100 percent in a revaluation, there’s going to be a big
shift in taxes back onto the residents,’’ said Thomas J. Denitzio Jr.,
a real estate lawyer with the Woodbridge law firm of Greenbaum, Rowe,
Smith & Davis. ‘‘It’s almost unavoidable.’’
A
Star-Ledger analysis of the Orange tax roll before and after the
revaluation shows that homeowners around the city suffered a double
body-blow. The average homeowner would have seen taxes rise $772 in
2006 without the procedure.
But
because the revaluation shifted $1.5 million in taxes from commercial
landowners onto the owners of residential property, the average
homeowner’s tax bill jumped an additional $411.
And that was just the average.
The
analysis plotted all residential property on a map and calculated
averages for 28 Census ‘‘block groups,’’ a geographical unit of roughly
1,500 people. In Seven Oaks and other Orange n e i g h b o r h o o d s
w i t h l a r g e r , h i s t o r i c homes, the average tax increase
was more than $2,000, the Star-Ledger analysis found.
On
Highland Avenue, Carlos Lanza, a retired cabinetmaker, saw his taxes
jump 83 percent, or nearly $6,000.
‘‘They
have the nerve to target all of the nice houses in the perimeter of the
city,’’ he said. ‘‘It’s like burglary. What if you’re preparing
yourself for retirement
and as soon as everything is set — Bang! here come the crooks, banging on the door.’’
While
property taxes are often portrayed as a suburban dilemma, the problem
has always been particularly acute in places like Orange, a blue-collar
city that is home to residents of all income levels. While Orange’s
overall level of property taxes is about the state average, Orange
homeowners pay a much greater share of their income in property taxes
than owners in most towns, and Orange taxes represent a much
higher-than-average percentage of what its homes are worth on the sale
market.
And this was the case before the revaluation added to homeowner’s tax stress.
BUSINESSES FEEL IT, TOO
While
some angry citizens have pointed the finger at the drop in assessment
granted to some retail businesses — taxes on a White Castle fast food
restaurant were slashed by $29,614 — there were plenty of business
properties that got hit as hard as homeowners.
The
Cotton Funeral Service operates out of three parcels on Main Street,
and has been a community institution for generations. Owner Macon
Cotton Jr. said he was planning on tearing down one of his buildings, a
100-year-old structure in need of major repairs, and building something
new.
But then he got his new tax bill.
The new appraisal puts the decaying building’s value at more than $1
million and its taxes at $28,000 — four times more than before the
revaluation.
‘‘If we were going to put
a new building in, it would be a $1.5 million or $2 million
investment,’’ he said. ‘‘Then what would happen to my taxes? Something
has to be done with what I have now before I jump in and make this kind
of investment.’’
Like all
revaluations, such dramatic increases are driven by shifts — the tax
burden is moved from some taxpayers onto others.
Among
those whose assessments generally went down were the owners of
apartment buildings, The Star-Ledger analysis found. The three parcels
that make up the 300-unit Washington Dodd complex, for example, were
collectively granted a $100,000 tax reduction.
Because
apartment buildings in Orange are subject to rent control, and because
apartment buildings are appraised based in large part on the rents they
command, city officials said it’s not surprising that the revaluation
resulted in tax cuts for these properties.
RESIDENTS SOUND OFF
City officials said they’ve received hundreds of complaints — and responded affirmatively.
Jack
Kelly, the city’s chief financial officer, said the city has been
extremely receptive to homeowner concerns. While some communities
require homeowners to go through a complicated appeal process with the
county tax board, Orange set up one-on-one meetings with hundreds of
property owners.
As a result of those
meetings, the city cut the new assessments on 46 homes that had
restricted deeds and another 178 on homes where owners successfully
proved that incorrect information or calculations were used to derive
the new figures.
That same option
remains open to any property owner who can show how a revaluation
formula flaw resulted in a too-high assessment, Kelly said.
In
some of those cases, revaluation firm representatives never got
permission to enter the residence and see just what is what themselves,
paving the way for assumptions and estimates. And in other cases, the
homeowners who allowed assessors in later were able to provide facts
and information t h a t w a r r a n t e d r e c o n s i d e r a t i o n
and finally a reduction in 2007, Kelly said.
He
bristled at the notion that Orange residents are not getting quality
services in return for their tax dollars.
‘‘I
find it incredible that people say they’re not receiving services,’’
Kelly said. ‘‘Our emergency services are second to none, and for 2.2
square miles, we have two street sweepers operating six days a week. I
don’t know what other kind of services a homeowner would want.’’
WHO’S TO BLAME?
The
man who is truly in the hot seat is Mayor Mims Hackett Jr., who angry
residents are now blaming for tax increases driven by the revaluation.
A
citizens group has formed to organize angry homeowners in protest.
There’s talk of mounting a recall drive.
Like
other Essex County towns — including East Orange, Irvington Newark and
Caldwell — Orange had avoided a revaluation for years. While tax
experts say periodic updates of tax rolls is the best way to keep taxes
fair in a community, local elected officials tend to dislike them
because of the controversy that often erupts in the aftermath.
Orange, however, was finally forced to undertake the revaluation by a 2001 court order.
‘‘Am
I going to listen to the residents, or listen to the law?’’ Hackett
asked. ‘‘The state attorney general mandated that we do a revaluation.
So for someone to come out, in the midnight hour, and accuse
‘‘I
find it incredible that people say they’re not receiving services Our
emergency services are second to none, and for 2.2 square miles, we
have two street sweepers operating six days a week. I don’t know what
other kind of services a homeowner would want.’’
JACK KELLY, Orange’s chief financial officer
responsible city officials, for doing their due diligence, is wrong.’’
But
Hackett is having a hard time convincing some Orange residents that the
tax shift caused by the revaluation has nothing to do with his
administration.
When Jason Jackson got his new tax bill last year, ‘‘We thought there was some mistake,’’ he said.
Jackson,
a Seton Hall University track coach, was staring at a bill topping
$14,000 — a $5,700 hike over 2005.
After
being caught off guard about the seriousness of the situation and
realizing that the hefty new property tax bill was about to become a
reality, ‘‘I knew that I really had to get involved to see why this is
happening. I knew that if I wanted to stay in Orange, that I had to
become involved.’’
Hence the
Responsible Citizens f o r O r a n g e g r o u p , c o m p r i s i n g
about 70 individuals who mainly live in the Seven Oaks area of the
city, was born.
Members of the group
then began attending city council meetings and attended all the
department hearings for the 2006-2007 municipal budget.
To
stay in Orange, Jackson and his wife agreed, ‘‘we really have to budget
wisely and figure out how much longer we can stay in town. Our son is a
sophomore at Orange High School. It’s kind of, can we get through the
next two years? We have to figure what we can do (financially), and
where we can go from here.’’
Jackson
said he’s not opposed to paying high taxes, ‘‘if I was getting my
money’s worth in services and education.’’
City officials, meanwhile, are trying to convince constituents that their anger is misdirected.
Hackett
said the city does its best to hold down costs, and like other
communities, Orange leaders are under pressure to hold down taxes from
residents who also don’t want any cuts in services.
‘‘I’m
not the reason it (revaluation) was not done 40 years ago,’’ he said.
‘‘You have to do it. There’s no reason why we would not do it. Why
fight the state and lose. I don’t know which one of those people would
have done it differently.’’
