Connell Foley LLP negotiated a settlement that netted the firm’s client a $896,681 tax refund after appealing the Jersey City Tax Assessor’s increase on the assessment of two lots from $2,818,300 to $52,387,200 in 2023.
The Tax Assessor’s increase was based on development approvals obtained by the property owner to construct a 27-story mixed use building on the two lots. As of the applicable assessment date, however, there existed on the property a small apartment building still occupied by tenants who could not be evicted under New Jersey’s Anti-Eviction Act.
As part of its appeal of the 2023 assessment before the New Jersey Tax Court, Connell Foley filed a motion for partial summary judgment, arguing that—as of the assessment date—the subject property could not be valued as vacant for development, and the 27-story mixed use building therefore could not be considered when determining the property’s “highest and best use.”
Reserving decision on Connell Foley’s motion until expiration of the discovery period, the Tax Court issued an initial opinion holding that legal restrictions must be considered in the “highest and best use” analysis. The Court further held that, when the municipality asserts a highest and best use that is prevented by a legal restriction, the municipality bears the burden of proving such use is viable.
In the wake of this interim Tax Court decision, the parties were able to reach a negotiated settlement of the 2023 tax appeal based upon the purchase price paid by Connell Foley’s client prior to obtaining development approvals for the 27-story mixed use building. The settlement resulted in Connell Foley’s client netting a $896,681 tax refund.