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Comptroller Report: No Oversight For Municipal Tax Assessors [AUDIO]

Flickr User Hoboken Condiminium

If you’ve ever suspected that not all property taxpayers are treated equally, here’s your proof.

A new report by the state comptroller’s office finds that a north Jersey developer received major property tax reductions without any oversight or documentation.

The investigation found that Arthur Carlson, the tax assessor for the Borough of Edgewater, Bergen County, inappropriately reduced the assessed value of more than 100 condominums owned by a wealthy developer.

In total, the assessor handed the developer more than $472,000 in disproportionate tax savings.

State Comptroller Matt Boxer says this raises broader concerns that municipal tax assessors can do this without detection. “Because of the way tax assessments are handled in New Jersey, this tax assessor was able to single-handedly grant these reductions without any real review or oversight by anyone, and as a result this corporate developer gets handed nearly a half-million dollars in inappropriate tax savings by all the other taxpayers in Bergen County.”

The tax assessment reductions were granted on two separate occasions.

First, in 2008, the tax assessor reached an agreement with the developer’s attorney to lower the assessed value of 50 developer-owned condominium units by 20 percent, without any documentation to justify or memorialize the agreement. A private condominium owner from the same complex appealed her property assessment to the county tax board that same year but received no reduction even though her unit originally had been assessed at the same amount as the developer-owned unit.

In 2009, the developer’s attorney renegotiated with the assessor for an even more generous reduction, the OSC report found. The 49 unsold developer-owned units that had received a 20 percent reduction in 2008 received an additional 45 percent reduction, bringing the total reduction from their initial assessed value to 56 percent. An additional 79 developer-owned units received tax assessment reductions ranging from 45 to 48 percent.

According to the tax assessor, the 2009 reductions were negotiated in a single telephone call to him from the developer’s attorney. The assessor said he performed calculations in his head during the phone call to come up with the reduction, which he said was based on a 25 percent drop in the real estate market and his continued fears that the developer might go bankrupt.

The report also found that the assessed values of the developer-owned units later were raised back to market value after the developer sold the units.

Boxer says they have made a series of recommendations to try and tighten up the system in the state. “Looking at things like where there are large reductions in assessements from year to year, and ensuring that someone is overseeing that process and asking the kinds of questions that need to be asked.”

For example, it recommends tax assessors file an annual report listing all municipal tax assessments that have been adjusted by 20 percent or more in the past year along with a written justification for each adjustment. Another recommendation suggests the state Division of Taxation develop a methodology to identify properties owned by a single entity that appear under-assessed relative to other, similarly situated properties.

“Our property tax system should be based on numbers, not favoritism,” Boxer said.

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