` NOT FOR PUBLICATION WITHOUT THE APPROVAL OF
TAX COURT COMMITTEE ON OPINIONS
TAX COURT OF NEW JERSEY
DOCKET NOS. 000877-1998
000695-1999
UNION DRYDOCK AND REPAIR,
Plaintiff,
v.
HOBOKEN CITY,
Defendant.
Decided: May 25, 2000
Richard B. Nashel for plaintiff
(Nashel & Nashel, attorneys).
Vincent J. LaPaglia for defendant
(Vincent J. LaPaglia, attorney).
KAHN, J.T.C.
This is the court's determination with respect to a local property tax appeal involving
assessments for 1998 and 1999. The property is known as Block 259, Lot l, located on River
Road, Hoboken, New Jersey. The relevant assessment under review for both years is as follows:
Land $1,431,000.00 Improvements $ 569,000.00
Total $2,000,000.00
The parties do not differ as to the essential description and character of the subject
property located in Hoboken, Hudson County along the westerly bank of the Hudson River, at
the foot of River Road. The site contains a total area of 8.248 acres of which 4.908 acres are
submerged and 3.340 acres are above the river and considered upland.
Improvements on the site consist of three finger piers extending eastward into the Hudson
River grounded upon the aforementioned submerged land. These piers total 13,122 square feet,
11,680 square feet and 8,250 square feet, respectively. The upland portion consists, first, of five
separate buildings, ranging in size between 750 square feet and 4,000 square feet, performing
various functions in the operation of the marine repair facility. Along the entire 553 foot length
of the subject property bordering the Hudson River there is a quay totaling 10,660. square feet in
area. Additional improvements on the upland portion include a paved parking lot and fencing.
At all times relevant, the property has been utilized as a marine repair facility for the
purpose of repairing tug boats and barges. Periodic dredging is required between the piers to
maintain sufficient water depth for efficient operation of the drydock equipment. The property
is zoned industrial. As both appraisal expert witnesses acknowledged, under the zoning
ordinance operation of a marine repair facility is a conditional use, and therefore, a legal non-
conforming use. The subject does have certain height restrictions. Approximately 95% of the
subject property has a height limitation for buildings at thirty-five feet. This area is located
directly in front of and fifty feet below the Stevens Institute of Technology. Approximately 5%
of the subject property, at the very northerly boundary, has a height restriction for buildings at
eighteen feet. This sliver of the subject property is located directly in front of Elysian Park,
approximately twenty feet below same. Both expert witnesses acknowledged that the subject
property is ultimately to be converted from industrial use to multi-family use similar to other
waterfront property in Hoboken. Since this zoning change has not yet occurred, both appraisal
experts agree that, as of the relevant assessment dates, the highest and best use of the subject is
as a marine repair facility as currently utilized.
Taxpayer's appraisal expert witness utilized both the cost and the income capitalization
approach as to valuation. By means of the cost approach, this witness concluded value at
$1,678,000.00 for both years in issue. By the income capitalization approach, the witness's
estimate of value was $1,408,000.00. Taxpayer's appraisal expert witness indicated heavier
reliance on the income capitalization approach. The municipality's appraisal expert, utilizing
only the cost approach, estimated value for the subject in the amount of $3,080,300.00 for 1998
and $4,273,600.00 for 1999.
It is this court's conclusion that neither party has established sufficient reliable evidence
to rebut the presumption of the validity of the appealed assessment. Said presumption has been
defined by the Supreme Court of New Jersey in Pantasote Co. v. City of Passaic, 100 N. J. 408
(1985) as follows:
"The strength of the presumption is exemplified by the nature of the evidence that is required to
overcome it. That evidence must be definite, positive and certain in quality and quantity to
overcome the presumption.” Aetna Life Ins. Co. v. Newark,
10 N. J. 99, 105 (1952). Id. at 413.
In MSGW Real Estate Fund v. Mountain Lakes Bor.,
18 N.J. Tax 364 (Tax 1998), the
Tax Court discussed the applicability of the presumption of the validity of the assessment
appealed from stating:
In the absence of a R. 4:37-2 (b) motion which is denied, the presumption of
validity remains in the case through the close of all proofs. See RodwoodGardens, Inc. v. City of Summit,
188 N.J. Super. 34 (App. Div. 1982), which
states, in the context of an appeal from a judgment rendered at the conclusion of a
full trial, that “only when the presumption is overcome does it become incumbent
upon the Tax Court to appraise the testimony, make a determination of true value,
and fix the assessment.”... Consequently, if the defendant does not move to
dismiss at the conclusion of the plaintiff's proofs pursuant to R. 4:37-2 (b), then,
at the conclusion of the trial, the court, before proceeding to decide the appeal
based on weighing and analysis of the evidence, must first determine whether the
presumption of validity has been overcome. In making this determination, the
court should view the evidence as if a motion for judgment at the close of all the
evidence had been made pursuant to R. 4:40-1 (whether or not the defendant or
plaintiff actually so moves), employing the evidentiary standard applicable to
such a motion.
[Id. at 377 (some citations omitted).]
Neither party in this case moved pursuant to R. 4:37-2(b) or R. 4:40-1 to terminate the
litigation. Therefore, pursuant to MSGW Real Estate Fund, supra, 18 N.J. Tax at 377, it is this
court's obligation to decide if the presumption of correctness was overcome. In doing so the
evidence will be viewed as if a R. 4:40-1 motion for judgment had been made at the conclusion
of the trial.
Taxpayer's appraisal expert's income capitalization analysis is fatally flawed by an
unreliable attempt to calculate potential gross income. The so-called comparable properties were
marinas that rent dock space to customers to store their boats. The witness calculated the
potential area for such use in terms of lineal feet, measuring the subject piers and quay, which
endeavor resulted in a dollar amount per lineal foot. This witness, however, testified that a
marina was clearly not the highest and best use of the subject. Taxpayer's expert witness
indicated that the current use of the subject as a marine repair facility provided a significantly
higher value to its property than would use as a marina. Both expert witnesses, in fact, indicated
that the subject property would be most valuable as a single-user marine repair facility and not
one to be leased by the owner to another party.
The use of marina rentals as comparables provides a totally unreliable comparison, since
this court has no reasonable basis to calculate potential gross income. Therefore, this court need
not analyze the balance of his income capitalization methodology.
Taxpayer's appraisal expert's cost approach fails for essentially the same reason. The
cost approach requires the establishment of a reliable land value by the use of comparable sales.
First, taxpayer's appraisal expert acknowledged that he could find no sales of land bordering the
Hudson River in Hoboken during the relevant time period. The witness indicated, however, that
such sales may have existed in New York, for example, but he did not investigate same. This
witness's four purported comparable sales involved industrially-zoned properties most suitable
for warehousing or manufacturing. Unlike the subject property, these properties are not situated
on or near water; therefore, these comparables could not be utilized as a marine repair facility.
Although taxpayer's appraisal expert described his comparables as being located in a former
waterfront zone, none has direct access to the Hudson River or any other waterway. Taxpayer's
witness acknowledged that his comparable properties could not be utilized in the same manner as
the subject. The fact that one of his comparable properties contained submerged land does not
provide a basis for comparison with the subject. In Ford Motor Co. v. Township of Edison,
127 N.J. 290 (1992), the Supreme Court discussed comparability factors as follows:
In State v. Azzolina Land Corp.,
101 N.J. Super. 103 (1968), Judge
Conford, writing for the Appellate Division, emphasized that
“[e]vidence of sales cited by an expert serves the function both of
independent evidence for the fact-finder and support for the
expert's opinion value. The latter factor should generally exert a
liberal influence on admissibility.” Id. at 108, (citing Delaware, L.
& W. R.R. v. City of Hoboken,
10 N.J. 418, 434 (1952)).
Generally speaking, comparable sales include all sales that will
lend logical, coherent, support if they show “comparable building
density ratios, functional similarities, proximity of sale dates to
assessing dates, similarity of age, construction and condition, and
in some cases, size.” Shulton, Inc. v. City of Clifton,
7 N.J. Tax 208, 218 (Tax 1983), aff'd,
7 N.J. Tax 220 (App. Div. 1984).
[Id. at 308.]
Utilizing the definition of comparability as described by the Supreme Court, the
purported comparables used by taxpayer's appraisal witness are only similar in that they are
zoned industrially and are located in the same county as the subject property. One or two of the
comparables are located within the confines of Hoboken. This is where comparability ends.
None of the parcels is located on or proximate to water. None can be utilized for a marine repair
facility, the acknowledged highest and best use of the subject. The subject consists of more than
50% submerged land. The highest and best uses of the comparables involve industrial facilities
without the height restriction that exists on the subject. The subject property, according to
taxpayer's appraisal expert, is not suitable for larger industrial development. With respect to the
comparable properties utilized by taxpayer for a) comparable rents utilized in the income
capitalization approach and b) the comparable land sales utilized in the cost analysis, no useful
comparison can be made with the subject.
The highest and best use determination is significant whenever a comparable sales
approach to valuation is utilized.
The second reason to estimate the highest and best use of property as
improved is to help identify comparable properties. The highest and best
use of land as though vacant and property as improved should be the same
or similar for each comparable property as for the subject property. For
example, it may be inappropriate to use a comparable property that has a
highest and best use as offices in appraising a subject property that has a
highest and best use as a hotel.
[Appraisal Institute, The Appraisal of Real Estate 280 (10th ed. 1992).]
The aforementioned attempted comparable sales analysis by taxpayer's appraisal expert
provides no reasonably reliable evidence of value for the subject land. There being no means for
this court to reasonably estimate the value of the subject land, review of taxpayer's appraisal
expert's cost analysis for the subject improvements is unnecessary.
The municipality attempted to estimate the value of the subject property by the cost
approach in seeking an increased assessment. Its appraisal expert also attempted to formulate a
value for the land by means of a comparable sales study. He too selected comparables located in
Hoboken and elsewhere in Hudson County. These comparables (like taxpayer's) were inland
and not situated along any waterway. Several of these parcels also were found to be improved.
The municipality's appraisal expert witness acknowledged that none of these comparables could
be utilized as a marine repair facility and could only be used for various industrial buildings. In
short, this witness's comparables exhibited the same flaws as existed with respect to the
comparables utilized by taxpayer's appraisal expert. This court finds that there is no reliable
information supplied by the municipality's appraisal expert from which this court could
reasonably estimate the value of the subject land. Without a reliable estimate of land value, it is
unnecessary for this court to analyze this witness's cost analysis of the improvements.
The municipality's appraisal expert testified that he was aware of a sale of a marine repair
facility in Perth Amboy. He testified, however, that said sale would not be applicable as a
comparable to the subject property. This witness, however, did not indicate any familiarity with
the Perth Amboy property or with the terms and conditions of that sale. In short, he presented
no information to support his determination that the Perth Amboy property was not comparable
to the subject. The Tax Court in Sunshine Biscuits Inc. v. Sayreville,
4 N.J. Tax 486 (Tax 1982),
dealt with the question of utilizing comparable properties not located proximate to the subject.
Defendant further contends that the market data approach as applied
by plaintiff's appraiser is fundamentally flawed because it is based on sales
of industrial plants outside of Sayreville and outside of Middlesex County.
While it is generally true that sales of comparable facilities should not be too
remote in location from the subject property, the process of comparison must
be based on sales that reflect typical market action within the market in which
the property would be sold. American Institute of Real Estate Appraisers, The Appraisal of Real Estate 274-275 (7th ed. 1978). The market for a particular
parcel of real estate consists of the potential purchasers, unlimited by a specific
geographical location. Ibid. The effectiveness of comparable sales which are
some distance from the subject depends, in large part, upon the nature and character
of the property involved. The record clearly reveals, in this matter, that the
market for the subject would be, at a minimum, from northern New Jersey to
metropolitan Philadelphia, Pennsylvania. Defendant's appraiser conceded that
the market would probably encompass an even greater geographical area. The
evidence is sufficient to support a finding, and I so find, that there is a broad
regional market for industrial plants such as the subject. The ultimate purpose
of valuation is to arrive at a fair and realistic value of the property involved. This
requires a view of the action and reaction of the potential buyers and sellers. If the
potential buyers would not be limited to a narrowly confined area, I see no reason
why this court should put on blinders and ignore economic realty.
[Id. at 496 (footnote omitted).]
Both appraisal experts' acknowledged that marine repair facilities are not common. Both
acknowledge the need for same to be located alongside water. Both, however, confined their
search to Hoboken and adjacent municipalities. Recognizing the potential paucity of true
comparables, the appraisal experts should have searched beyond the borders of the subject
municipalities, county and state. Failure to do so results in the appraisal experts utilizing
properties not at all comparable to the subject. In Pennwalt Corp. v. Holmdel Tp.,
4 N. J. Tax 51
(Tax 1982), Judge Rimm found the municipality's appraisal expert to not be credible, indicating
that the witness did not utilize proper appraisal methodology. Id. at 61. Judge Rimm further
indicated that the expert's testimony was useless in attempting to arrive at the value of the
property in that case.
The judiciary and fact-finding bodies are not bound by the opinions of expert
witnesses. Wright v. Purepack Corp.,
82 N. J. Super. 100, 111 (Cty. Ct. 1963).
The weight to be given to an expert's opinion depends especially upon the facts
and reasoning which are offered as the foundation of his opinion. Ocean City v.
Landolfo,
132 N. J. Super. 523, 528 (App. Div. 1975). The weight and value of
expert testimony are for the trier of facts. Robbins v. Thies,
117 N.J.L. 389, 398
(E. & A. 1937). An expert's opinion may be adopted in whole or in part or
completely rejected.
[Id. at 61 (quoting Atlantic City v. Atlantic City Bd. of Taxation,
2 N. J. Tax 30, 42-43
(Tax 1980).]
For the reasons set forth above, the municipality's appraisal expert has also failed to rebut
the presumption of correctness of the appealed assessment. In Ford Motor Co., supra,
127 N.J. 290, the Supreme Court stated as follows:
County Tax Board judgments do carry a presumption of correctness. To demand
"definite positive and certain evidence in quality and quantity to overcome the
presumption' is for the Tax Court. Pantasote, supra, 100 N. J. at 413, (quoting Aetna Life
Ins. Co. v. City of Newark,
10 N. J. 99, 105 (1952)). One court has held, however, that
“[t]he so-called 'presumption' ha[s] no artificial probative force once substantial evidence
to the contrary [has been] adduced,” Samuel Hird & Sons, Inc. v. City of Garfield, supra,
87 N.J. Super. at 74, and “[o]nce the 'presumption' is met it was the duty of the Division
[predecessor to the Tax Court] to appraise the testimony and make findings of fact.”
Van Realty, Inc. v. City of Passaic,
117 N. J. Super 425, 430 (App. Div. 1971) (citing
Samuel Hird & Sons, Inc. v. City of Garfield, supra, 87 N. J. Super. at 75).
(O)nce sufficient competent evidence is produced and the
presumption overcome, the matter is not thereby concluded in
favor of the complaining party. The court must then turn to a
consideration of the evidence adduced on behalf of both parties
and conclude the matter based on a fair preponderance of the
evidence. When the court rejects the ultimate conclusions as to the
true value proffered the parties' experts, it should make an
independent determination of true value. On the basis of those
portions of the expert's testimony which the court finds credible.
[Pennwalt Corp. v. Township of Holmdel,
4 N. J. Tax 51, 55-56
(Tax 1982) citing Samuel Hird & Sons, supra,
87 N. J. Super 65,
208 A.2d 1953; Almax Builders, Inc. v. City of Perth Amboy,
supra.
1 N. J. Tax 31; City of Newark v. 1013 Corp.,
1 N.J. Tax 107 (Tax 1980)).]
[Id. at 312-13.]
Pursuant to the analysis by the Tax Court in MSGW Real Estate Fund, supra, 18 N.J.
Tax at 377, this court must determine whether or not taxpayer or counterclaimant municipality
has rebutted the presumption of the validity of the assessment. This court finds that the parties
have not. Specifically, taxpayer's appraisal expert presented no reliable estimate of potential
gross income in the income capitalization approach and no reliable estimate of land value in the
cost approach. Without same there is insufficient evidence to support any value estimate
submitted by taxpayer. The evidence presented by defendant, discussed above, was also
insufficient for this court to make a reliable calculation of value. As a result, the presumption of
correctness of the assessment appealed from has not been overcome by either party.
Since this court has determined that both parties have failed to rebut the presumption of
the validity of the assessment, both taxpayer's complaints and the municipality's counterclaims
must be and are hereby dismissed. This court finds that the assessment for both years must,
therefore, be affirmed.
The Tax Court Administrator is therefore ordered to enter judgment affirming the
assessment for 1998 and 1999 as follows:
Land $1,431,000.00
Improvements $ 569,000.00
Total $2,000,000.00
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