ASSESSMENT DEMONSTRATION PROGRAM P.L. 2013 Chapter 15, N.J.S.A. 54:1-101 Monmouth County Implementation Update January 21, 2015
LEGISLATION STATEMENT S1213 - A1591 The real property assessment demonstration program proposes a real property assessment system that will remain decentralized for the purpose of creating a more responsive and accurate assessment function that can annually adjust to the flow of the county s varied markets and submarkets. The central premise of the demonstration program is a collaborative effort between the County Tax Board and municipal Assessors. The demonstration program relies on this working relationship to address the issues of cost effectiveness and the accurate process of assessment.
ASSESSMENT DEMONSTRATION OVERARCHING GOAL The real property assessment demonstration program provides a real property assessment system that will remain decentralized for the purpose of creating a more responsive and accurate assessment function that can annually adjust to the flow of the county s varied markets and submarkets.
ASSESSMENT DEMONSTRATION PROGRAM OVERVIEW There are five (5) primary components of the program that significantly modify the current assessment function. They are: 1. Appeal Calendar Municipal fiscal stabilization 2. Annual Assessment Revision (AKA Annual Reassessment) - Turning off the refund faucet 3. Revision Compliance - Uniformity 4. Assessment Standardization Uniformity, enhanced public service, Annual Reassessment Handbook 5. Education Uniformity, enhanced public service, Tax Board Portal
#1 - Appeal Calendar The Demonstration Program modifies the timing of the appeal season and filing requirements so that the vast majority of assessment disputes will be settled prior to the filing of the final assessment list with the County Board of Taxation.
ASSESSMENT DEMONSTRATION PROGRAM The Assessment Demonstration Program restructures the Assessment Calendar to position the appeal process before the budgetary process. ASSESSMENT FUNCTION CURRENT DATE NEW DATE Assessing Date October 1 PTY October 1 PTY Revaluation Completion Nov 1 PTY 1 week prior to November 1st Preliminary Assessments Certified to County Board (all towns) CTB to post all PRC to County Website Nov 1 PTY Revaluation Assessment Notice Mailed (Revaluation Towns Only) Not prior to November 10 PTY Nov 1 PTY Postcards Mailed (all non-revaluation towns) 1-Feb Nov 15 PTY Taxpayer Review Hearings completed (Revaluation Towns Only) Postcards Mailed (includes all hearing revisions) (Revaluation Towns Only) Not later than December 10 PTY 1-Feb Not later than November 30 1-Dec Added / Omitted Assessment Appeal Filed to CTB On or before December 1 On or before December 1 Added / Omitted Assessment Appeal Judgment Rendered by CTB On or before December 31st On or before December 31st Tax Appeals Filed 1-Apr 15-Jan Appeal Judgments Mailed 30-Jun 30-Apr Tax List Filed by Assessor 10-Jan 5-May Town Adopts Budget 31-Mar 15-May Tax List Finalized By Tax Board (Equalization) 10-Mar 25-May Tax Rate Certified by Tax Board 20-May 31-May Tax Bills Mailed 14-Jun 14-Jun
Appeal Calendar 2014 Year-1 Impact Summary Within Monmouth County for 2014 the assessments were reduced 271,680,650 through County Tax Board appeals. Based largely on the settlement of Tax Court issues, the Assessors processed the further reduction of 68,426,000 as 2014 Corrections of Errors. The total change to the assessments of the 2014 Preliminary Tax List was 340,106,650. In the old assessment model the $6,841,635 in TAX DOLLARS associated with the reduced assessment would have been anticipated but uncollected revenue due to loss in appeal that would require emergency bonding with interest. Because we have changed the calendar and placed the appeal process before the budgetary process, Monmouth has greatly avoided the need for emergency bonding.
#2 - Annual Assessment Revision AKA Annual Reassessments The Demonstration Program provides the Assessor with both the authority and the requirement for the annual review and revision of all properties within the jurisdiction. Performing Annual Reassessments is the key to avoiding multi-year refunds.
FRACTIONAL ASSESSMENTS Assessments that represent a percentage of Market Value
FRACTIONAL ASSESSMENTS
FRACTIONAL ASSESSMENTS Static Year to Year In the year of a district wide revaluation all assessments are set equal to the property's current market value. AV /MV = 100% Each year after that, while the value of properties appreciated or depreciated, the assessment remained unchanged. Generally, the assessment remains unchanged until the implementation of a new revaluation, a successful appeal or a physical change to the property. So, as an example, an assessment set at $500,000 will remain $500,000 year after year until changed. In an appreciating market the assessment remains to be $500,000 but the market value increases to $510,204. The AV to MV Ratio is 98% The following year the assessment remains to be $500,000 but the market value increases to $526,316. The AV to MV Ratio = 95% Over time, with continued market appreciation, the static assessment represents a smaller and smaller percentage of the current market value.
FRACTIONAL ASSESSMENTS An example of not understanding the Implied Market Value: A taxpayer receives their property record card with a total assessment of $200,000 Not understanding that the town s Assessed-to-Market-Value Ratio is 50%, and knowing that a similar house recently sold for $300,000 the taxpayer thinks he is Under-assessed so no appeal is filed. In actuality, because the Ratio is 50%, the implied market value is actually $400,00 and as such the recent sale is proof that the taxpayer is $100,000 OVER-Assessed.
The problem with understanding the transition from Fractional Assessments to 100% of Current Market Value Shortly after distributing the new 2015 Notification of Assessment Postcards a resident called the County Tax Board and said that there is no way that the value of my house went up 56,300. You guys are killing us. So we reviewed the details of the property. The town was transitioning from an "assessed value to market value ratio" of 87.24% to 100% of market value. Based on the calculation above the 2015 assessment of 516,000 is LOWER THAN the Assessor s estimate of Market Value from 2014.(526,937-516,000 = 10,937) The Taxpayer's complaint to the County Tax Board that there is no way that my house went up 56,300 is a PERFECT example as to why the old system of fractional assessments needs to be changed. The intent of the NEW system is to establish and maintain market value so that the taxpayer never has to perform an analysis in determining if the assessment is a fair representation of current market value.
#2 - Annual Assessment Revision Transitioning to Annual Reassessments Replacing the components of the old revaluation model with Annual Reassessments conducted by the Assessor. Valuation: The Assessor must be given the tools and support to annually perform the valuation of 100% of the properties. Data Collection: As opposed to inspections every 10 years the 20% annual internal inspection program will provide the data needed to annually recalibrate the costing system.
MONMOUTH COUNTY IMPLEMENTATION SUMMARY TRANSITION TO ANNUAL REASSESSMENTS REVALUATION IMPLEMENTATION Assessment Function Action 2014 2015 2016 2017 2018 Towns Parcels Towns Parcels Towns Parcels Towns Parcels Towns Parcels Revaluation 3 9,751 11 30,078 8 44,665 6 16,089 0 Annual Reassessment to Ratio Annual Reassessment to MV 50 239,766 14 60,754 6 16,089 0 0 28 158,685 39 188,763 47 233,428 53 249,517 Annual Totals 53 249,517 53 249,517 53 249,517 53 249,517 53 249,517
2015 IMPLEMENTATION SCHEDULE 2015 Assessments revised to market value by Assessor 1 ABERDEEN 25 LITTLE SILVER 3 ALLENTOWN 26 LOCH ARBOUR 4 ASBURY PARK 28 MANALAPAN 6 AVON BY THE SEA 30 MARLBORO 10 COLTS NECK 31 MATAWAN 11 DEAL 32 MIDDLETOWN 13 ENGLISHTOWN 33 MILLSTONE 14 FAIR HAVEN 40 ROOSEVELT 17 FREEHOLD TWP 41 RUMSON 18 HAZLET 44 SHREWSBURY BORO 19 HIGHLANDS 45 SHREWSBURY TWP 20 HOLMDEL 48 SPRING LAKE HGTS 21 HOWELL 49 TINTON FALLS 22 INTERLAKEN 53 WEST LONG BRANCH 2015 Assessments revised to current ratio - revaluation 2015 Assessments revised to market value by traditional revaluation pending for future years. ATLANTIC 5 HIGHLANDS 2017 Revaluation 2 ALLENHURST 2015 Revaluation 7 BELMAR 2017 Revaluation 8 BRADLEY BEACH 2015 Revaluation 12 EATONTOWN 2016 Revaluation 9 BRIELLE 2015 Revaluation 16 FREEHOLD BORO 2016 Revaluation 15 FARMINGDALE 2015 Revaluation 23 KEANSBURG 2017 Revaluation 24 KEYPORT 2015 Revaluation 27 LONG BRANCH 2016 Revaluation 34 MONMOUTH BEACH 2015 Revaluation 29 MANASQUAN 2017 Revaluation 35 NEPTUNE TWP 2015 Revaluation 37 OCEAN TWP 2016 Revaluation 36 NEPTUNE CITY 2015 Revaluation 38 OCEANPORT 2017 Revaluation 43 SEA GIRT 2015 Revaluation 39 RED BANK 2016 Revaluation 50 UNION BEACH 2015 Revaluation 42 SEA BRIGHT 2016 Revaluation 51 UPPER FREEHOLD 2015 Revaluation 46 LAKE COMO 2016 Revaluation 47 SPRING LAKE 2017 Revaluation 52 WALL TWP 2016 Revaluation
#2 - Annual Assessment Revision Continued No more Freeze Act each year stands on its own. No more fractional assessments each year taxpayers deal with market value. No more Chapter 123 if the assessment is proven to be $1 off, then it gets adjusted. (we no longer have to protect the municipality by providing a 1/3 margin of error.) No more large assessment changes after revaluation each year assessments are adjusted based on recent market evidence expectation of 0%-3% up or down each year by neighborhood and class. Once all towns are at 100%, the Assessor shall annually fold in the assessments back to current market value.
IMPACT on FREEZE ACT 2-year binding affect of appeal judgments N.J.S.A. 54:3-26... The conclusive and binding effect of such judgment shall terminate with the tax year immediately preceding the year in which a program for a complete revaluation or complete reassessment of all real property within the district has been put into effect... terminate with said pretax year.
IMPACT ON CHAPTER 123 Test for the need to revise assessments N.J.S.A. 54:3-22 Hearing of appeals; witnesses; evidence; revision of taxable value; grounds; computation (COUNTY) (see also N.J.S.A. 54:51A-6 (TAX COURT)) The provisions of this section shall not apply to any appeal from an assessment of real property taken with respect to the tax year in which the taxing district shall have completed and put into operation a district-wide revaluation program approved by the Director of Taxation pursuant to chapter 424, laws of 1971 (C. 54:1-35.35 et seq.).
Annual Qualified Reassessments and 5-Year Internal Inspections To improve the accuracy of the annual assessments the current model of "10-year revaluations will be replaced by Annual Qualified Reassessments supported by 5-year internal inspection contracts. Revaluation service is comprised of inspection, valuation and appealdefense. Under the new "annual qualified reassessment" model the assessor will be responsible for valuation and appeal defense. Each municipality will enter into a 5-year contract (3 years with 2, 1-year options) for the "internal inspections of 20% of all line items". This service will presumably be offered by the current revaluation firms. Every 5 years 100% of the properties will be internally inspected which is twice that of the current revaluation model. The assessors annual qualified reassessment, supported by the outside internal inspection model, is intended to be a permanent and sustainable replacement for all future revaluations.
5-Year, 20% Internal Inspection Savings Estimate A B C D E F Total Monmouth County Parcel Count 20% Internal Inspections Per Year Countywide Annual Maintenance Cost 10-Year Cost of 2, 5-Year Inspection Cycles 10-Year Cost of Revaluation Estimated Countywide 10- Year Savings on Maintenance (A x 20%) (B x $21) (C x 10 years) (A x $70) (D - E) ($21 per inspection) ($70 per line is statewide average) 249,212 49,842 1,046,682 10,466,820 17,444,840 ($6,978,020) On average, Revaluations cost $70 per line and the proposed system costs $42 per line. By performing the valuation and the appeal defense components of the revaluation model, the municipal Assessor saves the Taxpayers $6,978,020 over 10 years.
MONMOUTH COUNTY IMPLEMENTATION SUMMARY TRANSITION TO ANNUAL REASSESSMENTS 20% INTERNAL INSPECTION IMPLEMENTATION Assessment Function Action 2014 2015 2016 2017 2018 Towns Parcels Towns Parcels Towns Parcels Towns Parcels Towns Parcels Total Parcels Within Towns 28 158,685 39 188,763 47 233,428 53 249,517 53 249,517 20% Annual Internal Inspection* 31,737 37,753 46,686 49,903 49,903 *"Total Parcels" x.2 = number of parcels to be inspected annually 100% of parcels internally inspected every 5 years.
#3 - Revision Compliance Path of Implementation The Tax Board must shepherd the transition of the municipal Tax Lists from varying ratios of assessed-to-market values, to all towns submitting annual reassessments to 100% of market value. Towns transition through 3 distinct states of Tax List submission as they go through the 5-year implementation process; they are: 1. Revise to Ratio: Review 100% of parcels, revise assessments - both up and down in accordance with current market evidence, to the Directors Ratio (this is for all towns in year 1 and continued by any town that has a revaluation pending for future years) 2. Revaluation Implementation: Submission of final revaluation by outside firm. 3. Revise to Market Value: Review 100% of parcels, revise assessments - both up and down in accordance with current market evidence, to 100% market value.
#3 - Revision Compliance The Demonstration Program provides the power to compel the implementation of revaluation, reassessment, compliance plan, and maintenance programs. By providing the ability to expedite the implementation of the revaluation process there will be greater precision in the timely assignment of individual tax liabilities putting an end to the protracted over/under payment of taxes. The authority to compel facilitates the implementation plan for annual reassessments. In accordance with the State-approved implementation schedule, all Monmouth County towns will be performing annual reassessment supported by 5-year internal inspection programs in the year 2018.
#3 - Revision Compliance Tax List Validation As part of the Year-2 submission of the Preliminary Tax List the Tax Board and a team of Assessors developed a standardized way of reviewing each list for 2015. The criteria, which will be refined each year in line with advancements in technology and education, was a high-level review of the following characteristics: Review of Land Assessment Changes: an indicator that the Assessor recalibrated the VCS based on subject sales keeping uniformity within the VCS. Review of Class 4 Assessment Changes: A failure to move all segments of the ratable base in accordance with evidence will undermine inter-class uniformity and cause an unintended shift in the tax levy assignment Review of the treatment of recent sales as compared to other changes: address spot assessing. Review of quantity of total changes: Expectations are different in a town revising from 100% to 100% as compared to a town moving from 80% to 100% or a town revising to the Director s ratio. Review of expected ratio change compared to actual change: Expectations are different in a town revising from 100% to 100% as compared to a town moving from 80% to 100% or a town revising to the Director s ratio.
#3 - Revision Compliance Continued
#4 - Assessment Standardization The Demonstration Program provides for enhanced system administration by requiring that all municipalities within the County utilize the same property assessment software (MODIV/CAMA system). By adopting a single computerized costing environment we are now positioned to have a common controlling textbook and discussion that does not require alternative subtext to accommodate other systems. System standardization has permitted the development of Monmouth County s ADP Handbook for Annual Reassessments which shall be revised and expanded annually to incorporate the incremental advancement of appraisal techniques and technology. System standardization has permitted the fixed integration of new software tools such as the Tax Board Portal with the County s Microsystems software.
ADP Handbook for Annual Reassessments Introduction The intention of this text is to serve as a basic guide in support of your municipal reassessment as required under the Real Property Assessment Demonstration Program. While the assessor s knowledge of the local markets is at the center of the reassessment, proper utilization of Microsystems and available technology will play fundamental roles in your success and accuracy. It is essential for this guide to be considered as a whole, rather than in parts. Following only certain steps will result in an incomplete and non-uniform submission of the tax list.
ADP Handbook for Annual Reassessments - Continued VCS Review The delineation of neighborhoods and assigning of VCS s is arguably the most important aspect of the ADP. The VCS takes on a new roll in our system. It may no longer conform to zoning delineations or be an easy way to value an outlier within a neighborhood. Simply put, a VCS is now the identifier of a specific market. Each specific market will need a unique VCS. The same formula may be used in a different market however; it will require a separate VCS. In the event the two markets appreciate or depreciate at different rates, alterations could easily be identified and revised in subsequent years if coded properly. Improvement values will marginally change annually as we update our depreciation and costing tables. The land value will take into consideration the major and/or minor fluctuation to the overall market value. A comprehensive yearly review and revision of your current VCS structure is essential to the success of your annual reassessment. IMPORTANT: You must review your VCS structure after a revaluation as the Company performing the revaluation is not setting up your VCS structure for annual revision.
ADP Handbook for Annual Reassessments - Continued CAMA Data Management The management of your CAMA is essential, as the accuracy of value depends on the reliability of the data. Furthermore, the CAMA to saleprice ratio will be used as the catalyst for making global changes. It is crucial that these ratios are uniform and that flat adds, appeal judgments and data errors are corrected. If only a portion of the data is repaired, the entire analysis may be flawed. IMPORTANT: A review of the flat added field prior to clearing the data is necessary. Many municipalities have relied on this field a great degree in the past. Due to the multiple functions this field has held (addeds, appeal judgments, value gaps, etc.), it is important the field is properly reviewed and revised. In response to our needs, Microsystems has produced a robust Global Update Reassessment Menu. This menu allows the Assessor to create spreadsheets that identify flat adds, market, land and deprecation adjustments. It also provides the user with the ability to make global changes as needed. A review of the H-Codes utilized for Hurricane Sandy is also needed. The H-Code assigned to a property is a Hard Edit and will be removed if the improvement value is changed.
Standardization and Technology Details Work Product and Delivery Transparency Posting of public documents under the OPRS website. http://oprs.co.monmouth.nj.us Municipal Tax Map Maintenance shared services agreement Tax Board Portal development and expansion of graphical and statistical analysis software and Class 4 Valuation tools. Integration with Monmouth County GIS and Google Maps Engine. https://taxboardportal.co.monmouth.nj.us Incremental development of Microsystems functions and integration with external technology tools. Expansion of the Online Appeals Portal https://secure.njappealonline.com
TAX BOARD PORTAL VCS and Sales Mapping
TAX BOARD PORTAL VCS Mapping
TAX BOARD PORTAL Sales Mapping
N.J.S.A. Const. Art. 8, 1, 1 Township practice of increasing assessed value only of homes sold in township and leaving value of other homes undisturbed constituted a spot assessment in violation of New Jersey Constitution's uniformity clause. Township of West Milford v. Van Decker, 120 N.J. 354, 576 A.2d 881 (1990). The phrase true value means the price which the assessor believes can be obtained for the property, in money, at a fair sale. National Bank of N.J. v. Middlesex County Bd. of Taxation, 26 N.J. Misc. 249, 59 A.2d 270 (1948) Dominant principle of the constitutional mandate that property is to be assessed for taxation under general laws and uniform rule and that all realty assessed and taxed locally or by State for allotment in payment to taxing districts shall be assessed according to the same standard of value and taxed at the general tax rate of the taxing district in which the property is situated for use of such district is equality of treatment and burden. Delaware, L. & W. R. Co. v. Neeld, 23 N.J. 561, 130 A.2d 6 (1957). Where it is impossible to secure both standards of true value and uniformity and equality of valuation required by law in regard to assessment of property for taxation purposes, uniformity and equality required by law is to be preferred as the just and ultimate purpose of the law. Delaware, L. & W. R. Co. v. Neeld, 23 N.J. 561, 130 A.2d 6 (1957). Essential purpose of revaluation of all properties within a district is to achieve tax equalization among members of taxing district and among municipalities in same county. Cold Indian Springs Corp. v. Ocean Tp., 154 N.J.Super. 75, 380 A.2d 1178 (L.1977), affirmed 161 N.J.Super. 586, 392 A.2d 175, certification granted 78 N.J. 410, 396 A.2d 596, affirmed 81 N.J. 502, 410 A.2d 652. In equalization of assessments, where it is not possible to attain a uniformity and equality together with absolute true value, equality and uniformity are to be preferred at the expense of true value. Berkeley Heights Tp. v. Division of Tax Appeals, Dept. of Treasury, 68 N.J.Super. 364, 172 A.2d 453 (A.D.1961), certification denied 36 N.J. 138, 174 A.2d 923. Taxation 2621 In equalization of assessments, absolute quality is an impossibility, and even if some inequality should result, it is not sufficient to make the action taken by the county board arbitrary or unreasonable, and principle by which the court is guided is the constitutional mandate that property shall be uniformly assessed. Berkeley Heights Tp. v. Division of Tax Appeals, Dept. of Treasury, 68 N.J.Super. 364, 172 A.2d 453 (A.D.1961), A selling price is a guiding indicium of fair value for purpose of tax assessment and ordinarily is merely evidential, though it may become controlling, subject to limitation that determination of fair value properly involves the weighing and appraising of all component factors and circumstances. Hackensack Water Co. v. Division of Tax Appeals, 2 N.J. 157, 65 A.2d 828 (1949).
#5 - Education Underlying the Demonstration Program is a series of advancements in appraisal practices and procedures which necessitate additional educational requirements that, in fact, double the State s present requirements for Assessors and likewise apply to County Tax Board Commissioners and the Administrator within the Demonstration County. To position the local assessor with the tools to perform the annual reassessments the Tax Board must enhance the assessors' current capabilities through education in valuation principals, mass appraisal and technology.
A3916 Assembly Bill to update ADP Amend N.J.S.A. 40A:4-53 - to clarify that the preparation of annual tax map revisions necessary for the implementation and continuation of the demonstration program, and also the preparation and execution of a reassessment program ordered by a county board of taxation participating in the demonstration program, are purposes for which special emergency appropriations may be utilized. Amend N.J.S.A.54:1-6 35.29 Provides for Assessor s CTA suspension for willful noncompliance and removal from office if found guilty. Amend N.J.S.A.54:1-16 104 - Permits no more than 10 counties to participate in the demonstration program (currently only four may participate). Require Tax Board ordering of Annual Reassessments. Assessments must be revised to current market value annually. Require the use of 5-year, 20% annual internal inspection program to support annual reassessments. Require inspection of recently sold property within 60 days of deed filing. Provides County authority to update tax map and bill municipality when a town fails to do so. Amend N.J.S.A.54:3-21 to provide that when an appeal hearing date is adjourned for good cause, the evidence exchange window remains 7-days prior to the original hearing date.
Demonstration Program Year 1 Update Summary Working collaboratively within Monmouth County and by creating and nurturing partnerships with Burlington County, the Division of Taxation and with other forward- thinking assessment and technology professionals; we have accessed the knowledge and insight of a broad professional skill set. Over time, this mutually beneficial partnership will produce an effect greater than the sum of any individual effort. Our collective target remains to be the reduction of the cost of the Assessment Function by addressing all systemic cost-drivers while continually enhancing service to the public.
Monmouth County Tax Board Matthew Clark, County Tax Administrator http://tax.co.monmouth.nj.us matthewclark@co.monmouth.nj.us 732-431-7404