PROGRAM ADJUSTMENTS SINCE IMPLEMENTATION
The Assessment Demonstration Program (ADP) is intended to evaluate the efficacy and functionality of a collaborative system of real property assessment which utilizes a revised assessment, and assessment appeal, calendar, advanced appraisal techniques and technology to provide systemic cost reductions and enhanced public service. As part of the five-year pilot program stakeholders annually modify program requirements to enhance service, reduce cost and address unintended consequences. Below please find a summary of the major program enhancements applied to date.
TAX APPEAL JUDGMENT FREEZE ACT
Current law states that in most cases the assessment set by an appeal judgment is held for two additional years. This requirement is referred to as the “Freeze Act”. Within the same law, it states that the Freeze Act does not apply if there is a districtwide revaluation or reassessment. Further, language within the New Jersey Constitution effectively prohibits the Freeze Act in the year of the revaluation. Because the Assessment Demonstration Program implements a reassessment every year, there is no Freeze of the prior year judgments.
Having heard from taxpayers and local officials regarding the permanent loss of the Freeze Act the Commissioners of the Tax Board, working with Assemblyman O’Scanlon, took several steps to approximate the controls created by the Freeze Act.
The goal was to ensure that the Assessor was specifically reviewing and verifying any assessment change to prior-year appeal judgments. To accomplish this goal the Tax Board required the Assessor to accept and implement the “Year 3 Implementation requirements” for submitting the Preliminary Tax List which included the following requirements:
YEAR-OVER-YEAR ASSESSMENT VOLITILITY
Supporters of the old-model of assessments state that after the tumultuous first year of a revaluation there is “stability” in the individual assessments but in year-2 of the ADP there continues to be assessment revision. What they have assigned as "assessment stability" is actually just the assessor's inability to correct what is wrong. This is a FAILING of the old system NOT a strength. Factually, in year- 2 of the old-model many assessments remain inaccurate but the law forbids revision so they have to remain inaccurate until the next revaluation. Under-assessed property is to the long-term detriment of all other taxpayers. In the old-model each year after the revaluation assessment uniformity and accuracy continues to breakdown and the inaccurate distribution of the levy increases. Alternatively, in year-2 of the ADP, and every year thereafter, assessments continue to be adjusted to current market value so that both assessment uniformity and the accuracy of the levy distribution continually improve.
The Assessment Demonstration Program (ADP) is intended to evaluate the efficacy and functionality of a collaborative system of real property assessment which utilizes a revised assessment, and assessment appeal, calendar, advanced appraisal techniques and technology to provide systemic cost reductions and enhanced public service. As part of the five-year pilot program stakeholders annually modify program requirements to enhance service, reduce cost and address unintended consequences. Below please find a summary of the major program enhancements applied to date.
TAX APPEAL JUDGMENT FREEZE ACT
Current law states that in most cases the assessment set by an appeal judgment is held for two additional years. This requirement is referred to as the “Freeze Act”. Within the same law, it states that the Freeze Act does not apply if there is a districtwide revaluation or reassessment. Further, language within the New Jersey Constitution effectively prohibits the Freeze Act in the year of the revaluation. Because the Assessment Demonstration Program implements a reassessment every year, there is no Freeze of the prior year judgments.
Having heard from taxpayers and local officials regarding the permanent loss of the Freeze Act the Commissioners of the Tax Board, working with Assemblyman O’Scanlon, took several steps to approximate the controls created by the Freeze Act.
The goal was to ensure that the Assessor was specifically reviewing and verifying any assessment change to prior-year appeal judgments. To accomplish this goal the Tax Board required the Assessor to accept and implement the “Year 3 Implementation requirements” for submitting the Preliminary Tax List which included the following requirements:
- Analysis of prior year County Board and Tax Court judgments to determine if the most recent market evidence suggests that the judgment should be overturned or held.
- If held, verify judgment is entered into MODIV.If held, review similar properties for uniform adjustment.a. Note: Absent new specific market evidence or physical change (added), assessments of prior appeal judgments should typically not see major % changes in the agreed upon assessment.
- Without other data Prior Appeal Judgments are expected to move up and down with the “observed” average change from one year to the next (applying the known to the unknown).
YEAR-OVER-YEAR ASSESSMENT VOLITILITY
Supporters of the old-model of assessments state that after the tumultuous first year of a revaluation there is “stability” in the individual assessments but in year-2 of the ADP there continues to be assessment revision. What they have assigned as "assessment stability" is actually just the assessor's inability to correct what is wrong. This is a FAILING of the old system NOT a strength. Factually, in year- 2 of the old-model many assessments remain inaccurate but the law forbids revision so they have to remain inaccurate until the next revaluation. Under-assessed property is to the long-term detriment of all other taxpayers. In the old-model each year after the revaluation assessment uniformity and accuracy continues to breakdown and the inaccurate distribution of the levy increases. Alternatively, in year-2 of the ADP, and every year thereafter, assessments continue to be adjusted to current market value so that both assessment uniformity and the accuracy of the levy distribution continually improve.
Long-term benefits aside, the changes to individual assessments in the initial years of implementation
have been criticized. To help manage this transition the Commissioners of the Monmouth County Board
of Taxation have incorporated the following requirement into the “Year 3 Implementation
requirements” for submitting the 2016 Preliminary Tax List:
The purpose of this requirement is to ensure that the Assessor is not simply relying solely upon the most recent or highest sale. The intent of a uniform expansion of the market data sample size is to “smooth” the value estimates year over year thereby addressing concerns of volatility in the first few years of implementation.
TAX BOARD OVERSIGHT
Having instituted Tax List submission requirements that were intended to address the known issues of “prior-year appeal judgment revisions” and “year over year assessment volatility”, the Tax Board conducted a review of each 2016 Preliminary Tax List to confirm compliance. As part of the Tax Board’s review, if greater than 5% of the municipality had assessment changes in excess of 10% or prior-year appeal judgments increased greater than 5% a file shall be delivered to the Assessor identifying those properties for review and explanation.
The purpose of this review process was to ensure that any change implemented by the Assessor were intentional and supported by market evidence. If an error was discovered the Assessor could submit an appeal to correct it.
Under the authority of N.J.S.A. 54:4-46 and 47 the Commissioners of the Monmouth County Board of Taxation shall review and revise all assessments in association with the Equalization Process. The Commissioners shall determine the scope of this review.
Finally, there are concerns over the apportionment of shared levies when some towns are maintaining market value through annual reassessments and others towns are equalizing static assessments through the use of the Director’s Ratio. The concern is that the equalized value produced from the Director’s Ratio will often be lower than that which is developed from annual reassessments. A lower equalized value will result in the shifting of the tax levy from one town to another. The Tax Board is exploring modification of N.J.S.A. 54:4-49 and associated regulation that would require a “post year recalculation of apportionment based on the one-year average sales ratio of all useable sales” to be applied as a further debit and credit. The purpose of this process and a refined review of the management of the sales ratio program would be to ensure a more accurate apportionment of shared tax levies.
Moving forward, the Commissioners of the Monmouth County Board of Taxation shall continue to refine administrative controls to annually ensure increasingly more accurate assessments which lead to the most equitable distribution of the tax levy. The expectation is that each year, with continued data verification, new technology and education, the individual assessments will be held closer to current market value with a reduced variance of assessments.
- Research and review all sales within the municipality occurring in the last 36 months (weight reliance on most recent data).
The purpose of this requirement is to ensure that the Assessor is not simply relying solely upon the most recent or highest sale. The intent of a uniform expansion of the market data sample size is to “smooth” the value estimates year over year thereby addressing concerns of volatility in the first few years of implementation.
TAX BOARD OVERSIGHT
Having instituted Tax List submission requirements that were intended to address the known issues of “prior-year appeal judgment revisions” and “year over year assessment volatility”, the Tax Board conducted a review of each 2016 Preliminary Tax List to confirm compliance. As part of the Tax Board’s review, if greater than 5% of the municipality had assessment changes in excess of 10% or prior-year appeal judgments increased greater than 5% a file shall be delivered to the Assessor identifying those properties for review and explanation.
The purpose of this review process was to ensure that any change implemented by the Assessor were intentional and supported by market evidence. If an error was discovered the Assessor could submit an appeal to correct it.
Under the authority of N.J.S.A. 54:4-46 and 47 the Commissioners of the Monmouth County Board of Taxation shall review and revise all assessments in association with the Equalization Process. The Commissioners shall determine the scope of this review.
Finally, there are concerns over the apportionment of shared levies when some towns are maintaining market value through annual reassessments and others towns are equalizing static assessments through the use of the Director’s Ratio. The concern is that the equalized value produced from the Director’s Ratio will often be lower than that which is developed from annual reassessments. A lower equalized value will result in the shifting of the tax levy from one town to another. The Tax Board is exploring modification of N.J.S.A. 54:4-49 and associated regulation that would require a “post year recalculation of apportionment based on the one-year average sales ratio of all useable sales” to be applied as a further debit and credit. The purpose of this process and a refined review of the management of the sales ratio program would be to ensure a more accurate apportionment of shared tax levies.
Moving forward, the Commissioners of the Monmouth County Board of Taxation shall continue to refine administrative controls to annually ensure increasingly more accurate assessments which lead to the most equitable distribution of the tax levy. The expectation is that each year, with continued data verification, new technology and education, the individual assessments will be held closer to current market value with a reduced variance of assessments.
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