South Brunswick will hold off on a property revaluation program for at least one year to determine if such action is warranted moving forward.
During a discussion at Tuesday's Township Council meeting, Chief Financial Officer Joseph Monzo said South Brunswick experienced a significant decrease from the impact of tax appeals last year on the ratable base.
"I think there's been some improvement in the market, so I would hold tight to see what 2013 brings in terms of tax appeals and (the ratio of assessed value to market value), and then revisit this at the end of the year," he said.
A revaluation program appraises all real property according to its full and fair value. While some residents would see their assessments, and consequently their tax bills, increase under a township-wide revaluation, the process is intended to correct inequities in the tax base that may develop over time.
"Revaluation is not meant to raise anymore tax revenue to the township, it just redistributes who's paying taxes based on the market share of the properties," Monzo said.
Last year, 391 tax appeals were filed in the township, up from about 180 appeals in 2011, when about 100 companies successfully sued the township for a tax reduction. That reduction resulted in the loss of over $100 million in ratables in 2011, $98.5 million of which came from commercial and industrial tax appeals.
However, the total number of ratables lost to tax appeals dropped to $32 million in 2012. The drop was attributed to a new township threshold for settlement limits and the fact that commercial and industrial properties are only able to appeal their taxes once every three years.
Previously, any settlement that was greater than $50,000 had to be brought by the South Brunswick Tax Assessor to the council for approval. At a meeting last April, the council lowered the settlement limit from $50,000 to $25,000.
Since 2007, South Brunswick has lost $600 million in ratables from successful tax appeals. Over the last 10 years, the ratio of assessed value to market value dropped from about 80 percent to 47 percent in South Brunswick. That drop led the township to consider the revaluation program, which takes about two years to complete and costs between $1.5 to $2 million spread out over five years, Monzo said.
Despite the drop in the ratio of assessed value to market value over the last decade, the ratio improved last year from 44 percent to 47 percent, which township officials said was a sign that the economy may be turning around.
Based on projections, the South Brunswick Tax Assessor's Office said the group that would experience the most significant impact from a revaluation program would most likely be apartment properties, who would pay significantly more than they're paying now.
"In this economy, when the housing market is this bad, with people having foreclosures and losing their jobs, apartments are the way people are going," Monzo said. "They're not losing value and they're more in demand than single residential houses are."