Daily Development for Tuesday, January 13, 2004 
by: Patrick A. Randolph, Jr. 
Elmer F. Pierson Professor of Law 
UMKC School of Law 
Of Counsel: Blackwell Sanders Peper Martin 
Kansas City, Missouri 
dirt@umkc.edu 
TAXATION; PROPERTY TAXES; SPOT ASSESSMENTS; "ASSESSMENT 
MAINTENANCE:" Adjusting an assessment for legitimate reasons is 
an appropriate exercise of a tax assessor's duties, and it is not required 
that the change be done as part of a district-wide revaluation or 
reassessment. 
Regent Care Center, Inc. v. Hackensack City, 362 N.J. Super. 403, 828 
A.2d 332 (App. Div. 2003); July 22, 2003. 
The Appellate Division here considered "whether the increase in 
assessment of a [particular] nursing home ... constitute[d] a 
constitutionally impermissible spot assessment. The increase did not 
occur as part of a district-wide revaluation or reassessment. The nursing 
home was not the subject of a sale. Thus, the increased assessment was 
not based on a sale of the subject property. The increase was a product 
of the assessor's assessment maintenance program, in which he reviewed 
all line items on the municipality's tax rolls and determined that certain 
commercial properties dramatically increased in value. In the case of the 
subject property, the assessor concluded it had been grossly 
underassessed, perhaps as a result of an oversight on the part of the 
former assessor. The assessor increased the assessments of about 150 
properties, including [this particular nursing home]. About 95% of the 
changes were increases in assessments." 
The Tax Court upheld the increase assessment. The nursing home owner 
further appealed asserting that because the increase was not based on a 
zoning change or change in legal status or a physical change to the 
property, and its property was only one of a small group of properties so 
affected, it constituted prohibited spot assessment. It urged the Court to 
"declare the practice of 'assessment maintenance' an unconstitutional 
device creating spot assessments." Lastly, it argued that a 2001 
amendment to the tax law required the assessor to file a compliance plan 
with its county board of taxation and with the Division of Taxation for 
approval, but the Court did not consider that argument because it refused 
to apply that amendment retroactively. 
The challenged assessment was for 1998. The last prior revaluation in 
the municipality was in 1988, followed by a district-wide reassessment in 
1993. The nursing home was under construction at the time of the 1993 
reassessment and its valuation upon completion was carried forward in 
1994, 1995, and 1996. The assessor reviewed the assessment for 1997, 
leaving the value of the land unaffected, but almost doubling the value 
of the improvements. Between 1993 and the revaluation, there were no 
physical changes to the property and no zoning changes. The property 
was always used as a nursing home. 
The assessor initially characterized the change as part of an "update." It 
explained that it reviewed over 11,000 property record cards for the 
entire city. Based on examination of all available sales ratio data and 
similar information, he concluded that, "generally, between the 1993 
reassessment and 1997 the values of single family homes did not 
increase." He further determined that about 150 commercial properties 
were grossly underassessed. One hundred twenty-five were vacant 
parcels along one particular street and apartment buildings scattered 
throughout the city. The remainder were mostly shopping centers and 
other retail uses and this particular nursing home. He determined that the 
vacant parcels doubled or tripled in value because of a change in zoning 
from manufacturing to retail. He found the apartment building and other 
commercial properties to be substantially underassessed based on his 
analysis of income and expense data. "The 150 affected properties did 
not constitute all commercial properties in the city." There was one other 
nursing home in the municipality. Based upon the assessor's awareness 
of "recent nursing home sales in surrounding communities" he 
determined that both nursing homes should be assessed a per bed basis. 
In his opinion, the other nursing home was appropriately assessed but 
that the nursing home in question was so grossly underassessed that it 
"stood out like a sore thumb." 
The Court refused to characterize the process as "a piecemeal review of 
only some properties, some classes of properties, or some 
neighborhoods." It characterized the assessor's process as a 
"comprehensive review." In fact, about five percent of the 150 properties 
were substantially overassessed and their assessments were lowered. 
The nursing home did not present any evidence as to value and did not 
challenge the assessor's per bed valuation method. Further, it did not 
contend that its property was overassessed. 
The term "assessment maintenance" does not have a precise definition. 
Nonetheless, it generally "refers to the practice by which an assessor 
changes some assessments in a year when district-wide revaluation or 
reassessment is not performed." Under law, the assessor is required to 
"determine the full and fair value of each parcel of real property" in his 
district "at such price as, in his judgment, it would sell for at a fair and 
bonafide sale by private contract on October 1 next preceding the date on 
which the assessor shall complete his assessments... ." The Court refused 
to explore whether all "asset maintenance" is impermissible. It did, 
however, explore the property owner's argument "that even if asset 
maintenance, as generally described, were a permissible practice, it was 
impermissible here because no uniform standards existed to regulate the 
practice on a county-wide or state-wide basis." The Court rejected that 
proposition. According to the Court, "it is arbitrary intentional 
discrimination that is unconstitutional. A municipality may revise 
assessments in years other than years of municipal-wide revaluation for 
legitimate reasons." Although "under no circumstances can appraised 
valuation of property be increased merely because it has been sold," 
reassessment "of all industrial and commercial properties based on [a] 
study showing they were underassessed as a class" is permissible. 
The New Jersey State Constitution mandates equality of treatment and 
burden. Performing a district-wide revaluation or reassessment every 
year is simply not feasible. Consequently, an assessor can meet his or 
her obligation "to keep the tax rolls current by assessing each property at 
its full and fair value each year" by making appropriate "examination and 
inquiry ... in his judgment" to determine valuations in between full 
revaluations. "Assessors cannot be expected to do nothing in years in 
between district-wide revaluations or reassessments. Their role is not 
that of a caretaker." Thus, "adjusting an assessment for legitimate 
reasons is an appropriate exercise of the assessor's statutory obligation 
and is not arbitrary or discriminatory." The nursing home's revaluation 
was done in connection with a large group of properties and specific 
comparison was made to the only other nursing home in the 
municipality. 
Comment 1: Although the assessor denied that it was singling out 
particular neighborhoods or classes of property for reassessment, and 
certainly that it was identifying only one particular property, would it 
violate the court's interpretation if the assessor formulated a policy than 
whenever it determined that a property was more than 100% 
undervalued, say, it could initiate a reassessment? 
The court stated specifically that it was not holding that there is no 
prohibition of arbitrary or unequal assessment practices. In fact, it 
indicated that there is substantial New Jersey authority striking down the 
assessment methodology known as "Welcome, Stranger," whereby 
properties always are reassessed when ownership transfers. Although 
this is a uniform system, it singles out one class of property, and the 
court concluded that this is unconstitutional under New Jersey's 
Constitution. The court further stated that the "Welcome, Stranger," 
system if not the only example of improper assessment processes. 
But as a practical matter, the court appeared to concede that assessors 
have the right to initiate systems of reassessment designed to pick up 
underassessed properties. Although the court and the assessor politely 
referred to the situation in the present case as an "oversignt" by the prior 
assessor, the fact remained that a similarly situated nursing home was 
assessed in the range of the $60-$70 per bed price for which nursing 
homes were being sold, while the instant nursing home enjoyed an 
assessment based upon $26 per bed. An "oversight" indeed. 
Comment 2: The case is interesting because the Constitutional "spot 
assessment" prohibition likely is present in most jurisdictions. The court 
noted that in New Jersey new statutes have been enacted restricting the 
ability of local assessors to design and initiate their own reassessment 
methods, and requiring more uniform practices. But these statutes were 
not applicable to the instant facts.