Aceks Property Management LLC v. Paterson City
010619-2022, 005959-2023, 006309-2024
| N.J. Tax Ct. | Jun 16, 2025Background
- Aceks Property Management LLC owns warehouse property in Paterson, NJ, consisting of two 4-story historic mill buildings totaling about 164,000 sq ft, used as legal non-conforming warehouses.
- Plaintiff challenged the 2022-2024 property tax assessments set by Paterson City, arguing over-valuation.
- Both parties presented expert real estate appraisal testimony using the income capitalization method to estimate the property’s market value.
- The key disputed inputs involved market rent calculations, lease type (net vs modified gross), vacancy rates, operating expense estimates, and the appropriate capitalization rate.
- The court separately assessed the credibility and methodological rigor of the expert analyses, scrutinizing their adjustments, data sources, and explanations.
- After a full bench trial, the court determined the property was over-assessed for each relevant year and ordered reductions consistent with its own reconstructed value calculations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Presumption of Assessment Validity | Sufficient expert evidence rebutted statutory presumption of assessment validity | Assessments presumed correct absent strong contrary proof | Plaintiff produced cogent evidence to overcome presumption |
| Highest and Best Use | Light industrial/warehouse use is correct as both vacant/improved use | Agrees; highest/best use is warehouse | Court agreed with both parties |
| Income Approach Methodology (Lease Type, Market Rent) | Modified gross lease most reflective of the market, with detailed (but mostly unverified) comps by floor | Net leases predominate, with adjusted market rents applied for floors | Court found both lease types common; performed dual analyses, scrutinized adjustments/data for credibility |
| Appropriate Market Value and Corrected Assessment | Lower reconstructed value supported by expert analysis and market/rent data | City’s expert supported higher values, using distinct comps and adjustments | Court found true value to be lower and ordered reduction of assessments |
Key Cases Cited
- Pantasote Co. v. Passaic, 100 N.J. 408 (presumption of tax assessment validity and burden-shifting)
- MSGW Real Estate Fund, LLC v. Mountain Lakes Borough, 18 N.J. Tax 364 (standard for overcoming presumption of assessment correctness)
- Ford Motor Co. v. Edison Twp., 127 N.J. 290 (definition of highest and best use in valuation)
- Helmsley v. Borough of Fort Lee, 78 N.J. 200 (income capitalization analysis in tax appraisal)
- Spiegel v. Town of Harrison, 18 N.J. Tax 416 (real estate taxes not permitted as operating expense in valuation)
- Aetna Life Ins. Co. v. Newark City, 10 N.J. 99 (definition of cogent evidence in assessment appeals)