Tax Court: Glenpointe Associates, Glenpointe Associates II, LLC, and Glenpointe Associates III v. Township of Teaneck; Docket Nos. 004987-2007; 004989-2007; 004982-2007; 004984-2007; 004989-2007; 004992-2007;002967-2008; 002975-2008; 002977-2008; 002982-2008; 002987-2008; 001623-2009; 001638-2009; 001639-2009; 001640-2009; 001642-2009; 017684-2009;002077-2010; 002080-2010; 003183-2010; 003198-2010; 003207-2010;020410-2010; Opinion by Andresini, P.J.T.C., decided August 11, 2020.For plaintiff - Carl A. Rizzo (Cole Schotz P.C., attorneys); for defendant - Kenneth A. Porro and Edna J. Jordan (Chasan Lamparello Mallon & Cappuzzo, P.C., attorneys).
Held: In the valuation of an office complex portion of the subject property with exceptional quality, amenities, and location, the court concluded that the leases contained in the subject office are the best metric for determining economic rent. The court further found that plaintiff taxpayers’ claims that the subject leases must be adjusted to reflect alleged above market leasing commissions while simultaneously taking an expense for the commission is not a valid appraisal practice supported by any accepted source or methodology. Furthermore, adjustments made to comparable leases from the subject market must be grounded in cognizable data and may not be applied in an arbitrary fashion, though when stripped of arbitrary adjustments the comparable leases may still be of probative value in determining economic rent. Additionally, the use of outlier capitalization rates without adequate justification or support on the record renders those figures unreliable to the court in determining the fair market value of the subject.
The court further concluded that in the valuation of a hotel portion of the subject property, it cannot accept plaintiffs’ expert’s conclusions as valid or credible when the expert relies on lower-end data sets and improper hotel classification as the basis for his valuation conclusions. When relying on competitive hotel sets, an expert must base his conclusions on the correct classification of the subject hotel and rely on adequately comparable sources of hotel data from within that classification. An expert’s reliance on inferior hotel properties in his competitive set cannot be afforded any weight. Further, the court cannot accept capitalization rates based on unsubstantiated theories of risk without support in the record.