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(NOTE: The status of this decision is Unpublished.) OriginalWordPerfect file NOT FOR PUBLICATION WITHOUT APPROVAL OF THE TAX COURT COMMITTEE ON OPINIONS

TAX COURT OF NEW JERSEY

Mala Narayanan 153 Halsey Street JUDGE Gibraltar Building, 8 Newark, New Jersey 07101 Telephone: (973) 648-2921 TeleFax: (973) 648-2149 TH Floor

October 19, 2012 Joshua Novin, Esq. Joshua D. Novin, P.A. 96 Park Street Montclair, New Jersey 07402

Christopher Stracco, Esq. Day Pitney, L.L.P. One Jefferson Road Parsippany, New Jersey 07054

Re: Victor & Mary Aliotta, & Silo, Inc. v. Township of Belleville Block 2401, Lot 2 Docket Nos. 007055-2008; 009644-2009; 009418-2010

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Dear Counsel: This letter constitutes the court's opinion with respect to plaintiffs' motion in limine to exclude defendant's expert appraisal report as lacking credible factual basis. Specifically, plaintiffs argue that defendant's expert improperly deemed two trailers and one Quonset Hut located on plaintiffs' property, but allegedly owned by plaintiffs' tenants, as taxable real property. Additionally, plaintiffs argue that defendant's expert also improperly deemed the attic in their one-family home as another bedroom when in fact it is not. * The court finds that the two trailers and the Quonset Hut are taxable as real property. However, since the plaintiffs presented credible proof that the Quonset Hut did not physically exist until early 2009, its inclusion as taxable real property for tax years prior to tax year 2010 is improper. Therefore, the court denies plaintiffs' motion in part. The court does not decide plaintiffs' motion with respect to the alleged incorrect determination that the attic is a bedroom, and keeps the motion open for plaintiffs to raise during the valuation hearing. PROCEDURAL HISTORY Victor and Mary Aliotta, ("Aliottas") and Silo, Inc. (collectively "plaintiffs") filed complaints with this court challenging the assessment on real property located at 86 Lavergne Street, designated as Block 2401, Lot 2 ("Subject") in defendant township ("Belleville") for tax years 2008 through 2010. Trial was scheduled for December 13, 2011. On the date of trial, plaintiffs' counsel presented a motion in limine to exclude Belleville's expert appraisal report as lacking factual basis, and thus being an inadmissible net opinion requiring preclusion of his testimony in this regard. The trial was adjourned, and the court provided time for Belleville to respond to the motion. After parties filed the required briefing,
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the court scheduled a

plenary hearing. Plaintiffs provided testimony of Barbara Miller, a shareholder and employee of plaintiff Silo, Inc., and of Charles Davies, plaintiffs' valuation expert. The facts are adduced from the testimony and documents provided in connection with plaintiffs' motion. FACTS

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Silo, Inc., an S corporation, and the Aliottas own the Subject. However, the Aliottas only have a life estate in the same. Barbara Miller has been an equal shareholder in and an officer of Silo, Inc. since 2003, and has been employed by that company since 1976. She is not the property manager for the Subject. The Subject comprises of a lot sized about 2.08 acres. It is improved with the Aliottas' personal residence, a single-family home with a detached garage. Ms. Miller does not reside in the home. Plaintiffs dispute Belleville's expert's designation of the attic in the home as being "finished with one bedroom" and contend that it is unfinished and used only for storage. The land area adjacent to, but fenced off from the residence, is described as a "contractor's yard." Most of the contractor's yard is gravel; however, some areas are paved with concrete. Portions of the yard are leased by plaintiffs to several tenants, such as contractors and landscapers for the tenants' business purposes. Ms. Miller testified that the tenants could place/install any items, such as supplies, vehicles, storage containers, or equipment on the leased portion of the land, and plaintiffs exercise very little control in this regard although they ensure that nothing hazardous is kept on the property. The lease documents provided to the court delineate the specifically permitted usages such as parking landscaping trucks/trailers or a dump truck, or for the storage of materials/equipment. A violation of this provision of the leases is deemed an actionable breach.
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The leases are generally on a month-to-month basis. Many, such as the tenants alleged to own the three disputed items in the instant motion, namely, a white trailer, a brown trailer, and a Quonset-like hut ("Quonset Hut" or "Hut"), have occupied the leased areas in the Subject for several years.
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The tenants are responsible solely for paying rent for the use of land. They do not pay for any other expenses such as real property taxes or maintenance of common areas. They are responsible for directly paying the utility company any charges they incur for electric, heat, and water. Thus, the leases are considered "net." The lease agreements require the tenants to remove any "equipment, fixtures, goods or other property" upon termination of the leases or upon their vacating the premises. Failure to remove these items would be deemed an abandonment of the same, and the plaintiffs, as landlords, could sell or dispose of the items and retain the proceeds. Ms. Miller testified that over the past several years there have been several

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mobile trailers which had been removed by the tenants (along with all of their equipment) upon the tenants' vacation of the premises. Although she also testified that the lease agreements never provided for the tenants to leave their structures/equipment with plaintiffs, the standard clause in the lease agreements provides that if a tenant were to, with plaintiffs' consent, make, install or attach any "alterations, additions or improvements" to the leased area, those would "belong to and become the property" of plaintiffs and would revert to plaintiffs upon termination or expiration of the lease.

The White Trailer
According to Ms. Miller, the white trailer (so identified as it is painted white) belongs to tenant Roman E&G. The lease document provided to this court is dated May 1, 2006 and is on a month-to-month basis with a monthly rental of $1,260. The usage is specified to be for "only . . . storage of construction equipment, construction materials and office trailer" and "for no other purpose." The attached sketch of the area leased (Schedule A to the lease) shows four rectangles representing the location of the tenant's structures, namely, a "trailer," a "storage trailer," a "shed," and an "office trailer." Belleville's expert only included the "office trailer" in his report. The testimony offered with regards to the physical characteristics of the white trailer was not extensive. There was no testimony as to its dimensions. The photographs show a fairly lengthy structure, fully enclosed, with two separate doors and just enough parking space for two pickup trucks and a sedan between the two entryways/doors (these parked vehicles were in the photographs), and four windows on the front of the structure. It also has two separately constructed wooden staircases leading to the two doorways. The trailer is free-standing in that it is not connected to any other structures on the Subject or to the single-family residence. It lies upon a structure which has a hitch at one end (i.e., the trailer hitch). The trailer hitch rests on the land. The photographs show the tires as being still attached to the trailer with cinder-like blocks and heavy white packages positioned alongside the wheel-base and lying on the land to hold up and stabilize the trailer. Mr. Davies testified that the trailer was positioned "on blocks" with its wheels and axles still attached, as were the tires which were "deflated." The trailer is furnished with its own electric, heat and air conditioning services, as well as water/sewer, none of which is received or sourced from the single-family residence, but is provided for
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directly to the tenant by the utility company. The photograph also showed an air conditioning compressor outside the trailer, which Ms. Miller testified was a temporary fix to replace the unit attached to the trailer. She also stated that the trailer was a replacement of one previously standing there, but which had been removed at some point in the past. She stated that the present trailer had been there "quite a while" but could not recollect for how long. She conceded that she has never been inside the white trailer, and did not know whether it had a bathroom, shower, stove, refrigerator, or connections for gas. Mr. Davies did not know the identity of the owner of the white trailer. He also had never been inside of it. Neither witness provided any testimony about what was inside or what type of activity occurs within the trailer. He stated that, based upon his expertise and his personal experience as an owner of trailers, to move the trailer, one would have to jack it up, remove the blocks, inflate the tires, hook it with the hitch to another vehicle, and pull it away.

The Brown Trailer
The brown trailer (so identified because it is painted brown) is stated to belong to tenant Global Development. It has been on the Subject since at least 2007. The tenant conducts its business inside of the trailer. The trailer sits to the left of the Quonset Hut. There was no testimony as to the trailer's dimensions. The photographs show a fully enclosed, fairly lengthy structure, with a door, three windows of differing sizes on the side where the door is, and one paneled window on the west-side of the door. Near the door and on the side of the trailer is a spotlight. A wooden staircase on the side of the trailer, built by the tenant, provides access to its entrance. The staircase has railings on one side. There is a flat wooden porch between the railings and the door of the trailer. According to Mr. Davies, the porch is not attached to the trailer but is simply adjacent to it. A portion of the land leading to the steps and on the other side of the steps is paved, but the remainder is gravel. The trailer is attached to a structure that has a hitch which sits on the property. According to Mr. Davies, the trailer "is set up on blocks." Around the base of the trailer is a tenant-constructed wooden skirt or apron, which acts as a wind barrier, conceals and protects the wheels, axles and the undercarriage of the trailer from the elements and animals. The area covered by the wooden skirt can be accessed only by actually removing the skirt. Mr. Davies testified that he was told by the tenant's attorney that the wheels are "still attached to the trailer" and that there was a trailer hitch on the front, however, he did not observe
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or verify this information personally. There were no photographs showing the trailer's wheels. There is an air conditioning unit on the side of a trailer set on a concrete pad/block, and ductwork that runs up its side. The trailer's entire interior is air conditioned. It is fully insulated. The brown trailer has its own heat and power connections, for which it has a separate meter. Temporary services are provided by the electricity utility company for the area through an electric pole owned by the utility. The trailer is also connected to water and sewer, with direct arrangements connections. It has a bathroom but no shower or stove. Mr. Davies testified that the trailer had a typical exterior of a mobile trailer or a mobile home, and was used as an office and had a typical administrative interior, with one bathroom and one entrance. He also agreed that the trailer was serviced with all utilities. He stated that, based upon his personal experience and his expertise in appraising trailers, to move the trailer, one would have to remove the skirt, jack up the trailer, disconnect the power lines, air conditioning and sewer connections, remove the duct work, inflate the tires, and hook it with the hitch or a special mount to another vehicle such as a pick-up truck, and pull it away. He agreed that an electrician and a permit would be required to disconnect the power connections, but opined that dismantling the connections was not a "big deal."

The Quonset-Hut
From the photographs, the Hut is a large structure whose floor is a large concrete pad. The land area is leased to Global Development, a construction company, which is also the tenant occupying the Brown Trailer. According to Ms. Miller, the Hut was assembled only in late 2008 or early 2009 thus, prior to this time, the Hut or its components did not exist. Rather, there was a large concrete pad that had once been used for a kennel business on the property. Flanking the concrete pad on either side are eight large shipping containers which comprise the walls of the Hut. The shipping containers are owned by the tenant. On each side of the concrete pad, two shipping containers are positioned length-wise, end-to-end, comprising the base-level of the walls, and an additional shipping container rests on top of each of these four base-level shipping containers. The four base-level shipping containers are not on any foundations, nor are they drilled into the land or to any attachment which is dug into the land. Rather, they sit on the land surrounding the concrete pad. Each

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container weighs approximately two to three tons and together, they are used to stabilize the Hut. The containers can be moved only by cranes. While Mr. Davies testified that the storage containers, which comprise the walls of the hut, are required to be, and are, "stabilized" and "leveled" to the ground, no details were offered on specifically how this was done. Attached to the four upper-level shipping containers is a dome-shaped roof made of corrugated metal. It is attached by bolts to the shipping containers according to Mr. Davies, who was told of this method of affixation by someone refurbishing a large metal sleigh on the premises. The roof area has overhead lights. The Hut has a front and rear fa

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