The Division of Taxation opened investigations into the municipalities for letting their assessments become unfair, outdated.
TRENTON -- The state on Monday will order three New Jersey municipalities that have not revalued property in at least a quarter century to conduct revaluations that will affect property taxes for thousands of residents, NJ Advance Media has learned.
State officials will take the action against Jersey City, Elizabeth and Dunellen, which they say have defied the state Constitution's calls for fair and uniform assessments, according to a person familiar with the state's investigations of those towns.
The municipalities will have until November 2017 to complete revaluations, according to the source, who is not authorized to speak publicly and requested anonymity.
The assessed value of a home is used to help determine property tax bills. But property values change over time, and when governments stall revaluations, some taxpayers wind up paying too much and others pay too little.
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Fixing that through revaluations after a long period of time, however, can mean big tax increases for longtime residents. The conventional wisdom in property revaluations that taxes will go down for a third of property owners, and go up for a third.
Jersey City, the state's second-largest city and undergoing a population and real estate boom, hasn't conducted a revaluation in 27 years. The taxable value of its properties in 2015, about $6 billion, is just 27.6 percent of its $21.6 billion estimated market value.
Elizabeth hasn't updated its assessments in 39 years and Dunellen in 33.
When state officials announced in November they were opening investigations into the three municipalities, they indicated it was just the "beginning of a larger effort to address issues of noncompliance," and named six other municipalities that could also face state orders.
In all, 32 towns, boroughs, townships and cities across the state haven't revalued or reassessed in at least 25 years.
The state Division of Taxation also plans to investigate Westfield, Roselle and Winfield in Union County; South River in Middlesex County; and East Newark and Harrison in Hudson County, according to the person familiar with the state's investigations.
Esther Wintner, of Jersey City, predicted a revaluation would mean her property taxes could skyrocket overnight. But foremost is her own sense of fairness, and she's resigned to its necessity.
"I'm really afraid of this reval and what it's going to mean to our home and our family. However, I also know it's the law," she said at a January public hearing by the Division of Taxation in Jersey City. "My morals tell me that this is what we need to do. The law tells me that. Yet, I'm afraid."
At that public hearing, Wintner and a half dozen residents encouraged the state to step in and overrule Mayor Steven Fulop, a likely 2017 gubernatorial candidate who canceled a revaluation in the works when he took office in 2013.
Those who expressed support for a revaluation said some owners aren't paying their fair share and property taxes are out of whack.
"We all have access to the same public services ... but today homeowners like me and my husband pay drastically more to subsidize those benefits while others with very similar living arrangements pay much less," said Lorraine Sperling, who pays $19,000 a year in property taxes for her four-bedroom, 2.5 bath row home near Van Vorst Park.
Others at the hearing worried about longtime residents' whose tax bills may balloon because their property values increased on paper.
"I think that if there is no consideration for the actual ownership, people, the actual owners, for whether or not they're going to be forced out, then something is being neglected in terms of community, and it really becomes in service of gentrification," said Jersey City resident Maurice Moss. Another resident suggested tax bills be frozen until a property is sold.
Fulop told residents gathered at a town hall meeting that those pushing the revaluation are motivated by "purely for hatred of me."
"I voted no every step of the way," he said in a video of the town hall posted by Hudson County View. "... You will see there are some winners. No question about it. There are some winners. Their taxes go down $200, $300. And there are a lot of losers that go up $10,000, $15,000, $18,000."
Michael Darcy, executive director of the New Jersey League of Municipalities, said the state's intervention wouldn't be out of line, as state officials already closely scrutinize local governments' budgets and finances.
"My concern would be how it's done, rather than should the state be in this business," Darcy said, expressing concern for "the widow who's been in her home since she was a small child, even inherited the home from her parents, is now in her 90s, and it turns out her neighborhood has gentrified and her house is now worth 20 times what she thinks."
The state's announcement four months ago was also a shot across the bow to county tax boards in Union, Middlesex and Hudson counties. All but four of the 32 municipalities that haven't reassessed or held revaluations in 25 or more years are in Hudson, Union or Middlesex counties, according to state records.
Samantha Marcus may be reached at smarcus@njadvancemedia.com. Follow her on Twitter @samanthamarcus. Find NJ.com Politics on Facebook.