Blair, B. A. (2021). Cases in brief: Use of actual income to value nursing home must measure whether income represents the market. Appraisal Journal, 660, 10-12.
This Appraisal Journal articles summarizes Eagle Rock Convalescent Center v. West Caldwell Township; New Jersey Tax Court January 6, 2021; 32 N.J. Tax 122.
Abstract:
Eagle Rock Convalescent Center (Taxpayer) is a skilled nursing facility located in West Caldwell Township, New Jersey. The 180-bed facility was built in 1987 and contains 26 sub-acute or short-term care beds, with the remainder dedicated to long-term care patience. The Taxpayer's appraiser used the income approach and determined the stabilized income figure. He compared the facility's payer mix to the pay mix at three other nursing homes in other counties. The tax court observed that the successful use of actual income to value a nursing home must include a method for measuring whether the income represent the market. The tax court further rejected the income approach because of the difficulty in separating business and real estate income. Taxpayer's income approach was therefore deemed unreliable, and the tax court instead found the cost approach to be the more reliable method to value Taxpayer's nursing home facility. Ultimately, the tax court affirmed the assessments for all years under appeal.