County backs down on tax appeal

Following a brief standoff, Kenilworth expects to collect $120K in taxes from county

KENILWORTH — Although the county was fighting Kenilworth over the $120,000 in taxes the town wanted for the $15.6 million profit-making clubhouse built at the Galloping Hill Golf Course, they decided late last week to withdraw all objections.

On Oct. 12 the county notified the Union County Board of Taxation it was withdrawing its appeal but only if Kenilworth withdrew their counter appeal. The county has been mum on the tax appeal situation but over the weekend news surfaced that they had second thoughts about the appeal and backed down later in the week.

While county officials would not explain why the decision was made to back down from the appeal, according to one source there was a strong chance that moving forward could have backfired and ended up costing taxpayers even more than $120,000.

When asked about the current situation Monday by LocalSource, the county responded with the following statement.

“This year we paid $67,000 to Kenilworth,” said Union County Communications Director Sebastian D’Elia, adding in 2014 the county will be handing over the full $120,000 that Kenilworth felt was fair to pay for a county-owned profit generating clubhouse.

Tax courts can decide that based on the full value of the land or facility in question, full market value was not taken into consideration. In that case, a tax court judge has the right to increase the original amount. In November the county approved $69,341 in property taxes paid to Kenilworth, which is the prorated amount for seven months of this year, but then filed the tax appeal. The borough then filed a counter appeal.

According to Kenilworth officials, since the borough had filed a counter claim against the county for the entire $15.6 million facility, a judgment could have levied a higher tax than $120,000 against the county. It’s apparent the county did not want to end up in that situation.

“Sometime in early 2013 we were aware the Kenilworth Tax Assessor was looking at the project and possible taxation issue. These were informal discussions on the matter and since that time, given those discussions, it was not surprising that Kenilworth sought to tax the clubhouse by way of an added assessment,” said D’Elia on Monday, adding the county “was not aware of any tax payments to any municipality for county owned property.”

The state-of-the-art clubhouse, within the borders of Kenilworth, houses a banquet hall, bar, conference room and has become a hotspot for wedding receptions and other private social events since it opened. The facility is leased out to private caterers for these events, which puts it in the non-tax exempt position.

Another issue that has not been brought forth is the fact the golf association headquarters is also housed in the same building and that organization is not tax exempt either.

Kenilworth Borough Tax Assessor Paul Parsons knew that many months ago when he toured the facility and subsequently determined that a portion of the clubhouse was taxable. He subsequently determined $120,000 was a fair amount to charge the county annually and sent a bill. The clubhouse was built on the site of the former clubhouse, overlooking the Garden State Parkway with the golf course on the other side.

According to one freeholder the county fully expected a bill would be forthcoming, but not one as high as they received. Once the county filed their appeal, Kenilworth quickly filed a counter appeal, which has to be withdrawn by the borough if the arrangement the county proposed Oct. 12 is to be accepted.