ORDERS:
FINAL ORDER AND DECISION
STATEMENT
OF THE CASE
This
matter is before the Administrative Law Court (“ALC”) for a final order and
decision following a contested case hearing pursuant to S.C. Code Ann. § 12-60-2540
(2000) and S.C. Code Ann. § 1-23-600(B) (Supp. 2006). Petitioner Timothy V.
Key (“Key”) challenges the Respondent Aiken County Assessor’s (“Assessor’s”)
placement of his residence located at 195 River Wind Drive, North Augusta, South
Carolina 29847, on the 2006 county tax rolls. Key asserts that his residence
was not complete and fit for the use it was intended by December 31, 2005.
Accordingly, Key seeks to have the value of his residence deducted from his
2006 tax assessment. The Assessor found that the residence was complete and
fit for the use it was intended by December 31, 2005 and that no reduction in
Key’s tax assessment was warranted. The Assessor therefore issued a tax
assessment for 2006 for Key’s property that included the value of his
residence. Key appealed this assessment to the Aiken County Board of
Assessment Appeals (“Board”). The Board affirmed the Assessor’s assessment.
Key appealed this decision to the ALC.
After
notice to the parties, the court held a hearing on August 23, 2007. Both
parties appeared at the hearing. Evidence was introduced and testimony
presented. After carefully weighing all of the evidence, the court finds that Key’s
residence should not be included on the 2006 tax roll.
ISSUE
The sole issue before
the court is whether certain improvements to Key’s property should be included
on the 2006 tax roll for property tax assessment purposes.
FINDINGS
OF FACT
Having
observed the witnesses and exhibits presented at the hearing and closely passed
upon their credibility, and taking into consideration the burden of persuasion
by the parties, the court makes the following Findings of Fact by a
preponderance of the evidence.
On
May 13, 2004, Key applied for a building permit to build a residence at 195
River Wind Drive in North Augusta, South Carolina. Key was both the builder
and the intended occupant of this residence. The evidence demonstrated that
generally residences are completed approximately six to eight months after the
building permit is issued; however, when the builder is also the intended
occupant, the process often takes longer. In this case, it took Key
approximately eighteen months to complete the construction of his residence.
An
inspection report that was completed in mid-December 2005 indicated that there
were thirteen minor items to be completed before a certificate of occupancy could
be issued. These included:
1. handrail on interior steps
2. cut off pull down stairs to fit floor
3. finish doors & door hardware
4. finish noseing [sic] of landing at front steps
5. need thresholds at sunroom [door]
6. weather strip attic doors
7. caulk entry door thresholds
8. complete trim cover above all exterior doors
9. caulk exterior windows
10. 3 ft. landing required at rear sun room doors
11. clean out crawl space
12. make sure risers at rear steps are within 3/8”
13. 3” tall house numbers on home
[Respt.’s Ex.
6.] Key testified that he completed these thirteen deficiencies as quickly as
he could and that it would have been to his financial benefit to complete them
before the end of the year. However, the last item was not completed until the
first week of January 2006. Key testified that during the final stages of
construction he generally called the inspector on the same day – or at the
latest the day after – an item was completed. The inspection reports show that
Key was calling the inspector regularly in late November and early December
2005. The inspector testified that he would typically perform inspections
within a day of Key’s call. The final inspection occurred on January 6, 2006
and the city of North Augusta issued a certificate of occupancy for 195 River
Wind Drive on January 9, 2006. Key did not occupy this residence until after
the certificate of occupancy was issued.
Both
parties agree that the residence was substantially complete by December
31, 2005. However, the evidence shows that as of December 31, 2005 Key was
still working on “punch list” items that were required by the city’s building
inspector for issuance of a certificate of occupancy. These items were not
completed and found acceptable by the building inspector until January 9, 2006,
as shown by the issuance of the certificate of occupancy.
LAW
Based
upon the foregoing Findings of Fact, the court concludes the following as a
matter of law.
1. Jurisdiction
and Review
Jurisdiction
over this case is vested with the South Carolina Administrative Law Court
pursuant to S.C. Code Ann. § 12-60-2540(A) (Supp. 2006), S.C. Code Ann. §
1-23-600(B) (Supp. 2006), and S.C. Code Ann. §§ 1-23-310 et seq. (2005).
The weight and credibility assigned to evidence presented at the hearing of a
matter is within the province of the trier of fact. See S.C. Cable
Television Ass’n v. S. Bell Tel. & Tel. Co., 308 S.C. 216, 222, 417
S.E.2d 586, 589 (1992). Furthermore, a trial judge who observes a witness is
in the best position to judge the witness’s demeanor and veracity and to
evaluate the credibility of his testimony. See, e.g., Woodall v.
Woodall, 322 S.C. 7, 10, 471 S.E.2d 154, 157 (1996); Wallace v. Milliken
& Co., 300 S.C. 553, 556, 389 S.E.2d 448, 450 (Ct. App. 1990). In
presiding over this contested case, the court serves as the finder of fact and
makes a de novo determination regarding the matters at issue. Reliance
Ins. Co. v. Smith, 327 S.C. 528, 534, 489 S.E.2d 674, 677 (Ct. App. 1997); see S.C. Code Ann. § 1-23-600(B) (Supp. 2006).
2. Inclusion
on the Tax Rolls
A
taxpayer may appeal a property tax assessment of a county board of assessment
by requesting a contested case hearing before the ALC. S.C. Code Ann. §
12-60-2540(A) (Supp. 2006). A presumption exists that an assessor’s valuation
is correct. See S.C. Tax Comm’n v. S.C. Tax Bd. of Review, 278
S.C. 556, 562, 299 S.E.2d 489, 492-93 (1983).
The
taxable status of real property for a given tax year is to be determined as of
December 31 of the preceding year. S.C. Code Ann. § 12-37-900 (2000); Atkinson
Dredging Co. v. Thomas, 266 S.C. 361, 223 S.E. 2d 592 (1976). Section 12-37-670
provides, in pertinent part, that “[n]o new structure shall be
listed or assessed until it is completed and fit for the use for which it is
intended.” S.C. Code Ann. § 12-37-670 (2000). For an improvement to be included in a tax assessment, it must
be fully complete for its intended purpose, not merely “substantially”
complete. See, e.g., Charleston County Bd. of Assessment Control v.
S.C. Tax Comm’n, 78-CP-10-1543 (S.C. Feb. 22, 1979); International Center
II, LLC v. Berkeley County Assessor 05-ALJ-17-0235-CC, 2006 WL 477124 (S.C.
Admin. Law Ct., Feb. 2, 2006); Horry County Assessor v. TPC of Myrtle Beach,
00-ALJ-17-0187-CC, 2006 WL
477124 (S.C. Admin. Law Ct., July 28, 2000)
(all rejecting the argument that substantially complete is sufficient to
satisfy the requirements of § 12-37-670).
3. Conclusions
The parties agree that the relevant tax control date is
December 31, 2005. The Assessor argues that because the items remaining to be
completed on December 31, 2005 for certificate of occupancy purposes were minor
and did not otherwise prevent the residence from being inhabited, the structure
was complete and fit for the use for which it is intended within the meaning of
§ 12-37-670. Key, by contrast, contends that since he could not
lawfully occupy his residence on December 31, 2005, and because he in fact did
not occupy his residence on December 31, 2005, it was not complete and fit for
the use intended.
The County argues that a certificate of occupancy is
not always an accurate indicator of a structure’s completion and fitness for
its intended use. In support of its argument that the court should reject the certificate
of occupancy date, it contends that using that date as determinative for
purposes of § 12-37-670 would permit builders to avoid property taxes on “spec”
houses when they do not yet have a buyer by purposely postponing a final
building inspection even though the house is completed. Similarly, it points
out, taxpayers could avoid property taxes by unlawfully moving into their
substantially completed homes before a certificate of occupancy is issued.
The
court recognizes that there may be situations where no certificate of occupancy
is issued or where it does not accurately reflect the date upon which an
improvement should be included in the county’s tax base. Indeed, § 12-37-670
does not provide such a bright-line test for determining a structure’s
completion date or fitness for its intended use. Nonetheless, the court observes
that generally the certificate of occupancy or the actual date the structure
becomes occupied will be the most compelling evidence of the residence’s date
of completion and fitness for the use for which it was intended. See, e.g.,
2007 Act. No. 57, § 6 (to be codified at S.C. Code Ann. § 12-37-670(B)(1)) (using
the date of issuance of the certificate of occupancy, or, where no certificate
of occupancy is issued, the date the structure is actually occupied as the determinative
date for previously untaxed improvements in cases where a county chooses by
ordinance to add such properties to the tax rolls by calendar quarter). Here, both the issuance of the certificate of occupancy and the actual
date of occupancy occurred after the tax control date. The court therefore
finds that Key’s residence was not complete and fit for its intended use until
after December 31, 2005.
ORDER
Based upon the Findings of Fact and Conclusions of Law stated
above, it is hereby
ORDERED that the Assessor shall not include the value of Key’s residence for property
tax assessment purposes for the 2006 tax year.
IT
IS SO ORDERED.
_____________________________________
PAIGE J. GOSSETT
Administrative Law Judge
November 20, 2007
Columbia, South Carolina
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