ORDERS:
FINAL ORDER AND DECISION
STATEMENT
OF THE CASE
The
above-captioned matter comes before this court pursuant to S.C. Code Ann. §
12-60-2540(A) (2000), S.C. Code Ann. § 1-23-600(B) (Supp. 2007), and S.C. Code
Ann. §§ 1-23-310 et seq. (2005 & Supp. 2007) for a contested case hearing.
Petitioner Edward Przybyl (Taxpayer) challenges the valuation of his property
located at Lot D-14 in Mount Vintage Plantation in Edgefield County, by
Respondent Edgefield County Assessor for the 2006 tax year. Prior to bringing
this contested case matter, Taxpayer exhausted his administrative remedies with
the Assessor and the Edgefield County Tax Board of Appeals. After timely
notice to the parties, a hearing of this matter was held on June 20, 2008, at
the Administrative Law Court in Columbia, South Carolina. Based upon the
evidence and arguments presented at that hearing, I find that the Assessor accurately
and equitably assessed the value of Taxpayer’s property at $265,440 for the tax
year in question.
FINDINGS
OF FACT
Having
carefully considered all testimony, exhibits, and arguments presented at the
hearing of this matter, and taking into account the credibility and accuracy of
the evidence, I make the following Findings of Fact by a preponderance of the
evidence:
1. Taxpayer
is the owner of unimproved real property located at Lot D-14 in Mount Vintage
Plantation in Edgefield County, South Carolina. The property is identified for
tax purposes as Tax Map # 122-00-04-014-000.
2. The
Mount Vintage Plantation development includes a golf course with a national
reputation. The development is known as a prestigious place to live, as
reflected in the sales histories of the various lots in the development. From
2000 to 2005, the market was particularly aggressive. Sales in the development
then began to level off.
3. The
Assessor valued the subject property at $265,440, or $42,000 per acre, for the
2006 tax year. The Assessor arrived at a value for the subject property by
analyzing the lot sales in the development from 2000 to 2005.
4. Taxpayer
appealed the Assessor’s valuation to the Edgefield County Tax Board of Appeals.
On June 20, 2007, the Board reduced the fair market value assessment of the
property to $225,624.
5. On
April 18, 2008, the Assessor performed an individualized appraisal of the
subject property. In that appraisal, the Assessor relied primarily upon a
sales comparison approach to valuation, which uses information from actual
sales of comparable properties to arrive at the market value for the subject
property. The Assessor chose the comparable properties used in the appraisal
based on their similarities in location and size to the subject property and their
respective dates of sale. The Assessor also based the choice of comparables on
the fact that those chosen did not involve as many adjustments as other
properties would have involved, such as Lot D-15, which has an equestrian
easement on it. Just as Taxpayer’s lot has no easements on it, none of the
three chosen comparables have easements on them. In the appraisal, the
Assessor concluded that the fair market value of Taxpayer’s property was $270,000
as of December 31, 2005.
6. Taxpayer
contends that his property should be valued no higher than the adjacent lot,
Lot D-15, which the Assessor originally valued at $20,725 per acre and later
appraised at $33,250 per acre. Taxpayer argues that the higher value assigned
to his lot, $42,000 per acre, is inequitable.
7. The
Assessor testified that her valuation of Lot D-15, the lot adjacent to
Taxpayer’s lot, took into account the equestrian easement and the size of the
lot as factors affecting its fair market value. Horse-riding across the
easement is allowed at any time. Further, the Assessor’s analysis of actual lot
sales in the development showed that smaller lots commanded a price per acre
that was higher than the price per acre for larger lots. These factors account
for the difference in the valuations of Taxpayer’s lot and the adjacent lot.
8. In
the individualized appraisal of Taxpayer’s lot, the Assessor relied upon sales
of three comparable properties in determining the market value of Taxpayer’s
real estate. The first comparable property is Lot D-18, a lot neighboring
Taxpayer’s lot in Mount Vintage Plantation. Lot D-18 sold for $345,000, or $31,827
per acre, on August 5, 2005. The second comparable property is Lot D-12, a
neighboring lot in Mount Vintage Plantation. Lot D-12 sold for $185,000, or
$35,853 per acre, on September 10, 2003. The third comparable property is Lot
D-13, a neighboring lot in Mount Vintage Plantation. Lot D-13 sold for
$182,500, or $30,417 per acre, on March 20, 2003. In deriving a market value
for Taxpayer’s property from the sales of comparable properties, the Assessor made
adjustments in the sales prices of the comparables to account for differences
between the comparable properties and the subject property in such matters as
lot sizes, dates of sale, attractions, such as a pond view or a view of the
fairway, and other features. See Resp. Ex. 1.
CONCLUSIONS
OF LAW
Based
upon the foregoing Findings of Fact, I conclude the following as a matter of
law:
1. The
South Carolina Administrative Law Court has jurisdiction over this matter
pursuant to S.C. Code Ann. § 12-60-2540(A) (2000), S.C. Code Ann. § 1-23-600(B)
(Supp. 2007), and S.C. Code Ann. §§ 1-23-310 et seq. (2005 & Supp. 2007).
2. While
this matter reaches this court somewhat in the posture of an appeal, the
proceeding before this court is a de novo contested case hearing to
determine the appropriate valuation of the property in question based upon the
evidence presented at the hearing. See Smith v. Newberry County
Assessor, 350 S.C. 572, 577, 567 S.E.2d 501, 504 (Ct. App. 2002) (“When a
tax assessment case reaches the ALJ in this posture [i.e., upon appeal from a
county board of assessment appeals], the proceeding in front of the ALJ is a de
novo hearing.”); see also Reliance Ins. Co. v. Smith, 327
S.C. 528, 535, 489 S.E.2d 674, 677 (Ct. App. 1997) (“[A]though a case involving
a property tax assessment reaches the ALJ in the posture of an appeal, the ALJ
is not sitting in an appellate capacity and is not restricted to a review of
the decision below. Instead, the proceeding before the ALJ is in the nature of
a de novo hearing.”).
3. “Generally,
the proper valuation of realty for taxation is a question of fact, to be
ascertained in each individual case in the manner prescribed by statute.” 84
C.J.S. Taxation § 510, at 553 (2001).
4. Under
South Carolina law,
All property must be
valued for taxation at its true value in money which in all cases is the price
which the property would bring following reasonable exposure to the market,
where both the seller and the buyer are willing, are not acting under
compulsion, and are reasonably well informed of the uses and purposes for which
it is adapted and for which it is capable of being used.
S.C. Code Ann. §
12-37-930 (Supp. 2007). In short, the fair market value of property is the
measure of its true value for taxation purposes. See Lindsey v. S.C.
Tax Comm’n, 302 S.C. 504, 507, 397 S.E.2d 95, 97 (1990).
5. There
is a presumption that an assessor’s valuation of a piece of property 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). In a challenge to such a valuation, the
taxpayer bears the burden of demonstrating that the assessor’s valuation is
incorrect. See Newberry Mills, Inc. v. Dawkins, 259 S.C. 7,
15-16, 190 S.E.2d 503, 507 (1972). Ordinarily, the taxpayer meets this burden
by proving the actual value of the property. See Cloyd v. Mabry,
295 S.C. 86, 88-89, 367 S.E.2d 171, 173 (Ct. App. 1988). Therefore, in the
case at hand, Taxpayer bears the burden of proving, by a preponderance of the
evidence, that the Assessor’s valuation of his property, located at Lot D-14 in
Mount Vintage Plantation in Edgefield County, is incorrect, either by
demonstrating fatal errors in the Assessor’s valuation or by establishing the
actual value of the property.
6. In
the instant case, Taxpayer has not met his burden. Taxpayer did not
demonstrate that the Assessor’s appraisal of his property was flawed or
inaccurate in any way, nor did he establish an actual value for his property
that differed from the Assessor’s valuation. While Taxpayer presented some
information about neighboring properties in Mount Vintage Plantation, he did
not show that these properties were comparable to his property.
7. Moreover,
I find that the Assessor’s appraisal of Taxpayer’s property presents a credible
and accurate fair market value for the property. “In
estimating the value of land, an Assessor should take into consideration all
elements or incidents such as location, quality, condition . . . which affect
market value or would influence the mind of a purchaser.” 84 C.J.S. Taxation,
§ 411 at 794-795. In reaching a valuation of the property, the
Assessor applied the sales comparison approach to valuation, which is “[a] set
of procedures in which a value indication is derived by comparing the property
being appraised to similar properties that have been sold recently, applying
appropriate units of comparison, and making adjustments to the sale prices of
the comparables based on the elements of comparison.” The Appraisal Institute, The Appraisal of Real Estate 417 (12th ed. 2001). This
approach is widely recognized as a valid method of arriving at the fair market
value of a piece of real estate. See Smith v. Newberry County
Assessor, 350 S.C. 572, 580, 567 S.E.2d 501, 505 (Ct. App. 2002); 84 C.J.S. Taxation § 512. In fact, if sufficient information regarding comparable
sales is available, the sales comparison approach “is the most straight-forward
and simple way to explain and support a value opinion.” The Appraisal of
Real Estate, supra, at 419.
8. While it is impossible to predict with
certainty what a particular property will sell for, utilizing comparable sales
is a good indicator of what a potential purchaser will likely pay. That is,
utilizing comparables presents probative evidence of the market value of the
subject properties if the comparables are similar in character, location, and
physical characteristics. See 84 C.J.S. Taxation § 411 (1954).
9. In the case at hand, the
Assessor selected comparable properties similar to the subject property in
location, quality, and size, such that the valuation derived from sales data
from those comparables is a reliable indicator of the fair market value of
Taxpayer’s property. Accordingly, I find that, based upon the sales comparison
approach employed by the Assessor, a valuation of $265,440 is a reasonable and
fair assessment of the market value of Taxpayer’s property.
10. Consequently,
the Board’s decision to assess Taxpayer’s property at $225,624 must be
rejected. The Board’s decision does not provide any reasons for departing from
the Assessor’s valuation of the subject property.
Equitable
Assessment of Taxpayer’s Property
11. Taxpayer argues that his property is not valued equitably in
comparison to the lot adjacent to his lot. This argument is based upon the
Equal Protection clauses of the United States and South Carolina constitutions, see U.S. Const. amend. XIV, § 1; S.C. Const. art. I, § 3, and the
uniformity provision of the South Carolina Constitution. See S.C. Const.
art. X, § 1 (“The assessment of all property shall be equal and uniform in the
following classifications[.]”). This argument must fail.
12. Neither the United States Constitution nor
the South Carolina Constitution requires absolute accuracy in property tax
matters. Allied Stores of Ohio, Inc. v. Bowers, 358 U.S. 522,
526 (1959) (Fourteenth Amendment does not
impose an “iron rule of equality” in state tax matters); Owen Steel Co. v.
S.C. Tax Comm’n, 287 S.C. 274,
337 S.E.2d 880 (1985). Further, the law
recognizes that complete equity and uniformity are not practically attainable
in the valuation of property. Wasson v. Mayes, 252 S.C. 497,
502, 167 S.E.2d 304, 306-307 (1967). Rather,
what is proscribed by these equal protection and uniformity provisions is the
intentional and systematic undervaluation of certain properties while other
properties in the same class are valued at their fair market value. See Sunday
Lake Iron Co. v. Wakefield Township, 247 U.S. 350 (1918); Owen Steel Co., 287 S.C. 274,
337 S.E.2d 880 (1985); see also 84 C.J.S. Taxation § 43, at 143 (2001) (“[T]he mere overvaluation of specific property, in the
absence of proof of a systematic plan, is not sufficient to establish unfair
discrimination.”)
13. The
burden of proving an intentional and systematic undervaluation rests upon the
complaining party. Sunday Lake Iron Co., 247 U.S. at
353. This burden is not met by a mere showing that some properties
are undervalued in relation to the taxpayer’s property. See Sunday
Lake Iron Co., 247 U.S. 350; Owen Steel Co., 287 S.C. 274,
337 S.E.2d 880 (1985). However, where an
assessor explicitly established a county-wide procedure under which all
property was assessed according to the most recent purchase price, with the
result that the taxpayer’s property was valued between eight and thirty-five
times higher than comparable neighboring property for more than ten years, an
intentional and systematic undervaluation of property was found. Allegheny
Coal Co. v. County Comm’n, 488 U.S. 336 (1989).
14. Unlike Allegheny Coal Co., there has been no showing in the instant case that
the Assessor has intentionally and systematically undervalued property in Mount
Vintage Plantation. Taxpayer has failed to establish that the lot adjacent to
his lot is undervalued in relation to his property. Even if such a sporadic
undervaluation were proven, such evidence would not demonstrate that the
Assessor “entertained or is chargeable with any purpose or design to
discriminate” in her appraisals of property in Mount Vintage Plantation. See Sunday Lake Iron Co., 247 U.S. at
353.
15. Taxpayer’s equity argument cannot stand. An
equity or equal protection claim requires a high burden of proof. Further, the
assessment and valuation of property is not an exact science. Accordingly, the
law tolerates errors of judgment and varying assessment ratios with the
expectation that periodic reassessments will correct such errors and
variations. These mere errors of judgment or varying assessment ratios are
not, in themselves, necessarily tantamount to a systematic and intentional
undervaluation of property by the Assessor. See 84 C.J.S. Taxation § 509, at 551 (2001) (“An error or mistake on the assessor’s part is immaterial
where it does not result in an excessive or discriminatory valuation.”). Thus,
where a taxpayer can only identify isolated erroneous appraisals of property,
there is no ground upon which to support a finding of intentional and
systematic undervaluation of property by an assessor, and therefore, no ground
upon which to overturn an appraisal on a claim of inequitable assessment. In
any event, the evidence shows that Taxpayer’s property was valued equitably in
relation to the adjacent property.
ORDER
Based
upon the Findings of Fact and Conclusions of Law stated above,
IT
IS HEREBY ORDERED that the Assessor shall value Taxpayer’s property, identified
as Tax Map # 122-00-04-014-000 and located at Lot D-14 in Mount Vintage
Plantation in Edgefield County, South Carolina, at a value of $265,440 for the
2006 tax year.
AND
IT IS SO ORDERED.
_______________________________
July 8, 2008 JOHN
D. GEATHERS
Columbia, South Carolina Administrative
Law Judge
1205
Pendleton Street, Suite 224
Columbia,
South Carolina 29201-3731
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