SC Administrative Law Court Decisions

STATEMENT OF THE CASE

Gene Hendrix brought this case to determine whether his property should be classified as agricultural for the property tax years 2002 and 2003, and whether the valuation determined by the county is correct. The Petitioner applied for and was denied agricultural assessment by the Assessor's Office for 4.33 acres he owns in Lexington County. Following an appeal to the Lexington County Board of Assessment Appeals, the Petitioner was again denied the agricultural assessment, but the value of the property was reduced from $300,070 to $275,000. Mr. Hendricks then requested a hearing before the Administrative Law Court to consider these issues. A hearing on this matter was held on June 21, 2004 at the Court in Columbia, with the parties represented as indicated above. Following this hearing on the merits, I find and conclude that the property should not be classified as agricultural and that the value set by the Board of Assessment Appeals is correct.

ISSUES

Do the provisions of S.C. Code Ann. §§ 12-43-220 (d) (1) et seq. (Supp. 2003) require the Assessor to classify the Petitioner’s property as agricultural property based on his contention that it is “timberland,” and is the fair market valuation is correct in light of similar properties?

DISCUSSION

The Petitioner owns 4.33 acres in Lexington County. He claims that this tract meets all of the requirements of the referenced Code section to be classified as agricultural. The Petitioner, however, fails to consider that the subject property does not meet the minimum acreage requirement of §12-43-232(1) (a), nor does it qualify under the provision which allows for tracts of timberland of less than five acres, which are under the same management system as a tract of timberland which meets the minimum acres requirement, to be treated as part of the qualifying tract. In addition, the Petitioner’s property is properly assessed in comparison to similarly situated properties, as required by S.C. Code Ann. §12-43-220 (Supp. 2003).

FINDINGS OF FACT

Based upon the written evidence submitted by the parties, the testimony taken at the hearing and taking into consideration the burden of proof, I make the following Findings of Fact by a preponderance of the evidence:

1. The property is located in Lexington County, South Carolina, and is identified on the Lexington County Tax Map as Tax Map Number 004300-03-010. The Petitioner purchased this property March 27, 2002 from his brother for $190, 000. The property is located near the town of Lexington along Highway 1. At the same time, the Petitioner purchased several other parcels, not at issue in this particular matter, with a total acreage of 51.26 purchased all in Lexington County.

2. The Petitioner timely filed an application for agricultural assessment. The Assessor thereafter disapproved the agricultural use classification.

3. The Petitioner filed a written objection with the Assessor and appealed the matter to the Lexington County Board of Assessment Appeals. The Assessment Appeals Board heard this matter and concurred with the Assessor’s classification. The Board of Assessment Appeals did lower the valuation of the subject property from $300,070 to $275,000.

4. The Petitioner has appealed the decision of the Lexington County Board of Assessment Appeals.

5. The Petitioner is the owner of a parcel of real estate consisting of 4.33acres. The 4.33acre tract is unimproved with standing timber. It is not contiguous to the other parcels purchased simultaneously. The Petitioner has not cleared the brush from the property, has not thinned any trees, has not contracted with a timber company, nor has he planted trees in rows to facilitate harvesting. Likewise, the Petitioner did not submit any written plans, contracts or management agreements on any of the parcels he owns.

6. The County submitted comparable sales appraisals of five other parcels of land near the subject property. The sales price per square foot for these properties ranged from $2.30 to $5.76 per square foot. The range of adjusted price per foot by the appraiser for these comparable properties was $1.15 to $2.82. The range was due to access to Highway 1, frontage along this highway, topography and the amount of usable land in the parcel. The appraiser determined the adjusted price per square foot of the subject property to be $1.01.

CONCLUSIONS OF LAW

Based upon the above findings of fact, I conclude as a matter of law the following:

1. S.C. Code Ann. § 12-60-2540 (Supp. 2003) authorizes the Court to hear this contested case pursuant to Chapter 23 of Title I of the 1976 Code of Laws, as amended.

2. The Petitioner’s contention is that the property is agricultural property pursuant to S.C. Code Ann. § 12-43-220(d) (2000).

3. An agricultural use classification is granted to agricultural real property “actually used for agricultural purposes.” S.C. Code Ann. § 12-43-220(d) (2000).

4. Agricultural real property is “any tract of real property which is used to raise, harvest or store crops, feed, breed or manage livestock, or to produce plants, trees, fowl or animals useful to man, including the preparation of the products raised thereon for man's use and disposed of by marketing or other means.” S.C. Code Ann. § 12-43-230(a) (2000).

5. Furthermore, S.C. Code Ann. § 12-43-232 states “In addition to all other requirements for real property to be classified as agricultural real property, the property must meet the following requirements:

(1)(a) If the tract is used to grow timber, the tract must be five acres or more. Tracts of timberland of less than five acres which are contiguous to or are under the same management system as a tract of timberland which meets the minimum acreage requirement are treated as part of the qualifying tract. Tracts of timberland less than five acres are eligible to be agricultural real property when they are owned in combination with other tracts of nontimberland agricultural real property that qualify as agricultural real property. For the purposes of this item, tracts of timberland must be devoted actively to growing trees for commercial use.” (2000)

6. In 1979, the General Assembly directed the South Carolina Department of Revenue and Taxation (Department) to promulgate a regulation designed to provide a more detailed definition of “agricultural real property” and to exclude from the use assessment any real property not used for a bona fide agricultural purpose. S.C. Code Ann. § 12-43-230(a) (Supp. 2003).

7. Pursuant to that mandate, Regulation 117-114 was promulgated. Regulation 117-114 provides that while no single factor is controlling in determining if real property is used for a bona fide agricultural purpose, consideration may be given to the nature of the terrain, the density of the marketable product (timber, etc.) on the land, the past usage of the land, the economic merchantability of the agricultural product, the use or not of recognized care, cultivation, harvesting and like practices applicable to the product involved, and any implemented plans thereof, and the business or occupation of the landowner. Real property is not used for agricultural purposes unless the owner or lessee thereof has, in good faith, committed the property to that use. Real property which is ostensibly used for agricultural purposes, and which is, in reality, used for other purposes, is not agricultural real property. The agricultural use of the property must be genuine in nature as opposed to a sham or deception. S.C. Code Ann. Regs. 117-114 (1982).

8.      “In interpreting a statute, this Court's primary function is to ascertain the intent of the legislature.” Whitner v. South Carolina, 328 S.C. 1, 6, 492 S.E.2d 777, 779 (1997). “The interpretation of a term set forth in a statute should support the statute and should not lead to an absurd result. . . . Further, in interpreting a statute, one does not look merely at a particular clause in which a word may be used, but rather looks at the word and its meaning in conjunction with the purpose of the whole statute, and in light of the object and policy of the law.” South Carolina Coastal Council v. South Carolina State Ethics Comm’n, 306 S.C. 41, 45-46, 410 S.E.2d 245 (1991). “The cardinal rule of statutory construction is to ascertain and effectuate the legislative intent whenever possible. [citations omitted]. All rules of statutory construction are subservient to the one that legislative intent must prevail if it reasonably can be discovered in the language used, and that language must be construed in the light of the intended purpose of the statute. Kiriakides v. United Artists Communications, Inc., 312 S.C. 271, 440 S.E.2d 364 (1994).” City of Camden v. Brassell, 326 S.C. 556, 486 S.E.2d 494, 495 (Ct. App. 1997).

9.      An Assessor’s valuation is presumed correct and the property owner bears the burden of proving that the Assessor’s determination is not correct. 84 C.J.S. Taxation § 410 (1954). Ordinarily, this is done by proving the actual value of the property. The taxpayer may, however, show by other evidence that the assessing authority’s valuation is incorrect. If he does so, the presumption of correctness is removed and the taxpayer is entitled to appropriate relief. Cloyd v. Mabry, 295 S.C. 86, 367 S.E.2d 171 (Ct. App. 1988).

10.  While not conclusive, market sales of comparable properties present probative evidence of fair market value of similar property. 84 C.J.S. Taxation § 411 (1954). Furthermore, in estimating the value of property, all of the factors which affect market value or would influence the mind of a purchaser should be considered, such as location, quality, condition and use. See 84 C.J.S. Taxation § 410 at 784; § 411 at 794 (1954).