SC Administrative Law Court Decisions

I. Introduction

This contested case results from a disagreement for the 2003 tax year between George I. Waidner (taxpayer) and the Anderson County Assessor (Assessor) concerning the value of two lots owned by the taxpayer. Having exhausted the prehearing remedies within the Assessor's office and before the Anderson County Board of Assessment Appeals, the parties now bring this contested case to the Administrative Law Court. Jurisdiction is provided by S. C. Code Ann. Sec. 12- 60-2540(A) (Supp. 2005).

After timely notice to the parties, a hearing of this matter was held at the Anderson County Court House in Anderson, South Carolina. Based upon the evidence and arguments presented at that hearing, I find that the Assessor properly assessed the value of Taxpayer's properties at $80,000 and $107, 240 for the 2003 tax year in question.

II. Issue

What is the value of the taxpayer's properties for assessment purposes for tax year 2003?

III. Analysis

A. Findings of Fact

Based on the preponderance of the evidence, the following findings of fact are entered:

Taxpayer is the owner of two parcels of real property located in Anderson County on Hartwell Lake with the properties identified for tax purposes as Tax Map numbers 029‑03‑01‑013 and 029‑03‑01‑012. For the 2003 tax year, the Assessor valued the subject properties at $107,240 and 80,000 respectively.

To determine the market value of the properties, the Assessor primarily relied upon a sales comparison approach to valuation using information from actual sales of comparable properties to arrive at the market value for the subject property. The Assessor chose the comparable properties based on their similarities in size, design, age, and location to the subject property.

1. Tax Map numbers 029‑03‑01‑013

As for Tax Map numbers 029‑03‑01‑013, the property consists of a concrete block rental lakehouse situated on a point lot with almost 120 feet of lake frontage. The property is located on deep water with a good view of the open water. In addition, the property has its own private boat ramp and dock. The neighborhood is a mixture of summer houses, mobile homes and year‑round residents.

For valuation, the Assessor relied upon a combination of improved lots and vacant lots. For improved lots, four comparable sales were used with the sales being on the same street as the subject property. In addition, four vacant lots were utilized as well.

As for improved lots, sale #1 sold in 2000 for $170,000. While the dwelling with 2265 square feet is larger than the subject property, the lot is inferior to the subject lot in that the comparable has only 65 feet of lake frontage, 52 feet less than the subject property. In addition the comparable is located in the cove rather than on deep water. Sale #2 sold in 2000 for $182,250. It has 936 square feet and is similar to subject's 786 square feet. It has only 65 feet of lake frontage and is also back in the cove. Sale #3 sold for $195,000 in 2000 and consisted of a new 2001 mobile home and has only 70' of lake frontage. Sale #4 sold in 2000 for $80,000 and consisted of an older 1967 mobile home and a storage building both of which have a total assessed value of $2550. This property has 75' of lake frontage.

As to vacant lots, sale #1 sold twice in 1999. The first sale was for $90,000 and the second was for $99,500. The lot has only 66 feet of lake frontage, 51 feet less than the subject property. Sale #2 sold for $86,000 in 2000 and has 100 feet of lakefront. Sale #3 sold for $112,000 in 1998 and has 135 feet of lakefront. This sale is very similar in dimensions to the subject property. Sale #4 sold in 1999 for $92,500 and again in 2004 for $152,500. This property has 130 feet on the lake.

2. Tax Map number 029‑03‑01‑012

As for Tax Map number 029‑03‑01‑012, that property is a vacant lot on Hartwell Lake with a moderate slope having 90 feet of lake frontage. It is also located in a neighborhood with a mixture of summer houses, mobile homes and year-round residents.

Sale #1 is of a property having only 66 feet of lakefront. That property sold twice in 1999. The first sale was at a price of $90,000 with the second sale being for $99,500. Sale #2 sold for $86,000 in 2000 and is a property having 100 feet on the lake. Sale #3 sold for $112,000 in 1998 and had 135 feet on the lake. Sale #4 had 130 feet on the lake. The property sold in 1999 for $92,500 and again in 2004 for $152,500. Such an increase in value shows a continuing rise in property values.

B. Conclusions of Law

Based on the foregoing Findings of Fact, I conclude the following as a matter of law:

The South Carolina Administrative Law Court has jurisdiction over this matter pursuant to S.C. Code Ann. Sec. 12-60-2540(A) (2000), S.C. Code Ann. Sec. 1-23-600(B) (Supp. 2005), and S.C. Code Ann. Sec. 1-23-310 et seq. (2005). In exercising such jurisdiction, the matter is heard de novo as a contested case hearing to determine the appropriate valuation of the property in question based upon the evidence presented. 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.").

When determining the appropriate valuation "[g]enerally, 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 Sec. 510, at 553 (2001). The statute for valuation in South Carolina explains that 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. Sec. 12-37-930 (Supp. 2005). 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).

Under South Carolina law, a presumption exist 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)), and, 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 is incorrect, either by demonstrating fatal errors in the Assessor's valuation or by establishing the actual value of the property. Here, in the instant case, Taxpayer has not met that burden.

Taxpayer did not demonstrate that the Assessor's appraisal was flawed or inaccurate in any way, nor did he establish an actual value for either property that differed from the Assessor's valuation. While Taxpayer did present his view of what the properties should appraise for, he did not provide reliable comparables sufficient to offset the comparables presented by the Assessor.

Moreover, I find that the Assessor's appraisal of Taxpayer's property presents a credible and accurate fair market value for the property. In reaching a valuation of the property, the Assessor applied the sales comparison approach of 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 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 sec. 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. Here, the Assessor selected comparable properties similar to the subject property in location and quality so that the valuation derived from the sales data presents a reliable indicator of the fair market value of Taxpayer's properties.

As for Tax Map number 029‑03‑01‑013, the Assessor attributed only $17,240 to the improvement. Thus, the predominate value of the property is the land value. Here, the vacant land sales establish that comparable lots produce an average land value of $96,000. In this case the Assessor has valued the subject lot at $90,000. Thus, the Assessor's value is properly supported and the proper value for the 2003 tax year is $107,240.

As to Tax Map number 029‑03‑01‑012, the same vacant land sales used in Tax Map number 029‑03‑01‑013 are applicable here. These sales demonstrate an average value of $96,000. The Assessor has utilized only a value of $80,000. Thus, based on the record made, the Assessor's value is properly supported and the proper value for the 2003 tax year is $80,000.

III. Order

Accordingly, as for Tax Map number 029‑03‑01‑013, the Assessor's value is properly supported and the value for the 2003 tax year is $107,240. Further, as to Tax Map number 029‑03‑01‑012, the Assessor's value is properly supported and the value for the 2003 tax year is $80,000.

AND IT IS SO ORDERED

______________________

RAY N. STEVENS

Administrative Law Judge

Dated: December 29, 2005

Anderson, South Carolina