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Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
Charleston County Assessor vs. Harriet H. Selander

AGENCY:
Charleston County Assessor

PARTIES:
Petitioner:
Charleston County Assessor

Respondent:
Harriet H. Selander
 
DOCKET NUMBER:
02-ALJ-17-0306-CC

APPEARANCES:
Bernard E. Ferrara, Jr., Esquire, for the Petitioner

Mary Leigh Arnold, Esquire, for the Respondent
 

ORDERS:

FINAL ORDER AND DECISION

STATEMENT OF THE CASE

This matter comes before the Administrative Law Judge Division (ALJD or Division) pursuant to S.C. Code Ann. § 12-60-2540(A) (2000) on petition of the Charleston County Assessor (Assessor), contesting the decision of the Charleston County Board of Assessment Appeals (Board) finding the value of the Respondent’s property to be $20,000.00 for the 2001 tax year. A hearing was held at the offices of the ALJD on January 28, 2003.

ISSUE PRESENTED FOR DETERMINATION

Did Respondent Harriet Selander (Selander) prove that the appropriate value of the Respondent’s real property (the Property), known as Tax Map No. 340-09-00-009, for the tax year 2001 is $20,000.00?

PROCEDURAL BACKGROUND


In 2001, the Charleston County Assessor conducted a countywide reassessment. Pursuant to that assessment, the Assessor initially valued the Property at $149,000.00. The Respondent opposed the Assessor’s value, asserting the Property should be valued at $20,000.00 based upon a residential zoning classification and use limitations. The Assessor amended the assessment to $116,000.00. The Respondent appealed that valuation to the Charleston County Board of Assessment Appeals. On July 9, 2002, the Board determined the Property was residential and valued it at $20,000.00. It is from that decision that the Assessor appeals to this Division.

FINDINGS OF FACT

Having carefully considered all testimony, exhibits, and arguments presented at the hearing in this case 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. Notice of the time, date, place and subject matter of the hearing was properly given to all parties.

2. The Respondent owns a vacant parcel of land at 1715 Oak Point Road, Charleston, South Carolina (Tax Map No. 340-09-00-009) which consists of approximately 20,790 square feet. The Property, also designated as Lot 2, is zoned Single Family Residential Low Density and is surrounded on three sides by Lot 1, Lot 3 and 1717 Oak Point Road. The Property identified as 1717 Oak Point Road, which bounds the rear of the Property, is zoned residential. However, the Property is surrounded on three sides by commercially zoned properties. On one side of the subject parcel and closest to Folly Road (Lot 1) is an oil change commercial enterprise and on the opposite side of the parcel is a dentist’s office (Lot 3). Across from the Property is a Harris Teeter grocery store commercial enterprise. The Harris Teeter is open for operation 24 hours a day. Lots 4, 5, 6, 7, 8, and 9, located in close proximity to the subject Property, are also zoned residential.

3. A driveway easement for which there is no recorded plat runs down the middle of the Property, essentially dividing the Property into two separate parts. The easement is the only means of access to Oak Point Road for 1717 Oak Point Road and has been located on the Property for a substantial period of time. The easement divides the Property into two separate parts, each of which consist of insufficient square footage for any particular purpose. The Assessor asserts that the driveway could easily be relocated to the western boundary property line thereby opening the property to commercial uses. Consequently, the Assessor did not value the Property based upon its condition with the easement running down the center of the Property or make adjustments for the same. However, the Assessor offered no evidence to support his assertion that a purchaser of the Property could legally relocate the driveway or the cost of that relocation.


4. The Assessor’s valuation of the Property was based upon the premise that its highest and best use was commercial. In making the determination of the property’s “highest and best use,” the Assessor considered the physical characteristics of the property, the reasonable probability of a zoning change, the financial feasibility of commercially developing the property, and the maximum profitability of the location. Since the property is not currently zoned commercial, the Assessor assumed that a zoning classification from residential to commercial was probable. However, the Assessor offered no admissible specific evidence to support his assumption that the Property would be re-zoned from residential to commercial, nor has the County sought to have the property rezoned. Rather, the Assessor presented the sale of the parcel next to the subject parcel as the sale which most accurately reflects the fair market value of the Respondent’s Property. The site had similar square footage and no improvements at the time of sale. It sold for $125,000.00 in July 1999. After that property was sold, the owner submitted a zoning change application to rezone the parcel from SR Residential to OG, Office General, Commercial. The property next to the subject property was then approved to be rezoned to commercial in November 1999 with a recommendation for such from the Charleston County Planning Department. Furthermore, the land development pattern of the area is commercial, the parcel is close to Folly Road which is a commercial corridor, and the Property is located between two existing commercial properties and across from another. Using the above sale as a comparison, the Assessor valued the subject parcel of property at $116,000.00.

The Respondent, on the other hand, did not present an appraisal of the Property. Rather, she estimated the value of the parcel as $20,000.00 based upon the assessed value of $20,000.00 of another unimproved parcel of property she owns on Oak Point Road which is located on the other side of the dentist’s office and is also zoned residential. However, that parcel is surrounded on three sides by private unpaved access roads. It has limited frontage on a county-maintained road. It also consists of approximately three tenths (3/10) of an acre, limiting its potential uses.


Though the Property is not presently serviced by public sewer service, sewer is available by tapping into the main trunk line running parallel to Oak Point Road. However, the Assessor, in arriving at his value, did not consider the lack of sewer service or make adjustments for the increased cost that would be incurred in obtaining such service. Furthermore, the property adjacent to the Respondent’s Property (Lot 3), which was recently sold, was also not serviced by the public sewer service prior to construction of the present improvements upon that property. In order to obtain sewer service to Lot 3, a special pump station was installed at the approximate cost of $10,000.00.

Finally, adjacent to Lot 3, and approximately 164 feet from the subject Property, are lots 4 and 7. Lots 4 and 7 are similar in size to the subject Property, are both zoned residential, and have been assessed by the Assessor at a value of $20,000.00.

CONCLUSIONS OF LAW

Based upon the above Findings of Fact, I conclude the following as a matter of law:

1. S.C. Code Ann. §12-60-2540 (2000) authorizes the Division to hear this contested case pursuant to Chapter 23 of Title 1 of the 1976 Code of Laws, as amended. The taxable status of real property for a given year is to be determined as of December 31 of the preceding tax year. S.C. Code Ann. §12-37-900 (2000); Atkinson Dredging Company v. Thomas, 266 S.C. 361, 223 S.E.2d 592 (1976).

2. Though an Assessor’s valuation is generally presumed correct in cases in which the Assessor is appealing a County Board of Assessment Appeals’ decision, the Assessor bears the burden of proving the value of the subject property. Reliance Ins. Co. v. Smith, 327 S.C. 528, 489 S.E.2d 674 (1997). In S.C. Code Ann. §12-37-930 (2000), the legislature set forth how real property must be valued:

All real property shall be valued for taxation at its true value in money which in all cases shall be held to be the price which the property would bring following reasonable exposure to the market, where both the seller and buyer are willing, are not acting under compulsion, and are reasonably will informed as to the uses and purposes of which it is adapted and for which it is capable of being used.


Therefore, the measure of value for taxation purposes is fair market value. Lindsey v. S.C. Tax Comm'n, 302 S.C. 504, 397 S.E.2d 95 (1990). While not conclusive, comparisons of the sale price of other properties of the same character, location, and physical characteristics may be utilized to determine this fair market price. See Appraisal Institute, The Appraisal of Real Estate 367 (10th ed. 1992)[2]; Cloyd v. Mabry, 295 S.C. 86, 367 S.E. 2d 171 (Ct. App. 1988); See 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).

3. Here, the Assessor valued the Property as commercial property. The Assessor’s valuation is based upon the subject property’s potential for commercial development and the belief that the property can be rezoned for commercial use to achieve its highest and best use. The Assessor argues that the rezoning of the parcel next to the Respondent’s Property constitutes some showing that there is a reasonable probability that an application for a rezoning of the subject Property will be granted. The Respondent, on the other hand, maintains that while the Property is a suitable site for commercial development, it is not currently legally capable of being used for anything but residential purposes, and therefore can be valued only in terms of residential use.

The Assessor cites the position taken in The Appraisal of Real Estate and case law of other states as supporting the proposition that “highest and best use” is the primary determinative of value of property. However, as set forth above, Section 12-37-930 establishes how property is valued in this State. S.C. Tax Comm. v. S. C. Tax Board Review, 287 S.C. 415, 339 S.E.2d 131, 134 (Ct. App. 1985) (“Our decision is based upon the statutory law of South Carolina, which differentiates the cited cases from the applicable law of this State.”). Nevertheless, fair market value is considered in light of both a property’s current use and as any purpose “‘for which it is capable of being used.’” Id. Thus, an Assessor may evaluate the fair market value of property based upon highest and best use. See Cloyd, supra. In doing so, the Assessor may rely on the probability of a zoning change in evaluating fair market value or highest and best use. Cf. South Carolina Dept. of Highways & Public Transportation v. Cheston, 278 S.C. 464, 298 S.E.2d 447 (1982) (testimony of appraiser regarding a potential zoning change was properly considered by jury in determining market value of property as element of damages). However, the highest and best use of land must be legally permissible. See Appraisal Institute, The Appraisal of Real Estate 303 (11th ed. 1996).


Therefore, if a buyer would consider the probability of a zoning change and the zoning change legally permissible, that probability can be used in valuing the property. However, a potential highest and best use does not determine the fair market value but rather is an element along with other factors that would influence a buyer of the property. See Lindsey, supra.[3]; Cloyd, supra. Any combination of various factors has the potential to affect fair market value of the subject property. Moreover, any determination of the value of property upon this theory must be established by clear evidence reflecting the property’s value based upon another use and not upon speculation.

In the instant case, the Assessor’s comparable sale provides an accurate basis for the valuation of a vacant parcel currently zoned residential but purchased for commercial development in the immediate area. An accurate fair market valuation of the parcel must include consideration of existing land use regulations and that, as of December 31, 2000, the Respondent’s Property could legally be used only for residential purposes and that any future use as a commercial site would be speculative to some degree. Accordingly, I find that a well-informed buyer, though aware of the Property’s zoning classification, would weigh the likelihood of having the classification changed to allow commercial development in calculating a reasonable offering price for the parcel. However, the Property also has an easement running down the center of the Property. That easement would also be a consideration for any potential buyer of the Property.


The Assessor valued the Property based upon the presumption that the Respondent would move the existing driveway easement to the western boundary. However, the Assessor cannot presume that the Respondent would move the easement. In Long Cove Home Owners, et al. v. Beaufort County Tax, et. al., 327 S.C. 135, 139, 488 S.E.2d 857, 860 (1997) the S.C. Supreme Court held that the language of Section 12-37-930 “mandates that regardless of method used to determine true value, deed restrictions affecting the use of the land must be considered when determining value.” In fact, the Court specifically rejected the argument that restrictions voluntarily and self-imposed upon property should not be considered when determining taxation value. Id. Moreover, a citizen has the right to control the private use of his own land, as long as that use is not restricted by the State’s police powers. See 63C Am. Jur. 2d Property §33. The police powers of the State to secure the general safety and the public welfare do not give the Assessor the right to presume a relocation of the Respondent’s easement on her property which she does not wish to seek. In other words, the location of the easement is a private land use decision that the property owner is allowed to make based upon the benefits the easement provides her to the “land locked” property behind the subject property. Therefore, I find that the Assessor’s assumption concerning movement of the easement was improper.

Consequently, I find that though a buyer considering purchasing the Property would contemplate that there is a probability of using the Property commercially, the use of the Property for that purpose is only possible if the easement is moved. Since no evidence established that the easement could be moved to the western boundary without the owner’s permission, I find that the Property is divided by an easement which results in insufficient square footage for any particular purpose for those two separate parts. Furthermore, the evidence did not establish that the easement could be easily relocated or that the owner could be required to relocate the easement.

4. I find that the fair market value of the Taxpayer’s Property for tax year 2001 was $20,000.00.

ORDER

Based on the foregoing Findings of Fact and Conclusions of Law,

IT IS HEREBY ORDERED that the proper assessed value of the Property for the tax year 2001 is the sum of $20,000.00.

AND IT IS SO ORDERED.

_____________________________

Ralph King Anderson, III

Administrative Law Judge

April 3, 2003

Columbia, South Carolina



[1] At the commencement of the hearing into this matter, the caption of this case was amended to reflect the correct Respondent.

[2] The S.C. Court of Appeals has recognized the Appraisal Institute’s The Appraisal of Real Estate as an authoritative text. See South Carolina Tax Commission v. South Carolina Tax Board of Review, 287 S.C. 415, 339 S.E.2d 131 (Ct. App. 1985).

[3] In fact, valuing property based upon its potential highest and best use as opposed to its current use was questioned in Lindsey and the Court did not specifically approve or disapprove that valuation theory.


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