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Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
Aiken Regional Medical Center vs. Aiken County Assessor

AGENCY:
Aiken County Assessor

PARTIES:
Petitioners:
Aiken Regional Medical Center

Respondent:
Aiken County Assessor
 
DOCKET NUMBER:
05-ALJ-17-0208-CC

APPEARANCES:
n/a
 

ORDERS:

FINAL ORDER AND DECISION

STATEMENT OF THE CASE

This property tax valuation matter came before me pursuant to S.C. Code Ann. § 12-60-2540 as a contested case hearing. Both parties appealed the decision by the Aiken County Board of Assessment Appeals (Board) dated May 4, 2005. With the consent of the Aiken Regional Medical Center (Hospital or Petitioner) and the Aiken County Assessor (County or Respondent), I consolidated the two matters for hearing and a decision.

Pursuant to notice to the parties, a hearing was held before me on December 13, 1005 at the offices of the Administrative Law Court (ALC or Court). Twenty days prior to the hearing, the parties exchanged evidence in accordance with my pretrial order. A portion of that exchanged evidence was entered into the record at the hearing. In addition, both parties presented testimony.[1]

The question before the Court is the value of the Hospital for the 2004 property tax year. The Board found the value of the Hospital to be $20,500,000. Petitioner alleges that its value is $15,500,000 and Respondent alleges that its value is $25,259,000. For the reasons stated below, I find and conclude that the value of the Hospital as of December 31, 2003 for the 2004 property tax year is $18,700,000 (inclusive of both land and buildings).

FINDINGS OF FACT

Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, taking into consideration the respective burden of persuasion by the parties, I make the following Findings of Fact by a preponderance of evidence:

1. The property in question is the Aiken County Regional Medical Center (Hospital).

2. The property tax year at issue is 2004 and the valuation date is December 31, 2003.[2]

3. The cost approach, which was used by both parties, is the most accurate method to determine the fair market value of the hospital.

4. The Hospital was initially built in 1974. Since that time there have been a number of additions, the last occurring in 1992. Those additions and the square footage of them are as follows:

Building Section

Year of Completion

Square Footage

Original Building 1st Floor

1974

81,950

Original Building 2nd Floor

1974

20,546

Original Building 3rd Floor

1974

20,546

Original Building 4th Floor

1974

19,017

Building Addition 1st Floor

1992

20,576

Building Addition 2nd Floor

1992

16,433

Building Addition 3rd Floor

1992

26,590

Building Addition 5th Floor

1992

11,915

Building Addition 6th Floor

1992

20,576

Building Addition Penthouse

1992

5,900

Total

 

244,079

5. The total square footage of the Hospital is 244,079.

6. The hospital is a Class A, average quality structure.

7. The appropriate base cost of the hospital is $195.47.

8. The proper local cost multiplier for the Augusta, Georgia area is 0.880.

9. The proper height multiplier is 1.015.

10. The proper current multiplier is 1.00.

11. Using the multiplier and the square footage, the resulting replacement cost new is $175.00 per square foot for a total replacement cost new of $42,713,825.

12. The major difference in the parties’ written appraisals and their explanatory testimony was the depreciation allocable to the hospital building when using the cost approach. The County derived a depreciation rate of fourteen (14%) percent using the Marshall Swift Depreciation tables based on an economic life of forty-five (45) years and an effective age of fifteen (15) years. Petitioner's witness presented a depreciation rate of fifty (50%) percent using the age/life method of calculating depreciation based on an economic life of forty (40) years and an effective age of twenty (20) years.

13. I find that an economic life of forty five (45) years is appropriate.

14. I find that the effective age of the Hospital building on the valuation date was twenty (20) years.

15. I find that the Marshall Swift tables for depreciation do not accurately reflect the

depreciated state of the Hospital building on December 31, 2003. Instead, I find that the age/life method is the proper technique to estimate depreciation. The age/life method calculates depreciation based on the ratio of the effective age of the property to its total economic life.

16. Using the age/life method with a total economic life of forty-five (45) years and an effective age of twenty (20) years, I find that the building was forty-four (44%) depreciated on December 31, 2003.

17. The parties presented different values for functional depreciation and for deferred maintenance. The assessor presented a value for functional depreciation of $10,865,028. The Hospital's appraiser presented a value for deferred maintenance of $6,355,922. I understand these terms to have similar meaning for appraisal purposes. I find that the figure of $6,355,922 for functional depreciation or deferred maintenance is appropriate.

18. The value of the building, using the specific dictates of the cost method and giving appropriate weight to the testimony and evidence presented at the hearing, is $17,563,820.

19. The value of the land is $1,143,450.[3]

20. The combined value of the land and building is $18,707,290 and is rounded

to $18,700,000.

CONCLUSIONS OF LAW

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

1. The Administrative Law Court has jurisdiction of this matter pursuant to S.C. Code Ann. § 12-60-2540.

2. The standard of proof in proceedings before the ALC is a preponderance of the evidence. Anonymous v. State Bd. Of Medical Examiners, 329 S.C. 371, 496 S.E.2d 17 (1998).

3. The trier of fact must weigh and pass upon the credibility of the evidence presented. See South Carolina Cable Television Ass’n. v. Southern Bell Tel. and Tel. Co., 308 S.C. 216, 417 S.E.2d 586 (1992). The trial judge who observes a witness is in the best position to judge the witness' demeanor and veracity and evaluate his testimony. See e.g., McAlister v. Patterson, 278 S.C. 481, 299 S.E.2d 322 (1982).

4. Where an expert's testimony is based upon facts sufficient to form the basis for an opinion, the trier of fact determines its probative weight. See Berkeley Elec. Coop. v. South Carolina Pub. Serv. Comm'n., 304 S.C. 15, 402 S.E.2d 674 (1991); Smoak v. Liebherr-Am. Inc., 281 S.C. 420, 422, 314 S.E.2d 116, 118 (1984). A trier of fact is not compelled to accept an expert's testimony, but may give it the weight and credibility he determines it deserves. Florence Cty. Dep't. of Social Serv. v. Ward, 310 S.C. 69, 425 S.E.2d 61 (1992); Greyhound Lines v. South Carolina Pub. Serv. Comm’n., 274 S.C. 161, 262 S.E.2d 18 (1980).

5. The Constitutional and statutory authority which is applicable to this case is Article X, Section 1, of the Constitution of the State of South Carolina, which provides that "fair market value" is the standard for property taxation in this State. Section 12-37-930 (Supp 2004) of the Code provides that all property is to be valued "at its true value in money which is the price which the property would bring following reasonable exposure to the market where both seller and buyer are willing." See Lindsey v. South Carolina Tax Commission, 302 S.C. 504, 397 S.E.2d 95 (1990).

6. The date for valuation for property tax purposes is "the thirty-first day of December next preceding" the tax year under consideration. S.C. Code Ann. § 12-37-900 (Supp. 2004). See also F. Abbott Brown vs. Charleston County Assessor 02-ALJ-17-0549-CC (Administrative Law Judge Division, August 14, 2003). In the case at hand, the tax year is 2004; therefore, the valuation date is December 31, 2003.

7. Both parties to this litigation relied upon the cost approach for determining the value of the property in question. The cost approach is an acceptable appraisal method. See The Appraisal of Real Estate, 12th ed. (Chicago: Appraisal Institute, 2001).

8. Based on the evidence presented before me, I find and conclude that the market value of the hospital as of December 31, 2003 is $18,700,000.

ORDER

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

IT IS HEREBY ORDERED that the value of the Hospital for the 2004 tax year is $18,700,000; and

IT IS FURTHER ORDERED that the County Assessor shall forthwith certify this value to the proper county officials to ensure that Petitioner's property tax liability for the 2004 tax year is redetermined using this value; and

IT IS FURTHER ORDERED that if the amount previously paid to Aiken County by Petitioner for the 2004 tax year for this property exceeds this recomputed tax liability, the excess amount paid, together with statutory interest, shall be refunded to Petitioner; and

IT IS FURTHER ORDERED that if the amount of the recomputed tax liability exceeds the tax previously paid by Petitioner to Aiken County, Petitioner shall pay the additional tax owed together with statutory interest.

AND IT IS SO ORDERED.

Marvin F. Kittrell

Chief Administrative Law Judge

January 17, 2006

Columbia South Carolina



[1] Petitioner called two witnesses: Mr. Howard Bazzarre, the Chief Financial Officer of the Hospital, and Mr. Max Row, an appraiser with a MAI designation who is employed by Complex Property Advisors Corporation. Respondent called Mr. Mike Reed, the County Assessor, and Mr. Rick Jantzen, a county appraiser.

[2] All findings are as of December 31, 2003.

[3] The parties were in agreement as to the value of the land.


Brown Bldg.

 

 

 

 

 

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