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 (the Property) to be $330,000.00 for the 2001 tax year. A hearing was held at the offices of the Division on August 27, 2002.
ISSUE PRESENTED FOR DETERMINATION
Did the Charleston County Board of Assessment Appeals properly value the Respondent’s Property, known as Tax Map No. 141-00-00-092, at $330,000.00, or did the Respondent prove that the appropriate value of the Property should be $102,100.00 for the 2001 tax year?
PROCEDURAL BACKGROUND
In 2001, the Charleston County Assessor conducted a countywide reassessment pursuant to S.C. Code Ann. § 12-43-217 (2000) for the 2001 tax year. The Assessor initially determined in the reassessment that the total assessed value of the Respondent’s Botany Bay Island Property for the 2001 tax year was $495,000.00. The Respondent opposed the Assessor’s determination, asserting the Property should be valued at $102,100.00 based upon lack of services and severe restrictions placed on the Property, as part of a private island community. The Respondent appealed that valuation to the Charleston County Board of Assessment Appeals. On February 28, 2002, the Board set forth in its Decision:
The Charleston County Board of Assessment Appeals believes that the equity value should be reduced by one-third, based on the lack of services, restraint of use, and the comparables presented by Mr. Welch. Therefore, the Board of Assessment Appeals places an equity value of $330,000.00 on the subject property for the tax year 2001.
It is from that decision that the Assessor appeals to this Division.
FINDINGS OF FACT
Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, taking into consideration the burden of persuasion by the parties, I make the following Findings of Fact by a preponderance of evidence:
1. Notice of the time, date, place and nature of the hearing was timely given to all parties.
2. The Respondent owns Lot 12D, TMS No. 141-00-00-092, Beachview Lane, Botany Bay Island, Charleston County, South Carolina. The Property consists of an unimproved lot which is approximately one acre in size. It is one of twelve lots owned by the Respondent and eleven other members of Botany Island, LLC, with amenities, restrictions, and conditions thereto, also known as the Ocella Lodge Section. The Respondent has a one-twelfth undivided ownership interest and use of the entire island excluding any privately owned lots and homes. In November 1998, the Respondent signed a Lot Reservation Agreement to purchase this Property for a purchase price of $400,000.00, that also incorporated the parameters of owning a one-twelfth interest in Botany Island, LLC. That Lot Reservation Agreement had several “Conditions Precedent” incorporated into its “Recitals,” including the “Recordation of Restrictive Convenants” and “Modification and/or Amendment of that Conservation Easement dated September 25, 1987.” On December 22, 1999, Botany Island, LLC deeded Lot 12D (TMS No. 141-00-00-092) to the Respondent. Ultimately, the Respondent paid $400,000.00 for this Property, along with a one-twelfth undivided interest in Botany Island, LLC.
In accordance with the purchase agreements, each of the individual property owners who purchased an interest in the Ocella Lodge Section of Botany Bay Island has exclusive access to Ocella Lodge four weeks out of the year, as determined by a “lottery” system. The Ocella Lodge owners also have the right to use the Beach Cabana and a dock located near Ocella Lodge for access to the island from Bohicket Marina. Additionally, the Ocella Lodge Section owns the lot upon which a caretaker’s house has been built.
However, Botany Bay Island is accessible only by water and the sole means of motorized transportation on the island by the property owners or their guests is via golf cart. Consequently, the property owners must bring all their food and drink onto the island. Additionally, though Botany Bay Island does have electrical and private water capabilities, it does not have any services on the island, such as fire and medical services. Nor will the island be serviced by a public water supply for drinking, bathing or sewer use. The Conservation Easement also limits the square footage of the houses built on the island.
3. The Assessor argues that the market value of the Respondent’s Property for the 2001 tax year was $495,000.00. The Assessor supported his appraisal with a market sales analysis of the subject Property. The analysis was based upon comparison of the Respondent’s Property with the market sales of three similarly situated properties. The appraiser placed more weight on Comparables 1 and 2 because they are located on Botany Bay Island. Along with this market sales analysis, the Assessor conducted an equity study of these similar properties to account for the beachfront location of the subject Property, their various amenities, and services or lack thereof. Besides other lots located on Botany Bay Island, the only similarly situated property in Charleston County in which the resident’s are limited to accessing their homes only by boat is Dewees Island. The appraiser also looked to Seabrook Island, which is not really an “island” for purposes of this comparison.
The Assessor’s Comparable 1 is TMS No. 141-00-00-090 on Botany Bay Island, two lots away from the subject Property. This lot has the same view as the Respondent’s lot and is also approximately one acre in size. It sold in December 1999 for $500,000.00. The appraiser did not make any adjustments for this property amount as it is in a similar, if not identical, position to the subject Property, and assigned a value of $500,000.00 to Comparable 1. This lot is also part of the Ocella Lodge Section of Botany Bay Island and, as such, the owner received a one-twelfth undivided interest in the common areas of the island, as explained above.
Comparable 2 is TMS No. 141-00-00-089 which is located in a cluster of seven lots on the northeast side of Botany Bay Island and is also part of the Ocella Lodge Section. This lot also sold for $500,000.00 in December 1999. Again, the appraiser did not allow for any adjustments for the valuation of this property because of its similarities with the Respondent’s lot and assigned a value of $500,000.00.
Comparable 3 is TMS No. 608-15-00-041 on Dewees Island, Charleston County, South Carolina. This oceanfront property, which is approximately 2.21 acres, sold for $550,000.00 in November 1998. The appraiser made adjustments to this comparable by adding $110,000.00 to the 1998 sales price for appreciation and then deducting $100,000.00 to account for the differences between this lot and the subject Property. He ultimately valued Comparable 3 at $560,000.00.
4. The Respondent contends that his Property should be valued at $102,100.00, “based on the values of neighboring lots on the island.” The Respondent also used the market sales analysis approach to derive the value of his Property. The comparables the Respondent used were properties located on Botany Bay Island which are not part of the Ocella Lodge Section. The Respondent contends that the properties, which are not part of that section, best reflect the fair market value of his Property because the purchase price of the Ocella Lodge Section lots included the additional purchase of portions of the common areas that do not add to the fair market value of those properties.
The Respondent’s Comparable 1 is TMS No. 141-00-00-004, situated on Botany Bay Island outside of the twelve parcels that comprise the Ocella Lodge Section. It is approximately two acres and has a 1,430 square foot dwelling on the lot. This lot is similarly situated to the subject Property, with an ocean front view. The Charleston County Assessor assessed this property and dwelling at $186,000.00.
Comparables 2 and 3 presented by the Respondent are Botany Bay Island lots without dwellings. The comparables are also not a part of the Ocella Lodge Section. Comparable 2, TMS No. 141-00-00-010, is approximately two acres in size and was assessed by the Charleston County Assessor at $110,000.00. This lot is three lots away from the subject Property with an ocean front view. The Respondent’s Comparable 3, TMS No. 141-00-00-056, is approximately 1.4 acres in size. This lot also enjoys an ocean view, although it is set further back than the subject Property and is located on the marsh. This lot was assessed by the county at $96,000.00.
Finally, although neither party used TMS No. 141-00-00-050 as a comparable, it is important to note that this property is approximately 2.9 acres, is located on the marsh, and sold for $275,000.00 in February 1999.
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. In S.C. Code Ann. §12-37-930 (2000), the legislature set forth how real property must be valued:
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.
Under this statute there is no valid distinction between market value for sales purposes and market value for taxation purposes. S.C. Tax Comm’n v. S.C. Tax Board of Review, 287 S.C. 415, 419, 339 S.E.2d 131, 133 (Ct. App.1985). Therefore, fair market value is the measure of true value for taxation purposes. Lindsay v. S.C. Tax Comm’n, 302 S.C. 504, 397 S.E.2d 95 (1990). While not conclusive, fair market value may be determined by comparisons of the sale price of other properties of the same character, location, and physical characteristics. See Appraisal Institute, The Appraisal of Real Estate 367 (10th ed. 1992); 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. Ordinarily, an Assessor’s valuation is presumed correct and the property owner bears the burden of proving the Assessor’s determination is not correct. 84 C.J.S. Taxation § 410 (1954). The taxpayer may, however, remove the presumption of correctness by showing that the assessing authority’s valuation is incorrect. Cloyd v. Mabry, 295 S.C. 86, 367 S.E.2d 171 (Ct. App. 1988). However, in Reliance Ins. Co. v. Smith, 327 S.C. 528, 489 S.E.2d 674 (1997), the Court of Appeals held that when an Assessor is appealing a County Board of Assessment Appeals’ decision finding a different valuation than the Assessor, the Assessor bears the burden of proving the correctness of the valuation he propounds.
4. The Respondent’s Comparables 2 and 3 are located in the same area and share similar ocean views as the subject Property. Though Comparables 2 and 3 are not part of the Ocella Lodge Section of Botany Bay Island, the only additional amenities that the Ocella Lodge Section properties offer are:
· A one-twelfth ownership interest in Botany Island excluding any privately owned lots and homes;
· Use of Ocella Lodge four weeks out of the year;
· Use of a dock located near Ocella Lodge for access to the island from Bohicket Marina;
· Use of the Beach Cabana; and
· Ownership of the caretaker’s lot and home.
Though those amenities are certainly desirable, it appears questionable that a purchaser of the Respondent’s Property would view the above amenities as worth $385,000.00 (the difference between the Assessor’s valuation of the Respondent’s Property and the Assessor’s valuation of the Respondent’s Comparable 2). In fact, the Respondent’s Comparable 2 is larger and arguably has a better view than the Respondent’s Property.
On the other hand, the Respondent paid $400,000.00 for the subject Property and the owners of the Assessor’s Comparables 1 and 2 paid $500,000.00 for their property in 1999, just two years prior to the reassessment. The Respondent contends that those purchase prices were effected by the fact that the property owners were purchasing a “concept” – that this island would not be further developed in the future because of the many restrictions placed upon it. However, the restrictions and amenities granted to the Ocella Lodge Section owners are applicable to future purchasers of the property. Therefore, the concept that this island would not be further developed is equally applicable to a current purchaser of the Respondent’s Property. Furthermore, a subsequent purchaser would acquire the same rights to the use of the amenities of the Ocella Lodge Section.
Therefore, after reviewing the above factors, I find that the Charleston County Board of Assessment Appeals’ valuation of $330,000.00 best reflects the true market value of the Respondent’s Property.
ORDER
Based upon the above Findings of Fact and Conclusions of Law:
IT IS HEREBY ORDERED that the Assessor shall value the Respondent’s Property for the tax year 2001 at $330,000.00.
AND IT IS SO ORDERED.
____________________________
Ralph King Anderson, III
Administrative Law Judge
April 29, 2003
Columbia, South Carolina
Mr. Blanton, Appraisal Supervisor with the Charleston County Assessor’s Office, appeared at the hearing in the capacity of a designated representative of the Charleston County Assessor’s Office. ALJD Rule 9A provides, in relevant part: “An agency may be represented by the director, an official, or duly authorized employee of the agency.” (Emphasis added). This Division, therefore, recognized that Mr. Blanton represented the Petitioner under that authority. However, the Respondent and this Division were not notified of Mr. Blanton’s appearance until the commencement of this hearing. ALJD Rule 9B, entitled “Notice of Appearance,” sets forth:
An attorney or other person authorized to represent a party before the Division pursuant to this rule shall file with the Division a notice of appearance when retained or authorized to represent a party after commencement of a case.
(Emphasis added). Therefore, Mr. Blanton should have filed a “Notice of Appearance” with the Division and the Respondent. There was no evidence, however, that the Assessor's conduct caused any prejudice to the Respondent in this case. Nonetheless, I strongly caution the Assessor that failure to comply with the Division’s Rules of Procedure in the future may rise to the level of such prejudice as to warrant the Division’s ruling adversely against the Assessor.
Mr. Welch is a certified public account. See ALJD Rule 9A.
Section 12-43-217 sets forth, in relevant part:
(A) Notwithstanding any other provision of law, once every fifth year each county or the State shall appraise and equalize those properties under its jurisdiction. Property valuation must be complete at the end of December of the fourth year and the county or State shall notify every taxpayer of any change in value or classification if the change is one thousand dollars or more. In the fifth year, the county or State shall implement the program and assess all property on the newly appraised values.(B) A county by ordinance may postpone for not more than one property tax year the implementation of revised values resulting from the equalization program provided pursuant to subsection (A). . . . The postponement allowed pursuant to this subsection does not affect the schedule of the appraisal and equalization program required pursuant to subsection (A) of this section.
(Emphasis added). Charleston County was to have implemented its new countywide equalization in the 1999 tax year. However, the Charleston County Council delayed the implementation from the 1999 tax year to the 2001 tax year, contrary to Section 12-43-217(B). Furthermore, because there were no property sales of Botany Island, LLC lots prior to December 31, 1998, the Assessor relied upon the 1999 sales of those lots in making its analyses and comparisons.
There are approximately four other lots on Botany Bay Island that are not part of the Ocella Lodge Section of the island for purposes of the one-twelfth undivided ownership and use of the entire island excluding any privately owned lots and homes.
The twelve lots that were sold as part of the Ocella Lodge Section of Botany Bay Island received a one-twelfth undivided ownership interest and conditional use of the island’s common areas. These lots are situated all around the island and are all approximately the same size, within one-tenth of an acre of each other. The two lots on the marsh side of the island sold for $200,000.00. Of the remaining ten lots located on the island’s ocean front northeast and southeast portion of the island, they sold for as follows: two lots sold for $200,000.00; three lots sold for $400,000.00; and four lots sold for $500,000.00.
The cost and function of the caretaker, if any, is controlled by the Ocella Lodge Property Owners Association.
At the hearing into this matter, the appraiser testified that he used Dewees Island and Seabrook Island as “confirmation” for his appraisal and not as comparables. He further testified that he utilized Seabrook as a “point of reference.”
This language is taken directly from the Board’s Decision.
He also used lots located on the Isle of Palms. Nevertheless, I find those comparables to be too dissimilar because that island is accessible by vehicle and enjoys some public services and amenities.
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).
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