South Carolina              
Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
Ron and Marilyn Follmann vs. Charleston County Assessor

AGENCY:
Charleston County Assessor

PARTIES:
Petitioners:
Ron and Marilyn Follmann

Respondents:
Charleston County Assessor
 
DOCKET NUMBER:
05-ALJ-17-0367-CC

APPEARANCES:
For the Petitioners: Ron Follmann, Pro Se

For the Respondent: Bernard E. Ferrara, Jr., Esquire
 

ORDERS:

FINAL ORDER AND DECISION

STATEMENT OF THE CASE

This is a contested case brought by the Petitioner concerning a property tax valuation matter. Rather than disputing the fair market value, Petitioners assert their property is not equitably valued in relation to other properties in the surrounding area. Accordingly, Petitioners seek a reduction of the Assessor’s valuation of $793,000 to $583,000 so as to place it in parity with the Assessor’s appraised values of other allegedly similar properties in the area for the 2004 tax year. The Assessor argues that all properties in the County have been valued fairly and that no reduction is warranted. After notice of the date, time, place, and nature of the hearing was timely given to all parties, a hearing was held at the Administrative Law Court on April 13, 2006.

ISSUE

Whether the assessor properly equitably appraised the taxpayers’ property with comparable properties for the 2004 tax year? If not, what is the value of the taxpayer’s property for the 2004 tax year?

FINDINGS OF FACT

Having observed the witnesses and exhibits presented at the hearing and taking into consideration the burden of persuasion and the credibility of the witnesses, I make the following findings of fact by a preponderance of evidence:

Background

Petitioners own real property located at 93 Shelmore Boulevard in Mount Pleasant, Charleston County, South Carolina, identified as tax map number 535-06-00-268. The property is an owner occupied, three story single family residence built in 2003 on a .28 acre lot in an upscale neighborhood known as I’on. Based upon a field review of Petitioners’ property, the Charleston County Assessor determined that Petitioners’ home’s total square footage was 5,022 square feet. The Assessor also rated Petitioners’ residence as “special” quality which is the highest designation above the ratings of excellent, very good, fair and poor. The Assessor determined that Petitioners’ property was worth $851,000 for the 2004 tax year

Petitioners appealed the assessment to the Charleston County Board of Assessment Appeals (Board) on the grounds that the property’s equity value is not equally appraised when compared to like surrounding properties. They contended that the value of their property should be $607,000. Prior to the hearing before the Board, Petitioners provided a blueprint of their residence to the Assessor showing its exact square footage. Subsequently, the Assessor adjusted the total amount of square feet down 369 square feet from 5,022 to 4,653 square feet, and reduced the value to $803,000. After a hearing on August 17, 2005, the Board affirmed the Assessor’s value of $803,000 for tax year 2004.

The Petitioners’ now contend that the value of their property should be $583,800 because the Assessor did not properly measure the total square footage of their property and did not equitably appraise the property with comparable properties for the 2004 tax year.

Square Feet of Residence

Petitioners argue that the value for their home should be appraised as having only 4,170 square feet because that is the square footage that is considered habitable by the International Building Code that Charleston County has adopted. In other words, Petitioners contend that the total amount of square feet of the third floor should not be considered at all in the valuation of the property because it does not qualify as habitable space based on the regulations of the International Building Code.[1]

Section R304 of the International Building Code, Minimum Room Areas provides: “Portions of a room with sloping ceiling measuring less than 5 feet (1524 mm) or a furred ceiling measuring less than 7 feet (2134 mm) from the finished floor to the finished ceiling shall not be considered as contributing to the minimum required habitable area for that room.” The Code further provides that “habitable rooms shall not be less than 7 feet (2134 mm) in any horizontal dimension.” Petitioners argued that none of the rooms on the third floor fall within the requirement of having at least seven feet for habitable space because the width of the ceiling at the seven foot height is five feet six inches.

The Assessor calculated the square footage of Petitioners’ third floor based upon a measurement beginning at a height of five feet from the knee-walls. At the hearing, the Assessor conceded that he should have measured the square footage of the third floor based upon a measurement beginning at seven feet from the knee-walls. Measuring the square footage of the third floor at a height of seven feet from the knee-walls rather than five feet from the knee-walls results in a reduction of 106 square feet from Petitioners’ home. That reduction changes the total square footage of the home from 4,653 to 4,547 square feet.

Nevertheless, the evidence did not establish that the Assessor must assess properties and arrive at values in accordance with the definition of “habitable area” of the International Building Code. Rather, general principles of appraising provide that when appraising the value of Petitioners’ home, the square footage of the third floor should be considered in determining the value of the property. Moreover, even if it was not listed in the square footage, the third floor includes finished hardwood floors, painted ceiling and walls, electrical outlets, and a bathroom. Accordingly, the third floor obviously adds value to the house and thus, at a minimum, it is an amenity that adds value to the Petitioners’ property. In fact, if the third floor was considered as a separate amenity rather than generally in the square footage, it would add even greater value to the property.

Equity Analysis

Petitioners also argue that the property should be valued at $140 per square foot. In arriving at the amount of dollars per square foot, Petitioners relied upon a comparison of their property with seventeen lake front properties located in the I’on subdivision and five properties located in the Olde Park subdivision, which is adjacent to I’on.

However, Petitioners’ comparables are not special quality properties such as those cited by the Assessor in his equity analysis. Instead, evidence shows the comparables in I’on are rated a lower quality of excellent or very good. Five of the seventeen comparables in I’on contained no photographs of the house. The twelve houses that had photographs showed that the houses are built quite close together along the lake front. The lots are smaller than Petitioners’ lot and do not afford the privacy that the taxpayers’ lot offers because it is completely buffered on one side. The comparables in Olde Park are not similar to Petitioners’ property either. The community itself does not offer the prestige or amenities of I’on. Furthermore, again none of those comparables are special properties or have the amenities that Petitioners’ house and lot offer. Three of the five comparables were built of wooden siding with attached garages, and only one of the two was built of brick with a detached garage. Therefore, the comparables selected by Petitioners do not have the quality of construction and amenities of the Petitioners’ house and lot; therefore, I do not find them pertinent.

On the other hand, the equity analysis performed by the Assessor was of similar properties in the I’on subdivision. Moreover, his approach was consistent with the best practices for valuation methods under the equitable analysis technique. The Assessor examined eighteen houses rated special quality as of 2004. Thirteen of those houses were in I’on and the remaining five were in Olde Park. The six most comparable houses were located in I’on; all had square footage in excess of 3,000 square feet and all were built from the year 2000 to the present. The total dollars per square foot of those six comparables and Petitioners’ property varied from $168, $171, $173, $177, $185, $258, and $261 per square foot. Petitioners’ property is assessed at $173 per square foot which is at the lower end of the array. The median is $185 per square foot and the average is $212 dollars per square foot. Petitioners’ property was significantly below both the median and average.

Furthermore, in evaluating his appraisal the Assessor also valued Petitioners’ lot independently. There were several home sites that were available in 1999 in the I’on subdivision. That list included the six comparable properties noted above and Petitioners’ property, which was shown in the Shelmore Home sites section as a park view lot. That section revealed sale prices ranging from $55,000 to $88,250, and showed Petitioners’ home site at a list price of $87,750. The Assessor made further adjustments to the dollars per square foot analysis of the six comparable properties by making adjustments due to the various lot influences, i.e., deepwater, lakefront, marsh view, interior, etc. The lot adjustments lowered the dollars per square foot range from $168-$261 per square foot to $164-$255 per square foot.

Sales Ratio Analysis

In addition to analyzing the value of square feet of Petitioners’ residence, the Assessor also submitted evidence of a sales ratio analysis of the I’on subdivision and five surrounding subdivisions in Mount Pleasant using sales that occurred in 2003 compared to the appraised values in the County’s data base since the 2001 reassessment. The sales ratio resulted from a comparison of ultimate sales prices in the market to the value the Assessor placed upon the property. This is another tool the Assessor uses to determine if the properties in the County are equitably appraised or how close the properties are to the actual market value.

Seventy-four sales occurred in I’on, four sales in Hobcaw; sixteen sales in Hobcaw Creek Plantation; nine sales in Hobcaw Point; six sales in Molasses Creek subdivision; and nine in Olde Park subdivision. The average sales ratio for I’on was 68%; Hobcaw was 84%; Hobcaw Creek Plantation was 77%; Hobcaw Point was 78%; Molasses Creek was 79%; and Olde Park was 77%. The assessed values in I’on were thus on average less than the reported sales prices in any other comparable subdivision. Therefore, the properties in the I’on subdivision not only were reasonably valued, but were, in fact, undervalued and below equity when compared to the surrounding subdivisions. Furthermore, the increase in the I’on subdivision’s sale prices in 2003 is another indication that the properties in I’on offer more in value such as high quality construction and amenities.

Conclusion

The Assessor’s comparables possess similar characteristics to Petitioners’ property and, with the adjustments made by the Assessor, provide an accurate reflection of the equitable value of Petitioners’ property in relation to similar properties in the surrounding area. Moreover, Petitioners’ property is aptly rated as special quality in light of its quality of construction, materials, amenities and location. The residence has ornamental brick veneer, a copper roof, hardwood floors, top of the line cabinetry, an interior wall and archway in the kitchen with exposed brick, eight foot high solid wood panel doors, extensive moldings, chair rails and wainscoting, iron handrails, copper gutters, one masonry fireplace and one pre-fabricated fireplace, four bedrooms, several bath rooms and a large screened porch of 632 square feet. It is located on desirable buffered, corner lot offering additional privacy. It has a two-door, detached garage of ornamental brick veneer. Consequently, Petitioners’ did not establish that their property was wrongfully assessed. I therefore find that a value of $173 per square foot is proper. Furthermore, in light of the Assessors concession to adjust the total amount of square feet down to 4,547 square feet, I find that the property should be valued at $793,000.

CONCLUSIONS OF LAW

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

1. A taxpayer may appeal a property tax assessment determination of a county board of assessment by requesting a contested case hearing before the ALC. S.C. Code Ann. § 12-60-2540(A) (Supp. 2005). As the party contesting the assessing authority's valuation, the Petitioner has the burden of proving the actual value of the property at issue. See Reliance Ins. Co. v. Smith, 327 S.C. 528, 537, 489 S.E.2d 674, 679 (Ct. App. 1997). Thus, in this case, the Taxpayer has the burden of proving the value of their property should be $583,800.

2. 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).

3. “Appraisal is, of course, not an exact science and the precise weight to be given to any factor is necessarily a matter of judgment, for the court, in the light of the circumstances reflected by the evidence in the individual case.” Santee Oil Co. v. Cox, 265 S.C. 270, 277, 217 S.E.2d 789, 793 (1975). Nevertheless, S.C. Code Ann. § 12-37-930 (Supp. 2005) sets 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.

See also S.C. Const. Art. III § 29 (“All taxes upon property, real and personal, shall be laid upon the actual value of the property taxed.”). 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). “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 then removed and the taxpayer is entitled to appropriate relief.” Cloyd v. Mabry, 295 S.C. 86, 367 S.E. 2d 171, 173 (Ct. App. 1988).

3. Petitioners contend that the square footage of the third floor should not be considered in the valuation of their property because it is not habitable space pursuant to the regulations of the International Building Code. To the contrary, the Assessor testified that the tenets of the International Building Code are not controlling when appraising the value of a property. Furthermore, 84 C.J.S. Taxation § 511, at 554 (2001) sets forth that “[i]n estimating the value of land, an assessor should take into consideration all of its elements or incidents. . . .” Thus, Petitioners’ argument that the total amount of square feet of the third floor space should be eliminated from consideration by the Assessor in arriving at the value of Petitioners’ property is unjust and contravenes case law. Moreover, even if it was not listed in the square footage, the third floor is an amenity that has value.

4. Petitioners also argue that the Assessor did not equitably appraise the properties in the I’on subdivision with comparable properties for the 2004 tax year. S.C. Code Ann. § 12-43-210(A) (Supp. 2005) requires that all property “must be assessed uniformly and equitably.” However, neither the South Carolina Constitution nor the United States Constitution requires absolute accuracy in property tax matters. Allied Stores of Ohio v. Bowers, 358 U.S. 522 (1959; Reliance Ins. Co. v. Smith, 327 S.C. 528, 489 S.E.2d 674 (Ct. App. 1997). “While our constitution requires equality and uniformity in tax assessments, ‘[a]bsolute accuracy with respect to valuation and complete equality and uniformity are not practically attainable.’” 489 S.E.2d at 679 (quoting Wasson v. Mayes, 252 S.C. 497, 167 S.E.2d 304 (1969)). Rather, what is proscribed is the intentional and systematic undervaluation of certain properties while other properties in the same class are valued at fair market value. Sunday Lake Iron Co. v. Wakerfield Tp, 247 U.S. 350 (1918). To meet that burden, more than a mere showing that other properties are undervalued must be shown. Owen Steel Co., Inc. supra. “[A]s in any median figure, there are some properties taxed at a higher figure than the median and some at a lower.” Owen Steel, 337 S.E.2d at 882. Accordingly, the Taxpayer bears the burden of proving that the undervaluation is not the result of a mere judgment call but rather that the undervaluation is the result of an intentional and systematic undervaluation.

In the instant case, the Taxpayers failed to meet their burden of proof by showing that the Assessor’s valuation is incorrect. More specifically, Petitioners failed to prove that the “fair market value” of their residence was not $173 per square foot. To the contrary, though the Assessor failed to present a traditional market sales analysis, the Assessor established that its initial valuation was made using a computerized mass appraisal analysis. An Assessor is allowed to use mass appraisal techniques to estimate a property’s value for taxation purposes. 84 C.J.S. Taxation § 510 (2001). In that regard, the Assessor properly used a per square foot basis for measuring the value of Petitioners’ property with the value adjusted due to various factors such as quality of construction and amenities, and lot influences. Furthermore, the evidence established that the Petitioners’ residence has at least 4,653 square feet of livable space. In addition, the Assessor’s comparables were most similar to Petitioners’ property in quality of construction, design, amenities, and lot influence. Those comparables reflected a value of at least $173 per square foot valuation.

The evidence also did not establish that other properties in the surrounding area of Petitioners’ property were intentionally and systematically undervalued by the Assessor. The Assessor performed an equity analysis comparing Petitioners’ property to six other similar properties to ensure that the value assigned to the property was in line with values assessed on similar properties in Charleston County. The Assessor also performed a sales ratio analysis of I’on and five other subdivisions comparing the properties’ final values on the County’s books for the 2001 reassessment to what the properties sold for in 2003. That evidence established that the properties in I’on subdivision were, in fact, undervalued and below equity when compared to the surrounding subdivisions. Therefore, after making an adjustment lowering the amount of total square feet of the property, Petitioners’ residence should be valued at $793,000.

ORDER

Based upon the above Findings of Fact and Conclusions of Law:

IT IS HEREBY ORDERED that the Assessor value the Petitioners’ property for the tax year 2004 at $793,000.

AND IT IS SO ORDERED.

____________________________

Ralph King Anderson, III

Administrative Law Judge

July 12, 2006

Columbia, South Carolina



[1] This argument was raised by the Petitioners for the first time at the hearing before this Court. S.C. Code Ann. § 12-60-2540 (2005) provides that:

If the taxpayer failed to provide the county board with the facts, law, and other authority supporting his position, he shall provide the representative of the county at the hearing with the facts, law, and other authority he failed to present to the county board earlier. The Administrative Law Judge shall then remand the case to the county board for reconsideration in light of the new facts or issues unless the representative of the county at the hearing elects to forego the remand.

At the hearing into this matter, the representative of the county declined to exercise their right to have this case remanded concerning this new argument.


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