SC Administrative Law Court Decisions

The Petitioners own 26.3 acres on Lake Murray in Lexington County. Of that tract, 23.3 acres has been designated by the County as agricultural. The three acres in question in this case are those immediately surrounding the house. The Petitioners claim that this three acre tract meets all of the requirements of the referenced Code section to be classified as agricultural. The Petitioners, however, fail to consider that the portion of the subject property at issue does not meet the minimum acreage requirement of §12-43-232(1)(a), nor does it qualify under the provision which allows for tracts of timberland of less than five acres, which are under the same management system as a tract of timberland which meets the minimum acres requirement, to be treated as part of the qualifying tract. In addition, the Petitioners’ property is properly assessed in comparison to similarly situated properties, as required by S.C. Code Ann. §12-43-220 (2002).

FINDINGS OF FACT

Based upon the written evidence submitted by the parties, and taking into consideration the burden of persuasion, I make the following Findings of Fact by a preponderance of evidence:

1. The property is located in Lexington County, South Carolina, and is identified on the Lexington County Tax Map as Tax Map Number 003000-03-013.

2. The Petitioners timely filed an application for agricultural assessment. The Assessor thereafter disapproved the agricultural use classification.

3. The Petitioners filed a written objection with the Assessor and appealed the matter to the Lexington County Board of Assessment Appeals. The Assessment Appeals Board heard this matter and concluded that the 3.0 acres of the subject property should be classified as residential.

4. The Petitioners have appealed the decision of the Lexington County Board of Assessment Appeals.

5. The Petitioners are the owners of a parcel of real estate consisting of 26.3 acres. The 26.3 acre tract has a 3826 square foot residence, occupied by the Petitioners’ son, a detached brick building, some standing timber, and a cleared area around the house.

6. The area with timber consists of 23.3 acres of land. There is also the “fringe land” which is the area contiguous with the Petitioners’ property that fronts on Lake Murray. This fringe land is common at the lake as a result of the ownership of the lake and its surrounding property by South Carolina Electric and Gas. The owner of “lakefront property” on Lake Murray has the use of the fringe land which abuts the lake, but there are limits on what can be placed on this portion of property and what use the purported owner can make of the property.

7. The Petitioners testified that they have sold some trees from their 23.3 acres of land However, no timber management plan was submitted as evidence. In addition, they testified that the area surrounding the house was now planted with some pines and fruit trees, but again, there was no evidence produced to show that the Petitioners had sold any of the timber surrounding the house, nor any of the fruit produced by the fruit trees.

8.                  The Petitioners introduced an appraisal that James T. Wheat performed in January 2002. (Although Petitioner testified that the appraisal was dated June 30, 2002, that is the date the appraiser’s certification expires. Page 2 of Plaintiff’s Exhibit 17 clearly shows the date signed as January 14, 2002.) This appraisal valued the house at $250,000 and the additional acreage at $105,000 using a sales comparison approach, for a total value of $355,000. The County, after a formal and informal appeal, currently has the property valued at $364,680. In the Wheat appraisal introduced by the Petitioners, however, the cost value approach for the house itself is $178,770, while the appraisal done by the county in 1999 values the house at $169,461. The other properties used as comparables on both appraisals are all smaller homes on smaller acreage with less water frontage when the total acreage is included, not just the 3 acre tract immediately surrounding the residence. In addition, the Wheat appraisal apparently did not consider the value of any outbuildings on the property.

CONCLUSIONS OF LAW

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

1. S.C. Code Ann. § 12-60-2540 (2002) authorizes the Division to hear this contested case pursuant to Chapter 23 of Title I of the 1976 Code of Laws, as amended.

2. The Petitioner’s contention is that the property is agricultural property pursuant to S.C. Code Ann. § 12-43-220 (2002).

3. An agricultural use classification is granted to agricultural real property “actually used for agricultural purposes.” S.C. Code Ann. § 12-43-220(d) (2002). Furthermore, S.C. Code Ann. Regs. 117-114 (1982) sets forth that “in no event shall real property be classified as agricultural real property when such property is not used for bona fide agricultural purposes. . . .”

4. Agricultural real property is “any tract of real property which is used to raise, harvest or store crops, feed, breed or manage livestock, or to produce plants, trees, fowl or animals useful to man, including the preparation of the products raised thereon for man's use and disposed of by marketing or other means.” S.C. Code Ann. § 12-43-230(a) (2002).

5. In 1979, the General Assembly directed the South Carolina Department of Revenue and Taxation (Department) to promulgate a regulation designed to provide a more detailed definition of “agriculture real property” and to exclude from the use assessment any real property not used for a bona fide agricultural purpose. S.C. Code Ann. § 12-43-230(a) (2002).

6. Pursuant to that mandate, Regulation 117-114 was promulgated. Regulation 117-114 provides that while no single factor is controlling in determining if real property is used for a bona fide agricultural purpose, consideration may be given to the nature of the terrain, the density of the marketable product (timber, etc.) on the land, the past usage of the land, the economic merchantability of the agricultural product, the use or not of recognized care, cultivation, harvesting and like practices applicable to the product involved, and any implemented plans thereof, and the business or occupation of the landowner. Real property is not used for agricultural purposes unless the owner or lessee thereof has, in good faith, committed the property to that use. Real property which is ostensibly used for agricultural purposes, and which is, in reality, used for other purposes, is not agricultural real property. The agricultural use of the property must be genuine in nature as opposed to a sham or deception. S.C. Code Ann. Regs. 117-114 (1982).

7. “In interpreting a statute, this Court's primary function is to ascertain the intent of the legislature.” Whitner v. South Carolina, 328 S.C. 1, 6, 492 S.E.2d 777, 779 (1997). “The interpretation of a term set forth in a statute should support the statute and should not lead to an absurd result. . . . Further, in interpreting a statute, one does not look merely at a particular clause in which a word may be used, but rather looks at the word and its meaning in conjunction with the purpose of the whole statute, and in light of the object and policy of the law.” South Carolina Coastal Council v. South Carolina State Ethics Comm’n, 306 S.C. 41, 45-46, 410 S.E.2d 245 (1991). “The cardinal rule of statutory construction is to ascertain and effectuate the legislative intent whenever possible. [citations omitted]. All rules of statutory construction are subservient to the one that legislative intent must prevail if it reasonably can be discovered in the language used, and that language must be construed in the light of the intended purpose of the statute. Kiriakides v. United Artists Communications, Inc., 312 S.C. 271, 440 S.E.2d 364 (1994).” City of Camden v. Brassell, 326 S.C. 556, 486 S.E.2d 494, 495 (Ct. App. 1997).

8.                  An Assessor’s valuation is presumed correct and the property owner bears the burden of proving that the Assessor’s determination is not correct. 84 C.J.S. Taxation § 410 (1954). Ordinarily, this is done by proving the actual value of the property. 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 removed and the taxpayer is entitled to appropriate relief. Cloyd v. Mabry, 295 S.C. 86, 367 S.E.2d 171 (Ct. App. 1988).

9.                  While not conclusive, market sales of comparable properties present probative evidence of fair market value of similar property. 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).

10.              To determine a fair market price for the Petitioner’s property, comparisons of the sale price of other properties of the same character may be utilized. See Appraisal Institute, The Appraisal of Real Estate 367 (10^th ed. 1992) ^[1] ; Cloyd v. Mabry, 295 S.C. 86, 367 S.E. 2d 171 (Ct. App. 1988); 84 C.J.S. Taxation §§ 410-411 at 785, 797 (1954). While it is impossible to predict with certainty what a particular property will sell for, utilizing comparable sales is a good indicator of what a potential purchaser will likely pay and it provides probative evidence of the market value of the subject property if the comparables are similar in character, location and physical characteristics. See 84 C.J.S. Taxation § 411 (1954).

11.              Finally, S.C. Code Ann. § 12-43-232(1)(a) (2002) states:

If the tract is used to grow timber, the tract must be five acres or more. Tracts of timberland of less than five acres which are contiguous to or are under the same management system as a tract of timberland which meets the minimum acreage requirement are treated as part of the qualifying tract. Tracts of timberland less than five acres are eligible to be agricultural real property when they are owned in combination with other tracts of nontimberland agricultural real property that qualify as agricultural real property. For the purposes of this item, tracts of timberland must be devoted actively to growing trees for commercial use.

Here the property in question is the area immediately surrounding the house. Although the Petitioners claim that they have planted pine and fruit trees and are engaged in agricultural pursuits, they have presented no concrete evidence to support that. There was no timber management plan submitted, no copies of checks from timber companies or fruit vendors, no evidence at all of any merchantability of the product of any of this land. In this case, the trees, even if planted by the Petitioners, are growing of their own volition and no evidence has been presented to show they have been “managed” or “cared for” in any way other than a normal individual would care for a yard. Consideration of the above factors establishes that the Petitioners’ property is not used in actively growing timber as required by S.C. Code Ann. § 12-43-232(1)(a) and is not under a proper management system. Accordingly, the property does not qualify for the agricultural use classification.

In addition, I find that the property owned by the Petitioners has been adequately and accurately assessed by the County. The appraisal submitted by the Petitioners did not thoroughly consider all the attributes of the Petitioners’ property. Even considering the restrictions on the fringe land, the fact that a boater must cross under two bridges to reach the main part of the lake from this property, and the significant deferred maintenance on the house, the fact remains that the Petitioners own a sizeable estate on the shores of a desirable lake. There was also testimony introduced, without objection, that the Petitioners, although the owners of record of this property, were renting it to their son. Because the property is not the legal residence of the owner of record, it is assessed at six percent, not the four percent available to owner-occupied property. The Petitioners conceded that the County has tried to suggest ways that the property could qualify for the four percent owner-occupied rate, but the Petitioners are reluctant to follow the County’s suggestions. I find the appraisal submitted by the County to be more accurate and thorough than that submitted by the Petitioners, and that the property is equitably assessed in accordance with state law. The Petitioners failed to prove, by a preponderance of the evidence, that the Assessor’s valuation and classification of this property are incorrect.

ORDER

Based upon the above Findings of Fact and Conclusions of Law, it is hereby:

ORDERED that the disputed three acres of land of the Petitioner’s property designated as Tax Map Number 003000-03-013 shall not receive agricultural real property classification for the tax year 2001.

AND IT IS SO ORDERED.

_________________________________

Carolyn C. Matthews

Administrative Law Judge

August 26, 2003

Columbia, South Carolina