SC Administrative Law Court Decisions

ISSUE

Has the Assessor met the burden of S.C. Code Ann. § 12-37-930 (Supp. 2002) which requires the Assessor to assess the property in relation to the fair market value of this and other property in the area, and is the property overvalued compared to other properties in the area?

DISCUSSION

The Petitioners own 7.54 acres of commercial property located on the corner of Highway 378 and Bruton Smith Road in Lexington County. The County’s fair market value estimate for 2001 is $535,140, following the informal and formal appeals by the Bundricks^[1]. The Bundricks disagree with this valuation, claiming that other property in the area is assessed at much lower values. The Petitioners’ position is that the County did not take into account the water problems on the property, as well as the limits on construction. The County maintains that the assessment is valid in light of the commercial nature of the property in a fast growing area of Lexington County. The County contends that the limits on the use of the Petitioners’ property has no effect on the assessment or actual use of the property. I find and conclude, as explained below, that the assessment by the County is fair and equitable. 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, the testimony at trial, 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 004218-02-007.

2. 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 initial assessment was correct.

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

4. The Petitioners are the owners of 7.54 acres of commercial property located on the corner of Highway 378 and Bruton Smith Road in Lexington County. There is a building on a portion of the property which houses a radiator shop and an alterations business. There is also a mobile home dealer located on the property, as well as a billboard which is rented. All of these businesses provide rental income to the Bundricks.

5.                  As a part of the County’s record, an appraisal that James T. Wheat performed for the Bundricks in October 2001 was introduced. Based on this appraisal, the Petitioners argue that the property should be valued at $180,000, which is the value the appraiser arrived at using the sales comparison approach. This method compares the price that the property would bring on the open market between a willing buyer and a willing seller based on the price at which comparable properties have sold. Mr. Wheat indicated on the appraisal that he did not use the income approach due to a lack of available data on other properties. The income approach measures the value of the property based on what income it generates.

6.                  Todd Feaster, the commercial appraiser for Lexington County, testified concerning the appraisal of the property performed for the county by Daniel Thompson, also using the comparable sales approach. Based on that approach, he determined that the property should be valued at $535,140. Considering the size of the property and its value, he determined that the property should be valued at $70,973 per acre. Because this parcel is one of the largest properties in this area, and the largest compared to the other properties recently sold in the area, it should have the lowest price per acre cost. This value is the lowest of the true commercial properties appraised.

Lexington County’s Appraisal

*Comparable 4 is noted as residential/commercial.

7.                  Mr. Bundrick testified that the businesses located on his property provide the following rent per month:

These figures show a monthly rental total of $5750.00 per month, and an annual rental of $69,000.00.

8. Mr. Feaster, the commercial appraiser for the County, also testified that there is no evidence that the property cannot be built upon, or that it is in a flood zone. He specifically stated that the fill dirt on the front of the property would have no real effect on any construction on the property, because there is a seventy-five foot setback requirement measured from the center of the road. The fill area could not be built upon due to this restriction, not because of the fill. The area would, however, be suitable for a parking area for 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.                  S.C. Code Ann. § 12-37-930 (Supp 2002) states: “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.”

3. “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).

4.                  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).

5.                  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).

6.                  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) ^[2] ; 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).

7.                  In South Carolina Tax Commission v. South Carolina Tax Board of Review, 287 S.C. 415, 339 S.E. 2d 131 (Ct App., 1985) the Court of Appeals addressed the valuation of property encumbered by leases. The court stated that “all property must be valued at its ‘true value in money’ which is defined to be the market value between a willing buyer and seller. In determining the market value of income producing commercial real estate, we hold that the contract rent of long-term leases entered into at arms length and at a fair rental at the time is one of the determinative factors of the market vale of property.” This view was further clarified in Long Cove Homeowner’s Association v. Beaufort County Tax Equalization Board, 327 S.C. 135, 488 S.E. 2d 857 (1997) which held that “[t]he ‘willing buyer/willing seller’ standard in this section [S.C. Code § 12-37-930]is hypothetical in nature and may be assumed when no actual market exists for a particular parcel of land. [citations omitted] Other methods, such as cost or income, may be used to measure market value when no willing buyer exists.” id. at 142, 861. Therefore, under either the sales comparison or income approach, the Petitioners’ property is equitably valued.

8.                  The Petitioners presented no credible evidence to meet their burden of proof. The appraisal performed for the Bundricks was admitted as part of the County’s file. Although the Petitioners claim that their property is inequitably assessed, they did not bring in any appraisers to refute the County’s position. Likewise, no engineers testified for the Bundricks about the alleged restrictions on construction on this property.

I find that the property owned by the Petitioners has been adequately and accurately assessed by the County. 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 of this property is incorrect.

ORDER

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

ORDERED that the Petitioner’s property designated as Tax Map Number 004218-02-007 is properly assessed and valued at $535,140.

AND IT IS SO ORDERED.

_________________________________

Carolyn C. Matthews

Administrative Law Judge

August 26, 2003

Columbia, South Carolina