SC Administrative Law Court Decisions

STATEMENT OF THE CASE

This property tax valuation matter is before the Administrative Law Judge Division ("Division") as a contested case pursuant to S.C. Code Ann. §§ 1-23-310 to -400 (1986 & Supp. 2000) and § 12-60-2540 (A) (2000), upon the filing of a request for a contested case hearing by John L. Troughton and his wife, Mary U. Troughton, Trustees of The Troughton Family Revocable Trust ("Taxpayers"). The caption is corrected to reflect the correct owners of the real property. ⁽¹⁾

Taxpayers are contesting the Assessor's valuation of their real property located at 254 Evergreen Lane, Myrtle Beach, Horry County, South Carolina (Tax Map No. 156-09-01-036) for the tax year 1999. Taxpayers exhausted all prehearing remedies with the Assessor and the Horry County Board of Assessment Appeals ("Board") and now seek a contested case hearing before the Division.

The Assessor originally valued Taxpayers' residence at $259,400.00, based upon the mass valuation approach. Subsequently, after preparing a uniform residential appraisal report which calculated the value based upon a sales comparison approach at $261,800.00, the Assessor maintained the valuation of Taxpayers' property was $261,800.00.

Taxpayers appealed the valuation to the Board, which determined the proper valuation should be $261,800.00. Taxpayers allege that such valuation is excessive and that the correct valuation should be less than $235,000.00.

After notice to the parties, a hearing was held at the offices of the Administrative Law Judge Division in Columbia, South Carolina. Upon a thorough review of all relevant and probative evidence and testimony presented at the hearing and the applicable law, I find the fair market value of the Taxpayers' property for the tax year 1999 is $ 245,000.00.

FINDINGS OF FACT

Having carefully considered the credibility of the testimony and accuracy of the evidence presented at the hearing and taking into consideration the burden of persuasion by the parties, I make the following findings of fact by a preponderance of the evidence:

1. This Division has personal and subject matter jurisdiction.

2. Notice of the date, time, place, and nature of the hearing was timely given to the parties.

3. Taxpayers are retired. Prior to Mr. Troughton's retirement, he was the Director of Industrial Licensing for Westinghouse. He graduated from the University of Hartford with a degree in electrical engineering and from George Washington University with a Masters degree in Management. He and his wife moved to Myrtle Beach, South Carolina in 1986. Neither of the taxpayers has any expertise in appraising real property.

4. Mr. and Mrs. Troughton are the Trustees of The Troughton Family Trust, which is the legal owner of the real property which is the subject of valuation in this action.

5. Taxpayers' property consists of both real property ("lot") and a one-story brick family residence ("residence"), being known as 254 Evergreen Lane, Briarcliffe Acres, Myrtle Beach, Horry County, South Carolina (cumulatively referred to as the "subject property"). The subject property is also known as Lot 254, Briarcliffe Acres, and is delineated as Horry County TMS# 156-09-01-036. Taxpayers live in the subject property and make it their family home.

6. The lot contains 42,940 square feet of space. The residence has three bedrooms, two-and-a-half baths, a fireplace, and a total of 2,283 square feet of space. It was constructed in 1969. Additionally, the residence has a 252-square-foot open-frame porch and a 756-square-foot two-car garage.

7. Taxpayers purchased the subject property by deed from Mildred C. Donley for the sum of $227,000.00 on October 1, 1986. The deed was recorded in Deed Book 1082 at page 564 in the Horry County Clerk of Court's office. Subsequently, the subject property was transferred by deed from the Taxpayers to The Troughton Family Trust which is the legal title owner.

8. Taxpayers stated they paid much more for their home when they purchased it than it was worth. They stated they paid an excess sum in money because of a desire to obtain this specific house and because of a need to move within a short period of time. They opined the subject property was worth only $165,000.00 when they purchased it, but they paid $227,000.00 for it on October 1, 1986, as reflected in the deed and in the testimony.

9. The Horry County Assessor's Notice of Classification, Appraisal & Assessment ("Notice") for the year 1999 was dated February 1, 1999. It was mailed to and received by Taxpayers. It valued the subject property as of December 31, 1998, at $259,400.00 pursuant to a reassessment of all properties in Horry County for the year 1999. The Assessor allocated $118,400.00 to the residence and $141,000.00 to the lot.

10. By letter dated January 31, 1999, Taxpayers wrote the Assessor, enclosing photographs of the neighboring properties adjacent to the subject property. In the letter, they inferred that the condition of these neighboring houses and yards affected the valuation of the subject property. Taxpayers requested an appraiser visit the location of the subject property to visually observe the subject property and the adjoining properties.

11. On April 2, 1999, Taxpayers wrote the Assessor, referencing their letter of January 31, 1999. Taxpayers stated they had not received any response to their letter from the Assessor and asked for a response.

12. On July 8, 1999, Mr. Troughton went to the Assessor's office. He met with an employee of the Assessor and signed a form requesting a conference with the Assessor. On the form, he alleged the current appraised value of the subject property should be less than $259,400 "due to neighbors unkept homes on both sides."

13. On September 8, 1999, Mr. Troughton met with the Assessor. They discussed the valuation of the subject property.

14. The Assessor's office sent the 1999 Conference Results to Taxpayers by letter dated October 27, 1999. The letter concluded that the final valuation allocated to the subject property was $259,400.00.

15. On October 31, 1999, Taxpayers filed a written protest and appeal of the Assessor's final decision. Taxpayers assert the fair market value of the subject property is "perhaps $235,000.00"

16. Dana B. Germaine is a Staff Appraiser with the Horry County Assessor's office. She attended college for two years. She worked as a staff appraiser for the assessor's office in Washington, D.C. for thirteen years and as a staff appraiser for the Horry County Assessor's office for fifteen years. She is certified with the South Carolina Real Estate Appraisers Board in residential appraising. She was qualified by this court as an expert witness in the area of appraising residential properties for assessment purposes in South Carolina.

17. Ms. Germaine testified the subject property is located in one of the two "top" neighborhoods in Horry County. The subdivision borders Highway 17 on the northwest and the Atlantic Ocean on the southeast.

18. On January 1, 1999, Ms. Germaine prepared a written appraisal of the subject property for the tax year 1999, using the sales comparison method. She used three comparables. The following table reflects her evaluation and the results of her study:

19. Ms. Germaine adjusted the sales prices of each of the three comparables as shown on the report. See Respondent's Exhibit 5. After adjustments, the value accorded to Comparable 1 was $278,800, to Comparable 2 was $266,000, and to Comparable 3 was $294,400.

20. All of the three comparables and the subject property adjoin other subdivision lots and front on a street within the same subdivision.

21. Lot 254 is located at the end of Evergreen Lane on a cul-de-sac. It backs up to a corner of Lot 218 which fronts on a cul-de-sac of Myrtle Lane. Lot 215 is located on Myrtle Lane, four lots away from the subject property. Lot 228 is located on the cul-de-sac at the end of Live Oak Lane, four lots away from the subject property. ⁽²⁾

22. According to Ms. Germaine, the assessment value of a residential property generally increases 2% to 3% annually.

23. The increase in value from the purchase price of the subject property to the valuation placed thereon by the Assessor equates to $34,800.00, or an increase of approximately $2,677.00 per year since its purchase.

24. On March 21, 2000, almost five months after the request for the appeals hearing was mailed, the Horry County Board of Assessment Appeals wrote Taxpayers notifying them their appeal would be heard on June 6, 2000.

25. After the hearing by the Horry County Board of Assessment Appeals, it issued its written determination by letter dated June 14, 2000. The Board affirmed the valuation of the Assessor's appraisal of $261,800.00, as requested by the Assessor.

26. Taxpayers alleged that as of December 31, 1998, the house and lot known as Lot 255, which adjoins the subject property at the end of Evergreen Lane, had been abandoned and refuse was growing out of the roof. Further, the yards had "grown up" and there were snakes in the grass. The house has been demolished since and a new house is under construction.

27. Regarding Lot 253, which adjoins the subject property on the other side, Taxpayers placed into the record several photographs which showed heavy vegetation on the lot when the photographs were taken on December 31, 1998. By comparing these photographs to one taken of Lot 253 in October 1986, the grounds have grown up beyond that which is normal. See Petitioner's Exhibit # 2.

28. The neighboring properties that had overgrown shrubbery and residences in need of repair are no longer in those conditions. Their yards have been cleaned and either the houses have been repaired or new homes are being constructed.

CONCLUSIONS OF LAW

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

1. S.C. Code Ann. § 12-60-2540 (2000) authorizes the South Carolina Administrative Law Judge Division to hear contested cases arising from controversies involving the valuation of real properties pursuant to Chapter 23 of Title 1 of the 1976 Code, as amended.

2. An Assessor's valuation is presumed correct with the burden being on the property owner to disprove the Assessor's valuation. 84 C.J.S. Taxation § 410 (1954). The Assessor's decisions as to the situs of property and its taxability also are presumed correct and the person complaining has the burden of proving his grievance. S.C. Tax Comm'n v. S.C. Tax Board of Review, 278 S.C. 556, 299 S.E.2d 489 (1983) (citing 84 C.J.S. Taxation § 537 (1954)).

3. A taxpayer contesting an assessment has the burden of showing the taxing authority's valuation is incorrect. While the taxpayer ordinarily would meet this burden by proving the actual value of the property, the taxpayer may show by other evidence that the valuation is incorrect. If the taxpayer proves the valuation is incorrect, the presumption of correctness is revoked and the taxpayer is entitled to appropriate relief. Cloyd v. Mabry, 295 S.C. 86, 367 S.E.2d 171 (Ct. App. 1988).

4. All real property in the State of South Carolina is subject to taxation. S.C. Code Ann. § 12-37-210 (2000). Taxes are levied in the amount of 6% of the fair market value of the real property and must be paid by the individual owning the property. S.C. Const. art. X, § 1; S.C. Code Ann. § 12-37-610 (Supp. 2000).

5. Under S.C. Code Ann. § 12-37-930 (2000), the measure of value for taxation purposes is fair market value. See Lindsey v. S.C. Tax Comm'n, 302 S.C. 504, 397 S.E.2d 95 (1990); 84 C.J.S. Taxation § 411 at 791 (1954).

6. Fair market value of a parcel 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.

S.C. Code Ann. § 12-37-930 (2000).

7. While not conclusive, market sales of comparable properties present probative evidence of the fair market value of similar property. 84 C.J.S. Taxation § 451 (1954); Cloyd v. Mabry, 295 S.C. 86, 367 S.E.2d 172 (Ct. App. 1988).

8. In estimating the value of land, all of its elements or incidents which affect market value or would influence the mind of a purchaser should be considered, such as location, quality, condition, and use. 1969-70 Op. S.C. Att'y. Gen., No. 3045 at 337; see also 84 C.J.S. Taxation § 410 at 784; § 411 at 794 (1954).

9. If there are no comparable sales or recent sales to form a basis of comparison, fair market value may be determined by the testimony of persons acquainted with the property who have knowledge and experience qualifying them to form intelligent judgment as to the proper valuation of the property. Appeal of Hart, 199 A. 225 (Pa.. Super. Ct. 1938).

10. "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, 217 S.E.2d 789 (1975).

11. The burden of proving an intentional and systematic undervaluation rests with the complaining party. Sunday Lake Iron Co. v. Wakefield Township, 247 U.S. 350 (1918). This burden is not met by a mere showing that some properties are undervalued. See Owen Steel Co., Inc. v. S.C. Tax Comm'n, 287 S.C. 274, 337 S.E.2d 880 (1985).

12. The evidence here supports the valuation method used by the Assessor, as affirmed by the Horry County Board of Assessment Appeals. The three comparables used by the Assessor are reliable indicators of value. The value of $261,400.00 is well within the range of comparable residences in the same area and subdivision. The valuation, however, is adjusted to $245,000.00. A discount is applicable for the conditions of adjoining properties on the date of valuation, December 31, 1998.

ORDER

Based on the foregoing findings of fact and conclusions of law,

IT IS HEREBY ORDERED that the Horry County Assessor must value Taxpayers' property identified as 254 Evergreen Lane, Briarcliffe Acres Subdivision, Horry County, South Carolina, tax map number 156-09-01-036 at $ 245,000.00 for the tax year 1999.

AND IT IS SO ORDERED.

__________________________________

MARVIN F. KITTRELL

Chief Administrative Law Judge

January 31, 2001

Columbia, South Carolina

1. John L. Troughton testified at the hearing that subsequent to the purchase of the subject property in 1986 by him and his wife, they transferred title of the property to The Troughton Family Trust for estate planning purposes.

2. The maps of the subdivision placed into the record show the three comparables are all within 700 feet of the subject property.