SC Administrative Law Court Decisions

This contested case results from a disagreement between H.P. Worrell and Sidney D. Thompson (Worrell or Thompson individually but Taxpayers collectively) and the Georgetown County Assessor (Assessor) over whether the Taxpayers' properties are equitably valued in relation to other similar property in the area. The dispute concerns the 2000 tax year.

The parties exhausted the prehearing remedies within the assessor's office and before the Georgetown County Board of Assessment Appeals (Board) and now bring this contested case to the Administrative Law Judge Division (ALJD). Since the facts of each case arose from the same event, the two cases have been consolidated and this matter heard in one hearing Jurisdiction is in the ALJD under S. C. Code Ann. § 12-60-2540(A) (Supp. 2001) with this matter having been heard on July 26, 2002. After considering all of the arguments and evidence presented at the hearing, the property values as set by the Board are upheld.

Are the Taxpayers' properties equitably assessed in relation to similar property? ⁽¹⁾

1. Positions of Parties:

Taxpayers agree the improvements on their properties are valued fairly, and they do not challenge any aspect of the Assessor's valuation of those improvements. Rather, the dispute addresses only the Assessor's valuation of the land at each site. Further, as to the land, Taxpayers do not dispute the fair market value of the land since if the land were sold to a willing buyer in an arm's length transaction, the land would sell for at least a price equal to the Assessor's valuation.

Rather than dispute fair market value, the Taxpayers assert their properties in Georgetown County are not equitably valued in relation to other nearby properties. Accordingly, Taxpayers seek a reduction to the Assessor's valuation so as to place their properties in parity with the Assessor's appraised values of allegedly similar properties in the area. The Assessor argues that all properties have been valued fairly and that no reduction is warranted.

2. Findings of Fact:

I find, by a preponderance of the evidence, the following facts:

Worrell owns three properties in Murrells Inlet identified as TMS # 41-118-92.1, 41-118-92.2, and 41-118-93. Thompson owns one property in Murrells Inlet identified as TMS # 41-118-92. The four properties are all contiguous. For the tax year 2000, the Assessor valued Thompson's property at $226,035 and Worrell's three properties respectively at $261,767; $129,916; and $337,621. Both Worrell and Thompson challenged the Assessor's determination before the Board. The Board made no change to Thompson's valuation but reduced Worrell's valuation respectively as follows: $252,639; $126,167; and $325,973.

In arriving at land values in the area, the Assessor relied upon a "front-foot" valuation method based on the number of feet that each property had on the creek adjacent to the properties. To that number, the Assessor made adjustments reflecting the individual nature of each property.

More specifically, the Assessor utilized a base of $3,600 per front foot. That value was then adjusted by a specified computer-generated factor for depth. The adjustment was upward if the property had a depth more than 150 feet and downward if the depth was less than 150 feet. In addition, properties were adjusted downward for specific negative conditions such as road access problems.

Here, Thompson's land was valued at $3,600 per front foot, was adjusted upward since it had a depth greater than 150 feet, and was adjusted downward due to a "road access" problem. Likewise, Worrell's three properties were valued under the same methodology. As to TMS # 41-118-93, the assessor relied upon $3,600 per front foot but adjusted that value upward due to a depth greater than 150 feet and then downward due to the fact that a dirt road divided the property. As to TMS 41-118-92.2 and 41-118-92.1, the Assessor again applied the front foot method but was faced with a negative factor of two irregular shaped lots.

In accordance with the methodology being used and to account for the irregular shapes and road concerns, the Assessor applied $3,600 per front foot for TMS 41-118-92.1 but then made adjustments. The value was decreased due to a road access problem. Further, that value was again decreased for the lots irregularity. In adjusting for the irregular shape as to 41-118-92.1, instead of using 62 front feet at $3,600, the Assessor used 43 feet at 3,200 and 19 feet at 1,600. Likewise as to 41-118-92.2, because of the larger dimensions on the back of the lot, the Assessor used 15 front feet at 3,200 and 19 feet at 1,600.

The Assessor's methodology was consistently applied to other properties in the area. For example, TMS # 41-10-77 was valued using $3,600 per front foot on the creek and adjusted downward due to the same road access problem suffered by Worrell and Thompson. Likewise, TMS # 41-120-76 used $3,600 per front foot reduced downward due to the road access problem. Finally, TMS # 41-109-103 was valued at $3,600 a front foot and was not reduced downward since it had no road access problem and no depth adjustment.

3. Conclusions of Law

Based on the foregoing Findings of Fact, I conclude the following as a matter of law:

a. Introduction

Taxpayers are seeking a reduction in value based upon principles of equity. The allegation is that several neighbors' properties that are similar to Taxpayers' properties are being valued less than Taxpayers' properties. Further, Taxpayers disagreed with the "front-foot" method. From this position, Taxpayers assert their properties should be equalized by reducing the values of their properties. Taxpayers' argument is based on the uniformity provision found in the South Carolina Constitution at Article X, Section 1. Under the facts of this case, I cannot agree with Taxpayers.

b. Explanation

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); Owen Steel Co., Inc. v. S.C. Tax Comm'n, 287 S.C. 274, 337 S.E.2d 880 (1985). Indeed, the law recognizes that complete equity and uniformity are not practically attainable when valuing property. Wasson v. Mayes, 252 S.C. 497, 167 S.E.2d 304 (1967). 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. Wakefield Tp, 247 U.S. 350 (1918). The burden of proving an intentional and systematic undervaluation rests with the complaining party. Id.

To meet the taxpayer's burden, more than a mere showing that other properties are undervalued must be shown. Owen Steel Co., Inc., 337 S.E.2d at 882-3. The evidence must establish 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. For example, a noteworthy illustration of an "intentional and systematic undervaluation" is found in Allegheny Pittsburgh Coal Co. v. County Comm'n, 488 U.S. 336 (1989).

In Allegheny, the Court found that the property of the petitioners had been assessed at approximately 8 to 35 times more than comparable neighboring property, and that these discrepancies continued for more than 10 years with little change. Id., 109 S.Ct. at 638. Indeed, in finding the presence of a faulty and systematic valuation method which produced a disparity, Allegheny found that the disparity was a gross disparity as opposed to a mere judgment error in valuation by the Assessor.

Moreover, the Assessor in Allegheny increased the valuation on the petitioners' property by reference to the property's very recent sales price while other similar properties were not subject to any significant adjustments since those properties utilized their much older sales prices. Noting that the petitioners had "suffered from such 'intentional systematic undervaluation by state officials' of comparable property" in the County, the Court held that "[t]he relative undervaluation of comparable property in Webster County over time therefore denies petitioners the equal protection of the law." Id., 109 S.Ct. at 639.

In the instant case, no "intentional systematic undervaluation" has occurred. In fact, no showing has been made that any comparable properties have been undervalued relative to the Taxpayers' properties. The evidence establishes that for the entire area the Assessor employed a front footage basis for measuring value with that value adjusted due to various factors such as depth and road access. In short, the method employed in this case is rational and has been evenly applied to similar water front properties in the area. This no equity violation has occurred.

In a more fundamental argument, the Taxpayers assert that the front foot methodology is not a proper means for sharing the tax burden among the residents. Rather, they argue that a square foot basis is a more reasonable manner of valuation. I cannot agree. The front foot method is a common basis for assessing and distributing the cost of government to the public. For example, while not a "tax," the related concept of assessments has long relied upon the approved method of using a front-foot basis for equitably distributing tax burdens to the public:

A method of apportionment, whether by statute or by regulation, that is manifestly arbitrary or discriminatory does not fulfill the constitutional requirements of due process and equal protection. But there never has been and probably never can be a perfectly equitable distribution of the tax burden; and statutes or regulations for the apportionment of assessments for local improvements are not to be stricken down merely because they fail to attain the unattainable. All that is required of them by constitutional law is that they apportion the burden of assessments with approximate equality, upon a reasonable basis of classification, and with due regard to the benefits to the individual property owners and the requirements of the public health, safety or welfare. (Emphasis added).

Newton v. Hanlon, 248 S.C. 251, 263, 149 S.E.2d 606, 613 (1966). Thus, the Assessor's method of front foot valuation apportions the tax burden in an equal manner applied uniformly to similar properties and is accomplished under a reasonable basis. Therefore, the Assessor's practice does not produce an intentional and systematic undervaluation of certain properties while other properties in the same class are valued at fair market value. Accordingly, the valuation established by the Board is upheld. ⁽²⁾

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

For the tax year 2000, Thompson's property identified as TMS # 41-118-092 is valued at $226,035 and Worrell's three properties of TMS # 41-118-92.1, 41-118-92.2, and 41-118-93 are valued respectively at $252,639; $126,167; and $325,973.

AND IT IS SO ORDERED.

____________________________

RAY N. STEVENS

Administrative Law Judge

Dated: August 13, 2002

Columbia, South Carolina

1. The only issue presented is an equity issue; i.e., whether the Taxpayers' properties are equitably assessed in relation to other properties in the area. Thus, no issue of fair market valuation is before me and no adjustments to fair market value can be made by this order.

2. The Assessor did not appeal the Board's determination and did not assert that the Board's adjustments were incorrect. Rather, the Assessor argued the Taxpayers were incorrect in their position. Thus, the values set by the Board are the values approved here.