ORDERS:
ORDER AND DECISION
STATEMENT OF THE CASE
This matter came before me upon request of Petitioner, the Charleston County Assessor
(assessor), pursuant to S.C. Code Ann. § 12-60-2540(A) (Supp. 1995) contesting the decision of the
Charleston County Board of Assessment Appeals (Board), valuing certain real property identified as
PID# 486-01-00-(Various 75) for the tax year 1993. The taxpayer, The Elms of Charleston, Inc.,
exhausted all prehearing remedies with the assessor and the Board. The Board agreed with the
assessor's values on improved lots. Neither party seeks review of that portion of the decision. The
assessor is now seeking a contested case hearing before the Administrative Law Judge Division on
the remaining 75 parcels. After notice to the parties, a hearing was conducted on October 18, 1995.
I conclude that the fair market value of the property is $33,000 each for the eight villa lots and
$43,000 each for the sixty-seven patio and garden lots, based upon an average of the values contained
in the assessor's valuation at Addendum "AA", admitted into evidence as part of the assessor's
exchange.
Pursuant to ALJD Rule 52 and SCRCP 21, the Board is hereby dismissed as a party. The
County Board acted only as an adjudicatory body and is not a necessary party required for a complete
decision in this matter. See Owen Steel Co., Inc. v. S.C. Tax Comm'n, 281 S.C. 80, 313 S.E.2d 636
(Ct. App. 1984). Any issues raised in the proceedings or hearing of this case but not addressed in this
Order are deemed denied. ALJD Rule 29(B).
FINDINGS OF FACT
Based upon the evidence presented, I make the following findings of fact, taking into
consideration the burden on the parties to establish their respective cases by a preponderance of the
evidence and taking into account the credibility of the witnesses:
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 all parties.
3. The Elms subdivision is located to the north of U.S. Highway 78 and adjacent to the
east side of Charleston Southern University in the city of North Charleston, South Carolina. The
Elms of Charleston, Inc. is the builder that develops retirement housing for independent living.
4. The Elms consists of upper end housing with three basic lot styles marketed to persons
50 years old and older. The patio lots are for single family residences; the garden lots are improved
with duplex units that share one common wall; and the villa lots are improved with single quadplex
units. The project offers a club house, a pool and tennis courts, and provides limited services to its
residents such as lawn care, exterior maintenance, and activity programs.
5. The Charleston County Assessor engaged in a county-wide reassessment program in
1992 for the 1993 tax year and originally appraised the eight villa lots at $34,000 each and the other
sixty-seven patio and garden lots at values ranging from $49,300 to $52,200 for tax year 1993. The
taxpayer appealed to the Charleston County Board of Assessment Appeals. Prior to the Board
hearing, the assessor performed an actual inspection of the subject property, revised the original
value, and assessed new values of $33,000 each for the eight villa lots and ranges from $35,000 to
$47,500 each for the sixty-seven other patio and garden lots.
6. The Charleston County Board of Assessment Appeals, on January 5, 1995, determined
that the eight villa lots should be valued at $18,000 each and the sixty-seven other various lots should
be valued at $25,000 each. The Board was persuaded by the appraisal performed by Charles F.
Middleton of Atlantic Appraisals (Middleton appraisal), commissioned by the taxpayer, and found
that, based on ample comparable sales, these values were correct.
7. Applying both the market sales and cost approaches, the assessor conducted a physical
inspection of the property; reviewed the appraisal submitted by the taxpayer, sales information
provided to prospective purchasers, and information exchanged by the taxpayer to determine the fair
market value of the taxpayer's property.
8. The assessor used data on comparable sales of improved lots within the subdivision
to determine the value of the unimproved lots. Lot value was determined by calculating a building
value and then deducting the building value from the total value. The ratio of land to total value
ranged from 32-38%, approximately the same ratio determined by the taxpayer's appraiser.
9. Further, the assessor confirmed the value by using the price list for construction in
which the building costs were broken out. The ratio of land to total value from this data is 30-37%.
10. The taxpayer presented the Middleton appraisal to support of his value of $18,000
each for the villa lots and $25,000 each for the various patio and garden lots.
11. The Middleton appraisal estimated the market value of the subject property based
upon the best and worst case scenarios. The best case scenario assumes the original target market
is sufficient to complete absorption of The Elms at the current level of pricing. This model uses
comparable sales within the development since there are no competing subdivisions that command
the lot prices exhibited in The Elms. The worst case scenario assumes that the original development
theme is abandoned and that the lot prices are fixed by nearby competition. This requires a shift in
the target market resulting in open competition for lots among several subdivisions.
12. Under the worse case scenario, market sales in six comparable competing subdivisions
were used to determine the value of the subject lots. These sales ranged from $11,000 to $24,000.
One sale was over $31,000. Based upon the analysis of the sales, the subdivision with lots selling for
$11,000 was considered inferior to The Elms.
13. A value of $25,000 was selected for the patio and garden lots. The villa lots were
smaller than the lots in the comparable sales; therefore, an adjustment was made decreasing the value
by 25%, arriving at an indicated value of $18,000.
14. The market value of the subject lots under the best case scenario is determined by
using sales within The Elms. Sales of lots within the subdivision are an average of 38% higher than
the surrounding subdivisions. Based upon these sales, patio and garden lots are valued at $47,500
and villa lots are valued at $34,000.
15. Placing a lower value on the unimproved lots within the Elms would create inequities
in the assessed value of improved lots in the subdivision.
16. As of December 31, 1992, there were no changes in the target market for sales and
sales data demonstrated that sales were occurring within the development. Sales have continued into
1994 and 1995.
17. There is no evidence to support a lower market value within the Elms. There is no
evidence that property had to be discounted or reduced to achieve sales within the subdivision.
18. No evidence was presented to support the values placed on the 67 patio and garden
lots in the Assessor's Addendum "AA." There is evidence from which a value can be derived for
these lots.
19. The fair market value of the subject property is $33,000 each for the eight villa lots
and $43,000 each for the sixty-seven other lots.
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 (Supp. 1994) authorizes the South Carolina
Administrative Law Judge Division to hear contested cases pursuant to Chapter 23 of Title 1 of the
1976 Code, as amended.
2. S.C. Code Ann. § 12-37-90 (Supp. 1994) grants authority to the South Carolina Tax
Commission to alter values set by the assessor on real property. See S.C. Code Regs. 117-4 (1976).
3. Real property is subject to tax. S.C. Code Ann. § 12-37-210 (Supp. 1995).
4. S.C. Code Ann. § 12-37-930 (Supp. 1995) provides how real property must be valued
as follows:
All real property shall be valued for taxation at its true value
in money which in all cases shall be held to be the price which the
property would bring following reasonable exposure to the market,
where both the seller and buyer are willing, are not acting under
compulsion, and are reasonable well informed as to the uses and
purposes of which it is adapted and for which it is capable of being
used.
5. Fair market value is the measure of true value for taxation purposes. Lindsey v. S.C.
Tax Comm'n, 302 S.C. 504, 397 S.E.2d 95 (1990). There is no valid distinction between market
value for sales purposes and market value for taxation purposes under S.C. Code Ann. § 12-37-910.
S.C. Tax Comm'n v. S.C. Tax Bd. of Review, 287 S.C. 415, 339 S.E.2d 131 (Ct. App. 1985)
6. While not conclusive, market sales of comparable properties present probative
evidence of the fair market value of similar property. 84 C.J.S. Taxation § 411 (1954). Because
there was no evidence showing property within the Elms had to be reduced or discounted for sale,
the market values are the true values for the subdivision.
7. The value of the taxpayer's property is $33,000 each for the eight patio and garden
lots and $43,000 each for the sixty-seven other various lots, based upon the assessor's Addendum
"AA", which is an exhibit attached to the assessor's exchange.
ORDER
Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby
ORDERED that the Charleston County Assessor shall assess the taxpayer's property, The
Elms of Charleston, identified as PID# 486-01-00-(Various 75 lots) for the tax year 1993 at $33,000
each for the eight patio and garden lots and $43,000 each for the sixty-seven other various lots.
AND IT IS SO ORDERED.
_______________________________
ALISON RENEE LEE
Administrative Law Judge
March ____, 1996
Columbia, South Carolina. |