SC Administrative Law Court Decisions

STATEMENT OF THE CASE

These matters are consolidated contested cases brought by Kiawah Resort Associates, L.P. (Petitioner) against the Charleston County Assessor (Assessor) concerning the correct valuation of various parcels of real property on Kiawah Island for ad valorem property taxes for tax year 1993. Petitioner exhausted all prehearing remedies with the Assessor and the Charleston County Board of Assessment Appeals and sought a contested case hearing before the Administrative Law Judge Division (ALJD) pursuant to S.C. Code Ann. §12-60-2540 (Supp. 1995). After notice to the parties, a hearing was conducted on December 6, 1995. After considering the evidence and arguments, I find that the some of the subject properties were assessed at a value that did not adequately reflect the costs of developing the land into residential lots and should be reduced. The remaining properties are valued at their fair market value for ad valorem tax purposes and therefore remain unchanged. Any issues raised in the proceedings or hearing of this case, but not addressed in this Order, are deemed denied. ALJD Rule 29(B).

The issue in this case is the suitable approach by which to determine the valuation of 103 undeveloped tracts of real property on Kiawah Island. Petitioner asserts that the subdivision development approach, taking into account the revenues and expenses of development and the foreseeable absorption period, is the proper valuation method. The Assessor asserts that the market sales approach is the proper valuation method by which to determine a value of the properties for taxation purposes. The Charleston County Board of Assessment Appeals affirmed the Assessor's valuation on all properties, and this review followed.

The 103 properties under appeal consist of two distinguishable groupings. The first grouping consists of 85 individual lots ("lots") that were subject to a conditional plat filed before December 31, 1992. The second grouping involves 18 properties consisting of large tracts of undeveloped land ("tracts"), which had been categorized by the Assessor's office as "residual" property under the previous assessment. For purposes of this discussion, the 18 large tracts will be addressed first. The tracts in question are located throughout the Kiawah Island resort area and along its fringes.

After the Petitioner appealed the Assessor's valuations to the Charleston County Board of Assessment Appeals, the Assessor's office re-evaluated the assessments for the 18 tracts and modified the original assessments. Three of the tracts under appeal, PID#: 207-00-00-014, 207-00-00-015, and 264-01-00-055, had their values increased dramatically in the second assessment. Four tracts, PID#: 264-07-00-096, 264-13-00-131, 265-13-00-003, and 265-16-00-015, were reduced in value by the Assessor. The tracts in dispute are listed below, along with the Assessor's revised values and the Petitioner's proposed values:

Both the Petitioner and the Assessor submitted information on comparable property in the county in support of their proposed valuations. The Assessor submitted a list of comparables based upon recent sales of Kiawah Island property. While some of the sales submitted took place in 1993, they nonetheless serve as a basis for an equitable analysis of the Assessor's valuations. Although the Assessor supplied comparables other than those listed below, the other properties involved sales of land a significant time period after December 31, 1992 and were excluded from both the discussion and the list below.

The Petitioner argues that its comparables are more reflective of the appropriate valuation for the undeveloped residual land on Kiawah Island because the comparables all consist of large tracts of undeveloped land owned on nearby islands in Charleston County. Some of Petitioner's comparables come from residual properties owned by other resorts and expensive subdivisions in Charleston County. The comparables submitted by the Petitioner do not generally support a finding that the Kiawah Island properties have been inequitably assessed. The Petitioner's comparables are all located on islands other than Kiawah, and do not possess the same ready access to beaches, marshlands, rivers, golf courses, and other recreational facilities that properties on Kiawah Island possess. The Assessor's equity comparables are drawn from sales on Kiawah itself, and those properties more closely reflect the fair market value for the subject properties.

KRA also argues that the Assessor's valuations fail to take into account all of the costs associated with developing the subject tracts into marketable residential lots. In addition to the physical costs of development, such as cutting roads, clearing lots, and establishing water and sewer systems, KRA witnesses testified that there were additional costs not considered by the Assessor. KRA witnesses indicated that the partnership spends in excess of one million dollars on marketing the Kiawah Island resort and its lots. Furthermore, KRA maintains a full-time real estate company with a sizable support staff for the purpose of selling lots on the Island and has costs involved in operating the various recreational clubs in the resort.

In support of its contentions regarding the costs of development and the impact on the current value of the property, KRA submitted into evidence an internal pro forma, prepared by Ragin & Associates, that purports to calculate KRA's cash flows through the year 2006. The pro forma was prepared in 1994. At the hearing, KRA's witnesses testified that the pro forma was predicated on the assumption that the project would sell all its remaining properties over the next fourteen years. The pro forma's calculations began with a multiplier representing an adjustment for inflation of four percent each year. KRA's yearly revenues are also calculated, based upon projected sales of the remaining undeveloped lots, minus the costs associated with operating the Kiawah Island Real Estate Company.

The pro forma then lists out KRA's projected expenses over the next fourteen years, including land development costs, taxes, administrative costs, marketing costs, amenity development, and amenity operations. The present value of KRA's cash flow is then calculated, using an estimated 17.5 percent interest rate. The Assessor's appraiser testified that the estimated interest rate is probably excessive. The pro forma then divides the present value of KRA's cash flow by the total undeveloped acreage, giving a value of $16,574 per acre. KRA used this value in determining that its properties should be valued at a flat $15,000 per acre. This tribunal will not rule as to the validity of KRA's pro forma, but must consider the fact that this document contains numerous assumptions by the Petitioner. Factors such as inflation or the prevailing interest rates are beyond the ability of anyone to accurately predict, and the amount of acreage to be sold in any given year is at KRA's discretion. This tribunal is bound to follow the directives of S.C. Code Ann. §12-37-930 (Supp. 1996), which states that:

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.

A thorough review of the evidence in this case indicates that the pro forma calculations, however informative, do not necessarily reflect the "true value" of KRA's undeveloped properties.

"Development cost is the cost to create a property, including the land, and bring it to an efficient operating state, as distinguished from the cost to construct the improvements." The Appraisal of Real Estate, Appraisal Institute, p. 17 (Tenth Edition, 1992). Marketing costs do not represent costs needed to create a property, or to bring one to "an efficient operating state." Therefore, costs for marketing and other non-physical development costs such as maintaining a real estate office or operating resort clubs are not costs that an Assessor should consider in valuing property. While these costs do reflect additional investments on the part of the owners, they are more properly categorized as the ordinary and necessary business expenses incurred in running a resort community. As a general rule, the State does not have an interest in subsidizing special costs associated with developing real estate. KRA already derives a direct benefit from these special costs, namely, the fact that their property can be sold to consumers at extremely high prices for a substantial profit. Requiring assessors to factor in such costs would allow KRA to make a larger profit at the expense of all other taxpayers.

As a practical matter, it would be difficult for the Assessor to factor in non-physical development costs in valuing property. Each resort, subdivision, or other large-scale residential development would have drastically different outlays for expenses such as marketing or staff salaries. In addition, many real estate owners and developers contract out the marketing and sales of their properties to outside companies. These outside companies bear the cost of marketing and sales in exchange for a fee or commission with each sale. In most instances, developers who lack the expertise, financial resources, or desire to handle their own marketing and sales would be at a distinct disadvantage for purposes of property taxation. The fact that KRA has elected to carry those costs itself implies that it preferred not to share the profits from property sales with outside companies. As a result, KRA cannot reasonably expect the State to subsidize marketing costs with taxpayer funds.

The Petitioner contends that the tracts should be valued as a single piece of property, rather than individual parcels. While there are certain tracts consisting of hundreds of acres, the vast majority of the eighteen properties consist of separate parcels, with varying acreages, and are not contiguous with one another. Furthermore, the tracts have different uses, as some of the tracts are more suitable for commercial development, some for construction of recreational amenities, and some for residential development. It is more appropriate to value each tract individually, taking into account its unique characteristics. In analyzing the Assessor's valuations of the eighteen tracts, the valuations of three tracts, PID#: 207-00-00-015, 265-13-00-003, and 265-16-00-015, do not appear to consider the unique characteristics and special problems associated with development of the property. Accordingly, the value of these tracts should be adjusted as discussed below.

East End Residual, PID# 207-00-00-015

The largest tract under appeal is the parcel referred to as the "East End Residual" (East End). This tract consists of several small islands and long, finger-like peninsulas extending from the eastern end of Kiawah Island, including Squirrel Neck, Myrtle Point, Raccoon Neck, Three Loons Island, Cormorant Island, Eagle Point, and Little Bear Island. Most of this land is unplatted. While some of the islands are connected by bridge to Kiawah Island, this area has no utilities or major road systems and is essentially undeveloped land. The Petitioner alleges that this land should be valued at $15,000 per acre, while the Assessor set a base value of $50,000 per acre, subject to modifications. The Assessor's appraiser testified that the higher costs of developing these properties, located a great distance away from the heart of the Kiawah Island resort, were factored into the valuation by means of a percentage discount for all the property. The discount ran from twenty-five to thirty-five percent, depending on whether the land was an island or a peninsula. However, the Assessor still used the same base value for this tract as it had for all the other undeveloped tracts on Kiawah Island. Using the same base value for the East End tract was erroneous.

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). In this instance, the Assessor has failed to properly consider the condition, location, and quality of the land. While it is true that this land can eventually be used for residential resort property, its present state makes rapid development impossible. It will take considerable time and involve considerable expense for either KRA or an outside developer to bring the East End lots to market as resort property. In the original 1993 reassessment, the Assessor's office determined that the value of the East End tract was $9,067,000, or $19,845 per developable acre. The Assessor's witnesses did not provide a sufficient explanation as to why the original computer-assisted mass appraisal value had to be increased by over $11,000,000. The original estimate by the Assessor's office is in accord with the Petitioner's equity comparables and more properly reflects the actual present value of the East End tract. The East End residual tract will be valued at $9,067,000 for the 1993 tax year.

Flyway Drive, PID# 265-13-00-003

The tract located at an intersection on Flyway Drive has characteristics that were not adequately considered by the Assessor in valuing the parcel. The property consists of 0.47 acres, which the Assessor valued at $29,400. The property is adjacent to a pond and located at the end of a golf course fairway. Mr. Robert Ragin, a witness for the Petitioner, testified that the property is used for maintenance of the island's water and sewer systems, and is not suitable for residential development. A sewer pump station and an electrical station are located on the parcel. Since the Assessor based the parcel's valuation on the assumption that it could be developed for residential purposes, the need to keep the land vacant for maintenance reasons requires an adjustment in the property's valuation. The "highest and best use" of land must, among other requirements, be physically possible and appropriately supported. The Appraisal of Real Estate, Appraisal Institute, p. 45 (Tenth Ed., 1992). Given the characteristics and present function of the property, the Petitioner has adequately demonstrated that the property should be valued at $7100 for the 1993 tax year.

Tract on Ocean Course Drive, PID# 265-16-00-015

The tract on Ocean Course Drive consists of 1.09 acres in a narrow strip along Bass Creek. The site contains a nature observation deck and parking area. The Assessor valued the tract at $195,000. Mr. Ragin testified that this parcel is not a buildable lot because of its odd shape. As with the tract on Flyway Drive, the Assessor failed to take the characteristics of the land into account in valuing the property. If residential development is not physically possible, then the tract should not be valued as expensive residential resort property. The appropriate value for the property is $16,000 for tax year 1993.

Bass Pond, PID# 207-00-00-014

The Petitioner particularly disputed the Bass Pond area's valuation as excessive. Bass Pond is a 369.1 acre tract centrally located on Kiawah Island. The tract has 270.62 acres of developable land. In the first 1993 assessment, the tract was valued at $4,998,000. Following the Petitioner's appeal, the Assessor re-evaluated the tract and increased the assessment to $7,113,200. At the hearing before this tribunal, the Assessor's appraiser indicated that the increase was due to an error in the original assessment, in that the original assessment failed to take into account some of the marshland and water access influences on the property, as was done on other property. Based on the testimony of the Assessor's witnesses, the original assessment was made in error, and the Assessor's office took reasonable steps to correct the valuation. More importantly, an analysis of the comparables submitted by both sides indicates that a valuation of approximately $26,000 per acre is not an inequitable value for the Bass Pond tract.

Remaining Tracts

The Petitioner has failed to demonstrate that the remaining fourteen tracts (not heretofore discussed) have not been equitably assessed. The Petitioner has also failed to prove that the fair market value of these properties was lower than the Assessor's valuations. While these remaining parcels are located in different areas on the island and have different characteristics, they all share certain commonalities. First, the properties are all located close to existing residential and resort developments. Second, the properties have relatively easy access to water, sewer, electrical, and other utility services. Finally, the parcels are all located on or near existing roadways, and would not face the same logistical difficulties as the properties on the East End residual.

An Assessor's valuation is presumed correct, and the burden is on the property owner to disprove the Assessor's determination. 84 C.J.S. Taxation § 410 (1954). One method of showing that the Assessor's valuation is incorrect is to show the actual value of the property. Cloyd v. Mabry, 367 S.E.2d 171 (Ct. App. 1988). The Petitioner offered no testimony indicating that there were inherent characteristics of these lots that would make residential development impossible. The appraisals of the land take into account each property's access to water, marshland, recreational areas, and other influences on property values. Unlike the case of the East End properties, KRA or another developer would not have to incur extraordinary expenses in developing any of these remaining tracts. The Assessor's comparables also indicate that the fair market value of these properties after subdivision and development are substantially higher than the assessed values, an indication that the assessment took development costs into account.

Valuation of the 85 subdivided parcels

The second set of parcels under appeal include eighty-five lots which, on December 31, 1992, had been conditionally platted for development and assigned separate PID numbers by the Assessor's office. The Petitioner alleges that the Assessor's use of the land segmentation approach in valuing these properties was improper and led to an unacceptably high valuation for each individual lot. KRA believes that the properties should, along with the eighteen parcels discussed earlier, be valued as one single tract, representing the residual property of Kiawah Island. However, as discussed above, there is no logic in assessing the properties as one large parcel. A cursory examination of a map reveals that these properties are located all over Kiawah Island, with different influences and degrees of access. A more rational valuation approach would look at the individual properties and factor in the costs of developing the land.

Ordinarily, a taxpayer proves that the Assessor's valuation is incorrect by showing the actual value of the property. Cloyd v. Mabry, supra. In this case, the Assessor's comparables clearly suggest that if anything, the assessed values are significantly lower than the fair market value of these properties. Furthermore, the Assessor's office did take development costs into account in determining the value of the property, as evidenced by the documents submitted in the Assessor's exchange. The valuation of these eighty-five properties represents a reasonable and equitable valuation.

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. In 1993, Charleston County engaged in a county wide reassessment of the properties located in the county.

4. Petitioner is the owner of 103 properties on Kiawah Island, in Charleston County, South Carolina.

5. Kiawah Island is a planned development district subject to a master development plan implemented by the County and by Kiawah Island Company.

6. The 103 properties consisted of 85 individual lots ("lots") that were subject to a conditional plat filed before December 31, 1992. The remaining 18 properties consisted of large tracts of undeveloped land ("tracts"), which had been categorized by the Assessor's office as "residual" property in the previous assessment. The tracts in question are located throughout the Kiawah Island Resort Area and along its fringes, identified in the chart on page 3 of this Order. 7. A limited number of market sales involving individual parcels of the property have taken place on Kiawah Island.

8. After the Petitioner appealed the Assessor's valuations to the Charleston County Board of Assessment Appeals, the Assessor's office re-evaluated the assessments for the 18 tracts and modified the original assessments. Three of the tracts under appeal had their values increased dramatically in the second assessment, and four tracts were reduced in value.

9. Both the Petitioner and the Assessor submitted equity comparables in support of their proposed valuations. The Petitioner's equity comparables are summarized in the table below:

10. The Assessor also submitted a list of comparables based upon recent sales of Kiawah Island property. Some of the sales took place after the December 31, 1992 tax date. Although one comparable listed below includes three sales from the early months of 1993, all other comparables that included sales occurring in 1993 and 1994 were excluded from consideration, based upon the time the property was sold. The Assessor's submissions are as follows:

11. The Assessor's equity comparables are drawn from sales on Kiawah Island itself, and are derived from the sale of undeveloped property to outside developers and KRA property which was developed and resold as lots between 1991-1993. The values for the first two comparables reflect the sales price after development.

12. Sales of Kiawah Island property more accurately reflect the actual value of Kiawah Island property because of the access to amenities and Kiawah's reputation as a world-class resort.

13. The Petitioner submitted a pro forma that contains calculations of the present value of KRA's undeveloped acreage. Based upon these calculations, KRA determined a per acre value for the undeveloped property.

14. The pro forma's calculations are based, in part, on KRA choosing to sell only limited amounts of property each year for the next fourteen years. However, nothing prevents KRA from selling a greater or lesser number of properties each year.

15. Development costs for marketing, resort operations, and maintaining a real estate office need not be considered by the Assessor's office in valuing property for ad valorem tax purposes. The expenses associated with these costs are offset by increased profits from the sale of high-value property, and do not have to be further subsidized by the state.

16. The 103 properties are dispersed throughout Kiawah Island, have different uses, and are not contiguous with one another. These parcels do not have to be assessed as a single tract of land. The Assessor acted properly in valuing each property individually.

17. The East End Residual tract, PID# 207-00-00-015, was originally assessed at $9,067,000 for the entire 1,407.49 acres, with 456.41 acres of developable land. This property is mostly isolated undeveloped land with no utilities or infrastructure for roads and bridges. For all practical purposes, the bulk of the property is inaccessible for development.

18. The Assessor subsequently increased the assessment to $20,343,500 for the tract. This value was excessive, given the substantial costs involved in developing the property and building infrastructure. The original assessment of $9,067,000 for 1,407.49 acres or $19,845 per developable acre is a fair reflection of the East End property's market value. The tract should be valued at $9,067,000 for the 1993 tax year.

19. The Flyway Drive parcel, PID# 265-13-00-003, was valued at $29,400 by the Assessor. The property consists of 0.49 acres.

20. The Flyway Drive property includes a sewer pump station, an electrical station, and is used to access part of the island's water and sewer system, making residential development impossible. The highest and best use of this property is not residential.

21. Because the Flyway Drive property is not buildable as residential property, the appropriate valuation is $7,100 for the 1993 tax year.

22. The Ocean Course Drive property, PID# 265-16-00-015, consists of a narrow, 1.09 acre strip running alongside a creek. The site contains a nature observation deck and parking area. The odd shape of the parcel makes residential development impracticable.

23. The assessed value of $195,000 was excessive. The appropriate valuation for the Ocean Course Drive lot is $16,000 for tax year 1993.

24. The Bass Pond tract, PID# 207-00-00-014, consists of 369.01 acres located in the center of Kiawah Island. The tract contains a pond and several areas of marshland. The Assessor valued the property at $7,113,000.

25. The Assessor increased the valuation for the Bass Pond tract because the original assessed value was erroneous. The $7,113,000 valuation is the correct value for the property.

26. The remaining fourteen tracts have relatively easy access to utility connections and roads. These properties are surrounded by developed properties with access to interstates and amenities. Because these tracts would not require extensive site preparation, developers would not incur as great an expense in developing such lots for residential or commercial use.

27. The Assessor's valuations for the remaining fourteen tracts took into account the costs of developing the lots into end-user marketable properties. An analysis of the Assessor's equity comparables indicates that the properties are assessed well below their fair market value.

28. Mingo Point, PID# 207-00-00-009, is an 11.25 acre tract located on the western end of Kiawah Island. The tract was assessed at $1,372,000 for tax year 1993. The property is currently used as a picnic shelter.

29. Plat Reference BU141, PID# 207-00-00-016, is a 7.51 acre tract located on Ocean Course Drive. The Assessor valued the property at $396,000 for tax year 1993.

30. The Linds Course Access tract, PID# 207-00-00-025, is a 23.26 acre tract located on Ocean Course Drive and Governor's Drive. The Assessor valued the property at $1,238,000 for tax year 1993. The tract is on the eastern end of Kiawah Island, past the second private security gate.

31. Plat Reference CD-133, PID# 207-04-00-103, is a 2.39 acre tract located on Sora Rail Road. The tract is directly behind the Kiawah Island Fire Station and is across the street from the water and sewer plant. The Assessor valued the property as commercial development land at $120,000 for tax year 1993.

32. Plat Reference AS-85, PID# 207-05-00-115, is a 2.07 acre tract located on Beachwalker Drive. The tract adjoins the parking lot for Beachwalker Park, and is also referred to as the Employee Facility Tract. The Assessor valued the property at $725,000 for tax year 1993.

33. Plat Reference CG-70, PID# 207-05-00-117, is a 7.81 acre tract located on Beachwalker Drive. There are numerous subdivisions located around the tract, which is outside of the Kiawah Island Resort security gate. The Assessor valued the property at $390,000 for tax year 1993.

34. Plat Reference BS-60, PID# 207-05-00-118, is a 16.09 acre tract located on Beachwalker Drive. The lot has 13.52 acres of developable land, and includes oceanfront property. The Assessor valued the property at $2,032,000 for tax year 1993.

35. The Utility Tract, PID# 209-01-00-0119, is a 17.03 acre tract located on Sora Rail Road. The tract adjoins the Kiawah Island water and sewer plant, and was appraised as commercial property. The Assessor valued the property at $589,000 for tax year 1993.

36. Plat Reference AR-58, PID# 264-01-00-055, is a 13.16 acre tract located on Governor's Drive and the Kiawah Island Parkway. The tract includes a significant amount of marshland frontage. The Assessor valued the property at $907,000 for tax year 1993.

37. The property described as part of Tract 24, PID# 264-05-00-001, is a 33.22 acre tract located in the center of Kiawah Island. The tract is bounded by Governor's Drive, Kiawah Island Parkway, Green Dolphin Way, and Turtle Point Lane. The tract adjoins the Turtle Point golf course. The Assessor valued the property at $1,412,000 for tax year 1993.

38. Plat Reference BS-61, PID# 264-07-00-167, is a 2.9 acre tract located on Green Dolphin Way. The tract is located near the center of Kiawah Island, next to the site designated for the construction of a resort hotel. The Assessor valued the property at $181,000 for tax year 1993.

39. Plat Reference BS-56, PID# 264-07-00-096, is a 17.37 acre tract located on Governor's Drive. The tract includes the historic Vanderhorst House, and has only 14.63 developable acres. The Assessor valued the property at $1,206,400 for tax year 1993.

40. The parcel located on Ocean Green Drive, PID# 264-13-00-131, is a 6.04 acre tract designated for future development. The tract is centrally located on Kiawah Island and adjoins already developed property. The Assessor valued the property $928,000 for tax year 1993.

41. The property described as residual property, PID# 265-05-00-063, is an 8.87 acre tract located near Marsh Elder Court. The property is presently accessible by Marsh Cove Road, which did not exist until after the December 31, 1992 tax control date. The property is situated on the eastern end of the Kiawah Island Resort, in the midst of extensive residential development. The Assessor valued the property at $1,072,000 for tax year 1993.

42. The fourteen undeveloped tracts listed above were fairly and equitably valued by the Assessor's office based upon fair market value.

43. The eighty-five parcels that had been platted by December 31, 1992 were undeveloped on that date. Neither party disputed that the properties had no improvements on December 31, 1992.

44. After the Petitioner appealed the original assessments for these properties, the Assessor re-evaluated the assessments, and changed the valuations to take into account the cost for developing the properties.

45. The Assessor's revised valuations of the eighty-five lots are fair and equitable.

46. The Petitioner has failed to prove that the Assessor's valuation of these eighty-five lots was incorrect.

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

1. The ALJD has personal and subject matter jurisdiction in this matter.

2. S.C. Code Ann. §12-60-2540 (Supp. 1995) authorizes the South Carolina Administrative Law Judge Division to hear contested cases in property tax assessment matters pursuant to Chapter 23 of Title I, as amended.

3. The proper measure of value for taxation purposes is the fair market value. Lindsey v. S.C. Tax Commission, 302 S.C. 504, 397 S.E.2d 95 (1990), 84 C.J.S. Taxation § 411. 4. Fair market value is defined in S.C. Code §12-37-930 (Supp. 1995) as:

...the price which the property would bring following reasonable exposure to the market, where both the seller and the buyer are willing, are not 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.

5. An Assessor's valuation is presumed correct, and the burden is on the property owner to disprove the Assessor's determination. 84 C.J.S. Taxation § 410 (1954).

6. In this case, the Petitioner has the burden of showing that the valuation of the taxing authority is incorrect. Ordinarily this is done by showing the actual value of the property. Cloyd v. Mabry, 295 S.C. 86, 367 S.E.2d 171 (Ct.App. 1988).

7. 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).

8. A property's highest and best use must be considered in calculating the property's value. "Highest and best use" may be defined as:

The reasonably probable and legal use of vacant land or improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value.

The Appraisal of Real Estate, Appraisal Institute, p. 45 (Tenth Edition, 1992).

9. "Development cost is the cost to create a property, including the land, and bring it to an efficient operating state, as distinguished from the cost to construct the improvements." The Appraisal of Real Estate, Appraisal Institute, p. 17 (Tenth Edition, 1992). Marketing costs do not represent costs needed to create a property, or to bring one to "an efficient operating state."

10. To determine a fair market price for the subject property, comparisons of the sale price of other properties of the same character may be utilized. See Cloyd v. Mabry, supra; 84 C.J.S. Taxation §§ 410- 411 at 785, 797 (1954).

11. Complete equity and uniformity are not practically attainable when valuing property. Wasson v. Mayes, 252 S.C. 497, 167 S.E.2d 304 (1967).

12. Rather, where a county assessor deliberately established a county-wide procedure whereby all property values were based upon their most recent purchase price, an intentional and systematic undervaluation of property was found. Allegheny Pittsburg Coal Co. v. County Comm'n, 488 U.S. 336 (1989).

13. The Petitioner failed to prove that the Assessor's office systematically and intentionally overvalued their property in relation to other properties. In order to obtain relief from inequitable assessments, an aggrieved party must demonstrate a pattern of intentional and systematic discrimination in valuing property. Owen Steel Co., v. S.C. Tax Commission, 287 S.C. 270, 337 S.E.2d 880 (1985); Sunday Lake Sun Co. v. Wakefield Taxpayer, 247 U.S. 350 (1918).

14. The value of the subject parcels for tax year 1993 is set forth below.

Based upon the foregoing Findings of Fact, Discussion, and Conclusions of Law, the Assessor shall value the Petitioner's properties for ad valorem tax purposes for tax year 1993 as follows:

The Eighteen Unplatted Tracts:

The Eighty-Five Platted Lots:

AND IT IS SO ORDERED.

ALISON RENEE LEE

Administrative Law Judge

March 7, 1997

Columbia, South Carolina

1. PID# 264-13-00-133 and 264-06-00-117 consist of parcels subdivided and developed by KRA. The sales figures listed for these two properties are based upon the aggregate sales of all the lots in each parcel. The data for 264-13-00-133 is based in part on three sales occurring in 1993, and estimates for two unsold lots in the parcel. However, the parcel is still sufficient for an equity comparison.