ORDERS:
ORDER
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.
DISCUSSION OF THE ISSUES
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:
PID Number |
Property Description |
Assessor's
1993 Value |
Petitioner's
Value |
207-00-00-009 |
Mingo Point |
$1,372,000 |
$169,000 |
207-00-00-014 |
Bass Pond Area |
$7,113,000 |
$4,059,000 |
207-00-00-015 |
East End Residual |
$20,343,500 |
$6,365,000 |
207-00-00-016 |
Ocean Course Drive/ Plat Ref. BU141 |
$396,000 |
$119,000 |
207-00-00-025 |
Access property to Linds Course Tract |
$1,238,000 |
$349,000 |
207-04-00-103 |
Plat Ref. CD-133/ Fire Station |
$120,000 |
$36,000 |
207-05-00-115 |
Plat Ref. AS-85/Employee Facility Tract |
$725,000 |
$31,000 |
207-05-00-117 |
Plat Ref. CG-70 |
$390,000 |
$117,000 |
207-05-00-118 |
Plat Ref. BS-60 |
$2,032,000 |
$203,000 |
209-01-00-119 |
Utility Tract |
$589,000 |
$319,000 |
264-01-00-055 |
Plat Ref. AR-58 |
$907,000 |
$197,000 |
264-05-00-001 |
Part Tract 24 |
$1,412,000 |
$498,000 |
264-07-00-167 |
Plat Ref. BS-61 |
$181,000 |
$44,000 |
264-07-00-096 |
Plat Ref. BS-56 |
$1,206,400 |
$220,000 |
264-13-00-131 |
Future Development |
$928,000 |
$91,000 |
265-05-00-063 |
Residual |
$1,072,000 |
$133,000 |
265-13-00-003 |
Future Development |
$29,400 |
$7,100 |
265-16-00-015 |
Plat Ref. CG-135 |
$195,000 |
$16,000 |
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.
PID Number |
Year(s) Sold |
Sale Price |
No. of Acres |
Value Per Acre |
264-13-00-133(1) |
1991-1993 |
$6,169,547 |
6.67 |
$924,970 |
264-06-00-117 |
1991-1992 |
$3,794,509 |
2.4 |
$1,581,045 |
264-13-00-131 |
1990 |
$1,500,000 |
8.92 |
$168,161 |
265-13-00-002 |
1989 |
$5,825,000 |
17.09 |
$340,843 |
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.
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. 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:
TMS Number |
Location |
1993 Valuation |
No. of Acres |
Value Per Acre |
204-0-0-107 |
Johns Island |
$60,000 |
12.24 |
$4,902 |
204-0-0-112 |
Johns Island |
$673,000 |
81.43 |
$8,265 |
205-0-0-002 |
Johns Island |
$5,035,000 |
713.49 |
$7,057 |
205-0-0-003 |
Johns Island |
$275,000 |
23.8 |
$11,555 |
540-0-0-009 |
Mt. Pleasant |
$13,609,000 |
2268.2 |
$6,000 |
598-0-0-002 |
Mt. Pleasant |
$1,958,000 |
326.84 |
$5,991 |
580-0-0-058 |
Mt. Pleasant |
$4,672,000 |
619.35 |
$7,543 |
580-0-0-033 |
Mt. Pleasant |
$3,253,000 |
301.94 |
$10,774 |
580-0-0-087 |
Mt. Pleasant |
$684,000 |
45.62 |
$14,993 |
540-0-0-006 |
Mt. Pleasant |
$1,782,000 |
199.9 |
$8,916 |
540-0-0-005 |
Mt. Pleasant |
$3,864,000 |
409.07 |
$9,446 |
598-0-0-016 |
Mt. Pleasant |
$1,096,000 |
149.14 |
$7,349 |
599-0-0-026 |
Mt. Pleasant |
$868,000 |
52.37 |
$16,574 |
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:
PID Number |
Year(s) Sold |
Sale Price |
No. of Acres |
Value Per Acre |
264-13-00-133 |
1991-1993 |
$6,169,547 |
6.67 |
$924,970 |
264-06-00-117 |
1991-1992 |
$3,794,509 |
2.4 |
$1,581,045 |
264-13-00-131 |
1990 |
$1,500,000 |
8.92 |
$168,161 |
265-13-00-002 |
1989 |
$5,825,000 |
17.09 |
$340,843 |
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.
CONCLUSIONS OF LAW
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.
ORDER
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:
PID Number |
Valuation for 1993
|
207-00-00-009 |
$1,372,000 |
207-00-00-014 |
$7,113,000 |
207-00-00-015 |
$9,067,000 |
207-00-00-016 |
$396,000 |
207-00-00-025 |
$1,238,000 |
207-04-00-103 |
$120,000 |
207-05-00-115 |
$725,000 |
207-05-00-117 |
$390,000 |
207-05-00-118 |
$2,032,000 |
209-01-00-119 |
$589,000 |
264-01-00-055 |
$907,000 |
264-05-00-001 |
$1,412,000 |
264-07-00-167 |
$181,000 |
264-07-00-096 |
$1,206,400 |
264-13-00-131 |
$928,000 |
265-05-00-063 |
$1,072,000 |
265-13-00-003 |
$7,100 |
265-16-00-015 |
$16,000 |
The Eighty-Five Platted Lots:
PID Number |
Valuation for 1993 |
264-12-00-067 |
$65,500 |
264-12-00-068 |
$63,500 |
264-12-00-069 |
$65,500 |
264-12-00-070 |
$70,500 |
264-12-00-071 |
$70,500 |
264-12-00-072 |
$70,500 |
264-12-00-073 |
$65,500 |
264-12-00-074 |
$77,000 |
264-12-00-076 |
$82,000 |
264-12-00-077 |
$68,500 |
264-12-00-078 |
$67,000 |
264-12-00-079 |
$68,500 |
264-12-00-080 |
$67,000 |
264-12-00-081 |
$62,000 |
264-12-00-082 |
$65,500 |
264-12-00-083 |
$65,500 |
264-12-00-084 |
$79,000 |
264-12-00-086 |
$58,500 |
264-12-00-087 |
$62,000 |
264-12-00-088 |
$76,000 |
264-12-00-089 |
$83,000 |
264-12-00-090 |
$81,000 |
264-12-00-091 |
$74,000 |
264-12-00-092 |
$83,000 |
264-12-00-093 |
$104,000 |
264-12-00-094 |
$85,000 |
264-12-00-095 |
$106,000 |
264-12-00-096 |
$87,000 |
264-12-00-097 |
$85,000 |
264-12-00-098 |
$85,000 |
264-12-00-099 |
$68,500 |
264-12-00-100 |
$63,500 |
264-12-00-101 |
$68,500 |
264-12-00-102 |
$58,500 |
264-12-00-103 |
$73,500 |
264-12-00-104 |
$80,000 |
265-05-00-064 |
$118,000 |
265-05-00-086 |
$40,000 |
265-05-00-087 |
$51,500 |
265-05-00-088 |
$34,100 |
265-05-00-089 |
$42,300 |
265-05-00-090 |
$64,500 |
265-05-00-091 |
$44,700 |
265-05-00-092 |
$55,000 |
265-05-00-093 |
$50,500 |
265-05-00-094 |
$47,000 |
265-05-00-095 |
$42,300 |
265-05-00-096 |
$106,000 |
265-05-00-097 |
$63,500 |
265-05-00-098 |
$58,500 |
265-05-00-099 |
$58,500 |
265-05-00-100 |
$58,500 |
265-05-00-101 |
$48,600 |
265-05-00-102 |
$79,000 |
265-05-00-103 |
$16,200 |
265-05-00-104 |
$13,800 |
265-05-00-105 |
$11,700 |
265-05-00-106 |
$9,900 |
265-05-00-108 |
$12,900 |
265-05-00-111 |
$15,600 |
265-05-00-112 |
$92,000 |
265-05-00-113 |
$94,000 |
265-05-00-114 |
$9,600 |
265-05-00-115 |
$77,000 |
265-05-00-116 |
$57,000 |
265-05-00-117 |
$53,500 |
265-05-00-118 |
$50,500 |
265-05-00-119 |
$50,500 |
265-05-00-120 |
$65,500 |
265-05-00-121 |
$65,500 |
265-05-00-122 |
$65,500 |
265-13-00-009 |
$51,500 |
265-13-00-010 |
$50,500 |
265-13-00-011 |
$50,500 |
265-13-00-012 |
$238,000 |
265-13-00-013 |
$219,000 |
265-13-00-014 |
$222,000 |
265-13-00-015 |
$229,000 |
265-13-00-016 |
$232,000 |
265-13-00-017 |
$267,000 |
265-13-00-018 |
$42,300 |
265-13-00-019 |
$43,500 |
265-13-00-020 |
$43,500 |
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. |