SC Administrative Law Court Decisions

This matter is before the Administrative Law Judge Division ("ALJD") upon a request for a de novo contested case hearing, pursuant to S.C. Code Ann. § 12-60-2540(A) (Supp. 1995), by the Charleston County Assessor ("Assessor") following a decision of the Charleston County Board of Assessment Appeals ("Board") involving the 1994 assessed value of a 4.16 acre parcel in Charleston County, TMS # 559-10-00-009, owned by KJB Investment Corporation ("KJB"). The Assessor initially assessed the property at $744,000. He now contends that the property's fair market value for tax year 1994 is $1,123,000. The Board found the value of the subject property to be $630,000. KJB maintains that the Board's valuation is correct. A hearing was held on June 24, 1996, at the Charleston County Judicial Center. Based upon the relevant evidence and applicable law, I find the fair market value of the subject property for tax year 1994, to be $801,464.

DISCUSSION

Both parties presented expert evidence of the value of the subject property. Each of the appraisals used the direct sales comparison approach, utilizing recent sales information of comparable properties in Charleston County. Of the nine total comparable sales presented, only one was common to both appraisals.

The Subject Property

The subject property, TMS #559-10-00-009, is an unimproved 4.16 acre commercial lot owned by KJB. It is located in Charleston County in Mount Pleasant on U.S. Highway 17 North,

at the northeast corner of the junction of U.S. Highway 17 and Interstate 526 ("I-526"), commonly known as the Mark Clark Expressway. Although the subject property has frontage on and visibility from both Mark Clark Expressway and Highway 17, the only direct road access to either thoroughfare is via Woodland Avenue, a 550' unimproved dead-end road which intersects with Highway 17 at a point approximately 300' to 450' north of the Highway 17-Mark Clark Expressway intersection.

The highest and best use of the subject property is some type of commercial development which would benefit from the visibility and traffic along Highway 17, but which would not result in high traffic volume entering and exiting the subject property. Subdivision of the subject property is not probable. Based upon the following comparable sales, as adjusted to accurately reflect significant variations between the comparable and the subject property, the subject property's fair market value for tax year 1994 is estimated to be approximately $192,700 per acre for a total valuation of $801,464.

Assessor's Comparables

Linda Burnett, senior appraiser for the Assessor's office, examined the subject property and four comparables to conclude that the subject property's fair market value is $272,00 per acre, for a total of $1,123,000.

Assessor's Comp 1, (Charleston County TMS #559-00-00-061) located at Mathis Ferry Road and Highway 17 North, approximately .3 miles from the subject property, is a three-acre tract improved with an old supermarket. The structure is to be demolished and replaced with a Rite-Aid Drug Store. Comp 1 sold for $960,000 on February 22, 1995. It is the only comparable used by both the Assessor and KJB (identified as "Sale No. L-4" in the Attaway Appraisal, admitted as Respondent's Ex. #3). Both made downward adjustments for size and access. The assessor made a +5% adjustment for site/view; however, KJB's appraiser made a -20% adjustment for location. KJB's appraiser testified that site and view were considered as components of location. Burnett's -15% net adjustment to the sale of TMS #559-00-00-061 includes no adjustments for location or access.

The sale of TMS #559-00-00-061, if adjusted -10% for location (which includes site/view), -10% for size, and -10% for access (for a total adjustment of -30%), is a reasonable indicator of value of the subject property, indicating the subject property's value to be $190,400 per acre, or $792,064. See the table below:

TMS #559-00-00-061

Assessor's comparable #2, TMS #559-10-00-021, is a Ryan's steakhouse located on Highway 17 North, approximately .3 miles from the subject property. It is a reasonable indicator of value of the subject property and indicates subject property's value to be $198,000 per acre or $823,000.

Assessor's comparable #3, TMS #559-10-00-023, is a feed and seed store located across Woodland Avenue from the subject property. The sale is a reasonable indicator of value of the subject property, but Burnett's adjusted value is not persuasive. The subject property and TMS

#559-10-00-023 share access onto Woodland Avenue, but TMS #559-10-00-023 also has a curb cut on Highway 17. Burnett's -20% net adjustment fails to consider the comparable's Highway 17 direct access. Comp. #3 must be adjusted to reasonably weigh the comparable's similarlocation/site/view and superior access onto Highway 17. The sale of TMS #559-10-00-023, if adjusted +10% for location (which includes site/view), -35% for size, and -15% for access

(for a total adjustment of -40%), is a reasonable indicator of value of the subject property, indicating the subject property's value to be $205,200 per acre, or $853,632.

Assessor's comparable #4, TMS #558-00-00-358, a NationsBank branch bank located on Highway 17 North approximately 1.3 miles from the subject property, is not a reasonable indicator of value of the subject property.

KJB's Comparables

Stephen C. Attaway, MAI, of Attaway Thompson & Associates, Inc, a private appraiser retained by KJB, examined the subject property and five comparables to conclude that the subject property's fair market value is $165,000 per acre, for a total of $686,400, less the $56,000 cost of improvement of Woodland Avenue, for an adjusted total of $630,000.

KJB's comparable L-1, TMS #535-00-00245, a Chick-Fil-A restaurant, is not a reasonable indicator of value of the subject property, as it is an outparcel to Queensborough Shopping Center with far superior access and location than the subject property and requires a net adjustment of -60%.

KJB's comparable L-2, TMS #559-00-00-001, an appliance store east of Wando Crossing Shopping Center on Highway 17 North, is a reasonable indicator of value of the subject property and indicates the subject property's value to be $177,202 per acre, or $737,160.

KJB's comparable L-3, TMS #350-05-00-047, a site to be developed as a Holiday Inn Express on Highway 17 South, is not a reasonable indicator of value of the subject property, as it is located West of the Ashley and lacks proximity to the subject property.

KJB's comparable L-4, TMS #559-00-00-06, is the same sale as Assessor's comparable #1 and is discussed above. Attaway's net adjustment of -50% to the sale price of TMS

#559-00-00-06 overstates the negative adjustment necessary for comparison to the subject property.

KJB's comparable L-5, TMS #559-14-00-038 and -050 is an Applebee's restaurant located at the entrance of Wando Crossing Shopping Center. It is not a reasonable indicator of value of the subject property, as it is a shopping center outparcel and requires a net adjustment of -55%.

Comparables Used By the Court

The following sales, adjusted as indicated, form the basis for the Court's valuation of the subject property:

Cost of Paving Woodland Avenue

KJB's appraiser calculated the value of the subject property utilizing the sales comparison method of valuation. After deriving a valuation, however, Attaway subtracted a lump sum adjustment from the estimated value of the subject property to take into consideration that Woodland Avenue would need to be paved before the property could be put to commercial use.

Although all comparables presented have direct access to a paved road, no such adjustment should be made. It will cost approximately $56,000 to pave Woodland Avenue. The need for and cost of paving should be factored into the superior or more favorable aspects of the comparables' access. Under a direct sales comparison appraisal approach, the lack of paved access to the subject property should be factored as a downward adjustment to comparables with paved access. All of the comparables used by the court have a negative adjustment for access. Those adjustments adequately address the subject property's deficient access. To subtract the estimated cost of paving from the appraised value of the subject property mixes a comparative sales valuation method with a cost approach. It cannot be assumed that KJB will necessarily bear any or all of the financial burden of paving Woodland Avenue.

FINDINGS OF FACT

1. The subject property is an unimproved commercial lot owned by KJB.
2. The subject property was acquired by KJB, along with other nearby parcels of real property, on December 24, 1993, by deed recorded in Book X236, at Page 340, in the Charleston County RMC Office. The total consideration was $2,750,000.
3. Because the subject property was one of several tracts purchased in one transaction, the individual purchase price of the subject property is not distinguishable.
4. The subject property, TMS #559-10-00-009, is a 4.16 acre irregular shaped parcel in Charleston County in Mount Pleasant on U.S. Highway 17 North, known as Tract B.
5. As part of a county-wide program, the subject property was reassessed by the Assessor's Office for the 1993 tax year at $744,000.
6. The Assessor's valuation of the subject property remained at $744,000 for tax year 1994.
7. KJB requested and received review of the 1994 tax year assessment by the Assessor's office and the Charleston County Board of Assessment Appeals.
8. Following a conference on November 9, 1994, between KJB and Linda M. Burnett of the Assessor's office, the Assessor's valuation remained unchanged.
9. Following a conference on November 12, 1995, the Charleston County Board of Assessment Appeals valued the subject property at $630,000.
10. By notice and request filed November 29, 1995, Assessor requested a contested case hearing before the Administrative Law Judge Division.
11. A contested case hearing was held at the Charleston County Judicial Center on June 24, 1996.
12. The subject property is located at the northeast corner of the junction of U.S. Highway 17 and Interstate 526 ("I-526"), commonly known as the Mark Clark Expressway.
13. Although the subject property has frontage on and visibility from both Mark Clark Expressway and Highway 17, it does not have direct road access to either thoroughfare.
14. The only road access to or from the subject property is via Woodland Avenue.
15. Woodland Avenue is a 550' unimproved dead-end road which intersects with Highway 17 at a point approximately 300' to 450' north of the Highway 17-Mark Clark Expressway intersection.
16. The intersection of Woodland Avenue and Highway 17 does not have a traffic signal or turn lanes.
17. It would cost developers approximately $56,000 to pave Woodland Avenue.
18. The need for and cost of paving should be factored into the net adjustments made to comparable sales used for valuation of the subject property.
19. The subject property is zoned for area-wide business and is ideal for commercial development.
20. Because of the limited road access to the subject property, the property is best suited for a project which will result in low-volume traffic.
21. Because of the limited road access to the subject property, subdivision of the subject property is not probable.
22. The highest and best use of the subject property is some type of commercial development which would benefit from the visibility and high traffic volume along Highway 17 but which would not result in high traffic volume entering and exiting the subject property.
23. Based upon a detailed sales comparison approach appraisal performed by Linda M. Burnett of the Assessor's Office subsequent to the initial appraisal performed as part of the county-wide reassessment, the Assessor now asserts that the subject property is valued at $1,123,000.
24. Assessor's comparable #1, TMS #559-00-00-061 (the same sale as Assessor's comparable #1), a 3.0 acre tract on Highway 17 North and Mathis Ferry Road to be developed as a Rite-Aid drug store, is a reasonable indicator of value of the subject property, if adjusted to reasonably weigh the subject property's inferior location and access. Burnett's -15% net adjustment to the sale of TMS #559-00-00-061 includes no adjustments for location or access.
25. The sale of TMS #559-00-00-061, if adjusted -10% for location (which includes site/view), -10% for size, and -10% for access (for a total adjustment of -30%), is a reasonable indicator of value of the subject property, indicating the subject property's value to be $190,400 per acre, or $792,064.
26. Assessor's comparable #2, TMS #559-10-00-021, a Ryan's steakhouse located on Highway 17 North approximately .3 miles from the subject property, is a reasonable indicator of value of the subject property and indicates subject property's value to be $198,000 per acre, or $823,000.
27. Assessor's comparable #3, TMS #559-10-00-023, a feed and seed store located across Woodland Avenue from the subject property, is a reasonable indicator of value of the subject property, if adjusted to reasonably weigh the comparable's similar location/site/view and superior access onto Highway 17. Burnett's -20% net adjustment fails to consider the comparable's curb cut on Highway 17.
28. The sale of TMS #559-10-00-023, if adjusted +10% for location (which includes site/view), -35% for size, and -15% for access (for a total adjustment of -40%), is a reasonable indicator of value of the subject property, indicating the subject property's value to be $205,200 per acre, or $853,632.
29. Assessor's comparable #4, TMS #558-00-00-358, a NationsBank branch bank located on Highway 17 North approximately 1.3 miles from the subject property, is not a reasonable indicator of value of the subject property.
30. KJB's comparable L-1, TMS #535-00-00245, a Chick-Fil-A restaurant, is not a reasonable indicator of value of the subject property because it is an outparcel to Queensborough Shopping Center with far superior access and location than the subjectproperty and requires a net adjustment of -60%.
31. KJB's comparable L-2, TMS #559-00-00-001, an appliance store east of Wando Crossing Shopping Center on Highway 17 North, is a reasonable indicator of value of the subject property and indicates the subject property's value to be $177,202 per acre, or $737,160.
32. KJB's comparable L-3, TMS #350-05-00-047, a site to be developed as a Holiday Inn Express on Highway 17 South, is not a reasonable indicator of value of the subject property because it is located West of the Ashley and lacks proximity to the subject property.
33. KJB's comparable L-4, TMS #559-00-00-061 (the same sale as Assessor's comparable #1), a 3.0 acre tract on Highway 17 North and Mathis Ferry Road to be developed as a Rite-Aid drug store, is a reasonable indicator of value of the subject property, if adjusted to reasonably weigh the subject property's inferior location and access. Attaway's net adjustment of -50% to the sale price of TMS #559-00-00-06 overstates the negative adjustment necessary for comparison to the subject property (see Findings of Fact #24 and #25).
34. KJB's comparable L-5, TMS #559-14-00-038 and -050, an Applebee's restaurant located at the entrance of Wando Crossing Shopping Center, is not a reasonable indicator of value of the subject property because it is an outparcel and requires a net adjustment of -55%.
35. Based upon the following comparable sales, as adjusted to accurately reflect significant variations between the comparable and the subject property, the subject property's fair market value for tax year 1994 is estimated to be approximately $192,700 per acre for a total valuation for tax assessment purposes of $801,464.

CONCLUSIONS OF LAW

1. The Administrative Law Judge Division has jurisdiction over the issues and parties involved in this contested case pursuant to S.C. Code Ann. §§ 1-23-600 and 12-60-2540(A) (Supp. 1995).
2. All real property in the State of South Carolina is subject to taxation, S.C. Code Ann. § 12-37-210 (1995). Taxes are levied in the amount of six percent of the fair market value and must be paid by the individual owning the property. S.C. Const. art. X, § 1 (Supp. 1995); S.C. Code Ann. § 12-37-610 (1995).
3. Under S.C. Code Ann. § 12-37-930 (Supp. 1995), the measure of value for taxation purposes is fair market value. Lindsey v. S.C. Tax Comm'n, 302 S.C. 504, 397 S.E.2d 95 (1990); 84 C.J.S. Taxation § 411 at 791 (1954).
4. Fair market value of a parcel is:
   . . . the price which the property would bring following reasonable exposure to the market, where both the seller and the buyer are willing, are not acting under compulsion, and are reasonably well informed of the uses and purposes for which it is adapted and for which it is capable of being used.
   S.C. Code Ann. § 12-37-930 (Supp. 1995).
5. 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).
6. 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, 295 S.C. 86, 367 S.E.2d 172 (Ct. App. 1988); 84 C.J.S. Taxation §§ 410- 411 at 785, 797 (1954).
7. If there are no comparable sales or recent sales to form a basis of comparison, fair market value may be determined by the testimony of persons acquainted with the property who have knowledge and experience qualifying them to form intelligent judgment as to the proper valuation of the property. See Appeal of Hart, 199 A. 225, 131 Pa. Super. 104 (1938).
8. "Appraisal is, of course, not an exact science and the precise weight to be given to any factor is necessarily a matter of judgment, for the court, in the light of the circumstances reflected by the evidence in the individual case." Santee Oil Co., Inc. v. Cox, 265 S.C. 270, 217 S.E.2d 789 (1975).
9. Where an expert's testimony is based upon facts sufficient to form the basis for an opinion, the trier of fact determines its probative weight. Berkley Elec. Coop. v. S.C. Public Serv. Comm'n, 304 S.C. 15, 402 S.E.2d 674 (1991); Smoak v. Liebherr-Am., Inc., 281 S.C. 420, 422, 315 S.E.2d 116, 118 (1984).
10. A trier of fact is not compelled to accept an expert's testimony, but may give it the weight and credibility he determines it deserves and may accept the testimony of one expert over another. Florence County Dep't of Social Serv. v. Ward, 310 S.C. 69, 425 S.E.2d 61 (1992); Greyhound Lines v. S.C. Public Serv. Comm'n, 274 S.C. 161, 262 S.E.2d 18 (1980); S.C. Cable Tel. Assn. v. Southern Bell Tel. and Tel. Co., 308 S.C. 216, 417 S.E.2d 586 (1992).
11. Faced with divergent testimony from two experts concerning property valuation, the fact finder may adopt a valuation not proposed by either expert, so long as the court's calculation is reasonable in light of the evidence and sufficient to show that the result reached is not opposed to the clear weight and preponderance of the evidence. Santee Oil Co., Inc. v. Cox, 265 S.C. 270, 217 S.E.2d 789 (1975); McDuffie v. O'Neal, (S.C. Court of Appeals Opinion No. 2553; filed August 12, 1996).
12. To determine the value of the subject property, numerous factors have been taken into consideration, including but not limited to: size; location; condition; access; visibility; highest and best use of property; and zoning restrictions. Any one or a combination of these factors have the potential to affect fair market value.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, I find that for tax year 1994 and succeeding years until reassessed, the fair market value of the subject property, Charleston County TMS #559-10-00-009, is $801,464.

AND IT IS SO ORDERED.

_____________________________________

STEPHEN P. BATES

ADMINISTRATIVE LAW JUDGE

Columbia, South Carolina

August 30, 1996