ORDERS:
FINAL DECISION
BACKGROUND
This matter is before the Court on appeal from the Charleston County Board of Assessment
Appeals. A contested case hearing was held on August 21, 1996, at the offices of the
Administrative Law Judge Division, Columbia, South Carolina.
The issue in this case is whether a challenge by Bankers First Savings Bank, F.S.B. ("Petitioner")
to an assessment on property was made on a timely basis. The Honorable John Lindsey,
Charleston County Assessor, declined to hear the appeal of the assessment, on the grounds that it
was not timely. Petitioner then sought relief from Charleston County Board of Assessment
Appeals, which likewise ruled that Petitioner's challenge to the assessment was not timely. This
appeal followed.
FINDINGS OF FACT
Having observed the witnesses and exhibits presented at the hearing and closely passed upon their
credibility, taking into consideration the burden of persuasion of the parties, I make the following
findings of fact by a preponderance of evidence:
1. Notice of the date, time, place, and nature of the hearing was timely given to all parties.
2. This contested case concerns certain real property ("Property") located in the City of
Charleston, Charleston County, South Carolina, having tax map numbers 427-00-00-045 and
427-00-00-071, in a development known as Seaside Plantation, James Island, South Carolina.
3. During 1987, Petitioner (then known as Bankers First Savings and Loan Association) was
granted a mortgage on the Property by the then owner, FKS Properties, Inc.
4. In 1988, FKS Properties, Inc. applied to have the Property classified as agricultural for ad
valorem property tax purposes. This application was denied, and October 12, 1988, Charleston
County delivered to FKS Properties, Inc. a real estate assessment notice, indicating the appraised
and assessed value for 1988 on a non-agricultural basis. The notice set forth the following
information:
Class |
No. Bldgs |
Total
Appraised Value |
X |
RATIO |
Total
Assessment |
Roll Back
Assessment
Difference |
TO |
|
412,000 |
|
0.60 |
24,720 |
|
5. On August 18, 1989, Charleston County sent to FKS Properties, Inc. a Notice of Classification
Appraisal & Assessment of Real Estate, relating to tax year 1989, setting forth the following
information:
ASSESSMENT RATIO
CLASSIFICATION |
Bldgs |
Total
Appraised
Value |
X |
Ratio |
= |
Total
Assessment |
OWNER OCCUPIED
RESIDENTIAL |
|
|
|
|
= |
|
OTHER PROPERTY |
|
|
|
|
= |
|
MARKET VALUE -
AGRICULTURAL |
|
412,000
|
|
|
= |
|
USE VALUE -
AGRICULTURAL |
|
2,000 |
|
.040 |
= |
80 |
The notice also contained the following information:
PRIOR MARKET VALUE
WAS 412,000
PERCENT CHANGE
OVER PRIOR MARKET
VALUE
IS: |
6. On application of FKS Properties, Inc., the property was classified and taxed as agricultural
property for the tax year 1990, and continued to be so taxed through tax year 1994.
7. On December 17, 1991, Charleston County sent to FKS Properties, Inc. a Notice of
Classification Appraisal & Assessment of Real Estate, relating to tax year 1991, setting forth the
following information:
ASSESSMENT RATIO
CLASSIFICATION |
Bldgs |
Total
Appraised
Value |
X |
Ratio |
= |
Total
Assessment |
OWNER OCCUPIED
RESIDENTIAL |
|
|
|
|
= |
|
OTHER PROPERTY |
|
|
|
|
= |
|
MARKET VALUE -
AGRICULTURAL |
|
412,000
|
|
|
= |
|
USE VALUE -
AGRICULTURAL |
|
900 |
|
.040 |
= |
40 |
The notice also contained the following information:
PRIOR MARKET VALUE
WAS: 1990
2,000
PERCENT CHANGE
OVER PRIOR MARKET
VALUE
IS: 900
-55 |
8. On June 1, 1993, Charleston County sent to FKS Properties, Inc. a Notice of Classification
Appraisal & Assessment of Real Estate, relating to tax year 1993, setting forth the following
information:
ASSESSMENT RATIO
CLASSIFICATION |
BLDGS |
MARKET
VALUE |
X |
RATIO |
= |
ASSESSMENT |
OWNER OCCUPIED
RESIDENTIAL |
|
|
|
|
= |
|
OTHER PROPERTY |
|
|
|
|
= |
|
MARKET VALUE -
AGRICULTURAL |
|
650,000
|
|
|
= |
|
USE VALUE -
AGRICULTURAL |
|
900 |
|
.040 |
= |
40 |
The notice also contained the following information:
PRIOR MARKET VALUE
IN 1992
WAS 900
THE TOTAL MARKET VALUE
ESTIMATE
IS 900
THE PERCENT CHANGE
OVER PRIOR
MARKET VALUE IS: 0 |
9. On November 9, 1995, Charleston County sent to Petitioner a Notice of Classification
Appraisal & Assessment of Real Estate, setting forth the following information:
ASSESSMENT RATIO
CLASSIFICATION |
BLDGS |
MARKET
VALUE |
X |
RATIO |
= |
ASSESSMENT |
OWNER OCCUPIED
RESIDENTIAL |
|
|
|
|
= |
|
OTHER PROPERTY |
|
|
|
|
= |
|
MARKET VALUE -
AGRICULTURAL |
|
650,000
|
|
.060 |
= |
39,000 |
USE VALUE - AGRICULTURAL |
|
|
|
|
= |
|
TOTAL ASSESSMENT |
= |
39,000 |
The notice also contained the following information:
PRIOR MARKET VALUE
IN 1993
WAS 650,000
THE TOTAL MARKET VALUE
ESTIMATE
IS 650,000
THE PERCENT CHANGE OVER PRIOR
MARKET VALUE IS: 0 |
10. On November 16, 1991, Petitioner obtained title to the Property by way of a Master's Deed as a result of foreclosure.
11. On or about March 8, 1995, Petitioner sold the property to Pemberton Associates, a developer.
12. In connection with this sale of the Property by Petitioner and the resulting change in use, Petitioner's counsel, by letters
dated March 31, 1995, and April 19, 1995, requested a determination by the Assessor as to whether any roll-back taxes
were due with respect to the Property.
13. By letter dated June 7, 1995, the Assessor for Charleston County notified the Auditor for Charleston County that the
Property was no longer classified as agricultural, and requested the Auditor to render the appropriate roll back tax bills.
The letter set forth the following information:
Owner of Record |
Tax Year |
#
Acres |
Roll-Back
Assessment |
Millage
Rate |
Ag.
Use
Value |
Bankers First Fed. |
1994 |
11.51 |
38,960 |
316.9 |
900 |
Savings & Loan |
1993 |
11.51 |
38,960 |
299.1 |
900 |
FKS Properties, Inc. |
1992 |
12.33 |
24,680 |
368.6 |
900 |
same |
1991 |
11.30 |
24,680 |
350.5 |
900 |
same |
1990 |
11.30 |
24,680 |
342.6 |
2,000 |
14. On June 12, 1995, the Treasurer issued bills for roll back taxes for each of the years 1990 through 1994. The tax bills
set forth the following information:
Tax
Year |
Roll-Back
Assessment |
Mills |
Roll-Back
Tax |
City/County
Sales Tax Credit |
Net
Due |
1990 |
24,640 |
342.6 |
$8,441.66 |
N/A |
$8,441.66 |
1991 |
24,680 |
350.5 |
$8,650.34 |
$695.19 |
$7,955.19 |
1992 |
24,680 |
368.6 |
$9,097.05 |
$1,258.67 |
$7,838.38 |
1993 |
38,960 |
299.1 |
$11,652.93 |
$1,428.53 |
$10,224.40 |
1994 |
38,960 |
316.9 |
$12,346.42 |
$1,584.37 |
$10,762.05 |
|
|
|
|
|
|
15. The roll-back assessments above were calculated based on the difference between the agricultural use assessment and
the non-agricultural assessments. These assessments were calculated based on the agricultural use value and the 4%
agricultural assessment ratio, and the non-agricultural market value, and the non-agricultural, general assessment ration of
6%. The calculation of the roll-back assessments is set forth below:
A
Tax Year |
B
Ag.
Use
Value |
C
Ag.
Ass't
Ratio |
D
Ag.
Ass't
(B x
C) |
E
Non-Ag.
Market
Value |
F
Non-Ag
Ass't
Ratio |
G
Non-Ag
Ass't
(E x F) |
H
Roll-
Back
Ass't
(D - G) |
1990 |
$2,000 |
.04 |
$80.00 |
$412,000 |
.06 |
$24,720 |
$24,640 |
1991 |
$900 |
.04 |
$40.00 |
$412,000 |
.06 |
$24,720 |
$24,680 |
1992 |
$900 |
.04 |
$40.00 |
$412,000 |
.06 |
$24,720 |
$24,680 |
1993 |
$900 |
.04 |
$40.00 |
$650,000 |
.06 |
$38,960 |
$38,960 |
1994 |
$900 |
0.4 |
$40.00 |
$650,000 |
.06 |
$38,960 |
$38,960 |
[Note that for tax years 1993 and 1994, column H is calculated as if column G values were $39,000. This $39,000 value is
the correct extension of column F times column G. The actual tax bills, however, use the values set forth in Column G.]
[Note also that for tax years 1991 through 1994, column D should be $36, based on the extension of column B times
column C. All of the bills and other county records use the value of $40.]
16. On June 27, 1995, within thirty days of the date the Assessor's letter to the Auditor, Petitioner wrote a letter appealing
the assessments contained in that letter and on which the roll-back taxes were based.
17. On July 6, 1995, the Assessor, wrote to the Petitioner and advised the Petitioner that "the legal time for requesting a
review of the valuation and assessment of Property for tax year 1995 and prior years has expired."
18. On August 4, 1995, Petitioner, reserving all rights, paid to Charleston County $44,221.68 which represented the
amount of roll-back taxes on the Property for the years 1990, 1991, 1992, 1993, and 1994 plus penalties.
19. On September 4, 1995, the Assessor met with an appraiser, hired by the Petitioner to discuss the valuation the
Assessor used to determine the roll-back taxes. The Assessor advised the appraiser that he would not change the
valuation that he used to determine roll-back taxes.
20. On October 4, 1995, Petitioner's representatives advised the Assessor that Petitioner wished to appeal his finding.
21. On March 21, 1996, without conducting a hearing, the Charleston County Board of Assessment Appeals, advised the
Petitioner that Petitioner's appeal of the assessed value of the Property for roll-back tax purposes for the years 1990-1994
had been rejected, on the grounds that the Board did not have jurisdiction to hear the appeal because that Petitioner's
appeal to the assessor had not been timely made.
22. During the three and one-half years Petitioner owned the Property, the Property was classified as agricultural property
and valued as such. Petitioner was advised by the Assessor of the Assessor's determination of the Property's
non-agricultural use value for the first time on June 12, 1995. Petitioner has never received from the Assessor notice of
non-agricultural use market value as required by S.C. Code Ann. § §12-43-300(A)(Supp. 1995), and 12-60-2510 (Supp.
1996).
CONCLUSIONS OF LAW
Based upon the above findings of fact, I conclude as a matter of law the following:
General Conclusions
1. South Carolina Code Ann § 12-43-220 (d)(1)(A) (Supp. 1996), provides that Agricultural Real Property which is
actually used for agricultural purposes shall be taxed on an assessment equal to four (4%) percent of its "fair market value
for. . . agricultural purposes."
2. The term "fair market value for agricultural purposes" is defined in § 12-43-220(d)(2)(A)(Supp. 1996) for land used for
the growth of agricultural products other than timber, as "the productive earning power based on soil capability to be
determined by capitalization of typical cash rents or by capitalization of typical net annual income of similar soil in the
region or a reasonable area of the region, not including the agricultural products thereon."
After the average net annual earnings have been established by the Assessor for the property they must be capitalized to
determine use value of the property based on a capitalization rate which includes:
(a) An interest component;
(b) A local property tax differential component;
© A risk component; and
(d) An illiquidity component.
Id. Once all of these factors have been determined, the Assessor is then able to determine the fair market value of
the property for agricultural purposes.
When real property which has been used for agricultural purposes is converted to other uses, S.C. Code Ann. §
12-43-220(d)(4)(Supp. 1996) requires that it be subject to roll-back taxes in an amount equal to the difference between the
taxes paid or payable on the basis of the valuation and assessment established for agricultural purposes and the taxes that
would have been paid or payable had the real property been valued, assessed, and taxed as other real property in each of the
five (5) years immediately preceding the year in which the conversion took place.
3. The requirements for notices of assessment were, for the applicable period, set forth in S.C. Code Ann. § 12-43-300(A)
(Supp. 1995), which provides in pertinent part as follows:
Whenever the market value estimate of any property is fixed by the assessor at a sum greater by one thousand
dollars or more than the amount returned by the owner or his agent, or whenever any property is valued and
assessed for taxation which has not been returned or assessed previously, the assessor shall, on or before July first,
or as soon thereafter as may be practicable, in the year in which the valuation and assessment is made give written
notice thereof to the owner of the property or his agent.
* * *
The notice must include the prior market value, the total market value estimate, the value estimate if applicable, the
assessment ratio, the total new assessment, the percentage changes over the prior market value .
4. Appeals from assessments were also governed by S.C. Code Ann. § 12-43-300(A) (Supp. 1995), which provides in
pertinent part: "The owner or his agent, if he objects to the valuation and assessment, shall serve written notice of his
objection upon the assessor within thirty days of the mailing of the notice."
5. A taxpayer is entitled to notice of a change in assessment whether the assessment changes result from a change in value,
or from a change in classification and assessment ratio. 1978 S.C. Op. Atty. Gen. 78-215. See also 1993 S.C. Op. Atty.
Gen. 93-9.Conclusions Concerning Tax Year 1993 and 1994.
Respondent argues that the "Notification of Classification Appraisal and Assessment of Real Estate for Tax Year 1993," as
set out in paragraph 8 of the Findings of Fact, provides the required statutory notice to the taxpayers.
S.C. Code Ann. § 12-43-300 mandates that "[t]he Notice must include the prior market value , the total new assessment,
the percentage changes over the prior market value (emphasis supplied)." The "Notification of Classification Appraisal and
Assessment of Real Estate for Tax Year 1993" fails to meet these statutory requirement, and simply fails to put Petitioner
on notice that the fair market value of his property for non-agricultural purposes has changed.
The box entitled "Prior Market Value" indicates that the prior market value was "900," and that the "percent change over
prior market value" was "0." Thus, by viewing the contents of this box the taxpayer may be led to believe that the market
value of his property did not change.
As noted above, Respondent contends that the $650,000 figure in the 1993 Notice was adequate to put the taxpayer on
notice of the non-agricultural valuation of the Property. Significantly, however, this figure was labeled "market
value-agricultural." The inclusion of the phrase "market value" in the label "market value-agricultural," as opposed to the
label "market value-non-agricultural," is not sufficient to notify the taxpayer that this figure is a non-agricultural market
value. S.C. Code Ann. § 12-43-220, for example, uses the term "fair market value for agricultural purposes" in
referencing what the Notices referred to as "use value-agricultural.
Petitioner could not have in any event determined that the $650,000 valuation contained in the 1993 notice was an increase
in the non-agricultural market value without consulting the previous Notice issued in 1991.
Respondent further contends that the increase in the non-agricultural valuation was indicated in its books and records,
which are publicly available for inspection, and that the taxpayer knew or should have known of the increase. Again,
however, the box entitled "Prior Market Value" clearly states that there was no change in the market value of the property.
Because the 1993 Notice was legally insufficient to notify the taxpayer of the increase in the non-agricultural value of the
Property, the Charleston County Treasurer's bill for roll-back taxes dated June 12, 1995, was the first date the
Petitioner/Taxpayer was advised of a change in classification of the property and was the first date Petitioner had any
indication of the Assessor's determination of the non-agricultural fair market value of the Property.
Conclusions Concerning Tax Year 1991 and 1992.
The "Notice of Classification Appraisal and Assessment of Real Estate" for tax year 1991 likewise fails to meet the
statutory mandate of S.C. Code Ann. § 12-43-300, that the Notice mustinclude the prior market value, the total new
assessment, the percentage changes over the prior market value . . . ."
The Notice fails to set forth the prior market value of the property. In the box entitled "Prior Market Value," the prior
market value in 1990 is indicated to be $2,000, and the percent change in the Notice from the prior market value was
negative 55%. In fact, after reviewing the Notice for Tax Year 1989, the prior market value of the property was reported to
be $412,000. In contrast, the agricultural use value of the property was $2,000. The Petitioner cannot, consistent with
S.C. Code Ann. § 12-43-300, be required to consult a previous tax notice to determine whether the market value of the
property has changed.
In addition, as was the case with the 1993 Notice, the 1991 Notice fails to adequately notify the taxpayer of the current,
non-agricultural fair market value of $412,000. This number, although on the notice, is described as "market
value-agricultural," and thus gave no notice that this was in fact a valuation for other than agricultural purposes. As a
result of the failure of the notice document to accurately identify the prior market value of the property, no notice was
provided the Petitioner as to a possible change in the market value of the property.
Because the 1991 Notice was legally defective, the Charleston County Treasurer's bill for roll-back taxes dated June 12,
1995, was again the first date the Petitioner/Taxpayer was advised of a change in classification of the property and was the
first date Petitioner had any indication of the Assessor's determination of the underlying non-agricultural and fair market
value of the Property.
Conclusions Concerning Tax Year 1990
In 1989, Petitioner's Property was valued and assessed for the first time as agricultural property. The 1989 Notice of
Classification Appraisal & Assessment of Real Estate properly advised Petitioner that the "prior market value" was
$412,000, that the Market Value-Agricultural was $412,000, and that the Use Value-Agricultural was $2,000. Based on
this information, Petitioner had notice that the non-agricultural market value of its Property had not changed. The 1989
Notice provided Petitioner with the statutorily prescribed notice of prior non-agricultural fair market value and the change,
if any, resulting from the current assessment. Petitioner therefore had notice of the change in non-agricultural market
value (or lack thereof) and could have asserted its appeal rights at that time.
Conclusions Applicable to All Tax Years
As a result of the findings and conclusions set forth above pertaining to tax years 1991, 1992, 1993 and 1994, the
statutorily prescribed notice of assessment and fair market value required by S.C. Code Ann. §§ 12-43-300 and
12-60-2510 has never been given as to the non-agricultural assessment and fair market value of the property. Petitioner's
letter of June 27, 1995, constitutes written notice of its objection to the assessor's valuation of the property. The Charleston
County Board of Assessment Appeals does have jurisdiction to hold a conference and render a decision regarding
Petitioner's appeal of the assessor's determination of fair market value of the Property for roll-back property tax purposes.
ORDER
Based upon the Findings of Fact and Conclusions of Law, it is hereby:
ORDERED that
A. The appeals of Petitioner of the non-agricultural assessments and valuations of the Property for roll back tax purposes
for the tax years 1991, 1992, 1993, and 1994 were made on a timely basis;
B. The Charleston County Board of Assessment Appeals does have jurisdiction to and shall hear these appeals; and
C. This matter is hereby remanded to the Charleston County Board of Assessment Appeals for a hearing on Petitioner's
appeals for tax years 1991, 1992, 1993, and 1994.
AND IT IS SO ORDERED.
Ralph King Anderson, III
Administrative Law Judge
Columbia, South Carolina
January 30, 1997 |