ORDERS:
FINAL DECISION
BACKGROUND
This is a case brought by the Charleston County Assessor ("Assessor") against Mr. and Mrs. C.
Keith Finley on an Appeal filed by Petitioner from the Charleston County Board of Assessment
Appeals. The case concerns whether the Respondents' property should be classified as agricultural
use property for the tax year 1995. A contested case hearing was held on August 14, 1996, at the
Charleston County Judicial Building, Charleston, South Carolina.
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 by the Parties or Protestants, 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. The Respondents are the owners of property located at 5585 Church Flats Road in
Charleston County, South Carolina. They purchased the 5.94 acre parcel in 1994 for $110,000.
The Respondents argue the property should receive the agricultural use designation because the
property is used to produce hardwood, pine and pecan trees. This property also contains
marshlands, a small building, a narrow, unpaved driveway and land that lies idle. The subject
property bears PID # 95/223-00-00-058.
3. The Respondents applied for and were denied agricultural assessment by the Assessor's Office.
Afterwards, the Respondents appealed the denial to the Charleston County Board of Assessment
Appeals. The Board determined that the property qualified for the Agricultural Use designation.
4. The Assessor introduced into evidence a copy of the Tax Map of the subject property which is
attached hereto and incorporated into this Order. The tract of property in question is labeled as
Lot 58 on the attached map. The Assessor subdivided this tract into the six subsections labeled as
follows:
Pecan Orchard
Driveway
Building Site
"A" North of Orchard
"B" West of Orchard
"C" South of Building
5. Most of the pine and hardwood trees are located in a 2.01 acre subsection of the tract
designated as Area "C" on the attached map. The Assessor stipulated that this 2.01 acre area
possesses timber which can be harvested.
6. The Respondents have planted 42 young pecan trees in the area labeled "Pecan Orchard" on the
attached map. The pecan trees are spaced in three rows and have been planted fifty feet apart for
proper cultivation. The Respondents also installed a well, pump and waterlines.In the event that
there is insufficient rain, the Respondents either water the trees themselves or employ an
individual to water the pecan trees. They have also kept the orchard mowed and fertilized. As
they mature, these trees will produce pecan nuts. The Respondents expect that the trees already
planted will generate approximately $5,000.00 per year in nuts. Additionally, Mr. Finley testified
that he intends to harvest the pecan trees when they mature in approximately 20 years for use as
pulp wood and paper.
7. The Assessor has measured the area labeled "Pecan Orchard" and has determined that this
orchard contains .84 acres of land. The Respondents dispute the Assessor's determination because
the area identified by the Assessor as the "Pecan Orchard" fails to include 50 feet of clear land
surrounding the trees, such 50 foot area being necessary, they contend, for the proper cultivation
of the trees. According to the Respondents, if the trees are placed closer, the trees would compete
with each other for nutrients and would fail to thrive. The Respondents further testified that with
consideration given to the cleared land needed for proper cultivation, the "Pecan Orchard" is
actually one (1) to one and one half (1-½) acres in area.
8. The property also contains a 12' x 20' building labeled "Building Site" on the attached map.
This small building houses a pump and other farming tools and implements. The pump pumps
water from a well located on the property to the pecan orchard. The Respondents periodically
water the pecan orchard from water obtained from the well when rain water is insufficient to meet
the trees' needs. The building constitutes .006% of an acre.
9. The Respondents removed the trees that were destroyed by either Hurricane Hugo or other
storms. The Respondents also removed sweet gum trees and other underbrush which surrounded
healthy mature pine and hardwood trees in Areas "A","B" and "C." Mr. Finley testified that this
was done to prevent the mature trees from having to compete with the underbrush for water and
nutrients. The Respondents continue to employ an individual to keep the underbrush under
control. Additionally, the Respondents had the trees inspected for pine beetle infestation and
removed all trees with evidence of pine beetle infestation. The Respondent's purpose in removing
the trees infested with pine beetles was to prevent the infestation of the healthy trees on the tract.
10. While there is some merchantable timber growing on the remaining portion of the property,
the Respondents did not sufficiently prove any plan for this portion to be incorporated into a
forestry management plan or system. Further, the trees on those areas are reflective of natural
reproduction versus a planted tree farm. Therefore, the remaining portion of this property is not
devoted to a bonafide agricultural use.
11. I find that the total area of this tract that could be devoted to agricultural use is 2.86 acres or
forty-eight (48%) percent, with the remaining acreage constituting idle property. Since the
acreage constituting idle property is the most significant use of the property, the tract cannot
qualify as "agricultural real property." I make no finding as to whether any portion of this
property is "actually used for agricultural purposes."
CONCLUSIONS OF LAW
Based upon the above findings of fact, I conclude as a matter of law the following:
General Conclusions
1. S.C. Code Ann. §12-60-2540 (Supp. 1995) authorizes the ALJD to hear this contested case
pursuant to Chapter 23 of Title I of the 1976 Code of Laws, as amended.
2. The assessor's decision as to the situs of property, its taxability, and the valuation put on it
generally is presumed correct until the contrary appears, and the person complaining has the
burden of proving his grievance. Cloyd v. Mabry, 295 S.C. 86, 367 S.E.2d 171 (Ct. App. 1988);
84 C.J.S. Taxation §537 (1954).
3. S.C. Code Ann. § 12-37-930 (Supp. 1995) provides how real property must be valued as
follows:
All real property shall be valued for taxation at its true value in money which in all cases
shall be held to be the price which the property would bring following reasonable exposure
to the market, where both the seller and buyer are willing, are not acting under compulsion,
and are reasonably well informed of the uses and purposes for which it is adapted and for
which it is capable of being used.
In other words, fair market value is the measure of true value for taxation purposes. Lindsey v.
S.C. Tax Comm'n, 302 S.C. 504, 397 S.E.2d 95 (1990). This determination is made by examining
the highest and best use of the property.
Agricultural Use Conclusions
4. In evaluating whether the Respondent's property should receive the agriculture use
classification, there are three issues to consider. First, is the property greater than five (5) acres.
Second, is the most significant use of the property for agricultural purposes. Third, is the
agricultural most significant portion of the property actually used for bona fide agricultural
purposes. Since I find that the most significant use of the property is not used for any agricultural
purpose, I have not addressed the issue of whether the use of the property is for a bona fide
agricultural purpose.
5. S. C. Code Ann. § 12-43-232(3)(e) provides an exemption for non-timberland tracts that have
been classified as Agricultural Real Property provided they were so classified as such in 1994 and
were owned by the same family for ten (10) years immediately preceding 1994. This section,
however, requires that in addition to the above requirements, the non-timberland tract must also
meet any other requirements in Title 12, Article 3, Chapter 43 of the South Carolina Code.
6. The General Assembly amended the requirements for agricultural use classification in 1994
effective for tax years beginning after 1994. S.C. Code Ann. § 12-43-232 (Supp. 1995)
substantially revised the requirements for agricultural use and created separate more stringent
criteria for timberland tracts. It states in part:
(a) If the tract is used to grow timber, the tract must be five acres or more. Tracts of
timberland of less than five acres which are contiguous to or are under the same
management system as a tract of timberland which meets the minimum acreage requirement
are treated as part of the qualifying tract. . . . For purposes of this item, tracts of
timberland must be devoted actively to growing trees for commercial use.
S.C. Code Ann. § 12-43-232(1)(Supp. 1995).
7. S.C. Code Ann. § 12-43 230(a) (Supp. 1995) provides, in part, that "[i]n the event at least fifty
(50%) percent of a real property tract shall qualify as 'agricultural real property', the entire tract
shall be so classified, provided no other business for profit is being operated thereon."
8. An agricultural use classification is granted to agricultural real property "actually used for
agricultural purposes." S.C. Code Ann. §12-43-220(d) (Supp. 1995). Furthermore, S.C. Code
Regs. 117-114 (1982) sets forth that " . . . in no event shall real property be classified as
agricultural real property when such property is not used for bona fide agricultural purposes. . . . "
9. Agricultural real property is "any tract of real property which is used to raise, harvest or store
crops, feed, breed or manage livestock, or to produce plants, trees, fowl or animals useful to man,
including the preparation of the products raised thereon for man's use and disposed of by
marketing or other means." S.C. Code Ann. §12-43-230 (a) (Supp. 1995).
10. In 1979, the General Assembly directed the South Carolina Department of Revenue and
Taxation (Department) to promulgate a regulation designed to provide a more detailed definition
of "agriculture real property" and to exclude from the use assessment any real property not used
for a bona fide agricultural purpose. S.C. Code Ann. §12-43-230 (a) (Supp. 1995).
11. Pursuant to that mandate, Regulation 117-114 was promulgated. Regulation 117-114
provides that "[r]eal property is not used for agricultural purposes unless the owner . . . has, in
good faith, committed the property to that use. Real property which is ostensibly used for
agricultural purposes, and which is, in reality, used for other purposes, is not agricultural real
property. The agricultural use of the property must be genuine in nature as opposed to sham or
deception." While no single factor is controlling in determining if real property is used for a bona
fide agricultural purpose, consideration may be given to:
1. The nature of the terrain
2. The density of the marketable product (timber, etc.) on the land
3. The past usage of the land
4. The economic merchantability of the agricultural product
5. The use or not of recognized care, cultivation, harvesting and like practices
applicable to the product involved, and any implemented plans thereof.
6. The business or occupation of the landowner . . . however, the fact that the tract may
have been purchased for investment purposes does not disqualify it if actually used for
agricultural purposes.
In cases in which the real property is committed to uses in addition to agricultural uses, the
agricultural must comprise the most significant use of the property in order for it to be classified
as agricultural real property.
Use as "vacant" or "land lying dormant" does not qualify. S.C. Code Regs. 117-114 (1982)
(emphasis added).
12. The taxable status of real property for a given year is to be determined as of December 31 of
the preceding tax year. S.C. Code Ann. §12-37-900 (1976); Atkinson Dredging Company v.
Thomas, 266 S.C. 361, 232 S.E.2d 592 (1976).
13. The mere fact that Respondent's property was granted the agricultural use classification in
past years does not entitle it to such classification at the present time.
ORDER
Based upon the Findings of Fact and Conclusions of Law, It is hereby:
ORDERED that the Respondent's property designated as Parcel Identification Number
95/223-00-00-058 shall not receive agricultural use assessment for the tax year 1995.
AND IT IS SO ORDERED.
__________________________________
Ralph King Anderson, III
Administrative Law Judge
Columbia, South Carolina
October 10, 1996 |
