ORDERS:
FINAL DECISION
BACKGROUND
This is a contested case brought by the Charleston County
Assessor ("Assessor") protesting a decision of the
Charleston County Board of Assessment Appeals ("Board")
concerning property owned by Ocean Boulevard Properties
("Taxpayer"). The property consists of a city block in the City
of Charleston. A hearing was held at the Charleston County
Courthouse on July 25, 1996.
The Board based its decision on its conclusion that there
was no legal basis for reassessing the subject property
for tax year 1995. The subject property had previously been
reassessed as part of the county-wide reassessment program
in Charleston County during tax year 1993. Because there was no
legitimate basis for reassessment, the Board adopted
the 1993 reassessment valuation for the land, $2,189,000. The
Petitioner has appealed the Board's decision to the
Administrative Law Judge Division pursuant to S.C. Code
12-60-2540 (Supp. 1995) requesting a contested case hearing.
At the commencement of the contested case hearing the
Respondent made a motion for the exclusion of the new
evidence and new issues to be presented by the Petitioner that
were not presented before the Board. The multiple
grounds urged by Respondent in support of its motion to exclude
included the following: that the new issues and new
evidence were irrelevant in light of the Assessor's position that
the reassessment was based entirely on assemblage or
plottage; that this new evidence had not been presented to the
Board and that these new issues had not been decided
by the Board; that 12-60-2540(B) specifically provides for the
taxpayer to bring forth new matter (which may result
in a remand) but does not provide for the Assessor to do so; and
that permitting the introduction of this new evidence
and these new issues would constitute a denial of Respondent's
state and federal constitutional rights to due process.
I offered both the parties the opportunity to remand this
matter to the Board in light of the Assessor's new
evidence and issues. Both parties declined a remand. After full
consideration of the Respondent's grounds for exclusion
of this evidence and these issues, I denied Respondent's Motion.
As stated on the record at the contested case hearing,
this hearing is the first and only statutorily required due
process evidentiary hearing under the new statutes governing
objections to the valuations of real property for ad valorem tax
purposes. See, S.C. Code 12-60-2510 et seq. (Supp.
1995). These statutes do not require a due process evidentiary
hearing before the County Board of Assessment Appeals.
That proceeding is in fact now described in the statute as a
conference. Therefore, the introduction of this new evidence
and issues are proper.
ISSUES
1. Did the Petitioner have a legal basis for reassessing
the subject property for tax year 1995?
2. If so, what is the correct land valuation for the
subject property for tax purposes for 1995?
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, I make the following Findings of Fact by a
preponderance of evidence:
1. The subject property, identified as TMS #
457-08-02-026, comprises 1.477 acres (64,328 sq.ft.) located
in the commercial district in downtown Charleston. The
subject property consists of a city block bounded by
King, Market, Princess, and Archdale Streets.
2. The Taxpayer, Ocean Boulevard Properties, Inc.,
purchased the subject property on December 20, 1994
from R.I. Waterman Properties, Inc. ("Waterman") for the
amount of $3,400,000.00.
3. Waterman had previously acquired the property through a
deed dated September 25, 1991, from the
Master in Equity in Charleston County. At that time the
property consisted of 10 contiguous parcels, each having
a separate tax identification number. These parcels were
described separately in the deed from Waterman to
Respondent.
4. On December 28, 1994, a plat was filed in the
Charleston County RMC Office abandoning the interior
property lines among these parcels. The plat shows the
former boundaries and the former tax plat parcel lot
numbers.
5. In 1993 Charleston County conducted county-wide
reassessment. The Assessor valued the land of these
10 parcels comprising the subject property, then all under
Waterman's common ownership, at $2,189,000.
6. The subject property came to the Assessor's attention in
1995 because of the filing of the plat in
December 1994. The Assessor reassessed the land value of the
subject at $3,039,000. At the time of this
reassessment the Assessor based the revaluation of the
subject entirely on his view that the highest and best
use of the subject had changed because of plottage and/or
assemblage.
7. The Respondent objected to the reassessment in accord
with the statutory procedures. Respondent
premised its objection on the ground that there was no legal
basis for reassessment and that the reassessed
value was inequitable and not uniform with the Assessor's
valuation of other similar properties.
8. The Respondent appealed to the Board which conducted its
conference regarding the subject on April
3, 1996. At the Board's conference Ballard T. Lesemann, an
appraiser in the Assessor's Office, stated the
property was not reassessed because of the filing of the plat
or because of the transfer of title. The sole reason
the property was reassessed was plottage.
9. The Board ruled in favor of the Respondent, finding
that the land valuation of the subject should be
returned to the valuation assigned as part of the 1993
reassessment because the Assessor did not have a valid
legal reason to reassess the subject in 1995.
10. At the contested case hearing the Assessor argued two
new reasons in support of its reassessment.
Relying on information developed after the Board's
conference, the Assessor contended that the 1995
reassessment should be sustained because:
a. The Respondent obtained a variance allowing
the height of part of the
building planned for the property to be 64
ft., 9 ft. above the zoning
height maximum of 55 ft.; and
b. The City of Charleston agreed to change the
traffic flow on Archdale Street
from one way to two way for two blocks (from
Market to Fulton Streets)
once construction at the site is completed.
11. The Respondent purchased the subject property for the
purpose of developing a specific project. This
project consists of a four-story building that houses retail
and commercial businesses on the King Street side
of the block, connected to a parking garage on the Archdale
Street side of the block. The anchor tenant for
the project is a Saks Fifth Avenue store. The lease for Saks
Fifth Avenue was signed in the fall of 1994.
12. Saks required an unusually high ceiling for the first
floor. The Charleston Board of Architectural Review
urged the project's architects to lessen the effect of this
tall first floor by extending the other three floors
above, including a parapet. On August 16, 1994, the
architectural firm of LSP3, on behalf of the Taxpayer,
submitted an application to the City of Charleston Board of
Adjustment-Zoning requesting a height variance of
nine feet in the 55 foot height district to 64 feet, which
was granted on September 20, 1994.
13. The height variance granted by the City of Charleston
was specifically for use in this building design.
The height variance was not granted to allow an extra story
in the form of a usable fifth floor. Instead, the
height variance was granted for aesthetic reasons dealing
with the design of this four-story project.
14. The parking garage portion of the project contains an
entrance/exit on Archdale Street. Archdale Street
is southbound, leading into downtown residential areas. In
late 1994, Charleston City Council voted to make
Archdale a two-way street between Market and Fulton Streets
(a two-block span) once the project was
completed. Council's concern was that a motorist unfamiliar
with the many one-way streets in downtown
Charleston may automatically head south down Archdale Street
creating congestion in residential neighborhoods.
15. The Assessor derived his valuation of $3,039,000 from an
in-house computer system. This system,
referred to as CAMA (Computer Assisted Mass Appraisal
system), was used by the Assessor in the 1993
reassessment program. CAMA relies on land valuation tables
based on information loaded into it by various
appraisers. The figure derived from these land valuation
tables for a particular piece of property is then
multiplied by two critical variables. These two variables are
entirely subjective and are determined by the person
generating the CAMA calculation of value. CAMA does not
provide an appraisal, rather it produces a valuation
figure.
16. The Assessor did not do an appraisal to determine his
value of $3,039,000. The Assessor derived this
figure using the CAMA computer program according to the
calculation that is reflected on the Assessor's
computer-generated cost valuation report dated March 18,
1996. The subject's land size is 64,328 sq.ft. The
computer tables determined a "rate" per square foot of $45.
An employee of the Petitioner then inserted a
variable of .6 for size adjustment, resulting in a "base
value" of $1,736,856 (64,328 sq.ft. x $45/sq.ft. x .6). This
"base value" was then multiplied by another subjective
variable, in this case 1.75, described on the cost valuation
report as "INF1-ADJ-PCT EXTRA SPECIAL," resulting in a total
valuation of $3,039,000.
17. The Assessor's witnesses did not have any first-hand
knowledge of the reasons for selecting the variables
of .6 and 1.75. Additionally, they could not testify to the
number, size, location, or use of the parcels that were
considered by the computer in its land valuation table that
produced the base rate of $45 per sq.ft. Although
Mr. Huggins testified that the land valuation tables were
reliable, there was no testimony about how the two
subjective variables were determined or, for that matter, who
made these determinations. For example, the
Assessor was unable to demonstrate why the extra special
variable was 1.75, instead of 1.9 or 1.6, or to what
extent, if any, plottage affected this variable.
18. The Assessor conceded that his computer-produced
valuation figure was derived without any
consideration of the effect on value, if any, of the height
variance for this particular project or the change in
traffic flow on Archdale Street. More important, the
Assessor did not put forth a valuation that considered these
justifications for reassessment.
19. I find that the evidence presented did not support that
the height variance or the future change in
traffic flow on Archdale Street affected the value of the
subject property.
CONCLUSIONS OF LAW
Based upon the above findings of fact, I conclude as a matter
of law the following:
1. The Administrative Law Judge Division has jurisdiction
of this matter pursuant to S.C. Code Ann. 12-60-2540(A) (Supp.
1995).
2. This matter is a contested case pursuant to S.C. Code
Ann. 12-60-2540 and 1-23-310 et seq. (Supp.
1995). As such, I hear and decide this matter de novo.
3. S.C. Code Ann. 12-43-210(B) (Supp. 1995) provides as
follows:
No reassessment program may be implemented in a
county unless all real
property in the county, including real property
classified as manufacturing property,
is reassessed in the same year.
4. However, the Assessor may reassess property if there has
been a change in circumstance affecting the
value of that real property, even though this reassessment is
not part of a county-wide reassessment program.
S.C. Code Ann. 12-37-90 (Supp. 1995) specifies, in
pertinent part, as follows:
When values change, reappraise and reassess any or
all real property so as to reflect
its proper valuation in light of changed
conditions, except for exempt property and
real property required by law to be appraised and
assessed by the commission, and
to furnish a list of those assessments to the
county auditor.
(Emphasis added).
5. The filing of the plat for the subject in the RMC Office
in December 1994 did not change the value of
the subject.
6. The filing of the plat in December 1994 did not result
in an increase in valuation in 1994 due to
plottage. Plottage and assemblage has been defined as:
Plottage is the process of combining two or more
sites under a single
ownership in order to develop one site having greater
utility and unit value than the
aggregate when each is separately considered.
"Assemblage", on the other hand, is
simply the merging of adjacent properties into one of
common ownership or use.
Property Assessment Valuation, International Association of
Assessing Officers, p. 91. The subject property was held
in one ownership at the time of the 1993 reassessment.
Therefore, common ownership of the subject did not
occur for the first time in 1994 and would not have provided
a change of condition of the subject property
justifying a change from the valuation derived for the
subject in the 1993 reassessment, when it was held under
common ownership.
7. I conclude that neither the height variance (which was
building-specific) nor the change in traffic flow
(which was also building-specific) constituted a change which
affected the value of the subject for tax year 1995.
The Assessor did not put forth any opinion testimony of the
alleged increase in value caused by these changes;
the Petitioner's witness testified merely that he felt the
value was increased, without rendering an opinion as
to the financial extent, if any, of this influence.
8. For the foregoing reasons, I conclude that there was no
change in circumstance to the subject in 1994
that would increase its valuation for the 1995 tax year and
that the Petitioner had no legal basis for his
reassessment.
9. Because of the above conclusions, it is unnecessary to
decide the issue of whether the Assessor's
valuation of Respondent's property is equitable and uniform.
ORDER
Based upon the Findings of Fact and Conclusions of Law, It is
hereby:
ORDERED that the Assessor value taxpayer's property for tax
year 1995 at $2,188,400.
AND IT IS SO ORDERED.
Honorable Ralph King Anderson, III
Administrative Law Judge
October 31, 1996
Columbia, South Carolina |
