SC Administrative Law Court Decisions

STATEMENT OF THE CASE

This matter came before me pursuant to S.C. Code Ann. § 12-60-2540(A) (Supp. 1996) for a contested case hearing requested by Kenneth Glover (Taxpayer), against the Charleston County Assessor (Assessor) contesting the Assessor's valuation of a parcel of real property identified as Parcel No. 561-01-00-003, located at 1435 Omni Boulevard in Mount Pleasant, South Carolina for the tax year 1996. After notice to the parties, a hearing was conducted on September 9 and 15, 1997.

The Taxpayer exhausted the prehearing remedies with the Assessor and the Charleston County Board of Assessment Appeals (Board). He is now seeking a contested case hearing before the Administrative Law Judge Division. The issues raised in this contested case are whether the Assessor has the authority to change the value in a non-reassessment tax year, and if so, was the property properly assessed.

Any issues raised in the proceedings or hearing of this case but not addressed in this Order are deemed denied. ALJD Rule 29(B).

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. The Taxpayer, Kenneth P. Glover, owns certain real property located in Charleston County at 1435 Omni Boulevard, Mount Pleasant, and identified as Parcel No. 561-01-00-003.
2. The subject property is located in a gated subdivision known as Raven's Run. Raven's Run is located on Rifle Range Road in Mount Pleasant, approximately four miles from the beaches of the Isle of Palms and Sullivan's Island.
3. The subject property is 1.16 acres and contains a residence built by the Taxpayer. The residence has a total of 3,720 square feet.
4. A permit for new construction was issued on March 31, 1986.
5. A temporary occupancy permit for the structure was issued on April 11, 1989, and the final occupancy permit was issued on November 11, 1991.
6. A county-wide reassessment program of all real property in Charleston County was conducted for 1993.
7. The Assessor originally valued the subject property at $239,000. The Taxpayer objected to the valuation on the basis that the residence was not completed and produced photographs showing the condition of the interior of the residence. The Assessor then valued the property at $176,000, which included $61,000 for land and $115,000 for the structure. According to the Assessor, this value was discounted 35% to reflect Taxpayer's contention that the interior was not finished.
8. The assessed value remained the same for tax years 1994 and 1995.
9. For tax year 1996, the Assessor issued a notice of change in assessment proposing the value of the subject property be increased from $176,000 to $238,000 because of the renovation of an existing building. The Assessor allocated $177,000 for the building and $61,000 for the land.
10. The Taxpayer objected, claiming that there was no renovation of the building, that the value assessed was arbitrary and excessive, and that the Assessor had no authority to change the value of the property.
11. The Taxpayer, in 1996 during the appeal process, conceded that the building is complete. See Documents submitted to the Board.
12. The Assessor valued the subject property at $213,400 for tax year 1996.
13. Thomas Lesemann, Jr., senior appraiser for the Charleston County Assessor's Office, appraised the subject property in accordance with Uniform Standards of Professional Appraisal Practices. Lesemann appraised the subject property on December 5, 1996 and August 5, 1997, in order to estimate the value of the subject property on December 31, 1992.
14. During the December 5, 1996 appraisal inspection, Lesemann was denied access to the structure by the Taxpayer. As a result, Lesemann assumed the quality of the structure to be "excellent," based on an instruction from the county attorney.
15. In addition, because he was denied access to the property, photographs were taken by Leseman from the street. In the photographs, the exterior of the structure appears to be stucco and was so listed on the appraisal.
16. For the August 5, 1997 inspection, Lesemann assumed the quality of the structure to be "very good," which was consistent with other houses in the subdivision.
17. The August 5 appraisal indicated the structure was brick.
18. The Assessor derived the land value by taking the lowest land value from two appraisals and from an equity analysis.
19. The Assessor determined the value of the structure by taking the lower value of an appraisal and an equity analysis.
20. The Assessor compared values of other properties in Raven's Run to the subject property and determined that the building value over all was less than the building value on the August 5, 1997 appraisal, while the land value was higher under the equity analysis.
21. The Taxpayer did not present any evidence of comparable sales or equity. No evidence was presented to demonstrate the current condition and value of the property by Taxpayer.

Spot reassessments are prohibited, and any change in the method of determining the value for the property must be addressed in the next reassessment program. Reassessments may not be done unless all property in the county is reassessed in the same year. S.C. Code Ann. § 12-43-210(B) (Supp. 1996). Although spot reassessments are prohibited, the Assessor may reassess a property that has been improved. The Assessor may, without a county-wide reassessment, change the value of a property previously assessed when there has been a change in the use or condition of the property. S.C. Code Ann. § 12-37-90(c) (Supp. 1996). See Lexington Co. Assessor v. Hendrix, 96-ALJ-17-0555-CC (May 5, 1997). S.C. Code Ann. § 12-37-90(c) (Supp. 1996) states that the Assessor shall, "[w]hen values change, reappraise and reassess any or all real property to reflect its proper valuation in light of changed conditions. . . ." (Emphasis added).

It was not established in the record of this case that the subject property had changed since the 1993 assessment, however. The Assessor had the burden of proving this, as the party seeking to change the value of the property. Taxpayer insists that when a value was reached in May 1994 for $176,000, the building was complete and that the Assessor is prohibited from assessing the property without evidence of any additions to the property. The Taxpayer's argument is that the Assessor was prohibited by law from taxing the structure until it was complete. S.C. Code Ann. § 12-37-670 (1976) provides in part that "[n]o new structure shall be listed or assessed until it is completed and fit for the use for which it is intended." In 1991, a certificate of occupancy was issued and the residence was complete. The first taxable year for the structure was 1992. In 1993, during reassessment, the value of the house was raised. Taxpayer objected on the basis that the house could not be taxed at its highest rate because it could not be considered in excellent condition because of the work that needed to be finished on the interior. The Taxpayer and the Assessor negotiated a value of $176,000 for the property (land and structure). This value was agreed upon in 1994.

In 1996, the Assessor seeks to increase the value of the property based upon the records which state that the property was discounted because it was not complete. This information in the Assessor's file was erroneous. The Assessor could not tax the structure if not completed. The Assessor determined that the structure was complete and began taxing it in 1992. In 1994, the Assessor negotiated the value of the property after an appeal by the Taxpayer. There is no authority to change the value unless there has been some change in the property. In 1996, the Assessor had no evidence of any change in the property.

Similarly, S.C. Code Ann. § 12-39-220 provides that "if the owner of any real estate or new structure thereon, subject to taxation, has not reported it for taxation, according to the requirements of this chapter, and it has not been appraised for taxation, the auditor shall, upon discovery thereof, appraise it. . . ." In Columbia Developers, Inc. v. Elliott, 269 S.C. 486, 238 S.E.2d 169 (1977), the Supreme Court upheld a trial court determination that the completion of five floors of new construction constituted "new structures" and justified a new assessment under Section 12-39-220. Here, however, it was not established that a new structure was added to the subject property.

In this case, there was also no evidence that an error was made in valuing the subject property. The Assessor agreed to value the property at $176,000 in 1994, based on the Taxpayer's assertion, supported by evidence the Taxpayer presented, that the interior of the house was not finished at that time. The Assessor has not established that there was an error in the valuation. The Assessor asserts that the Taxpayer refused to allow access to the property and therefore, assumptions had to be made to determine the value of the property. In 1996, there was no reason for the Assessor to view the property. In the next county-wide reassessment, the Assessor will be required to value all of the property in the county. At that time the Assessor may attempt to access the property, if refused then the Assessor will have to value the property making certain assumptions. When a taxpayer appeals the valuation and completes the required protest form, the taxpayer consents to inspection of the property both inside and outside if necessary.

The Assessor has made no showing that the subject property was due for reassessment. As the Assessor did not establish authority to reassess the property, the issue of the validity of the method of appraisal not need be reached. During the next county-wide reassessment program, the county will be authorized by law to revalue the subject property. If the Taxpayer protests the valuation placed on the property by completing the required form, the Assessor may inspect the property to determine its value.

1. S.C. Code Ann. § 12-60-2540 (Supp. 1996) authorizes the South Carolina Administrative Law Judge Division to hear this contested case pursuant to Chapter 23 of Title I of the 1976 Code, as amended.
2. S.C. Code Ann. § 12-37-90 (Supp. 1996) grants authority to the South Carolina Tax Commission to alter values set by the assessor on real property.
3. S.C. Code Ann. § 12-4-30(D) (Supp. 1996) provides that an administrative law judge, after February 1, 1995, shall hear all contested cases as defined by S.C. Code Ann. § 1 -23-310 (Supp. 1996) previously heard by the South Carolina Tax Commission.
4. Generally, a "proceeding before the ALJ is in the nature of a de novo hearing. . . . Thus, the Assessor is required to prove the correctness of the valuation he is seeking." Reliance Ins. Co. v. Smith, ___ S.C. ___, 1997 WL 395379 at 3 (Ct. App. 1997).
5. Once the assessor establishes the basis for the valuation, his 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. Newberry Mills v. Dawkins, 259 S.C. 7, 190 S.E.2d 503 (1972); 84 C.J.S. Taxation §537 (1954). Taxpayer has met this burden if he proves the actual value of the property is a value other than that determined by the taxing authority. Cloyd v. Mabry, 295 S.C. 86, 367 S.E.2d 171 (Ct. App. 1988).
6. S.C. Code Ann. §12-37-90 (Supp. 1996) provides that all counties shall have an assessor, whose responsibility is appraising and listing all real property.
7. "All property must be assessed uniformly and equitably throughout the State. . . ." S.C. Code Ann. § 12-43-210(A) (Supp. 1996).
8. S.C. Code Ann. § 12-37-670 (1976) provides in part that "[n]o new structure shall be listed or assessed until it is completed and fit for the use for which it is intended."
9. Similarly, S.C. Code Ann. § 12-39-220 provides that "if the owner of any real estate or new structure thereon, subject to taxation, has not reported it for taxation, according to the requirements of this chapter, and it has not been appraised for taxation, the auditor shall, upon discovery thereof, appraise it. . . ." In Columbia Developers, Inc. v. Elliott, 269 S.C. 486, 238 S.E.2d 169 (1977), the Supreme Court upheld a trial court determination that the completion of five floors of new construction constituted "new structures" and justified a new assessment under Section 12-39-220.
10. Here, however, it was not established that a new structure was added to the subject property.
11. Except under limited circumstances, spot reassessments are prohibited. Long Cove Home Owners' Ass'n, Inc. v. Beaufort County Tax Equalization Bd., ___ S.C. ___, 1997 WL 435883 (1997). S.C. Code Ann. § 12-43-210(B) (Supp. 1996) provides that "[n]o reassessment program may be implemented in a county unless all real property in the county . . . is reassessed in the same year."
12. Although spot reassessments are prohibited, the Assessor may reassess a property that has been improved. S.C. Code Ann. § 12-37-90 (Supp. 1996).
13. The Assessor may, without a county-wide reassessment, change the value of a property previously assessed, when there has been a change in the use or condition of the property. S.C. Code Ann. § 12-37-90(c) (Supp. 1996). See Lexington Co. Assessor v. Hendrix, 96-ALJ-17-0555-CC (May 5, 1997).
14. S.C. Code Ann. § 12-37-90(c) (Supp. 1996) states that the Assessor shall, "[w]hen values change, reappraise and reassess any or all real property to reflect its proper valuation in light of changed conditions. . . ." (Emphasis added).
15. Long Cove Home Owners' Ass'n, Inc. v. Beaufort County Tax Equalization Bd., ___ S.C. ___, 1997 WL 435883 at 2 (1997), describes instances in which reassessment may be conducted in non-reassessment years:

The statute prohibits reassessment in a non-assessment year except in limited circumstances. S.C. Code Ann. § 12-41-120 (1976) ("[b]ut real estate shall be valued and assessed by any such board only in those years in which real estate is by law required to be returned. . . ."). The statute only allows an assessor, without direction from the Department, to reassess properties under the following limited circumstances: if done on a county-wide basis in a legal assessment year, S.C. Code Ann. § 12-43-210(B) (Supp. 1995); if the property was omitted property, S.C. Code Ann. § 12-41-120 (1976); or if there was a change in conditions on the property, S.C. Code Ann. § 12-37-90 (Supp. 1995)."

(Emphasis added).

16. The Assessor failed to establish the basis for the reassessment in a non-assessment year.ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby

ORDERED that the Charleston County Assessor shall assess Taxpayer's property located at 1435 Omni Boulevard (Parcel No. 561-01-00-003) in Mount Pleasant at $176,000 for tax year 1996.

AND IT IS SO ORDERED.

________________________________

ALISON RENEE LEE

Administrative Law Judge

December 19, 1997

Columbia, South Carolina