SC Administrative Law Court Decisions

This county tax matter comes before me pursuant to S.C. Code Ann. § 12-60-2540 (Supp. 1997) upon Petitioner's request for a contested case hearing. Respondent ("Taxpayer") applied for agricultural use classification of a 9.15-acre tract in Middleton Plantation on Edisto Island in Charleston County for tax year 1996. Upon Petitioner Charleston County Assessor's ("Assessor") denial of the application, Taxpayer appealed to the Charleston County Board of Assessment Appeals ("the Board"). The Board granted Taxpayer's application, and the Assessor requested a contested case hearing before this tribunal, asserting that the tract is not used for bona fide agricultural purposes.

A hearing before the Administrative Law Judge Division was conducted on March 9, 1998, at the Charleston County Judicial Complex in North Charleston. Upon review of the relevant and probative evidence and the applicable law, Taxpayer's application for agricultural use classification of the subject property is denied.

DISCUSSION

Taxpayer Clarkson Family Limited Partnership obtained title to the subject property in May, 1995. Certain members of the Clarkson Family, including Townsend Clarkson, were the predecessors in title to the property. Townsend Clarkson and his mother, Caroline Clarkson Boineau, own percentage interests in Clarkson Family Limited Partnership. Townsend Clarkson currently resides on the property.

The property has some young pecan trees on approximately three acres of the 9.15-acre tract. Taxpayer states that these trees were planted to replace old pecan trees destroyed by Hurricane Hugo. Taxpayer also states that the property has been in the Clarkson family for almost 100 years and that prior generations farmed the property.

Taxpayer asserts that the subject property should be classified as agricultural, pursuant to S.C. Code Ann. § 12-43-232(3)(e) (Supp. 1995).⁽¹⁾ This subsection is a "grandfather" provision allowing an exemption from the acreage and income requirements of § 12-43-232 for certain non-timberland tracts previously classified as Agricultural Real Property. To qualify for the exemption, the tract must have been classified as Agricultural Real Property in 1994 and owned by the same family for ten (10) years immediately preceding 1994. Section 12-43-232, however, clearly states that its requirements are in addition to the other requirements for the agricultural use classification in Title 12, Chapter 43 of the South Carolina Code. In addition to qualifying for the exemption in § 12-43-232(3)(e), the taxpayer must show that his land is used for a bona fide agricultural purpose to obtain the agricultural use classification. S.C. Code Ann. § 12-43-230(a) (Supp. 1995); 27 S.C. Code Ann. Regs. 117-114 (1992).

In determining if real property is used for a bona fide agricultural purpose, consideration may be given to the density of the marketable product on the land, the economic merchantability of the product, and the use, or not, of recognized care, cultivation, harvesting and like practices applicable to the product involved, among other factors. 27 S.C. Code Ann. Regs. 117-114 (1992). In cases in which the real property is committed to uses in addition to agricultural uses, the agricultural activity must comprise the most significant use of the property in order for it to be classified as agricultural real property. Id. Use as "vacant" or "land lying dormant" does not qualify. Id.

In this case, less than thirty percent of the total acreage is devoted to the growth of pecan trees. Further, Taxpayer has not harvested or sold any pecans. Additionally, Townsend Clarkson uses the plantation home on the property as a residence. The remainder of the property is idle. Under these circumstances, I find that Taxpayer's property was not used for bona fide agricultural purposes for the tax year 1996. Additionally, for the entire tract to be classified as agricultural real property pursuant to S.C. Code Ann. § 12-43-230(a) (Supp. 1995), the use of the land for a bona fide agricultural purpose must cover at least fifty percent of the tract. Therefore, Taxpayer's property should not be classified as agricultural for the tax year 1996.

FINDINGS OF FACT

By a preponderance of the evidence, I make the following findings of fact:

1. The subject property is a 9.15-acre tract, located at 8488 Middleton Point Lane on Edisto Island in Charleston County, shown on the Charleston County Tax Maps as Tax Map Number 028-00-00-055.

2. Taxpayer Clarkson Family Limited Partnership has been the owner of the subject property

since May 4, 1995.

3. The partnership's predecessors in title are certain individual members of the Clarkson family.

4. Townsend Clarkson and his mother, Caroline Clarkson Boineau, own percentage interests in Clarkson Family Limited Partnership.

5. The subject property is located in Middleton Plantation on Edisto Island, adjacent to a deep water creek.

6. The property consists of an old plantation house with two out buildings and several oak, magnolia and pecan trees.

7. Townsend Clarkson resides in the old plantation house on the property.

8. New pecan trees were planted on certain areas of the property, after Hurricane Hugo destroyed existing pecan trees.

9. Some of the young pecan trees began yielding pecans two seasons ago.

10. Taxpayer has not harvested or sold any pecans.

11. The young pecan trees cover approximately three acres of the 9.15-acre tract.

12. The remainder of the 9.15-acre tract remains idle.

13. No timber has been planted on or harvested from the subject property.

14. The subject property is not devoted actively to growing trees for timber use.

15. Prior to 1996, the subject property was classified as agricultural use property by Charleston County.

16. In 1994, effective for tax year 1995, provisions of the South Carolina tax code relating to agricultural use classification of property for county property tax purposes were amended.

17. Because of the change in the law, the Assessor sent assessment notices to all taxpayers who owned property previously classified for agricultural use, informing taxpayers that no property would receive agricultural use classification without a new application for such classification being submitted and approved under the newly codified requirements.

18. In July, 1996, Taxpayer filed an application for agricultural assessment of the subject property for tax year 1996, based on its partial use as a pecan orchard and as timberland.

19. The Assessor denied the application for classification of agricultural use on November 27, 1996.

20. Taxpayer filed a written objection to the denial with the Assessor on December 16, 1996.

21. Taxpayer's written objection was treated by the Assessor as an appeal to the Charleston County Board of Assessment Appeals.

22. After a conference with the parties on June 18, 1997, the Board rendered its decision, in which it ordered that the subject property was eligible for agricultural use classification pursuant to S.C. Code Ann. § 12-43-232(3)(e) (Supp. 1995).

23. The Assessor filed a request for a contested case hearing before the Administrative Law Judge Division by Notice filed July 16, 1997.

24. A contested case hearing was conducted on March 9, 1998, with notice of the date, time, place, and nature of the hearing timely given to all parties.

Based upon the above findings of fact, I conclude as a matter of law the following:

1. The Administrative Law Judge Division has subject matter jurisdiction of this case pursuant to S.C. Code Ann. § 12-60-2540 (Supp. 1997).
2. Upon written application, an agricultural use classification is granted to real property "actually used for agricultural purposes" pursuant to S.C. Code Ann. § 12-43-220(d) (Supp. 1995), subject to the requirements of S.C. Code Ann. § 12-43-232 (Supp. 1995).

3. 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).

4. If at least fifty percent of a real property tract qualifies as "agricultural real property," the entire tract shall be so classified, provided no other business for profit is being operated thereon. S.C. Code Ann. § 12-43-230(a) (Supp. 1995).

5. South Carolina Code Ann. § 12-43-232(3)(e) provides "[a] non-timberland tract that does not meet the acreage or income requirements of this section to be classified as agricultural real property must nevertheless be classified as agricultural real property if the current owner or an immediate family member of the current owner has owned the property for at least ten years [immediately preceding 1994], and the property is classified as agricultural real property for property tax year 1994."

6. Section 12-43-232, however, provides that in addition to its listed requirements, the subject property must also meet the other requirements in Title 12, Article 3, Chapter 43 of the South Carolina Code.

7. South Carolina Code Ann. §12-43-230(a) (Supp. 1995) requires the South Carolina Department of Revenue 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.

8. "Real 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, but 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." 27 S.C. Code Ann. Regs. 117-114 (1992).

9. 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; and

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.

27 S.C. Code Ann. Regs. 117-114 (1992).

10. In cases in which the real property is committed to uses in addition to agricultural uses, the agricultural activity must comprise the most significant use of the property in order for it to be classified as agricultural real property. 27 S.C. Code Ann. Regs. 117-114 (1992).

11. Use as "vacant" or "land lying dormant" does not qualify as agricultural use. 27 S.C. Code Ann. Regs. 117-114 (1992).

12. Taxpayer's property was not used for a bona fide agricultural purpose for the tax year 1996.

13. The mere fact that Taxpayer's property was granted the agricultural use classification prior to 1996 does not entitle it to such classification for 1996.

14. Even if the use of the subject property had been for a bona fide agricultural purpose, the growth of pecan trees covers less than fifty percent of the subject property. Therefore, the entire tract cannot be classified as agricultural for the tax year 1996. S.C. Code Ann. § 12-43-230(a) (Supp. 1995).

15. S.C. Code Ann. § 12-43-232(1)(a) (Supp. 1995) provides for agricultural use classification of timber tracts where they are devoted actively to growing trees for commercial use.

16. The subject property does not meet the eligibility requirements of S.C. Code Ann. § 12-43-232(1)(a) (Supp. 1995) in that it is not devoted actively to growing trees for commercial use.

IT IS THEREFORE ORDERED that Taxpayer's property, designated as Charleston County Tax Map Number 028-00-00-055, is not eligible for agricultural use classification for the property tax assessment for tax year 1996.

AND IT IS SO ORDERED.

_____________________________

STEPHEN P. BATES

ADMINISTRATIVE LAW JUDGE

May 14, 1998

Columbia, South Carolina

1. The statute as it appears in the 1995 supplement to the S.C. Code is applicable to tax year 1996.