SC Administrative Law Court Decisions

This property tax matter is before the Administrative Law Judge Division (ALJD) pursuant to S.C. Code Ann. § 12-60-2540 (Supp. 1997) upon the timely filing of a request for a contested case hearing by Petitioner Woodrow F. Clark, Jr. ("Taxpayer" or "Clark") after the Greenville County Board of Assessment Appeals upheld the Assessor's valuation of five parcels of real property for tax year 1995. A hearing was conducted before the ALJD on June 17, 1998, at the Anderson County Courthouse. Upon consideration of all the testimony and evidence in the record, I conclude that because of the existence of environmental contamination and its effects and stigma, the subject parcels have a nominal fair market value for tax year 1995 of one dollar ($1.00) each.

At issue is the fair market value of five separate unimproved parcels totaling 80.5 acres (collectively referred to as the "Clark property" or "subject property") for tax year 1995. The Assessor asserts that the Clark property is properly valued at $125,243, based on sales of comparable properties in the area. Taxpayer argues that groundwater contamination of the property renders it unusable, unmarketable, and that the property should be given a zero valuation for tax purposes.

The Clark property is adjacent to the site of the former Simpsonville Landfill No. 1, in suburban Greenville County. Clark purchased the property for residential development; however,

other than the installation of water lines, no development has occurred because of the discovery of groundwater contamination at the former Simpsonville Landfill No. 1 and on the Clark property.

Taxpayer previously challenged the Assessor's valuations of certain parcels of the Clark property for tax years 1993 and 1994, in a case decided by the ALJD in Greenville Co. Real Property Srvcs. v. Clark, 95-ALJ-17-0227-CC (Nov. 1, 1995) (hereinafter referred to as "Clark I"). In that case, Administrative Law Judge Ray N. Stevens found that the property was contaminated, but held that the Taxpayer did not prove a zero market value since he failed to establish the cost to remediate the contamination or prove that the contamination prevented financing of the development.

Clark obviously learned a lesson from the hearing and decision in Clark I: he presented much more comprehensive and compelling evidence in the present case, especially on the points Judge Stevens found lacking in the previous case. To support his claim that the subject property has a zero market value for tax year 1995, Taxpayer presented uncontroverted expert testimony regarding the extent of the contamination and estimated cost of remediation. Taxpayer also presented evidence that the contamination or perception of contamination has resulted in the refusal of financial institutions to offer financing for the sale or development of lots within the Clark property. Subsequent to the Clark I decision, Taxpayer was forced to rescind several sales of lots within the subject property because buyers were refused financing and faced the potential liability for environmental cleanup as property owners. Based on those facts, Taxpayer renews his claim that the subject property is unmarketable and valueless.

The value of real property for ad valorem tax purposes is found by determining the price a willing buyer would pay to a willing seller for the taxpayer's property.

S. C. Code Ann. § 12-37-930 (Supp. 1995). The taxpayer has the burden of showing the valuation of the taxing authority is incorrect. S.C. Tax Comm'n v. S.C. Tax Bd. of Review, 278 S.C. 556, 299 S.E.2d 489 (1983). This burden is met if the taxpayer proves the actual value of the property is a value other than that determined by the taxing authority. Newberry Mills v. Dawkins, 259 S.C. 7, 190 S.E.2d 503 (1972). Even if the taxpayer fails to prove the actual value of the property, however, the taxpayer still meets his burden of proof when the he "show[s] by other evidence that the assessing authority's valuation is incorrect." Cloyd v. Mabry, 295 S.C. 86, 367

S.E.2d 171 (S.C. App. 1988). In the instant case, the taxpayer has met his burden of proof of showing The Assessor's and Board's valuation is incorrect.

There are three primary real property valuation methods utilized in ad valorem tax cases, which are the cost, income, and market approaches. None of the three are perfect for determining the fair market value of the subject property.⁽¹⁾ The Assessor employed a sales comparison market approach to value the subject property. Under a market approach, the value of the property in an uncontaminated state depends upon the comparison methodology, the validity of the comparables, and application of the unit of comparison to the taxpayer's property. Clark does not contest that method of valuation or the Assessor's estimation of the subject property's fair market value in an uncontaminated condition. Clark does point out, however, that Assessor's comparables are uncontaminated and further asserts that comparable properties do not exist.

For actions involving allegedly contaminated property, the salient question is whether the presence of contamination has been proven and what impact that contamination has upon market value. Firestone v. County of Monterey, 223 Cal. App. 3d 382 (1990). A valid appraisal of contaminated property must take into account the contamination and cost of remediation in determining the price a hypothetical willing buyer would pay for the subject property. In the Matter of The Appeal of Camel City Laundry Company, 123 N.C.App. 210, 472 S.E.2d 402 (1996). Before assigning a zero valuation to contaminated property, however, it must be proven that the contamination prevents the present or future owners from putting the property to its highest and best use. See Id.

It is uncontroverted that the former landfill site has groundwater contamination. DHEC performed a Site Inspection Prioritization ("SIP") of the former landfill in 1992, which resulted in DHEC giving Simpsonville Landfill No. 1 a "High" priority for a Listing Site Inspection for Superfund action. Groundwater flows from the Simpsonville Landfill No. 1 through and under the Clark property, and monitor wells placed on the Clark property in 1997 indicate the presence of volatile organic compounds (VOCs) in the groundwater at levels exceeding allowable standards for drinking water.

Licensed hydrologist George Y. Maalouf, of Rogers & Calcott Engineers, Inc., examined the Clark property, studied the test results from the monitor wells, and prepared a conceptual cost estimate for remediation of the Clark property. The estimate was based on documentation about the property, the Simpsonville Landfill No. 1, the area's geology, the nature of the contaminants, and the potential for remediation. Maalouf's estimate for remediation reasonably includes the cost of investigating the specific nature, severity and horizontal and vertical extent of the groundwater contamination and of designing, constructing, and operating a groundwater treatment system to cut off the flow of groundwater from the contaminant source and remove existing contaminants. That will require building a slurry wall to block the flow of water from the adjacent landfill site, as well as pumping and filtering the existing groundwater on the Clark property. In Maalouf's uncontroverted expert opinion, the lowest total estimated cost of returning the Clark property's contaminated groundwater to background levels and protecting it from further contamination from nearby contaminant sources is $8,750,000, which is about seventy times the assessed value of the property. The included expense of merely investigating the site to provide a more precise estimate of the cost of remediation would also be greater than the property's assessed value. The cost of investigating the precise extent of the groundwater contamination of the Clark property alone would be at least $200,000.

The Clark property is contaminated, and adequate evidence has been presented of the extent of the contamination, the cost of remediation, and the effect of the stigma of contamination has on selling or financing the sale and/or development of the property. If the subject property were income producing property, a simple deduction of the entire cost of cleanup from the uncontaminated value to reach the fair market value of the property would not be appropriate. Capitalization of the remediation cost over a period of years would render a more accurate valuation of the property. Inmar Associates, Inc. v. Borough of Carlstadt, 549 A.2d 38 (N.J. 1988). Because capitalization of the remediation costs is not possible in this case since the contaminated subject property is unimproved land which produces no income and has no practical use as long it remains contaminated, a straight deduction of the clean-up costs from the uncontaminated value of the land is the most reasonable method of valuation of the Clark property. Because the uncontroverted estimate of the remediation costs far exceeds the value of the subject parcels, the property is practically worthless.

Assessor failed to take into account the contamination's effect on market value. Assessor chose recent sales in the area as comparable properties; however, she failed to present evidence that property sales in the area were comparable to the Clark property in any meaningful way. No analysis was made of the specific features of the properties that would render them relevant to determining the value of the Clark property other than their unimproved state and relative proximity to the Clark property. Most importantly, none of the comparables had groundwater contamination, and their values were not adjusted for the presence of contamination on the Clark property. Accordingly, the properties chosen by Assessor are not comparable to the Clark property.

While the Assessor does not deny that the property is contaminated or that remediation would be extraordinarily expensive, Assessor refuses to lower the valuation of the property, arguing that the extent of the contamination is unknown and the cost of any necessary remediation is speculative. Sufficient evidence was presented, however, that the level and extent of contamination is more than negligible and that any legitimate clean up would include not only remediating the existing contamination, but also identifying and eliminating the sources of the contaminants. The uncontroverted expert testimony of a hydrologist established that the cost of any necessary remediation would exponentially exceed that value, easily running into the millions of dollars.

Without remediation, the Clark property cannot be put to any practical use, much less its highest and best use. Clark has repeatedly attempted to secure financing for, develop, and/or sell portions of the subject property. Because of the existence of and stigma of environmental contamination, no commercial lenders would offer financing, no willing buyers were interested in purchasing the Clark property, and residential development was not possible. In fact, four of the subject parcels were actually sold by Clark to buyers before contamination was verified, but once the condition of the property became known, the buyers were unable to get financing, and Clark was forced to buy back the land. The Clark property is currently classified for agricultural use, but, again because of the groundwater contamination, that use is not possible.

Regardless of the precise extent of the contamination and/or the exact cost of remediation, the proximity of the Clark property to the old landfill, the verified existence of contamination of the landfill site and the Clark property, and the stigma that environmental contamination attaches to the Clark property render the subject parcels unmarketable. The threat of liability resulting from groundwater contamination, the extent of which is not completely known, further renders the property unmarketable.

Given that Assessor presented almost no useful evidence to establish the value of the property, and given the uncontroverted and persuasive evidence presented by Taxpayer establishing the contamination of the property and its effect on the market value, the only determination supported by the evidence presented is that the Clark property had only nominal value on December 31, 1994.

By a preponderance of the evidence, I find:

Woodrow F. Clark, Jr. is the taxpayer for five parcels of land totaling 80.5 acres, identified as tax map numbers 0575.02-01-006.01, 007.01, 007.02, 007.04 and 007.05, located on New Harrison Bridge Road, in the Simpsonville area of Greenville County.

As of December 31, 1994, Woodrow F. Clark, Jr. was the fee simple owner of one of the subject parcels, a 55.5 acre lot shown as tax map number 0575.02-01-006.01.

As of December 31, 1994, Frank H. Huff and Deminia W. Huff were the fee simple owners of one of the subject parcels, a 7. acre lot shown as tax map number 0575.02-01-007.01; however, by Bond for Title dated May 6, 1997, the Huffs contracted to sell the lot to Woodrow F. Clark, Jr.

As of December 31, 1994, Nancy JoAn Massie, f/k/a Nancy JoAn Walls, was the fee simple owner of one of the subject parcels, a 5. acre lot shown as tax map number 0575.02-01-007.02; however, by Bond for Title dated April 30, 1997, Massie contracted to sell the lot to Woodrow F. Clark, Jr.

As of December 31, 1994, Frederick H. Baisden and Terry S. Baisden were the fee simple owners of one of the subject parcels, an 8. acre lot shown as tax map number 0575.02-01-007.04; however, by Bond for Title dated May 2, 1997, the Baisdens contracted to sell the lot to Woodrow F. Clark, Jr.

As of December 31, 1994, David R. Boalt and Gail F. Boalt were the fee simple owners of one of the subject parcels, a 5. acre lot shown as tax map number 0575.02-01-007.05; however, by Bond for Title dated May 2, 1997, the Boalts contracted to sell the lot to Woodrow F. Clark, Jr.

For tax year 1995, Assessor valued the Clark property at $1,315 per acre, for a total fair market value of $125,243, apportioned as follows:

TMS 0575.02-01-006.01 55.5 ac $72,983

TMS 0575.02-01-007.01 7.0 ac 28,268

TMS 0575.02-01- 007.02 5.0 ac 6,680

TMS 0575.02-01-007.04 8.0 ac. 10,621

TMS 0575.02-01-007.05 5.0 ac. 6,691

$125,243

After a conference on March 26, 1998, the Greenville County Board of Assessment Appeals upheld Assessor's valuation of $125,243, after determining that Clark failed to submit new evidence to support a change in the value from tax years 1993 and 1994.

Clark claims that the subject property is unmarketable and unusable because of groundwater contamination and asserts, therefore, that the fair market value is zero.

Upon issuance of the decision of the Greenville County Board of Assessment Appeals, Taxpayer timely filed a request for a contested case hearing before the Administrative Law Judge Division.

The valuation of much of the Clark property for tax years 1993 and 1994 was established by the ALJD Final Order and Decision in the contested case of Greenville Co. Real Property Srvcs. v. Clark, 95-ALJ-17-0227-CC (Nov. 1, 1995), heard and decided by Administrative Law Judge Ray N. Stevens.

Judicial notice is taken of the Final Order and Decision of Judge Stevens in Greenville Co. Real Property Srvcs. v. Clark, 95-ALJ-17-0227-CC (Nov. 1, 1995).

In Greenville Co. Real Property Srvcs. v. Clark, 95-ALJ-17-0227-CC (Nov. 1, 1995), Judge Stevens valued one of the present subject parcels and other non-subject but adjacent lots at $1,315 per acre.

Taxpayer and his wife purchased the parcels constituting the Clark property in several separate transactions on September 14, 1984; October 29, 1985; March 9, 1988; and February 27, 1987, respectively.

Taxpayer purchased the various parcels of the Clark property for residential development.

The Clark property is unimproved real estate.

The highest and best use of the Clark property, in an uncontaminated state, is residential development.

The Simpsonville area in which the Clark property is located is one of the fastest growing residential areas in the Southeast.

The only improvement made to the subject property since Clark originally purchased it has been the installation of municipal water lines to the area.

The Clark property is currently classified for agricultural use for tax purposes.

Agricultural use of the Clark property is not possible because of groundwater contamination.

Taxpayer receives no income from the Clark property.

The Clark property adjoins the site of the former Simpsonville Landfill No. 1, which was operated by Greenville County as a trench-fill landfill from the mid 1960s until 1972 by Greenville County.

When in operation, Simpsonville Landfill No. 1 was an unregulated, open dump encompassing approximately 60 acres of land and included a small chemical pond.

Part of the former Landfill No. 1 encroached upon the Clark property.

Unknown wastes, including domestic and commercial wastes, and possibly industrial chemical wastes, were deposited into the landfill.

The landfill was closed and covered with soil in 1976.

There have been no removal or remediation actions at Simpsonville Landfill No. 1 since its closure.

A Site Inspection Prioritization ("SIP") was performed for the former landfill by DHEC in 1992, for the purpose of evaluating the site and testing data to determine whether the site should be included on the National Priority List for Superfund action.

Based upon the SIP of the former landfill site, DHEC gave Simpsonville Landfill No. 1 a "High" priority for a Listing Site Inspection for Superfund action.

If the Federal and state environmental authorities determine that remediation of the Clark property is necessary, any prospective purchaser of the Clark property could be liable under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C.A. §§ 9601 to 9675 (CERCLA), for all costs of removal or remedial action incurred by the state or federal government.

The potential liability under CERCLA renders the Clark property unattractive to any potential buyer.

Monitoring wells placed on the former landfill site have detected groundwater contamination.

The flow of shallow groundwater generally mimics the slope of the topography of the saprolite layer of soil, which generally extends from ground surface to bedrock depth of approximately thirty feet deep.

The groundwater flow in bedrock aquifers is not completely predictable and may flow in any direction.

Groundwater flows from the Simpsonville Landfill No. 1 through and under the Clark property.

Surface water at the landfill has been contaminated by manganese, aluminum, cadmium, cobalt, and other metals at levels up to four times the background levels.

Surface water downstream of the former landfill has been adversely impacted by the landfill contamination.

A spring-fed creek contaminated by the Simpsonville Landfill No. 1 flows across the Clark property.

In April 1997, DHEC granted Taxpayer permission to place two wells on the Clark property to monitor and assess groundwater quality.

Samples taken from the Clark property groundwater monitor wells indicate the presence of volatile organic compounds (VOCs) in the groundwater at levels exceeding allowable standards for drinking water.

A "VOC" is an organic compound which participates in atmospheric photochemical reactions with more than negligible photochemical reactivity.

Licensed hydrologist George Y. Maalouf examined the Clark property; installed the monitor wells; studied the test results from the wells; and prepared a conceptual cost estimate for remediation of the Clark property based upon a review of available information about the property, the Simpsonville Landfill No. 1, the area's geology, the nature of the contaminants, and the potential for remediation.

Maalouf's conceptual cost estimate for remediation of the Clark property, dated December 4, 1997, is based upon the assumption that a groundwater treatment system must be designed, constructed, and operated which will encompass the construction of a slurry wall to cut off the flow of groundwater from the contaminant source and the pumping and filtering of groundwater on the Clark property to remove existing contaminants.

Maalouf prepared his conceptual cost estimate for remediation of the entire Clark property (approximately 80 acres), as well as for half the subject property (approximately 40 acres).

The lowest total estimated cost of returning the Clark property's contaminated groundwater to background levels is $8,750,000.

Before any remediation could commence, an investigation of the specific nature, severity, and horizontal and vertical extent of the groundwater contamination must be performed.

The cost of investigating the specific nature, severity and horizontal and vertical extent of the groundwater contamination is included in Maalouf's conceptual cost estimate for remediation.

Based upon experience in investigating chlorinated-solvent and metal contamination in Piedmont geology, the cost of investigating the precise extent of the groundwater contamination of the Clark property is between $200,000 and $500,000.

The cost of groundwater contamination remediation at the Clark property is in excess of Assessor's proposed value of the property.

Prior to December 31, 1994, Taxpayer conveyed four of the subject parcels to buyers.

After purchase of the four subject parcels, the buyers were unable to secure financing for the lots because of the presence and stigma of contamination and sought to rescind the conveyances from Clark.

In 1997, Clark contracted to repurchase the following subject parcels from the following grantors (See "Findings of Fact" Numbers 1-6):

Parcel Acres Owner Repurchase Price

TMS 0575.02-01-007.001 7.067 Huff $113,072

TMS 0575.02-01-007.04 8.077 Baisden $129,232

TMS 0575.02-01-007.05 5.088 Boalt $81,408

TMS 0575.02-01-007.02 5.088 Massie $81,408

Assessor's valuation of the Clark property is based upon the sales of five unimproved parcels in the vicinity of the subject parcels.

The assessor's comparables support the valuation of the subject parcels, in an uncontaminated state, at $1,315 per acre, for a total of $125,243.

None of Assessor's comparables have groundwater contamination.

No comparables with groundwater contamination were presented by either party.

Taxpayer attempted to have an appraisal conducted of the Clark property in March 1998; however, a licensed appraiser refused to appraise the property because of the presence of contamination.

Assessor did not take into account groundwater contamination or the stigma of contamination as a factor affecting the value of the subject property.

As of December 31, 1994, no willing buyers "were interested" in purchasing the

Clark property because of the presence of contamination, and no sales of properties sufficiently comparable to the Clark property were made in the area.

Regardless of the precise extent of the contamination and/or the exact cost of remediation, the proximity of the Clark property to the old landfill, the verified existence of contamination of the landfill site and the Clark property, and the stigma that environmental contamination attaches to the Clark property render the subject parcels unmarketable.

Clark sought financing to develop the property from several commercial financial lenders, but was refused by all lenders he had contacted once they were informed of the potential contamination issues related to the subject parcels.

Financing to purchase or develop the Clark property is unavailable because of the stigma of environmental contamination and the potential liability for clean-up.

A willing buyer would not be able to obtain financing to purchase the Clark property for residential development because of the stigma of groundwater contamination.

The threat of liability resulting from groundwater contamination, the extent of which is unknown, and the proximity of the Clark property to the Simpsonville Landfill No. 1, render the property unmarketable.

Real property which is unmarketable, unusable, and unable to produce income has little or no value.

The subject parcels have the nominal value of one dollar ($1.00) per parcel for property taxation purposes for tax year 1995.

Based upon the above Findings of Fact, I conclude as a matter of law, the following:

1. S.C. Code Ann. § 12-60-2540 (Supp. 1997) 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. "All taxes upon property, real and personal, shall be laid upon the actual value of the property taxed, as the same shall be ascertained by an assessment made for the purpose of laying such tax." S.C. Const. Art. III, § 29.
3. All property shall be valued for taxation purposes 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 the buyer are willing, are not acting under compulsion, and are reasonably well informed as to the uses and purposes for which it is adapted and for which it is capable of being used. S.C. Code Ann. § 12-37-930 (Supp. 1995).
4. "The pertinent date to determine the value of property for a given tax year is December 31st of the preceding year." Lindsey v. South Carolina Tax Comm'n, 302 S.C. 274, 395 S.E.2d 184, 186 (1990), citing S.C. Code Ann. § 12-37-900 (1976) and Atkinson Dredging Co. v. Thomas, 266 S.C. 361, 223 S.E.2d 592 (1976).
5. The Court in Long Cove Home Owners' Assoc., Inc. v. Beaufort Co. Tax Equalization Bd., 327 S.C. 135, 488 S.E.2d 857, 861 (1997) states:

All real property in South Carolina must be assessed according to its

"true value in money," which has been held to mean fair market

value. . . . The "willing buyer/willing seller" standard in [section

12-37-930] is hypothetical in nature and may be assumed when

no actual market exists for a particular parcel of land. Other

methods, such as cost or income, may be used to measure market

value when no willing buyer exists." (citations omitted)

1. 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).
2. The Petitioner has the burden of showing the valuation of the county tax board is incorrect. S.C. Tax Comm'n v. S.C. Tax Bd. of Review, 278 S.C. 556, 299 S.E.2d 489 (1983); Reliance Insurance Co. v. Smith, ____ S.C. ____, 489 S.E 2d 674 (Ct. App. 1997).
3. The taxpayer's burden is met if the taxpayer proves the actual value of the property is a value other than that determined by the taxing authority. Newberry Mills v. Dawkins, 259 S.C. 7, 190 S.E.2d 503 (1972). If the taxpayer fails to prove the actual value of the property, however, the taxpayer still meets its burden of proof when the taxpayer "show[s] by other evidence that the assessing authority's valuation is incorrect." Cloyd v. Mabry, 295 S.C. 86, 367 S.E.2d 171 (Ct. App. 1988).
4. For actions involving allegations of contaminated property, the salient question is whether the presence of contamination has been proven and what impact that contamination has upon market value. Firestone v. County of Monterey, 223 Cal. App. 3d 382 (1990).
5. While absolute certainty is not required, probative evidence is presented by demonstrating contamination of a specific site along with the remediation costs for that site as of the valuation date. Badische Corp. v. Town of Kearny, 14 N.J. Tax 219 (1994).
6. "Generally, where environmental contamination depresses a property's value, that contamination must be considered in a property tax assessment. . . ." Landau v. Assessor of the Town of Carmel, 652 N.Y.S.2d 777, 778 (A.D.2d 1997); accord, B.P. Oil Co., Inc. v. Board of Assessment Appeals of Jefferson County, 633 A.2d 1241 (Pa. Cmwlth. 1993).
7. Courts have only recently begun to deal with the impact of contamination on the valuation of property for tax assessment purposes. Those courts which have faced this issue have usually acknowledged that environmental contamination has an adverse effect on property values or have concluded that the assessor must at least consider the effect of contamination on the fair market value of the property. E.g., Reliable Elec. Finishing Co. v. Board of Assessors, 410 Mass. 381, 573 N.E.2d 959, 960 (1991); Inmar Assocs., Inc. v. Borough of Carlstadt, 112 N.J. 593, 549 A.2d 38, 41 (1988); B.P. Oil Co. v. Board of Assessment, 159 Pa.Cmwlth. 414, 633 A.2d 1241, 1243 (1993); see Westling v. County of Mille Lacs, 512 N.W.2d 863, 866 (Minn.1994).

Boekeloo v. Bd. of Review of the City of Clinton, 529 N.W.2d 275, 278 (Iowa 1995).

1. The cost approach may be used to determine the fair market value of real property by subtracting the cost to cure the contamination from the value the property would have if it were not contaminated. See B.P. Oil Co., Inc. v. Board of Assessment Appeals of Jefferson County, 633 A.2d 1241 (Pa. Cmwlth. 1993). The cost approach is not applicable in this case since the subject property is unimproved land and the cost method is most useful for property that has been recently constructed. See The Appraisal of Real Estate p. 316 (American Institute of Real Estate Appraisers 10th ed.).
2. In determining a property's value, the ability of the subject property to produce income in its contaminated state and the cost to cure the contamination may be considered as evidence of the fair market value of the property if linked to the price a buyer would pay for the property. In re Appeal of Camel City Laundry Co. , 115 N.C. App 469, 444 S.E.2D 689 (1994).



3. Generally, the methodology to account for the reduction in fair market due to contamination is not simply to deduct the entire cost of the cleanup from the uncontaminated value, but to capitalize the cost of remediation over a period of years, offset by the continuing income generated by rental of the subject property under the income method of valuation. Inmar Associates, Inc. v. Borough of Carlstadt, 549 A. 2d 38 (N.J. 1988). The income approach is not applicable in this case, however, since rental of the property has not been suggested and rental is a relevant criterion for value. 84 C.J.S. Taxation § 411 (1954).
4. While not conclusive, market sales of comparable properties present probative evidence of the fair market value of similar property. 84 C.J.S. Taxation § 411 (1954); see Cloyd v. Mabry, 295 S.C. 86, 367 S.E.2d 171 (Ct. App. 1988).
5. The market sales approach of valuation is the best method to use to attempt to determine the value for the subject property.

18. Although Assessor gathered sales prices of nearby uncontaminated properties which are otherwise comparable in character to the Clark property, Assessor did not make any "subjective corrections to the sales prices of the comparable properties in order to produce an expert opinion as to value." James R. Arnold, Valuation of Contaminated Property: 1997, SC18 ALI-ABA 933, 938 (1997).

19. Because no comparables were presented which had known environmental contamination or even had the stigma of potential contamination associated with them, no "true" comparable properties were offered to utilize in determining an accurate valuation of the subject property under the market method.

20. Taxpayer has met his burden of proof of showing the Assessor's and County Board's valuation is incorrect.

21. The known contamination of the Clark property and the adjacent former landfill, the potential liability for clean-up, and the stigma of environmental contamination, renders the Clark property unmarketable.

22. It is reasonable to attach a nominal value of one dollar to valueless contaminated property lots. See Monroe County Bd. of Assessment Appeals v. Miller, 570 A.2d 1386, 1390 (Pa. Cmwlth. 1990) (contaminated property lots were valueless and worth one dollar each for purposes of tax assessment as result of contamination by benzene); cf. Sterling v. Velsicol Chem. Corp., 855 F.2d 1188 (6th Cir. 1988) (Assessor and Federal District Court properly assessed contaminated land near former landfill as valueless).

23. For tax year 1995, each of the five parcels of subject property is valued at one dollar ($1.00).

24. Any issues raised or presented in the proceedings or hearing of this case not specifically addressed in this Order are deemed denied. ALJD Rule 29(C)

IT IS THEREFORE ORDERED that the Greenville County Division of Real Property Services shall assess the five parcels of real property totaling 80.5 acres, located on New Harrison Bridge Road in Greenville County, owned by Woodrow F. Clark, Jr., and identified as tax map numbers 0575.02-01-006.01, 007.01, 007.02, 007.04 and 007.05, at the nominal value of one dollar ($1.00) each for tax year 1995.

AND IT IS SO ORDERED.

__________________________________

STEPHEN P. BATES

ADMINISTRATIVE LAW JUDGE

October 8, 1998

Columbia, South Carolina

1. The income method is best suited for income-producing property, which is typically purchased as an investment. It relies upon a determination of the earning power of the subject property, converted into an indication of present cash value. In its present condition, the subject property produces no income and is not likely to do so in the foreseeable future. Although the cost approach is especially useful for property that is difficult to value under an income or market approach where the price in the market is indeterminable because of some unique consideration, that approach is most useful for property that has been recently constructed. 84 C.J.S. Taxation Sec. 411 (1954; See The Appraisal of Real Estate, p. 316 (American Institute of Real Estate Appraisers 10th ed.). Here, there are no improvements to the property other than the installation of underground water lines.