ORDERS:
FINAL ORDER AND DECISION
STATEMENT OF THE CASE
This is a contested case brought by Oscar C. Fitzhenry against Charleston County Assessor
concerning a property valuation for the 1995 and 1996 tax years. The Taxpayer exhausted all
prehearing remedies with the Assessor and the Charleston County Board of Assessment Appeals
(Board). Jurisdiction is granted to the Administrative Law Judge Division by S.C. Code Ann. § 12-60-2540(A) (Supp. 1997).
After notice to the parties, a hearing was conducted on September 1, 1998. The parties
stipulated that the facts and evidence in this case shall apply to both the 1995 and 1996 tax years and
that the Taxpayer's respective appeals of the 1995 assessment, Docket No. 98-ALJ-17-0231-CC, and
the 1996 assessment, Docket No. 98-ALJ-17-0509-CC, be consolidated.
I find that the proper valuation of the property located at 1223 Pembrooke Drive in
Charleston, South Carolina is $217,500 for the 1995 and 1996 tax years.
FINDINGS OF FACT
Having carefully considered all testimony, exhibits, and arguments presented at the hearing
of this matter, and taking into account the credibility and accuracy of the evidence, I make the
following Findings of Fact by a preponderance of the evidence:
1. The Taxpayer is the owner of real property at 1223 Pembrooke Drive, Charleston,
South Carolina, which is the subject of this contested case hearing.
2. The subject property is identified as Tax Map No. 349-10-00-039 for tax purposes.
3. The Assessor originally valued the subject property at $226,000. After the Taxpayer
appealed the assessment to the Charleston County Board of Assessment appeals, the Assessor
adjusted the valuation to $223,000, of which $140,000 was attributed to the land and $83,000 was
attributed to the residence. The Taxpayer does not challenge the $223,000 valuation as an
unadjusted valuation; instead, he believes this valuation should be adjusted to reflect deficiencies
in the property.
4. On March 19, 1998, the Board determined the true value of the subject property to
be $223,000. The Taxpayer contends that the value of the subject property is $175,000.
5. At the time of the Assessor's appraisal, the subject property had poor drainage under
the residence as well as notable termite damage. The cost to repair the termite damage is
approximately $1,700, and the cost to correct the drainage problem is approximately $3,800.
6. At the time of the appraisal, the subject property had a seawall which was
significantly deteriorated and no longer functional.
7. The Assessor appraised the subject property using the market approach and the cost
approach, with primary emphasis on the market approach.
8. In determining value under the market approach, the Assessor used five comparable
properties. Because there were no recent sales in the neighborhood of the subject property, the
Assessor used comparables from other nearby neighborhoods. The Assessor made an adjustment
to reflect the difference in quality between the neighborhood of the subject property and the
neighborhoods of the comparable properties.
9. Because of the deterioration of the seawall on the subject property, the Assessor made
an adjustment to those comparables with seawalls to reflect the absence of a seawall from the subject
property.
10. The Assessor made adjustments to the comparables for variations in overall condition
from the overall condition of the subject property.
11. The Assessor attributed no termite damage to any of the comparables.
12. The Assessor attributed no drainage problem to any of the comparables.
13. The Assessor acknowledged the subject property's termite damage and poor drainage.
14. The Assessor did not make adjustments to the comparables for the absence of termite
damage or poor drainage.
DISCUSSION AND CONCLUSIONS OF LAW
The issue in dispute is the value of the Taxpayer's property, 1223 Pembrooke Drive,
Charleston, South Carolina, for taxation purposes. Land is unique, as no parcel is identical to
another. Unlike commodities, it does not have a fixed market price at a given period and its value
is determined by the estimate of the person who values it. 84 C.J.S. Taxation § 411 at 793 (1954).
"Generally, the proper valuation of realty for taxation is a question of fact, to be ascertained in each
individual case in the manner prescribed by statute." Id.
S.C. Code Ann. § 12-37-930 (Supp. 1997) provides:
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 as to the uses and
purposes of which it is adapted and for which it is capable of being
used.
Fair market value is the measure of true value for taxation purposes under this statute. Lindsey v.
South Carolina Tax Comm'n, 302 S.C. 504, 397 S.E.2d 95 (1990).
In order to determine a fair market price for the Taxpayer's property, comparisons of the sale
price of other properties of the same character may be utilized. See Appraisal Institute, The
Appraisal of Real Estate at 367 (10th ed. 1992); 84 C.J.S. Taxation §§ 410-411 at 785, 797 (1954).
While it is impossible to predict with certainty what a particular property will sell for, utilizing
comparable sales is a good indicator of what a potential purchaser will likely pay and it provides
probative evidence of the market value of the subject property, if the comparables are similar in
character, location, and physical characteristics. See 84 C.J.S. Taxation § 411 (1954).
In the instant case, the Taxpayer does not dispute the Assessor's selection of comparables
in applying the market approach to valuation. Rather, the Taxpayer argues that the Assessor failed
to make the necessary adjustments to the comparables in arriving at a value for the subject property
under the market approach. The Taxpayer asserts that adjustments should be made for needed
repairs because of termite damage, poor drainage, damage to the roof and deterioration of the
seawall. The Taxpayer has the burden of showing that the Assessor's valuation is incorrect. Cloyd
v. Mabry, 295 S.C. 86, 367 S.E.2d 171 (Ct. App. 1988).
In valuing property, an assessor should take into consideration all relevant factors and
circumstances bearing on this determination which are within his knowledge or brought to his
attention. 84 C.J.S. Taxation § 410 at 784-785 (1954). The assessor "should take into consideration
all of [the land's] elements or incidents, such as location, . . . quality, [and] condition . . . which
affect market value or would influence the mind of a purchaser." 84 C.J.S. Taxation, § 411 at 794-795 (1954). "Each case of valuation must be determined according to the conditions existing at the
time, and the property to be assessed is to be taken and valued in the actual condition in which the
owner holds it. . . ." 84 C.J.S. Taxation § 410 at 784-785 (1954).
The quality and condition of a property has a major influence on the property's comparability
with other properties. Appraisal Institute, The Appraisal of Real Estate at 244 (10th ed. 1992).
Further, the maintenance of a property affects its condition. Id at 245. Moreover, in determining a
property's comparability with other properties, an appraiser should distinguish between items in need
of immediate repair and those items that may be repaired or replaced at a later time. See Appraisal
Institute, The Appraisal of Real Estate at 244-245, 248 (10th ed. 1992). For those items in need of
immediate repair, a willing buyer would reasonably be expected to take into consideration the cost
of repair and reduce the purchase price accordingly. See Adams v. Zimmerman, No. 93-32677, 1994
WL 25883 (Mo.St.Tax.Com. January 28, 1994).
Seawall and Roof
Because of the deterioration of the seawall on the subject property, the Assessor made an
adjustment to those comparables with seawalls to reflect the absence of a seawall from the subject
property. But the Taxpayer asserts that this adjustment was not sufficient because his property's
particular location on Wappoo Creek is subject to continual erosion; he reasons that the absence of
a functioning seawall makes his property worth less than an otherwise comparable property without
a seawall that is not subject to erosion. However, the Taxpayer failed to carry his burden of proving
that a seawall is essential to maintain the integrity and value of his property. The Taxpayer also
failed to carry his burden of proving that the comparable properties examined in the Assessor's
appraisal were not subject to the same erosion patterns which he attributed to his property.
The Taxpayer also asserts that an adjustment should have been made for the roof on his
property as it is in need of repair. However, the Taxpayer failed to carry his burden of proving that
the roof is in need of immediate repair or is in any worse condition than those on the comparable
properties examined in the Assessor's appraisal. Therefore, this tribunal declines to make
adjustments to the appraised value for the seawall and the roof.
Termite Damage and Poor Drainage
The Assessor's appraiser testified that he did not recall seeing any termite damage or
drainage problems in any of the comparables. Further, although the Assessor made adjustments for
the overall condition of the respective comparables and the subject property, there is nothing in the
written appraisal to indicate whether these comparables had items in need of immediate repair or
merely items that could be repaired or replaced at a later time.
Both parties agreed that the subject property has termite damage and poor drainage, and that
the approximate cost of correcting the poor drainage is $3,800. Further, the Taxpayer presented
credible evidence that the approximate cost to repair the termite damage is $1,700. Because these
items require immediate attention, it is highly likely that a potential purchaser would be influenced
by these repairs or the lack thereof. Hence, the Assessor should have made the appropriate
adjustments in his valuation to reflect the cost of these needed repairs. See Adams v. Zimmerman,
No. 93-32677, 1994 WL 25883 (Mo.St.Tax.Com. January 28, 1994) (existence of termite damage
decreased value of property, as willing buyer would reasonably be expected to take into
consideration the cost of repair and reduce the purchase price accordingly). Based on adjustments
for lack of repair of termite damage ($1,700) and the drainage problem ($3,800), the market value
of the Taxpayer's property is $217,500.
ORDER
Based upon the foregoing Findings of Fact and Conclusions of Law,
IT IS HEREBY ORDERED that the Taxpayer's appeal of the 1995 assessment, Docket No.
98-ALJ-17-0231-CC, and the Taxpayer's appeal of the 1996 assessment, Docket No. 98-ALJ-17-0509-CC, be consolidated.
IT IS FURTHER ORDERED that the Assessor value the Taxpayer's property, 1223
Pembrooke Drive, Charleston, South Carolina, for the 1995 and 1996 tax years at $217,500.
AND IT IS SO ORDERED.
____________________________________
JOHN D. GEATHERS
Administrative Law Judge
Post Office Box 11667
Columbia, South Carolina 29211-1667
September 23, 1998
Columbia, South Carolina |