Dorchester County Assessor v. Middleton Place Equestrian Center, LLC
Docket: Appellate Case No. 2013-002320; No. 5358
Court: Court of Appeals of South Carolina; November 3, 2015; South Carolina; State Appellate Court
The Dorchester County Assessor appeals the Administrative Law Court’s (ALC) affirmation of the Dorchester County Board of Assessment Appeals’ decision allowing Middleton Place Equestrian Center, LLC to maintain an 'agricultural use' classification for eleven parcels of land, which the Assessor sought to reclassify for the 2012 tax year. The Assessor contends the ALC erred by applying the agricultural classification despite the parcels being subject to restrictive covenants for residential use, and argues that the classification should not apply as the parcels are not timberland.
The case involves eleven parcels in the Middleton Oaks Subdivision, part of a larger tract owned by Middleton Place. The parcels, ranging from 0.29 to 3.08 acres, were part of a master plan developed by Charles H.P. Duell in 1970 to sell home sites for restoring the historic Middleton Place National Historic Landmark. Initially classified as 'agricultural use,' individual sites were reclassified by the Assessor upon sale and taxed at market rates.
Duell, who created the Middleton Oaks Property Owners Association and established covenants for the residential community, retained control over these restrictions. In 1990, concerns arose about how recording a plat of potential house sites might affect the agricultural classification, leading Duell to seek assurances from the Assessor at the time, which he received in writing. From the recording of the plat in 1990 until 2012, the entire property maintained its agricultural classification, with minimal sales of house sites, the last occurring in 2007.
In 2012, timber valued at approximately $40,000 was harvested from Middleton Place, where the ARB had previously approved improvement cutting for the MPPOA. Duell had cut timber from all eleven parcels in question since their agricultural designation was reaffirmed in 1993. For the 2012 tax year, the Assessor denied agricultural land use classification for these parcels, claiming they did not meet statutory requirements, and issued new assessed values for ad valorem tax purposes. Middleton Place appealed this denial to the Dorchester County Board of Assessment Appeals, which reversed the Assessor’s decision.
During the ALC hearing, the Assessor cited two main reasons for the denial: the parcels were all under five acres, and the Covenants and Restrictions prohibited timber management and wholesale harvesting. He characterized the parcels as "all timberland." Cross-examination revealed that the Assessor's interpretation of the restrictive covenants was based on assumptions rather than explicit language. He acknowledged that the purpose of the covenants was to protect the subdivision and its homeowners from commercial activities like logging.
The ALC ruled in favor of Middleton Place in an order dated August 20, 2013, and subsequently denied the Assessor’s motion to alter or amend this decision on September 30, 2013, while also reversing an award of attorney’s fees to Middleton Place. The Assessor appealed the ALC's ruling, arguing that the agricultural use designation was improperly awarded. The reviewing body affirmed the ALC's decision.
The standard of review for decisions from the Administrative Law Court (ALC) is governed by the Administrative Procedures Act. A court may reverse or modify the ALC's decision if the appellant's substantial rights have been prejudiced due to findings that are unconstitutional, exceed statutory authority, are made through unlawful procedures, involve errors of law, are clearly erroneous based on the entire record, or are arbitrary, capricious, or abuse discretion. Courts cannot substitute their judgment for that of the ALC regarding the weight of evidence on factual questions. Instead, the review is limited to whether findings are supported by substantial evidence or controlled by legal error.
In this case, the Assessor contends that the Covenants and Restrictions for Middleton Oaks, which limit the parcels to residential use, disqualify them from being classified as agricultural real property for tax purposes. However, it is established that a court must discern and uphold the legislature's intent, relying primarily on the plain language of statutes. South Carolina Code section 12-43-230(a) defines "agricultural real property" broadly, covering land used for various agricultural activities. If 50% or more of a property qualifies as agricultural, the entire tract is classified as such, so long as no other profit-driven business operates on it. Additionally, the Department of Revenue is required to establish regulations detailing agricultural property classification for county assessors.
South Carolina Code of Regulations Section 117-1780.1 establishes criteria for classifying property as agricultural, specifically indicating that real property must comply with Sections 12-43-220(d), 12-43-230, and 12-43-232 to be deemed agricultural. Residential properties are explicitly excluded from this classification. County assessors evaluate several factors to determine if a property qualifies as bona fide agricultural real property, including the terrain, marketable product density, historical use, economic viability of the agricultural product, care and cultivation practices, and the landowner's business. Importantly, properties with dual uses must predominantly serve an agricultural purpose to qualify.
For timberland, a minimum of five acres is required, although smaller contiguous parcels or those managed together with qualifying agricultural land can be included. The eleven parcels in question are each under five acres. The Assessor claims there is no evidence of agricultural activity on these parcels, while Middleton Place argues they are connected to larger qualifying timberlands. Evidence presented includes testimony from Duell, the exclusive owner since 1970, who confirmed that the parcels have been part of a timber management plan since 1990, overseen by a full-time forester and woodland manager. Duell explained their practices focus on sustainable timber management, primarily involving pine trees, and noted the necessity of periodic harvesting to maintain the health of the forest.
Respect for live oaks and hardwoods is emphasized as part of conservation efforts. The distinction between residential lots and timberland is clarified, asserting that the properties in question are timberland until sold as residential lots. The speaker notes that no clear-cutting is taking place, mentioning a timber sale that generated $40,000 last year and plans for further timber harvesting this year, which has received advisory approval from the architectural review board.
Despite Dorchester County's request for separate platting of parcels in 1990, it is stated that Mr. Duell has treated these parcels as part of a larger timberland area, which exceeds statutory acreage requirements, and has managed them akin to the rest of the property within a National Historic Landmark. The Assessor testified that the eleven parcels are classified as 'all timberland' and argued that no evidence supports a different classification.
The ALC's finding that the respondent owns contiguous timberland exceeding minimum requirements is defended as non-arbitrary and supported by substantial evidence. The Assessor's denial of 'agricultural use' classification is attributed to his assumptions regarding the Middleton Oaks Covenants and Restrictions, which he interpreted within the context of a traditional subdivision. The ALC noted the Assessor’s misinterpretation of the Covenants, particularly regarding the exclusive use of residential lots and the removal of vegetation, emphasizing that Duell holds ultimate authority over the Architectural Review Board (ARB) decisions. The Assessor acknowledged that the record shows no evidence of treating the parcels as anything other than timberland.
Duell clarified that the Covenants and Restrictions aimed to prevent commercial activities, such as shops or manufacturing, within residential lots to maintain the integrity of the community and its natural surroundings. The purpose of these covenants extends beyond individual property protection to encompass the overall appeal of Middleton Place. There is no explicit language in the covenants restricting selective cutting or timber management, leading to the interpretation that any ambiguity should favor the unrestricted use of property, per Hardy v. Aiken, which mandates that property use restrictions be clearly defined and strictly construed.
Regarding the classification of land, the Assessor contended that the Agricultural Use Classification (AUC) should not apply to parcels deemed 'nontimberland.' However, this assertion was rejected; under South Carolina law, a tract must be ten acres or more to qualify as agricultural if it does not grow timber. Nontimberland tracts of less than ten acres can still qualify if contiguous to larger qualifying tracts. Additionally, a nontimberland tract may retain agricultural classification if owned by the same family for at least ten years before a specified date, regardless of its current use.
Duell inherited the property from a family member in 1970 and recorded a plat for eleven parcels at the request of the Dorchester County Planning Board, not intending to develop a subdivision. Therefore, even under the Assessor’s nontimberland argument, the eleven parcels should retain their agricultural classification based on familial ownership criteria. Consequently, the Administrative Law Court's ruling reaffirming the agricultural classification for these parcels was upheld. The Covenants and Restrictions were filed in 1979, defining 'residential lot' as parcels intended for single-family homes, and identifying an 'immediate family member' within the third degree of consanguinity or affinity.
