Appeal by taxpayer from Final Decision entered 22 March 2007
by the North Carolina Property Tax Commission. Heard in the Court
of Appeals 28 November 2007.
Rom B. Parker, Jr., pro se.
Parker Poe Adams & Bernstein LLP, by Charles C. Meeker,
for appellee, Halifax County
Taxpayer Rom B. Parker, Jr., appeals from the Final Decision
of the North Carolina Property Tax Commission which confirmed the
2007 Halifax County Schedule of Values adopted by the Halifax
County Board of Commissioners to appraise real property for the
purpose of levying property taxes.
On 19 September 2006, the Halifax County Board of
Commissioners approved the 2007 Halifax County Schedule of Values
(HCSV) at its regular meeting. Taxpayer filed a notice of
appeal with the North Carolina Property Tax Commission (PTC)
pursuant to N.C. Gen. Stat. § 105-290(c) on 16 October 2006,
contending that the HCSV was unlawful because it did not conform tothe statutory requirements of N.C. Gen. Stat. § 105-317. The PTC
heard the appeal on 14 December 2006. The PTC issued a Final
Decision on 22 March 2007, confirming the HCSV. Taxpayer timely
appealed to this Court pursuant to N.C. Gen. Stat. § 105-345.
On appeal, taxpayer contends that the 2007 Halifax County
Schedule of Values is insufficient as a matter of law because (1)
the present use value schedule does not contain a definition of the
soil types (soil type key) used for valuation, and (2) the true
value schedule does not contain: (i) reference to each and every
one of the statutory factors listed in N.C. Gen. Stat. § 105-
317(a), (ii) a valuation adjustment for governmental restrictions
on the land, (iii) a valuation adjustment for shared ownership of
land, (iv) definition, delineation or maps of valuation
neighborhoods, and (v) a table of incremental and decremental
rates. Taxpayer also contends that the Property Tax Commission
erred in the admission of the expert testimony of Charles M. Graham
and Joe Hunt.
II. Standard of Review
Taxpayer acknowledges that he is not challenging a specific
property valuation, but rather appeals solely on the basis that the
HCSV is inadequate on its face as a matter of law, pursuant to N.C.
Gen. Stat. § 105-290(c)(1).
(See footnote 1)
We review decisions of the [Property Tax]
Commission pursuant to N.C.G.S. § 105-345.2.
Questions of law receive de novo
issues such as sufficiency of the evidence to
support the Commission's decision are reviewed
under the whole-record test. Under a de novo
review, the court considers the matter anew
and freely substitutes its own judgment for
that of the Commission.
In re Appeal of the Greens of Pine Glen Ltd. P'ship
, 356 N.C. 642,
646-47, 576 S.E.2d 316, 319 (2003). Because taxpayer's appeal to
the PTC challenged only the sufficiency of the HCSV as a matter of
law pursuant to N.C. Gen. Stat. § 105-290(c), we will review the
PTC's decision de novo
On appeal of a property tax matter to this Court, as on appeal
to the PTC, the good faith of tax assessors and the validity of
their actions are presumed[.] In re McElwee
, 304 N.C. 68, 75, 283
S.E.2d 115, 120 (1981). The taxpayer bears the burden of
overcoming this presumption by showing the illegality or
arbitrariness of the schedule of values, standards and rules
through competent, material and substantial evidence. Id.
(citation and quotation marks omitted).
III. Present-Use Value Schedule
Taxpayer first argues that the Property Tax Commission erred
when it concluded, as a matter of law, that there is no deficiency
in the present-use [value] schedule simply because the present-use
value schedule does not contain a soil type key.
(See footnote 2)
that the absence of a soil type key renders the schedule of
present-use values, which is largely based on soil type,
meaningless. We disagree.
North Carolina law directs tax assessors to prepare [u]niform
schedules of values, standards, and rules to be used in appraising
real property at its true value and at its present-use value
[which] are sufficiently detailed to enable those making appraisals
to adhere to them in appraising real property. N.C. Gen. Stat. §
105-317(b)(1) (2005). Generally, real property subject to taxation
is appraised for taxation according to its true value.
(See footnote 3)
Stat. § 105-283 (2005); In re Appeal of Whiteside Estates, Inc.
136 N.C. App. 360, 364, 525 S.E.2d 196, 198, cert. denied
, 351 N.C.473, 543 S.E.2d 511 (2000). However, real property may be taxed at
its present-use value, an amount typically lower than its true
value, if a taxpayer is able to show that the property qualifies
for present-use valuation. N.C. Gen. Stat. § 105-277.4(a) (2005);
, 136 N.C. App. at 364, 525 S.E.2d at 198. The present-
use value of qualifying land is [t]he value of land in its current
as agricultural land, horticultural land, or forestland, based
solely on its ability to produce income and assuming an average
level of management. N.C. Gen. Stat. § 105-277.2(5) (2005)
(emphasis added). When a taxpayer wants his property valued at the
lower present-use value, the burden is on the taxpayer to clearly
show that the property comes within one of the classes eligible
for present-use value, N.C. Gen. Stat. § 105-277.4(a), and to
provide any other relevant information required by the assessor to
properly appraise the property at its present-use value
The HCSV includes a table showing the estimated net income,
capitalization rate, and use value per acre for different classes
of agricultural land and refers users of the HCSV to the soil
values determined by the North Carolina Department of Agriculture
(NCDOA). The HCSV also includes a brief discussion, presumed
made in good faith until rebutted by the taxpayer, McElwee
N.C. at 75, 283 S.E.2d at 120, on the limitations of using soil
type to value land by the soil productivity method and the method's
dependence on available soil maps. These inclusions in the HCSV
provided sufficient detail to enable those making appraisalsto adhere to the HCSV in appraising real property. N.C. Gen.
Stat. § 105-317(b)(1). The burden is on the taxpayer to show the
class of agricultural, horticultural, or forested land in which his
property fits, and to obtain the soil values for his particular
land from the NCDOA. N.C. Gen. Stat. § 105-277.4(a); McElwee
N.C. at 77, 283 S.E.2d at 121 (In every case, the burden of
establishing entitlement to present use valuation is on the
property owner.). Accordingly, we hold that the Property Tax
Commission did not err in concluding that there is no deficiency
in the present-use [value] schedule simply because the present-use
value schedule does not contain a soil type key.
IV. True Value Schedule
Taxpayer next contends the PTC erred when it concluded that
the true value schedule in the HCSV contained sufficient detail to
comply with N.C. Gen. Stat. § 105-317(b). Specifically, he
contends that the HCSV lacked five elements of detail which must
appear in a legally sufficient schedule of true values: (i)
reference to each and every one of the statutory factors listed in
N.C. Gen. Stat. § 105-317(a), (ii) a valuation adjustment for
governmental restrictions on the land, (iii) a valuation adjustment
for shared ownership of land, (iv) definition, delineation or maps
of valuation neighborhoods, and (v) a table of incremental and
decremental rates. We disagree.
We reiterate that a schedule of values, standards and rules
(SVSR) may only be appealed on the basis that it do[es] not meet
the true value . . . appraisal standards established by G.S.105-283. . . . N.C. Gen. Stat. § 105-290(c)(1). In order for an
SVSR to meet the true value appraisal standards of N.C. Gen. Stat.
§ 105-283, the SVSR should be [u]niform [and] sufficiently
detailed to enable those making appraisals to adhere to them in
appraising real property. N.C. Gen. Stat. § 105-317(b)(1).
Further, the assessor preparing an SVSR for land should
consider as to each tract, parcel, or lot
separately listed at least its advantages and
disadvantages as to location; zoning; quality
of soil; waterpower; water privileges;
dedication as a nature preserve; conservation
or preservation agreements; mineral, quarry,
or other valuable deposits; fertility;
adaptability for agricultural,
timber-producing, commercial, industrial, or
other uses; past income; probable future
income; and any other factors that may affect
its value except growing crops of a seasonal
or annual nature.
N.C. Gen. Stat. § 105-317(a)(1) (2005). However, in applying the
personal property appraisal statute, N.C. Gen. Stat. § 105-317.1,
this Court held that [i]t would be meaningless to construe
literally the applicable appraisal statutes of the Machinery Act.
These statutes must be interpreted in the light of tax history and
legislative purpose in formulating laws to guide local authority in
the difficult and complex problem of appraising property for tax
purposes. In re Appeal of Bosley
, 29 N.C. App. 468, 472-73, 224
S.E.2d 686, 689 (holding that an equitable and reasonably uniform
and accurate method of valuation which reflects market values does
not violate the applicable appraisal statutes for personal
property even though the method does not consider every single
factor listed in N.C. Gen. Stat. § 105-317.1(a)), disc. reviewdenied
, 290 N.C. 551, 226 S.E.2d 509 (1976). This Court has also
held that G.S. 105-317(a)(1) is directory and failure to consider
each and every indicia
of values recited in the statute does not
vitiate the appraisal. In re Appeal of Highlands Dev. Corp.
N.C. App. 544, 546, 342 S.E.2d 588, 589 (1986) (citing In re Appeal
of Broadcasting Corp
., 273 N.C. 571, 160 S.E.2d 728 (1968)).
Taxpayer contends that McElwee
, 304 N.C. 68, 283 S.E.2d 115
(1981), and In re Allred
, 351 N.C. 1, 519 S.E.2d 52 (1999), both
held that a schedule of values, standards and rules must contain
all of the statutory factors listed in N.C. Gen. Stat. § 105-
317(b)(1) to be legally sufficient, citing to language in Allred
that stated, petitioners have not taken the position that the . .
. valuations resulted from any failure by the County or its
appraiser to provide for a method by which each of the valuation
factors designated in subsections 105-317(a)(1) and (2) could be
considered and valued through the use of the uniform schedules of
values, standards and rules[.] 351 N.C. at 11, 519 S.E.2d at 58.
We do not agree with taxpayer that a statement by the North
Carolina Supreme Court that a particular issue was not presented
for review served to overrule Broadcasting
To the contrary, in Allred
the Court determined that the PTC erred
when it ignored the County's schedule of standards and rules and
based its decision on an expert's evaluation. 351 N.C. at 12, 519
S.E.2d at 59. Similarly, in McElwee
the Court determined that the
County's valuation was arbitrary because, inter alia
, there was no
evidence in the record that the County Commissioners had approveda schedule of values, standards and rules. 304 N.C. at 85, 283
S.E.2d at 125. Neither of those cases held that each
statutory factors found in N.C. Gen. Stat. § 105-317(a) was
required to be considered in a schedule of values, standards and
rules. In fact, McElwee
selectively quoted only those land
valuation factors which were relevant to that particular case:
[t]he record does not demonstrate, and in no way can we imagine,
that such factors as 'quality of soil . . . ; fertility;
adaptability for agricultural, timber-producing, commercial,
industrial, or other uses; past income; probable future income . .
. ,' G.S. § 105-317(a)(1), could have received any consideration
whatsoever[.] 304 N.C. at 83, 283 S.E.2d at 124 (omissions and
ellipses in original); see also In re Appeal of Broadcasting Corp.
273 N.C. 571, 578, 160 S.E.2d 728, 733 (1968) (In appraising a
vacant lot on Main Street, for example, an assessor would not
likely give attention to mineral deposits or water power.).
The Land Pricing Schedule in the HCSV divides land into three
categories -- residential, commercial/industrial, and agricultural.
This categorization expressly considers the adaptability for
agricultural, commercial, industrial or other uses, as directed by
N.C. Gen. Stat. § 105-317(a)(1). The HCSV also includes reference
to the following additional factors, which apply across the
categories of land: topography; shape or size, which expressly
includes zoning restrictions; economic, including location;
restrictions, including zoning and other legal restrictions; corner
influence, which is a specific location factor; view, anotherlocation factor; economic misimprovement; and frequent flooding.
Consistent with the liberal construction of the appraisal statutes
set forth in Bosley
, 29 N.C. App. at 472-73, 224 S.E.2d at 689, the
HCSV expressly declined to use quality or fertility of the soil to
determine true value because:
Comparable sales in any area of the county
will typically include a cross-section of the
same soil characteristics, topography and
water features as the parcels being appraised
within that general area. Sales analysis of
agricultural land sold in Halifax County
during the past three years indicates that
buyers give little or no consideration to soil
productivity or other soil features
and price seem to be the only determining
(Emphasis added.) Our review of the HCSV also does not reveal any
specific mention of water power or water rights, other than the
general reference to water features quoted above, or any mention
of mineral, quarry, or other valuable deposits, but taxpayer has
made no showing that those factors actually influence the value of
land in Halifax County, and are therefore necessary details to
enable those making appraisals to adhere to them in appraising real
property. N.C. Gen. Stat. § 105-317(b)(1).
Taxpayer next contends that the HCSV was required to include
a valuation adjustment for certain governmental restrictions on a
tract of land, including The Clean Water Act, The Food Security
Act, and The N.C. Sedimentation Pollution Control Act. We
Restrictions on land use, including governmental restrictions,
while not specifically included in N.C. Gen. Stat. § 105-317(a)(1),certainly fall within the catch-all category of any other factors
that may affect its value except growing crops of a seasonal or
annual nature[,] N.C. Gen. Stat. § 105-317(a)(1). The HCSV does
in fact expressly include restrictions on the use of land as a
valuation factor. Though the example restrictions noted in the
HCSV do not specifically mention governmental restrictions, this
does not render the HCSV legally insufficient. The scope of legal
restrictions is simply too broad to mention every conceivable type
in a general use guideline like an SVSR. In so concluding, we
emphasize that we do not hold that governmental restrictions on
land are irrelevant to valuation of property for tax purposes. In
fact, taxpayer correctly points out that in some cases governmental
restrictions would be the most important valuation factor of all.
We simply hold that when a County's SVSR includes a general
reference to legal restrictions on land use, it need not list every
type of restriction in order to be sufficiently detailed to enable
those making appraisals to adhere to them in appraising real
property. N.C. Gen. Stat. § 105-317(b)(1).
Taxpayer next contends that an SVSR must include a valuation
adjustment for shared ownership of land, such as a tenancy in
common. He cites cases from the United States Tax Court and
pronouncements from the Internal Revenue Service which interpret
the meaning of fair market value in the Internal Revenue Code.
Taxpayer's reliance on these cases and pronouncements is misplaced.
Property tax valuations in North Carolina are governed by the
Machinery Act (N.C. Gen. Stat. §§ 105-271 et seq.
), not by theInternal Revenue Code and the cases and pronouncements interpreting
it. Taxpayer has cited no provision in the Machinery Act or in the
cases interpreting it, and we find none, that the valuation of real
property is to be adjusted for taxpayers who hold the property as
tenants in common or another form of shared ownership. In fact,
N.C. Gen. Stat. § 105-271 refers to valuation of tracts, parcels
and lots of land but makes no mention of valuation of ownership
shares of land.
Taxpayer next argues that the valuation 'neighborhoods'
listed in the HCSV are legally insufficient because they are
completely undefined, undelineated, and unmapped. Again, we
Taxpayer contends that [t]his is in direct violation of G.S.
105-317(b)(1),(3) and (4) which requires that the Schedule of
Values, Standards and Rules be in sufficient detail to enable both
appraisers and property owners to understand the method, rules and
standards of value by which property is appraised[.] A careful
review of the statute subdivisions taxpayer relies on reveals that
he has misapprehended them. N.C. Gen. Stat. § 105-317(b)(1)
requires that [u]niform schedules of values, standards, and rules
to be used in appraising real property at its true value and at its
present-use value are prepared and are sufficiently detailed to
enable those making appraisals
to adhere to them in appraising real
(emphasis added). On the other hand, N.C. Gen.
Stat. § 105-317(b)(3) require[s] that individual property records
be maintained in sufficient detail to enable property owners
toascertain the method, rules, and standards of value by which
property is appraised[,] and N.C. Gen. Stat. § 105-317(b)(4)
requires property characteristics relevant to tax valuation to be
included in the individual property record.
The HCSV contains a list of neighborhoods with valuation
amounts for residential, commercial/industrial and agricultural
properties. This detail contained therein is sufficient to enable
those making appraisals to adhere to those valuation amounts for
each neighborhood to appraise the real property to be valued.
(See footnote 4)
Next taxpayer argues that the HCSV is legally insufficient
because it does not contain a table of incremental and decremental
rates for use in calculating valuations for properties of greater
or lesser size than the base size listed in the tables within the
HCSV. Again, we disagree.
It is elementary that the size of a tract or lot of land
affects its value. It is so elementary, in fact, the General
Assembly did not mention it in N.C. Gen. Stat. § 105-317(a)(1) when
it listed the factors which should be considered in determining the
value of land. Because the General Assembly did not mention tract
or lot size in N.C. Gen. Stat. § 105-317(a)(1) as a factor fordetermining true value, it was not error for the HCSV to fail to
include a table of incremental and decremental rates for applying
the base rate to individual properties of varying sizes. We are
not holding that tract or lot size is not relevant in valuing
property; surely it is relevant. We hold only that N.C. Gen. Stat.
§ 105-317(a) does not require a table of incremental and
decremental values to be included in an SVSR.
Finally, taxpayer argues that the PTC erred when it allowed
expert testimony from Charles Graham, the Halifax County Tax
Assessor, and from Joe Hunt as to the legal sufficiency of the
HCSV. Assuming arguendo
that the admission of testimony from these
experts was error, taxpayer can show no prejudice because
taxpayer's appeal was strictly based on the facial validity of the
HCSV and our de novo
review was conducted accordingly.
For the foregoing reasons, we conclude that taxpayer has not
meet his burden of showing that the HCSV fails to comply with the
statutory directives of the Machinery Act. The PTC did not err
when it confirmed the 2007 Halifax County Schedule of Values.
Accordingly, we affirm the Final Decision of the Property Tax
Judges HUNTER and CALABRIA concur.