Must a South Carolina assessor exclude a golf course's personal property income when valuing its real estate for tax?

Plain-English summary

In January 2020, the South Carolina Attorney General answered three questions about valuing golf course real estate for property tax. The office said S.C. Code § 12-43-365 applied regardless of the appraisal method. Assessors had to leave out the value of tangible and intangible personal property, as well as income or expense derived from it. The AG answered yes when asked whether failing to make that exclusion and adjust the real property's taxable value would violate state law.

The PDF also appends a separate March 2019 AG opinion about the same statute. That earlier opinion said the statute neither required nor barred a particular appraisal method, and it discussed income data and appeals. The January 2020 letter relied on and clarified it; the attached 2019 text is reproduced with the source below.

Currency note

This opinion was issued in 2020. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did the exclusion apply only if an assessor used the income approach?
A: No. The January 2020 letter said the statute controlled what property could count toward golf course real estate value regardless of the appraisal method.

Q: What did the January 2020 letter say about income and expenses from personal property?
A: It said they had to be excluded from the valuation of golf course real property, regardless of the appraisal method. The letter did not decide whether any particular receipt was income from personal property.

Q: What did the AG say if an assessor failed to exclude personal property income or expenses?
A: The office answered that failing to make the exclusion and adjust the real property's value accordingly violated South Carolina law.

Q: Was an assessor required to use an income approach for golf courses?
A: The attached March 2019 opinion said no particular appraisal method was mandated. The January 2020 letter reaffirmed that the statutory exclusions applied whichever method was chosen.

Background and statutory framework

The 2020 letter responded to a legislator's constituent seeking clarification of the AG's March 2019 opinion. Subsection (A) of the statute excluded tangible and intangible personal property and income or expense derived from it from the fair market value of golf course real property. The earlier opinion explained that subsection (C) required a taxpayer to provide operation-wide income and expense data when the capitalized income approach was used, while the assessor could use other appraisal methods. The 2020 letter gave direct yes answers on the reach and effect of the exclusion.

Citations and references

• S.C. Code § 12-43-365: golf course real property valuation.
• The January 2020 letter quoted Daniel Island Club v. Berkeley County Assessor on the statute's application across appraisal methods.

Official title

Regarding what appraisal methods are permissible for the valuation of golf courses under S.C. Code, Section 12-43-365.

Requester

The Honorable Bart T. Blackwell, Member, South Carolina House of Representatives.

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/january-10-2020/
• Original PDF: https://www.scag.gov/wp-content/uploads/2020/01/BlackwellB-OS-10439-FINAL-Opinion-110-2020-02180070xD2C78-02186405xD2C78.pdf

Original opinion text

Alan Wilson
Attorney General

January 10,2020
The Honorable Bart T. Blackwell

Member

South Carolina House of Representatives
District No. 81

Post Office Box 6658

Aiken, SC 29804

Dear Representative Blackwell:

Attorney General Alan Wilson has referred your letter to the Opinions section. Your letter references a prior opinion this Office issue on March 04, 2019 (attached for reference) regarding golf course valuation under S.C. Code § 12-43-365. The questions raised by your constituent appear to seek clarification to the issues addressed therein. Your constituent asks the following:

1. If an assessor determines the fair market value of golf course property
   utilizing an appraisal method other than the capitalized income approach, is S.C. Code § 12-43-365 applicable to other methods?

2. Upon determination of fair market value by an assessor, does S.C. Code 1243-365 require an assessor to exclude income or expense derived from
   personal property when calculating the proper assessed ad valorem tax value?

3. If an assessor fails to exclude income and expenses derived from personal
   property in calculation affair market value and does not adjust ad valorem tax value accordingly, does this constitute a violation of S.C. Law?

Law/Analvsis

The responses to the questions presented in the request letter are answered in the order presented below.

r^EMBERT C.Dennis Building » Post Office Box 11549 - Columbia,SC 29211-1549 « Telephone 803-734-3970 • Facsimile 803-253-6283

The Honorable Bart T. Blackwell
Page 2
January 10, 2020

1.

If an assessor determines the fair market value of golf course property utilizing an appraisal method other than the capitalized income approach, is S.C. Code § 12-43-365 applicable to other methods?

Yes. S.C. Code § 12-43-365 applies to golf course valuations and establishes what "type of property ... that may be considered in the determination of fair market value for ad valorem tax purposes, regardless of the appraisal method used." Daniel Island Club v. Berkeley County Assessor. No. Docket No.: 11-ALJ-l 7-046 1-CC, 2013 WL 683563, at *6 (Feb. 7, 2013).

2.

Upon determination of fair market value by an assessor, does S.C. Code 12-43-365 require an assessor to exclude income or expense derived from personal property when calculating the proper assessed ad valorem tax value?

Yes. Daniel Island Club v. Berkeley County Assessor. No. Docket No.: 1 1-ALJ-l 7-046 1-CC, 2013 WL 683563, at *6 (Feb. 7, 2013) ("[T]he value of tangible personal property and intangible personal property and any income or expense derived from such property, whether directly or indirectly, must not be included in the determination of fair market value of golf course real property' for ad valorem tax purposes."). 3.

If an assessor fails to exclude income and expenses derived from personal property in calculation affair market value and does not adjust ad valorem tax value accordingly, does this constitute a violation of S.C. Law?

Yes. See answer to question 2 above.

Sincerely,

I
Matthew Houck

Assistant Attorney General
REVIDWFD AND APPROVED BY:

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iert D. Cook
olicitor General

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Alan Wilson
Attorney General

March 04, 2019

The Honorable Lawrence Roscoe
Horry County Government & Justice Center
1301 Second Avenue

Conway, SC 29526

Dear Mr. Roscoe:

Attorney General Alan Wilson has referred your letter to the Opinions section.

The

request letter reads as follows:

S.C. Code of Laws, Section 12-43-365 states:
(A) The value of tangible personal property and intangible personal property and any income or expense derived from such property, whether directly or indirectly,

must not be included in the determination of fair market value of golf course real property for ad valorem tax purposes.

(B) For purposes of this section "intangible personal property" has the same meaning as "intangible personal property" as contained in Article X, Section 3(j) of the Constitution of this State.

(C) If the fair market value of golf course real property for ad valorem tax purposes is determined pursuant to the capitalized income approach, the taxpayer

shall provide income and expense data for the entire golf course operation, golf cart rentals, food and beverage services, and pro shop sales on a form designed by the county assessors and golf course owners and approved by the South Carolina Department of Revenue. Any data provided by the taxpayer for this purpose is not public data and may not be disclosed except in the process of a formal appeal involving the subject real property. Questions:

1. Is there any implication in this statute that the income approach MUST be used
   to value golf courses?

Rembert C. Dennis Building

.

post Office Box i i 549

.

Colombia, SC 2921 1-1549

. Telephone 803-734-3970

.

Facsimile 803-253-62S3

The Honorable Lawrence Roscoe
Page 2

March 04, 2019

2. Would the ordinary methods of income capitalization apply, once the income
   prohibited from valuation is removed per the statute?
3. Upon appeal, would the Assessor be limited to using only income statements
   received from the appellant specific to the individual course, or if other golf courses have submitted similar statements as required by law, could those also be

used to assist in the determination of value?

4. If the answer to #3 is yes, if the resultant income from application of the statute

is so low that is close to zero, or negative, must the assessor value the property another way, or reduce the assessment to zero?

5. If the application of 12-43-65 results in a value lower than the value of the land
   as if vacant (sold with no personality attached) must the Assessor use the lower value derived from income?

6. Would an Assessor be justified in deciding to abandon the income approach as
   a matter of policy in favor of another approach, being that the statute is unclear how to handle these common contingencies? Law/Analvsis

The responses to the questions presented in the request letter are answered in the order presented below. The two cases cited below have been attached for your review. 1.

Is there any implication in this statute that the income approach MUST be

used to value golf courses?

No. Administrative Law Judge Shirley C. Robinson explained in Daniel Island Club v. Berkeley County Assessor. No. Docket No.: 1 1-ALJ-l 7-046 1-CC, 2013 WL 683563, at *6 (Feb.

7, 2013) that Section 12-43-365 does not compel an income approach to valuations. S.C. Code Ann. § 12-43-365 does not prescribe or preclude the use of any specific appraisal method. Rather, it provides for the type of property - golf course real property - that may be considered in the determination of fair market value for ad valorem tax purposes, regardless of the appraisal method used. The statute also

sets forth a taxpayer's duty to provide income and expense data for the entire golf course operation in the event that fair market value of golf course real property for ad valorem tax purposes is determined pursuant to the capitalized income approach. S.C. Code Ann. § 12-43-365(C). Ld.

The Honorable Lawrence Roscoe
Page 3
March 04, 2019

2. Would the ordinary methods of income capitalization apply, once the income
   prohibited from valuation is removed per the statute?
   Yes. See answer to question 1.

3. Upon appeal, would the Assessor be limited to using only income statements
   received from the appellant specific to the individual course, or if other golf courses have submitted similar statements as required by law, could those also

be used to assist in the determination of value?
S.C. Code Ann. § 12-43-365 does not appear to limit evidence an assessor may use to

establish the fair market value of a property. Rather, the statute simply limits personal property, both tangible and intangible, as well as income or expense derived from such property from being included in the determination of the fair market value of golf course real property.

If a

taxpayer does provide income and expense data as set forth in S.C. Code Ann. § 12-43-365(C) and the assessor chooses to use an approach other than the capitalized income approach, a reviewing court may require a disclosure of the "reasoning, methodology, or computation" by

which the court may evaluate such a decision. See Aiken Golf Club. Inc.. v. Aiken County Assessor. No. 17-ALJ-17-0427-CC, 2018 WL 3817522, (August 2, 2018).

4.

If the answer to #3 is yes, if the resultant income from application of the statute is so low that is close to zero, or negative, must the assessor value the property another way, or reduce the assessment to zero?

See answer to question 3.

5.

If the application of 12-43-365 results in a value lower than the value of the land as if vacant (sold with no personality attached) must the Assessor use the lower value derived from income?

See answer to question 1 .

6.

Would an Assessor be justified in deciding to abandon the income approach as a matter of policy in favor of another approach, being that the statute is unclear how to handle these common contingencies?

The Honorable Lawrence Roscoe
Page 4
March 04, 2019

This Office's opinions refrain from commenting on matters of policy that are left to the discretion of another officeholder or public body. See Op. S.C. Att'v Gen.. 2017 WL 1717129

(April 24, 2017) (discussing the Office's longstanding policy to defer to regarding "effectuating
. . . policy"). As discussed above, Daniel Island Club v. Berkeley County Assessor. No. Docket No.: 1 1-ALJ-l 7-046 1-CC, 2013 WL 683563, at *6 (Feb. 7, 2013) explains that S.C. Code Ann. §

12-43-365

does not require "any specific appraisal method."

It seems clear that the

Administrative Law Court has not interpreted S.C. Code Ann. § 12-43-365 to require an income approach for all golf course valuations. Sincerely,

Matthew Houck

Assistant Attorney General

REVIEWED AND APPROVED BY:

RobertD. Cook

Solicitor General