Buckingham Wood Products, Inc. v. South Dakota State Board of Equalization

WOLLMAN, Chief Justice.

The South Dakota State Board of Equalization appeals from a judgment that declared void certain property assessments on land owned by appellee, Buckingham Wood Products, Inc., (Buckingham). We reverse and remand.

Buckingham is the owner and developer of a subdivision located in Fall River County, South Dakota. The subdivision is platted and contains both improved and unimproved lots.

Buckingham objected to the 1979 assessed valuation of the unimproved subdivision lots and appealed to the county board of equalization, which reduced the valuation of some of the lots by one-half. Buckingham then appealed to the State Board of Equalization, which sustained the county board’s valuations.

Buckingham appealed to the circuit court, which, after a trial de novo, concluded that the Fall River County Director of Equalization had failed to comply with the provisions of SDCL 10-6-33.

Buckingham has sold none of the unimproved lots in question. The lots are subject to restrictive covenants, which, among other things, prohibit the owners of the lots from installing their own individual water supply systems. The lots are presently not *589served by any central water supply system nor by any other utilities. Buckingham has not established any definite timetable for providing such services. Other than a rough trail that has been bulldozed out of the natural rolling, rocky terrain, there are no established roads serving the lots.

The trial court found that the only change that had occurred in the land between the 1978 and the 1979 tax assessment years was the platting of the land. This, the trial court found, did not make the unimproved lots usable. The trial court accordingly found that the fair market value of the lots did not exceed $600 per lot. Concluding that the mere platting of unimproved property and the setting of a price for future sales and development work does not establish a market value, the trial court held that the Fall River County Director of Equalization had failed to comply with SDCL 10-6-33, which establishes the “true and full value in money” standard of valuation. Accordingly, the trial court ordered that a new assessment be made.

The scope of our review of a trial court’s decision in a trial de novo of a tax assessment case is to determine whether the trial court’s findings are clearly erroneous. Mortenson v. County of Stanley, 303 N.W.2d 107 (S.D.1981); Knodel v. Bd. of County Com’rs, 269 N.W.2d 386 (S.D.1978); Yadco, Inc. v. Yankton County, 89 S.D. 651, 237 N.W.2d 665 (1975); Willow, Inc. v. Yankton County, 89 S.D. 643, 237 N.W.2d 660 (1975).

Although there is a presumption that a director of equalization’s value is correct, Mortenson v. County of Stanley, supra, we are satisfied that the evidence submitted by Buckingham overcame that presumption.

In the absence of any improvements in the way of roads, streets, and basic utilities, the value of the lots more closely approached the acquisition cost of the bare land than it did the selling price that Buckingham placed on the lots after the area was platted. Included in the selling price was the cost of ultimately providing the roads and utilities necessary to transform the area from its pristine state to that normally found in a developed area. We conclude, therefore, that the trial court’s finding that the valuation placed on the lots by the county officials did not comport with the standards set forth in SDCL 10-6-33 is not clearly erroneous.

We agree, however, with the State Board’s contention that the trial court erred in finding that the fair market value of the unimproved lots was not more than $600 per lot at the time of the assessment.

Two of Buckingham’s witnesses gave opinions regarding the fair market value of the unimproved lots. A real estate salesman and appraiser testified that the lots were worth five to six hundred dollars an acre. Buckingham’s vice president testified that the market value of the property was $555 an acre. Although these witnesses testified in terms of market value per acre, the circuit court made a finding that the fair market value was not more than $600 per lot. Buckingham has seventy-three unimproved lots for sale, consisting of approximately 106 acres. The number of acres per lot ranges from one-half acre to 6.5 acres, with the average being approximately 1.5 acres per lot. Therefore, this finding of the circuit court is without support in the record, even assuming that the circuit court accepted the testimony that the fair market value of the property was $500 per acre.

The judgment is reversed and the case remanded to the circuit court for further proceedings.

DUNN and MORGAN and FOSHEIM, JJ., concur. HENDERSON, J., concurs specially.