In re the Appeal of McElwee

Judge Wells

dissenting:

I believe that the final decision of the Property Tax Commission must be reversed because it is affected by a manifest error of law. See G.S. 150A-51(4). If the decision of the Commission is allowed to stand, the sensible and salutary policies underlying G.S. 105-277.2 through 105-277.6, establishing classifications for ad valorem taxes on agricultural and forestland, will be defeated. Generally, real property is taxed at its true value. G.S. 105-317. In finding the true value for purposes of appraisal, various factors may be considered:

§105-317. Appraisal of real property; adoption of schedules, standards, and rules. — (a) Whenever any real property is appraised it shall be the duty of the persons making appraisals:

(1) In determining the true value of land, to 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; mineral, quarry, or other valuable deposits; fertility; adaptability for agricultural, timber-producing, commercial, industrial, or other uses; past income; probable future income; and any *170other factors that may affect its value except growing crops of a seasonal or annual nature.

By establishing the special classification as to farm, horticultural, and forestlands, G.S. 105-277.3, the General Assembly provided the means for these lands to become eligible for appraisal on a special basis, whereby present use becomes the standard, avoiding appraisal on the factors of general application set out in G.S. 105-317(a)(l). We quote in pertinent part:

§ 105-277.4. Agricultural, horticultural and forestland — application for taxation at present-use value. — (a) Property coming within one of the classes defined in G.S. 105-277.3 but having a greater value for other uses shall be eligible for taxation on the basis of the value of the property in its present use if a timely and proper application is filed with the tax supervisor of the county in which the property is located. The application shall clearly show that the property comes within one of the classes and shall also contain any other relevant information required by the tax supervisor to properly appraise the property at its present-use value. ...
(b) Upon receipt of a properly executed application, the tax supervisor shall appraise the property at its present-use value as established in the schedule prepared pursuant to G.S. 105-277.6(c). ...
(c) Property meeting the conditions herein set forth shall be taxed on the basis of the value of the property for its present use. ...

G.S. 105-277.6(c) provides in pertinent part:

(c) To insure uniform appraisal of the classes of property herein defined in each county, the tax supervisor, at the time of the general reappraisal of all real property as required by G.S. 105-286, shall also prepare a schedule of land values, standards and rules which, when properly applied, will result in the appraisal of the property at its present-use value. ...

G.S. 105-277.2(5) establishes the criteria for finding present-use value:

*171(5) “Present use value” means the price estimated in terms of money at which the property would change hands between a willing and financially able buyer and a willing seller, neither being under any compulsion to buy or to sell, assuming that both of them have reasonable knowledge of the capability of the property to produce income in its present use and that the present use of the property is its highest and best use.

Through the enactment of the foregoing statutes, the General Assembly established the means for such land to remain in its traditional use and avoid being taxed on the value of similar property sold for or devoted to other non-farming uses. The classic examples, common in our experience and observable all around us, are farms and forests existing side-by-side with residential subdivisions, resorts, shopping centers and industrial parks. If the farmer or forester wants to keep his land in agricultural production under such circumstances, the General Assembly has provided the opportunity, if not the incentive, for him to do so by establishing a special tax classification. See generally W.R. Company v. Property Tax Comm., 48 N.C. App. 245, 269 S.E. 2d 636 (1980). The Commission has not correctly applied the law under the facts of this case. I quote from the Commission’s decision in pertinent part as follows:

From our review of the applicable law, the evidence and our findings of fact, we conclude and so decide that the County’s appraisal of the subject land is not in excess of its forest land use value. All of the witnesses testified that although the subject land was poor timber land, its highest and best use was the commercial growing of trees. The County’s appraisal is entirely consistent with this testimony. It has appraised the land for market value purposes and for use value purposes at $100 per acre. That is the figure in the County’s schedules of value for poor timber land. It seems obvious to us that if the highest and best use of the property is what it is being used for, the market value and the use value should be the same figure. The $100 figure is also supported by sales of comparable properties introduced by the County. Appellants’ estimates of value were developed based on general statements about stumpage value, net income and capitalization rates. ...
*172No evidence was introduced to indicate that appellants would be willing sellers of any of the subject land or that they would expect to acquire any similar land for less than $100.

The thrust of the Commission’s order is that market value, no matter how established, equates present use value. This result flies in the face of the clear directive of the statute to find market value by the criteria of “the capability of the property to produce income in its present use.” Such a methodology does not allow substituting prices obtained for sales of comparable land as the criteria, which apparently is the position taken by the Commission. It is clear from the Commission’s findings of fact that it considered both the income producing capability and sales of other timberland in reaching its conclusions. But it is clear from its conclusions that it relied on comparable sales in reaching its result. Thus, the Commission has effectively but erroneously negated the statutory scheme and directives we have discussed in this dissenting opinion.

Additionally, the notice published by the county does not meet the requirements of the statute, G.S. 105-317. The statute requires the Board of County Commissioners to publish a copy of its order. The notice in this case does not even purport to be a copy of the Commissioners’ order. It is not signed, and nothing in its contents indicates who authorized it or required its publication. It is outstandingly lacking in official qualities. Such an informal, unofficial, and uninformative utterance published so modestly and so far in advance (27 months) of the effective date also fails, in my opinion, to comport with due process requirements.