In re the Appeal of Parker

PARKER, Judge.

We note at the outset that petitioners have flagrantly violated Appellate Rule 28 by failing to bring forward in their brief assignments of error with exceptions grouped thereunder. Nevertheless, in the exercise of our discretion, pursuant to Appellate Rule 2, we will consider the appeal; however, all exceptions not herein discussed are deemed abandoned.

The question presented for review before this Court is whether the decision of the North Carolina Property Tax Commission as it affected the ad valorem tax present use value schedule and the ad valorem tax true or market value schedule adopted by the Bertie County Board of Commissioners was (i) unsupported by competent, material and substantial evidence in view of the entire record as submitted, or (ii) arbitrary and capricious or (iii) affected by other errors of law. G.S. 105-345.2. For the reasons herein discussed as to that part of the Property Tax Commission’s decision finding the adoption of the true value schedule to be arbitrary on account of the twenty-five (25%) percent reduction in the proposed true value schedule, we affirm; however, as to that part of the decision permitting the true value schedule and the use value schedule to be the same except for Notes F and G as modified on the true value schedule, we reverse.

The statutory scheme for taxation of property qualifying for present use value treatment as defined in G.S. 105-277.2 and 277.3 is a tax deferment. General Statute 105-277.4(c) provides:

Property meeting the conditions herein set forth shall be taxed on the basis of the value of the property for its present use. The difference between the taxes due on the present-use basis and the taxes which would have been payable in the absence of this classification, together with any interest, penalties or costs that may accrue thereon, shall be a lien on *451the real property of the taxpayer as provided in G.S. 105-355(a). The difference in taxes shall be carried forward in the records of the taxing unit or units as deferred taxes, but shall not be payable, unless and until [certain disqualifying conditions occur].

The statutory provision which, in our view, mandates that the true value schedule and the use value schedule be determined separately is G.S. 105-277.6 which provides:

(b) In revaluation years, as provided in G.S. 105-286, all property entitled to classification under G.S. 105-277.3 shall be reappraised at its true value in money and at its present use value as of the effective date of the revaluation. The two valuations shall continue in effect and shall provide the basis for deferred taxes until a change in one or both of the appraisals is required by law. (Emphasis added.)
(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. Such schedule, standards and rules shall be used by the tax supervisor to appraise property receiving the benefit of this classification until the'next general revaluation of real property in the county as required by G.S. 105-286. . . . The schedule of values, standards and rules shall be subject to all of the conditions set forth in G.S. 105-317(c), (c)(1) and (c)(2) relating to the adoption of schedules, standards and rules in revaluation years. (Emphasis added.)

Under the plain language of the statute, the Board of County Commissioners was required to adopt a separate market value schedule and use value schedule. The utilization of a note such as Note F to appraise properties having enhancing factors is not consistent with the stated purpose of the statute to “insure uniform appraisal.” Without an objective standard by which to determine the tax to be deferred, taxpayers who would qualify for present use value tax treatment are conceivably deprived of the benefit of the classification. This lack of a uniform standard affects a substantial right and is clearly prejudicial. G.S. 105-345.2(c). We *452reiterate that petitioners are challenging the schedule and not the assessed value of a particular parcel.

The Bertie County Tax Supervisor testified that he correlated the income approach and the market approach based on thirty-one comparable sales. The Commission, relying on In re McElwee, 304 N.C. 68, 283 S.E. 2d 115 (1981), ruled that the income approach was not the sole appropriate method for determining present use value. While In re McElwee, supra, does not prohibit a correlation of the market and income approaches to determine present use value, the situation in Bertie County, where the highest and best use of much land is in fact for agricultural purposes or timber land, may well illustrate the necessity for using the capitalization approach for determining present use value. As stated in McElwee, supra:

[I]n determining the present use value of agricultural, horticultural and forest land as contemplated by G.S. 105-277.2(5) . . . the criterion is that both buyer and seller shall “have reasonable knowledge of the capability of the property to produce income in its present use. . . .” (Emphasis added.) In this instance, the clear legislative intent is that property be valued on the basis of its ability to produce income in the manner of its present use. All other uses for which the property might be employed and the many factors enunciated in G.S. 105-317(a) are irrelevant and immaterial. The focus of the appraisal is a narrow one: If the use of the property subject to present use valuation continues as at present what income will the property produce? Id. at 89, 283 S.E. 2d at 128.

For the foregoing reasons, we hold that there was error of law in the Commission’s final decision and we remand the case to the Property Tax Commission for further proceedings not inconsistent with this opinion.

Reversed and remanded.

Judges Arnold and Martin concur.