CHARLESTON – The state Supreme Court has affirmed the Kanawha County Tax Assessor’s valuation of 79 condominiums at Country Club Village Apartments, ruling that Pope Properties failed in its bid to have the valuations lowered by approximately $20,000 a unit.
Justice Menis E. Ketchum delivered the opinion of the Court, filed February 6.
The complex that the condominiums are part of, Country Club Village Apartments, was constructed in 1979 and includes 102 condominiums, 79 of which were purchased by Pope Properties in the early 1990s. Pope Properties has operated its condominiums, consisting of 16 one-bedroom units and 63 two-bedroom units, as income-producing rental property.
At no time have the 79 units been owner-occupied or held out for sale. Through the years, the assessor has valued the 79 units individually as Class III property. The rest of the condominiums in the complex, not belonging to Pope Properties, are owner-occupied and are valued as Class II units, according to the opinion.
The Class II units are classified as residential property. The Class III units are subjected to higher tax assessments than the Class II units.
After Pope Properties received a substantially higher assessment of the value of the condos for the 2011 tax year than for the previous year, Pope Properties filed an application for relief before the County Commission of Kanawha County, which sat as the Board of Equalization and Review.
The board conducted an evidentiary hearing in which Joseph Pope, a manager of Pope Properties, testified that for commercial lending purposes the assessor should use the “income approach” to valuation of the condos rather than the” market approach” that had been used.
The income approach is based on the amount of money that the property brings in whereas the market approach is the potential value of the property if it were sold.
Pope Properties called Stephen A. Holmes, a certified real estate appraiser who testified that the units were commercial property which should be valued using the income approach rather than the market approach.
Chief Deputy Assessor Stephen Duffield testified, however, that the condos were not commercial property when viewed as separate units rented to individuals. Regardless, he stated, the market date approach was the appropriate method to use in valuing the units since three recent comparable sales used by the Assessor were within the same condominium complex.
The Board of Equalization and Review upheld the assessor’s valuation of the 79 units. The decision held that Pope Properties failed to prove by clear and convincing evidence (1) that the assessor abused her discretion in using the market data approach or (2) that the valuation of the units was incorrect.
Pope Properties appealed to the Circuit Court of Kanawha County and the circuit court affirmed the decision of the county commission sitting as the Board of Equalization and Review. Pope Properties then appealed to the state’s highest court.
“This case is before this Court upon the appeal of Pope Properties/Charleston Limited Liability Company from the September 20, 2011, order of the Circuit Court of Kanawha County which affirmed the decision of the County Commission of Kanawha County sitting as the Board of Equalization and Review,” Ketchum wrote.
“At issue is the valuation and corresponding tax assessment of Pope Properties’ 79 condominium units located in a complex known as Country Club Village Apartments. The Board of Equalization and Review upheld the determination of the Assessor that for ad valorem tax purposes for 2011, the 79 units should be valued as follows: $63,700 for each of Pope Properties’ 16 one-bedroom units and $70,000 for each of its 63 two-bedroom units.
“Pope Properties contends that the valuations of the Assessor are incorrect and that, instead, the 79 units should be valued at $42,000 for each of the 16 one-bedroom units and $49,000 for each of the 63 two-bedroom units.
“The underlying disagreement between Pope Properties and the Assessor concerns the Assessor’s use of the market data (comparable sales) approach in determining the value of the units, rather than the income approach to valuation advocated by Pope Properties.”
“Upon careful review of the record-appendix, the briefs and argument of the parties, and relevant authorities, this Court is of the opinion that Pope Properties has failed to establish that the Assessor was erroneous by clear and convincing evidence.
“[T]he Assessor was mistaken in concluding that the 79 units, considered individually, were non-commercial in nature, that conclusion did not affect the validity of the Assessor’s choice, or manner of application, of the market data approach in this case. Accordingly, the September 20, 2011, order of the circuit court is affirmed.”