Appealed From No. 2408 of 1991. Common Pleas Court of the County of Fayette. Judge WAGNER.
Before: Honorable Joseph T. Doyle, Judge, Honorable Bonnie Brigance Leadbetter, Judge, Honorable Jess S. Jiuliante, Senior Judge. Opinion BY Judge Doyle.
The opinion of the court was delivered by: Doyle
RAS Development Corporation (RAS) appeals from an order of the Court of Common Pleas of Fayette County which established the tax assessment valuation for the years 1992 through 1997 on four parcels of land owned by RAS.
RAS is the owner of four tracts of real estate located in Saltlick Township, Fayette County, which it initially purchased as an investment at a sheriff's sale on March 28, 1991, for $1,500,000.00. Three of the four tracts of land consist of undeveloped property totaling 271.895 acres in size. The fourth tract of land has been developed into a campground facility, known as Mountain Pine Resort, and consists of 87.022 acres. The Mountain Pine Resort facility consists of approximately 950 rental spaces or pads which are leased on a daily, monthly or yearly basis. However, since the property was purchased in 1991, it has yet to produce a profit for RAS and has, in fact, consistently produced a loss.
Accordingly, RAS, wishing to reduce its tax burden, filed with the Board a timely appeal from its 1992 tax assessment in 1991, and a hearing was held before the Board on October 28, 1991. By order dated October 31, 1991, the Board revised the 1992 tax assessment and combined the assessments of the four tracts of land into one assessment as follows:
1. Parcel No. 31-12-84 consist of 75.725 undeveloped acres. The 1992 assessment was revised from 13,130 to 0. The assessment was combined with Parcel No. 31-12-78.
2. Parcel No. 31-12-89 consist of 50.25 undeveloped acres. The 1992 assessment was revised from 16,500 to 0. The assessment was combined with Parcel No. 31-12-78.
3. Parcel No. 31-12-50-7 consist of 145.95 undeveloped acres. The 1992 assessment was revised from 33,560 to 0. The assessment was combined with Parcel No. 31-12-78.
4. Parcel No. 31-12-78 consists of 87.022 developed acres. The 1992 assessment was revised from 400,390 to 374,260. The assessments of the three undeveloped parcels of land stated hereinabove were combined with this developed parcel of land.
(Trial Court Opinion at 2.)
Thereafter, on November 26, 1991, RAS appealed the Board's October 30th order to the Court of Common Pleas. Subsequently, a hearing was held before the Honorable Richard Cicchetti on March 25, 1995.
At the March 25th hearing, James A. Hercik, Chief Assessor and Director of Assessments for Fayette County, testified for the Board. Specifically, Hercik testified that he performed an on-site review of the subject property with the prior owners in May of 1987, at the time it was being developed into a commercial campground, and that he visited the property again on two subsequent occasions. Hercik also testified that on March 28, 1991, RAS paid Harva Inc., a holding company created by Gallatin National Bank, the amount of $1,500,000.00 for the subject property. He explained that the property was the subject of a sheriff's sale during a mortgage foreclosure action.
Hercik further stated that he used the market data approach method or comparable sales approach to determine the valuation of both the undeveloped and developed portions of the property. Specifically, he used the following three comparable sales to determine the fair market value of the undeveloped portion:
1. Actual sale of the subject property: 272 acres for $525,000.00 on December 16, 1986 from Wilma Ida Miller, grantor, and others to Alpine Valley Resorts, Inc. The unit rate of $1,930.00 per acre was adjusted to $1,750.00 per acre. The adjusted rate was determined by subtracting the value of the improvements, the residence, and the farm buildings from the gross sale to obtain a value for vacant unimproved real estate.
2. The sale of Nemacolin, Inc. to the Hutterian Brethren on July 23, 1987 for $677,090.00. The property consisted of 658 acres of wooded land located on an unimproved township road. The unit rate per acre was $1,028.00.
3. The sale from Nemacolin, Inc. to Evans Resources, Inc. on October 29, 1987 for $134,510.00. The property consisted of 107 acres of wooded and hilly land on a state improved road in Wharton Township. The unit rate was $1,253.00 per acre.
(Trial Court Opinion at 4.)
Hercik testified that he used these three sales to determine that the range of values for the property was from a minimum of $1,028.00 per acre to a maximum of $1,750.00 per acre. He then assigned a unit rate of $1,500 per acre to the undeveloped portion of the subject property. Using this unit rate, the proposed value for the undeveloped 271.895-acre tract was computed at $407,842.00.
Hercik then testified that he used the market data approach in order to assess the value of the developed portion of the subject property. He stated that he considered five comparable sales to evaluate the raw land portion of the developed tract and that he utilized the cost approach to value all of the improvements on the property. Hercik further testified that the comparable sales of land being developed for commercial use ranged from a minimum of $2,800.00 per acre to a maximum of $6,000.00 per acre. *fn1 After adjusting for typography, location, available utilities, and roadways, Hercik concluded that $5,500.00 per acre was the appropriate and fair market value for the 87-acre developed portion of the subject property. Using this unit rate, he calculated the market value of the 87 acres of land utilized as a camping facility as $478,621.00.
With respect to the improvements situated on the property, Hercik testified that he used the cost approach method and that, after consulting the cost manual of Marshall & Swift, valued the 22 individual structures or improvements on the subject property at $1,809,187.00. Ultimately, Hercik opined that, based upon the comparable sales and cost approach methods, he determined the total fair market value of the subject property to be $2,696,000.00 He recommended this amount to the Board, which adjusted the figure to $2,692,500.00.
Neither party presented any other expert witnesses, and no other witness testified as to the fair market ...