Rainbow Springs Partnership v. Macon County, 8510PTC474

• Decision Date: 18 February 1986
• Docket Number: No. 8510PTC474,8510PTC474
• Citation: 339 S.E.2d 681,79 N.C.App. 335
• Court: North Carolina Court of Appeals
• Parties: RAINBOW SPRINGS PARTNERSHIP v. COUNTY OF MACON.

Page 681

339 S.E.2d 681

79 N.C.App. 335

RAINBOW SPRINGS PARTNERSHIP v. COUNTY OF MACON.

No. 8510PTC474.

Court of Appeals of North Carolina.

Feb. 18, 1986.

Van Winkle, Buck, Wall, Starnes & Davis by Larry McDevitt and Marla Tugwell, Asheville, for petitioner-appellant Rainbow Springs Partnership.

Jones, Key, Melvin & Patton by R.S. Jones, Jr., Franklin, for respondent-appellee Macon County.

COZORT, Judge.

Rainbow Springs Partnership (hereinafter "Partnership" ) appeals from a ruling of the State Property Tax Commission (hereinafter "Commission" ) assessing the value of a 2,252 acre tract upon which the Partnership granted conservation easements. The Commission determined that the highest and best use of the property, both before and after the granting of the easements was, and is, "for hunting, fishing, and other recreational activities"; found the granting of the easements reduced the value of the encumbered property by 45%; and concluded that the true value of the encumbered acreage is $500.00 per acre. Having reviewed the whole record in accordance with G.S. 105-345.2, we affirm, finding the Commission's decision to be supported by substantial evidence.

The facts and procedures necessary for an understanding of the issues considered on appeal are as follows:

As of 1 January 1983, the Partnership was the owner of 2,252.2 acres, with certain improvements, in Macon County. The County assessed property taxes based on an acreage of 2,546.46 acres, which it valued at $2,566,180.00. The Partnership appealed the County's assessment to the Macon County Board of Equalization and Review which upheld the County's valuation. The Partnership appealed to the State Property Tax Commission sitting as the State Board of Equalization and Review. At the hearing before the Commission, the parties stipulated that the acreage to be taxed was 2,252 acres and that, at a minimum, the County would reduce the valuation accordingly, regardless of the final decision by the Commission.

The Partnership contended it was entitled to a reduction in fair market value due to certain conservation easements it had granted to The Nature Conservancy. The County contended that the conservation easements had no effect on the fair market value of the property. At the hearing before the Commission on 23 August 1984, the parties stipulated the issue to be tried was: What was the fair market value of the Partnership's real property located in Macon County as of 1 January 1983?

The evidence showed that the Partnership is the owner of 258.20 acres known as the Carpenter tract, against which no conservation easement has been granted. It owns a non-contiguous tract, the Slagle tract, containing 1,998.63 acres. By deeds executed in 1980 and 1982, it granted to The Nature Conservancy conservation easements encumbering 1,838 acres in the Slagle tract. There are several improvements, including a lodge, on the Slagle tract.

The easements were granted in perpetuity by two deeds. The Commission found without objection, that both deeds contained essentially the same covenants by the Partnership:

1. There shall be no hunting of bear or non-game animals; no commercial trapping; no construction or placing of buildings, camping accomodations [sic], mobile homes, fences, signs, billboards, other advertising material, or other structures;

2. There shall be no filling; excavating; dredging; mining or drilling; removal of topsoil, sand, gravel, rock, or minerals; nor construction of roads, except as provided herein;

3. There shall be no removal, intentional destruction, or cutting of trees or plants, planting of trees or plants, spraying of biocides, grazing of domestic animals, or disturbance or change in the natural habitat in any manner, except as provided herein;

4. There shall be no dumping of ashes, trash, garbage, or other unsightly or offensive material, and no changing of topography through the placing of soil or other substance or material such as landfill or dredging spoils.

There shall be no manipulation or alternation [sic] of natural water courses, lake shores, marshes, or other water bodies. There shall be no activities or uses conducted on the Protected Property which are detrimental to water purity; and

5. There shall be no operation of snowmobiles, dune buggies, motorcycles, all terrain vehicles, or other types of motorized vehicles, except on roads unless necessary either for purposes of security and enforcement of these Covenants, or for uses not restricted by this grant, provided that any off-road use be in a manner consistent with the preservation of the Protected Property and its plant and animal populations and their habitat.

While fee simple title to the property remains in the Partnership, the covenants contained in the easements run with the land in perpetuity.

Both deeds reserve for the Partnership the right to use the property subject to the easements for all purposes not inconsistent with the granting of the easements. Subsequent to the granting of the easements, however, the Partnership cannot use the property for developmental purposes or timbering. Prior to the granting of the easements, the property under appeal was used exclusively for hunting and fishing by the Partnership.

In the early 1970's the Partnership was approached with a proposal to sell portions of its property for development. Some large tracts of land bordering on the Partnership's property were purchased several years ago for development, but the project was unsuccessful. The Partnership's property is surrounded by heavily forested woodland, the majority of which is owned by the United States Forest Service. The closest residential development is three to five miles from the property.

The County valued the Carpenter tract at $1,440.00 per acre for 1983 and valued the Slagle tract at $972.00 per acre for 1983. The County valued the improvements on the Slagle tract at $104,330.00 for 1983. In appraising the Slagle tract, the County did not consider the effect on value of the conservation easements.

The Commission determined that the highest and best use of the property, both before and after the granting of the easements, was, and is, "for hunting, fishing and other recreational activities." It also concluded that "[t]here has been a reduction in value of most of the acreage under appeal as a result of the granting of the conservation easements, although there has been no change in the highest and best use of the property as a result of the easements." The Commission rejected the County's position that there was no reduction in value of the Partnership's property as a result of the granting of the easements. It concluded that the reduction in value of the acreage encumbered by the easements was 45%. Accordingly, the Commission concluded that the true value of the acreage in the Slagle tract encumbered by conservation easements, as of 1 January 1983, was $500.00 per acre, for a total of $919,000.00. The Partnership excepted to this conclusion. The true value of the improvements under appeal, as of 1 January 1983, was found to be $118,000.00. The Partnership took no exception to the values placed on the unencumbered acreage of the Slagle tract, the unencumbered Carpenter tract, and the improvements on the property under appeal. It excepted to the Commission's conclusion that the truevalue of all the real property under appeal as of 1 January 1983 was $1,579,820.00.

On appeal the Partnership contends:

(1) The Commission committed prejudicial error in concluding that the highest and best use of the land before the Partnership granted the conservation easements was for hunting, fishing, and other recreational activities;

(2) The Commission erred in failing to adopt the valuations of William Cantrell, the Partnership's expert witness "in the field of conservation easements," the only expert in that specific category;

(3) The Commission erred in finding that Cantrell and another of the Partnership's experts, Robert York, gave opinions of the value of the land for a date other than 1 January 1983; and,

(4) The Commission erred in failing to find that The Nature Conservancy has affirmative rights to use the property pursuant to the conservation easements and in finding that the use of the property by the Partnership is exclusive.

We have elected to consolidate the first two issues listed above because both present the same issue, i.e., whether the Commission's conclusion on the highest and best use of the property before the granting of the easements is erroneous and not supported by substantial evidence because the Commission, in effect, adopted the opinion of the County's expert, Sam Pipkin, rather than the opinion of the Partnership's expert, William Cantrell.

The scope of appellate review of cases from the Property Tax Commission is set by G.S. 105-345.2, which provides, in pertinent part, that:

(b) ... The court may affirm or reverse the decision of the Commission, declare the same null and void, or remand the case for further proceedings; or it may reverse or modify the decision if the substantial rights of the appellants have been prejudiced because the Commission's findings, inferences, conclusions or decisions are:

* * *

* * *

(5) Unsupported by competent, material and substantial evidence in view of the entire record as submitted; or

(6) Arbitrary or capricious.

(c) In making the foregoing determinations, the court shall review the whole record or such portions thereof as may be cited by any party and due account shall be taken of the rule of prejudicial error.

This standard of review is known as the "whole record" test. In Thompson v. Wake County Board of Education, Justice Copeland explained the "whole record" test:

This standard of judicial review is known as the "whole record" test and must be distinguished from both de novo review and the "any competent evidence" standard of review. Universal Camera Corp. v. N.L.R.B., 340 U.S....