Supreme Court ruling: Saunders says county is 'greedy, arrogant' for improper appraisal

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By Laura Lewis, Reporter

HOLDEN BEACH—Developer Mark Saunders has choice words for Brunswick County.

On Jan. 25, the North Carolina Supreme Court unanimously found that in 2008 Brunswick County unlawfully reappraised the tax value of more than 100 undeveloped parcels in Ocean Isle Palms, one of Saunders’ developments.

This latest ruling from the state’s highest court is a reflection of “greed, arrogance and a disregard for Brunswick County citizenry,” Saunders said in an interview Monday at his Holden Beach office.

The decision reverses an earlier ruling by the North Carolina Court of Appeals in the case, which Saunders said has now been heard in six venues.

The decision also affects other Saunders’ developments, he said.

In North Carolina, counties can appraise property for taxation only in specified years. Brunswick County conducted an authorized appraisal of all county property in 2007.

The court had to determine whether the county acted lawfully when it reassessed the tax value of Ocean Isle Palms property in 2008, “which was not a statutorily designated year for setting property values for tax purposes.”

“Although the County argues that it was merely correcting an error in an existing appraisal that arose from a misapplication of its 2007 schedule of values of land in the County, we conclude that the County’s 2008 action constituted an improper reappraisal,” the court wrote in its decision.

It also found the N.C. Property Tax Commission “correctly entered judgment in favor of Ocean Isle [Palms]. Accordingly, we reverse the decision of the Court of Appeals reversing the Commission’s decision.”

“My feeling is that the angle is much deeper and broader than what I’ll call the final score,” Saunders said. “Certainly, we all recognize that it is the victor of the Super Bowl that makes the biggest story and most important story, but this story goes back a long ways.”

Brunswick County Attorney Huey Marshall said Tuesday the Supreme Court judgment speaks for itself.

“The Court of Appeals agreed with us, but it has to answer to the Supreme Court, and that is it,” he said.


‘Condition factor’

While revaluations are required every eight years, a county can choose to increase frequency.

Brunswick County had revaluations in 1999, 2003 and 2007, according to court records.

For each revaluation, the county developed and approved a schedule of values for its appraisers to use.

To account for differences in values between developed and undeveloped parcels, the county used a “condition factor,” an adjustment that allows appraisers to account for a lower true value of undeveloped property.

One example is a parcel without utilities or paved roads could be assigned a condition value of .20.

Former Brunswick County Tax Assessor Boyd Williamson, who retired in April 2006 after 30 years with the county, said Monday he gave a deposition in the case about the revenue stamp on sales.

“Some lots you couldn’t get to,” Williamson said, citing instances where roads are non-existent.

“We were valuing them according to condition,” he said. “This was not a so-called developer’s discount. This was done across the board.”

That changed when the assessor who succeeded Williamson—former county tax administrator Tom Bagby—removed all condition factors and valued property at 100 percent, Williamson said.

Bagby resigned from the county in October 2008 at the request of county commissioners.

The Supreme Court said the county tax office was aware condition factors, ranging from 20 percent to 40 percent, were being applied to unfinished properties and the 2007 schedule of values was adopted in 2006 with the intention of maintaining consistency with this appraisal practice.

In 2007, Ocean Isle Palms’ undeveloped lots were assessed at 20 percent, resulting in revaluation ranging from $45,000 to $60,000 per parcel.

After the condition factors were removed, “…for the year 2008, Ocean Isle [Palms’] parcels were reassessed at taxable values ranging from $191,250 to $718,630 per parcel,” the Supreme Court noted.


Values disputed

After discussions between the two parties, tax values of undeveloped parcels were slightly decreased and carried forward for 2009 and 2010.

In 2010, Saunders disputed tax values before the Brunswick County Board of Equalization and Review, which declined to change valuations.

The decision was appealed to the N.C. Property Tax Commission, which moved for a summary judgment. It argued the 2008 reassessments were not permissible because they did not occur in a designated reappraisal year.

Brunswick County opposed the summary judgment motion. It argued the reassessment was proper under section 105-287(a)(2), which allows reappraisals in off years to “[c]orrect an appraisal error resulting from a misapplication of the schedules, standards, and rules used in the count’s most recent general reappraisal.”

The county claimed application of the condition factor to Ocean Isle Palms’ undeveloped lots in 2007 “constituted a misapplication of the schedule of values.”

In June 2011, the commission determined the 2008 revaluation was unlawful, and the county appealed.



The Supreme Court’s determination that Brunswick County illegally taxed a number of parcels owned by Saunders’ development company, The Coastal Companies, is significant, Saunders said.

“What I’m really talking about is the illumination of practices and attitudes within our county government,” he said.

When the condition factor was eliminated, Saunders said his company’s annual taxes to be paid were increased by $800,000 in the 2007-2008 time frame—“which you recognize was the very collapse of this nation’s real estate and financial markets,” he said.

Saunders said county officials declined to meet with him and his representatives following the tax commission’s judgment.

“We asked before the appeal process started, and we asked several times of the last several years,” Saunders said. “We were constantly and consistently rebuffed.”

When he went before the Brunswick County Board of Equalization and Review, “I was told, ‘Mr. Saunders, you have two minutes to give me your comments regarding this case,’” he said. “We were denied.”

Saunders further charged the county repeatedly “gave its putrefied indictment to the press that we were not paying our taxes, even though the county knew all along that it was the one acting improperly and illegally.”

Saunders said the harm caused to him over this issue is to him the most significant impact of what has occurred.

He said the matter has also affected the lives of local people who have lost their jobs and homes.

“The unlawfulness of the county has cost a number of citizens in Brunswick County its very livelihood,” he said. “I’m not just talking about the hundreds of Coastal Company employees. I’m talking about all of the other businesses and people in this county that are affected by this type of thing. It could include the person who puts down the carpet, the person that brings their refrigerator, the lighting supplier to our new homes, the person that prints brochures for rental agencies, that list goes on.

“There has been significant damage to real people in their real lives because of illegal taxation by our county government.”

While it has cost him financially to pursue the ongoing legal battles, Saunders said it has also cost the county—in taxpayer funds.

“Certainly, what the ruling does say is that while the county was going off out here saying we owed them millions of dollars, we do not,” Saunders said.

As for his company, “We’ve been in business here in Brunswick County for almost three decades,” he said. “We have an umbrella of businesses that have been significant producers and contributors to Brunswick County and state economies for years and years. Nothing is going to change that.

“We are good corporate citizens,” Saunders added. “We will pay our fair and proper share of taxes. When given the choice between right and wrong, we choose the right thing every time.”


Laura Lewis is a staff writer at the Beacon. Reach her at 754-6890 or email llewis@brunswickbeacon.com.