Opinion ID: 1893465
Heading Depth: 1
Heading Rank: 2

Heading: Unequal or Arbitrary Taxation

Text: The second issue is whether the decision of the Court of Civil Appeals, that the common areas of Lake Forest were not shown to have been assessed and taxed differently than similar common area property in Baldwin County, conflicts with State v. Alabama Power Co., supra. LFPOA cites State v. Alabama Power for the proposition that § 211 and § 217, of the Alabama Constitution, as amended by Amendment 373, coupled with the Due Process Clauses of the State and Federal Constitutions, afford the equivalent of equal protection to taxpayers. See Also Howell v. Malone, 388 So.2d 908 (Ala.1980). Section 211 states, in pertinent part: All taxes levied on property in this state shall be assessed in exact proportion to the value of such property.... Section 217, as amended, states in pertinent part: (c) With respect to ad valorem taxes levied by counties, municipalities or other taxing authorities, all taxable property shall forever be taxed at the same rate. LFPOA asserts that the common areas of Lake Forest are treated for tax purposes in a manner different from the manner in which common areas of other developments in Baldwin County are treated. Primarily, LFPOA contends that the common areas of condominium complexes and other developments where the title to common areas is held in fractional shares by each property owner are not taxed separately. The distinguishing factor, as pointed out by the tax assessor, is that the lot owners in the other developments own fractional interests in the common areas. In Lake Forest the common areas are owned by LFPOA. LFPOA is entitled, via the same encumbrance that it claims reduces the value of the common areas, to receive a monthly fee from each of the over 3200 lot owners in Lake Forest. We find this distinction to be sufficient to justify different tax treatment. This is especially true in light of the fact that Alabama law requires that every piece of property be assessed to its owner at its fair market value. Ala.Code 1975, §§ 40-7-1, 40-7-15, and 40-11-1. There was testimony regarding another development in Baldwin County, Ono Island, that may have had common areas owned by a property owners association. The record is unclear as to whether the common areas of that other development were taxed in a manner that was inconsistent with the treatment accorded Lake Forest. There was testimony regarding a master card file that is apparently used to record certain common areas that are not to be taxed. The property that qualifies for the master card file is assessed, but no tax bill is sent. The record is unclear as to whether there were common areas of Ono Island listed in the master card file. Despite the lack of clarity as to whether there were common areas that were owned by property owners associations listed in the master card file, the tax assessor of Baldwin County made it perfectly clear that it was the intention of the tax assessor's office to tax all properties that were similar to Lake Forest in the exact manner as that in which Lake Forest was taxed, i.e., to tax the common areas owned by property owners' associations. The Supreme Court pointed out that mere inequality in valuation does not contravene constitutional provisions, to-wit, Sections 217 and 211 of the Constitution of Alabama, nor the Equality Clause of the Fourteenth Amendment of the Federal Constitution. It is only where there is a plan or intent to systematically or intentionally discriminate against an area, or class of taxpayers or class of property within a taxing area, and such plan smacks of fraud, bad faith, or evil design on the part of the taxing authority, that constitutional privileges are infringed.... The plan placed in effect indicated that the inequality of taxation placed upon the taxpayers of the first district chosen for reassessment was a temporary one due to the magnitude of the task involved.... It was plain that a plan must begin at some place in the county and that the board was working in good faith. State v. Murphy, 45 Ala.App. 637, 644, 235 So.2d 888, 894 (1970). This statement of the law is applicable to this case. The tax assessor stated that he knew of no other development like Lake Forest and that any developments that were like Lake Forest would be taxed in a manner identical to the manner in which Lake Forest was taxed. Specifically, Charles L. Jones, a property appraiser for the State of Alabama, testified as follows: Q.... Mr. Blackburn was asking you questions relative to the master card index. Have you recently given as part of your capacity with the Department of Revenue instructions to the tax assessor of Baldwin County how he's to keep commonly held properties in the master card index? A. Immediately following the last hearing on this matter. . . . . Q. [What was] the Department of Revenue's direction to him? A. Several pages in length and [sets] out all of the various criteria that must be met in order to qualify for the master card file. It was given to Mr. Johns, Mrs. Eddins and I think the chief appraiser Nancy Cox at the time. And it was requested that the master card be reviewed and to be sure that no parcels were in there that didn't qualify. Q. Was part of it to treat all parcels in Baldwin County the same? A. Yes, sir. Q. So, if they were not treated the same, is it mere error? A. Right. That's what it should be, mere error. From this unrefuted testimony it is apparent that any discrepancy between the ways in which the common areas of real estate developments were taxed was an error and not part of an intentional or systematic discriminatory scheme that smacked of fraud, bad faith or evil design on the part of the taxing authority. State v. Murphy, supra. Therefore, we hold that the circuit court did not err in holding that the taxes imposed upon LFPOA did not violate the State or Federal constitutions. The final argument posed by LFPOA is that the Baldwin County tax assessor acted arbitrarily in assessing the common areas of Lake Forest. LFPOA initially argues that the tax assessor did not appraise the common areas of Lake Forest. This contention is apparently based, at least partially, upon the fact that the tax assessor did not use a comparable golf course sale in valuing the golf course. However, there is ample evidence in the record to support the tax assessor's valuation. The tax assessor used the market method for valuing the land in the common areas and the cost method for valuing the improvements upon the land. In doing this, the tax assessor necessarily appraised the common areas. Furthermore, as the circuit court specifically stated in its order, LFPOA did not disagree with the $6,031,000 value placed upon the common areas. LFPOA believed that this value was already taxed to the lot owners in the form of the increased value of the individual lots. There is no merit to the argument that the tax assessor arbitrarily valued the common areas of Lake Forest. For the foregoing reasons, the judgment of the Court of Civil Appeals is affirmed. AFFIRMED. HORNSBY, C.J., and MADDOX, ALMON, [] HOUSTON, KENNEDY, COOK and BUTTS, [] JJ., concur. SHORES, J., dissents.