Opinion ID: 2500902
Heading Depth: 2
Heading Rank: 1

Heading: Tykat Appeal

Text: Article X, section 1 of the South Carolina Constitution permits the General Assembly to provide for the ad valorem taxation by the State or any of its subdivisions of all real and personal property. Article X, section 3 then provides, in relevant part: There shall be exempt from ad valorem taxation: (a) all property of the State, counties, municipalities, school districts and other political subdivisions, if the property is used exclusively for public purposes; .... The parties do not dispute that the South Carolina Public Service Authority is a tax-exempt political subdivision. Rather, they dispute whether article X, section 3 operates to exempt Tykata private, for-profit entityfrom ad valorem taxation on property leased from the Authority. As explained by the American Law Reports: Where land is leased to another, the original and traditional procedure ... is to assess the entire value of the land to the owner of the reversion. Such an assessment covers the value of the leasehold, as well as the reversionary interest, the sum of the two being comprised in the value of a complete ownership of the land. But where the owner of the fee is exempt from taxation, that method cannot be followed, and the question arises whether the leasehold interest of the tenant may be taxed separately against him. Maurice T. Brunner, Annotation, Comment note: availability of tax exemption to property held on lease from exempt owner, 54 A.L.R.3d 402 § 15, 513 (1973). In South Carolina, this question has been answered by section 12-37-950 of the South Carolina Code (2000), which provides: When any leasehold estate is conveyed for a definite term by any grantor whose property is exempt from taxation to a grantee whose property is not exempt, the leasehold estate shall be valued for property tax purposes as real estate. (Emphasis added). Despite the plain language of section 12-37-950, Tykat attempts to extrapolate a rule from our decisions in South Carolina Public Service Authority v. Summers, 282 S.C. 148, 318 S.E.2d 113 (1984), and Charleston County Aviation Authority v. Wasson, 277 S.C. 480, 289 S.E.2d 416 (1982), that would extend the article X, section 3 tax exemption to lessees of property owned by a tax-exempt entity so long as the lessees use the property for a public purpose. We are constrained to reject this approach because the cases relied on by Tykat do not address the tax status of lessees and because the plain language of section 12-37-950 precludes the result Tykat desires. The precedents relied upon by Tykat address whether a tax-exempt owner in fee simple retains its tax exemption when it leases real property to a private entity. These cases make no mention of a tax exemption for a lessee. See Summers, 282 S.C. at 150, 318 S.E.2d at 114 (The Authority paid the taxes under protest and instituted this action to recover them....); Taylor v. Davenport, 281 S.C. 497, 316 S.E.2d 389 (1984) (holding, in a dispute between Greenwood County and the counties of Newberry and Laurens, that property owned by Greenwood County and leased to a private entity was exempt from taxation); Wasson, 277 S.C. at 483, 289 S.E.2d at 418 (The Authority, excepting to the assessor's determination, sought review ....); cf. Quirk v. Campbell, 302 S.C. 148, 151-53, 394 S.E.2d 320, 322-23 (1990) (holding that, because a property was owned by Richland County and used for a public purpose, a fee in lieu of taxes agreement concerning the property did not violate constitutional provisions requiring uniformity in ad valorem tax rates). By contrast, section 12-37-950 is directly on point. Section 12-37-950 unambiguously requires that Tykat's leasehold estate be valued for property tax purposes as real estate, and it makes no mention of an exemption if the leasehold estate is used for a public purpose. Tykat has not argued section 12-37-950 runs afoul of article X, section 3. Accordingly, we are bound by the plain language of the statute. See Wynn ex rel. Wynn v. Doe, 255 S.C. 509, 512, 180 S.E.2d 95, 96 (1971) (Where the language of [a] statute is plain and unambiguous... the court has no right to look for or impose another meaning.). Thus, our holding is limited to Tykat's effort to apply the Summers-Wasson line of cases to lessees of real property where the grantor is exempt from taxation. Applying the plain language of section 12-37-950, we hold that Tykat's leasehold interest was not exempt from ad valorem taxation, regardless of whether Tykat used that interest for a public purpose. [1] For these reasons, we affirm the order of the ALC as to the issues raised in Tykat's appeal. [2] We turn now to the appeal by the county.