Charleston Co. ordered to refund $9.3M in taxes

Property owners who were overcharged score victory; council expected to appeal A circuit judge has ordered Charleston County to issue tax refunds to nearly 90,000 property owners who were overcharged because of the county's revaluation cap two years ago. Ranging from just pennies to tens of thousands of dollars, individual refunds must be mailed within 60 days, Judge Victor A. Rawl said in an order received by attorneys Monday. Council is expected to appeal the decision and it is not clear when, or even if, refunds totaling an estimated $9.3 million will ever be issued. To issue refunds, council would have to raise taxes on all property owners. Rawl's ruling is a huge victory for many homeowners and all owners of commercial and rental property, who paid higher taxes in 2001 because of tax breaks council gave to owners of homes that soared in value during the 1990s, most notably in beach communities, resorts, and in downtown Charleston. While Rawl, and later the S.C. Supreme Court, ruled the tax break from a reassessment cap illegal, Rawl's latest decision is the first in which a refund is ordered. "We're happy with the decision, but we regret that the county did not use the 11 months Judge Rawl gave them to come forward with a solution," said Trenholm Walker, who represents taxpayers in the class-action lawsuit. County attorneys have refused to comment on the ongoing litigation. Council Chairman Tim Scott could not be reached Monday after the order was released. According to Rawl's order, some owners of single-family homes and virtually all commercial and rental property owners are due refunds, which will vary depending on the value of property, how much it increased in value since 1993, when the property was purchased and where it is located. All property owners who received county refund notices in the mail three months ago would get refunds if Rawl's decision is upheld by a higher court. The refunds on commercial and rental property amount to roughly 5 percent of the total tax bill in 2001. Refunds on owner-occupied homes, most in neighborhoods where property values did not rise as rapidly as in beach communities, average roughly 3.3 percent of the total tax bill for the same year, Walker said. In all, owners of 97,305 properties paid higher taxes because of the illegal reassessment cap, according to county tax records. Owners who live in their homes who received a benefit from the reassessment cap would not get refunds. Instead, they along with all other property owners would have to pay higher property taxes to cover the county's cost to issue refunds. Rawl's decision is the latest in the reassessment cap controversy, which has thrown the entire county and municipal property tax system into confusion the past three years. The controversy stems from public opposition to higher property taxes, especially on homes that have increased substantially in value. Property taxes are based on the value of property. In 2001, as a result of state-mandated re-evaluations of property values, called reassessment, property taxes on homes in beach communities, private resorts and in downtown Charleston were expected to soar. Anticipating an outcry from these owners, council initiated a 15 percent reassessment cap. It capped the taxable increase in value on homes occupied by their owners. As a result of the cap, owner-occupied homes that increased substantially in value in the 1990s received a tax break. Conversely, since those property owners paid less in taxes, all other homeowners and commercial property owners paid more. A North Charleston apartment complex owner and a couple who own a second home on Kiawah Island sued, saying it is not fair that they have to pay taxes on the full value of their property while others do not. Rawl ruled last year that the cap is illegal and later ordered the county to notify nearly 100,000 property owners that they may be due a refund. The vast majority of those taxpayers have opted to join the class-action lawsuit against the county, Walker said. Last year, council members approved another reassessment cap to take effect this year. They later reversed themselves, deciding instead to wait until a final court decision to learn if a cap is legal. With the new cap, most homeowners would have paid higher taxes to ensure tax breaks for commercial property owners. Scott has said that while the former reassessment cap has been ruled illegal, until a final ruling from the S.C. Supreme Court, the cap is legal.

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