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Glynn County Board of Assessors v. Sia Propco I, LLC.

Court of Appeals of Georgia, Second Division

June 25, 2019

GLYNN COUNTY BOARD OF ASSESSORS
v.
SIA PROPCO I, LLC.

          MILLER, P. J., RICKMAN and REESE, JJ.

          Rickman, Judge.

         The Glynn County Board of Assessors (the "County") appeals the partial grant of summary judgment in favor of a property owner in this case involving the correct way to assess the value of condominiums located within the Cloister Ocean Residences on Sea Island (the "COR"). For the following reason, we reverse in part.

         Summary judgment is warranted when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. OCGA § 9-11-56 (c). "On appeal from the grant or denial of summary judgment, we conduct a de novo review, with all reasonable inferences construed in the light most favorable to the nonmoving party."(Citations and punctuation omitted.) Smith v. Found, 343 Ga.App. 816, 817 (806 S.E.2d 287) (2017).

         As of 2015, SIA Propco I, LLC ("the Taxpayer") owned 52 Quarter Ownership Interests[1] of 17 condominium units in COR, and the County assigned each interest a fair market value for 2015 ad valorem tax purposes, using the sales comparison approach, based on two comparable Quarter Ownership Interest sales from 2014. The Taxpayer appealed the assessments to the Glynn County Board of Equalizations, which reduced the valuations to account for the value of Sea Island Club Membership[2] rights that were included in the sales price of the comparable properties. The County appealed that decision to the Superior Court of Glynn County.

         The superior court granted partial summary judgment in favor of the Taxpayer, among other things, on the grounds that (1) the County assessments failed to exclude the value of membership in the Sea Island Club, which is associated with ownership at COR; and (2) the assessments failed to exclude any value arising from the fact that owners of Quarter Ownership Interests were required to pay only 25% of the annual club dues.[3] The County appeals these two rulings.[4]

         1. In its order, the superior court determined that the County was required to exclude the value of Sea Island Club membership rights from the comparable sales price used to value the properties. The County challenges this holding.

         The superior court framed the parties' respective arguments on the issue. The Taxpayer asserted: "Where membership rights are intangible personal property which cannot be taxed, . . . the gross comparable sales prices should be downwardly adjusted by the value of the membership received at the time of sale." The County asserted, on the other hand, that "there should be no such adjustment, as the quarter-interest purchase did not include membership, but rather included only a right to immediate access to membership."

         This Court has previously addressed this issue involving the same club membership (but related to other Sea Island properties): whether the County was required to downwardly adjust the value of Sea Island Company properties by the value of Sea Island Club memberships. See Morton v. Glynn County Board of Tax Assessors, 294 Ga.App. 901, 903-907 (1) (670 S.E.2d 528) (2008). Morton held that although a club membership per se is intangible personal property and therefore not taxable real estate, if the applicable procedure for transferring club memberships shows that a purchaser obtains a right to apply for a membership with the club, rather than purchasing a membership directly from the property seller, such a right is inextricably bound with the sale of qualified real property and is, therefore, properly considered when assessing the fair market value of such properties. See Id. at 904-905 (1). Thus, the Morton Court concluded that "the County could properly include the enhanced value paid to the seller for the right to apply for membership as part of the fair market value of the property. This increased value is a benefit connected to the real property itself, rather than an intangible benefit such as goodwill." Id. at 905 (1).

         The trial court in the present case found that the factual circumstances in Morton were distinguishable from the present case, but it did so by resolving an issue of fact, namely, an inconsistency between documents that govern the COR, including the transfer of club memberships, and testimony from the vice president of membership at the club on the same topic.

         More specifically, the trial court concluded:

In Morton, the sale of the membership was a separate transaction between the seller and the Club. Here, despite the language in the Public Offering Statement [and] Declaration, the undisputed fact[ ] remains that membership is guaranteed as part of the transaction between buyer and seller. [Citing the vice president's deposition.]

         Yet as the trial court acknowledged, the Declaration of Condominium for the COR and the COR Public Offering Statement issued prior to sale each "provide that quarter-interest purchasers are entitled only to an opportunity to apply for membership." Indeed, the Declaration of Condominium for the COR provides that memberships are not transferrable, that COR sales terminate memberships, and that purchasers must then apply for club membership:

Membership in the [Club] held by an Owner of a Quarter Ownership Interest as a result of ownership of such Quarter Ownership Interest of Residence Unit shall terminate at such time as the Owner conveys, transfers, or otherwise disposes of such Quarter Ownership Interest. Such membership is not transferrable or assignable. The purchaser from any Owner of a Quarter Ownership Interest may, as determined by Sea Island Company, be provided an ...

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