Youngs' appeal use management decision to county review board

By Lynn Hotaling

David Young, whose 484 acres straddle the Continental Divide between Cashiers and Highlands, contends that his family's property has been denied tax-deferred status despite the fact that he has submitted the required forest management plan. That plan, prepared by forester Rachel Wood of Asheville, has not been denied, said Cecil Dills, Jackson County's tax assessor.

"The plan was accepted," Dills said. "Rachel Wood does good work."

One sticking point, Dills said, is that since the Youngs did not comply with a previous plan, he wants assurance that they plan to follow the new one, which was submitted to the tax assessor's office in March 1999.

The Youngs' attorney, Billy Clarke of Asheville, questioned whether the county can require proof of active engagement before a plan is approved.

The other question, according to Dills, is whether the Youngs' corporation, Whiteside Estates, can qualify for the use management designation. State statutes require that a corporation's primary business activity be commercial timber production in order for it to receive the tax-deferred status, Dills said. The Youngs' property consists of two tracts that are divided by U.S. 64. Whiteside Estates is made up of 226 acres that are part of the Tuckaseigee watershed, and the O.E. Young tract is comprised of 257 acres that are part of the Chattooga watershed. Both tracts were included in the use value program from 1976 until 1996.

According to testimony from Wood, the Youngs asked for a plan that included both tracts and are ready to begin timber sales. She is currently marking trees on approximately 25 acres in preparation for a sale this fall or winter. During cross examination by county attorney Diane Sherrill, Wood stated that she completed the management plan in early 1999 but had not been back to the Youngs' property until two weeks ago.

With regard to the primary business of Whiteside Estates, David Young said that the corporation's original function had been real estate development. That goal was abandoned during the 1960s, he said, and only one lot was sold during the 20-year period the property received the tax-deferred classification. The corporate charter was amended earlier this year to include timber management, he said.

During questioning from his lawyer, David Young told of a timber sale that occurred in 1994-95 and netted Whiteside Estates $14,000. Though many of the trees harvested were downed by Hurricane Opal, some sound timber was included, he said. Clarke offered corporate financial records as evidence that the Youngs routinely spend more maintaining the property than they realize as income.

"We'd like to get the plan accepted and get going on it," David Young said. "Our interests are sincere."

Sherrill questioned David Young's statement that the primary business of Whiteside Estates was timber management. She pointed out that the corporate charter still refers to various real estate activities, and that the only regular income Whiteside Estates shows is from a road maintenance agreement and fees to maintain a community water system. That income is consistent with a real estate focus, she said.

In summing up the evidence for the Youngs, Clarke said the issue before the board is whether there is active management occurring at the Youngs' property.

"Obviously, there is, but I'm not sure you have to see evidence of active management before approving a plan," said Clarke, who reminded the board that timber doesn't grow overnight, and that patience is required, especially with hardwood production.

With regard to the principal business of the corporation, Clarke said that in North Carolina a corporation has to have timber as its principal business to qualify for use value, and that Whiteside Estates had not cut much timber in the past. However, if the corporation realizes $20,000 from timber sales during the next year, that would be its largest income source ever.

"A fair argument can be made that its principal occupation is growing and harvesting timber," Clarke said. He asked the board to approve the inclusion of the Youngs' property - both the Whiteside Estates and O.E. Young tracts - in the use value program.

Speaking for the county, Sherrill said the primary business of Whiteside Estates in its charter is real estate. Most of the corporation's income is from real estate as well.

"It's obvious timber development and sale is not the primary purpose," she said. "It's very important that David Young said he's not going to manage it as timber land unless they get deferred status."

The total assessed value of the Youngs' two tracts is $3,440,200. Taxes for this year are $7,359.84 for the O.E. Young tract, which has an assessed value of $1,533,300. A tax bill for the Whiteside Estates tract has not yet been generated, according to the tax assessor's office. If the Young's property regains use value status, the assessed value will be reduced by about two-thirds, Dills said.

The Youngs, who appealed their 1997 removal from the use value program all the way to the N.C. Supreme Court, maintain that they have now met all statutory requirements for inclusion in the program. The state Court of Appeals rejected their appeal, and the state Supreme Court declined to hear it. The Youngs paid taxes as if their property still had the use value classification during the time the matter was under appeal, David Young said.

Both Young tracts were removed from the use value classification after an area logger protested the property's status to the Board of Equalization and Review. That protest, according to BER Chairman Tom Crites, who is the only current member who was on the board at that time, was based on statements by the logger to the effect that the Youngs and other landowners in the use value program did not intend to harvest timber.

David Young, who was under oath as a witness at the hearing, denied ever making such a statement. He recalled the logger being on his property, but said the man was under the influence of alcohol at the time and was asked to leave.

The use value program, according to Dills, is set up to encourage timber production. Those who do not intend to harvest timber do not belong in the program, he said.

The Youngs appealed to the BER, they said, so they could get their current timber management plan approved and regain their use value status. When a property is in that program, it is appraised at a lower rate than current market value, and landowners thus pay ad valorem taxes at a reduced rate, Dills said. If they property is sold, the deferred taxes are due in full. If the property is removed from the program, owners must pay the full amount of taxes for three years prior to the removal.

David Young, who testified at length, maintained that though he didn't follow his original plan exactly, he mostly adhered to it. The county should have checked periodically, he said, and advised him of steps he could take. Statutes require that one-eighth of all properties in the program be checked each year, he said. His property was in the program for 20 years and to his knowledge was not assessed by the county until the time of the logger's protest.

The county could have worked with the Youngs with regard to compliance to their original plan, Dills said. However, the citizen who protested the classification of the Youngs' property and other tracts bypassed Dills' office and went straight to the BER, which ejected the Youngs' property from the use value program. The Jackson County Board of Equalization and Review told David Young he would be notified of their decision by Nov. 1.

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