June 8, 2017
From The Administrative Law Court Deborah Brooks Durden,
Administrative Law Judge
Stephen M. Cox, of Robinson Bradshaw & Hinson, PA, of
Rock Hill, for Appellants.
G. Ryan and Jason Phillip Luther, both of the South Carolina
Department of Revenue, of Columbia, for Respondent.
Preparatory Academy (YPA) and Hock RH, LLC (Hock) appeal an
order of the administrative law court (ALC) affirming the
South Carolina Department of Revenue's (DOR's) denial
of Appellants' tax protest and request for a refund of
2013 property taxes paid on property leased by YPA, a public
charter school. Appellants argue they are entitled to the
refund because, in 2014, the General Assembly amended section
59-40-140(K) of the South Carolina Code to clarify that real
property leased by public charter schools is exempt from ad
valorem taxation. We reverse.
and Procedural History
2009, the South Carolina Public Charter School District
issued YPA a charter to establish and operate a public
charter school under the South Carolina Charter Schools
YPA subsequently organized as a nonprofit corporation and is
exempt from Federal income tax.
April 7, 2011, YPA entered a twenty-five year lease agreement
with Hock, with the lease to begin on November 1, 2012. In
late 2012, YPA moved to Hock's forty-five acre campus on
Golden Gate Court in Rock Hill (the Campus). Since that time,
YPA has used the Campus exclusively to educate students from
kindergarten through twelfth grade. Under the terms of the
lease agreement, YPA is responsible for all maintenance and
upkeep of the Campus and its facilities and any property
taxes. On September 27, 2013, Appellants executed a lease
memorandum granting YPA the option to purchase the Campus.
Appellants recorded the lease memorandum in York County on
October 8, 2013.
November 4, 2013, YPA sought a property tax exemption for the
Campus from DOR pursuant to S.C. Code Ann. §
12-37-220(A)(2) (Supp. 2012). DOR denied YPA's
application by determination letter dated January 31, 2014,
concluding that "§ 12-37-220(A)(2) makes no
provision for leased property. Because [YPA] does not own
[the Campus], an exemption through § 12-37-220(A)(2)
does not exist."Using funds tendered by YPA, Hock paid the
2013 property taxes of $271, 801.51 on February 20, 2014.
conveyed the Campus to YPA in February 2014. On March 26,
2014, DOR notified YPA that it had granted a §
12-37-220(A)(2) exemption for the Campus for the 2014 tax
29, 2014, the South Carolina General Assembly passed Act 208
to amend legislation "exempting all earnings or property
of charter schools from state or local taxation, except for
the sales tax, so as to clarify that property of charter
schools exempt from such taxation includes owned or leased
property." 2014 S.C Act No. 208. The amendment was
subsequently codified with an effective date of June 2, 2014.
S.C. Code Ann. § 59-40-140(K) (Supp. 2014).
the 2014 amendment, on October 6, 2014, Appellants filed for
a refund of the 2013 property taxes. DOR denied the refund
request on February 3, 2015, determining Appellants were not
entitled to an exemption under § 59-40-140(K) for the
2013 tax year because the 2014 amendment did not apply
March 3, 2015, Appellants appealed DOR's determination to
the ALC, where the parties filed cross-motions for summary
judgment. The ALC granted DOR's motion for summary
judgment on September 2, 2015, finding Appellants were not
entitled to a refund because ...