State Tax Commission of Missouri
| HMH LLC, | ) | |
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| Complainant, | ) | |
| ) | ||
| v. | ) | Appeal Number 05-11370 |
| ) | ||
| JAKE ZIMMERMAN, ASSESSOR, | ) | |
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) | |
| ) | ||
| Respondent. | ) |
ORDER
AFFIRMING HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
On June 16, 2014, Hearing Officer Maureen Monaghan, entered her Decision and Order (Decision) adopting the Board of Equalization value, but changing the assessed value to reflect the level of assessment for commercial property in the county for tax year 2005.
Respondent timely filed his Application for Review of the Decision on July 16, 2014. Complainant timely filed its Response on August 13, 2014. Respondent’s Reply was received September 8, 2014, dated September 3, 2014.
Standard Upon Review
A party subject to a Decision and Order of a hearing officer with the State Tax Commission may file an application requesting the case be reviewed by the Commission. The Commission may then summarily allow or deny their request. The Commission may affirm, modify, reverse or set aside the decision. The Commission may take any additional evidence and conduct further hearings.
DECISION
Complainant’s Claims of Error
Respondent puts forth the following alleged errors in the Decision.
- The Decision and Order of the Hearing Officer is erroneous, arbitrary, capricious, unreasonable [and] constitutes an abuse of discretion and is contrary to Missouri law in that the Hearing Officer found that neither party disputed the valuation of the subject property and thereby ignored the fact of which [sic] the State tax [sic] Commission can take official notice that Complainant’s casino sold in 2012 for $610,000,000 and also ignored the State Tax Commission’s valuation of Complainant’s casino for tax years 2011 and 2012 of $227,596,740.
- The Decision and Order of the Hearing Officer is erroneous, arbitrary, capricious, unreasonable, constitutes an abuse of discretion and is contrary to Missouri law in that it rejects the unrebutted expert testimony presented by Respondent that inclusion of a casino in a sales ratio study is inappropriate under the IAAO’s Standard on Ratio Studies approved in July 1999 and finding that “such testimony fails to offer anything of relevance”.
Discussion and Rulings
As set forth in the Hearing Officer decision, this case was submitted on exhibits. Respondent submitted the following exhibits:
- St. Louis County Board Appeal Form for 2005 on subject property;
- St. Louis County Board of Appeal Decision for 2005 on subject property;
- State Tax Commission Decision 11-11007 and 12-10158 on parcel number B0104930A (the barge), property classified as personal property by the Assessor;
- Written Direct Testimony of John Gillick; and
- Written Direct Testimony of Patrick M. O’Connor, ASA.
The thing noticeably absent from this list is an appraisal report. Also, completely absent from Respondent’s Application for Review is any indication of what alternative value Respondent would have proposed. Respondent now argues that the Hearing Officer should have divined Respondent’s opinion of value from the fact that a different Hearing Officer reached a different opinion of value for a different year for a different parcel of the property and/or from the fact that the entire complex sold some seven years after the relevant tax day for $610,000,000. The only thing that Respondent presented that could absolutely indicate an opinion of value for the parcel in question was the Board of Equalization decision. It was reasonable for the Hearing Officer to rely upon that opinion of value. Taking notice of a sales value or a prior decision for a different tax year does not establish the value of the subject property on the tax day.
Respondent’s second allegation of error was the Hearing Officer’s failure to afford weight to Respondent’s expert’s testimony that commercial sales ratio studies do not include casino sales. The Hearing Officer was correct in finding that said testimony does not add anything of relevance to the discussion of discrimination. The relevant subclass of property in this appeal was commercial. The subject property, as commercial property, was entitled to receive the same assessment ratio enjoyed by other commercial properties.
Summary and Conclusion
The St. Louis County Board of Equalization made a determination of value for the property. Both the Complainant and the Respondent submitted as an Exhibit for valuation, the determination of value by the Board. The State Tax Commission previously found the weighted median assessment ratio for commercial property in St. Louis County in 2005 for commercial property was 25%. The subject property is of commercial classification. The Hearing Officer had clear evidence of value (the Board’s determination of value submitted by both parties) and the proper assessment ratio for the subject commercial property (previously determined by the State Tax Commission) and she found according to these facts. Respondent has failed to state any error warranting a change in the Hearing Officer’s value.
ORDER
The Decision and Order of the Hearing Officer, including the findings of fact and conclusions of law therein, is AFFIRMED and incorporated by reference, as if set out in full, in this final decision of the Commission.
Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of the mailing date set forth in the Certificate of Service for this Order.
If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts unless disbursed pursuant to Section 139.031.8, RSMo.
If no judicial review is made within thirty days, this decision and order is deemed final and the Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal.
So ordered this 7th day of October, 2014.
STATE TAX COMMISSION
Bruce E. Davis, Chairman
Randy Holman, Commissioner
Victor Callahan, Commissioner
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 9th day of October, 2014, to: Thomas Campbell, 100 South Fourth Street, Suite 1000, St. Louis, MO 63102, Attorney for Complainant; Edward Corrigan, Associate County Counselor, Attorney for Respondent, County Government Center, 41 South Central Avenue, Clayton, MO 63105; Jake Zimmerman, Assessor, County Government Center, 41 South Central Avenue, Clayton, MO 63105; Mark Devore, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.
Jacklyn Wood
Legal Coordinator
DECISION AND ORDER
HOLDING
Decision of the County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE. Substantial and persuasive evidence was presented to rebut the presumption of correct assessment by the Board of Equalization.
True value in money for the subject property for tax years 2005 and 2006 is set at $144,608,400, commercial assessed value of $36,152,100.
Complainant represented by counsel Attorney Thomas Campbell.
Respondent represented by Attorney Edward Corrigan.
Case decided by State Tax Commission.
ISSUE
Complainant appeals, on the ground(s) of overvaluation and discrimination, the decision of the County Board of Equalization. Having considered all of the competent evidence upon the whole record, the following Decision and Order is entered.
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the County Board of Equalization.
- Subject Property. The subject property is identified by map parcel number: 11P420023 and is further identified as 777 Casino Center Drive, Maryland, Missouri.
- Valuation and Assessment. The County Board of Equalization determined the valuation and assessment of the property as:
| Year | True Value | Assessment Ratio | Assessed Value |
| 2005-2006 | $144,608,400 | 32% | $46,274,690 |
- 2005 Ratio. The State Tax Commission in West County BMW v. Muehlheausler, STC Number 05-12569, (Decision and Order, including the findings of fact and conclusions of law therein, is incorporated by reference, as if set out in full, in this final decision of the Commission) found the weighted median of 25% as the commercial ratio assessment. No evidence was presented suggesting that the Board of Equalization applied anything less than the statutorily required 32% assessment rate to commercial properties when attempting to determine assessed value. Therefore, determining that the actual level of assessment in the county for 2005 was 25% necessarily means that a large portion of the commercial properties within the county were undervalued for tax years 2005 and 2006.
5. Complainant’s Evidence. Complainant filed the following exhibits:
A. Notice of Decision by the County Board of Equalization dated 8-19-05 and Commercial Review Document of St. Louis County.
6. Respondent’s Evidence. Respondent filed the following exhibits:
1. St. Louis County Board Appeal Form for 2005 on subject property;
2. St. Louis County Board of Appeal Decision for 2005 on subject property;
3. State Tax Commission Decision 11-11007 and 12-10158 on parcel number B0104930A (the barge), property classified as personal property by the Assessor;
4. Written Direct Testimony of John Gillick; and
5. Written Direct Testimony of Patrick M. O’Connor, ASA.
7 Exhibits Admitted into Evidence. Parties were ordered to file objections on or before April 1, 2014. Neither party filed objections. All exhibits admitted into evidence. Parties were ordered to request a hearing by May 5, 2013. No hearing was requested. The case was taken under advisement.
8. Subject property’s true value as of January 1, 2005 was $144,608.400. Subject property was classified as commercial property. The median assessment ratio for commercial real property in St. Louis County in 2005-2006 was 25%.
CONCLUSIONS OF LAW AND DECISION
Jurisdiction
The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious. The Commission shall issue a decision and order affirming, modifying or reversing the determination of the board of equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious.[1]
Basis of Assessment
The Constitution mandates that real property and tangible personal property be assessed at its value or such percentage of its value as may be fixed by law for each class and for each subclass.[2] The constitutional mandate is to find the true value in money for the property under appeal. By statute real and tangible personal property is assessed at set percentages of true value in money.[3]
Presumption In Appeals and True Value
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[4] This presumption is a rebuttable rather than a conclusive presumption. It places the burden of going forward on the taxpayer – Complainant.
The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the Board’s valuation is erroneous and what the fair market value should have been placed on the property.[5]
In this case, the both parties set forth the Board of Equalization’s determination of value as the true value of the subject property; therefore, the Board of Equalization’s determination of true value is sustained.
Respondent also submitted a State Tax Commission decision on other property owned by this taxpayer. The Decision is not relevant in this case for the following reasons: (1) the assessment cycle of this appeal is 2005-2006, the assessment years of the Decision were 2011 and 2012; (2) the subject property is real property not including the barge of the taxpayer, the property in the Decision was classified as personal property – the barge – belonging to the taxpayer; and (3) the Commission did not make a finding of true value in the Decision – the presumption of true value of the Board of Equalization was not rebutted.
Discrimination
In order to obtain a reduction in assessed value based upon discrimination, the Complainant must (1) prove the true value in money of their property on January 1, 2005; and (2) show an intentional plan of discrimination by the assessing officials resulting in an assessment of that property at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction or show that the level of an assessment is so grossly excessive as to be inconsistent with an honest exercise of judgment. [6]
The State Tax Commission previously took up this matter in West County BMW v. Muehlheausler, STC 05-12569. The Commission found that there was no evidence that there was an intentional plan of discrimination by the assessing officials, however, they did find that the level of their assessment is so grossly excessive as to be inconsistent with an honest exercise of judgment. “By requiring that the level of an assessment be so grossly excessive as to be inconsistent with an honest exercise of judgment in cases in which intentional discrimination is not shown, the courts and the Commission refrain from correcting assessments which reflect no more than de minimus errors of judgment on the part of assessors. Such a standard recognizes that ‘[w]hile practical uniformity is the constitutional goal, absolute uniformity is an unattainable ideal’.” [7]
In this instance, the true value as set by the Board of Equalization is $144,608,400. Neither party disputed the valuation as evidence by both parties presenting the Board’s determination of value as evidence of true value. It was previously found by the Commission that the median assessment ratio for commercial property for January 1, 2005, was 25% rather than the statutorily mandated 32%. At 25%, the assessed value for the subject property should have been $36,152,100. Instead, the assessed value for the subject property, as determined by the Board of Equalization, was $46,274,690 or 32%. The issue is whether the difference between the average assessment level for the county (25%) and the assessment level for the taxpayer’s property (32%) is grossly excessive.
The median level of assessment for St. Louis County for the 2005 assessment cycle is 25% and the Complainant’s assessment for the 2005 assessment cycle is 32%. The Complainant’s assessment can be considered to be so grossly excessive as to be entirely inconsistent with an honest exercise of judgment or inconsistent with a “de minimus error of judgment on the part of assessor” recognizing that absolute uniformity is an unattainable ideal.[8]
The County presented the testimony of Patrick O’Connor on ratio studies and the IAAO standards. The witness testified that he conducted a ratio study for West County BMW v. Muehlheausler, STC Number 05-12569. The witness stated that he did not include any casinos in his study. The testimony fails to offer anything of relevance. First, State Tax Commission already made a finding that Mr. O’Connor’s ratio study was not persuasive. Second, Mr. O’Connor conducted a sales ratio study; no casinos sold within the jurisdiction during the period of the study therefore the property would not be included in a sales ratio study. Lastly, a casino property that sold may not be included in a study due to its unique nature – licensing requirements and sale involving personal property.
Even if a sale of casino property occurred during the relevant time period and even if all concurred that the sale should not be included in a sales ratio study, the Respondent does not present any precedent that specific types or uses of properties within the class tested in the ratio study is precluded from participating or receiving relief in a discrimination case or alleging discrimination as a ground for appealing their assessment. Review of Koplar v. STC, 321 SW2d 686 (1950) office buildings, Cupples –Hesse v. STC 39 SW2d 696 (1959) industrial property, Breckenridge v. Leachman 571 S.W.2d 251 (1978) hotel, Cassilly v. Riney, 576 S.W.2d 325 (1979) residential, finds no ruling that the average level of assessment would not be applicable to a property within a classification. Only in Sperry v. STC, 695 S.W.2d 464 (1985) did a court decline to apply an average ratio. In that case, the court did not find the disparity in statutory ratio of assessed value to true value between a class comprised of real property and a class comprised of tangible personal property to warrant relief. The Court found that the Constitution does not require the assessed valuation of personal property be the same ratio to true value as that of real property; the Constitution only requires that taxes be uniform upon the same subclass of property within the jurisdictional territory.
ORDER
The assessed valuation for the subject property as determined by the Board of Equalization for St. Louis County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2005 and 2006 is set at $36,152,100
Application for Review
A party may file with the Commission an application for review of this decision within thirty days of the mailing date set forth in the Certificate of Service for this Decision. The application shall contain specific facts or law as grounds upon which it is claimed the decision is erroneous. Said application must be in writing addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.
Failure to state specific facts or law upon which the application for review is based will result in summary denial. Section 138.432 RSMo.
Disputed Taxes
The Collector of St Louis County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 139.031.8, RSMo.
Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed. Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.
SO ORDERED this 16th day of June, 2014 .
STATE TAX COMMISSION OF MISSOURI
Maureen Monaghan
Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this ____ day of ________, 2014, to: Thomas Campbell, 100 South Fourth Street, Suite 1000, St. Louis, MO 63102, Attorney for Complainant; Edward Corrigan, Associate County Counselor, Attorney for Respondent, County Government Center, 41 South Central Avenue, Clayton, MO 63105; Jake Zimmerman, Assessor, County Government Center, 41 South Central Avenue, Clayton, MO 63105; Mark Devore, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.
Jacklyn Wood
Legal Coordinator
Contact Information for State Tax Commission:
Missouri State Tax Commission
301 W. High Street, Room 840
P.O. Box 146
Jefferson City, MO 65102-0146
573-751-2414
573-751-1341 Fax
[1] Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.
[2] Article X, Sections 4(a) and 4(b), Mo. Const. of 1945
[3] Section 137.115.5, RSMo
[4] Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STC, 308 S.W.2d 748, 759 (Mo. 1958)
[5] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
[6] Savage v. State Tax Commission, 722 S.W.2d 72 (Mo. banc 1986); Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003.)
[7] Savage v. State Tax Commission, 722 S.W.2d 72 (Mo. banc 1986).
[8] Sperry Corp. v. State Tax Commission, 695 S.W.2d 464, 468 (Mo. banc 1985) (quoting Sunday Lake Iron Company v. Wakefield Tp., 247 U.S. 350, 353, 38 S.Ct. 495, 495, 62 L.Ed. 1154, 1156 (1918)). See also Brandel v. State Tax Commission of Missouri, 716 S.W.2d 886, 888-89 (Mo. App. 1986)