NORTHTOWN VILLAGE, )
)
Complainant, )
)
v. ) Appeal Nos. 03-62515 through 03-62558
)
DON DAVIS, ASSESSOR, )
JASPER COUNTY, MISSOURI, )
)
Respondent. )
DECISION AND ORDER
HOLDING
Complainant=s evidence is minimally sufficient to establish the appropriateness of an agricultural classification and the application of agricultural grade values on the subject lots.
ISSUES
Complainant appealed these assessments on grounds of overvaluation and misclassification. Specifically, Complainant argued that (1) the statute provides that the assessment of lots cannot change from agricultural to residential until the actual occupation of the house takes place; (2) Jasper County=s methodology for classifying and assessing developing subdivisions differs from that of Christian and Greene Counties which creates a uniformity problem; and (3) the lots are used for agricultural purposes in that hay is cut annually.
SUMMARY
Complainant appeals the assessments on 44 vacant lots in the Northtown Village subdivision located at Highway D and Amber Drive in Oronogo, Missouri. The decision letter from the Jasper County Board of Equalization, issued on September 10, 2003, reflects that for the 2003 assessment the Assessor valued the parcels based upon an estimate of their market value and classified them as residential property. The Board of Equalization affirmed these assessments.
An evidentiary hearing was held on December 11, 2003, before the State Tax Commission Hearing Officer, Aimee L. Smashey, in the Jasper County Annex Building in Carthage, Missouri. Complainant was represented by Thomas Mann, Attorney. Respondent was represented by Mike Roberts, Assistant Prosecuting Attorney.
Complainant=s Evidence
Complainant offered the testimony of Jim Allen, CPA and Vice President of Complainant. Mr. Allen testified about the development of Phase 2 of the subject subdivision. He indicated that Complainant has cut and sold hay once a year and cut and sold some timber from the subject lots. Complainant=s on-site manager usually locates someone willing to cut the hay and the typical arrangement is that the cutter receives 2/3 and the landowner receives 1/3 of the sales price.
Respondent=s Evidence
Respondent offered the testimony of Assessor Don Davis, Deputy Assessor Karen Wright, and Chief Deputy Assessor Sharon Collier. Mr. Davis testified about the manner in which Jasper County classifies and values new subdivision developments. He further testified that occupancy law is not in effect for Jasper County until January 1, 2004. Ms. Wright testified that she had physically inspected the subject subdivision on two occasions and had not detected any type of agricultural activity during her inspections. Ms. Collier testified that when a new subdivision starts developing, the platted lots are valued at 50% of the standard residential lots values for the area and such lots are not assessed at full value until they are sold or developed.
FINDINGS OF FACT
1. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Jasper County Board of Equalization.
2. Complainant filed Complaints for 44 parcels, each with specific parcel numbers and the general address as Highway D and Amber Drive, Oronogo, Missouri. There is a discrepancy between the number of parcels (44 parcels) which Complainant appealed for 2003 and the number of parcels that Complainant appears to have owned on January 1, 2003, based upon Complainant=s Exhibits 1 and 2 (43 parcels). Complainant=s Exhibit 1 is a map of the plat for the Northtown Village subdivision outlining 47 lots identified as Phase 2 of the subdivision. It appears from Mr. Jim Allen=s testimony referencing Complainant=s Exhibit 2 (Tr. 14), that Complainant sold 4 lots (#42, #51, #56, and #67) from Phase 2 in the 2002 year, which leaves 43 lots according to the outlined area on the plat in Complainant=s Exhibit 1.
3. Complainant filed a subdivision plat for Northtown Village on February 4, 2002. Curbed streets and utilities serving the subject lots were constructed between February and October of 2002.
4. Complainant=s on-site manager, Mr. Gerald Schaefer, annually hires a hay cutter to cut hay from the subject lots. Tr. 26. Additionally, some timber has been cut and sold during Complainant=s ownership of the subject property.
CONCLUSIONS OF LAW AND DECISION
For property tax purposes, Missouri law provides that real property is to be classified into one of three categories — >residential property=, >agricultural and horticultural property=, and >utility, industrial, commercial, railroad, and other real property.= Section 4(b), article X of the Missouri Constitution. The categories are defined by statute in Section 137.016.1, RSMo 2000. In relevant part, the statute provides:
As used in section 4(b) of article X of the Missouri Constitution, the following terms mean:
(1) “Residential property“, all real property improved by a structure which is used or intended to be used for residential living by human occupants, vacant land in connection with an airport, land used as a golf course, and manufactured home parks, but residential property shall not include other similar facilities used primarily for transient housing. For the purposes of this section, Atransient housing@ means all rooms available for rent or lease for which the receipts from the rent or lease of such rooms are subject to state sales tax pursuant to section 144.020.1(6), RSMo;
(2) “Agricultural and horticultural property“, all real property used for agricultural purposes and devoted primarily to the raising and harvesting of crops; to the feeding, breeding and management of livestock which shall include breeding and boarding of horses; to dairying, or to any other combination thereof; and buildings and structures customarily associated with farming, agricultural, and horticultural uses. Agricultural and horticultural property shall also include land devoted to and qualifying for payments or other compensation under a soil conservation or agricultural assistance program under an agreement with an agency of the federal government. Agricultural and horticultural property shall further include land and improvements, exclusive of structures, on privately owned airports that qualify as reliever airports under the Nation Plan of Integrated Airports System, to receive federal airport improvement project funds through the Federal Aviation Administration. Real property classified as forest croplands shall not be agricultural or horticultural property so long as it is classified as forest croplands and shall be taxed in accordance with the laws enacted to implement section 7 of article X of the Missouri Constitution;
(3) “Utility, industrial, commercial, railroad and other real property“, all real property used directly or indirectly, for any commercial, mining, industrial, manufacturing, trade, professional, business, or similar purpose, including all property centrally assessed by the state tax commission but shall not include floating docks, portions of which are separately owned and the remainder of which is designated for common ownership and in which no one person or business entity owns more than five individual units. All other real property not included in the property listed in subclasses (1) and (2) of section 4(b) of article X of the Missouri Constitution, as such property is defined in this section, shall be deemed to be included in the term “utility, industrial, commercial, railroad and other real property”.
Section 137.016.1, RSMo 2000. As illustrated in the definitions, the classification turns on the actual use put to the property. If there is no active use being made of the property, the classification turns on the immediate most suitable economic use that could be made of the property after consideration of certain factors set forth at Section 137.016.5, RSMo 2000.
Complainant argued at hearing that the statute provides that the assessment of lots cannot change from agricultural to residential until the actual occupation of the house takes place. In relevant part, Section 137.119, RSMo 2000 provides:
The filing of a real property subdivision plat with the recorder of deeds shall not, singularly, result in a change in classification or an increase in the appraised value of such property. All contiguous lots and lands for which a plat has been filed shall be combined and valued as a single parcel if no improvements have been made to such lots or lands.
On May 2, 1995, the Commission issued a Memorandum to all assessors in the state addressing this statute. The memo referenced the circuit court decision in St. Charles County, Cause No. CV194-2460 which resulted in a March 13, 1995, ruling from Judge Rauch that when improvements are made on a particular lot, that lot may be split into a separate parcel and valued individually, with the remaining contiguous unimproved property continuing to be valued as a single parcel. The memo also provided three examples that the Commission hoped would be helpful in understanding the statute. The second example fits the facts in this appeal. It provides that when a developer files a subdivision plat with the recorder of deeds dividing a tract previously classified as agricultural land into twenty lots and builds access roads into the land, the valuation and classification of the parcel as a whole may change, but the lots must be valued as a single combined parcel because there has been no improvement on a particular lot. Based upon this guideline, once the roads are constructed or the utilities are put in such that they can be accessed from each lot, the valuation and classification of the parcel may change.
Complainant filed a subdivision plat for Northtown Village on February 4, 2002. Curbed streets and utilities serving the subject lots were constructed between February and October of 2002. Once those improvements had been made, the assessor and his staff were following good assessment practice in changing the classification and valuation of the subdivision land.
To the extent that Complainant=s argument addresses the provisions of occupancy law set out at Section 137.082, RSMo, this statute is not applicable to the facts in this case because these provisions (1) do not impact the assessment of the underlying land, they only require that a residential building or structure shall not be assessed until occupancy or the year after the construction is completed, and (2) had not been adopted by the Jasper County governing body such that they were effective on January 1, 2003.
Complainant also argued that Jasper County=s methodology for classifying and assessing developing subdivisions differs from that of Christian and Greene Counties which creates a uniformity problem. The evidence concerning Jasper County=s methodology for the classifying and assessing of developing subdivisions shows it to be lawful and appropriate. The Jasper County Assessing staff reviewed the property, noted the road improvements to the subdivision land, and did not note any apparent agricultural use. The resulting assessments were appropriate and lawful based upon the observations at the site. [Note: When a property owner is performing an active agricultural use, such as the cutting of hay which is only clearly observable while the cutting is taking place, on property that has an observable alternative use, the property owner assumes the responsibility of notifying the assessing staff of the active agricultural use.] There was insufficient evidence presented concerning the applicable law for Christian and Greene counties and the specific methodologies used by these counties in assessing developing subdivisions to show an unlawful lack of uniformity.
Complainant=s final argument was that the subject lots should be classified and valued as agricultural property because hay is cut and sold annually from them. While Complainant could have done a more thorough job at establishing the timing, scope, and approach of the third-party hay cutter in light of the difficulty in haying lots in a subdivision improved with curbed streets, Complainant=s evidence is minimally sufficient to establish the appropriateness of an agricultural classification and productive value for the subject lots.
ORDER
In light of the evidence establishing the fact that hay has been cut from the subject lots annually and sold, the subject lots should be classified as agricultural property and valued based upon its productive capacity as determined by the grade and value assigned in the 2001 assessment. The agricultural grade values set by regulation have remained stable since the 2001 tax year. 12 CSR 30-4.010.
If either party ascertains that Complainant did not own all 44 of the appealed parcels as of the January 1, 2003, tax date, that party is directed to notify the Commission promptly and in no case later than 30 days after the date of this decision and order such that the scope of this decision can be corrected.
A party may file with the Commission an application for review of this decision within thirty (30) days of the mailing of such decision. The application shall contain specific grounds upon which it is claimed the decision is erroneous. Failure to state specific facts or law upon which the appeal is based will result in summary denial. Section 138.432, RSMo.
If an application for review of a hearing officer decision is made to the Commission, any protested taxes presently in an escrow account in accordance with these appeals shall be held pending the final decision of the Commission. If no application for review is received by the Commission within thirty (30) days, this decision and order is deemed final and the Collector of Jasper 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 these appeals. If any protested taxes have been disbursed pursuant to Section 139.031(8), RSMo, either party may apply to the circuit court having jurisdiction of the cause for disposition of the protested taxes held by the taxing authority.
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 May 27, 2004.
STATE TAX COMMISSION OF MISSOURI
Aimee Smashey
Hearing Officer
ORDER
REVERSING HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
On May 27, 2004, Hearing Officer Aimee L. Smashey entered her Decision and Order (Decision) setting aside the assessments by the Jasper County Board of Equalization.
Respondent timely filed his Application for Review of the Decision. Complainant timely filed Response.
FINDINGS OF FACT
1. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Jasper County Board of Equalization.
2. Complainant filed Complaints for 44 parcels, each with specific parcel numbers and the general address as Highway D and Amber Drive, Oronogo, Missouri. There is a discrepancy between the number of parcels (44 parcels) which Complainant appealed for 2003 and the number of parcels that Complainant appears to have owned on January 1, 2003, based upon Complainant=s Exhibits 1 and 2 (43 parcels). Complainant=s Exhibit 1 is a map of the plat for the Northtown Village subdivision outlining 47 lots identified as Phase 2 of the subdivision. It appears from Mr. Jim Allen=s testimony referencing Complainant=s Exhibit 2 (Tr. 14), that Complainant sold 4 lots (#42, #51, #56, and #67) from Phase 2 in the 2002 year, which leaves 43 lots according to the outlined area on the plat in Complainant=s Exhibit 1.
3. Complainant filed a subdivision plat for Northtown Village on February 4, 2002. Curbed streets and utilities serving the subject lots were constructed between February and October of 2002.
4. The testimony of Complainant=s accountant of some possible hay cutting or timber cutting was insufficient to establish by substantial and persuasive evidence an on going agricultural use prior to and as of January 1, 2003 that did in fact continue after curb, guttering and utilities were constructed to the various individual lots which comprise the Northtown Village development.
CONCLUSIONS OF LAW
Complainant=s Burden of Proof
In an appeal challenging the classification of real property, Complainants must present substantial and persuasive evidence that the use of the property as of the effective tax date (January 1, 2003 in this instance) is consistent with the proposed classification as established by statute. Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, at 897. Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See, Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact. The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief. Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975). See also, Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003); Daly v. P. D. George Co., 77 S.W.3d 645 (Mo. App. E.D. 2002); Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003).
Board of Equalization Presumption
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. 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).
DECISION
The taxpayer as the moving party in a classification case, bears the burden of establishing by substantial and persuasive evidence the appropriate classification under the controlling statutes. Although there is no presumption as to the Assessor=s valuation being correct, there is a presumption of correct classification by the assessor and of correct assessment by the Board. Hermel and May, supra. In the present case, on the critical issue of an ongoing and existing agricultural use, specifically that had been and was continuing to be annually harvested off of lots prepared for residential use by installation of curb, guttering and utilities, Complainant did not meets its burden of proof.
A taxpayer does not meet his burden if evidence on any essential element of his case leaves the Commission Ain the nebulous twilight of speculation, conjecture and surmise.@ See, Rossman v. G.G.C. Corp. Of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980). The essential element in this case for reclassification was to establish the agricultural use of the subject lots. Although Complainant=s witness testified about a haying operation and some past timber cutting, there was no substantiating evidence. No documentation to establish either the person or persons who had cut hay or timber was presented. No documentation was presented to establish the frequency of either hay or timber cutting. No documentation was presented to establish the most recent hay and timber cutting activities.
The entirety of the claim of agricultural use was based upon hearsay testimony. The Commission is not persuaded based upon this testimony, when there was available to Complainant sufficient time and resources to have provided solid documentary evidence, and additional supporting testimony to establish that the haying and timber operations were of such a nature as to have been going on in a regular basis even after streets, curbs, guttering and other utilities had been located to the subject lots.
Complainant=s failed to carry their burden of proof and rebut the presumption of correct classification by the Assessor and correct assessment by the Board.
ORDER
The Commission upon review of the record and Decision in this appeal, the Decision of the Hearing Officer should be reversed. Accordingly, the Decision is set aside. The subject properties are to be assessed for tax years 2003 and 2004 as residential properties and assessed values as set forth for each parcel in the Board Decision Letters.
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 date of the mailing of this Order.
SO ORDERED October 22, 2004.
STATE TAX COMMISSION OF MISSOURI
Sam D. Leake, Chairman
Bruce E. Davis, Commissioner
Jennifer Tidwell, Commissioner