Missouri State Tax Commission »

Glaxo Smith Kline v. Mavis Thompson, License Collector City of St Louis

December 22nd, 2014

State Tax Commission of Missouri

GLAXO SMITH KLINE	)
	)
Complainant,	)
	)
v.	)	Appeals Number 11-20565 & 13-29000
	)	(Tax years 2011 thru 2013)
MAVIS THOMPSON	)
LICENSE COLLECTOR	)
CITY OF ST. LOUIS, MISSOURI	)
Respondent.	)

ORDER AFFIRMING HEARING OFFICER DECISION

On December 22, 2014, Hearing Officer Maureen Monaghan issued her order setting aside the value placed upon the subject property by the St. Louis City Merchants’ and Manufacturers’ Tax Equalization Board, (sustaining the assessment made by the License Collector), and finding the correct assessed value to be $1,987,338 for tax year 2011; $1,902,394 for tax year 2012; and $2,493,186 for tax year 2013. Respondent appealed.

The parties agreed to the historical cost of the personal property. The difference in value between the parties arises in the calculation of obsolescence to construction work in progress properties and the question of whether Section 137.115.3(6) granting a 25% assessment ratio to personal property in qualifying enterprise zones has been effectively repealed.

The parties stipulated that the property was located within a qualifying enterprise zone on the relevant tax days.

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.

Issues

Respondent appealed raising the following issues:

The Hearing Officer erred in her finding as to 65% Good on Construction in Progress as the Complainant failed to show this percentage equated to the actual true value in money of the subject property, a failure which the Hearing Officer expressly acknowledged, and as the License Collector of the City of St. Louis is not bound regarding percent good construction in progress by other state offices or jurisdictions.

The Hearing Officer erred in finding that Complainant is entitled to a reduction in assessed value of certain property due to a former and defunct State Enterprise Zone statute which is no longer the law in the State of Missouri, a fact which the Hearing Officer concedes, at p. 9-10 of the Decision, but then fails to rule in accordance with.

DISCUSSION AND RULING

The Hearing Officer erred in her finding as to 65% Good on Construction in Progress as the Complainant failed to show this percentage equated to the actual true value in money of the subject property, a failure which the Hearing Officer expressly acknowledged, and as the License Collector of the City of St. Louis is not bound regarding percent good construction in progress by other state offices or jurisdictions.

The machinery and equipment, which is the subject of this appeal, consists of a variety of machinery, tools, and appliances utilized by Complainant in its facility at 320 South Broadway, St. Louis, Missouri. Complainant is a pharmaceutical manufacturer with an NAICS code of 32. Pharmaceutical manufacturers formerly had an SIC code of 28. The City of St. Louis License Collector does not discount (apply an obsolescence factor) construction-in-progress property (CIP). The City of St Louis Assessor discounts CIP at 65% good (35% obsolescence). The Hearing Officer found that Complainant was not entitled to a reduction based upon true value of its CIP property but was entitled to a reduction based upon the discriminatory impact of the License Collector’s decision to assess at 100% of market value. In short, the Hearing Officer found that Complainant was not required to show actual obsolescence if it could demonstrate a pattern and practice of differing treatment of other similarly situated property owners (discrimination).

Respondent argues that she is not bound by the assessment policies of the Assessor of the City of St. Louis, or any other taxing jurisdiction. However, the Respondent is bound by the Constitution of Missouri. It states, at Article X, Section 3: “Taxes . . .shall be uniform upon the same class of subclass of subject within the territorial limits of the authority levying the tax . . .” The test is not whether actual obsolescence was demonstrated, but rather, whether or not Complainant was treated differently than a statistically significant number of similarly situated taxpayers within the taxing jurisdiction. The evidence was that the assessor for the City of St. Louis routinely allows a 35% obsolescence factor to work in progress. The license collector of the same jurisdiction routinely rejects an obsolescence factor. The Hearing Officer was correct in finding that “Complainant suffers from discrimination as to their CIP business personal property in that their property is taxed differently from other similarly classified property within the jurisdiction.”

The Hearing Officer erred in finding that Complainant is entitled to a reduction in assessed value of certain property due to a former and defunct State Enterprise Zone statute which is no longer the law in the State of Missouri, a fact which the Hearing Officer concedes, at p. 9-10 of the Decision, but then fails to rule in accordance with.

No one argues that Missouri has a system allowing for Enterprise Zones. Enterprise Zones were subsequently replaced with Enhanced Enterprise Zones. Respondent incorrectly argues that the provisions of Section 137.115.3(6) granting a 25% assessment ratio to certain personal property located within a “state enterprise zone” can no longer be given effect because state enterprise zones were repealed in that the term “state enterprise zone” was not changed to “enhanced enterprise zone” in Section 137.115 when the law was changed; and, therefore, Section 137.115.3(6) was repealed by implication. Further, Respondent argues that the Enhanced Enterprise Zones were never meant to allow reduced assessments on certain personal property.

The simple fact is that Section 137.115.3(6) RSMo. is still law. That section is frequently amended by the legislature – most recently in 2013. From this we can reasonably assume that the legislature was aware of the specific wording of Section 137.115.3(6) RSMo. and did not believe that said section required amending or deleting.

It is also reasonable to note that all enterprise zones are created by state statute and administered by the Director of the Department of Economic Development, a state agency. Section 135.210, Section 135.250 RSMo. All enterprise zones can be characterized as “state” zones.

Additionally, under Section 135.200(3), most recently amended in 2011, a qualifying “facility” is “any building used as a revenue-producing enterprise located within an enterprise zone, including the land on which the facility is located and all machinery, equipment and other real and depreciable tangible personal property acquired for use at and located at or within such facility and used in connection with the operation of such facility”. Respondent’s argument that Section 137.115.3(6) must be repealed inasmuch as Enhanced Enterprise Zones do not include personal property, is not well taken.

When engaging in statutory construction, the primary purpose is to ascertain the legislature’s intent from the language used and to give effect to that intent if possible. The Court must presume that the legislature intended the provisions of the statute to have effect. “The construction of statutes is not to be hypertechnical, but instead is to be reasonable and logical and give meaning to the statutes.” Lewis v. Gibbons, 80 S.W.3d 461. Provisions of a legislative act must be construed together and all provisions must be harmonized. Statutes in pari materia are to be consulted for the construction of each other though some of the statutes may have expired, or even been repealed, and whether they are referred to or not. Chester Bross Const v. Missouri Department of Labor and Industrial Relations 11 S.W.3d 425 (Mo App ED 2003)

The interpretation of Section 137.115.3 RSMo. must be read and interpreted in a reasonable and logical manner to give meaning to the statute. We reject Respondent’s contention that we are not required to enforce said statute.

Section 137.115.3(6) RSMo creates four requirements for personal property to be assessed at 25% rather than 33 1/3% of its true value in money. The property must be:

a. Used as pollution control equipment; or
Used as tools and equipment used for retooling for the purpose of introducing new product lines or used for making improvements to existing products;
Purchased after August 28, 1998;
Located in an enterprise zone; and
Used by a company identified by any standard industrial classification number cited in subsection 135.200(6), RSMo. [now an NAICS code found in subdivision (7)]

Complainant’s property met all criteria.

The Hearing Officer did not err in overruling the decision of the St. Louis City Merchants’ and Manufacturers’ Tax Equalization Board. 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 the City of St. Louis, 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 28th day of April, 2015.

STATE TAX COMMISSION

Bruce E. Davis, Chairman

Randy Holman, Commissioner

Victor Callahan, Commissioner

I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 30th day of April, 2015, to: Complainants(s) counsel and/or Complainant, the county Assessor and/or Counsel for Respondent and county Collector.

tcampbell@polsinelli.com

moakm@stlouis-mo.gov

zazae@stlouis-mo.gov

thompsonm@stlouis-mo.gov

phillipsa@stlouis-mo.gov

Jacklyn Wood

Legal Coordinator

State Tax Commission of Missouri

GLAXO SMITH KLINE	)	Appeal No.	11-20565
	)		13-29000
	)		(2011, 2012, 2013)
	)
Complainant	)
	)
v.	)
	)
MAVIS THOMPSON, LICENSE COLLECTOR	)
CITY OF ST LOUIS, MISSOURI	)

DECISION AND ORDER

HOLDING

Decision of the St. Louis City Merchants’ and Manufacturers’ Tax Equalization Board

sustaining the assessment made by the License Collector, SET ASIDE, Hearing Officer finds true value in money for the subject property as follows:

YEAR	ASSESSED VALUE
2011	$1,987,338
2012	$1,902,394
2013	$2,493,186

Complainant appeared by Counsel, Thomas Campbell, St. Louis, Missouri.

Respondent appeared by Counsel, Matthew Moak and Erika ZaZa, Associate City Counselors.

Case heard by Hearing Officer Maureen Monaghan.

ISSUE

The issue in this appeal is the true value in money and assessed value of Complainant’s machinery and equipment as of January 1, 2011, January 1, 2012, and January 1, 2013. The parties stipulated to the true value for the Complainant’s personal property for years 2011, 2012 and 2013. The parties stipulated to the historical cost for the personal property deemed to be “construction in progress” property in 2011, 2012 and 2013. After stipulation of the values and costs, the remaining issues before the Hearing Officer were:

The appropriate level of assessment;
The true value of the personal property deemed to be construction in progress; and
The application of penalties.

SUMMARY

Complainant appeals the subject machinery and equipment value set by the License Collector and reviewed by the St. Louis City Board of Merchants’ and Manufacturers’ Tax Equalization (Board). The value set by the License Collector was as follows:

Year	True Value	Assessed Value
2011	$18,763,209	$6,254,403
2012	$10,230,106	$3,410,035
2013	$13,637,889	$4,545,963

The following exhibits were filed by the Complainant:

Exhibit	Description
A	STC Decision and Order (NPT) August 8, 2012
B	2011 Amended Property Declaration
C	2011 Amended Assessment Summary
D	Enterprise Zone Map and Custodian Affidavit
E	2011 CIP Summary Sheet
F	2011 Additions and Retirements
G	2012 Amended Property Declarations
H	2012 Amended Assessment Sheets
I	2012 CIP Summary Sheet
J	2012 Additions and Retirements
K	2013 Amended Property Declarations
L	2013 Amended Assessment Summary
M	2013 CIP Summary Sheet
N	2013 Additions and Retirements
O	Written Direct Testimony of Edward Moeller

The following exhibits were filed by the Respondent:

Exhibit	Description
1	Letter dated 5/2/2011 to “Valued Business Owner”
2	Declaration 2011
3	Declaration 2011
4	License and Permit System Values and Payments showing file date of 6/30/11 and total paid of $25,513.10
5	Letter dated 5/11/2012 to Mr. Steve Levick from Board of Merchants’ and Manufacturers’ informing him that the Assessed Value as set forth in the 2011 Declaration is approved
6	2012 Declaration – “see attached” – dated June 28, 2012 – $3,489,773
7	Notice of Assessment Change. Assessed value as filed by taxpayer for year 2011 $6,254,403 and Assessed value approved by the Board for tax year 2012 $7,818,004
8	2013 Declaration – signed 6/27/13 – “see attached”
9	Signed page 2 of Declaration dated 10/20/2013
10	Manufacturers’ Tax Bill dated 10/28/13 – approved assessed value $4,545,963 – no penalty assessed
	Written Direct Testimony of Darius Chapman
11	Senate Bill 1155
12	Section 137.115 RSMo.
13	Chapter 135 RSMo
14	Letter dated 10/8/14 to Erika ZaZa from Kenneth Voss – Objection by the Complainant – Sustained
	Written Direct Testimony of Shawn Ordway
	Rebuttal Written Testimony of Darius Chapman
	Written Rebuttal Testimony of Kenneth Voss

Complainant objected to Exhibit 14 and the Written Rebuttal Testimony of Kenneth Voss and such objections were sustained.

The appeals were consolidated and set for hearing. On October 24, 2014, a prehearing conference was conducted. The parties agreed to the true value of the personal property for tax years 2011, 2012 and 2013. The parties agreed to the historical cost for the construction in progress for 2011, 2012 and 2013. The parties agreed to the address and location of the business personal property and that said location was designated by ordinance as an enterprise zone.

FINDINGS OF FACT

Jurisdiction over this appeal is proper.
The machinery and equipment, which is the subject of this appeal, consists of a variety of machinery, tools, and appliances utilized by Complainant in its facility at 320 South Broadway, St. Louis, Missouri. Complainant is a pharmaceutical manufacturer with an NAICS code of 32; pharmaceutical manufacturers formerly had an SIC code of 28.
The parties stipulated to the true values for the following properties in 2011:

Supplies	$2,200
3 year recovery	$272,650
5 year recovery	$4,457,630
Seven year recovery	$280,070
TOTAL	$5,012,550

The parties agree that the construction in progress (CIP) historical costs for 2011 is $2,809,574. The parties do not agree as to CIP’s true value (taxable value).

The parties stipulated to the true values for the following properties in 2012:

Supplies	$4,435
3 year recovery	$327,680
5 year recovery	$6,394,367
Seven year recovery	$221,669
TOTAL	$6,948,151

The parties agree that the construction in progress (CIP) historical costs for 2012 is $240,000. The parties do not agree as to CIP’s true value (taxable value).

The parties stipulated to the true values for the following properties in 2013:

Supplies	$4,850
3 year recovery	$605,715
5 year recovery	$7,506,417
Seven year recovery	$170,200
TOTAL	$8,287,182

The parties agree that the construction in progress (CIP) historical costs for 2013 is $1,446,000. The parties do not agree as to CIP’s true value (taxable value).

The personal property subject to the appeals was located at 320 South Broadway, St. Louis, Missouri in 2011, 2012 and 2013.
320 South Broadway is located within the designated boundaries of the enterprise zone of the City of St. Louis pursuant to City of St. Louis Ordinance.
The Complainant purchased equipment used for retooling for the purpose of introducing new product lines or improving existing products in the following amounts:

Tax Year	CIP – Historical Cost
2011	$2,809,574
2012	$240,000
2013	$1,446,000

Personal property under construction is not “placed in service” as defined in Section 137.122 RSMo.
The City of St. Louis License Collector does not discount (apply an obsolescence factor) construction-in-progress property (CIP). The City of St Louis Assessor discounts CIP at 65% good (35% obsolescence).
The Complainant filed an asset listing with the City License Collector on June 30, 2011, June 28, 2012 and June 27, 2013.

CONCLUSIONS OF LAW

Jurisdiction

The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious. The Hearing Officer 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. Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.

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. Article X, Sections 4(a) and 4(b), Mo. Const. of 1945. The constitutional mandate is to find the true value in money for the property under appeal. By statute, real and tangible personal property are assessed at set percentages of true value in money. Section 137.115.5, RSMo.

Burden of Proof

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). 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 fair market value should have been placed on the property. Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).

Assessment Ratio

Tangible personal property is valued at market value and classified annually. § 137.115.1, RSMo. The assessment level for a class or subclass of property is a statutorily fixed percentage of its market value. The assessed value is derived by multiplying the market value times the assessment level, i.e., the percentage of market value for that class or subclass of property. Generally, tangible personal property is assessed at 33 1/3 percent of its true value in money. § 137.115.1, RSMo. The exceptions, followed by their respective assessment levels, are: grain in an unmanufactured condition, one-half of one percent; livestock, 12 percent; farm machinery, 12 percent; historic motor vehicles, 5 percent; aircraft that are home built from a kit, 5 percent; noncommercial aircraft that are at least twenty-five years old and fly less than fifty hours per year, 5 percent; pollution control equipment, 25 percent; and state enterprise zone retooling equipment for new or improved products, 25 percent. § 137.115.3.

137.115.3(6) states:

“Tools and equipment used for pollution control and tools and equipment used in retooling for the purpose of introducing new product lines or used for making improvements to existing products by any company which is located in a state enterprise zone and which is identified by any standard industrial classification number cited in subdivision (6) of section 135.200 , twenty-five percent.”

The subsection references “standard industrial classification number.” Standard industrial classification numbers (SIC) were developed by the federal government and used by the U.S. Office of Management and Budget (OMB) as well as many other U.S. agencies. In 1997, OMB adopted North American Industrial Classification System (NAICS) as its new industry classification system. Both SIC and NAICS codes identify a firm’s primary business activity. SIC code assignments were discontinued in November 2004 and the government began only assigning NAICS codes.

135.200 RSMo. referenced in §137.115.3(6) has been amended. Subdivision (6) of §135.200 RSMo is now (7). The subdivision also references NAICS codes rather than the SIC equivalent. Manufacturing activities that were classified as SICs 20 through 39 (as referenced in Section 135.200 RSMo) are now coded NAICS 31 through 33 (as referenced in Section 135.200 RSMo). Pharmaceutical manufactures formerly coded SIC 28 are now coded NAICS 32 – which is referenced in subdivision (7) of §135.200 RSMo.

The interpretation of Section 137.115.3 RSMo, in particular subsection (6) that references §135.200 (6), must be read and interpreted in a reasonable and logical manner to give meaning to the statute. The referenced SIC referred to in the statute were moved to the subsection below (subsection 7) and that subsection was updated to reflect the NAICS which was adopted by the government agency formerly issuing the SIC. Both subsections included the number assigned to the pharmaceutical manufacturers.

Section 137.115.3(6) RSMo creates four requirements for personal property to be assessed at 25% rather than 33 1/3% of its true value in money. The property must be:

a. Used as pollution control equipment; or
Used as tools and equipment used for retooling for the purpose of introducing new product lines or used for making improvements to existing products; and
Purchased after August 28, 1998;
Located in an enterprise zone; and
Used by a company identified by any standard industrial classification number cited in subsection 135.200(6), RSMo. [now an NAICS code found in subdivision (7)]

The witness testified that the tools and equipment are used for retooling to introduce new product lines and to make improvements to existing products. The property was purchased after August 28, 1998. The property has a tax situs located in an enterprise zone. The Complainant is identified by SIC 28 or updated NAICS code 32 which is found in § 135.200 RSMo.

Notably in this statute (§137.115.3) is that there is no requirement that the twenty-five percent assessment level applies only to companies whose real property qualifies for an abatement under the enterprise zone program set forth in Chapter 135 or participates in one of the economic development programs. Although all the economic programs cited by the parties – Enterprise Zone, Enhanced Enterprise Zone and Missouri Works – recognize prior economic programs and provide for the sunset of their predecessor programs, it appears that it may be irrelevant as it is not a statutory requirement.

The following assessed values have been proven by substantial and persuasive evidence:

Tax Year 2011
Recovery Period	True Value	Assessed Value
3 year EZ	$172,200	$43,050
5 year EZ	$3,330,000	$832,500
EZ Computer	$4,830	$1,208

Tax Year 2012
Recovery Period	True Value	Assessed Value
3 year EZ	$248,900	$62,225
5 year EZ	$5,335,000	$1,333,750
Computer	$3,977	$994

Tax Year 2013
Recovery Period	True Value	Assessed Value
3 year EZ	$530,610	$132,653
5 year EZ	$5,335,000	$1,333,750
Computer	$3,214	$804

Construction in Progress

Section 137.122 RSMo does not address or include construction in progress (CIP). However, CIP is not exempt as argued by Complainant. Section 137.122 RSMo sets forth a methodology for valuation of business personal property and such value is presumed to be correct. Other personal property such as motor vehicles and CIP are excluded from that approach to value.

Complainant argues that other jurisdictions use a fraction of the historic costs or discount CIP 100%. Complainant’s proposition may be true. However, the property is taxable and any cost approach to value would require the “discount” to represent some obsolescence as determined by the assessor. The discount or obsolescence factor may be a standard figure applied to all CIP as part of their mass appraisal. In this appeal, there was no testimony of how valuations were calculated or any calculations as to the appropriate obsolescence factor to be applied.

Although, the valuation (cost minus depreciation/obsolescence) has not been proven, the Hearing Officer is concerned with the lack of uniformity and equity within the City of St. Louis. The Assessor in the City of St. Louis applies a factor of 65% good (or 35% obsolescence) to CIP business personal property as evidenced by their declaration form. The License Collector in the City of St. Louis does not apply a factor for the same class of properties – business personal property, construction in progress.

Section 137.490 RSMo provides:

“1. The assessor, or his deputies under his direction, shall assess all … tangible personal property ….and for that purpose the assessor may divide and assign the work or any of it among them. ….The assessor shall see that the assessment is made uniform and equal throughout the city….” (emphasis added)

The uniformity and equity mandated by statute (as well as Constitution and caselaw) is absent. The purpose of the equal protection clause of the 14^th Amendment is to secure every person against discrimination whether it be through intentional violations of the statute or by improper execution of a statute. If a jurisdiction cannot both secure the standard of true value and uniformly and equitably assess property for taxing purposes, “the latter requirement is to be preferred as just and ultimate purpose of law.” A taxpayer whose property is taxed differently from other property within a jurisdiction has the right to have his assessment reduced to the percentage of that value at which the others are taxed. Sioux City Bridge v. Dakota County, 260 U.S. 441 (U.S. S.Ct. 1923)

The Complainant is entitled to a reduction in value on the CIP not based upon substantial and persuasive evidence as to the true value of the property but as to discrimination. Complainant suffers from discrimination as to their CIP business personal property in that their property is taxed differently from other similarly classified property within the jurisdiction. The resulting true values are:

Tax Year	CIP – Historical Cost	True Value
2011	$2,809,574	$1,826,223.10
2012	$240,000	$156,000.00
2013	$1,446,000	$939,900.00

The property is assessed at 33 1/3% as it still under construction and not in use for pollution control or introducing new product lines.

Penalty

Respondent has proposed that the Hearing Officer apply a penalty to the assessment claiming that Complainant failed to file properly in 2011, 2012 and 2013. Respondent initially proposed a penalty of a 25% increase in the assessed value. The Respondent is now proposing a 10% increase in the assessed value as set forth in Section 137.505 RSMo.

Complainant is a manufacturer. Section 150.350 RSMo gives the license collector of the city of St. Louis the authority to perform the duties of the set forth in Sections 150.300 to 150.370 RSMo. The license collector is required, at least once each year prior to the first Monday in May, to visit and inspect each manufacturer for the purpose of verifying information on the statement made by the manufacturer under Section 150.320. (Section 150.325 RSMo). Section 150.320 was repealed in 1987. However, it can be assumed that reporting in some form all of the personal property as of January 1 of the tax year is required of the manufacturer. Property declarations, under Section 150.350.3 RSMo must be filed by manufacturers with the license collector on or before July first of each year. However, no penalty provision is contained within the statute.

Complainant filed a declaration in June of each year. The collector did not assess a penalty in 2011, 2012 or 2013. Since the license collector did not apply the penalty at the time of the assessment and billing and since Chapter 150 does not provide for a penalty, the Hearing Officer declines to entertain doing so.

ORDER

The assessed valuation for the subject property as determined by the Merchants’ and Manufacturers’ Tax Equalization Board for St. Louis City for the subject tax day is SET ASIDE. The values are set as follows:

2011
	True Value	Assessment level	Assessed Value
EZ 3 year recovery	$172,200	25%	$43,050
3 year recovery	$100,450	33 1/3%	$33,483
EZ 5 year recovery	$3,330,000	25%	$832,500
5 year Recovery	$1,099,000	33 1/3%	$366,333
EZ Computer	$4,830	25%	$1,208
Computer	$23,800	33 1/3%	$7,933
Supplies	$2,200	33 1/3%	$733
7 year recovery	$280,070	33 1/3%	$93,357
CIP	$1,826,223.10	33 1/3%	$608,741
		Total	$1,987,338

2012
	True Value	Assessment level	Assessed Value
EZ 3 year recovery	$248,900	25%	$62,225
3 year recovery	$78,780	33.33%	$26,260
EZ 5 year recovery	$5,335,000	25%	$1,333,750
5 year Recovery	$1,037,380	33.33%	$345,793
EZ Computer	$3,977	25%	$994
Computer	$18,010	33.33%	$6,003
Supplies	$4,435	33.33%	$1,478
7 year recovery	$221,669	33.33%	$73,890
CIP	$156,000	33.33%	$52,000
		Total	$1,902,394

2013
	True Value	Assessment level	Assessed Value
EZ 3 year recovery	$530,610	25%	$132,653
3 year recovery	$75,105	33.33%	$25,035
EZ 5 year recovery	$6,456,300	25%	$1,614,075
5 year Recovery	$1,034,058	33.33%	$344,686
EZ Computer	$3,214	25%	$804
Computer	$12,845	33.33%	$4,282
Supplies	$4,850	33.33%	$1,617
7 year recovery	$170,200	33.33%	$56,733
CIP	$939,900	33.33%	$313,300
		Total	$2,493,184

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 1994.

If an application for review of this decision is made to the Commission, any protested taxes presently in an escrow account in accordance with this appeal 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 License Collector of St. Louis City, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal. If any or all 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: December 22, 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 22^nd day of December, 2014, to: Thomas Campbell, 100 South Fourth Street, Suite 1000, St. Louis, MO 63102; Matthew Moak and Erika ZaZa, Associate City Counselors, 314 City Hall, St. Louis, MO 63101, Attorney for Respondent; Mavis Thompson, License Collector, 102 City Hall, St. Louis, MO 63103.

Jacklyn Wood

Legal Coordinator

Posted in 2014 | Comments Off on Glaxo Smith Kline v. Mavis Thompson, License Collector City of St Louis

Reckitt Benckiser v. Rick Kessinger, Assessor Greene County

December 22nd, 2014

State Tax Commission of Missouri

RECKITT BENCKISER,	)
	)
Complainant,	)
	)
v.	)	Appeal Number 13-33023
	)
RICK KESSINGER, ASSESSOR	)
GREENE COUNTY, MISSOURI,	)
	)
Respondent.	)

DECISION AND ORDER

Decision of the Greene County Board of Equalization sustaining the assessment made by the Assessor is SUSTAINED. Complainant did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization.

Complainant represented by S. Jay Dobbs, Attorney at Law.

Respondent represented by Theodore Johnson, Attorney at Law.

Case heard and decided by Hearing Officer Maureen Monaghan.

ISSUE

Complainant appeals, on the grounds of overvaluation and discrimination, the decision of the Greene County Board of Equalization, which sustained the Assessor’s valuation of the subject property. Complainant presented no evidence as to discrimination and therefore that claim is waived. The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2013. The value as of January 1 of the odd numbered year remains the value as of January 1 of the following even numbered year unless there is new construction and improvement to the property. Section 137.115.1 RSMo

The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

Exhibits

The following exhibits were introduced into the record without objection.

Ex. A Complainant’s Appraisal Report

Ex. B Complainant’s Written Direct Testimony

Ex. 1 Respondent’s Appraisal Report

Ex. 2 Respondent’s Written Direct Testimony

FINDINGS OF FACT

Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Greene County Board of Equalization.
Evidentiary Hearing. The Evidentiary Hearing in this appeal was held on Wednesday, November 19, 2014, at the Greene County Courthouse, Springfield, Missouri.
Identification of Subject Property. The subject property is identified by map parcel number 12-02-300-003. It is further identified as 4455 E. Mustard Way, Springfield, Greene County, Missouri.
Description of Subject Property. The subject property is a 49.03 acre tract improved with an industrial building constructed in 1971. The industrial building is approximately 494,370 square feet. The building has office space of 26,565 square feet, multi-story space of 75,552 square feet, cooler section of 2,850 square feet, and air conditioned manufacturing space of 144, 892 square feet. The building has 30 truck docks, 4 drive through doors, and rail service (2,100 lineal feet). There are also 12 silos and 8 storage tanks.
Highest and Best Use. The highest and best use of the property is for industrial use.
Assessment. The Assessor appraised the property at $8,481,800, an assessed commercial value of $2,714,170. The Board of Equalization sustained the assessment.
Complainant’s Evidence. Complainant presented an appraisal report which was marked as Exhibit A and the Written Direct Testimony of Daniel Kelly (Exhibit B), a certified general real estate appraiser with a temporary license for State of Missouri.

The appraiser developed the sales comparison approach to value. The appraiser reviewed six sales occurring from October 2009 to August 2012. The buildings ranged in size of 240,589 to 945,160 square feet and were located in Springfield and Kansas City, Missouri; Tulsa, Oklahoma; Pittsburg, Kansas; and Siloam Springs, Arkansas.

The appraiser compared the properties as to location (proximity to interstate, rail or airport access), size, age, clear ceiling heights, land-to-building ratio, and percentage of multi-story space. The appraiser made a determination as to whether the comparable was inferior or superior to the subject as to each characteristic. The appraiser concluded on $10 per square foot or $4,943,700 value. The appraiser determined a value for the tanks and silos on the property of $160,000. His concluded total valuation was $5,100,000.

No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2013, to January 1, 2014, therefore the assessed value for 2013 remains the assessed value for 2014. Section 137.115.1, RSMo.
Respondent’s Evidence. Respondent produced an appraisal report identified as Exhibit 1 and Written Direct Testimony of Brian Wood (Exhibit 2), a certified residential real estate appraiser. The appraiser developed all three approaches to support the valuation sustained by the Board of Equalization.
True Value. True Value remains set at $8,481,800 as the Complainant’s appraisal was not substantial and persuasive to rebut the presumption of correct assessment by the County Board of Equalization.

CONCLUSIONS OF LAW AND DECISION

Jurisdiction

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. Article X, Sections 4(a) and 4(b), Mo. Const. of 1945. The constitutional mandate is to find the true value in money for the property under appeal. By statute real and tangible personal property are assessed at set percentages of true value in money. Section 137.115.5, RSMo – residential property at 19% of true value in money; commercial property at 32% of true value in money and agricultural property at 12% of true value in money.

Presumption In Appeal

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. Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).

Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See, Cupples-Hesse, supra. 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).

Burden of Proof

In order to prevail, a party must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2013. Hermel, supra. There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a Commission appeal still bears the burden of proof. The taxpayer is the moving party seeking affirmative relief. Therefore, the Complainant bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.” See, 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); Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991).

Weight to be Given Evidence

The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled. The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).

Methods of Valuation

Proper methods of valuation and assessment of property are delegated to the Commission. It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case. See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra; Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975). Missouri courts have approved the comparable sales or market approach, the cost approach and the income approach as recognized methods of arriving at fair market value. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STC, 789 S.W.2d 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm’n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. Div. 2 1974).

Opinion Testimony by Experts

An expert’s opinion must be founded upon substantial information, not mere conjecture or speculation, and there must be a rational basis for the opinion. Missouri Pipeline Co. v. Wilmes, 898 S.W. 2d 682, 687 (Mo. App. E.D. 1995). The State Tax Commission cannot ignore a lack of support in the evidence for adjustments made by the expert witnesses in the application of a particular valuation approach. Drey v. State Tax Commission, 345 S.W. 2d 228, 234-236 (Mo. 1961), Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W. 3d, 341, 348 (Mo. 2005). The Hearing Officer, as the trier of fact, has the authority to weigh the evidence and is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert’s testimony and may accept it in part or reject it in part. Beardsley v. Beardsley, 819 S.W. 2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W. 2d 605, 607 (Mo. 1981); Scanlon v. Kansas City, 28 S.W. 2d 84, 95 (Mo. 1930).

DISCUSSION

Complainant has the burden of proof and therefore must present substantial and persuasive evidence as to their opinion of value. The Complainant’s appraiser developed only one approach to value. The appraiser stated that the cost and income approach were not appropriate methodologies for this property. The approach to value developed by an appraiser will depend upon the type of property, data available and the use of the appraisal. An appraiser may weigh the results of one approach more than another approach given the appraisal assignment. Appraisers should apply all approaches applicable as alternative value determinations can provide support or refute the proposed value developed using another approach. (Appraisal of Real Estate 13^th Edition)

The appraiser developed the sales comparison approach to value. The appraiser reviewed six sales. The appraiser compared the properties as to numerous characteristics. The appraiser made a determination as to whether the comparable was inferior or superior to the subject as to each characteristic then made an overall conclusion as to whether the comparable was inferior or superior. The appraiser made no analysis as to the degree of the difference or the adjustment necessary to the comparable’s sales price. The appraiser stated that he could not quantify the adjustments or provide explanation. The appraiser in reviewing characteristics that made a property inferior or superior to the subject and determined that sales 2, 3, 5, and 6 were all inferior to the subject and sales 1 and 4 were superior to the subject. Sales 1 and 4 also have the highest sales price per feet square ($11.04 & $11.39) and the inferior comparables had lower sales price per square foot ($4.58 to $8.36). The higher sales price per square foot properties were in Missouri and most of the lower price properties were outside of Missouri. The appraiser stated that he did not study the markets in any of the areas; he testified that he does not conduct market studies nor did he review any time studies. The appraiser concluded that the sales price for the subject property would fall between the highest per square foot price inferior property and the lowest square for price for the property deemed superior.

The Appraisal of Real Estate sets forth the steps in a properly conducted sales comparison approach. One of the steps is to “adjust the price of each sale property, reflecting how it differs, to equate it to the subject property.” The appraiser should also “[r]econcile the various value indications produced from the analysis of comparables to a value bracket and then to a single value of indication.” The Complainant’s appraiser failed to make any adjustments to the comparable properties sale prices. The appraiser used some type of “middle” value as his market value.

The Complainant’s appraiser’s consideration of the appraisal problem and basis of sales comparison approach lacked persuasiveness. The appraiser testified that he was not familiar with the market in which the subject property was located nor was he familiar with the market of the comparables. The appraiser did not provide a list of industrial properties he reviewed as part of the sales comparison approach. There were additional sales of properties as evidenced by the sales offered by the Respondent’s appraiser in his sales comparison approach.

Without knowledge of the markets, without a properly conducted sales approach, without supporting information for the development of the valuation approach, and without an additional valuation approach to support the opinion of value developed under the sales approach, the evidence is not substantial and persuasive. The State Tax Commission cannot ignore a lack of support in the evidence for adjustments made by the expert witnesses in the application of a particular valuation approach. Drey v. State Tax Commission, 345 S.W. 2d 228, 234-236 (Mo. 1961), Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W. 3d, 341, 348 (Mo. 2005).A taxpayer does not meet his burden if evidence on any essential element of his case leaves the Commission “in 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).

ORDER

The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Greene County for tax years 2013 and 2014 is AFFIRMED.

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 Greene 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 22nd day of December, 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 by electronic mail this 22^nd day of December, 2014, to: Jay Dobbs, 100 S. 4^th St. #1000, St Louis, MO 63102, Attorney for Complainant; Theodore Johnson, Greene County Counselor, 901 St. Louis Street, 20th Floor, Springfield, MO 65806, Attorney for Respondent; Rick Kessinger, Assessor; Richard Struckhoff, Clerk; Scott Payne, Collector, Greene County Courthouse, 940 Boonville, Springfield, MO 65806.

Jacklyn Wood

Legal Coordinator

Posted in 2014 | Comments Off on Reckitt Benckiser v. Rick Kessinger, Assessor Greene County

Willliam Tennel et al v. Johnny North, Assessor Laclede County

December 22nd, 2014

State Tax Commission of Missouri

WILLIAM TENNEL, et al.,	)
	)
Complainants(s),	)
	)
v.	)	Appeal # 14-64000
	)
JOHNNY NORTH, ASSESSOR,	)
LACLEDE CO., MISSOURI,	)
	)
Respondent.	)

DECISION AND ORDER

HOLDING

Decision of the County Board of Equalization Laclede County affirming the assessment, including the classification, made by the Assessor of the applicable property is AFFIRMED. Complainants did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization. Complainants bore the burden of proof in this appeal. Respondent was under no obligation to present any evidence.

The Assessed value in money for the subject property for tax year 2014 was properly set at $2,020, which Complainants did not dispute. The property was also properly assessed as real property. This Hearing Office would note that whether the property, such being a mobile home, used as a residence, was assessed as real property or personal property would result in the exact same assessment calculation, such being true market value times 19%.

Complainants Tennel and Frazier appeared pro se. Complainant Perez did not appear.

Respondent appeared by attorney Jon Morris.

Case heard and decided by Senior Hearing Officer John Treu.

ISSUE

Complainants appeal, on the ground of misclassification, the decision of the Laclede County Board of Equalization, which classified the subject property as real property. Complainants do not challenge the actual assessed value or tax bill. The Commission takes this appeal to determine the proper classification of the subject property on January 1, 2014.

The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

FINDINGS OF FACT

Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Laclede County Board of Equalization.
Evidentiary Hearing. The Evidentiary Hearing was held on December 10, 2014 at the Laclede County Courthouse/ Administration Building, Lebanon, Missouri.
Identification of Subject Property. The subject property is identified by map parcel number or locator number 03-4.0-20-000-000-003.08. It is further identified as 20-36-16 Turkey Ridge, Lot D, Laclede County, Missouri. (Ex. 9)
Description of Subject Property. The subject property consist of a 1969 Mobile Home (12’ x 57’) with an add-on (Ex A, Exs.1-3 & Ex 7-8)
Assessment. The Assessor classified the property as residential. The Board of Equalization sustained such assessment. (Ex. A, Ex. 6-7 & Complainants’ Complaint for Review of Assessment)
Complainant’s Evidence. Complainant offered into evidence Exhibit A which consisted of a packet of pictures, a brief written statement and various Laclede County record. Exhibit A was received into evidence without objection.
Evidence of New Construction & Improvement. There was evidence of new construction and improvement from January 1, 2013, to January 1, 2014, therefore the assessed value for 2014 changed. However, once again, Complainants are not disputing the valuation of the property, the assessment ratio of 19% or amount of tax. They only dispute the classification of the property or the description of the property as on the tax bills.
Respondent’s Evidence. Respondent offered into evidence Exhibit 1-10. The exhibits were as follows:
Photo of front of structure
Photo of back of structure
Aerial Photo of property
Statute 700.111 (Old Version)
Portion of statute 137.115
Assessors Property Record
2014 Laclede County Real Estate Tax Statement
2013 Assessment List
General Warranty Deed
Dept. of Revenue Record

All exhibits were received into evidence without objection.

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 hearing officer 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. Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.

Applicable Law

137.115 RSMo states in pertinent part:

“…6. Manufactured homes, as defined in section 700.010, which are actually used as dwelling units shall be assessed at the same percentage of true value as residential real property for the purpose of taxation. The percentage of assessment of true value for such manufactured homes shall be the same as for residential real property. If the county collector cannot identify or find the manufactured home when attempting to attach the manufactured home for payment of taxes owed by the manufactured home owner, the county collector may request the county commission to have the manufactured home removed from the tax books, and such request shall be granted within thirty days after the request is made; however, the removal from the tax books does not remove the tax lien on the manufactured home if it is later identified or found. For purposes of this section, a manufactured home located in a manufactured home rental park, rental community or on real estate not owned by the manufactured home owner shall be considered personal property. For purposes of this section, a manufactured home located on real estate owned by the manufactured home owner may be considered real property. (underline added by Hearing Officer for emphasis)

Each manufactured home assessed shall be considered a parcel for the purpose of reimbursement pursuant to section 137.750, unless the manufactured home is real estate as defined in subsection 7 of section 442.015 and assessed as a realty improvement to the existing real estate parcel.
Any amount of tax due and owing based on the assessment of a manufactured home shall be included on the personal property tax statement of the manufactured home owner unless the manufactured home is real estate as defined in subsection 7 of section 442.015, in which case the amount of tax due and owing on the assessment of the manufactured home as a realty improvement to the existing real estate parcel shall be included on the real property tax statement of the real estate owner. …”

442.015 RSMo states in pertinent part: “1. For the purposes of this section, “manufactured home” means a manufactured home as defined in section 700.010. Notwithstanding the foregoing, for the purposes of 11 U.S.C. Section 1322(b)(2), a manufactured home shall be deemed to be real property. For the purposes of this section, a manufactured home is permanently affixed if it is anchored to real estate by attachment to a permanent foundation, constructed in accordance with applicable state and local building codes and manufacturer’s specifications as provided in 24 CFR Part 3285, and connected to residential utilities, such as water, gas, electricity, or sewer or septic service. …”

700.010 RSMo states in pertinent part: “As used in sections 700.010 to 700.500, for the purpose of sections 700.010 to 700.500, the following terms mean:

… (6) “Manufactured home”, structure, transportable in one or more sections, which, in the traveling mode, is eight body feet or more in width or forty body feet or more in length, or, when erected on site, is three hundred twenty or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning, and electrical systems contained therein. The term includes any structure that meets all of the requirements of this paragraph except the size requirements and with respect to which the manufacturer voluntarily files a certification required by the United States Secretary of Housing and Urban Development and complies with the standards established under Title 42 of the United States Code; …”

700.111 RSMo states in pertinent part: “1. (1) The owner or owners of a manufactured home that is covered by a manufacturer’s certificate of origin and that is permanently affixed to real estate as defined in subsection 1 of section 442.015, or which the owner intends to permanently affix to real estate as defined in subsection 1 of section 442.015, may surrender the manufacturer’s certificate of origin to the manufactured home to the director of revenue by filing with the director of revenue, in the form prescribed by the director, an application for surrender of manufacturer’s certificate of origin containing or accompanied by:

(a) The name, residence, and mailing address of the owner;

(b) A description of the manufactured home including the name of the manufacturer, the make, the model name, the model year, the dimensions, and the manufacturer’s serial number of the manufactured home and whether it is new or used and any other information the director of revenue requires;

(c) The date of purchase by the owner of the manufactured home, the name and address of the person from whom the home was acquired and the names and addresses of any security interest holders and lienholders in the order of their apparent priority;

(d) A statement signed by the owner, stating either:

Any facts or information known to the owner that could affect the validity of the title to the manufactured home or the existence or nonexistence of a security interest in or lien on it; or
That no such facts or information are known to the owner;

(e) A certified copy of the affidavit of affixation as provided in accordance with subsection 5 of section 442.015;

(f) The original manufacturer’s certificate of origin;

(g) The name and mailing address of each person wishing written acknowledgment of surrender from the director of revenue;

(h) The applicable fee for filing the application for surrender; and

(i) Any other information and documents the director of revenue reasonably requires to identify the owner of the manufactured home and to enable the director to determine whether the owner satisfied the requirements of subsection 6 of section 442.015, and is entitled to surrender the manufacturer’s certificate of origin, and the existence or nonexistence of security interests in or liens on the manufactured home.

(2) When satisfied of the genuineness and regularity of the surrender of a manufacturer’s certificate of origin to a manufactured home and upon satisfaction of the requirements of subdivision (1) of this subsection, the director of revenue shall:

(a) Cancel the manufacturer’s certificate of origin and update the department’s records in accordance with the provisions of section 700.320; and

(b) Provide written acknowledgment of compliance with the provisions of this section to each person identified on the application for surrender of a manufacturer’s certificate of origin under paragraph (g) of subdivision (1) of this subsection.

(3) Upon satisfaction of the requirements of this subsection a manufactured home shall be conveyed and encumbered as provided in chapter 442. If the application to surrender a manufacturer’s certificate of origin is delivered to the director of revenue within sixty days of recording the related affidavit of affixation with the recorder of deeds in the county in which the real estate to which the manufactured home is or shall be affixed and the application is thereafter accepted by the director of revenue, the requirements of this subsection shall be deemed satisfied as of the date the affidavit of affixation was recorded.

(4) Upon written request, the director of revenue shall provide written acknowledgment of compliance with the provisions of this subsection.

(1) The owner or owners of a manufactured home that is covered by a certificate of title and that is permanently affixed to real estate in accordance with subsection 1 of section 442.015, or which the owner intends to permanently affix to real estate in accordance with subsection 1 of section 442.015, may surrender the certificate of title to the manufactured home to the director of revenue by filing with the director of revenue an application in the form prescribed by the director for surrender of title containing or accompanied by:

(a) The name, residence, and mailing address of the owner;

(d) A statement signed by the owner, stating either:

Any facts or information known to the owner that could affect the validity of the title to the manufactured home or the existence or nonexistence of a security interest in or lien on it; or
That no such facts or information are known to the owner;

(e) A certified copy of the affidavit of affixation provided in accordance with subsection 5 of section 442.015;

(f) The original certificate of title;

(g) The name and mailing address of each person wishing written acknowledgment of surrender from the director of revenue;

(h) The applicable fee for filing the application for surrender; and

(i) Any other information and documents the director of revenue reasonably requires to identify the owner of the manufactured home and to enable the director to determine whether the owner satisfied the requirements of subsection 6 of section 442.015, and is entitled to surrender the certificate of title and the existence or nonexistence of security interests in or liens on the manufactured home.

(2) The director of revenue shall not accept for surrender a certificate of title to a manufactured home unless and until all security interests or liens perfected under section 700.350 have been released.

(3) When satisfied of the genuineness and regularity of the surrender of a certificate of title to a manufactured home and upon satisfaction of the requirements of subdivisions (1) and (2) of this subsection, the director of revenue shall:

(a) Cancel the certificate of title and update the department’s records in accordance with the provisions of section 700.320; and

(b) Provide written acknowledgment of compliance with the provisions of this section to each person identified on the application for surrender of title under paragraph (g) of subdivision (1) of this subsection.

(4) Upon satisfaction of the requirements of this subsection a manufactured home shall be conveyed and encumbered as provided in chapter 442. If the application to surrender a certificate of title is delivered to the director of revenue within sixty days of recording the related affidavit of affixation with the recorder of deeds in the county in which the real estate to which the manufactured home is or shall be affixed, and the application is thereafter accepted by the director of revenue, the requirements of this subsection shall be deemed satisfied as of the date the affidavit of affixation was recorded.

(5) Upon written request, the director of revenue shall provide written acknowledgment of compliance with the provisions of this subsection.

(1) The owner or owners of a manufactured home that is not covered by a manufacturer’s certificate of origin or a certificate of title, or that is covered by a manufacturer’s certificate of origin or a certificate of title which the owner of the manufactured home, after diligent search and inquiry, is unable to produce, and that is permanently affixed to real estate in accordance with subsection 1 of section 442.015, or which the owner intends to permanently affix to real estate as defined in subsection 1 of section 442.015, may apply to the director of revenue by filing with the director of revenue an application for confirmation of conversion containing or accompanied by:

(a) The name, residence, and mailing address of the owner;

(d) A statement signed by the owner, stating either:

Any facts or information known to the owner that could affect the validity of the title to the manufactured home or the existence or nonexistence of a security interest in or lien on it; or
That no such facts or information are known to the owner;

(e) A certified copy of the affidavit of affixation as provided in accordance with subsection 5 of section 442.015;

(f) A declaration by an attorney-at-law, duly admitted to practice in the courts of the state of Missouri, or an agent of a title insurance company duly licensed to issue policies of title insurance in the state of Missouri, that the manufactured home is free and clear of, or has been released from, all recorded security interests, liens and encumbrances; and

Any facts or information known to him or her that could affect the validity of the title of the manufactured home or the existence or nonexistence of any security interest in or lien on it; or
That no such facts or information are known to him or her;

(g) The name and mailing address of each person wishing written acknowledgment of surrender from the director of revenue;

(h) The applicable fee for filing the application for surrender; and

(i) Any other information and documents the director of revenue reasonably requires to identify the owner of the manufactured home and to enable the director to determine whether the owner satisfied the requirements of subsection 6 of section 442.015, and the existence or nonexistence of security interests in or liens on the manufactured home.

(2) When satisfied of the genuineness and regularity of the application for confirmation of conversion of a manufactured home and upon satisfaction of the requirements of subdivision (1) of this subsection, the director of revenue shall:

(a) Update the department’s records in accordance with the provisions of section 700.320; and

(b) Provide written acknowledgment of compliance with the provisions of this subsection to each person identified on the application for confirmation of conversion under paragraph (g) of subdivision (1) of this subsection.

(3) Upon satisfaction of the requirements of this subsection, a manufactured home shall be conveyed and encumbered as provided in chapter 442. If the application for confirmation of conversion of a manufactured home is delivered to the director of revenue within sixty days of recording the related affidavit of affixation with the recorder of deeds in the county in which the real estate to which the manufactured home is or shall be affixed and the application is thereafter accepted by the director of revenue, the requirements of this subsection shall be deemed satisfied as of the date the affidavit of affixation was recorded.

(4) Upon written request, the director of revenue shall provide written acknowledgment of compliance with the provisions of this subsection.

(1) Notwithstanding any other provision of law, where a manufactured home has been permanently affixed to real estate and an affidavit of affixation has been recorded in the real estate records in the county in which the manufactured home is located in accordance with section 442.015, and where the manufactured home subsequently is detached or severed from the real estate, the owner or owners of the manufactured home may apply for a new certificate of title by filing with the director of revenue an application for a certificate of title to a manufactured home, containing or accompanied by:

(a) The name, residence, and mailing address of the owner;

Any facts or information known to the applicant that could affect the validity of the title of the manufactured home or the existence or nonexistence of any security interest in or lien on it; or
That no such facts or information are known to the applicant;

(d) A certified copy of the affidavit of severance provided in accordance with section 442.015;

(e) A declaration by an attorney-at-law, duly admitted to practice in the courts of the state of Missouri, or an agent of a title insurance company duly licensed to issue policies of title insurance in the state of Missouri, that the manufactured home is free and clear of, or has been released from, all recorded security interests, liens and encumbrances; and

Any facts or information known to him or her that could affect the validity of the title of the manufactured home or the existence or nonexistence of any security interest in or lien on it; or
That no such facts or information are known to him or her;

(f) The applicable fee for filing the application; and

(g) Any other information and documents the director of revenue reasonably requires to identify the manufactured home and to enable the director to determine whether the owner is entitled to a certificate of title and the existence or nonexistence of security interests in or liens on the manufactured home.

(2) When satisfied of the genuineness and regularity of the application for a certificate of title to a manufactured home and upon satisfaction of the requirements of subdivision (1) of this subsection, the director shall issue a new certificate of title and update the department’s records in accordance with the provisions of section 700.320.

(3) Immediately upon satisfaction of the requirements of this subsection, a manufactured home shall be conveyed and encumbered as personal property.

(4) Upon written request, the director of revenue shall provide written acknowledgment of compliance with the provisions of this subsection.

The department of revenue shall promulgate rules to implement the provisions of this section. The department of revenue shall also promulgate standard affidavit of affixation forms, affidavit of severance forms, and confirmation of conversion forms that comply with the provisions of this section. Any rule or portion of a rule, as that term is defined in section 536.010, that is created under the authority delegated in this section shall become effective only if it complies with and is subject to all of the provisions of chapter 536 and, if applicable, section 536.028. This section and chapter 536 are nonseverable and if any of the powers vested with the general assembly under chapter 536 to review, to delay the effective date, or to disapprove and annul a rule are subsequently held unconstitutional, then the grant of rulemaking authority and any rule proposed or adopted after August 28, 2010, shall be invalid and void.
The provisions of this section shall become effective no later than March 1, 2011.

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. Article X, Sections 4(a) and 4(b), Mo. Const. of 1945. The constitutional mandate is to find the true value in money for the property under appeal. By statute real property and manufactured homes used as a residence are assessed at the same rate. Section 137.115.5 & 137.115.6, RSMo – residential property at 19% of true value in money.

Presumption In Appeal

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). This presumption is a rebuttable rather than a conclusive presumption. It places the burden of going forward with some substantial evidence on the taxpayer – Complainants. When some substantial evidence is produced by the Complainant, “however slight”, the presumption disappears and the Hearing Officer, as trier of facts, receives the issue free of the presumption. United Missouri Bank of Kansas City v. March, 650 S.W.2d 678, 680-81 (Mo. App. 1983), citing to State ex rel. Christian v. Lawry, 405 S.W.2d 729, 730 (Mo. App. 1966) and cases therein cited.

As set forth previously, Section 442.015 RSMo states in pertinent part: “1. For the purposes of this section, “manufactured home” means a manufactured home as defined in section 700.010. Notwithstanding the foregoing, for the purposes of 11 U.S.C. Section 1322(b)(2), a manufactured home shall be deemed to be real property. For the purposes of this section, a manufactured home is permanently affixed if it is anchored to real estate by attachment to a permanent foundation, constructed in accordance with applicable state and local building codes and manufacturer’s specifications as provided in 24 CFR Part 3285, and connected to residential utilities, such as water, gas, electricity, or sewer or septic service. …”

Complainants did not present any substantial and persuasive evidence that the property, including, but not limited to the 1969 Mobile Home, is not permanently affixed as set forth above. Complainants solely bore the burden to prove that the requirements of Sections 442.015 and 137.115 RSMo were not true as of January 1, 2014. Respondent was under no obligation to prove the requirements of Sections 442.015 and 137.115 RSMo were not true. The evidence submitted by both Complainants’ and Respondent clearly shows the entire structure is used as a residence and that the 1969 Mobile Home portion of the structure has heat, water and electricity connected to it.

Complainants are free to file a new appeal in 2015 and present admissible evidence which is substantial and persuasive to prove that the requirements of Sections 442.015 and 137.115 RSMo as well as other pertinent statues are fulfilled.

Complainants’ Burden of Proof

In order to prevail, Complainants were required to prove the property should be classified as personal property. It should be specifically noted that the assessed value of the mobile home, whether classified as residential or personal property, would be assessed at 19% pursuant to 137.115.6. There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a Commission appeal still bears the burden of proof. The taxpayer is the moving party seeking affirmative relief. Therefore, the Complainant bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.” See, 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); Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991).

Investigation by Hearing Officer

In order to investigate appeals filed with the Commission, the Hearing Officer may inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, subclassification or assessment of the property. The Hearing Officer’s decision regarding the assessment or valuation of the property may be based solely upon his inquiry and any evidence presented by the parties, or based solely upon evidence presented by the parties. Section 138.430.2, RSMo. The Hearing Officer during the evidentiary hearing made inquiry of Complainant and Respondent’s appraiser.

Weight to be Given Evidence

The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968). The Hearing Officer as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances.

Complainant Fails to Meet Burden of Proof

Subject property is a mobile home with an add-on used as a residence. Complainant did not contest the valuation or its use as a residence. Complainants’ issue is that the property tax bill does not identify the property as a trailer or that the property is not classified as personal property. As set forth above, Complainants failed to present substantial and persuasive evidence to prove the subject property should not be assessed as real property or classified as residential property. Complainants did not overcome the presumption that the Board of Equalizations decision was correct. Respondent was under no burden to prove anything. The burden was solely Complainants to meet.

ORDER

Although Complainants do not challenge the actual tax bill, the assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Laclede County for the subject tax day is AFFIRMED. The determination that the subject property by the Assessor and affirmed by the Board of Equalization is additionally affirmed.

The assessed value for the subject property, as residential property for tax year 2014 is set at $2,020.

Application for Review

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 Laclede 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 22^nd day of December, 2014.

STATE TAX COMMISSION OF MISSOURI

John Treu

Senior Hearing Officer

Delivery or Notice was made via mail, email, fax, or personally on December 22, 2014 to the following Individuals of this Decision/Order/Holding

William Tennel, 34495 Niagra Drive, Eldridge, MO 65463

Judy Frazier, 34495 Niagra Drive, Eldridge, MO 65463

Dawn Perez, 34495 Niagra Drive, Eldridge, MO 65463

Jon Morris, Attorney for Respondent, 200 N Adams Ave., Lebanon, MO 65536

Johnny North, Assessor, 200 N. Adams Ave., Lebanon, MO 65536

Steve Pickering, Collector, 200 N. Adams Ave., Lebanon, MO 65536

Glenda Mott, Clerk, 200 N. Adams Ave., Lebanon, MO 65536.

Jacklyn Wood

Legal Coordinator

Posted in 2014 | Comments Off on Willliam Tennel et al v. Johnny North, Assessor Laclede County

Craigshire Plaza Partners v. Jake Zimmerman, Assessor St Louis County

December 18th, 2014

State Tax Commission of Missouri

CRAIGSHIRE PLAZA PARTNERS,	)
	)
Complainant,	)
	)
v.	)	Appeal Number 08-10551
	)
JAKE ZIMMERMAN, ASSESSOR,	)
ST LOUIS COUNTY, MISSOURI,	)
	)
Respondent.	)

DECISION AND ORDER

HOLDING

St. Louis County Board of Equalization’s assessment SET ASIDE. Complainant presented substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization.

True value in money and assessment ratio for the subject property for tax year(s):

True Value 2007-2008	Assessment Ratio	Assessed Value
$4,581,500	29.4%	$1,346,960

Complainant appeared by counsel, Thomas Campbell. Respondent appeared by Attorney Edward Corrigan.

Case heard and decided by Hearing Officer Maureen Monaghan.

ISSUE

Complainant appeals, on the grounds of overvaluation and discrimination, the decision of the County Board of Equalization. Having considered all of the competent evidence upon the whole record, the Hearing Officer finds that the Complainant failed to present substantial and persuasive evidence as to overvaluation, however, the Complainant presented substantial and persuasive evidence as to discrimination. 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.
Schedule and Procedure. On June 20, 2014, the State Tax Commission issued an Order setting forth the schedule and procedures for this appeal. The Schedule and Procedure required that each party file and exchange exhibits and written direct testimony to establish their case in chief on or before October 3, 2014. Complainant and Respondent filed and exchanged the exhibits set out below under Evidence. Parties had until October 21, 2014, to file objections and rebuttal exhibits. Neither party objected to exhibits. Respondent was ordered to file, on or before November 3, 2014, a Request for Hearing indicating a good faith intention to require a hearing. Respondent did not request a hearing on the appeal. Any pending summary motion judgments or motions otherwise are moot based upon the issuance of the Decision and Order.
Subject Property. The subject property is identified as follows:

Parcel	Address
15O310615	1850 Craigshire Road

Assessment. The Assessor made the following determinations of value which the Board of Equalization sustained:

True Value	Commercial Assessed Value
$4,581,500	$1,466,080

Evidence. Complainant filed with the Commission the following documents: Exhibit A – The Board of Equalization’s finding of true value. Respondent filed the following documents: Exhibit 1 – The Board of Equalization’s finding of value.
Median Level of Assessment. The State Tax Commission previously found that the median level of assessment for commercial property in St. Louis County in 2007 is 29.4%. The previous decision is incorporated by reference.

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 Hearing Officer 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. Article X, Section 14, Mo. Const. of 1945 Sections 138.430, 138.431, 138.431.4, RSMo.

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. Article X, Sections 4(a) and 4(b), Mo. Const. of 1945 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. Section 137.115.5, RSMo

Presumption In Appeals

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)

Valuation

Section 137.115 of the Missouri Revised Statutes requires that property be assessed based upon its true value in money, which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and purchased by one who is desiring to purchase but who is not compelled to do so. St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. Ct. App. 1993); Missouri Baptist Children’s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo 1993). The value used for the true value in money of a subject property is the fair market value of the subject property on the valuation date. Hermel, Inc. v. STC, 564 SW.2d. 888, 897 (Mo. 1978).

There is a presumption of validity, good faith, and correctness by the County Board of Equalization. Williamson v. Kessinger, Green County Assessor, Appeal No. 11-22003-11-33019 (June 28, 2012); Cohen v. Bushmeyer, 251 S.W.3d 345 (Mo. Ct. App. 2008). The case law and the Commission’s decisions have repeatedly held the presumption of a correct assessment may only be rebutted when substantial and persuasive evidence is presented to establish that the Board’s valuation is erroneous. See Cohen, 251 S.W.3d 345; Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341 (Mo. 2007) (citing Hermel, Inc. v. STC, 564 SW.2d. 888, 895 (Mo. 1978)); Couples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 7029.4 (Mo. 1959).In the absence of such evidence, the presumptions are assumed to be correct.

The determination of true value is necessary for both overvaluation and discrimination claims. Complainant submitted as Exhibit A the Board of Equalization’s decision as to the true value in money of the Complainant’s property. The Supreme Court holds that the Commission cannot compel a taxpayer to present evidence in a particular form. State ex rel. Ashby Partners, LLC v State Tax Commission, 297 S.W.3d 80, 88 (Mo. banc 2009). Therefore, complainants are entitled to present evidence of the true value in money of their respective properties in the form of the Board of Equalization decisions. The hearing officer’s decision must be based upon its inquiry into relevant matters and evidence presented in the case or solely upon the evidence presented in the case.”

The Complainant’s exhibit establishes true value in money of the subject property. The Complainant’s exhibit does not establish that the property was overvalued. The Complainant’s Exhibit A does satisfy the first prong of the test to prove discrimination.

Discrimination

The purpose of the equal protection clause of the 14^th Amendment is to secure every person within the state’s jurisdiction against discrimination whether it be through intentional violations of the statute or by improper execution of a statute. If a jurisdiction cannot both secure the standard of true value and uniformly and equitably assess property for taxing purposes, “the latter requirement is to be preferred as just and ultimate purpose of law.” A taxpayer whose property is taxed differently from other property within a jurisdiction has the right to have his assessment reduced to the percentage of that value at which the others are taxed. Sioux City Bridge v. Dakota County, 260 U.S. 441 (U.S. S.Ct. 1923)

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, 2007; 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. 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.)

As stated previously, the first prong of the test to prove discrimination, determining true value of the property, has been addressed. The next step is to review the assessment of the subject property and properties within the same class.

The median level of assessment for a particular class of real property and the actual assessment imposed on the property of the taxpayer alleging discrimination must be evaluated. Savage 722 S.W.2d at 79. The median level of assessment is determined by (a) independently determining the market value of a representative sample of commercial properties within the County; (b) determining the assessed value placed on the property by the Assessor’s office for the relevant year; (c) dividing the assessed value by the market value to determine the level of assessment for each property in the sample; and (d) determining the mean and median of the results. The Commission, in a previous hearing, held that the median level of assessment for commercial properties in St. Louis County in 2007 was 29.4%. See In The Matter of the 2007 and 2008 Commercial Assessment Ratio of Properties in St. Louis County v. Zimmerman State Tax Commission Appeal 07-08 Ratio (“2007 Ratio Case”).

The subject property’s assessed value as determined by the County was $1,466,080 using an assessment ratio of 32%. The subject property’s assessed value using a median assessment ratio of 29.4% is $1,346,960; a difference of $119,120. The Complainant established that the assessment was more than a de minimus error in judgment on the part of the assessor.

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 2007 and 2008 is set at $1,346,960.

Application for Review

Failure to state specific facts or law upon which the application for review is based will result in summary denial. Section 138.432, 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 December 18, 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 18^th day of December, 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

Posted in 2014 | Comments Off on Craigshire Plaza Partners v. Jake Zimmerman, Assessor St Louis County

Metro Partners LLC v. Jake Zimmerman, Assessor St Louis County

December 18th, 2014

State Tax Commission of Missouri

METRO PARTNERS, LLC,	)
	)
Complainant,	)
	)
v.	)	Appeal No. 07-11381
	)
JAKE ZIMMERMAN, ASSESSOR,	)
ST. LOUIS COUNTY, MISSOURI,	)
	)
Respondent.	)

ORDER

AFFIRMING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

On December 18, 2014, Chief Counsel Maureen Monaghan, acting as Hearing Officer, entered her Decision and Order (Decision) setting aside the assessment by the St. Louis County Board of Equalization (“BOE”) and setting the assessed value for the subject property for tax years 2007 and 2008 at $802,620.

Respondent filed his Application for Review of the Decision. Complainant filed their Response.

CONCLUSIONS OF LAW

Standard Upon Review

The Hearing Officer is not bound by any single formula, rule or method in determining fair market value (FMV), but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled. The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968). Likewise the State Tax Commission (“STC”) is free to consider all pertinent facts and give them such weight as reasonably the STC deems them entitled. The STC having reviewed the record, considered the Decision and briefs of the parties enters its Decision and Order.

DECISION

Respondent’s Points on Review

Respondent put forth the following points in support of his Application for Review:

The Hearing Officer erred in holding that the median level of assessment for commercial properties in St. Louis County in 2007 was 29.4% and in applying the 29.4% assessment ratio to arrive at the assessed value for the subject property for the 2007 tax year.
The Hearing Officer erred in finding that Complainant presented substantial and persuasive evidence as to discrimination.

Commission’s Decision

The Commission will now address each of the Points raised under the following headings: Evidence of Discrimination and Application of the Median Assessment Level. For the reasons that will now be set forth in response to the Points just stated, the Commission finds the Respondent’s arguments to be unpersuasive to warrant either a modification or overturning of the Decision.

Factual and Procedural History

In 2007, Metro Partners, LLC (“Metro”) received a Change of Assessment Notice for the property regarding their tax liability for tax year 2007. The St. Louis County Assessor (“Assessor”) determined the fair market value (“FMV”)^[1] of the Property to be $6,400,100. The Assessor classified the property as commercial and calculated the assessed value for the Property at $2,048,040 using an assessment ratio of 32%.^[2]

Taxpayer appealed the Assessor’s $6,400,100 valuation of the Property to the BOE. The BOE held a hearing at which the Assessor and Metro each presented evidence as to the FMV of the Property. On August 21, 2007, the BOE issued a decision determining the FMV of the Property for the year 2007 to be $5,000,000.

On September 17, 2007, Metro filed a Complaint for Review of Assessment with the STC alleging discrimination. Specifically, Metro’s Complaint cited “discrimination based on level of assessment ratio” as the basis for its appeal to the STC.

Metro’s appeal to the STC was one of several hundred such appeals filed alleging discrimination for tax year 2007. To expedite those appeals, the STC bifurcated the issues. The STC first held an evidentiary hearing to determine the median level of assessment for commercial properties in St. Louis County for 2007.^[3] On December 7, 2010, the STC conducted the evidentiary hearing. Metro, along with other taxpayers, presented expert testimony that commercial properties in St. Louis County in 2007 were, on average, assessed at 26.6% of the FMV. The Assessor presented expert testimony that those properties were assessed at 29.4% of the FMV. On April 29, 2011, the Hearing Officer issued a Decision and Order finding the median level of assessment for commercial properties in St. Louis County in 2007 to be 29.4% , i.e., commercial properties, on average, were assessed at 29.4% of FMV in tax year 2007.

The adjudication of Metro’s and the other appeals resumed with proceedings conducted to determine the FMV of the Property and whether discrimination had in fact occurred. The evidence submitted included an appraisal report by state certified general appraisers, testimony of the appraisers, the BOE decision, the property record card, and the testimony of an Assessor’s employee who confirmed the values set by the Assessor and BOE. The Assessor did not object to any evidence of valuation and chose not to request a hearing. The Hearing Officer rendered a decision based upon the submitted exhibits.

On December 18, 2014, the Hearing Officer entered a Decision and Order. The Hearing Officer found the FMV of the property was $2,730,000 based upon the testimony of two certified appraisers and their appraisal report and concluded that substantial and persuasive evidence as to discrimination was presented. More specifically, the Hearing Officer made the following factual findings:

The Assessor appraised the property at $6,400,100, resulting in an assessed value of $2,048,040;
The BOE determined the FMV of the property to be $5,000,000;
The FMV of the Property as opined by two general, certified appraisers, as of January 1, 2007, was $2,730,000; and
The median level of assessment for commercial property in St. Louis County in 2007 was 29.4%.

Based upon the factual findings, the Hearing Officer made conclusions of law as to both valuation and discrimination. The Hearing Officer, relying on the report and testimony of the appraisers, concluded the FMV of the Property as of January 1, 2007 was $2,730,000. The Hearing Officer concluded that Metro satisfied the first prong of the test to prove discrimination by establishing the FMV as of January 1, 2007. In considering the second prong of the discrimination test, the Hearing Officer concluded that no evidence of an intentional plan of discrimination was presented. However, when considering whether the level of assessment was “so grossly excessive as to be inconsistent with an honest exercise of judgment,” the Hearing Officer proceeded to compare the median or actual level of assessment for commercial properties in St. Louis County in 2007 to the level of assessment imposed by the Assessor on the Property in 2007. The Hearing Officer found that the Property’s assessed value as determined by the Assessor using an assessment ratio of 32% was $2,048,040. The subject property’s assessed value using the Hearing Officer’s determination of FMV and a median assessment ratio of 29.4% was $802,620. The difference between the assessed values is $1,245,410. The Property was assessed at 75% of its FMV. The figures and calculations are set out in the tables below:

	Assessment Ratio	FMV	Assessed Value
Assessor	32%	$6,400,100	$2,048,040
STC	29.4%	$2,730,000	$802,620

Assessed Value divided by FMV

Level of

Assessment

$2,048,040

$2,730,000

= .75 (or 75%)

Because the Property had been assessed at 75% of its FMV, the Hearing Officer found that Taxpayer demonstrated that the Assessor’s 2007 assessment of the Property was more than a de minimis error in judgment and established a right to have the assessment reduced to the percentage of that value at which others are taxed. The Hearing Officer ordered the assessed value of the Property to be set at $802,620.

On January 20, 2015, the Assessor filed his application for review.

Conclusions of Law

Discrimination

In discrimination appeals, there are only two elements to be established: (1) FMV of the subject property and (2) the median assessment ratio. More specifically, Taxpayer was required to (1) prove the FMV of the Property on January 1, 2007; 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. 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.) “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.” Savage,722 S.W.2d 72 (Mo. banc 1986). A taxpayer pursuing a discrimination claim must prove both the FMV of his property and, in relevant part here, that the level of assessment is so grossly excessive as to be inconsistent with an honest exercise of judgment. State ex rel Ashby Road Partners, LLC v State Tax Commission, 297 S.W.3d 80 (Mo banc 2009).

Since the Respondent has not disputed the finding of FMV by the Hearing Officer, we turn to the second prong of the test – whether the level of assessment is so grossly excessive as to be inconsistent with an honest exercise of judgment. The Missouri Supreme Court has held that the proper method for analyzing discrimination compares the median level of assessment for similar-situated properties – in this appeal, commercial properties located in St. Louis County as of January 1, 2007 – to the actual level of assessment imposed on the property by the Assessor. The median level of assessment for commercial property in St. Louis County in 2007 was found to be 29.4% based upon the 2011 STC decision to that effect which relied upon the evidence presented by the Assessor.

The actual level of assessment imposed on the property was 75%.

The Hearing Officer found that the actual level of assessment was more than a de minimis error on the part of the Assessor.

Median Assessment Level

The median assessment ratio for the 2007-08 assessment cycle in St. Louis County for commercial property is 29.4% as determined and established by the Decision and Order dated April 29, 2011. The Hearing Officer correctly evaluated the actual assessment imposed upon Complainant’s property and the median level of assessment that had been established by the prior Decision and Order. The Hearing Officer did not err in concluding that the Complainant was entitled to have its assessment reduced to the percentage of value at which others were taxed, i.e. 29.4% – the assessment placed upon the general mass of other commercial property in St. Louis County. Sioux City Bridge Co. V. Dakota County, Neb., 43 S. Ct. 190 (1923)

Respondent’s argument that the median level of assessment established from Respondent’s own ratio study of 29.4% should be compared to the statutory assessment ratio of 32% is not well taken. This simply is not the appropriate methodology. It is not the standard adopted by the Commission or the Supreme Court. Savage v. State Tax Commission, 722 S.W.2d 72 (Mo. banc 1986); West County BMW v. Muehlheausler, STC Appeal No. 05-12569 (March 17, 2009) Both Savage and BMW require a comparison between the average level of assessment (29.4%) and the actual level of assessment for the subject property (75%); not between the median assessment ratio (29.4%) and the statutory assessment ratio (32%) as argued by Respondent. The Hearing Officer correctly and properly made this comparison and evaluation, ascertaining the subject property’s assessed value using the statutory ratio applied to the FMV set by the Assessor and the subject property’s assessed value using the median assessment ratio established from Assessor’s own ratio study and the FMV set by the BOE. Neither Missouri Courts nor the Commission has established a bright line test to identify what constitutes a grossly excessive assessment as opposed to a mere de minimis error in judgment in discrimination appeals. While a bright line test does not exist, previous appeals do provide guidance. In Town & Country Racquet Club v. Morton, 1989 WL 41005, the State Tax Commission found no discrimination wherein the average level of assessment for commercial property ranged from 30.48 to 31.46 percent and the actual level of assessment was 32%. In Mid-America Financial, ED102716, (Mo Ct. App-ED, 2015), the Court found discrimination wherein the average level of assessment for commercial property was 29.4% and the actual level of assessment was 42%. The assessment in each given case must be analyzed against the assessment under the median ratio to address the grossly excessive factor. In this appeal, the difference in the two assessed values was grossly excessive. The Hearing Officer did not err in her analysis, comparison and conclusions in this appeal.

Finding discrimination, the Hearing Officer reduced the assessed value for the property to $802,620 by applying the median ratio of 29.4% to the FMV.

Summary & Conclusion

A review of the record in the present appeal provides ample support for the determinations made by the Hearing Officer. There is competent and substantial evidence to establish a sufficient foundation for the Decision of the Hearing Officer. A reasonable mind could have conscientiously reached the same result based on a review of the entire record. The Commission finds no basis to support a determination that the Hearing Officer acted in an erroneous, arbitrary, capricious or unreasonable manner, or that she abused her discretion as the trier of fact and concluder of law in this appeal. Hermel, Inc. v. STC, 564 S.W.2d 888 (Mo. 1978); Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Holt v. Clarke, 965 S.W.2d 241 (Mo. App. W.D. 1998); Smith v. Morton, 890 S.W.2d 403 (Mo. App. E.D. 1995); Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).

The Hearing Officer did not err in her determinations as challenged by Respondent.

ORDER

The Commission upon review of the record and Decision in this appeal, finds no grounds upon which the Decision of the Hearing Officer should be reversed or modified. Accordingly, the Decision is affirmed. The Decision and Order of the Hearing Officer, 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.

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 December 20th, 2016.

STATE TAX COMMISSION OF MISSOURI

Bruce E. Davis, Chairman

Victor Callahan, Commissioner

Certificate of Service

I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 20th day of December, 2016, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.

Jacklyn Wood

Legal Coordinator

Contact Information for State Tax Commission:

Missouri State Tax Commission

P.O. Box 146

301 W. High Street, Room 840

Jefferson City, MO 65102

573-751-2414

573-751-1341 FAX

[1] FMV is also referred to by the STC and Missouri Courts as “true value.” The terms are used interchangeably. Zimmerman v. Mid-America Financial, ED102716.

[2] The formula for determining the assessed value of a parcel of real property is Assessed value = FMV * assessment ratio as set by statute for the classification of property. Commercial property is assessed using a 32% ratio. Section 137.115.5(3) RSMo.

[3] The median level of assessment represents the median assessment ratio as a percentage of FMV, applied by the Assessor to similarly situated properties in a given year. In this group of appeals, it is the commercial properties in St. Louis County. The median level of assessment represents at what percentage of FMV a class of properties, on average, has been assessed in a certain year. Discrimination analysis involves comparing the median level of assessment to the level of assessment actually applied to the Property by the Assessor. Such issue will be addressed in the legal conclusions.

STATE TAX COMISSION OF MISSOURI

METRO PARTNERS LLC,	)	Appeal Nos.	07-11381
	)
Complainant	)
	)
v.	)
	)
JAKE ZIMMERMAN, ASSESSOR	)
ST LOUIS COUNTY, MISSOURI, Respondent	)

DECISION AND ORDER

HOLDING

St. Louis County Board of Equalization’s assessment SET ASIDE. Complainant presented substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization.

True value in money and assessment ratio for the subject property for tax year(s):

True Value 2007-2008	Assessment Ratio	Assessed Value
$2,730,000	29.4	$802,620

Complainant appeared by counsel, Thomas Campbell. Respondent appeared by Attorney Edward Corrigan.

Case heard and decided by Hearing Officer Maureen Monaghan.

ISSUE

Complainant appeals, on the grounds of overvaluation and discrimination. Having considered all of the competent evidence upon the whole record, the Hearing Officer finds that the Complainant presented substantial and persuasive evidence as to overvaluation and discrimination. 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.
Schedule and Procedure. On June 20, 2014, the State Tax Commission issued an Order setting forth the schedule and procedures for this appeal. The Schedule and Procedure required that each party file and exchange exhibits and written direct testimony to establish their case in chief on or before October 3, 2014. Complainant and Respondent filed and exchanged the exhibits set out below under Evidence. Parties had until October 21, 2014, to file objections and rebuttal exhibits. Neither party objected to exhibits. Respondent was ordered to file, on or before November 3, 2014, a Request for Hearing indicating a good faith intention to require a hearing. Respondent did not request a hearing on the appeal. Any pending summary motion judgments or motions otherwise are moot based upon the issuance of the Decision and Order.
Subject Property. The subject property is identified by map parcel number: 09K210217 and is further identified as 8900 Pershall Road, St. Louis, Missouri. The property is a single tenant office building.
Assessment. The Assessor appraised the property at $6,400,100, an assessed commercial value of $2,048,030. The Board of Equalization reduced the value to $5,000,000, assessed value of $1,600,000
Evidence. Complainant filed with the Commission the following documents: Exhibit A – The Appraisal Report of John Hottle, Exhibit B – WDT of John Hottle and Exhibit C- WDT of Michael Robinson. Respondent filed with the Commission the

following documents: Exhibit 1 – Board of Equalization Decision and Exhibit 2 – WDT of Mr. Gillick.

The State Tax Commission previously found that the median level of assessment for commercial property in St. Louis County in 2007 is 29.4%. The previous decision is incorporated by reference.
The true value as of January 1, 2007 was $2,730,000.

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 Hearing Officer 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. Article X, Section 14, Mo. Const. of 1945 Sections 138.430, 138.431, 138.431.4, RSMo.

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. Article X, Sections 4(a) and 4(b), Mo. Const. of 1945 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. Section 137.115.5, RSMo

Presumption In Appeals

Standard for Valuation

Section 137.115, RSMo, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so. St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993); Missouri Baptist Children’s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993).

True value in money is defined in terms of value in exchange and not value in use. Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 S.W.2d 376, 380 (Mo. App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973). It is the fair market value of the subject property on the valuation date. Hermel, supra.

Market value is the most probable price in terms of money which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price is not affected by undue stimulus.

Implicit in this definition are the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby:

Buyer and seller are typically motivated.

Both parties are well informed and well advised, and both acting in what they consider their own best interests.

A reasonable time is allowed for exposure in the open market.

Payment is made in cash or its equivalent.

Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.

The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction. Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; See also, Real Estate Valuation in Litigation, J. D. Eaton, M.A.I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80; Uniform Standards of Professional Appraisal Practice, Glossary.

Mr. Hottle and Mr. Robinson conducted an appraisal of the property under appeal consistent with this standard.

Weight to be Given Evidence

The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled. The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).

The Hearing Officer as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances. The Hearing Officer is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert’s testimony and accept it in part or reject it in part. St. Louis County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981). The Hearing Officer is persuaded that the valuation presented in the appraisal is based upon appropriate and sound appraisal practice and therefore constitutes substantial and persuasive evidence to establish the value concluded of $2,730,000.

Methods of Valuation

Proper methods of valuation and assessment of property are delegated to the Commission. It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case. See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra; Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975).Missouri courts have approved the comparable sales or market approach, the cost approach and the income approach as recognized methods of arriving at fair market value. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STC, 789 S.W.2d 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm’n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. Div. 2 1974).

The appraisers appraised the property developing the income and the sales comparison approach. The methodologies utilized were appropriate for the appraisal problem presented in the present appeal.

Complainant Proves Value

In order to prevail, Complainant must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2007. Hermel, supra. There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a Commission appeal still bears the burden of proof. The taxpayer is the moving party seeking affirmative relief. Therefore, the Complainant bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.” See, 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). Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991). A valuation which does not reflect the fair market value (true value in money) of the property under appeal is an unlawful, unfair and improper assessment. The appraisal reviewed sales of comparable properties.

The appraisers concluded a value of $2,730,000.

The Complainant’s appraisal evidence meets the required evidentiary standard to rebut the presumption of correct assessment by the Board and to establish the true value in money as of January 1, 2007, of the subject property.

Issuance of Decision Absent Evidentiary Hearing

The Hearing Officer, after affording the parties reasonable opportunity for fair hearing, shall issue a decision and order affirming, modifying or reversing the determination of the board of equalization, correcting any assessment which is unlawful, unfair, improper, arbitrary or capricious. Section 138.431.5 RSMo; 12 CSR 30-3.080 (2) The filing of exhibits and written direct testimony establishes the basis upon which opportunity for an evidentiary hearing can be held. The Complainant has the burden to present substantial and persuasive evidence. The Respondent did not file any rebuttal exhibits. The Respondent may have cross examined the Complainant’s experts and was provided with an opportunity to notify the Hearing Officer that they wished to cross examine the expert witness. The Respondent failed to file a request.

Since Respondent voluntarily waived cross examination and presenting any rebuttal evidence, an evidentiary hearing would serve no purpose. Accordingly, the responsibility of the Hearing Officer, as has been addressed above, was to simply consider the exhibits and testimony filed and then proceed to ascertain if said exhibits met the standard of substantial and persuasive evidence to establish the market value of the property.

The Complainant’s exhibit establishes true value in money of the subject property. The Complainant’s Exhibit A does satisfy the first prong of the test to prove discrimination.

Discrimination

There is no evidence that there was an intentional plan of discrimination by the assessing officials so we must determine if the Complainant has presented substantial and persuasive evidence to show 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’.” Savage v. State Tax Commission, 722 S.W.2d 72 (Mo. banc 1986).

In a discrimination case, the Commission evaluates the difference between the average level of assessment for a particular class of real property and the actual assessment imposed on the property of the taxpayer alleging discrimination. Savage 722 S.W.2d at 79 The Commission has held that the average level of assessment for commercial properties in St. Louis County in 2007 was 29.4%. See In The Matter of the 2007 and 2008 Commercial Assessment Ratio of Properties in St. Louis County v. Zimmerman State Tax Commission Appeal 07-08 Ratio (“2007 Ratio Case”). To prevail and be entitled to a remedy in a discrimination case, the taxpayer must show that the differential between the Assessor’s assessment on the taxpayer and the average level of assessment is grossly excessive. The subject property’s assessed value as determined by the Assessor was $2,048,030 using an assessment ratio of 32%. The subject property’s assessed value using the true value of $2,730,000 and a median assessment ratio of 29.4% is $802,620. The difference between the assessed values is $1,245,410. In other words, the property was assessed at 75% of its true value.

The Complainant has established that the assessment was more than a de minimus error in judgment on the part of the assessor and thereby established their right to have his “assessment reduced to the percentage of that value at which others are taxed…” Sioux City Bridge Co. v. Dakota County, Neb, 43 S.Ct.190 (1923) in other words, the taxpayer’s assessed valuation should be set at the assessment “placed upon the general mass of other taxable property in the county.”

ORDER

Application for Review

Failure to state specific facts or law upon which the application for review is based will result in summary denial. Section 138.432, 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 December 18, 2014

STATE TAX COMMISSION OF MISSOURI

Maureen Monaghan

Hearing Officer

Certificate of Service

Jacklyn Wood

Legal Coordinator

Posted in 2014 | Comments Off on Metro Partners LLC v. Jake Zimmerman, Assessor St Louis County

Walters Properties LLC v. Jake Zimmerman, Assessor St Louis County

December 18th, 2014

STATE TAX COMISSION OF MISSOURI

WALTERS PROPERTIES LLC,	)	Appeal Nos.	07-11378
	)
Complainant	)
	)
v.	)
	)
JAKE ZIMMERMAN, ASSESSOR	)
ST LOUIS COUNTY, MISSOURI, Respondent	)

DECISION AND ORDER

HOLDING

St. Louis County Board of Equalization’s assessment SET ASIDE. Complainant presented substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization.

True value in money and assessment ratio for the subject property for tax year(s):

True Value 2007-2008	Assessment Ratio	Assessed Value
$2,885,000	29.4%	$848,190

Complainant appeared by counsel, Thomas Campbell. Respondent appeared by Attorney Edward Corrigan.

Case heard and decided by Hearing Officer Maureen Monaghan.

ISSUE

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.
Schedule and Procedure. On June 20, 2014, the State Tax Commission issued an Order setting forth the schedule and procedures for this appeal. The Schedule and Procedure required that each party file and exchange exhibits and written direct testimony to establish their case in chief on or before October 3, 2014. Complainant and Respondent filed and exchanged the exhibits set out below under Evidence. Parties had until October 21, 2014, to file objections and rebuttal exhibits. Neither party objected to exhibits. Respondent was ordered to file, on or before November 3, 2014, a Request for Hearing indicating a good faith intention to require a hearing. Respondent did not request a hearing on the appeal. Any pending summary motion judgments or motions otherwise are moot based upon the issuance of the Decision and Order.
Subject Property. The subject property is identified by map parcel number: 16M240351 and is further identified as 10655 Gateway Boulevard, St. Louis, Missouri. The property is a single tenant office/warehouse building.
Assessment. The Assessor appraised the property at $4,822,900, an assessed commercial value of $1,543,330. The Board of Equalization reduced the value to $3,800,000 assessed value of $1,216,000.
Evidence. Complainant filed with the Commission the following documents: Exhibit A – The Appraisal Report of John Hottle, Exhibit B – WDT of John Hottle and Exhibit C- WDT of Michael Robinson. Respondent filed with the Commission the following documents: Exhibit 1 – Board of Equalization Decision and Exhibit 2 – WDT of Mr. Gillick.
The State Tax Commission previously found that the median level of assessment for commercial property in St. Louis County in 2007 is 29.4%. The previous decision is incorporated by reference.
The true value as of January 1, 2007 was $2,885,000.

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 Hearing Officer 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. Article X, Section 14, Mo. Const. of 1945 Sections 138.430, 138.431, 138.431.4, RSMo.

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. Article X, Sections 4(a) and 4(b), Mo. Const. of 1945 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. Section 137.115.5, RSMo

Presumption In Appeals

Standard for Valuation

Implicit in this definition are the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby:

Buyer and seller are typically motivated.

Both parties are well informed and well advised, and both acting in what they consider their own best interests.

A reasonable time is allowed for exposure in the open market.

Payment is made in cash or its equivalent.

Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.

The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction. Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; See also, Real Estate Valuation in Litigation, J. D. Eaton, M.A.I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80; Uniform Standards of Professional Appraisal Practice, Glossary.

Mr. Hottle and Mr. Robinson conducted an appraisal of the property under appeal consistent with this standard.

Weight to be Given Evidence

The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled. The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).

Methods of Valuation

Proper methods of valuation and assessment of property are delegated to the Commission. It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case. See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra; Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975).Missouri courts have approved the comparable sales or market approach, the cost approach and the income approach as recognized methods of arriving at fair market value. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STC, 789 S.W.2d 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm’n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. Div. 2 1974).

The appraisers appraised the property developing the income and the sales comparison approach. The methodologies utilized were appropriate for the appraisal problem presented in the present appeal.

Complainant Proves Value

The appraisers concluded a value of $2,885,000.

Issuance of Decision Absent Evidentiary Hearing

The Complainant’s exhibit establishes true value in money of the subject property. The Complainant’s Exhibit A does satisfy the first prong of the test to prove discrimination.

Discrimination

In a discrimination case, the Commission evaluates the difference between the average level of assessment for a particular class of real property and the actual assessment imposed on the property of the taxpayer alleging discrimination. Savage 722 S.W.2d at 79 The Commission has held that the average level of assessment for commercial properties in St. Louis County in 2007 was 29.4%. See In The Matter of the 2007 and 2008 Commercial Assessment Ratio of Properties in St. Louis County v. Zimmerman State Tax Commission Appeal 07-08 Ratio (“2007 Ratio Case”). To prevail and be entitled to a remedy in a discrimination case, the taxpayer must show that the differential between the Assessor’s assessment on the taxpayer and the average level of assessment is grossly excessive. The subject property’s assessed value as determined by the Assessor was $1,543,330 using an assessment ratio of 32%. The subject property’s assessed value using the true value of $2,885,000 and a median assessment ratio of 29.4% is $848,190. The difference between the assessed values is $695,140. The property was assessed at 53% of its true value.

ORDER

Application for Review

Failure to state specific facts or law upon which the application for review is based will result in summary denial. Section 138.432, 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 December 18, 2014

STATE TAX COMMISSION OF MISSOURI

Maureen Monaghan

Hearing Officer

Certificate of Service

Jacklyn Wood

Legal Coordinator

Posted in 2014 | Comments Off on Walters Properties LLC v. Jake Zimmerman, Assessor St Louis County

Blessings Investments LLC v. Jake Zimmerman, Assessor St Louis County

December 18th, 2014

State Tax Commission of Missouri

BLESSINGS INVESTMENTS LLC,	)
	)
Complainant,	)
	)
v.	)	Appeal Number 07-11376
	)
JAKE ZIMMERMAN, ASSESSOR,	)
ST LOUIS COUNTY, MISSOURI,	)
	)
Respondent.	)

DECISION AND ORDER

HOLDING

St. Louis County Board of Equalization’s assessment SET ASIDE. Complainant presented substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization.

True value in money and assessment ratio for the subject property for tax year(s):

True Value 2007-2008	Assessment Ratio	Assessed Value
$1,232,800	29.4%	$362,440

Complainant appeared by counsel, Thomas Campbell. Respondent appeared by Attorney Edward Corrigan.

Case heard and decided by Hearing Officer Maureen Monaghan.

ISSUE

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.
Schedule and Procedure. On June 20, 2014, the State Tax Commission issued an Order setting forth the schedule and procedures for this appeal. The Schedule and Procedure required that each party file and exchange exhibits and written direct testimony to establish their case in chief on or before October 3, 2014. Complainant and Respondent filed and exchanged the exhibits set out below under Evidence. Parties had until October 21, 2014, to file objections and rebuttal exhibits. Neither party objected to exhibits. Respondent was ordered to file, on or before November 3, 2014, a Request for Hearing indicating a good faith intention to require a hearing. Respondent did not request a hearing on the appeal. Any pending summary motion judgments or motions otherwise are moot based upon the issuance of the Decision and Order.
Subject Property. The subject property is identified as follows:

Parcel	Address
09J320197	4585 Washington St

Assessment. The Assessor made the following determination of value:

True Value	Commercial Assessed Value
$1,390,800	$445,060

The Board of Equalization reduced the valuation:

True Value	Commercial Assessed Value
$1,232,800	$394,500

Evidence. Complainant filed with the Commission the following documents: Exhibit A – The Board of Equalization’s finding of true value and Exhibit B – Motion for Summary Judgment. Respondent filed the following documents: Exhibit 1 – The Board of Equalization’s finding of value.
Median Level of Assessment. The State Tax Commission previously found that the median level of assessment for commercial property in St. Louis County in 2007 is 29.4%. The previous decision is incorporated by reference.

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 Hearing Officer 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. Article X, Section 14, Mo. Const. of 1945 Sections 138.430, 138.431, 138.431.4, RSMo.

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. Article X, Sections 4(a) and 4(b), Mo. Const. of 1945 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. Section 137.115.5, RSMo

Presumption In Appeals

Valuation

There is a presumption of validity, good faith, and correctness by the County Board of Equalization. Williamson v. Kessinger, Green County Assessor, Appeal No. 11-22003-11-33019 (June 28, 2012); Cohen v. Bushmeyer, 251 S.W.3d 345 (Mo. Ct. App. 2008).The case law and the Commission’s decisions have repeatedly held the presumption of a correct assessment may only be rebutted when substantial and persuasive evidence is presented to establish that the Board’s valuation is erroneous. See Cohen, 251 S.W.3d 345; Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341 (Mo. 2007) (citing Hermel, Inc. v. STC, 564 SW.2d. 888, 895 (Mo. 1978)); Couples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 7029.4 (Mo. 1959). In the absence of such evidence, the presumptions are assumed to be correct.

The determination of true value is necessary for both overvaluation and discrimination claims. Complainant submitted as Exhibit A the Board of Equalization’s decision as to the true value in money of the Complainant’s property. The Supreme Court holds that the Commission cannot compel a taxpayer to present evidence in a particular form. State ex rel. Ashby Partners, LLC v State Tax Commission, 297 S.W.3d 80, 88 (Mo. banc 2009). Therefore, complainants are entitled to present evidence of the true value in money of their respective properties in the form of the Board of Equalization decisions. The Hearing Officer’s decision must be based upon its inquiry into relevant matters and evidence presented in the case or solely upon the evidence presented in the case.”

Discrimination

The subject property’s assessed value as determined by the Assessor was $445,060 using an assessment ratio of 32%. The subject property’s assessed value using a median assessment ratio of 29.4% and the value determined by the Board of Equalization is $362,440; a difference of $82,620. The Complainant established that the assessment was more than a de minimus error in judgment on the part of the assessor.

ORDER

Application for Review

Failure to state specific facts or law upon which the application for review is based will result in summary denial. Section 138.432, 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 December 18, 2014.

STATE TAX COMMISSION OF MISSOURI

Maureen Monaghan

Hearing Officer

Certificate of Service

Jacklyn Wood

Legal Coordinator

Posted in 2014 | Comments Off on Blessings Investments LLC v. Jake Zimmerman, Assessor St Louis County

Two Oaks Corporation v. Jake Zimmerman, Assessor St Louis County

December 18th, 2014

STATE TAX COMISSION OF MISSOURI

TWO OAKS CORPORATION,	)	Appeal Nos.	07-11375
	)
Complainant	)
	)
v.	)
	)
JAKE ZIMMERMAN, ASSESSOR	)
ST LOUIS COUNTY, MISSOURI, Respondent	)

DECISION AND ORDER

HOLDING

St. Louis County Board of Equalization’s assessment SET ASIDE. Complainant presented substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization.

True value in money and assessment ratio for the subject property for tax year(s):

True Value 2007-2008	Assessment Ratio	Assessed Value
$1,155,000	29.4%	$339,570

Complainant appeared by counsel, Thomas Campbell. Respondent appeared by Attorney Edward Corrigan.

Case heard and decided by Hearing Officer Maureen Monaghan.

ISSUE

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.
Schedule and Procedure. On June 20, 2014, the State Tax Commission issued an Order setting forth the schedule and procedures for this appeal. The Schedule and Procedure required that each party file and exchange exhibits and written direct testimony to establish their case in chief on or before October 3, 2014. Complainant and Respondent filed and exchanged the exhibits set out below under Evidence. Parties had until October 21, 2014, to file objections and rebuttal exhibits. Neither party objected to exhibits. Respondent was ordered to file, on or before November 3, 2014, a Request for Hearing indicating a good faith intention to require a hearing. Respondent did not request a hearing on the appeal. Any pending summary motion judgments or motions otherwise are moot based upon the issuance of the Decision and Order.
Subject Property. The subject property is identified by map parcel number: 25O420274 and is further identified as 3615 Tree Court Industrial Boulevard, St. Louis, Missouri. The property is a single tenant office/warehouse building.
Assessment. The Assessor appraised the property at $1,946,400, an assessed commercial value of $622,850. The Board of Equalization reduced the value to $1,850,000 assessed value of $592,000
Evidence. Complainant filed with the Commission the following documents: Exhibit A – The Appraisal Report of John Hottle, Exhibit B – WDT of John Hottle and Exhibit C- WDT of Michael Robinson. Respondent filed with the Commission the following documents: Exhibit 1 – Board of Equalization Decision and Exhibit 2 – WDT of Mr. Gillick.
The State Tax Commission previously found that the median level of assessment for commercial property in St. Louis County in 2007 is 29.4%. The previous decision is incorporated by reference.
The true value as of January 1, 2007 was $1,155,000.

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 Hearing Officer 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. Article X, Section 14, Mo. Const. of 1945 Sections 138.430, 138.431, 138.431.4, RSMo.

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. Article X, Sections 4(a) and 4(b), Mo. Const. of 1945 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. Section 137.115.5, RSMo

Presumption In Appeals

Standard for Valuation

Implicit in this definition are the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby:

Buyer and seller are typically motivated.

Both parties are well informed and well advised, and both acting in what they consider their own best interests.

A reasonable time is allowed for exposure in the open market.

Payment is made in cash or its equivalent.

Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.

The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction. Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; See also, Real Estate Valuation in Litigation, J. D. Eaton, M.A.I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80; Uniform Standards of Professional Appraisal Practice, Glossary.

Mr. Hottle and Mr. Robinson conducted an appraisal of the property under appeal consistent with this standard.

Weight to be Given Evidence

The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled. The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).

Methods of Valuation

Proper methods of valuation and assessment of property are delegated to the Commission. It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case. See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra; Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975).Missouri courts have approved the comparable sales or market approach, the cost approach and the income approach as recognized methods of arriving at fair market value. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STC, 789 S.W.2d 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm’n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. Div. 2 1974).

The appraisers appraised the property developing the sales comparison approach. The methodology utilized was appropriate for the appraisal problem presented in the present appeal.

Complainant Proves Value

The appraisers concluded a value of $1,155,000.

Issuance of Decision Absent Evidentiary Hearing

The Complainant’s exhibit establishes true value in money of the subject property. The Complainant’s Exhibit A does satisfy the first prong of the test to prove discrimination.

Discrimination

In a discrimination case, the Commission evaluates the difference between the average level of assessment for a particular class of real property and the actual assessment imposed on the property of the taxpayer alleging discrimination. Savage 722 S.W.2d at 79 The Commission has held that the average level of assessment for commercial properties in St. Louis County in 2007 was 29.4%. See In The Matter of the 2007 and 2008 Commercial Assessment Ratio of Properties in St. Louis County v. Zimmerman State Tax Commission Appeal 07-08 Ratio (“2007 Ratio Case”). To prevail and be entitled to a remedy in a discrimination case, the taxpayer must show that the differential between the Assessor’s assessment on the taxpayer and the average level of assessment is grossly excessive. The subject property’s assessed value as determined by the Assessor was $622,850 using an assessment ratio of 32%. The subject property’s assessed value using the true value of $1,155,000 and a median assessment ratio of 29.4% is $339,570. The difference between the assessed values is $283,280. In other words, the property was assessed at 54% of its true value.

ORDER

Application for Review

Failure to state specific facts or law upon which the application for review is based will result in summary denial. Section 138.432, 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 December 18, 2014

STATE TAX COMMISSION OF MISSOURI

Maureen Monaghan

Hearing Officer

Certificate of Service

Jacklyn Wood

Legal Coordinator

Posted in 2014 | Comments Off on Two Oaks Corporation v. Jake Zimmerman, Assessor St Louis County

Armstrong – Trotwood LLC et al v Jake Zimmerman, Assessor St Louis County

December 16th, 2014

State Tax Commission of Missouri

ARMSTRONG-TROTWOOD, LLC, et al	)	Appeal	11-10827 through 11-10830,
	)		11-11018 through 11-11027,
	)		and 11-13959 through 11-13961.
	)
Complainant	)
	)
v.	)
	)
JAKE ZIMMERMAN, ASSESSOR	)
ST LOUIS COUNTY, MISSOURI, Respondent	)

ORDER

AFFIRMING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

On July 14, 2014, Senior Hearing Officer Luann Johnson dismissed the appeals sua sponte for failure to state grounds upon which relief may be granted.

Complainants filed appeals on their individual parcels with the St. Louis County Board of Equalization. The Board of Equalization sustained the Assessor’s valuation. The Complainants filed appeals with the State Tax Commission asserting inter-county discrimination.

Complainants’ properties are located within St. Louis County. Complainants concede that the St. Louis County Assessor has correctly valued and classified their property. Complainants do not contend that St. Louis County is engaging in any discriminatory practices (intra-county discrimination). Complainants allege that discrimination is present because the neighboring county is undervaluing property (inter-county discrimination). Four taxing jurisdictions – St. Louis Community College District, Special School District of St. Louis County, Rockwood School District and Eureka Fire Protection District – cross county territorial lines. These four taxing jurisdictions are located in St. Louis County and Jefferson County. Complainants contend that properties located in Jefferson County are assessed at lower than true value. Therefore, they contend, they are being discriminated against because they are paying higher levies in those four taxing districts than neighboring properties that are undervalued by Jefferson County.

CONCLUSIONS OF LAW

Standard of 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. See Section 138.432. RSMo.

DECISION

Complainant’s Claims of Error

A. “The Senior Hearing Officer erred in dismissing these appeals, because the decisions in Foster Bros. Mfg. Co. v. State Tax Com’n of Mo., 319 S.W.2d 590 (Mo. 1958) and Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo.App. 2003) do not govern these appeals, in that these appeals involve taxing jurisdictions that are located in more than one county and Foster Bros. and Westwood did not involve such taxing jurisdictions.”

B. “The Senior Hearing Officer erred in dismissing these appeals, because these appeals invoke this Commission’s duty to correct assessments or valuations that are ‘unlawful, unfair, improper, arbitrary or capricious,’ Section 138.430.1 RSMo, in that the appraisal ratio for Complainants’ properties is significantly greater than the appraisal ratio for similar properties located in Jefferson County and also located within the St. Louis Community College District, the Special School District of St. Louis County and (in Appeal No. 11-11019) the Rockwood School District and the Eureka Fire Protection District, all of which are authorities levying a property tax.”

Foster Bros. Mfg. Co v State Tax Com’n of Mo

In Foster Bros., the property owners conceded that their property was assessed appropriately in their county. However, the property owners argued that their property had been assessed at a higher percentage of true value than other property of the same class in other counties throughout the state. The property owners argued that Section 138.390 RSMo imposed upon the State Tax Commission (Commission) a duty to equalize the valuation of property between the counties.

The Court found that the State Tax Commission has the power to adjust valuations of individual properties in order to equalize the assessments within a county. The power to adjust the assessments of individual properties is derived from an appeal from the Board. The Commission has been statutorily authorized to equalize valuations between counties. The power of the Commission to annually equalize the valuation between counties is not subject to review in a specific property owner’s appeal. “Uniformity in assessments as between the various counties must be accomplished, however, by the State Tax Commission in its annual order of intercounty equalization,” and not within an appeal of an individual parcel.

Westwood Partnership v. Gogarty

The property owner appealed the classification of property. The issue addressed a prior definition of residential property which was interpreted and applied differently among counties. The Court of Appeals held that the Commission’s jurisdiction, in appeal from board of equalization, was limited to issues of intra-county equalization and the Commission did not have jurisdiction to rule on allegations of inter-county discrimination.

The taxpayers in the case presented evidence, not of discrimination by their county assessor, but discrimination by assessors outside of their county – the territorial limits of the authority levying the property tax. Article X, Section 3 of the Missouri Constitution provides that:

“Taxes may be levied and collected for public purposes only, and shall be uniform upon the same class or subclass of subjects within the territorial limits of the authority levying the tax…”

The ad valorem real property tax is levied by the governing body of the county, which is the taxing authority. Westwood citing Beatty v State Tax Commission, 912 S.W.2d 492 (Mo. Banc 1995) The Commission’s jurisdiction then is over appeal of property owners from rulings by the Board of Equalization relating to assessments of property within their county and is no more extensive than that of a Board. Therefore the Commission is limited in appeals to adjust, correct and equalize the valuations of taxable real or tangible personal property within a county (intra-county); the Commission lacks jurisdiction in appeals from Boards of Equalization to rule on allegations of inter-county discrimination.

Commission’s Duty to Correct Assessments

Commission’s duty to correct assessments or valuations is set forth in Section 138.390 RSMo. :

“1. The state tax commission shall equalize the valuation of real and tangible personal property among the several counties in the state in the following manner: with the abstracts of all the taxable property in the several counties of the state and the abstracts of the sales of real estate in such counties as returned by the respective county clerks and the assessor of the city of St. Louis, the commission shall classify all real estate situate in cities, towns, and villages, as town lots, and all other real estate as farming lands, and shall classify all tangible personal property as follows: banking corporations, railroad corporations, street railroad corporations, all other corporations, horses, mares and geldings, mules, asses and jennets, neat cattle, sheep, swine, goats, domesticated small animals and all other livestock, poultry, power machinery, farm implements, other tangible personal property.

The state tax commission shall equalize the valuation of each class or subclass of property thereof among the respective counties of the state in the following manner:

(1) It shall add to the valuation of each class, subclass, or portion thereof of the property, real or tangible personal, of each county which it believes to be valued below its real value in money such amount or percent as will increase the same in each case to its true value;

(2) It shall deduct from the valuation of each class, subclass, or portion thereof of the property, real or tangible personal, of each county which it believes to be valued above its real value in money such amount or percent as will reduce the same in each case to its true value.

May Department Stores Company v. State Tax Commission, 308 S.W. 2d 748 (S. Ct. 1958), the Court stated that the Commission’s authority to equalize assessments between counties is not a subject matter of a contested case. Decisions, or lack of decisions or actions, of administrative officers which are not matters of contested cases may be reviewed by suits for injunctions, mandamus, prohibition or other appropriate action. The Court stated that appeals of assessments of individual properties are not proper avenues for inter-county discrimination issues. An action as to inter-county equalization is not subject to collateral attack and is not subject to review in a landowner’s appeal from a specific valuation.

Savage v. State Tax Commission, 722 S.W.2d 72 (S Ct 1986) the court examined the legal grounds upon which the Commission could adjust a property’s assessment. The Court stated that an assessor’s actions or lack of actions in regards to property within the county may violate the principle of practical uniformity such that it would deny a person within its jurisdiction the equal protection of law. Article X, Section 3 requires uniformity of taxes upon the same class of properties within the territorial limits of the authority levying the taxes. The governing body of the county is the taxing authority. Westwood Therefore, the Commission, in an appeal of a parcel’s assessment, may review the county’s assessments for uniformity. The Commission is not authorized in an appeal of a parcel’s assessment to review uniformity among counties.

Conclusion

Intra-county equalization, or lack thereof, may be reviewed by the State Tax Commission in an appeal of an assessment of a particular property under their authority which is derived from the jurisdiction of the Board of Equalization. Inter-county equalization is not subject to attack under the appeal process. The fact that a few political subdivisions cross county lines does not authorize county assessors or county boards of equalization to engage in inter-county equalization. Inasmuch as the Commission’s jurisdiction in appeals is derivative, the Commission may not use the appellate process to engage inter-county equalization. The Commission may only engage in inter-county equalization as provided by law under Section 138.390 RSMo. The Complainants may not attack inter-county equalization under an appeal from a county Board of Equalization decision.

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 herein verbatim, in this final decision of the Commission.

SO ORDERED this 16 day of December, 2014.

STATE TAX COMMISSION OF MISSOURI

Bruce E. Davis, Chairman

Randy B. Holman, Commissioner

Victor Callahan, Commissioner

Certificate of Service

I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 18^th day of December, 2014 to: James P. Gamble, 231 South Bemiston Ave, Suite 1111, Clayton, MO 63105, 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

Posted in 2014 | Comments Off on Armstrong – Trotwood LLC et al v Jake Zimmerman, Assessor St Louis County

Hawthorn Bank v. Sandra Brownsberger, Interim Assessor Henry County

November 26th, 2014

State Tax Commission of Missouri

HAWTHORN BANK,	)
	)
Complainant,	)
	)
v.	)	Appeal Number 13-59501
	)
SANDRA BROWNSBERGER	)
INTERIM ASSESSOR,	)
HENRY COUNTY, MISSOURI,	)
	)
Respondent.	)

DECISION AND ORDER

Decision of the Henry County Board of Equalization sustaining the assessment made by the Assessor is AFFIRMED . The parties did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization.

Complainant represented by Cathy Steele, Attorney at Law.

Respondent represented by Richard Shields, Attorney at Law.

Case heard and decided by Senior Hearing Officer Luann Johnson.

ISSUE

Complainant appeals, on the grounds of overvaluation, the decision of the Henry County Board of Equalization, which sustained the Assessor’s valuation of the subject property. The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2013. The value as of January 1 of the odd numbered year remains the value as of January 1 of the following even numbered year unless there is new construction and improvement to the property. Section 137.115.1 RSMo

The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

Exhibits

The following exhibits were introduced into the record without objection.

Ex. A Complainant’s Appraisal Report

Ex. B. Complainant’s Written Direct Testimony

Ex. C Corrections to Complainant’s Appraisal Report

Ex. 1 Respondent’s Appraisal Report

Ex. 2 Respondent’s Written Direct Testimony

FINDINGS OF FACT

Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Henry County Board of Equalization.
Evidentiary Hearing. The Evidentiary Hearing in this appeal was held on Wednesday, October 15, 2014, at the Henry County Courthouse, Clinton, Missouri.
Identification of Subject Property. The subject property is identified by map parcel number 18-1.0-02-003-017-007.000. It is further identified as 102 North Second Street, Clinton, Henry County, Missouri.
Description of Subject Property. The subject property is a 3.26 acre tract improved with two bank branch buildings; the main branch containing 6,350 square feet built in 2007 and the former bank branch containing 4,508 square feet, for a combined square footage of 10,858 square feet. The main branch building is considered to be in good condition. The former bank branch, built in 1972, is in fair condition. (Ex. A, p. 1)

The former bank building has been on the market since 2006. It has a current asking price of $395,000, or $87.62 per square foot. There have been no interested potential purchasers. (Ex. A, p. 5).

The subject property is located in Clinton, Missouri. Clinton is approximately 55 miles southeast of the Kansas City metropolitan area at the intersection of Highway 7 and Highway 13. Population was reported as 9,008 in 2010. Population was estimated to be 9,120 in 2013 and is anticipated to be 9,177 in 2018. (Ex. A, pg. 7)

The subject neighborhood has a mix of commercial, industrial and residential uses. The predominate age of improvements in the area is 20 to 40 years. Predominant age, quality and condition of improvements is average. It is not likely that speculative development of any type will occur in the foreseeable future. (Ex. A, pg. 9)

Clinton residents have five options for full service retail banking. Banking competition is represented by two larger banks, a regional bank (UMB) and a national bank (U.S. Bank), along with several smaller regional banks including Hawthorn Bank, First Community Bank and First National Bank of Clinton. First National Bank of Clinton and Hawthorn Bank both have two locations within Clinton. (Ex. A, pg. 13)

The subject neighborhood is in the second stage of its life cycle, a period of stability. The area has good highway access, located at the intersection of Highway 7 and Highway 13. The neighborhood has a stable population base. Overall, the outlook for the local area is average with no foreseeable changes in the future. (Ex. A, p. 9).

Highest and Best Use. The highest and best use of the property is for continued bank branch use. (Ex. A, p. 1, 28). The most probable buyer of the subject property is an owner/user and the most probable user would be a bank. (Ex. A, p. 31).
Assessment. The Assessor appraised the property at $1,818,100, an assessed commercial value of $581,800. The Board of Equalization sustained the assessment. (Complaint for Review.) Complainant asserts a value of $1,190,000. Respondent asserts a value of $2,030,000. The Board’s value of $1,818,100 is affirmed.
Complainant’s Evidence. Complainant presented an appraisal report which was marked as Exhibit A. Additionally, Complainant produced Written Direct Testimony of T.J. Hawks, a certified general real estate appraiser.

Clinton is a peripheral market to the Kansas City metropolitan area. Peripheral locations such as Clinton would be more vulnerable to lower rental rates and high vacancy, given the rural nature of the markets. Most of the failed bank branches located in growing areas of Kansas City are likely to be acquired by another bank and continue to operate as banking facilities. Banks located in aging areas of the metropolitan area or low demand areas are being shuttered and the real estate sold to another user. (Ex. A, pg. 15).

Income Approach

Complainant’s evidence suggests that retail banking locations are typically owner occupied. However, there are a handful of free standing retail bank branch leases. These indicate rental rates from $12 to $25 per square foot and are typically written on a triple net lease basis . Operating expenses on these triple net leases are near typical office operating expenses of $9 to $10 per square foot.

A former bank branch can be converted to general office use or medical office use. Areas of obsolescence include the vault and the drive through service bays. Second generation users typically purchase branch buildings at a discount. (Ex. A, p. 15)

Complainant’s appraiser presented 16 leases of former bank buildings, including multi-tenant and multi-story buildings. These leases show a rental rate of $10.50 per square foot to $25.00 per square foot with an average rental rate of $17.97 per square foot and a median lease rate of $20.00 per square foot. Older buildings and/or inferior locations show a triple net rate of $10.50 per square foot to $12.13 per square foot. All of these leases of older buildings were considered significantly inferior to the subject property. Newer free-standing bank branch buildings show a rental rate of $20.00 to $24.00 per square foot. The locations of these buildings in suburban Kansas City were considered superior to the subject property. From these comparable rentals, Complainant’s appraiser estimated that the subject property would rent for $12.13 per square foot to $17.88 per square foot. From this, Complainant’s appraiser concluded that $14.00 per square foot on a triple net lease would be a market rental rate for the primary bank branch and $9.00 per square foot triple net for the older building. (Ex. A, p. 42-43). He testified that he studied demographics to determine the appropriate adjustments to his rental rates.

Complainant’s appraiser testified that in the Clinton rental history the high point for general retail space was $14.50 per square foot for strip mall space. He testified that, in the Kansas City area, general retail space leased for more than bank space; leasing for $25 to $35 per square foot while bank facilities were leasing for $20 to $24 per square foot. He used this difference in rental rates to project where he believed the subject property would rent in Clinton.

In a triple net lease, all expenses including real estate taxes, insurance and common area maintenance charges are paid directly by the tenant with no recovery from the landlord. However, the landlord would still incur a management fee and a replacement reserve is allocated to cover expenses during vacancy. Complainant estimated a management fee of 3.0%. A 10% vacancy rate was considered reasonable in a stabilized market. Based upon these assumptions, Complainant’s appraiser projected a net operating income of $110,315 or $10.16 per square foot. (Ex., A, p. 43-44).

Inasmuch as there were no sales of similar properties within the three years prior to the tax day, Complainant’s appraiser presented no overall capitalization rate. After review of investor surveys of capitalization rates of office properties, a range of capitalization rates between 7.60% and 9.60% was concluded. The lower rate included a reserve for replacement while the higher rate did not. Complainant’s appraiser also calculated a capitalization rate using a band of investment methodology. He assumed a 25 year loan with 70% financing at 6% interest. He estimated a 14% equity dividend rate and an 18% equity yield rate. This resulted in a capitalization rate of 9.60%. In addition to consideration of occupancy, overall condition, location and other attributes, Complainant’s appraiser indicates that the subject property’s configuration of two separate buildings and limited or no demand for commercial real estate in the downtown area of Clinton, significantly increased the risk for the subject. Given this property specific information, he concluded that the appropriate cap rate for the subject would be 10.00%. Based upon a net operating income of $110,315 and a capitalization rate of 10.00%, he determined value of the subject property to be $1,100,000 or $101.31 per square foot. (Ex. A, pg. 45-47).

Sales Comparison

Complainant’s appraiser presented four sales of comparable bank buildings located in Pleasant Hill, Saint Joseph and Blue Springs, Missouri and Leawood, Kansas. The sale comparables were currently in use as bank facilities. (Ex. A, p. 35). Adjustments to the sales were made for areas of significant variation. (Ex. A, pg. 36-38). These adjustments indicate a range of value for the subject between $102.97 per square foot to $125.93 per square foot. Complainant’s appraiser utilized an average square foot price of $110.00 per square foot for a market value of the subject property of $1,190,000. (Ex. A, pg. 39). The square foot value was an average of value of the newer structure and the older structure.

Complainant’s appraiser also presented sales listings for eight branch banks currently on the market in Kansas and Missouri. Those listings had asking prices of $54.49 to $276.12 per square foot with the average asking price of $145.57 per square foot. Typically, asking rates establish the high end of the range of value. (Ex. A, p. 40).

Complainant’s appraiser testified that it was difficult to find comparables in Clinton or towns similar to Clinton.

Cost Approach

Complainant’s appraiser did not prepare a cost approach to value. He testified that the income approach accounted for economic obsolescence and, therefore, the cost approach would mirror the income approach.

Summary of Conclusions

Complainant’s appraiser found the sales comparison approach to be the most reliable indicator of value for the subject property and proposed a value of $1,190,000. (Ex. A, p. 48).

No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2013, to January 1, 2014, therefore the assessed value for 2013 remains the assessed value for 2014. Section 137.115.1, RSMo.
Respondent’s Evidence. Respondent produced an appraisal report identified as Exhibit 1 and Written Direct Testimony of Shane Gretzinger, a certified general real estate appraiser.

Cost Approach

The subject improvements consist of a one-story bank-central office built in 2007 which, Respondents appraiser deemed to be in excellent condition. The property has an actual age of 6 years and an effective age of 6 years. Based upon an economic life of 35 years, the indicated physical deterioration is 17.14%. The property has a remaining economic life of 29 years. For construction or replacement purposes, the subject is considered to be a Good Quality Class C, Bank – Central Office building in Marshall & Swift building cost estimators. (Ex. A, Subject –4-9).

The subject improvements also include a one-story bank building built in 1972 and renovated in 1996, currently listed for sale for $395,000. The property according to Respondents appraisal is in average condition. (Ex. A, Subject –4-9).

Respondent’s appraiser contends that a portion of the land associated with this parcel constitutes excess land which should be valued separately, and in addition to, the site value associated with the two buildings.

Respondent’s appraiser looked at market sales of vacant land in the area and determined a range of value for the subject land of $0.59 to $7.67 per square foot with an average of $4.30 per square foot. After making adjustments for areas of significant variation, he determined that the subject land would sell for $5.00 per square foot or $320,000. (Ex. 1, Cost Approach, 4-6).

For the newer building, Respondent’s appraiser classified the improvements as “good” quality which resulted in a Marshall & Swift base cost of $185.75 per square foot or $1,273,570. Cost comparables indicate a range of value of $112.40 to $310.70 per square foot. After adjustments, Respondent’s appraiser determined that his proposed cost estimate of $185.76 was correct. (Ex. 1, Cost Approach, p. 7-8). Additional site improvements had a depreciated value of $121,177. Respondent’s appraiser determined that an addition for entrepreneurial profit was not appropriate since bank facilities were generally owner occupied and rarely built as speculative construction. (Ex. 1, Cost Approach, p. 9).

Respondent’s appraiser found no evidence of external or functional obsolescence in the newer building, but found physical depreciation at the rate of 2.86% annually or 17.14% for the six year old building. He concluded the depreciated value of the building improvements to be $1,165,325. Adding his land value of $320,000 and his depreciated site improvement value of $121,177, he concluded a value for the main structure under the cost approach of $1,606,502, say $1,600,000. (Ex. 1, Cost Approach, p. 12-13).

Income Approach

Respondent’s appraiser looked at rental rates on six new bank facilities located in Lee’s Summit and Independence, Missouri and Overland Park, Leawood, Lenexa and Ottawa, Kansas. All properties leased the year they were built. The range of lease prices was $27.21 per square foot to $44.18 per square foot. (Ex. 1, Income Approach, p.1). Almost all leased on a triple net basis. Respondent’s appraiser estimated that the subject property would lease at the low end of the range at $25.00 per square foot, or $172,075. In addition, Respondent’s appraiser calculated that the tenants would reimburse landlord’s operating expenses of about $30,265. (Ex. 1, Income Approach, p. 1-2).

Rental vacancy at the subject location is near 0%. Overall vacancy in both the retail and office markets are estimated at under 5%. Respondent’s appraiser used a stabilized vacancy for the subject property of 2.5%.

Respondent’s appraiser found that an adjustment for management fees, insurance, repairs and maintenance, common area maintenance, utilities, and cleaning and janitorial expenses was appropriate. He concluded this adjustment should be 19.35% of effective gross income which equates to $5.55 per square foot or $159,124, net operating income. (Ex. 1, Income Approach, p. 2-5).

Respondent’s appraiser found two older bank sales which had overall capitalization rates of 7.00% and 7.98%. Looking at investor surveys, Respondent’s appraiser determined that cap rates should be adjusted 0.10% and 0.75% which resulted in an indicated capitalization rate for the subject property of 7.10% to 7.14%. Other office sales indicate overall rates of 7.27% to 8.10%. Based upon this information, Respondent’s appraiser determined that an overall capitalization rate of 8.00% would be appropriate for the subject property. (Ex. 1, Income Approach, p. 6-8). Respondent’s appraiser also prepared a band of investment capitalization rate based upon a 75% loan at a rate of 8.6% with a 25% equity at a yield rate of 12%. Based upon this analysis, he determined the overall rate under the mortgage equity analysis should be 7.93%. (Ex. 1, Income Approach, p. 9). Respondent’s appraiser found the market extraction method, indicating a cap rate of 8%, to be the most reliable. He then added an effective tax rate of 1.917 for an indicated overall capitalization rate of 9.917%. (Ex. 1, Income Approach, p. 10-11). This cap rate, applied to the net operating income, indicated an adjusted value of $1,600,000. (Ex. 1, Income Approach, p. 11).

Sales Approach – Newer Building

Respondent’s appraiser found seven sales of older bank properties, selling for $130.07 per square foot to $278.44 per square foot. The sales were located in Springfield, Harrisonville and Ozark, Missouri and Olathe and Lawrence, Kansas. Four of the sales were located in larger markets and were, therefore, superior to the subject. Gross adjustments on the comparables were 13%, 60%, 99%, 59%, 30%, 41% and 35%. The sales indicate a range of value for the subject of $207.66 per square foot to $273.27 per square foot. Respondent’s appraiser determined the appropriate value under the sales comparison approach of $235.00 per square or $1,617,505, say $1,620,000. (Ex. 1, Sales Comparison, p. 1-6).

Sales Approach – Older Building

Respondent used six sales of banks or office buildings to determine his value for the older building. Three of those sales were in Clinton, two were in Warrensburg, one was in Holden and one was in Pleasant Hill. After adjustment for areas of significant variation, these sales indicated a value for the older building of $59.09 per square foot to $102.86 per square foot. Total adjustments to each parcel was 29%, 0%, 0%, 0%, 10%, 25%. Respondent’s appraiser used a square foot value of $60.00 for an indicated market value of the older building of $270,000.

Sales Approach – Excess Land

Respondent’s appraiser presented seven land sales in the Clinton area. Those sales indicated a price of $0.59 to $7.67 per square foot. After making adjustments for areas of significant variation, Respondent’s appraiser determined that the appropriate value for the excess land was $2.00 per square foot. He determined that the amount of excess land was 83,010 square feet, for an indicated market value of $166,020, say $165,000.

Summary of Conclusions

Respondent’s appraiser contended that the value of the new building was $1,600,000; the value of the old building was $270,000; and the value of the excess land was $165,000 for a total value for the parcel of $2,035,000. He deducted $5,000 to allow for legal and platting charges to split the parcel, for an indicated value of $2,030,000

10. Presumption of Correct Assessment Not Rebutted. When a party proposes a value different from the value determined by the Board of Equalization, that party bears the burden of proving that the Board’s value was erroneous. Neither party met their burden of proof to establish correct value. (See, Presumption In Appeal and Discussion.)

CONCLUSIONS OF LAW AND DECISION

Jurisdiction

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. Article X, Sections 4(a) and 4(b), Mo. Const. of 1945. The constitutional mandate is to find the true value in money for the property under appeal. By statute real and tangible personal property are assessed at set percentages of true value in money. Section 137.115.5, RSMo – residential property at 19% of true value in money; commercial property at 32% of true value in money and agricultural property at 12% of true value in money.

Presumption In Appeal

Burden of Proof

In order to prevail, a party must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2013 and January 1, 2014. Hermel, supra. There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a Commission appeal still bears the burden of proof. The taxpayer is the moving party seeking affirmative relief. Therefore, the Complainant bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.” See, 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); Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991). A valuation which does not reflect the fair market value (true value in money) of the property under appeal is an unlawful, unfair and improper assessment.

“Where the basis for a test as to the reliability of the testimony is not supported by a statement of facts on which it is based, or the basis of fact does not appear to be sufficient, the testimony should be rejected.” Carmel Energy at 783.

A taxpayer does not meet his burden if evidence on any essential element of his case leaves the Commission “in 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). Section 137.115, RSMo, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase, but who is not compelled to do so. St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993); Missouri Baptist Children’s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993).

When Respondent challenges the Board of Equalization value, he or she has the same burden of proof as the taxpayer.

Standard of Valuation

True value in money is defined in terms of value in exchange and not value in use. Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 S.W.2d 376, 380 (Mo. App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).

It is the fair market value of the subject property on the valuation date. Hermel, supra.

Market value is the most probable price in terms of money which a property should bring in competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price is not affected by undue stimulus.

Implicit in this definition are the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby:

Buyer and seller are typically motivated.
Both parties are well informed and well advised, and both acting in what they consider their own best interests.
A reasonable time is allowed for exposure in the open market.
Payment is made in cash or its equivalent.
Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction. Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; See also, Real Estate Valuation in Litigation, J . D. Eaton, M.A.I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80; Uniform Standards of Professional Appraisal Practice, Glossary.

Official and Judicial Notice

Agencies shall take official notice of all matters of which the courts take judicial notice. Section 536.070(6), RSMo. Courts will take judicial notice of their own records in the same cases. State ex rel. Horton v. Bourke, 129 S.W.2d 866, 869 (1939); Barth v. Kansas City Elevated Railway Company, 44 S.W. 788, 781 (1898).

In addition, courts may take judicial notice of records in earlier cases when justice requires or when it is necessary for a full understanding of the instant appeal. Burton v. Moulder, 245 S.W.2d 844, 846 (Mo. 1952); Knorp v. Thompson, 175 S.W.2d 889, 894 (1943); Bushman v. Barlow, 15 S.W.2d 329, 332 (Mo. banc 1929); State ex rel St. Louis Public Service Company v. Public Service Commission, 291 S.W.2d 95, 97 (Mo. banc 1956).

Courts may take judicial notice of their own records in prior proceedings involving the same parties and basically the same facts. In re Murphy, 732 S.W.2d 895, 902 (Mo. banc 1987); State v. Gilmore, 681 S.W.2d 934, 940 (Mo. banc 1984); State v. Keeble, 399 S.W.2d 118, 122 (Mo. 1966).

Investigation by Hearing Officer

Weight to be Given Evidence

The Hearing Officer as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances. The Hearing Officer is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert’s testimony and accept it in part or reject it in part. St. Louis County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).

Methods of Valuation

The Supreme Court of Missouri has also held that evidence of the actual sales price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time. The actual sale price is a method that may be considered for estimating true value. St. Joe Minerals Corp., supra

Opinion Testimony by Experts

The testimony of an expert is to be considered like any other testimony, is to be tried by the same test, and receives just so much weight and credit as the trier of fact may deem it entitled to when viewed in connection with all other circumstances. The Hearing Officer, as the trier of fact, has the authority to weigh the evidence and is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert’s testimony and may accept it in part or reject it in part. Beardsley v. Beardsley, 819 S.W. 2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W. 2d 605, 607 (Mo. 1981); Scanlon v. Kansas City, 28 S.W. 2d 84, 95 (Mo. 1930).

If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto.

The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data need not be admissible in evidence.

Section 490.065, RSMo; State Board of Registration for the Healing Arts v. McDonagh, 123 S.W.3d 146 (Mo. SC. 2004); Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. E.D. 1992).

DISCUSSION

Neither party overcame the presumption in favor of the Board of Equalization. Both appraisers are to be commended for their attempts to value the subject property.

However, the flaw in both appraisal reports is that they have no Clinton comparables for the sales approach or the income approach on the newer building. The appropriateness of adjustments cannot be tested. We are left wondering how the fact that the subject property is located in a town with a small and declining population, which already has seven bank facilities, should factor into value. Most of the comparables are located in the greater Kansas City metropolitan area. Even the St. Joseph comparable is located in a town of 75,000 while the subject is in a town of 9,000. Mr. Hawk testified that his latest retail rental information for Clinton showed a rental rate of $14.50 per square foot for strip mall space. We don’t have any further information concerning this rental rate and do not know what the impact the fact that Clinton now has almost no retail vacancy currently available may have on rates.

In the future, we would like to see the use of paired sales or paired rentals to quantify the difference between the location of the subject property and the location of the comparable sales and rentals to validate adjustments made.

It seems more likely than not that this parcel would be split in the event of sale. Both parties agree that the older building is already being marketed separate and apart from the newer building. Splitting the parcel, rather than averaging the square foot value of the improvements, would produce a better indication of what each building was worth. This technique would also produce a better indication of whether or not there was excess land in the parcel.

ORDER

The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Henry County for tax years 2013 and 2014 is AFFIRMED.

Application for Review

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 Henry 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 26^th day of November, 2014.

STATE TAX COMMISSION OF MISSOURI

Luann Johnson

Senior Hearing Officer

Luann.Johnson@stc.mo.gov

816-678-6936

Certificate of Service

I hereby certify that a copy of the foregoing has been mailed by electronic mail this 26^th day of November, 2014, to:

Cathy Steele, Attorney for Complainant, 225 S. Meramec #511, St Louis, MO 63105

Richard Shields, Attorney for Respondent, 100 W. Franklin St, Clinton, MO 64735

Sandra Brownsberger, Henry County Interim Assessor 100 W. Franklin, Room 3

Clinton, MO 64735

Rick Watson, Henry County Clerk, 100 W. Franklin Clinton, MO 64735

Maggie Stoddard, Henry County Treasurer and Ex Officio Collector of Revenue

100 West Franklin St. Clinton, MO 64735.

Jacklyn Wood

Legal Coordinator

Posted in 2014 | Comments Off on Hawthorn Bank v. Sandra Brownsberger, Interim Assessor Henry County

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