IN THE STATE TAX COMMISSION OF MISSOURI
| A CARING PLUS FOUNDATION | ) | |
| ) | ||
| Complainant, | ) | |
| ) | ||
| v. | ) | Appeal No. 18-11230 through 18-11279 |
| ) | ||
| JAKE ZIMMERMAN, ASSESSOR | ) | |
| ST. LOUIS COUNTY, MISSOURI, | ) | |
| ) | ||
| Respondent. | ) |
DECISION AND ORDER
HOLDING
The decision of the St. Louis County Board of Equalization (BOE) sustaining the assessment made by Jake Zimmerman, Assessor, St. Louis County, Missouri (Respondent) is AFFIRMED.
A Caring Plus Foundation (Complainant) failed to present substantial and persuasive evidence establishing the subject properties are exempt from ad valorem taxation under Article X, Section 6, of the Missouri Constitution for tax year 2018:
Complainant is represented by counsel Joseph Noelker.
Respondent is represented by counsel Ed Corrigan.
Cases heard on the record and decided by Senior Hearing Officer John Treu (Hearing Officer).
ISSUE
Complainant appealed Respondent’s ad valorem taxation of the subject property on the ground that the subject property qualified for exemption in 2018 because Complainant, a not-for-profit Internal Revenue Service Section 501(c)(3) organization, used the property for charitable purposes. Complainant did not challenge the assessed valuation of the subject property.
The Hearing Officer, having considered all of the competent evidence upon the whole record enters the following Decision and Order.
FINDINGS OF FACT
- Authority. Complainant timely appealed to the State Tax Commission (STC) from the decision of the BOE.
- Appeals Submitted on Record. Upon agreement of the parties the appeals were submitted upon the record. Each party briefed the issues.
- Identification and Description of Subject Properties.
| APPEAL NO. | LOCATOR | PHYSICAL ADDRESS | STATUS ON 01/01/2019 |
| 18-11230 | 14G220563 | 6373 Sherry Avenue | Vacant Land |
| 18-11231 | 14G220224 | 5233 Wilborn Avenue | Vacant Land |
| 18-11232 | 14G240657 | 5356 Janet Avenue | Vacant Land |
| 18-11233 | 14G240675 | 5424 Hodiamont Avenue | Vacant Land |
| 18-11234 | 14G241061 | 5433 Hodiamont Avenue | Vacant Land |
| 18-11235 | 14G242325 | 5406 Hodiamont Avenue | Vacant Land |
| 18-11236 | 14G310213 | 5401Wilborn Drive | Vacant Land |
| 18-11237 | 14G330370 | 5429 Hamilton Avenue | Vacant Land |
| 18-11238 | 14G330417 | 5435 Hamilton Avenue | Vacant Land |
| 18-11239 | 14G331580 | 5402 Hamilton Avenue | Vacant Land |
| 18-11240 | 14G221719 | 5318 Hodiamont Avenue | Vacant Land |
| 18-11241 | 14G241124 | 5435 Hodiamont Avenue | Vacant Land |
| 18-11242 | 14G241142 | 5437 Hodiamont Avenue | Vacant Land |
| 18-11243 | 14G221746 | 5320 Hodiamont Avenue | Vacant Land |
| 18-11244 | 14G221627 | 5319 Hamilton Avenue | Vacant Land |
| 18-11245 | 14G310112 | 5363 Wilborn Drive | Home with Gutted Interior |
| 18-11246 | 14G221030 | 5255 Hamilton Avenue | Boarded Up House |
| 18-11247 | 12F211627 | 2 Watson Mill Court | Vacant Land |
| 18-11248 | 12F121454 | 7 Watson Mill Court | Vacant Land |
| 18-11249 | 12F121463 | 3 Watson Mill Court | Vacant Land |
| 18-11250 | 12F141263 | 33 Robinson Circle Drive | Vacant Land |
| 18-11251 | 12F141281 | 45 Robinson Circle Drive | Vacant Land |
| 18-11252 | 14G220293 | 5223 Hamilton Avenue | Vacant Land |
| 18-11253 | 14G221052 | 5257 Hamilton Avenue | Vacant Land |
| 18-11254 | 14G220462 | 6367 Sherry Avenue | Vacant Land |
| 18-11255 | 14G220581 | 6375 Sherry Avenue | Vacant Land |
| 18-11256 | 14G240510 | 535 Janet Avenue | Vacant Land |
| 18-11257 | 14G240192 | 5346 Helen Avenue | Vacant Land |
| 18-11258 | 12F141300 | 37 Robinson Circle Drive | Vacant Land |
| 18-11259 | 12F141319 | 53 Robinson Circle Drive | Vacant Land |
| 18-11260 | 14G240547 | 5357 Helen Avenue | Vacant Land |
| 18-11261 | 12F211618 | 6 Watson Mill Court | Vacant Land |
| 18-11262 | 12F141364 | 75 Robinson Circle Drive | Vacant Land |
| 18-11263 | 12F141429 | 20 Hensley Terrace | Vacant Land |
| 18-11264 | 12F141355 | 79 Robinson Circle Drive | Vacant Land |
| 18-11265 | 12F141346 | 83 Robinson Circle Drive | Vacant Land |
| 18-11266 | 12F141337 | 87 Robinson Circle Drive | Vacant Land |
| 18-11267 | 12F141438 | 29 Hensley Terrace | Vacant Land |
| 18-11268 | 12F141539 | 28 Robinson Circle Drive | Vacant Land |
| 18-11269 | 12F141548 | 32 Robinson Circle Drive | Vacant Land |
| 18-11270 | 12F141557 | 44 Robinson Circle Drive | Vacant Land |
| 18-11271 | 12F141566 | 36 Robinson Circle Drive | Vacant Land |
| 18-11272 | 12F141575 | 40 Robinson Circle Drive | Vacant Land |
| 18-11273 | 12F141290 | 49 Robinson Circle Drive | Vacant Land |
| 18-11274 | 12F141328 | 91 Robinson Circle Drive | Vacant Land |
| 18-11275 | 14G242343 | 5353 Hodiamont Avenue | Vacant Land |
| 18-11276 | 14G240217 | 5341 Helen Avenue | Vacant Land |
| 18-11277 | 14G310130 | 5387 Wilborn Drive | Vacant Land |
| 18-11278 | 14G240082 | 5347 Hodiamont Avenue | Vacant Land |
| 18-11279 | 14G220884 | 5258 Hamilton Avenue | Vacant Land |
- Assessment. Respondent determined true value in money (“TVM”) and classified all of the subject parcels as residential property. As Complainant did not challenge valuation, only the issue of exemption will be addressed.
- Board of Equalization. The BOE sustained Respondent’s determination that the subject properties do not qualify for exemption.
- Complainant. Complainant is a not-for-profit organization recognized as exempt from federal income taxation under IRS Section 501(c)(3). Complainant for Review.
- Complainant’s Evidence. Complainant offered the following Exhibits:
| Exhibit | Description |
| Exhibit A | Map of Subject Properties |
| Exhibit B | IRS Tax Exempt Notice |
| Exhibit C | State of Missouri Sales/Use Tax Exemption |
| Exhibit D | Letters from BOE Relating to Properties Not Appealed |
| Exhibit K | Email From Mitchel Harkness to Complainant |
| Exhibit L | Letter From Federal Home Loan Bank |
| Written Direct Testimony (WDT) | Lewis McKinney (McKinney) |
Complainant, established in December of 2012, is a 501(c)(3) not for profit corporation which is also exempt from Missouri sales and use tax. McKinney is the Managing Director of Complainant and is responsible for the business development, financial management and day-to-day operations of Complainant. The purpose of Complainant is to provide housing support, home improvement and necessary services to low-income seniors. Complainant provides apartments and single homes to low income senior and provides home improvements to existing home through the Natural Occurring Retirement Community (NORC). NORC is a grant administered by the State of Missouri. Complainant receives funds from the Federal Home Loan Bank, HUD, the State of Missouri, the St. Louis County Community Development Agency (SLCCDA), and from individual and corporate donors. SLCCDA administers the HUD disbursements. McKinney generally states that Complainant is in the process of constructing new homes on the subject properties. (Exhibits A-D, Exhibits K-L and WDT). No evidence was offered regarding the specific plans, status of plans, etc. of any of the subject properties.
- Respondent’s Evidence.
| Exhibit | Description |
| WDT | Wynell Landers (Landers) |
| Exhibit 1 | Landers CV |
| Exhibit 2 | List of Properties Appealed |
| Exhibit 3 | Land Information Services (LIS) Photographs |
| Exhibit 4 | LIS Photographs |
| Exhibit 5 | LIS Photograph |
| Exhibit 6 | LIS Photographs |
| Exhibit 7 | LIS Photograph |
| Exhibit 8 | LIS Photographs |
| Rebuttal WDT | Landers |
| Rebuttal Exhibit 1 | General Warranty Deed |
Landers made an inspection of the subject properties on March 20, 2018 and made first-hand visual observations regarding the status of each of the subject properties. On that date, all of the subject properties consisted of vacant land, other than two. The subject property in appeal 18-11246 consists of a one-story brick bungalow with one bedroom and one bathroom. Landers observed the property appeared unoccupied and in poor condition, with the windows and doors boarded. The subject property in appeal 18-11245 consists of a house with the interior gutted. Landers observed the vacant properties showed no sign of construction, with no equipment of the properties. He observed no disturbed ground and no signage indicating upcoming activity. Also on March 20, 2018 Landers reviewed the records in the Public Works department and found no work permits, no blueprints, and no records or plans, indicating an active efforts to being any work on the subject properties. (WDT, Exhibits 4-8).
- Taxation of the Property. Complainant failed to present substantial and persuasive evidence to establish the subject properties qualify as exempt from ad valorem taxation under Article X, Section 6 of the Missouri Constitution on January 1, 2018. Consequently, the determinations of the BOE are Affirmed.
CONCLUSIONS OF LAW AND DECISION
Authority
The Commission has authority 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. Mo. Const. art. X, sec. 14, Sections 138.430, 138.431, 138.431.4, RSMo.
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 BOE, correcting any assessment which is unlawful, unfair, improper, arbitrary or capricious. Section 138.431.5 RSMo. The parties agreed to submit the appeals on the record.
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 Hearing Officer considered all the exhibits and written direct testimony and determines the subject properties are not entitled to exemption from ad valorem taxation under article X, section 6, of the Missouri Constitution for tax year 2018.
Presumption In Appeal
There is a presumption of validity, good faith and correctness of assessment by the BOE. Hermel, Inc. v. State Tax Comm’n, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. State Tax Comm’n, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. State Tax Comm’n, 308 S.W.2d 748, 759 (Mo. 1958). This presumption is a rebuttable rather than a conclusive presumption. The presumption of correct assessment is rebutted when the taxpayer presents substantial controverting evidence to establish that the BOE’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 Comm’n, 329 S.W.2d 696, 702 (Mo. 1959).
Exemptions
Taxation of property is the rule and exemption from taxation is the exception. United Cerebral Palsy Ass’n of Greater Kansas City v. Ross, 789 S.W.2d 798, 799 (Mo. banc 1990). Tax exemptions are not favored in the law, and statutes granting exemptions are to be strictly, yet reasonably, construed against the one claiming the exemption. Mo. Church of Scientology v. State Tax Comm’n, 560 S.W.2d 837, 844 (Mo. banc 1987), State ex rel. Union Electric Co. v. Goldberg, 578 S.W.2d 921,923 (Mo. banc 1979). A property owner who claims the exemption bears a substantial burden to prove that his property falls within the exempted class. United Cerebral Palsy Ass’n of Greater Kansas City, 789 S.W.2d at 799.
Under Missouri law, all property, real and personal, actually and regularly used exclusively for religious worship, for schools and colleges, or for purposes purely charitable and not held for private or corporate profit, except that the exemption herein granted does not include real property not actually used or occupied for the purpose of the organization but held or used as investment even though the income or rentals received therefrom is used wholly for religious, educational or charitable purposes, are exempt from taxation for state, county or local purposes. Section 137.100(5) RSMo (2013).
Under the three-pronged Franciscan test, a complainant claiming exemption from property taxation must prove that (1) the subject property is actually and regularly used exclusively for purposes purely charitable; (2) the property is owned and operated on a not-for-profit basis; and (3) the dominant use of the property must be for the benefit of an indefinite number of people and must directly or indirectly benefit society generally. United Cerebral Palsy Ass’n of Greater Kansas City, 789 S.W.2d at 801, citing Franciscan Tertiary Province of Mo., Inc. v. State Tax Comm’n, 566 S.W.2d 213 (Mo. banc 1978). Complainant’s failure to prove any single element is sufficient for denial of exemption. See, Westwood P’ship 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); Ind. Dev. Auth. of Kansas City v. State Tax Comm’n, 804 S.W.2d 387, 392 (Mo. App. 1991).
The actual use of the real property is the controlling factor in a determination of whether or not the real property is exempt from taxation. Franciscan, 566 S.W.2d at 224. The dominate use of the property must be for the benefit of an indefinite number of people, for the purpose of “bringing their hearts under the influence of education or religion, by relieving their bodies from disease, suffering, or constraint, by assisting them to establish themselves for life, or by erecting or maintaining public buildings or works or otherwise lessening the burdens of government.” Id.
Discussion
Complainant offered only a general statement that Complainant is in the process of constructing new homes on the subject properties. (Exhibits A-D, Exhibits K-L and WDT). No evidence was offered regarding the specific plans for each property, the steps taken regarding each specific plan, the status of each specific plan, etc. Overall, the evidence offered by Complainant was extremely limited.
In Complainant’s primary brief it is stated:
A Caring Plus Foundation promotes services that enhance the quality of life of seniors. Through programs that focus on the overall health and wellness of seniors in Jennings, Missouri, and surrounding communities, the Foundation assists underserved populations and helps them access service providers in a convenient, one-stop location…One of the ways Complainant provides safe and affordable housing for low-income elderly is by purchasing parcels, such as the parcels that are the subject of this appeal, typically with run-down, dilapidated houses on them, and through a continual process of redevelopment, clears the parcels, re-plats them into larger lots that will meet modern building standards suitable for today’s modern dwelling units, and builds new houses, which it then sell for less than its cost basis.
The above statement lacks any evidentiary support in the record. Such is not a fact in the evidentiary record. Statements of counsel do not constitute evidence.
All but two properties were vacant land at the pertinent time. A review of cases makes it clear that some actual activity must be undertaken in order to meet this requirement. Sunday School Bd. of Southern Baptist Conv. v. Mitchell, 658 S.W.2d 1 (Mo. banc 1983). The property must be dedicated unconditionally to a charitable activity. Abbot Ambulance Inc. v. Leggett, 926 SW2d 91 (Mo. App 1996) it is the purpose for which the owner actually uses the property that is controlling, not potential purposes for which the property could be used. Missouri United Methodist Retirement Homes v. State Tax Comm’n, 522 SW2d 745 (Mo. banc 1975). A charitable use exemption depends upon the use made of the property and not solely upon the stated purpose of the organization.
In Franciscan the Court reasoned that the property “must be dedicated unconditionally to the charitable activity in such a way that there will be no profit, presently or prospectively, to individuals or corporations.” 556 S.W.2d at 224.
In many instances, a religious, educational or charitable entity may, either through purchase or by donation, obtain an unimproved or partially improved tract of land for which it is intended that the property be developed and used for a tax exempt purpose. The issue becomes how a not-for-profit entity might obtain the benefit of its statutory right under 137.100 while it intends and seeks to develop the land for what would clearly otherwise be an exempt purpose and use.
Taking the present fact situation as the basis for the illustration, all but two of the subject properties are vacant land. Complainant may be looking to a real eventuality of constructing an improvement which use would qualify it for an exemption. From past appeals the Commission looked to elements as a fund raising program for a new building, a building committee, plans and drawings, or plans for consultations with architects and government officials about locating of a new facility, these activities would clearly manifest a definite intention to develop the property for Complainant’s charitable use. An erection of a sign noting the site to be the future home of the affordable housing would be further tangible evidence of the realistic intention that the property was to be utilized in the future for a charitable purpose. Certainly, bringing on site the equipment to actually commence initial construction is clear evidence of development for the exempted use.
Such activities as have just been outlined provide a basis that the “intention” to develop is something more than just a hope or dream which is some time away from realization and actualization. Each case will vary, and no hard and fast rule can be laid down to address every case of the acquisition of undeveloped land and the elements and steps that would qualify as the property being in use for an exempt purpose.
Regarding the two properties with improvements, the testimony of Landers evidences no use of the properties, let alone a charitable use. Complainant submitted no evidence regarding the two properties with improvements. Complainant failed to meet its burden of proof.
Conclusions
Although a taxing statute is construed strictly against the state, an exemption statute is strictly construed against the one claiming the exemption. State ex rel. Union Electric Co. v. Goldberg, 578 S.W.2d 921, 923 (Mo. banc 1979); State ex rel. Dravo Corp. v. Spradling, 515 S.W.2d 512 (Mo.1974); Tiger v. State Tax Comm’n, 277 S.W.2d 561, 564 (Mo.1955); American Bridge Co. v. Smith, 352 Mo. 616, 179 S.W.2d 12, 15 (1944); Mississippi River Fuel Corp. v. Smith, 350 Mo. 1, 164 S.W.2d 370, 377 (1942); State ex rel. Spillers v. Johnston, 214 Mo. 656, 662, 113 S.W. 1083, 1084 (1908). Complainant simply failed to present any evidence regarding each particular property and its associated plans to fulfill its burden of presenting substantial evidence on all elements for exemption. Complainant also failed to present any evidence regarding each particular property and its associated plans to fulfill its burden of presenting persuasive evidence on all elements for exemption. 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. E.D. 1980). The BOE determination regarding the exemption must be affirmed.
ORDER
The assessed valuation for the subject property as determined by the BOE for the subject tax day is AFFIRMED. Subject parcels are not entitled to exemption from ad valorem taxation.
Application for Review
A party may file with the Commission an application for review of this decision within 30 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. The application must be in writing addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.
Failure to state specific facts or law upon which the application for review is based will result in summary denial. Section 138.432, RSMo
Disputed Taxes
The Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 139.031.8, RSMo.
Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed. Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.
SO ORDERED this 16th day of October, 2019.
STATE TAX COMMISSION OF MISSOURI
John Treu
Senior Hearing Officer