STATE TAX COMMISSION OF MISSOURI
|ADAM C. & PENNY L. BROWN,||)|
|v.||)||Appeal No. 17-44000|
|RONDA ELFRINK, ASSESSOR,||)|
|BOLLINGER COUNTY, MISSOURI,
DECISION AND ORDER
The decision of the Bollinger County Board of Equalization (BOE) is SET ASIDE. Complainants Adam C. Brown (Mr. Brown) and Penny L. Brown (collectively referred to as Complainants) presented substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.
Mr. Brown appeared pro se; Penny L. Brown appeared not.
Respondent Ronda Elfrink, Assessor, Bollinger County, (Respondent) appeared pro se.
Case heard and decided by Senior Hearing Officer Amy S. Westermann (Hearing Officer).
The issue in this case is a matter of law. The facts of the case are not in dispute. Complainants appealed on the ground of misclassification, specifically claiming that one acre of real property (the one-acre subject property), which was part of a larger agricultural parcel, had been misclassified as residential rather than agricultural. The total acreage of Complainants’ parcel was 100 acres, 99 of which had been classified as agriculatural property while the one-acre subject property had been classified as residential property. Complainants did not dispute Respondent’s valuation of the subject property. Respondent initially set the true market value (TMV) of the one-acre subject property at $7,000, as residential property, as of January 1, 2017, with a corresponding assessed value of $1,330. (BOE Notice of Decision; Exhibit 4) The BOE sustained both Respondent’s classification and valuation of the one-acre subject property. The State Tax Commission (STC) takes this appeal to determine the classification and TMV for the one-acre subject property as of January 1, 2017.
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. Complainants timely appealed to the State Tax Commission.
- Evidentiary Hearing. The issue of misclassification was presented at an evidentiary hearing on September 28, 2017, at the Bollinger County Government Building and Courthouse, 204 High Street, Marble Hill, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 07-04.2-19-00.0-00-03.02000. It is further identified as BCR 346, Jackson, Bollinger County, Missouri. (Complaint; Exhibit A; Exhibit 1)
- Description of Subject Property. The subject property consists of one acre that is part of a 100-acre parcel. A water well and an electricity meter are present on the one-acre subject property. (Exhibit 4) No structures for human habitation are present on the one-acre subject property. (Exhibit A; Exhibit 1; Testimony of Mr. Brown)
- Assessment. Respondent set a TMV for the one-acre subject property of $7,000, as residential, as of January 1, 2017. The one-acre subject property was assessed at the statutory rate of 19% of TMV ($1,330).
- Board of Equalization. The BOE sustained Respondent’s classification and TMV of the one-acre subject property.
- Complainants’ Evidence. Mr. Brown testified on behalf of Complainants. Mr. Brown testified that Complainants had purchased the 100-acre parcel that includes the one-acre subject property in October 2016 for approximately $110,000. Mr. Brown testified that Complainants purchased the land from another individual through a private sale and without the involvement of a realtor. Mr. Brown testified that the land was encumbered by a mortgage with a balance of $89,000. Mr. Brown testified that two acres (other than the subject property) of the 100-acre parcel already had been designated for permanent forest clearing through a United States Department of Agriculture (USDA) Farm Service Agency Agreement (Agreement) between Complainants and the USDA. (Exhibit B; Exhibit C) Mr. Brown testified that, under the Agreement, the USDA and Complainant would share the cost of clearing forest from the 100-acre parcel. Mr. Brown further testified that Complainants were not contesting Respondent’s valuation of the one-acre subject property but only its classification as residential. Mr. Brown testified that Complainants believed that the one-acre subject property should be classified as agricultural along with the remaining 99 acres of the 100-acre parcel.
To support Complainants’ opinion regarding classification of the subject property, Mr. Brown offered as evidence the following exhibits:
|Exhibit A||Sections 137.010, 137.015, 137.016, and 137.017 of the Missouri Revised Statutes (RSMo 2016)|
|Exhibit B||USDA Farm Service Agency Abbreviated 156 Farm Record of Complainants’ 100-acre parcel with flyover photograph depicting the boundaries of the 100-acre parcel covered by the agreement between USDA and Complainants|
|Exhibit C||Planned Permanent Forest Opening Map related to the Agreement between USDA and Complainants depicting the boundaries of Complainants’s 100-acre parcel with three areas cleared of forest and the one-acre subject property|
|Exhibit D||Color photographs depicting the one-acre subject property with no structures for human habitation|
|Exhibit E||Color photographs depicting Forest Clearing Number One located on the 100-acre parcel|
|Exhibit F||Color photographs depicting Forest Clearing Number Two located on the 100-acre parcel|
Respondent did not object to Complainants’ exhibits, all of which were received into the record.
- Respondent’s Evidence. Respondent testified on her own behalf. Respondent testified that the one-acre subject property was classified as residential due to a past use as a homesite for a mobile home, which had been connected to the water well and the electricity meter. Respondent testified that the highest and best use of the one-acre subject property was residential and that the classification of the one-acre subject property as residential was consistent with the manner in which other similar properties were classified as a combination of agricultural and residential in Bollinger County. To support Respondent’s opinion regarding classification of the subject property, Respondent offered as evidence the following exhibits:
|Exhibit 1||Section 137.016 RSMo 2016|
|Exhibit 2||Property Record Cards of comparable properties, three of which showed mixed-use classification with part of the parcel classified as residential and part of the parcel classified as agricultural|
|Exhibit 3||Color photographs depicting the water well and electricity meter on the one-acre subject property|
|Exhibit 4||Property Record Card of Complainants’ 100-acre parcel|
Complainants did not object to Respondent’s exhibits, all of which were received into the
- Presumption of Correct Assessment Rebutted – Proper Classification Established.
Complainants presented substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE and to establish the proper classification of the one-acre subject property as of January 1, 2017, as agricultural.
CONCLUSIONS OF LAW AND DECISION
The STC has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious, including the application of any abatement. The Hearing Officer shall issue a decision and order affirming, modifying or reversing the determination of the BOE, 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 property and tangible personal property are assessed at set percentages of true value in money: residential property at 19%; commercial property at 32%; and agricultural property at 12%. Section 137.115.5 RSMo (2000) as amended.
Classification of Real Property
According to Missouri law, “residential property” is all real property (1) improved by a structure which is used or intended to be used for residential living by human occupants; (2) vacant land in connection with an airport; (3) land used as a golf course; (4) manufactured home parks; (5) bed and breakfast inns in which the owner resides and uses as a primary residence with six or fewer rooms for rent; and (6) time-share units as as defined in Section 407.600 except to the extent such units are actually rented and subject to sales tax under Section 144.020.1(6); but residential property shall not include other similar facilities used primarily for transient housing. Section 137.016.1(1).
“Agricultural and horticultural property” is all real property used for agricultural purposes and devoted primarily to the raising and harvesting of crops; to the feeding, breeding and management of livestock which shall include breeding, showing, and boarding of horses; to dairying, or to any other combination thereof; and buildings and structures customarily associated with farming, agricultural, and horticultural uses. Section 137.016.1(2). Agricultural and horticulatural property shall also include land devoted to and qualifying for payments or other compensation under a soil conservation or agricultural assistance program under an agreement with an agency of the federal government. Id. (emphasis added).
Where real property is used or held for use for more than one purpose and such uses result in different classifications, the county assessor shall allocate to each classification the percentage of the true value in money of the property devoted to each use; except that, where agricultural and horticultural property, as defined in this section, also contains a dwelling unit or units, the farm dwelling, appurtenant residential-related structures and up to five acres immediately surrounding such farm dwelling shall be residential property, as defined in this section. Section 137.016.4 (emphasis added).
All real property which is vacant, unused, or held for future use; which is used for a private club, a not-for-profit or other nonexempt lodge, club, business, trade, service organization, or similar entity; or for which a determination as to its classification cannot be made under the definitions set out in subsection 1 of this section, shall be classified according to its immediate most suitable economic use, which use shall be determined after consideration of:
(1) Immediate prior use, if any, of such property;
(2) Location of such property;
(3) Zoning classification of such property; except that, such zoning classification shall not be considered conclusive if, upon consideration of all factors, it is determined that such zoning classification does not reflect the immediate most suitable economic use of the property;
(4) Other legal restrictions on the use of such property;
(5) Availability of water, electricity, gas, sewers, street lighting, and other public services for such property;
(6) Size of such property;
(7) Access of such property to public thoroughfares; and
(8) Any other factors relevant to a determination of the immediate most suitable economic use of such property.
Section 137.016.5 (emphasis added).
Highest and Best Use
True value in money is the fair market value of the property on the valuation date and is a function of its highest and best use, which is the use of the property which will produce the greatest return in the reasonably near future. Aspenhof Corp. v. State Tax Commission, 789 S.W. 2d 867, 869 (Mo. App. 1990). It is true that property can only be valued according to a use to which the property is readily available. But this does not mean that in order for a specific use to be the highest and best use for calculating the property’s true value in money, that particular use must be available to anyone deciding to purchase the property. A determination of the true value in money cannot reject the property’s highest and best use and value the property at a lesser economic use of the property. Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W. 3d 341, 348-349 (Mo. banc 2005).
Investigation by Hearing Officer
In order to investigate appeals filed with the STC, 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. Section 138.430.2 RSMo (2000) as amended. 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. Id.
During the hearing, the Hearing Officer inquired of Mr. Brown and of Respondent.
Complainant’s Burden of Proof
There exists a presumption of correct assessment by the BOE – the BOE presumption. The BOE presumption operates in every case to require the taxpayer to present evidence to rebut it. Conversely, if Respondent is seeking to prove a value different than that set by the BOE, then Respondent is required to rebut the BOE presumption.
In the present appeal, the BOE sustained the initial classification and valuation of Respondent. The only issue is whether the BOE properly classified the one-acre subject property as residential. Therefore, the BOE presumption applies with regard to classification, and Complainants must rebut the presumption by substantial and persuasive evidence to prevail.
Substantial evidence can be defined as such relevant evidence that a reasonable mind might accept as adequate to support a conclusion. Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is evidence that has sufficient weight and probative value to convince the trier of fact. Cupples Hesse Corp., 329 S.W.2d at 702. The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief. Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975). See also, Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003); Daly v. P. D. George Co., 77 S.W.3d 645 (Mo. App. E.D. 2002); Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003).
There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a STC 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.” Westwood Partnership, 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. W.D. 1991).
Weight to be Given Evidence
The Hearing Officer is not bound by any single formula, rule, or method in determining the correctness of the BOE’s determination and 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 deemed necessary when viewed in connection with all other circumstances. Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. W.D. 1991). The Hearing Officer, as the trier of fact, is not bound by the opinions of experts but may believe all or none of the expert’s testimony or accept it in part or reject it in part. Exchange Bank of Missouri v. Gerlt, 367 S.W.3d 132, 135-36 (Mo. App. W.D. 2012).
In the present appeal, no expert witnesses testified. Both Mr. Brown and Respondent testified.
In this case, Complainants’ evidence was substantial and persuasive to rebut the presumption of correct classification and assessment by the BOE. Substantial evidence is that which is relevant, adequate, and reasonably supports a conclusion. Cupples Hesse Corp., 329 S.W.2d at 702. Persuasive evidence is that which causes the trier of fact to believe, more likely than not, the conclusion advocated is the correct conclusion. Id.
The testimony of both parties was credible and the facts are not in dispute; the issue in this case is a matter of law. Complainant argued that the one-acre subject property should be classified as agricultural property as defined in Section 137.016.1(2). Respondent argued that the one-acre subject property was properly classified as residential property as defined in Section 137.016. 4 and .5.
The undisputed evidence established that the one-acre subject property was vacant and unused land as of January 1, 2017. No structure intended for residential living by human occupants was located on the one-acre subject property as of January 1, 2017. The only improvements on the one-acre subject property were the water well and the electricity meter. However, neither the availability of water, due to the presence of the water well, nor the availability of electricy, due to the electricity meter, cause the subject property to fall under the definition of residential real property.
Mr. Brown testified that Complainants had purchased the 100-acre parcel in October 2016. Respondent’s Exhibit 4 confirmed that Complainants obtained title to the 100-acre parcel by warranty deed on October 7, 2016. Respondent testified that the one-acre subject property had been used as a homesite for a mobile home in the past and that residential use was the highest and best use of the subject property. However, as of January 1, 2017, Complainants were not using the one-acre subject property as a homesite for a mobile home. Moreover, there was no evidence indicating that Complainants had ever used the one-acre subject property as a homesite since they purchased the property in 2016. Respondent presented no expert testimony indicating that the highest and best use of the one-acre subject property as part of the 100-acre parcel was as residential property, i.e., that residential use of the one-arcre subject property would produce the greatest return in the reasonably near future. Furthermore, analyzing the highest and best use of real property is useful when determining the property’s true value in money rather than its classification. Complainants did not dispute Respondent’s valuation of the one-acre subject property. Accordingly, given the specific circumstances and evidence in this case, to determine the classification of the one-acre subject property, the factors under Section 137.016.4 and .5 need not be considered.
The one-acre subject property falls squarely within the provisions of Section 137.016.1(2), which provides that agricultural property includes land devoted to and qualifying for payments or other compensation under a soil conservation or agricultural assistance program under an agreement with an agency of the federal government. Complainants’ substantial and persuasive evidence established that Complainants had entered into the Agreement with the USDA, a federal agency, to share the cost of clearing forest from the 100-acre parcel, 99 acres of which Respondent had classified and assessed as agricultural. Complainants’ Exhibit B showed that, in preparation for the cost-sharing program, the USDA had mapped the 100-acre parcel in June 2016, prior to Complainants’ purchase of the parcel and prior to the tax date of January 1, 2017. This evidence was persuasive in that it indicated an intention to designate the entire 100-acre parcel as eligible for the cost-sharing program, an agricultural assistance program of a federal government agency, including the one-acre subject property. The one-acre subject property is part of the 100-acre parcel covered by the Agreement between Complainants and the USDA. (Exhibits B and C) Mr. Brown testified that Complainants and the USDA share the cost of clearing forest from the 100-acre parcel, which is a form of payment or compensation under the Agreement. Thus, Section 137.016.1(2) controls, and the one-acre subject property should be classified as agricultural for assessment purposes.
The classification of the one-acre subject property and its corresponding assessed value as determined by the BOE for tax year 2017 is SET ASIDE. The proper classification of the one-acre subject property as of January 1, 2017, is agricultural; thus, the one-acre subject property should be assessed at the statutory rate of 12% as of January 1, 2017.
Application for Review
A party may file with the STC 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
The Collector of Bollinger 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 October 30, 2017.
STATE TAX COMMISSION OF MISSOURI
Amy S. Westermann
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 30th day of October, 2017, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.
 It should be noted that the classification of real property could change from tax cycle to tax cycle, depending upon the specific circumstances shown by substantial and persuasive evidence in each case. For example, the one-acre subject property in this case was vacant and unused as of January 1, 2017. However, in the future, if the one-acre subject property is used as a homesite, the classification of the subject property could change to residential, regardless of its prior use as vacant and unused land classified as agricultural.