State Tax Commission of Missouri
AMERICAN MULTI-CINEMA, INC.,)
)
Complainant,)
)
v. ) Appeal Nos.09-10932 & 10-10036
)
JAKE ZIMMERMAN, ASSESSOR,)
ST. LOUIS COUNTY,MISSOURI,)
)
Respondent.)
DECISION AND ORDER
HOLDING
Decisions of the St. Louis County Board of Equalization sustaining the assessments made by the Assessor are SET ASIDE.True value in money for Complainant’s property in 2009 is set at $1,353,100, assessed value of $451,030, and for 2010 at $1,012,330, assessed value of $337,440.
Complainants failed to present substantial and persuasive evidence to rebut the presumption of correct estimation of value by the Assessor under Section 137.122, RSMo, or the presumption of correct assessment by the Board of Equalization.
Complainant appeared by Counsel, Robert J. Droney, Gallop, Johnson & Neuman, LC, St. Louis, Missouri.
Respondent appeared by Associate County Counselor, Paula J. Lemerman.
Case heard by Senior Hearing Officer W. B. Tichenor.
Case decided by Commissioners Bruce Davis and Randy Holman.
ISSUE
Complainant appeals, on the ground of overvaluation, the decisions of the St. Louis County Board of Equalization, which sustained the valuations of the subject property.The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2009, and January 1, 2010.The State Tax Commission, having considered all of the competent evidence upon the whole record and briefs of the parties, enters the following Decision and Order.
FINDINGS OF FACT
1.Jurisdiction.Jurisdiction over these appeals is proper.Complainant timely appealed to the State Tax Commission from the decisions of the St. Louis County Board of Equalization.
2.Hearing and Briefs.A hearing was conducted on October 6, 2011, at the St. Louis County Government Center, Clayton, Missouri.Transcript was received by the Commission on December 15, 2011, and transmitted to the attorneys for each party on that date.Complainant’s Post Hearing Brief was received by the Commission on January 20, 2012.Respondent’s Post Hearing Brief was received by the Commission on March 1, 2012.Complainant’s Reply to Respondent’s Post Hearing Brief was received by the Commission on March 13, 2012.
3.Subject Property.The subject property is tangible personal property of AMC Chesterfield 14 located at 3000 Chesterfield Mall, Chesterfield, Missouri.The property is identified by Assessor’s Account Number B00135619.The property consists of concession equipment, computer equipment, furniture and fixtures, general support equipment, office equipment and telephone and theater equipment used at the AMC Chesterfield 14 movie theater.[1]
4.Assessment.The Assessor appraised the subject property for 2009 at $1,439,580, an assessed value of $479,860.[2]The Board sustained the assessment.[3]The Assessor appraised the subject property for 2010 at $1,114,530, an assessed value of $371,510.[4]The Board sustained the assessment.[5]
5.Complainant’s Evidence.The following evidence was presented on behalf of Complainant:
|
Exhibit |
Description |
|
A |
Personal Property Appraisal Report – 1/1/09 – H. W. Choate, ASA, CEA |
|
B |
Personal Property Appraisal Report – 1/1/10 – H. W. Choate, ASA, CEA |
|
C |
Written Direct Testimony – H. W. Choate |
Exhibits A, B and C were received into evidence.Mr. Choate testified at hearing.[6]
6.Respondent’s Evidence.The following evidence was presented on behalf of Respondent:
|
DESCRIPTION |
|
|
1 |
|
|
2 |
2009 Active Property List (marked with proposed corrections) |
|
4 |
Photographs/Information on Strong 35 mm Projections Systems |
|
5 |
2009 Assessor’s Valuation Method on 9 items |
Exhibits 1, 2, 4 and 5 were received into evidence.Ms. Edison testified at hearing.[9]She testified that the value, as determined under Section 137.122, RSMo, for the property under appeal for 2009 at $1,353,100 based upon a correction made to the property list.The correction was removing of installation and labor costs that had been listed.Ms. Edison testified that the value, as determined under Section 137.122, RSMo, of the property under appeal for 2010 at $1,012,330 based upon correcting for removal of non-taxable installation and labor costs.
CONCLUSIONS OF LAW AND DECISION
Jurisdiction
The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious.The Commission or a designated 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.[10]
Presumptions In Appeals
Board of Equalization Presumption
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[11] 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.[12]
Assessor’s Valuation and Presumption of Correctness
Section 137.122 provides the statutory procedure for the Assessor to determine the assessed value of depreciable tangible personal property (business personal property).
It states:
“2. To establish uniformity in the assessment of depreciable tangible personal property, each assessor shall use the standardized schedule of depreciation in this section to determine the assessed valuation of depreciable tangible personal property for the purpose of estimating the value of such property subject to taxation under this chapter.”
It provides in relevant part:
“3. For purposes of this section, and to estimate the value of depreciable tangible personal property for mass appraisal purposes, each assessor shall value depreciable tangible personal property by applying the class life and recovery period to the original cost of the property according to the following depreciation schedule.”
The legislature has created by enactment of Section 137.122, RSMo, a statutory presumption that the:
“. . . estimate of value determined under this section shall be presumed to be correct for thepurpose of determining the true value in money of the depreciable tangible personal property, but such estimation may be disproved by substantial and persuasive evidence of the true value in money under any method determined by the state tax commission to be correct, including, but not limited to, an appraisal of the tangible personal property specifically utilizing generally accepted appraisal techniques, as contained in a narrative appraisal report in accordance with the Uniform Standards of Professional Appraisal Practice . . .”[13]
Section 137.122, RSMo specifically establishes that the assessor’s estimate of value derived under the application of the statutory depreciation schedule is presumed correct rebuttable by substantial and persuasive evidence which may include an appraisal “utilizing generally accepted appraisal techniques, and contained in a narrative appraisal report in accordance with the Uniform Standards of Professional Appraisal Practice.” (Emphasis added)
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[14]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.[15]
Weaknesses In Personal Property Appraisals
The trier of fact has the duty to evaluate the evidence presented to determine its sufficiency and persuasiveness in establishing market value.Personal property appraisals are often lacking in information needed by the Commission to find the appraisal as substantial and persuasive. The appraisals are often summary reports rather than narrative reports as required by Section 137.122, RSMo.[16] Narrative reports contain the information required to substantiate the findings of the appraiser.[17]
Exhibits A and B are summary appraisal reports.Section 137.122, RSMo requires a narrative appraisal report.Therefore, the exhibits lack the information necessary to substantiate the findings of the appraiser in his sales comparison approach or his cost approach.
The sales comparison approach is only reliable if there is an active market providing sufficient number of sales of comparable property that can be independently verified through reliable sources.The appraiser must identify the elements of comparison and investigate the sales for accurate adjustments.[18] Without supportive documentation, or without investigation into the sales, an appraisal is not substantial and persuasive.
The sales approach presented by the appraiser is not substantial or persuasive. The information provided by the appraiser in his report is lacking as to the exact model or serial number of the property. The appraiser does not provide the condition of the property.It is unknown if the property from the sales were a direct match or if the comparables were properties the appraiser deemed to be similar. The source data for sales was not identified.The appraiser testified that he asked dealers to “think back” to the valuation date and their opinions of values and what they may remember.The dealers are not identified and the information they provided to the appraiser is not included.He further testified that the information he gathers is “conversational,” nothing written.
The appraiser did not provide information regarding the sales such as the number of units involved in the sales, the condition of the property sold, the date of the sales, location of sales, types of sales, environmental compliance, safety compliance, capacity, size, and effective age of the comparable properties.The information regarding the sales is necessary for a sales comparison approach.Each of those items impacts the adjustments necessary and the accurateness of the appraisal.
When he lacked “sufficient sales data,” the appraiser used offers or the cost approach.The appraiser does not explain what might be “sufficient sales data,” when he was lacking sales data, or to what personal property he used the offers or cost approach.He stated that offer prices will vary greatly and often differ from actually sales prices.However, the appraiser does not provide information as to how they differ from actual sales prices, if adjustments were made, or how adjustments, if necessary, were calculated.As to the cost approach, he provides no information as to how he determined the property’s age or life, economic obsolescence, functional obsolescence, or unusual deterioration.
The only information provided by the appraiser is his opinion as to final value.There is no evidentiary basis for the opinion of assessed value. “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.”[19]In this instance the opinion of value must be rejected as it was not shown to be based upon proper elements or a proper foundation. 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.”[20]Absent evidence to support an appraiser’s opinion of value, the Commission is left with nothing.Accordingly, the value established by the Assessor and sustained by the Board must be affirmed.
Respondent’s Exhibits
The evidence did establish that the Assessor’s valuation and resulting assessment of the Complainant’s property for both 2009 and 2010 was in error due to the valuation of non-taxable items, specifically installation and labor costs.Items of freight, installation or sales and use taxes are not part of original costs when the Assessor is doing a mass appraisal of tangible personal property.[21]Therefore, these items are not taxable and cannot be included as an item of tangible personal property.
The testimony of Ms. Edison and the other exhibits simply provided information with regard to the mass appraisal valuation under Section 137.122.Except for the correction on the non-taxable items, the testimony and documents are redundant given the statutory presumption.
The Assessor accepted the personal property declaration and followed the valuation procedures as set forth in Section 137.122, RSMo.The Assessor used the recovery periods declared by the Complainant and the depreciation schedule set forth in the statute.Complainant does not allege that the Assessor failed to fully comply with Section 137.122, RSMo.
ORDER
The assessed valuations for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Louis County for the subject tax days are SET ASIDE.
The assessed value for the subject property for tax year 2009 (Appeal No. 09-10932) is set at $451,030.
The assessed value for the subject property for tax year 2010 (Appeal No. 09-10932) is set at $337,440.
Judicial Review
Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of the mailing date set forth in the Certificate of Service for this Order.
If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts unless disbursed pursuant to Section 139.031.8, RSMo.
If no judicial review is made within thirty days, this decision and order is deemed final and the Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal.
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 August 8, 2012.
STATE TAX COMMISSION OF MISSOURI
_____________________________________
Bruce E. Davis, Chairman
_____________________________________
Randy B. Holman, Commissioner
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 8thday of August, 2012, to:Robert Droney, 100 South Fourth Street, Suite 1000, St. Louis, MO63102, Attorney for Complainant; Paula Lemerman, Associate County Counselor, County Government Center, 41 South Central Avenue, Clayton, MO 63105, Attorney for Respondent; Jake Zimmerman, Assessor, County Government Center, 41 South Central Avenue, Clayton, MO 63105, John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.
___________________________
Barbara Heller
Legal Coordinator
Contact Information for State Tax Commission:
Missouri State Tax Commission
301 W. High Street, Room 840
P.O. Box 146
Jefferson City, MO 65102-0146
573-751-2414
573-751-1341 Fax
[1] Photographs and a listing of the personal property can be found in Exhibit A, pp. 17 – 36 and Exhibit B, pp. 17 – 36
[2] Complaint for Review of Assessment – 09-10932; Personal Property is assessed at 33 1/3 of its appraised (true value in money, fair market value) – Section 137.115.1, RSMo.
[4] Complaint for Review of Assessment – 10-10036;Personal Property is assessed at 33 1/3 of its appraised (true value in money, fair market value) – Section 137.115.1, RSMo.
[7] Two photographs of a 35mm film projector was marked as Exhibit 3 but was never tendered at hearing.
[8] Attached as Exhibit 1 to Exhibit 1 was a copy of a letter to Lewis Aycock, American Multi Cinema, Inc, from Ms. Edison, dated 4/14/10
[11] 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)
[12] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
[16] 12 CSR 30-3.065 (2) states“As used in this rule, an appraisal report for personal property should, at a minimum, conform to Uniform Standards of Professional Appraisal Practice (USPAP) requirements for a summary appraisal.” However, the statute specifically sets forth the requirement of a narrative appraisal.When a statute and a regulation are in conflict, the regulation is invalid.Hansen v. State, Dept. of Social Services, Family Support Div., 226 S.W.3d 137, 143–44 (Mo. banc 2007); Levinson v. State, 104 S.W.3d 409, 412 (Mo. banc 2003); Gasconade County Counseling Services, Inc. v. Missouri Dept. of Health, 314 S.W.3d 368, 377–78 (Mo. App. 2010); Leeper v. Scorpio Supply, IV, LLC, 351 S.W.3d 784 (SD 2011).