STATE TAX COMMISSION OF MISSOURI
| APTUIT, LLC, | Appeal No. 19-30224 | |
| Complainant., | 49-810-05-29-00-0-00-000 | |
| v. | ||
| GAIL MCCANN BEATTY, ASSESSOR, | ||
| JACKSON COUNTY, MISSOURI, | ||
| Respondent. |
DECISION AND ORDER
HOLDING
The decision of the Jackson County Board of Equalization (BOE) independently valuing the subject property in this appeal at the same amount as the valuation made by the Assessor is SET ASIDE. Aptuit, LLC (Complainant) presented substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.
True value in money (TVM) for the subject property for tax years 2019 and 2020 is set at $7,700,400 commercial assessed value of $2,464,128.
Complainant appeared by attorney Apollo Carey.
Gail McCann Beatty, the assessor of Jackson County, Missouri, (Respondent) appeared by attorney Tamika Logan.
Case heard and decided by Senior Hearing Officer John Treu.
ISSUE
Complainant appeals, on the ground of overvaluation and discrimination, the decision of the BOE, which sustained the valuation of the subject property. Complainant did not offer any evidence of discrimination at the evidentiary hearing. The STC takes this appeal to determine the TVM for the subject property on January 1, 2019. 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.[1]
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
- Authority. Authority over this appeal is proper. Complainant timely appealed to the STC from the decision of the BOE.
- Evidentiary Hearing. The Evidentiary Hearing was held on September 4, 2020, via Webex.
- Identification of Subject Property. The subject property is identified by map parcel number or locator number 49-810-05-29-00-0-00-000. It is further identified as 10245 Hickman Mills Drive, Kansas City, Jackson County, Missouri. (Ex. 1)
- Description of Subject Property. The subject property consists of a 45.68 acre tract of land improved by an owner occupied industrial, research, and development complex with 426,615 gross building square feet. The improvement consist of a pharmaceutical research and development facility which manufactures, packages, and warehouses pharmaceuticals. The facility consist of 7 buildings. The weighted age of the buildings is 40 years, as they were built from 1965 through 2017. (Ex. 1)
- Assessment. The Assessor valued the property at $11,624,652, an assessed commercial value of $3,719,890. The BOE sustained the assessor’s valuation of the subject property (Complaint for Review of Assessment)
- Complainant’s Evidence. Complainant offered into evidence Exhibit A and the written direct testimony of appraiser Robert Becker (Becker). Exhibit A consisted of the appraisal of Becker. Both the written direct testimony of Becker and Exhibit A were received into the record to be given such weight as the hearing officer deemed appropriate. Becker described his appraisal as a summary appraisal. He developed a land value approach, a cost approach and a sales comparison approach. Becker did not develop an income approach as the subject property is owner occupied. Becker assigned primary emphasis to the sales comparison approach with the cost approach supporting his opinion of the subject property’s value. See Complainant Presents Evidence to Prove Value for further specific facts, as if fully incorporated herein verbatim.
- No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2019, to January 1, 2020, therefore the assessed value for 2019 remains the assessed value for 2020. Section 137.115.1.
- Respondent’s Evidence. Respondent offered no evidence.
- Presumption of Correct Assessment Rebutted – Value Established. The evidence presented by Complainant was substantial and persuasive to both rebut the presumption of correct assessment by the BOE and to allow the Hearing Officer to establish the TVM of the subject property to be $7,853,982, assessed commercial value of $2,513,275.
CONCLUSIONS OF LAW AND DECISION
STC Authority Over Ad Valorem Taxation Appeals
The STC has authority to hear this appeal and to correct any assessment that 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.
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. 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
There is a presumption of validity, good faith and correctness of assessment by the BOE. 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 – Complainant. 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. The presumption is not evidence of value. The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive 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 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).
Complainant’s Burden of Proof
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, 2019. Hermel, supra. 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.” 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 that does not reflect the fair market value (true value in money) of the property under appeal is an unlawful, unfair and improper assessment.
BOE Presumption
The Assessor’s original value in this appeal was determined by the BOE to be correct. Accordingly, the taxpayer must rebut that presumption in order to prevail. The taxpayer must establish by substantial and persuasive evidence that the value concluded by the BOE is in error and what the correct value should be. The burden, of course, is discharged by simply establishing the fair market value of the property as of the valuation date, since once fair market value is established it, a fortiori, proves that the BOE’s value was in error.
Methods of Valuation
Proper methods of valuation and assessment of property are delegated to the STC. 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, 615 (Mo. App. W.D. 2000); Hermel, Inc., 564 S.W.2d at 897; 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. 1974).
“For purposes of levying property taxes, the value of real property is typically determined using one or more of three generally accepted approaches.” Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005), citing St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977). “Each valuation approach is applied with reference to a specific use of the property – its highest and best use.” Snider, 156 S.W.3d at 346-47, citing Aspenhof Corp., 789 S.W.2d at 869. “The method depends on several variables inherent in the highest and best use of the property in question.” Snider, 156 S.W.3d at 347. “Each method uses its own unique factors to calculate the property’s true value in money.” Id. “The ‘comparable sales approach’ uses prices paid for similar properties in arms-length transaction and adjusts those prices to account for difference between the properties.” Id. at 348. “Comparable sales consist of evidence of sales reasonable related in time and distance and involve land comparable in character.” Id. (quotation omitted). “This approach is most appropriate when there is an active market for the type of property at issue such that sufficient data [is] available to make a comparative analysis.” Id.
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 interest;
- 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.
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. 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.
Weight to be Given Evidence
The Hearing Officer is not bound by any single formula, rule or method in determining true value in money 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. Sercurity Bohomme, 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)
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) (emphasis added). The STC 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, 156 S.W. 3d, at 348 (Mo. 2005).
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; State Board of Registration for the Healing Arts v. McDonagh, 123 S.W.3d 146 (Mo. banc. 2004); Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. E.D. 1992).
Complainant Presents Evidence to Prove Value
Complainant presented substantial and persuasive evidence consisting of the appraisal of Becker opining a TVM of $5,100,000 for the subject property as of January 1, 2019. Becker gave primary emphasis to the sales comparison approach. In Becker’s appraisal he utilized five comparable properties. The five comparable properties sold throughout the United States. Comparable #5, the property most similar to the subject property, sold in Kansas City, in fact sitting next door to the subject property. Both the subject property and Comparable #5 were developed in the same complex. Comparable #5 was previously owned by Sanofi-Aventis, which closed the facility in 2009. The property was on and off the market from 2009 until 2016. In 2016, Cerner purchased Comparable #5 for $12,500,000. Becker testified that the broker he spoke with stated the seller was lucky that Cerner was interested in the property because the property otherwise would still be on the market or would have had to have been demolished.
Regarding Comparable #5, Becker made a 40% sale condition negative adjustment to the purchase price. Becker testified that Cerner, the buyer, had a motivation to stop a competitor from expanding. Comparable #5 had been on and off the market for approximately 7 years. The broker said the seller was lucky Cerner was interested in Comparable #5 and that the property would otherwise either still be on the market or demolished. Becker offered no market based evidence to support the 40% sale condition adjustment. No evidence was offered that either Complainant or any other pharmaceutical company was in the market to purchase Comparable #5. The Hearing Officer did not find Becker’s 40% adjustment to persuasive.
The Hearing Officer finds sale Comparable 5 to be the most persuasive indicator of the TVM of the subject property. Like the subject property, it is located in Kansas City, Missouri, in fact lying next door to the subject property. Although the Hearing Officer was not persuaded by the 40% sales condition adjustment made by Becker, the appraiser’s overall methodology was generally consistent with accepted guidelines for the appraisal of property of the subject’s type. Reversing the 40% sale condition adjustment allowed the Hearing Officer to establish the TVM of the subject property as of January 1, 2019, to be $7,853,982 for the subject property. The following table summarizes Becker’s sales comparison approach conclusions and the Hearing Officer’s recalculation of such:
| Comparable | Adjust. Sales Price/Sq. Ft. | Adjust. Sales Price/Sq. Ft. w/o Sales Conditions. Adjust. to #5 | Location |
| #1 | $19.87 | $19.87 | Boulder, CO |
| #2 | $11.90 | $11.90 | Westborough, MA |
| #3 | $17.28 | $17.28 | Minneapolis, MN |
| #4 | $12.16 | $12.16 | Columbus, OH |
| #5 | $11.05 | $18.05 | Kansas City, MO |
| Adjust. Sales Price/Sq. Ft. | Adjust. Sales Price/Sq. Ft. w/o Sales Conditions. Adjust. to #5 | ||
| Appraiser | $12.00/sq. ft. | ||
| Low | $11.05 | $11.90 | |
| Mean | $14.45 | $15.92 | |
| Median | $12.16 | $17.28 | |
| High | $19.87 | $19.87 |
The appraiser’s adjusted sales prices of the comparable properties ranged from $11.05/square foot to $19.87/square foot. Upon removing the appraiser’s unpersuasive 40% sales condition adjustment to comparable #5, the adjusted sales prices of the comparable properties ranges from $11.90/square foot to $19.87/square foot. Comparable #5, the comparable most similar to the subject property, absent the 40% negative adjustment for sales conditions, sold for $18.05/square foot. Given the totality of the evidence, particularly the fact that the subject property and Comparable #5 were originally developed as parts of the same complex and were situated next door to each other, it is reasonable to conclude that the subject property’s TVM as of January 1, 2019, was similar to the recent sale price of Comparable #5. The sale price per square foot of Comparable #5, $18.05, falls within the range of the comparable properties presented in the appraisal report, further supporting the conclusion that the subject property’s TVM as of January 1, 2019 was $18.05/square foot or $7,700,400.
ORDER
The assessed valuation for the subject property as determined by the Assessor and sustained by the BOE for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2019 and 2020 is set at $2,464,128 (TVM of $7,700,400).
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.
Disputed Taxes
The Collector of Jackson 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.
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, 2020.
STATE TAX COMMISSION OF MISSOURI
John J. Treu
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been electronically mailed and/or sent by U.S. Mail on October 30, 2020, to:
Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.
Elaina McKee
Legal Coordinator
[1] All statutory citations are to RSMo. 2000, as amended.