Armstrong Maison De Ville, LLC, et al. v. Muehlheausler (SLCO)

 

ARMSTRONG MAISON DEVILLE )

LLC, et al., )

)

Complainants, )

)

v. ) Appeals Number 01-11138 through 01-11158

)

PHILIP A. MUEHLHEAUSLER, )

ACTING ASSESSOR, )

ST. LOUIS COUNTY, MISSOURI, )

)

Respondent. )

DECISION AND ORDER

HOLDING

Decisions of the St. Louis County Board of Equalization sustaining the assessments made by Respondent, SET ASIDE, Hearing Officer finds assessed values for the subject properties, all classified as residential property, for tax years 2001 and 2002 to be as follows:

 

Complainants represented by Counsel, James P. Gamble, St. Louis, Missouri.

Respondent represented by Counsel, Edward W. Corrigan, Associate County Counselor, and Robert J. Droney, Assistant County Counselor.

Case decided by Chief Hearing Officer, W.B. Tichenor.

ISSUE

The Commission takes this appeal to determine whether (i) Section 137.115.10, RSMo requires that increases in valuations of residential properties be limited to seventeen percent if the Assessor fails to conduct a physical inspection of the property; and (ii) Section 138.135.3, RSMo requires that the value asserted by a taxpayer is to be the value for a given property when the Board of Equalization denies the taxpayer’s request to be heard by a majority of the Board.

SUMMARY

Complainants appeal the decisions of the St. Louis County Board of Equalization, which sustained Respondent’s assessed values. Complainants assert that the values proposed by Complainants on each of the individual properties in hearings before a hearing officer for the Board of Equalization should be the values set for the properties under appeal on two grounds: (1) that the assessor increased values more than seventeen percent without a physical inspection of the property and therefore, the increase in value from 2000 to 2001 must be limited to seventeen percent and (2) that Complainants, through their agent, requested a hearing on the issue of valuation, specifically the matter of increases of more than seventeen percent, before the full Board and was denied such a hearing and that accordingly the values advocated by Complainants’ agent before the hearing officer for the Board must prevail as the values for the individual properties.

EVIDENCE

The parties waived evidentiary hearing, stipulated to the relevant facts and to the following exhibits:

Exhibit A    Letter from Sandy Rothschild to St. Louis Count Board of Equalization dated July 26, 2001, with attached list of appeals.

Exhibits B1-B21 St. Louis County Board of Equalization Real Property Appeal Forms for the subject properties.

Exhibit C    Letter from Sandy Rothschild to Dennis C. Affolter dated July 27, 2001.

Exhibit D    Letter from Dennis C. Affolter to Sandy Rothschild and James P. Gamble dated August 8, 2001.

Exhibits E1-E21 Decision letters from the St. Louis County Board of Equalization to Sandy Rothschild dated August 10, 2001.

Counsel for the parties provided briefs on the issue of law involved in these appeals. Counsel for Complainants filed Complainants’ Brief on October 25, 2002. Respondent’s Brief was filed on November 25, 2002. Complainants’ Reply Brief was filed on December 20, 2002. The Hearing Officer, having considered all of the competent evidence upon the whole record and the Briefs filed by Complainants and Respondent, enters the following Decision and Order.

FINDINGS OF FACT

1. Jurisdiction over this appeal is proper. Complainants timely appealed to the State Tax Commission from the decisions of the St. Louis County Board of Equalization.

2. The subject property in each appeal consists of land improved with an apartment community. Respondent’s valuation of each subject property was made by a computer-assisted method. Paragraphs 1 and 2, Stipulation of Facts.

3. Classification of the subject properties is not at issue. The subject properties are classified as residential property. Paragraph 2, Stipulation of Facts.

4. The last assessed valuation of each subject property, before the assessed valuations for 2001 and 2002 at issue in these appeals, was the assessed valuation for 2000. Paragraph 6, Stipulation of Facts.

5. The increase in assessed valuation of each subject property from 2000 to 2001 exceeds seventeen percent. Paragraph 26, Stipulation of Facts.

6. None of the increase of the assessed valuation of any of the subject properties from the last assessed valuation for 2000 to the assessed valuation for 2001 at issue in these appeals was due to new construction or improvements. Paragraph 27, Stipulation of Facts.

7. Respondent returned the assessor’s book for 2001 to the St. Louis County Council on or about May 15, 2001. Paragraph 7, Stipulation of Facts.

8. When Respondent returned the assessor’s book for 2001 to the St. Louis County Council on or about May 15, 2001, Respondent had not conducted a physical inspection of any of the subject properties with respect to the assessed valuation of that subject property for 2001. Paragraph 9, Stipulation of Facts.

9. Respondent conducted physical inspections of one of the subject properties on July 16, 2001, three of the subject properties on July 5, 2001, four of the subject properties on July 9, 2001, and the other subject properties on July 6, 2001. Paragraphs 28 through 48, Stipulation of Facts.

10. When Complainants’ agent, Sandy Rothschild (Rothschild), arrived at the hearing location for the St. Louis County Board of Equalization (the BOE) for the hearings on July 26, 2001, he delivered a letter for the BOE with a list of appeals attached (Exhibit A) to a clerk at the check-in position. Paragraph 12, Stipulation of Facts.

11. The full BOE was present at the hearing location on July 26, 2001. Paragraph 14, Stipulation of Facts.

12. Dennis C. Affolter (Affolter) was acting as counsel for the BOE and Respondent on July 26, 2001. Prior to the commencement of hearings, Affolter read Exhibit A and stated to Rothschild that he was instructing the BOE not to meet with Rothschild. Paragraphs 15 and 16, Stipulation of Facts.

13. Later on July 26, 2001, Rothschild reiterated to Affolter his request to meet with a majority of the BOE about the appeals of the subject properties. Affolter denied this request. Paragraph 17, Stipulation of Facts.

14. Later on July 26, 2001, at the hearing location, Rothschild met Anthony Ciarleglio (Ciarleglio), a member of the BOE, and told Ciarleglio that he wanted to meet with a majority of the BOE about the appeals of the subject properties. Ciarleglio stated that Affolter had instructed the BOE not to meet with Rothschild about the appeals of the subject properties. Paragraph 18, Stipulation of Facts.

15. On August 10, 2001, the BOE issued its decisions affirming Respondent’s assessed valuations of the subject properties for 2001. Exhibits E1 through E21; paragraph 21, Stipulation of Facts.

16. There are no agendas or minutes of any meeting of the BOE, from August 10, 2001 through the thirtieth day after those decisions were issued on August 10, 2001, reflecting any action of the BOE relating to those decisions or the subject properties. Paragraph 23, Stipulation of Facts.

17. There are no records of the BOE (other than agendas or minutes of any meeting), from August 10, 2001 through the thirtieth day after those decisions were issued on August 10, 2001, reflecting any action of the BOE relating to those decisions or the subject properties. Paragraph 24, Stipulation of Facts.

18. From July 26, 2001, when Rothschild’s requested, both orally and in writing, to meet with a majority of the BOE relating to the subject properties through August 10, 2001, Rothschild was not given a meeting before a majority of the BOE concerning the subject properties. Paragraph 25, Stipulation of Facts.

19. Complainant rebutted any presumption that the Board of Equalization properly determined the assessed valuations of the subject properties.

CONCLUSIONS OF LAW

Jurisdiction

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

Construction of Tax Statutes

Ambiguities in taxing statutes are resolved against the taxing authority and in favor of the taxpayer. Morton v. Brenner, 842 S.W.2d 538, 542 (Mo. banc 1992).

Board of Equalization Presumption

There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. Hermel, Inc. v. State Tax Com’n, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. State Tax Com’n, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. State Tax Com’n, 308 S.W.2d 748, 759 (Mo. 1958). There is no presumption that the assessor’s valuation is correct. Section 138.431.3, RSMo.

Complainant’s Burden of Proof

In order to prevail, Complainants must present substantial and persuasive evidence to support their position of value. In this instance Complainants’ position relating to value is based on the fact that Complainants requested to be heard by a majority of the St. Louis County Board of Equalization and a majority of the Board was in attendance, but denied Complainants the opportunity to be heard by a majority of the Board. Hermel, Inc. v. State Tax Com’n, 564 S.W.2d at 897. Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See, Cupples-Hesse Corporation v. State Tax Com’n, 329 S.W.2d 696, 702 (Mo. 1959). 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).

Classification

For purposes of ad valorem taxation, real property is classified as residential if the property is improved by a structure which is used or intended to be used for residential living by human occupants and is not used primarily for transient housing. The subject properties are classified as residential property. Section 137.016.1(1), RSMo.

Respondent’s Duty to Inspect

If Respondent increases the assessed valuation of any parcel of residential property by more than seventeen percent since the last assessment, excluding new construction or improvements, then Respondent shall conduct a physical inspection of the property. Section 137.115.10, RSMo, 2000. Section 137.115.10 was amended in 2002; however, the statute in effect at the time the present appeals went before the Board was that contained in the 2000 statutes.

Duty of Board of Equalization Majority

In St. Louis County, if a property owner requests to be heard by a majority of the Board of Equalization, and a majority of the Board of Equalization is not in attendance for any reason, the position of the property owner shall prevail without further action. Section 138.135.3, RSMo.

Standard for Valuation

Section 137.115, RSMo 1994, 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). It is the fair market value of the subject property on the valuation date. Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978).

DECISION

No Evidence of True Value In Money

No evidence as to the true value in money of the subject properties as of January 1, 2001, was presented in the present appeals, since the basis for Complainants’ claims of valuation are based on issues of law and not on evidence of what the fair market value of each property may have been on January 1, 2001. If as a matter of law, Complainants’ position, on either issue raised, ultimately prevails in a final judicial decision, evidence as to fair market value would be superfluous, as well as, irrelevant. In the event that it is determined as a matter of law that Complainants’ claims are not well found, it will then be necessary for each case to be tried as to the issue of the true value in money of the each of the properties as of January 1, 2001. Jurisdiction over the appeals is, in this event, retained by the Commission.

Complainants’ Grounds For Decision As A Matter Of Law

Complainants put forth two arguments, which according to their position, require as a matter of law that the values presented by Complainants’ agent before the Board be set as the true values in money for each of the appealed properties. The first argument is that since the values on each property were increased by more than seventeen percent from the previous assessment cycle and no physical inspection was performed by the Assessor, that the values can increase no more than seventeen percent. The second argument is that since Complainants’ agent requested a hearing before the full Board and this request was denied that Complainants’ position on value must prevail. The Hearing Officer finds Complainants’ first argument not persuasive, but finds, as a matter of law, Complainants prevail on their second argument.

More Than Seventeen Percent Increase

In this group of cases, Respondent increased the assessed valuations by more than seventeen percent since the last assessment without having conducted physical inspections of the subject properties. Complainants contend that because all of the subject properties are classified as residential property, these assessments violated Section 137.115.10, RSMo. Accordingly, Complainants assert that the valuations for each of the properties must be set at seventeen percent above the value determined by the Assessor for the 1999-2000 assessment cycle.

Section 137.115.10, RSMo provides:

“If the assessor increases the assessed valuation of any parcel of subclass (1) real property by more than seventeen percent since the last assessment, excluding increases due to new construction or improvements, then the assessor shall conduct a physical inspection of such property.”

There is no dispute that the subject properties are all subclass (1) real property, i.e. residential property. There is no dispute that the assessed values placed on the properties by the Assessor for tax year 2001 were more than seventeen percent than the assessed value which were on the properties for the 1999-2000 assessment cycle. Furthermore, there is no dispute that prior to setting the 2001 assessed values the Assessor had not conducted a physical inspection of the subject properties. It is therefore concluded that the Assessor did not comply with Section 137.115.10, this non-compliance was a violation of the statute.

Respondent’s subsequent inspections of the subject properties do not cure the violation. Respondent’s jurisdiction ended when he returned the assessment book to the St. Louis County Council on May 15, 2001. Wymore v. Markway, 89 S.W.2d 9, 13 (Mo. 1935); see generally, Chapter 137, RSMo. The processes of tax assessment and levy remaining after the return of the assessment book must be completed on schedule in order for the St. Louis County Council to levy taxes by August 10, as required by Section 137.390, RSMo. When an inspection is required, it must be performed before the assessment book is returned.

Section 137.115.10 is silent as to the remedy for a violation of the statute. Nothing in subsection 10 provides authority to arbitrarily set the assessed value of a non-inspected property at only seventeen percent of its previous assessed value. Setting the assessed value for a property at seventeen percent of its previously assessed value may or may not arrive at the true value in money for the property (a legitimate valuation). The assessed value being nineteen percent of the true value in money (fair market value). However, without evidence that is relevant to actual valuation any such seventeen percent increase is nothing more than a valuation by speculation and conjecture.

In the absence of the statute specifically stating that the remedy for the failure of the Assessor to physically inspect properties, whose values have been increased by more than seventeen, is to set values at only seventeen percent above the previous value, the Hearing Officer does not possess the authority to apply the remedy sought by Complainants under this point. For the Hearing Officer to impose the seventeen percent cap would be the same as the Hearing Officer engrafting into the statute a specific provision to the effect, “in the event that the Assessor shall fail to conduct a physical inspection as required by this subsection, the assessed value of such property shall be set at seventeen percent more than the assessed value under the last preceding assessment.” Clearly, any such amending of the statute cannot come by a quasi-judicial action of the Hearing Officer, but must fall within the purview of the legislature.

Complainants’ point asserting that the seventeen percent cap on value must be imposed in these appeals pursuant to Section 137.115.10 is not well taken. As a matter of law, the remedy sought is not provided for by statute.

Denial of Hearing Before Majority of the Board

Under Complainants’ second point there is no dispute as to the essential facts. On appeal to the St. Louis County Board of Equalization, the property owners’ representative requested to meet with a majority of the Board of Equalization to assert that the increases in assessment were limited to seventeen percent because of the violation of Section 137.115.10, RSMo. The Board of Equalization refused to meet with him. This refusal was a violation of Section 138.135.3, RSMo.

Unlike, Section 137.115.10, Section 138.135.3 provides a specific remedy for a violation of this law. The remedy is clear and unequivocal. The refusal of a majority of the Board to meet when requested by a taxpayer requires that “… the position of the property owner shall prevail without further action.” Emphasis added.

When Complainants’ representative requested to meet with a majority of the Board of Equalization concerning Respondent’s failure to conduct physical inspections of the subject properties, the Board of Equalization refused to meet with him, although all its members were present. Therefore, Complainants’ position, as a matter of law, prevails without further action. Section 138.135.3, RSMo. The assessed values asserted either through the BOE Appeal form, or in the case of Appeals No. 01-11140, 01-11144, 01-11145, 01-11148 and 01-11158 by Complainants’ agent must be set as the assessed values for tax years 2001 and 2002.

The primary rule of statutory construction is to ascertain and give effect to the intent of the legislature and to give effect to each provision of the statute. Brown Group, Inc. v. Administrative Hearing Com’n, 649 S.W.2d 874, 881-82 (Mo. banc 1983). The legislature is presumed to have intended a logical, rather than an unreasonable or absurd, result, and it is presumed not to have enacted meaningless provisions. Boyd v. Bd. of Registration for Healing Arts, 916 S.W.2d 311, 315 (Mo. App. 1996). And, any ambiguities must be resolved against Respondent and in favor of Complainants. Morton v. Brenner, 842 S.W.2d at 542.

In order to give effect to Section 138.135.3, RSMo, to be “in attendance,” a member must be in attendance at a duly constituted meeting of the Board of Equalization. It would be an absurd result to hold that mere physical presence at the hearing location, while refusing to participate in a hearing, is sufficient to be in attendance. Also, refusal to participate is included in the words “for any reason.” Refusing to participate in a hearing is equivalent to physical absence. Therefore, where the Board of Equalization refuses to hold a hearing in the face of a taxpayer’s request to be heard by a majority, no one is “in attendance,” and the position of the property owner must prevail without further action.

The violation of Section 138.135.3, RSMo requires that the assessed values asserted by the taxpayers, either by way of their BOE Appeals or by way of the values asserted by their representative, be set as the assessed values for tax years 2001 and 2002. In reaching this conclusion, the Hearing Officer is quite aware had the claim of the taxpayers been that the same values as set for 1999-2000 were the values for 2001, that position, as a matter of law under the statute, would have to prevail. If Complainants had asserted an assessed value which represented only five or ten percent of the fair market value of the subject properties, that position, as a matter of law under Section 138.135.3, would have to prevail. In other words, Section 138.135.3 is a legislative exception to, or a statutory conflict with, the provisions of Section 137.115.1 which requires an assessor to value property at its true value in money and Section 4(b) of Article X of the Missouri Constitution which requires real property to be “assessed at its value or such percentage of value as may be fixed by law.”

However, such an exception or conflict can only be properly addressed by a court decision, not by this Hearing Officer’s decision and order. Accordingly, the Hearing Officer will give effect to the statute as written. Complainants’ point relative to the remedy which must be imposed for the failure of the Board to hear the taxpayers on their claim for valuation is well taken. The Board acted in violation of Section 138.135.3 and the remedy is to set the assessed values as proposed by the taxpayers.

ORDER

The assessed valuations of the subject properties as determined by Respondent and sustained by the Board of Equalization for St. Louis County for the subject tax day are SET ASIDE.

The assessed valuations of the subject residential properties for tax years 2001 and 2002 are as follows:

A party may file with the Commission an application for review of this decision within thirty (30) days of the mailing of such decision. Gregory F. X. Daly, v. Warner-Jenkinson Mfg. Co., (Mo. App. E.D. 81135, 12/17/02). 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.

If an application for review of this decision is made to the Commission, any protested taxes presently in an escrow account in accordance with these appeals 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 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 these appeals. 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 January 3, 2003.

STATE TAX COMMISSION OF MISSOURI

W.B. Tichenor

Chief Hearing Officer