State Tax Commission of Missouri

 

BILL’S TRUCK REPAIR, INC, et al	)
	)
Complainant,	)		Appeal No. 15-11170[1]
	)
v.	)
	)
JAKE ZIMMERMAN, ASSESSOR	)
ST. LOUIS COUNTY, MISSOURI,	)
Respondent.	)

 

DECISION AND ORDER

 

HOLDING

 

Complainants failed to present substantial and persuasive evidence that there was an intentional plan by the assessing officials to assess the property under appeal at a ratio greater than 32% of true value in money or at a ratio grossly excessive to the average 2015 commercial assessment ratio for St. Louis County.

Complainants appeared by counsel Patrick W. Keefe.

Jake Zimmerman, Assessor of St. Louis County, Missouri (Respondent) appeared by counsel Jeremy Shook.

Case heard by Senior Hearing Officer John Treu and Chief Counsel Maureen Monaghan and decided by Monaghan (Hearing Officer).

ISSUE

The Commission takes this appeal to determine whether there was an intentional plan by the assessing officials to assess the property under appeal at a ratio greater than 32% of true value in money, or at a ratio grossly excessive to the average 2015 commercial assessment ratio for St. Louis County.

FINDINGS OF FACT

1. 1. Jurisdiction. Jurisdiction over this appeal is proper.  Complainant timely appealed to the STC.
2. Evidentiary Hearing. The issue of commercial ratio was presented at an evidentiary hearing on March 13-14, 2017, at 7733 Forsyth, Clayton, Missouri.
3. Identification of Subject Property. A complete list of properties identified by parcel/locator number is attached as Decision Exhibit A.
4. Assessment. Respondent determined a TVM for the subject properties and classified them as commercial.  Respondent assessed them at the statutory commercial rate of 32% of TVM.
5. Board of Equalization. On September 18, 2015, the BOE notified the property owners that it “reviewed all evidence submitted regarding [the property] and … determined the valuation of [the subject] property for 2015”.  The property was classified as commercial.  The assessed value was set at an assessment ratio consistent with the statutory commercial assessed ratio of 32%.
6. Discrimination  Complainant failed to present substantial and persuasive evidence that there was an intentional plan by the assessing officials to assess property at a ratio greater than 32% of true value in money or at a ratio grossly excessive to the average 2015 commercial assessment ratio for St. Louis County.

  

EVIDENCE PRESENTED

The issue of commercial ratio was presented as to all commercial ratio appeals at an evidentiary hearing on March 13-14, 2017, at 7733 Forsyth, Clayton, Missouri.

Level of Assessment – Ratio Studies

Each party presented an expert in the field of appraisal, mass appraisal, and assessment ratio studies (Exhibits A and 1) as well as the experts’ study on the commercial assessments in St. Louis County for 2015 (ratio study) (Exhibits C and 2).  Ratio studies provide information regarding the level and equity of assessments.  Studies use a statistically significant number of properties and compare an assessor’s value for those properties to a market value proxy for those properties.  The market value proxy is either the sale prices of properties in the jurisdiction within a relevant time period or an independent appraisal of randomly selected properties.   In this appeal, the ratio studies utilized recent sales.  In the studies, the experts use the following terms:

• Appraisal Level: Overall ratio of assessor’s values to market values. Level measurements provide information about the degree to which goals or legal requirements are met. Estimates of appraisal level are based on measures of central tendency.
• Assessed Value: Legally authorized fraction of market value.
• Assessment: Determination of true value, classification and location within taxing districts for ad valorem taxation.
• Coefficient of Dispersion (COD): It measures the average percentage of deviation of the ratios from the median ratio. A lower COD implies a lesser amount of variability or more equity in assessments.
• Computer-Assisted Mass Appraisal (CAMA): A process that uses a system of integrated components and software tools necessary to support the appraisal of a universe of properties through the use of mathematical models that represent the relationship between property values and supply/demand factors.
• Equalization: The process by which an appropriate governmental body attempts to ensure that property under its jurisdiction is assessed at the same assessment ratio or at the ratio or ratios required by law.
• Mean: The arithmetic average.  It is created by adding together all individual samples and dividing by the number of samples.
• Median: The middle observation when the values of the data are arrayed. It divides the data into two parts.
• Price-Related Bias (PRB): It is used to measure assessment equity (regressivity/progressivity). It measures the relationship between assessment-sales ratios and value in percentage terms. For example, a PRB of .05 indicates that, on average, assessment ratios increase by 5% whenever values double.
• Price Related Differential (PRD): Itis calculated to measure assessment regressivity or progressivity.  It is found by dividing the mean by the weighted mean.  The comparison tests for equity between low value properties and high value properties.  A PRD above 1.00 suggests that the assessment values placed on high-value parcels are relatively lower than the assessment values placed on low-value parcels.
• Progressivity: Taxation is imposed in such a manner that the tax rate decreases as the amount subject to taxation decreases.
• Ratio Study: Sales or appraisal based study designed to evaluate appraisal performance to determine if statutory requirements are met. Studies can be used to evaluate the degree of discrimination and to adjust assessed values on appealed properties to the common level.
• Regressivity: Taxation is imposed in such a manner that tax rate decreases as the amount subject to taxation increases.
• True Value in Money: Also referred to as appraised value, market value, or fair market value.
• Weighted mean: It is the sum of the assessed values divided by the sum of the individual indicators of market value.

2015 St. Louis County Commercial Ratio

             The Complainant[2] filed the following Exhibits, which were admitted into evidence:

Exhibit	Description
A	Written Direct Testimony of Robert Denne
B	CV of Robert Denne
C	Assessment Ratio Study
D	Written Direct Testimony of Timothy Schoemehl
E	Qualifications of Timothy Schoemehl
F	CD ROM  St Louis County Assessment Roll
G	CD ROM St Louis County Assessment Roll 2016
H	Excel File – Commercial Sales 2014 – 2015 (on CD)
I	Excel File – Revised Sales List(on CD)
J	Excel File – Stratum Codes(on CD)
K	PDF Locator – Neighborhood Chart(on CD)
L	Real Estate Data Extract
M	Excel File – ComlOnlySalesWork data file (on CD)
N	Excel File – Supplemental List for Tim (on CD)
O	Commercial Sales Review Form
P	Codes
Q	CD ROM Deed Images from Metropolitan Title Data, Inc
R	DVD-ROM Assessor’s Certificates of Value (2014 & 2015)
S	DVD-ROM Assessor’s Sales Research Packages (2014)
T	DVD-ROM Assessor’s Sales Research Packages (2015)
U	Excel File Worksheet Draft 9-7-2016 (on CD)
V	Validated Sales from Tim (on CD)
W	Validated Sales from Tim with trim notes (on CD)
X	IAAO Standard on Ratio Studies 2013 (on CD)
Y	IAAO Standard on Verification and Adjustment of Sales (on CD)
Z	STC Assessor Manual, Chapter 4, Ratio Studies (2016) (on CD)
Rebuttal
AA	Rebuttal Report of Robert C. Denne
BB	Written Direct Testimony of Robert C. Denne
Surrebuttal
CC	Written Direct Testimony of Timothy Schoemehl
DD	Sales Verification Questionnaire – 21 N. Meramec
EE	Sales Verification Questionnaire – 32K130454
FF	Real Estate Information 12M330315
GG	Article dated May 1-7, 2015
HH	Commercial Sales Summary
II	Real Estate Information 16H421088
JJ	Sales Verification Questionnaire
KK	Press Release
LL	Press Release
MM	Deed
NN	Phillips Edison  SEC Report
OO	Written Direct Testimony of Robert C. Denne
PP	Study using pre-BOE valuations
QQ	Study using pre-BOE valuations
RR	CD Rom – 2015-2016 Commercial Assessments
SS	BOE Decision 19Q130163

 

To analyze the assessment of commercial property in St. Louis County for tax year 2015,

Complainants presented the testimony of Robert Denne (Denne), an expert in the field of appraisal, mass appraisal, and assessment ratio studies.  Denne used sales of commercial property in St. Louis County that occurred from July 2014 through June 2015. (Exhibit C p.2)  The study utilized data from the St. Louis County Assessor’s Office regarding sales of commercial properties. (Exhibit C p.2)  The number of sales requiring validation was 1,228. The commercial sales were provided to an appraiser, Timothy Schoemehl (Schoemehl) for validation per IAAO[3] standards. (Exhibit C p.3)

Schoemehl was provided with sales data obtained from the St. Louis County Assessor’s Office.  Schoemehl worked with Denne to ensure the sales validation process complied with IAAO standard for ratio studies. (Exhibit A p.8)   Schoemehl validated sales of commercial properties occurring in St. Louis County between July 1, 2014, and June 30, 2015.   Schoemehl “reviewed information in [his] possession, including the deeds, COV, and SVQ or other notes or information from the disks provided to me.  [He] looked through [the] office files for any internal research [they] may have done, including whether [they] had appraised the property or used the sale as a comparable in an appraisal.  [He] consulted recognized commercial sales databases….[and] used the St. Louis County website.  If [he] still had questions or concerns about the vailidity of a sales, [he] tried to identify a party to the sale…with whom [he] could follow up….” (Exhibit D p.6)  Of the 1,228 sales records, 306 sales were found to be valid, arm’s-length transactions.  (Exhibit A p.16)

Denne computed measures of central tendency for his ratio study – median, weighted median, mean and weighted mean.  The median is the middle number in a set of numbers.  The mean is the average or the sum of the numbers divided by the total count of numbers.  The weighted mean is the weighted average of the ratios when each ratio is weighted by its sale price, i.e., the sum of the assessed values divided by the sum of the TVM proxy (sale price).

Denne reported the following findings for commercial assessments in St. Louis County in 2015 (Exhibit C):

Median		27.4%	97.2
Weighted Median		24.1	97.8
Mean		26.7
Weighted Mean		24.3%
PRD			1.116
COD			.188
PRB			-1.750

 

Denne subsequently amended his report findings due to a “copy-paste error.”  (Exhibit OO p. 2)  He concluded:

that the figures appearing in columns 3 through 11 of row 6 of that Table 3 are essentially meaningless.  For stratified data they should not have been reported, much less should they have been recommended….Complainant’s Exhibit QQ is a recalculation of the original Table 3 incorporating the data correctly trimmed of outliers from the same (post-BOE) dataset as was used for the remainder of the data in the original Table 3.

(Exhibit OO p. 3)  Denne reported the following findings for commercial assessments in St. Louis County in 2015 in his amended table, Table 3 (Exhibit QQ):

Median		29%	.906
Assessment Weighted Median		23.9%
Weighted Mean		26.7%
Stratum Value Weighted Mean		24.3%
PRD			1.116
COD			.188
PRB			-1.750

 

Table 3 of Exhibits C and QQ were calculated using post-BOE valuations.

Complainant also submitted Exhibit PP which “is an alternate to the original Table 3…which shows the effect on [the] calculations of substituting pre-BOE values for post-BOE values. (Exhibit PP)

Median		30.8%	96.25
Assessment Weighted Median		30.9%	96.56
Weighted Mean		27.6%	86.25
Weighted Mean		26%	81.25
PRD			1.131
COD			.260
PRB			-2.197

 

Respondent’s Evidence

The Respondent filed the following Exhibits which were admitted into evidence:

Exhibit	Description
1	Testimony of Patrick O’Connor
2	Study of Patrick O’Connor
3	IAAO Standard on Ratio Studies
4	Spreadsheet – 145 sales used
5	2015 Ratio Study
6	Testimony of Steve Robertson
7	Spread sheet of sales from 1/1/15 to 12/31/15
8	Testimony of Sandy Youtzy
	Rebuttal
9	Testimony of John Gillick
10	CV of John Gillick
11	SLCo sale file of 18K310513
12A	SLCo sale file for 12M330315
12B	SLCo sale file for 12M330315
13	SLCo sale file for 13J330980.
14	SLCo sale file for 18K310997
15	SLCo sale file for 23T531199
16	SLCo sale file for 28P440441
17	SLCo sale file for 26G112010
18	SLCo sale file for 26K640466
19	SLCo sale file for 17N540851
20	SLCo sale file for 27K111697
21	SLCo sale file for 16H421088
22	SLCo sale file for 09N120191
23A	SLCo sale file for 17L441202
23B	SLCo sale file for 17L441202
24A	SLCo sale file for 24M221111
24B	SLCo sale file for 25M543135
25	SLCo sale file for 17N430563
26	Testimony of Patrick O’Connor
	Sur-rebuttal
27	Sur-rebuttal Testimony of Steve Robertson
28	Sur-rebuttal Testimony of Sandy Youtzy
29	St. Louis County Board of Equalization Memorandum of Waiver, dated 8/28/15, as to Keefe

 

            Witness Patrick M. O’Conner (O’Connor) testified on behalf of the county.  O’Conner is a Certified General Real Estate Appraiser. (Exhibit 1 p.1)  He has been involved in mass appraisal since 1973. (Exhibit 1 p. 2)

He prepared a report involving:

1. Sales ratio study as of January 1, 2015;
2. Statistical review of a separate file of sales prices for commercial properties from 2011 through 2015;
3. Application of direct market models to a sample of sold and unsold commercial properties as of the valuation date of January 1, 2015;
4. Performance of a direct market model values-to sales prices ratio study on a sample of sold properties; and
5. Performance of appraisal ratio studies of 2015 appraised-to-direct market model values on a sample of sold and unsold commercial properties. (Exhibit 2 p.1)

 

O’Connor’s ratio study used 145 commercial sales from the last three quarters of 2014 and the first three quarters of 2015.  O’Connor determined the following:

Mean			N/A
Weighted Mean			N/A
	Assessment Ratio	Not Calculated
Median			96.5%
	Assessment Ratio	31%
PRD			105%
COD			16.8%
PRB			-1.2%

 

O’Connor inadvertently used post-BOE TVM rather than Assessor’s value (pre-BOE) in his study on 13 of the 145 properties.  The BOE adopted the sales price as TVM as to those properties.  The result is a 1:1 ratio of sale price to BOE valuation.  The use of the properties had no impact on the findings.

O’Connor found little indication of regressivity.

 

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 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, 138.431.4, RSMo. 

Official and Judicial Notice

Agencies shall take official notice of all matters of which the courts take judicial notice. Section 536.070(6), RSMo.

Courts will take judicial notice of their own records in the same cases.  State ex rel. Horton v. Bourke, 129 S.W.2d 866, 869 (1939); Barth v. Kansas City Elevated Railway Company, 44 S.W. 788, 781 (1898).  In addition, courts may take judicial notice of records in earlier cases when justice requires or when it is necessary for a full understanding of the instant appeal. Burton v. Moulder, 245 S.W.2d 844, 846 (Mo. 1952); Knorp v. Thompson, 175 S.W.2d 889, 894 (1943); Bushman v. Barlow, 15 S.W.2d 329, 332 (Mo. banc 1929) State ex rel St. Louis Public Service Company v. Public Service Commission, 291 S.W.2d 95, 97 (Mo. banc 1956).  Courts may take judicial notice of their own records in prior proceedings involving the same parties and basically the same facts.  In re Murphy, 732 S.W.2d 895, 902 (Mo. banc 1987); State v. Gilmore, 681 S.W.2d 934, 940 (Mo. banc 1984); State v. Keeble, 399 S.W.2d 118, 122 (Mo. 1966).

  Presumption of Correctness of BOE

 There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.  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.   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. Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).

Duty to Investigate

In order to investigate appeals filed with the STC, the STC has the duty to 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 Commission’s decision regarding the assessment or valuation of the property may be based solely upon its inquiry and any evidence presented by the parties, or based solely upon evidence presented by the parties. Section 138.430.2, RSMo.

 

Weight to be Given Evidence

The STCs not bound by any single formula, rule or method in determining true value in money, but 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 Commission 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).

Trier of Fact

The STC as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as they may deem it entitled to when viewed in connection with all other circumstances.  The Commission 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 accept it in part or reject it in part. St. Louis County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).

Opinion Testimony by Experts

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, but the facts or data need not be admissible in evidence. Section 490.065, RSMo; State Board of Registration for the Healing Arts v. McDonagh, 123 S.W.3d 146 (Mo. SC. 2004); Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. E.D. 1992).

Three expert witnesses were presented at hearing as to the average level of assessment of commercial property in St. Louis County in 2015[4].  All experts had experience in appraisal and mass appraisal for ad valorem tax purposes as well as the review of valuation by mass appraisal.

Complainant’s Burden of Proof

The taxpayer is the moving party seeking affirmative relief, therefore, the taxpayer bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious,” by substantial and persuasive evidence. 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).

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 Commission, 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).

Ratio/Discrimination

Complainants allege discrimination as their ground for appeal.  The issue is whether the assessment is in violation of the Fourteenth Amendment of the Constitution of the United States, as it attempts to deprive and deny the Complainant the equal protection of the laws.  “The purpose of the equal protection clause of the Fourteenth Amendment is to secure every person within the state’s jurisdiction against intentional and arbitrary discrimination, whether occasioned by express terms of a statute or by its improper execution through duly constituted agents.”  Sunday Lake Iron Co v Wakefield Tp, 247 U.S. 350, 38 S. Ct 495, 62 L.Ed 1154 (1918)

To obtain a reduction in assessed value based upon discrimination, the complaining taxpayer must (1) prove the true value in money of the subject property as of the taxing date; and (2) show an intentional plan of discrimination by the assessor, which resulted in an assessment at a greater percentage of value than other property within the same class and the same taxing district, or, in the absence of such an intentional plan, show that the level of assessment is “so grossly excessive as to be inconsistent with an honest exercise of judgment.”  Zimmerman v. Mid–America Financial Corp., 481 S.W.3d 564, 571 (Mo. App. E.D. 2015), quoting Savage v. State Tax Comm’n of Missouri, 722 S.W.2d 72, 78 (Mo. banc 1986).

Given the two-part test for proving a claim of discrimination in the context of ad valorem taxation as stated by Missouri courts, in the instant appeal, Complainants were first required to prove the TVM of the subject property.  Complainants presented as evidence of TVM the Decision and determination of value by the BOE.   The BOE “reviewed all the evidence submitted…and…determined the valuation of [the subject] property for 2015” was that of the Respondent’s TVM. (BOE Decision) The assessed values as set by the Respondent were set at a ratio consistent with the statutory commercial assessed ratio of 32%.  In other words, the actual level of assessment of the subject properties in these appeals was 32%.

The second part of the test requires Complainants to show an intentional plan of discrimination by the assessor, which resulted in an assessment at a greater percentage of value than other property within the same class and the same taxing district, or, in the absence of such an intentional plan, show that the level of assessment is “so grossly excessive as to be inconsistent with an honest exercise of judgment.  There is no evidence that there was an intentional plan of discrimination by the assessing officials, so we must determine if the Complainant presented substantial and persuasive evidence to show that the level of their assessment is so grossly excessive as to be inconsistent with an honest exercise of judgment.

Missouri courts have consistently held that the proper method of determining discrimination is to compare the actual level of assessment of the subject property as determined by the assessor to the common level of assessment for the subject property’s subclass.  Mid-America Financial Corp., 481 S.W.3d at 574, citing Savage, 722 S.W.2d at 72.

“By requiring that the level of an assessment be so grossly excessive as to be inconsistent with an honest exercise of judgment in cases in which intentional discrimination is not shown, the courts and the STC refrain from correcting assessments which reflect no more than de minimus errors of judgment on the part of assessors.”  Mid-America Financial Corp., 481 S.W.3d at 571 (internal quotation omitted).  “This standard recognizes that while practical uniformity is the constitutional goal, absolute uniformity is an unattainable ideal.”  Id. (internal quotation omitted).

In deciding whether the assessment of the subject property is “grossly excessive” or nothing more than a “de minimus error of judgment,” the STC must determine the common level of assessment for the class of property at issue within the taxing district.   In Savage, 722 S.W.2d at 79, the Missouri Supreme Court reasoned:

The “common level of assessment” has been defined as a single ratio of true value used in assessing each property in a taxing district.  [citation omitted]  The “average level of assessment” means the “arithmetical mean of the varying percentages of true value applied by . . . the assessor in assessing properties within a taxing district.”  [citation omitted]

A taxpayer has the right to have his “assessment reduced to the percentage of that value at which others are taxed[.]” [citation omitted]

 

The Missouri Supreme Court has held that the proper method of analyzing discrimination compares the common level of assessment for similarly-situated properties to the actual level of assessment imposed on the subject property.  Mid-America Financial Corp., 481 S.W.3d at 571; Savage, 722 S.W.2d at 74.  A necessary component of this comparison is the TVM of both the subject property and the similarly-situated properties, i.e., properties within the same class as the subject property.  See Id.; see also Savage, 722 S.W.2d at 74.  Once the TVM of the subject property and the similarly-situated properties has been determined, the STC can calculate at what percentage or ratio of TVM the subject property and the similarly-situated properties, respectively, have been assessed.  Mid-America Financial Corp., 481 S.W.3d at 571.  This determination requires a comparison not between the common level of assessment and the statutory assessment ratio, but between the common level of assessment and the actual level of assessment for the subject property.  Id. at 574.   Neither Missouri courts nor the STC has established a “bright-line” test to identify what constitutes a grossly excessive assessment as opposed to a mere de minimus error in judgment.  Id. at 575.  The assessment in each given case must be analyzed against the assessment under the median ratio to address the grossly excessive factor.  Id.  The STC has found a 5% disparity between the common level of assessment and the actual level assessment to be de minimus.  Town and Country Racquet Club v. Morton, 1989 WL 41005 (Missouri State Tax Commission) (affirmed on appeal in Town & Country Racquet Club v. State Tax Commission of Missouri, 811 S.W.2d 403 (Mo. App. E.D. 1991).

  

Appropriate Measure

It is established under Missouri law that when a taxpayer’s property is subject to an assessment proportionately higher than other property in the same class, the assessment should be reduced. See, e.g., Koplar v. State Tax Commission, 321 S.W.2d 686 (Mo. 1959). The Constitutions of Missouri and the United States require that the subject property be assessed at a ratio no higher than the common level or average for the same class of subject. Fourteenth Amendment, U.S. Constitution, Article X, Sections 3, 4(a), Missouri Constitution 1945; Breckenridge Hotels v. Leachman, 571 S.W.2d 251, 252 (Mo. banc 1978); May Department Stores Company v. State Tax Commission, 308 S.W.2d 748, 762 (Mo. 1958).

To determine the common level of assessment, the experts looked to measures of central tendency.  In this case, the issue of dispute between the parties is the proper measure of central tendency: the median, mean or the weighted mean.

The inquiry in a discrimination appeal is to determine a single ratio representing the assessments of varying properties within the same classification – the average or common level of assessment.  Complainant argues that the assessments in St. Louis County in 2015 for commercial properties were regressive – assessment ratio decreases as the value of the property increases.  Complainant argues that when regressivity is present, the weighted mean is the only appropriate measure.

The Complainant is one of more than 2,600 claims of discrimination by commercial property owners in St. Louis County for the 2015-2016 assessment cycle.  The valuations of the properties vary.  The STC cannot look at any particular property value and determine that all properties in excess of that value are subject to discrimination; “there is no dividing line”. (Tr. Vol II. P. 231)  The evidence did not establish a point estimate for all properties within the subclass, i.e. there is no common level of assessment. Commercial properties, according to the Complainant’s study, are over assessed, accurately assessed, and under assessed.  Isolated and uncoordinated reductions in selected assessments could produce additional disparities, i.e., discrimination.

All three experts calculated a median.  The medians calculated by the three experts were within a consistent range.  The calculated medians ranged between 30.7% and 31.1%.  The parties’ median levels of assessment are within .004 of each other.  Such consistent findings as to the median assessment are substantial and persuasive. The median level of assessment in St. Louis County for 2015 was approximately 31%.  In previous decisions, the STC found 5% disparity to be de minimus.  Town and Country Racquet Club v. Morton, 1989 WL 41005.  Such disparity between the statutory level of assessment and the average level of assessment is not so grossly excessive as to be entirely inconsistent with an honest exercise of judgment and, hence, does not prove discrimination.

Complainant’s argument to use weighted mean is not persuasive.  It is the only measure of central tendency that indicated a disparity in commercial assessments.  Other statistical measures, such as the mean, median, or COD utilized by the experts in their studies, did not indicate discrimination in assessments.  One statistical measure found within a study is not substantial and persuasive evidence.

The same issue was raised in Industrial Development Authority of Kansas City v. John Kelley, Jackson County, 1989 WL 96234 (Mo. St. Tax Comm.)  The STC, in that decision, stated “[i]t is generally accepted that when adjusting individual assessments to the average level of assessment the median ratio should be used.”  The STC has consistently accepted such measure of central tendency. Zimmerman v. Mid-America Financial Corporation, 481 S.W.3d 564, 577 (Mo. Ct App. ED, 2015) and West County BMW v. Muehlheausler, STC 05-12569.  The STC’s Assessor Manual sets forth that the median is the measure to determine if a county is accurately assessing property.  A finding that the median is the most persuasive measure of central tendency is a reasonable and sound finding in a particular appeal based upon evidence presented.

ORDER

The assessed valuation for the subject properties as determined by the BOE is AFFIRMED.

A party may file with the Commission 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

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 August 23, 2018.

STATE TAX COMMISSION OF MISSOURI

 

Maureen Monaghan

Hearing Officer

 

Certificate of Service

 

I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 23rd day of August, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.

 

Jackie Wood

Legal Coordinator

 

Complainants represented by Sansone Tax Representative and Counsels Thomas Campbell and Jason Turk filed the following exhibits as part of the hearing to determine the common level of assessment (ratio) for commercial properties in St. Louis County in 2015:

 

Exhibit	Description
A	Written Direct Testimony of Robert Gloudemans
B	Written Direct Testimony of John Hottle
C	Commercial Ratio Study of Robert Gloudemans
D	Supplement to Appendix 2 of Exhibit C
	Sur-Rebuttal
E	Testimony of Robert Gloudemans
F	Testimony of John Hottle
G	Impact Notice 10L420653
H	Impact Notice 13K520081
I	Impact Notice 14N120030, Letters from Assessor
J	Impact Notice 15N130407, Letters from Assessor
K	Impact Notice 15K240583
L	BOE Decision 16M530069, Impact Notice
M	Impact Notice 16P610696, Letters from Assessor
N	Impact Notice 19Q140113
O	BOE Decision 21K331251, Impact Notice
P	BOE Decision 22S121644, Impact Notice
Q	Impact Notice 23S540286, Letters from Assessor
R	Impact Notice 28L640434
S	Impact Notice 29H210253, Letters from Assessor

 

Decision Exhibit A

Appeal No.	Complainant	Parcel/Locator Number
15-11170	BILL’S TRUCK REPAIR INC	13N131417
15-11382	Joda LLC	17V120231
15-11387	INSITUFORM TECHNOLOGIES LLC	17V220034
15-11400	CROWN DIVERSIFIED INDUSTRIES CORP	17W320056
15-11401	SCOTT JOE H SR    TRUSTEE ETAL	17W320254
15-11403	EDISON HOLDINGS LLC	17W320605
15-11433	CROWN DIVERSIFIED INDUSTRIES CORP	18V430058
15-11434	TOPEKA AIRCRAFT SALES & SERVICE INC	18W640058
15-11466	CRYLEN JEROME R  TRUSTEE ETAL	19Q230131
15-11474	FORTY POINTE L L C	19R620069
15-11475	SCOTT FAMILY PROPERTIES LP	19S130103
15-11476	MCDONALD’S USA LLC	19S410328
15-11479	BERKSHIRE REALTY LIMITED PARTNERSHIP	20K240024
15-11484	DDL PARTNERSHIP LP	20K330600
15-11485	FRISELLA PROPERTIES L L C	20K330646
15-11486	1002 – 1010 HANLEY INDUSTRIAL COURT LLC	20K330729
15-11487	DDL PARTNERSHIP	20K330958
15-11488	DDL PARTNERSHIP LP	20K331012
15-11489	DDL PARTNERSHIP LP	20K331021
15-11490	DDL PARTNERSHIP LP	20K331030
15-11491	DDL PARTNERSHIP LP	20K331041
15-11496	SUNNEN PRODUCTS COMPANY	21J111441
15-11497	SUNNEN PRODUCTS COMPANY	21J130903
15-11498	SUNNEN PRODUCTS COMPANY	21J130912
15-11503	DDL PARTNERSHIP L P	21J230681
15-11505	MAPLE KING L L C	21J242295
15-11506	ROTHSCHILD DEVELOPMENT L T D	21J242350
15-11507	Rothschild Development Ltd	21J242361
15-11508	Rothschild Development Ltd	21J242394
15-11515	BLAN CORPORATION	21K211274
15-11516	ABW HOLDINGS LLC	21K211432
15-11522	2343 2355 SOUTH HANLEY RD L L C ETAL	21K620573
15-11529	2343 2355 SOUTH HANLEY RD L L C ETAL	21K640854
15-11530	2335-37 SOUTH HANLEY ROAD LLC	21K640863
15-11533	FELICE PROPERTIES LLC	21L220073
15-11535	MCKNIGHT DEVELOPMENT LLC	21L321185
15-11536	MCKNIGHT DEVELOPMENT LLC	21L321314
15-11543	AUTOHAUS WEST INC	22J431694
15-11547	BKM Development LLC	22K110121
15-11550	MORGNER DONALD J TRUSTEE	22K530826
15-11551	Rothschild Development Ltd	22K610443
15-11556	CROWN DIVERSIFIED INDUSTRIES CORP	22M620374
15-11557	CROWN DIVERSIFIED INDUSTRIES CORP	22M620734
15-11558	MANCHESTER 270 DEVELOPMENT INC	22O530251
15-11560	GERSHMAN BETTIE      TRUSTEE	22O620653
15-11567	EMERALD GROUP INC THE	22P220328
15-11574	CLARKSON PLAZA LLC	22T210763
15-11578	CLARKSON CLAYTON CEN ASSOC JTVENTURE	22T420313
15-11579	CLARKSON CLAYTON CEN ASSOC JTVENTURE	22T440096
15-11581	WILKEN DAVID   RENEE C  H/W	22T510342
15-11582	EDWARD SIMON PAINTING COMPANY	23J520575
15-11585	BERNERT JOSEPH      TRUSTEE	23K610301
15-11586	BERNERT JOSEPH C     TRUSTEE	23K610602
15-11587	RED HOLDINGS LLC	23K630244
15-11588	HOLTZ ROBERT	23K630952
15-11590	DONE PROPERTIES L L C	23M120471
15-11595	NICO PROPERTIES II L L C	23Q440180
15-11596	NICO PROPERTIES II L L C	23Q441116
15-11597	H & H INVESTMENTS	23Q530463
15-11600	ST LOUIS CAR WASH PROPERTIES LLC	23Q540712
15-11605	DOUROS IRENE V TRUSTEE	23R540924
15-11607	DOUROS IRENE V TRUST	23R541116
15-11608	SUNTRUP WILLIAM N TRUSTEE ETAL	23R541208
15-11609	BCJ PROPERTIES LLC	23S430431
15-11610	BCJ PROPERTIES LLC	23S430505
15-11611	MCDONALDS REAL ESTATE CO	23S540550
15-11617	PATAM PROPERTIES MO GENERAL PTNSP	23T640187
15-11619	VILLAGE PLAZA L L C	23U140639
15-11620	PICCIONE PETER P  NANCY A  H/W TRUSTEES	23U340194
15-11621	WESTWOODS CENTER II L L C A MISSOURI LIM	23U340325
15-11624	MONOLO TIMOTHY C	23U640441
15-11625	ST LOUIS CAR WASH PROPERTIES LLC	24J410224
15-11627	MCDONALDS REAL ESTATE CO OF COLUMBIA MD	24K310695
15-11628	BAKULA PAUL G  JANET M  H/W	24M110204
15-11629	RATERMANN CARL J & VICKI L H/W	24M111175
15-11630	LIN PAUL CHAO CHING & HOMEI SHIU H/W	24M120892
15-11632	ROBERT VATTEROTT PROPERTIES INC	24M121295
15-11633	MITCHELL ELIZA P & CARL M H/W TRS	24M121361
15-11635	PETERSON WARREN J TRUSTEE	24M320809
15-11636	SHATOFF JEROME & DEBRA K H/W	24M431044
15-11639	RRS REAL ESTATE HOLDINGS LLC	24M520953
15-11644	YARD PROPERTIES LLC THE	24O410384
15-11648	ZIEGLER WILLIAM M  BARBARA R  H/W	24P220409
15-11650	HOWARD M & SHIRLEY J SUTTON LLC	24Q320555
15-11652	SUNSET PROPERTIES L L C	24R311004
15-11654	CCE PROPERTIES LLC	24R331941
15-11655	DAU THE HOUSE FURNISHER INCORPORATED	24V510375
15-11661	ELLSWORTH BREIHAN BUILDING COMPANY	25K531026
15-11662	ELLSWORTH BREIHAN BUILDING COMPANY	25K531082
15-11664	ST LOUIS CAR WASH PROPERTIES LLC	25K531169
15-11674	VORHOF DUENKE PROPERTY II L L C ETAL	25M130416
15-11677	SUNSET LAND HOLDINGS L L C	25M232220
15-11678	BECKER RUSSELL O  LAVERNE C  H/W TRS	25M240012
15-11682	KIRKWOOD SURE WING L L C	25M421732
15-11684	Manfried Investments LLC	25M640276
15-11685	Manfried Investments LLC	25M640287
15-11686	Manfried Investments LLC	25M640403
15-11691	L E SAUER MACHINE CO	25O420340
15-11692	SCHOOLING L L C	25O510012
15-11700	U-GAS STL MACKENZIE LLC	26J231832
15-11707	P M LEACH PROPERTIES INC	26O210340
15-11709	QUICK POINT INC	26O220251
15-11710	QUICK POINT PENCIL CO	26O220350
15-11714	BRANDT & COMPANY LLC	26O630078
15-11719	STOJKOVIC ALEXANDER & ZITA H/W TRUSTEES	26P320626
15-11725	RENNER RAYMONDD & MAEDELL ANN H/W	27H140262
15-11734	JSEC ASSOCIATES	27L410027
15-11737	SUNSET 11 LLC	27L410913
15-11740	HERITAGE VILLAGE CENTER INC	27L530477
15-11744	SMITH-TREANOR COMPANY A PTNSP	27O530386
15-11745	CGM SMITH LLC A MISSOURI LIMITED LIABILI	27O530397
15-11748	RUTH INVESTMENTS INC A MISSOURI CORPORAT	27O610576
15-11749	BRE L L C	27O610631
15-11750	STIFEL CARL C  BARBARA   H/W	27O630080
15-11753	MARITZ FAMILY DEVELOPMENT LLC	27P540322
15-11765	MOSBLECH ANN TRUSTEE	28H221652
15-11769	MILFORD HENRY   EMILY   H/W ETAL	28J420557
15-11771	STACK-EM & RACK-EM LLC	28J430921
15-11772	SEVENTY-SEVEN-THIRTY-ONECORP	28J440236
15-11773	JONES GARY C & KATHLEEN A H/W TRS ETAL	28K310501
15-11774	TRIPLE  J PROPERTIES L L C	28K330235
15-11776	ACROPOLISPM SOUTHTOWNE24 LLC	28K340388
15-11777	11140 SOUTH TOWNE SQUARE LLC	28K340421
15-11779	CONCORD VILLAGE NO 9 L L C	28K430522
15-11784	QUATRO L L C	28K521031
15-11785	BECHTLE ESTHER TRUSTEE ETAL	28K541138
15-11790	D & D SPORTS ENTERPRISES LLC	28L620272
15-11791	TEXACO REFINING & MARKETING INC	28L620755
15-11792	DAYBREAK INVESTMENTS L L C	28L620777
15-11795	FRISELLA PROPERTIES L L CETAL	28N110412
15-11796	FRISELLA PROPERTIES L L CETAL	28N110485
15-11799	ST LOUIS CAR WASH PROPERTIES LLC	28P440450
15-11811	U N K O PROPERTIES L L C	29J540645
15-11814	JEWEL FAMILY LP	29L120751
15-11816	MUCKLER RICHARD F TRUSTEE ETAL	29L510844
15-11817	RICHARD ENTERPRISES L L C	29N420103
15-11821	KARAGIANNIS INVESTMENT CORPORATION	29V331278
15-11835	WOLF MICHAEL L& BERNITABORNH/W ETAL	31H110523
15-11839	BASLER LEONARD L     TRUSTEE	31J510706
15-11841	SUNSET PROPERTIES L L C	32H430695
15-11847	BARRON CAPITAL L P	32K440957
15-13691	Chevron USA Inc.	14N230452
15-13692	Chevron USA	14N240132
15-13693	CHEVRON CHEMICAL COMPANY	14N240215
15-16884	SNH Maryland Heights LLC	11P320170
16-10059	BGR 18336 LLC	17V110430
16-10060	REGEV NIR      TRUSTEE ETAL	22T231030
16-10061	REGEV NIR      TRUSTEE ETAL	22T231041
16-10140	GLIDEPATH LLC	09K340392
16-10141	OBRIEN JAMES K FAMILY TRUST C/O KATHLEEN	12H121722
16-10142	PROPERTIES OF FERGUSON L L C	12H121933
16-10143	Schnuck Markets Inc	13H430692
16-10144	SM PROPERTIES L P	13L241031
16-10145	Schnuck Markets Inc	13L241064
16-10146	HANDY REALTY LLC	14N531133
16-10147	Schnuck Markets Inc	15N330043
16-10148	DESCO INVESTMENT COMPANYL L C	15N340273
16-10149	DESCO INVESTMENT COMPANYL L C	15N620157
16-10150	SUGAR MAGNOLIALLC	16L240110
16-10151	Lou Fusz Properties LLC	16M630037
16-10152	Schnuck Markets Inc	17N620698
16-10154	WOODS MILL LLC	19Q410070
16-10155	U S BANK NATIONAL ASSOCIATION	20J241370
16-10157	Als Property Holdings LLC	21J130976
16-10158	Schnuck Markets Inc	22M520395
16-10159	Chlanda Josephine F Etal J/T	23K110928
16-10160	Ruthellen Yodon Family Living Trus	23K111253
16-10161	ESSLINGER CAROL L     TRUSTEE	23Q441400
16-10162	Cross Oil Company	24V520202
16-10163	Cross Oil Company	24V630011
16-10164	Odonnell Francis E Jr. & Kathleen E H/W	25M442760
16-10165	Odonnell Francis E Jr. & Kathleen E H/W	25M442771
16-10166	BEHRCO REAL ESTATE MANAGEMENT LLC	27J110181
16-10167	REDEXIM NORTH AMERICA INC	27Q440113
16-10168	MUNGENAST BARBARA TRUSTEE	28K521064

 

[1] The decision addresses 175 appeals.  A complete list of appeals is attached as Decision Exhibit A.

[2] Two sets of Complainants presented evidence at the hearing as to the ratio of assessment of Commercial properties.  The groups were labeled by the parties for ease of reference as “PAR” Complainants and “Sansone” Complainants.  Complainants are in the PAR group.  Exhibits filed on behalf of Sansone group are listed at the end of this Decision and Order.

[3] IAAO is the acronym for the International Association of Assessing Officers.  Its members include government assessment officials and others interested in the administration of the property tax.  They provide education, resources and standards for ad valorem taxation.

[4] Witness Robert Goudemans also testified at the ratio hearing.   Gloudemans is the expert witness for Complainants (“Sansone” Complainants) represented by Attorney Thomas Campbell and Attorney Jason Turk.  Gloudemans has training, experience and education in the field of appraisal, mass appraisal and mass appraisal review.  The witness conducted a ratio study for the 2015 commercial properties in St. Louis County.  He used 258 sales in his study comparing the verified sale data to post-BOE valuations.  (Transcript p. 95)