Boulders at Katy Trail v. Shipman (St. Charles)

December 29th, 2011

State Tax Commission of Missouri

 

BOULDERS AT KATY TRAIL,)

)

Complainant,)

)

v.) Appeal Number 09-32678

)

SCOTT SHIPMAN, ASSESSOR,)

ST. CHARLES COUNTY, MISSOURI,)

)

Respondent.)

 

 

DECISION AND ORDER

 

HOLDING

 

Decisions of the St. Charles County Board of Equalization sustaining the assessments of the Assessor are SET ASIDE in part and AFFIRMED in part.True value in money and Assessed Values for the subject properties[1] for tax years 2009 and 2010 are set at the values listed in FINDING OF FACT 8, infra.Complainant appeared by Counsels, Steven D. Graham and Patrick L. Cullerton, St. Louis, Missouri.Respondent appeared by Assistant County Counselor, Charissa Mayes.

Evidentiary Hearing was conducted by Senior Hearing Officer W. B. Tichenor.

Decision rendered by the Commission.

ISSUE

Complainant appeals, on the ground of overvaluation, the decisions of the St. Charles County Board of Equalization, which sustained the valuations of the subject properties.The Commission takes this appeal to determine the true value in money for the subject properties on


January 1, 2009.The Commission, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

FINDINGS OF FACT

1.Jurisdiction.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the St. Charles County Board of Equalization.Senior Hearing Officer W. B. Tichenor conducted an evidentiary hearing April 12, 2011, at the St. Charles County Administration Building, St. Charles, Missouri.Transcript filed with the Commission on May 31, 2011.Complainant’s Brief received by the Commission on August 15, 2011.Brief of Respondent received by the Commission on September 12, 2011.Complainant’s Reply Brief received by the Commission on October 3, 2011.

2.Assessment.The combined appraised value placed on the individual parcels under appeal by the Assessor was $16,210,263, a combined residential assessed value of $3,079,950.[2]The Board sustained the assessments for each parcel.Finding of Fact 3 provides the Assessor/BOE appraised values for each property under appeal.

3.Subject Properties.The subject properties consist of 104 units of a 240 unit[3] apartment/condominium complex known as The Boulders at Katy Trail in St. Charles, Missouri.A total of 136 condominium units had previously sold in the following years: In 2006, 61 units sold; in 2007, 59 units sold; and in 2008, 16 units sold.[4]

The 104 units are identified as follows:[5]

Parcel #[6]

Unit #

Sq. Ft. Area[7]

Assessor/BOE

Complainant

Respondent

Vacant/

Leased[8]

03-202I

202I

1,337

$200,526

$148,320

$185,000

Vacant

00-202K

202K

1,337

$200,526

$148,320

$185,000

Leased

03-202E

202E

1,337

$200,894

$148,320

$185,000

Vacant

03-200J

200J

1,337

$200,526

$148,320

$185,000

Vacant

03-200F

200F

1,337

$200,894

$148,320

$185,000

Vacant

05-300D

300D

827

$126,842

$91,155

$125,000

Leased

05-302C

302C

827

$126,842

$91,155

$125,000

Leased

05-300B

300B

827

$126,737

$91,155

$125,000

Leased

05-302A

302A

827

$126,737

$91,155

$125,000

Leased

10-322D

322D

1,091

$154,157

$120,928

$185,000*

Leased

10-322B

322B

1,091

$154,157

$120,928

$185,000*

Vacant

10-322A

322A

1,091

$154,157

$120,928

$185,000*

Leased

10-324E

324E

1,091

$154,157

$120,928

$185,000*

Leased

10-324D

324D

1,091

$154,157

$120,928

$185,000*

Leased

10-324C

324C

1,091

$154,157

$120,928

$185,000*

Leased

10-324B

324B

1,091

$154,157

$120,928

$185,000*

Leased

10-324A

324A

1,091

$154,157

$120,928

$185,000*

Leased

04-212A

212A

1,091

$154,157

$120,928

$185,000*

Vacant

04-214B

214B

1,091

$154,157

$120,928

$185,000*

Leased

03-202B

202B

1,091

$154,157

$120,928

$185,000*

Vacant

04-214L

214L

1,091

$155,842

$120,928

$185,000*

Leased

10-322J

322J

1,091

$155,842

$120,928

$185,000*

Leased

10-322I

322I

1,091

$155,842

$120,928

$185,000*

Leased

10-322F

322F

1,091

$155,842

$120,928

$185,000*

Vacant

10-322E

322E

1,091

$155,842

$120,928

$185,000*

Vacant

10-324L

324L

1,091

$155,842

$120,928

$185,000*

Leased

10-324K

324K

1,091

$155,842

$120,928

$185,000*

Vacant

10-324J

324J

1,091

$155,842

$120,928

$185,000*

Leased

10-324I

324I

1,091

$155,842

$120,928

$185,000*

Leased

10-324F

324F

1,091

$155,842

$120,928

$185,000*

Leased

04-212L

212L

1,091

$155,842

$120,928

$185,000*

Vacant

04-212K

212K

1,091

$155,842

$120,928

$185,000*

Leased

04-212J

212J

1,091

$155,842

$120,928

$185,000*

Leased

04-212H

212H

1,091

$155,842

$120,928

$185,000*

Leased

03-202L

202L

1,091

$155,842

$120,928

$185,000*

Leased

04-214E

214E

1,091

$155,842

$120,928

$185,000*

Leased

04-214F

214F

1,091

$155,842

$120,928

$185,000*

Vacant

04-214G

214G

1,091

$155,842

$120,928

$185,000*

Leased

04-214I

214I

1,091

$155,842

$120,928

$185,000*

Leased

04-214K

214K

1,091

$155,842

$120,928

$185,000*

Leased

03-202J

202J

1,091

$155,842

$120,928

$185,000*

Vacant

03-202F

202F

1,091

$155,842

$120,928

$185,000*

Leased

03-200K

200K

1,091

$155,842

$120,928

$185,000*

Leased

03-200I

200I

1,091

$155,842

$120,928

$185,000*

Leased

03-200G

200G

1,091

$155,842

$120,928

$185,000*

Vacant

03-200E

200E

1,091

$155,842

$120,928

$185,000*

Vacant

05-300H

300H

827

$128,210

$91,155

$125,000

Leased

05-300F

300F

827

$128,210

$91,155

$125,000

Vacant

05-302G

302G

827

$128,210

$91,155

$125,000

Leased

05-302E

302E

827

$128,210

$91,155

$125,000

Leased

05-300L

300L

1,087

$143,789

$119,480

$147,000*

Leased

05-302K

302K

1,087

$143,789

$119,480

$147,000*

Vacant

02-204K

204K

1,087

$143,789

$119,480

$147,000*

Vacant

06-102L

102L

801

$126,421

$88,767

$130,000*

Leased

06-102K

102K

801

$126,421

$88,767

$130,000*

Leased

06-102G

102G

801

$126,684

$88,767

$130,000*

Leased

06-106H

106H

801

$126,684

$88,767

$130,000*

Vacant

03-202C

202C

1,337

$198,895

$148,320

$185,000

Leased

00-202A

202A

1,337

$198,895

$148,320

$185,000

Leased

03-200B

200B

1,337

$198,895

$148,320

$185,000

Leased

03-200D

200D

1,337

$200,632

$148,320

$185,000

Leased

06-102D

102D

801

$125,210

$88,767

$130,000*

Leased

06-102B

102B

801

$125,210

$88,767

$130,000*

Leased

06-102A

102A

801

$125,210

$88,767

$130,000*

Vacant

06-104C

104C

801

$125,210

$88,767

$130,000*

Leased

06-104B

104B

801

$125,210

$88,767

$130,000*

Vacant

06-104A

104A

801

$125,210

$88,767

$130,000*

Leased

06-106A

106A

801

$125,210

$88,767

$130,000*

Leased

12-331

331

1,366

$183,474

$123,600

$160,000

Leased

12-334

334

1,366

$183,474

$123,600

$160,000

Leased

11-326

326

1,366

$183,474

$123,600

$160,000

Leased

11-329

329

1,366

$183,474

$123,600

$160,000

Leased

09-317

317

1,366

$183,474

$123,600

$160,000

Leased

09-320

320

1,366

$183,474

$123,600

$160,000

Leased

08-315

315

1,366

$183,474

$123,600

$160,000

Leased

07-305

305

1,366

$183,474

$123,600

$160,000

Vacant

07-308

308

1,366

$183,474

$123,600

$160,000

Vacant

01-208

208

1,366

$183,474

$123,600

$160,000

Leased

01-211

211

1,366

$183,474

$123,600

$160,000

Vacant

01-210

210

1,366

$183,474

$123,600

$160,000

Vacant

05-300C

300C

654

$110,684

$72,615

$115,000*

Leased

05-302D

302D

654

$110,684

$72,615

$115,000*

Leased

12-332L

332L

1,166

$171,105

$129,007

$160,000

Leased

12-332K

332K

1,166

$171,105

$129,007

$160,000

Leased

12-332G

332G

1,166

$170,947

$129,007

$160,000

Vacant

11-327L

327L

1,166

$171,105

$129,007

$160,000

Leased

11-327K

327K

1,166

$171,105

$129,007

$160,000

Leased

09-318L

318L

1,166

$171,105

$129,007

$160,000

Leased

09-318K

318K

1,166

$171,105

$129,007

$160,000

Leased

09-318J

318J

1,166

$171,105

$129,007

$160,000

Leased

08-312J

312J

1,166

$171,105

$129,007

$160,000

Leased

08-312I

312I

1,166

$171,105

$129,007

$160,000

Leased

08-312G

312G

1,166

$170,947

$129,007

$160,000

Vacant

07-306J

306J

1,166

$171,105

$129,007

$160,000

Leased

07-306H

306H

1,166

$170,947

$129,007

$160,000

Leased

07-306G

306G

1,166

$170,947

$129,007

$160,000

Leased

07-306E

306E

1,166

$170,947

$129,007

$160,000

Vacant

01-209L

209L

1,166

$171,105

$129,007

$160,000

Leased

05-300K

300K

654

$111,737

$72,615

$116,000*

Leased

05-300G

300G

654

$111,737

$72,615

$116,000*

Vacant

05-302L

302L

654

$111,737

$72,615

$116,000*

Leased

05-302H

302H

654

$111,737

$72,615

$116,000*

Leased

02-204L

204L

654

$111,737

$72,615

$116,000*

Leased

02-206G

206G

654

$111,737

$72,615

$116,000*

Leased

 

 

TOTALS

$16,210,263

$12,360,000

$16,787,000

 

*The value cannot be increased above the Assessor/BOE value based on Respondent’s evidence, See, Evidence of Increase in Value, infra.

 

The properties under appeal are further identified and described as follows:

The units are either one-story garden or two-story townhouse apartments.There are seven different model types.The property of which the 104 subject parcels are a part was constructed originally in 2003 as an apartment complex, but beginning in April 2006 the units were marketed for sale as condominium units.As of January 1, 2009, the 104 units were managed as apartment rentals, under a marketing effort for sale as condominiums.As of the valuation date none of the individual units had ever been owner-occupied all had a past history of being apartment rental properties.

Eight units were used as models.The model units were available for sale as of January 1, 2009.The remaining 96 units made up the inventory of possible rental apartments.A total of 75 of the 96 apartments were leased and occupied as of January 1, 2009.

4.Complainant’s Evidence.Complainant presented the following evidence which was received into the record:

Exhibit

Description

A

Summary Appraisal Report – Douglas A. Zink[9]

B

2009 Sales Katy Trail Tax Appeal

C

List of Sales Dates and Prices

D

Written Direct Testimony – Douglas A. Zink

 

Mr. Zink testified under cross and redirect examination at the evidentiary hearing.[10]

There was no evidence of new construction and improvement from January 1, 2009, to January 1, 2010, therefore the assessed value for 2009 remains the assessed value for 2010.[11]

Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money for the combined 104 units as of January 1, 2009, to be $12,360,000, as proposed.

5.Respondent’s Evidence.Respondent presented the following evidence which was received into the record:

Exhibit

Description

1

Appraisal Report – Thomas P. Babb[12] – Units 202I, 202K, 202J, 202E & 202F

2

Appraisal Report – Thomas P. Babb – Units 300D, 302C, 300B & 302A

3

Appraisal Report – Thomas P. Babb – Units 322D, 322B, 322A, 324W, 324D, 324C, 324B, 324A, 212A, 214B, 202B & 214L

4

Appraisal Report – Thomas P. Babb – Units 322J, 322I, 322F, 322E, 324L, 324L, 324J, 324I, 324F, 212L, 212K, 212J, 212H, 202L, 214E, 214F, 214G, 214I, 214K, 202J, 202F, 200K, 200I, 200G, & 200E

5

Appraisal Report – Thomas P. Babb – Units 300H, 300F, 302G, & 302E

6

Appraisal Report – Thomas P. Babb – Units 300L, 302K, & 204K

7

Appraisal Report – Thomas P. Babb – Units 102L, 102K, 102G, & 106H

8

Appraisal Report – Thomas P. Babb – Units 202C, 202A, 200B & 200D

9

Appraisal Report – Thomas P. Babb – Units 102D, 102B, 102A, 104C, 104B, 104A & 106A

10

Appraisal Report – Thomas P. Babb – Units 331, 334, 326, 329, 317, 320, 315, 305, 308, 208, 211 & 210

11

Appraisal Report – Thomas P. Babb – Units 300C & 302D

12

Appraisal Report – Thomas P. Babb – Units 332L, 332K, 327L, 327K, 318L, 318K, 318J, 312J, 312I, 306J, 209L, 332G, 312G, 306H, 306G & 306E


 

13

Appraisal Report – Thomas P. Babb – Units 300K, 300L, 204L, 300G, 302H & 206G

14

Written Direct Testimony – Thomas P. Babb

15

Summary of Exhibits 1 – 13

 

Mr. Babb testified under cross and redirect examination at the evidentiary hearing.[13]

6.Values Above Original Assessment.Respondent’s appraisals for those parcels with values marked by an asterisk in Finding of Fact 3 were accepted only to sustain the original assessment made by the Assessor and affirmed by the Board, and not for the purpose of raising the assessment above that value.See, Evidence of Increase in Value, infra.

7.2009 Sales.Ten of the properties under appeal sold in 2010.[14]The sales date for each of these properties is at a time relevant to the valuation date of January 1, 2009.The sale prices for these properties establish the market value as of January 1, 2009. See, Determination of Value, Sale of Ten Properties in 2009, infra.The ten properties which sold during 2010 are listed as follows:

Parcel #

Unit #

Address

*used as RP’s Comp

Sale Price

03-202I

202I

175 Babbling Brook*

$159,900

03-202E

202E

171 Babbling Brook*

$186,670

10-322B

322B

42 Scenic Cove

$155,376

04-214F

214F

208 Babbling Brook

$148,629

05-300F

300F

112 Scenic Cove Ln*

$118,772

02-204K

204K

189 Babbling Brook*

$143,653

06-106H

106H

126 Katy Trail

$113,900

06-104B

104B

132 Katy Trail Lane*

$125,296

01-211

211

228 Babbling Brook*

$172,143

01-210

210

227 Babbling Brook*

$154,682

 

8.True Value in Money and Assessed Values.The true values in money for the properties under appeal and the assessed values are set as follows[15]:

Map Parcel #[16]

Unit #

True Value in Money

Assessed[17]

03-202I

202I

$159,900

$30,380

00-202K

202K

$185,000

$31,150

03-202E

202E

$186,670

$35,470

03-200J

200J

$185,000

$31,150

03-200F

200F

$185,000

$31,150

05-300D

300D

$125,000

$23,750

05-302C

302C

$125,000

$23,750

05-300B

300B

$125,000

$23,750

05-302A

302A

$125,000

$23,750

10-322D

322D

$154,157

$29,290

10-322B

322B

$155,376

$29,520

10-322A

322A

$154,157

$29,290

10-324E

324E

$154,157

$29,290

10-324D

324D

$154,157

$29,290

10-324C

324C

$154,157

$29,290

10-324B

324B

$154,157

$29,290

10-324A

324A

$154,157

$29,290

04-212A

212A

$154,157

$29,290

04-214B

214B

$154,157

$29,290

03-202B

202B

$154,157

$29,290

04-214L

214L

$154,157

$29,290

10-322J

322J

$155,842

$29,610

10-322I

322I

$155,842

$29,610

10-322F

322F

$155,842

$29,610

10-322E

322E

$155,842

$29,610

10-324L

324L

$155,842

$29,610

10-324K

324K

$155,842

$29,610

10-324J

324J

$155,842

$29,610

10-324I

324I

$155,842

$29,610

10-324F

324F

$155,842

$29,610

04-212L

212L

$155,842

$29,610

04-212K

212K

$155,842

$29,610

04-212J

212J

$155,842

$29,610

04-212H

212H

$155,842

$29,610

03-202L

202L

$155,842

$29,610

04-214E

214E

$155,842

$29,610

04-214F

214F

$148,629

$28,240

04-214G

214G

$155,842

$29,610

04-214I

214I

$155,842

$29,610

04-214K

214K

$155,842

$29,610

03-202J

202J

$155,842

$29,610

03-202F

202F

$155,842

$29,610

03-200K

200K

$155,842

$29,610

03-200I

200I

$155,842

$29,610

03-200G

200G

$155,842

$29,610

03-200E

200E

$155,842

$29,610

05-300H

300H

$125,000

$23,750

05-300F

300F

$118,772

$22,570

05-302G

302G

$125,000

$23,750

05-302E

302E

$125,000

$23,750

05-300L

300L

$143,789

$27,320

05-302K

302K

$143,789

$27,320

02-204K

204K

$143,653

$27,290

06-102L

102L

$126,421

$24,020

06-102K

102K

$126,421

$24,020

06-102G

102G

$126,684

$24,070

06-106H

106H

$113,900

$21,640

03-202C

202C

$185,000

$31,150

00-202A

202A

$185,000

$31,150

03-200B

200B

$185,000

$31,150

03-200D

200D

$185,000

$31,150

06-102D

102D

$125,210

$23,790

06-102B

102B

$125,210

$23,790

06-102A

102A

$125,210

$23,790

06-104C

104C

$125,210

$23,790

06-104B

104B

$125,296

$23,810

06-104A

104A

$125,210

$23,790

06-106A

106A

$125,210

$23,790

12-331

331

$160,000

$30,400

12-334

334

$160,000

$30,400

11-326

326

$160,000

$30,400

11-329

329

$160,000

$30,400

09-317

317

$160,000

$30,400

09-320

320

$160,000

$30,400

08-315

315

$160,000

$30,400

07-305

305

$160,000

$30,400

07-308

308

$160,000

$30,400

01-208

208

$160,000

$30,400

01-211

211

$172,143

$32,710

01-210

210

$154,682

$29,390

05-300C

300C

$110,684

$21,030

05-302D

302D

$110,684

$21,030

12-332L

332L

$160,000

$30,400

12-332K

332K

$160,000

$30,400

12-332G

332G

$160,000

$30,400

11-327L

327L

$160,000

$30,400

11-327K

327K

$160,000

$30,400

09-318L

318L

$160,000

$30,400

09-318K

318K

$160,000

$30,400

09-318J

318J

$160,000

$30,400

08-312J

312J

$160,000

$30,400

08-312I

312I

$160,000

$30,400

08-312G

312G

$160,000

$30,400

07-306J

306J

$160,000

$30,400

07-306H

306H

$160,000

$30,400

07-306G

306G

$160,000

$30,400

07-306E

306E

$160,000

$30,400

01-209L

209L

$160,000

$30,400

05-300K

300K

$111,737

$21,230

05-300G

300G

$111,737

$21,230

05-302L

302L

$111,737

$21,230

05-302H

302H

$111,737

$21,230

02-204L

204L

$111,737

$21,230

02-206G

206G

$111,737

$21,230

TOTALS

104

$15,555,110

$2,927,480[18]

 

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 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.[19]

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.[20]The constitutional mandate is to find the true value in money for the property under appeal. By statute real and tangible personal property is assessed at set percentages of true value in money.[21]In an overvaluation appeal, true value in money for the property being appealed must be determined based upon the evidence on the record that is probative on the issue of the fair market value of the property under appeal.

Presumption In Appeals

There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[22]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 Commission, as trier of facts, receives the issue free of the presumption.[23]The presumption of correct assessment is rebutted when the taxpayer, or Respondent, when advocating a value different than determined by the Board, 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.[24]Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board.Respondent’s evidence was substantial and persuasive to rebut the presumption of correct assessment by the Board and to establish value in those appeals not otherwise decided by the actual sale of a given property.

Standard for Valuation

Section 137.115, RSMo, 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.[25]True value in money is defined in terms of value in exchange and not value in use.[26]It is the fair market value of the subject property on the valuation date.[27]Market value is the most probable price in terms of money which a property should bring in competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price is not affected by undue stimulus.

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:

1.Buyer and seller are typically motivated.

 

2.Both parties are well informed and well advised, and both acting in what they consider their own best interests.

 

3.A reasonable time is allowed for exposure in the open market.

 

4.Payment is made in cash or its equivalent.

 

5.Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.

 

6.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.[28]

 

Both appraisers properly addressed the appraisal problem under the Standard for Valuation.[29]

Methods of Valuation

Proper methods of valuation and assessment of property are delegated to the Commission.It is within the purview of the Commission to determine the method of valuation to be adopted in a given case.[30]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.[31] Complainant’s appraiser valued the subject properties using a discounted sellout methodology.[32]Respondent’s appraiser developed both the cost and sales comparison approaches in arriving at his conclusion of value for each of the subject properties.[33]Mr. Babb’s


sales comparison approach constituted substantial and persuasive evidence to establish the fee simple value of each property under appeal.

Determination of Value

Appraisal Approaches

Complainant’s Appraisal

Appraiser Zink valued the 104 properties as a single economic unit being operated as an apartment complex, as has been done since The Boulders was developed, but recognizing the individual apartments will one by one be converted and sold as condominiums, as had been done with the 136 sold condominiums.In other words, the development is in the process of being converted from an apartment complex to a totally owner occupied condominium development, a process that has been going on since 2006.

Under his methodology, Mr. Zink concluded his value based on a sale of all 104 units to a single investor purchaser.[34]To determine the price that such a purchaser would pay for the 104 apartments, the appraiser developed a sales comparison approach in conjunction with a discounted sellout analysis to estimate the market value of the subject.The Zink approach covered both the value of the rental income for the leased units and the future value from the eventual sale of all the units for condominium ownership.This analysis reflects what a single investor purchaser would pay for the 104 units recognizing the income from units being rented and income from units being converted to condominiums and sold over a 20 year period until all 104 units are held by individual owners.[35]

Respondent’s Appraisal

Appraiser Babb valued each of the individual properties as single condominium units under a fee simple basis.Although he developed a cost approach, his conclusion of value in each instance rested on his sales comparison analysis.The subject units fell into eight groups of properties based upon the type of model and the square footage of the living area.[36]Sales of units within The Boulders at Katy Trails were used in every instance as Mr. Babb’s comparables. His conclusion of value was based upon the sale of each of the 104 units to 104 separate individual owner occupants.[37]

Subject Units Legal Position on 1/1/09

While the entire Boulders complex was converted to a condominium form of ownership in late spring/early summer of 2006,[38] the 104 units that are the subjects of this appeal, on January 1, 2009, were still under the ownership of the Complainant.[39]The 104 units as of January 1, 2009, existed as rental apartments and display models yet to be converted into individual owner occupied condominium units.They had been platted as separate properties hence the individual map parcel numbers for each property.In order to finalize the conversion of each apartment unit into an individual condominium there are additional legal requirements that would have to be completed.[40]In addition, on January 1, 2009, 75 of the 104 units were occupied as rental units.Of the remaining 29 units, 8 were display models, but the other 21 existed as vacant rental units under the existing operation.The units were being marketed for sale and lease.[41]The sale of the 75 leased units would be subject to the existing leases.The 29 non-leased units were available to sale on January 1, 2009, as individual condominiums.

Highest and Best Use

Both appraisers presented their highest and best use analysis.The Zink analysis is found on pages 39 – 41 of his appraisal.He concluded the highest and best use of the property as improved “is consistent with the current use, as a condominium conversion development.”The


Babb analysis is found on page 12 of each of his appraisals.He found the highest and best use of the subject property “is its current use.”

Zink Analysis

Mr. Zink performed his highest and best use analysis as if the properties under appeal were a single economic unit both as vacant and as improved.The As Vacant analysis presents somewhat of an anomaly since the 104 properties are disbursed among existing residential structures and in fact form essential parts of those structures.The spaces which the 104 properties occupy cannot become vacant, unimproved space without the demolition of the existing buildings in which they are located.Accordingly, the As Vacant analysis, although required by sound appraisal practice will not logically fit the present situation, and is of no real value in addressing the present appraisal problem.

The As Improved analysis is more helpful in the existing appraisal problem.Mr. Zink again analyzed the situation as if the 104 properties were a single economic unit under the four elements which constitute highest and best use – Legal Permissibility, Physical Possibility, Financial Feasibility and Maximum Profitability.The final conclusion was that the highest and best use of the property, as improved, is consistent with the current use, as a condominium conversion development.

Babb Analysis

Mr. Babb’s analysis appears in the top half of page 12 of his appraisals.The appraiser simply concluded: “After considering the location, surroundings, economic and social forces, physical setting and the potential uses as of the date of the appraisal, it is my opinion that the highest and best use of the subject property is its current use.”


It appears that the appraiser’s conclusion to then be that the highest and best use of the subject property (104 apartment units) is to continue the operation of the properties as apartments, available for sale to be converted to individual owner occupied condominium homes.

Burden of Proof


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, 2009.[42]There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a Commission 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.”[43]

Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[44]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.[45]

Complainant’s appraisal evidence failed to meet the standard of substantial and persuasive evidence to establish the fair market value of the 104 subject properties in fee simple.

Respondent, when advocating a value different from that determined by the original valuation or a valuation made by the Board of Equalization, must meet the same burden of proof to present substantial and persuasive evidence of the value advocated as required of the Complainant under the principles established by case law.[46]Respondent’s appraisals met the standard of substantial and persuasive evidence to establish the fair market value of the 104 subject properties in fee simple that had not sold by the end of 2009.

Accordingly, the record provides substantial and persuasive evidence to make a determination as to the values of the individual properties under appeal.

Sale of Ten Properties in 2009

In 2009, ten properties sold.[47]Evidence of the actual sales price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time. The actual sale price is a method that may be considered for estimating true value.[48]Respondent’s appraiser used seven of these sales in his sales comparison approaches.Specifically, Mr. Babb used the seven sales as comps in the following instances:

Property

Exhibit – Subject

Exhibit – Comp

175 Babbling Brook – 202I

Exhibit 1

Exhibit 1

171 Babbling Brook – 202E

Exhibit 1

Exhibits 1 & 8

42 Scenic Cover – 322B

Exhibit 3

 

208 Babbling Brook – 214F

Exhibit 4

 

112 Scenic Cove Lane – 300F

Exhibit 5

Exhibits 2 & 5

189 Babbling Brook – 204K

Exhibit 6

Exhibits 6 & 10

126 Katy Trail Lane – 106H

Exhibit 7

 

132 Katy Trail Land – 104B

Exhibit 9

Exhibits 2, 5, 7, 9, & 11

227 Babbling Brook – 210

Exhibit 10

Exhibit 10

228 Babbling Brook – 211

Exhibit 10

Exhibit 10

 

Mr. Babb made time of sale adjustments for the seven 2009 sales which he used.He made an upward adjustment to each sales price apparently to reflect that after January 1, 2009, the value of the property had increased.A review of the appraisals fails to provide any explanation or discussion as to the basis for the upward time of sale adjustments for the 2009 sales.At page 10 of each appraisal is a discussion under Neighborhood Description which states the following:“As documented through paired sales and biennial trend analysis, the subject’s property value is decreasing by an annual trend of 6.32% (report attached).”


The following page of the appraisal contains the report, which provides paired sales analysis into 2008.It does conclude a -6.32 % decline in value.There is no data which provides a factor to establish that values increased or decreased during 2009, or the rate of any asserted increase.There is no data upon which a conclusion can be made that values decreased from 1/1/09 to the time of sales during 2009.This would be required in order for an upward time of sale adjustment to be made to the 2009 sales for the 1/1/09 valuation date.There is no testimony from Mr. Babb to substantiate the basis for the time of sale adjustment.“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.”[49]

On this point the Commission is left with what appears from the four corners of Mr. Babb’s appraisal to be an upward adjustment to the sales prices which is based only on conjecture.Accordingly, the Commission concludes that the actual 2009 sale prices for these ten properties, without a time of sale adjustment, are determinative of the fair market value for the properties as of January 1, 2009, and must be so valued for purpose of this appeal.

Remaining 94 Properties

The properties noted in Finding of Fact 3 with an asterisk were valued by Respondent’s appraiser at a value greater than the Assessor/BOE value.By operation of law, the assessed value cannot be increased above that set by the Assessor and sustained by the Board for these properties.See, Evidence of Increase in Value, infra; Finding of Fact 3, supra.Accordingly in those instances where the Babb value is greater than the Assessor/BOE value, the Babb value will not be used, but the value set by the Assessor/BOE will be affirmed.

It is understood that not all 94 properties would have sold on a single day, however, for purpose of determining value of each individual unit, it is necessary to assume what each unit would have in fact sold for on January 1, 2009.This is the assumption of the hypothetical sale between the willing buyer and seller of each separate unit which is to be followed.On that basis,

the valuation data and conclusions provided by Mr. Babb provide persuasive evidence of value in fee simple for the properties.

The Commission is not persuaded that the discounted sellout methodology utilized by Complainant’s appraiser captured the fee simple value of the individual properties.Mr. Zink’s methodology was founded upon a number of assumptions as to future rental income and expenses and future sales prices for the individual properties which cannot in the mind of the Commission be validated by market data to demonstrate that the concluded values are reflective of the fee simple value of the properties under appeal.Accordingly, Complainant failed to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2009, for the subject properties.

Evidence of Increase in Value

In any case in St. Charles County where the assessor presents evidence which indicates a valuation higher than the value finally determined by the assessor or the value determined by the board of equalization, whichever is higher, for that assessment period, such evidence will only be received for the purpose of sustaining the assessor’s or board’s valuation, and not for increasing the valuation of the property under appeal.[50]Under the Commission rule just cited and Supreme Court decision[51] the assessed values for those parcels marked with an asterisk (*) by the Respondent’s proposed values in Finding of Fact 3, supra, cannot be increased above the assessed value established by the Assessor/BOE in each particular appeal, based upon evidence tendered by Respondent.


ORDER

The assessed valuations for the subject properties as determined by the Assessor and sustained by the Board of Equalization for St. Charles County for the subject tax day are SET ASIDE in part and AFFIRMED in part.

The assessed values for the subject properties for tax years 2009 and 2010 are set as follows:

Map Parcel #

Unit #

Assessed Value

03-202I

202I

$30,380

00-202K

202K

$31,150

03-202E

202E

$35,470

03-200J

200J

$31,150

03-200F

200F

$31,150

05-300D

300D

$23,750

05-302C

302C

$23,750

05-300B

300B

$23,750

05-302A

302A

$23,750

10-322D

322D

$29,290

10-322B

322B

$29,520

10-322A

322A

$29,290

10-324E

324E

$29,290

10-324D

324D

$29,290

10-324C

324C

$29,290

10-324B

324B

$29,290

10-324A

324A

$29,290

04-212A

212A

$29,290

04-214B

214B

$29,290

03-202B

202B

$29,290

04-214L

214L

$29,290

10-322J

322J

$29,610

10-322I

322I

$29,610

10-322F

322F

$29,610

10-322E

322E

$29,610

10-324L

324L

$29,610

10-324K

324K

$29,610

10-324J

324J

$29,610

10-324I

324I

$29,610

10-324F

324F

$29,610

04-212L

212L

$29,610

04-212K

212K

$29,610

04-212J

212J

$29,610

04-212H

212H

$29,610

03-202L

202L

$29,610

04-214E

214E

$29,610

04-214F

214F

$28,240

04-214G

214G

$29,610

04-214I

214I

$29,610

04-214K

214K

$29,610

03-202J

202J

$29,610

03-202F

202F

$29,610

03-200K

200K

$29,610

03-200I

200I

$29,610

03-200G

200G

$29,610

03-200E

200E

$29,610

05-300H

300H

$23,750

05-300F

300F

$22,570

05-302G

302G

$23,750

05-302E

302E

$23,750

05-300L

300L

$27,320

05-302K

302K

$27,320

02-204K

204K

$27,290

06-102L

102L

$24,020

06-102K

102K

$24,020

06-102G

102G

$24,070

06-106H

106H

$21,640

03-202C

202C

$31,150

00-202A

202A

$31,150

03-200B

200B

$31,150

03-200D

200D

$31,150

06-102D

102D

$23,790

06-102B

102B

$23,790

06-102A

102A

$23,790

06-104C

104C

$23,790

06-104B

104B

$23,810

06-104A

104A

$23,790

06-106A

106A

$23,790

12-331

331

$30,400

12-334

334

$30,400

11-326

326

$30,400

11-329

329

$30,400

09-317

317

$30,400

09-320

320

$30,400

08-315

315

$30,400

07-305

305

$30,400

07-308

308

$30,400

01-208

208

$30,400

01-211

211

$32,710

01-210

210

$29,390

05-300C

300C

$21,030

05-302D

302D

$21,030

12-332L

332L

$30,400

12-332K

332K

$30,400

12-332G

332G

$30,400

11-327L

327L

$30,400

11-327K

327K

$30,400

09-318L

318L

$30,400

09-318K

318K

$30,400

09-318J

318J

$30,400

08-312J

312J

$30,400

08-312I

312I

$30,400

08-312G

312G

$30,400

07-306J

306J

$30,400

07-306H

306H

$30,400

07-306G

306G

$30,400

07-306E

306E

$30,400

01-209L

209L

$30,400

05-300K

300K

$21,230

05-300G

300G

$21,230

05-302L

302L

$21,230

05-302H

302H

$21,230

02-204L

204L

$21,230

02-206G

206G

$21,230

TOTALS

104

$2,927,480

 

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.The party filing for judicial review shall so notify the Collector of St. Charles County at the time of filing for judicial review.

Disputed Taxes

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 ofSt. Charles 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 assessments 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 December 29, 2011.

STATE TAX COMMISSION OFMISSOURI

 

 

_____________________________________

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 29thday of December, 2011, to:Steven Graham, Thompson Coburn LLP, One US Bank Plaza, St. Louis, MO 63101, Attorney for Complainant; Joseph Smith, Assistant County Counselor, 100 North Third Street, Room 216, St. Charles, MO 63301, Attorney for Respondent; Scott Shipman, Assessor, 201 North Second, Room 247, St. Charles, MO 63301-2870; Ruth Miller, Registrar, 201 North Second Street, Room 529, St. Charles, MO 63301; Michelle McBride, Collector, 201 North Second Street, Room 134, St. Charles, MO 63301.

 

 

___________________________

Barbara Heller

Legal Coordinator

Barbara.Heller@stc.mo.gov

 

 

 

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] Although there is a single appeal number, the property under appeal consists of 104 individual apartments/condominiums.

 

[2] Residential property is assessed at 19% of its true value in money (Assessor’s appraised value), Section 137.115.1, RSMo.

 

[3] As of January 1, 2009, the other 136 units had been sold to individual owners as condominium residences.The subject property does not consist of all 240 units at the Boulders at Katy Trail, as argued by Respondent in the Brief of Respondent, p. 2.

 

[4] Exhibit A, p. 1 – Property Identification, Ownership and Property History, and Transmittal Letter.

 

[5] The Assessor/BOE column gives the Assessor’s appraised value for the unit that was sustained by the BOE.

The Complainant column gives the advocated fair market value for the combined units proposed by the Complainant, the Hearing Officer having calculated a per unit value based on square footage of each individual unit as a percentage of the total square footage for all 104 units.

The Respondent column gives the advocated fair market value for the unit as presented in the appraisal reports of Respondent’s appraiser.

 

[6] The complete parcel number for all units has the following nine numbers/letter preceding the number given in the char t as the parcel # – 3-0117-A114-.

 

[7] The square foot area is taken from Respondent’s appraisal reports as the area reflected in the Assessor’s records.Complainant’s Appraiser showed slightly different square footage for units.

 

[8] Under the authority of section 138.430.2, RSMo, the Hearing Officer made inquiry of Counsel for Complainant to obtain a list as to the status of each of the 104 units on 1/1/09.Said list was provided to the Hearing Officer on July 18, 2011 and was marked for identification as Commission Exhibit 1.

Section 138.430.2 states:“In order to investigate such appeals, the commission 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 commission may make its decision regarding the assessment or valuation of the property based solely upon its inquiry and any evidence presented by the parties to the commission, or based solely upon evidence presented by the parties to the commission.”

 

[9] Douglas A. Zink is a Missouri State Certified General Real Estate Appraiser

 

[10] Tr. 5 – 45

 

[11] Section 137.115.1, RSMo

 

[12] Thomas P. Babb is a Missouri State Certified General Real Estate Appraiser

 

[13] Tr. 46 – 62

 

[14] Exhibit B; Exhibits 1, 3, 5, 6, 7, 9, & 10

 

[15] See, Unoccupied Properties and Occupied or Leased Properties, infra.

[16] The complete map parcel number for all units has the following nine numbers/letter preceding the number given in the chart as the map parcel # – 3-0117-A114-.

 

[17] Rounded to nearest $10

 

[18] Assessed Value is greater than 19% of True Value in Money due to rounding of assessed values to nearest $10; 12,021,721 x .19 = $2,284,127

 

[19] Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.

 

[20] Article X, Sections 4(a) and 4(b), Mo. Const. of 1945

 

[21] Section 137.115.5, RSMo

 

[22] 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)

 

[23] 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.

 

[24] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)

 

[25] 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).

 

[26] Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 S.W.2d 376, 380 (Mo. App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).

 

[27] Hermel, supra.

 

[28] 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.

 

[29] Exhibit A, p. 2 – Purpose of the Appraisal; Exhibits 1 – 13, p. 4 – Market Value

 

[30] See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra;Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975).

 

[31] 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. Div. 2 1974).

 

[32] Exhibit D, Q & A 42

 

[33] Exhibit 14, Q & A 9 – 15

 

[34] Exhibit A, p. 57 – “This resulted in our estimate of the Discounted Value to a Single Purchaser, as of the date of value.”Tr. 37:22 – 38:8

 

[35] Exhibit D, Q & A 43; Exhibit A, pp 42 – 70

 

[36] 9 – Innsbrook Units – 1,337 sq. ft. – Exhibits 1 & 8 (4 comps); 8 – Keystone Units – 827 sq. ft. – Exhibits 2 & 5 (6 comps); 37 – Steamboat Springs Units – 1,091 sq. ft – Exhibits 3 & 4 (4 comps); 11 Keystone Units – 801 sq. ft – Exhibits 7 & 9 (6 comps); 3 Copper Mountain Units – 1,087 sq. ft – Exhibit 6 (3 comps); 12 Sun Valley Units – 1,366 sq. ft – Exhibit 10 (5 comps); 8 – Aspen Units – 654 sq. ft – Exhibits 11 & 13 (6 comps); & 16 Vail Units – 1,166 sq. ft – Exhibit 12 (5 comps).

 

[37] Exhibits 1 – 13

 

[38] Exhibit D, Q & A 40

 

[39] Exhibit A – p. 1 – Ownership and Property History

 

[40] Exhibit A, p. 55 – Condominium Discounted Sellout Analysis

 

[41] Tr. 13:25 – 14:5; Tr. 15:4 – 17; Tr. 15:22 – 16:23

 

[42] Hermel, supra.

 

[43] 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).

 

[44] See, Cupples-Hesse, supra.

 

[45] Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).

 

[46] Hermel, Cupples-Hesse, Brooks, supra.

 

[47] See, Finding of Fact 7, supra

 

[48] St. Joe Minerals Corp., supra.

 

[49] Carmel Energy at 783.

 

[50] Section 138.060, RSMo; 12 CSR 30-3.075.

 

[51] The Supreme Court of Missouri has interpreted Section 138.060.The Court stated:

“Section 138.060 prohibits an assessor from advocating for or presenting evidence advocating for a higher ‘valuation’ than the ‘value’ finally determined by the assessor. … . Because the legislature uses the singular terms ‘valuation’ and ‘value’ in the statute, however, it clearly was not referring to both true market value and assessed value.While the assessor establishes both true market value and assessed value, which are necessary components of a taxpayer’s assessment, as noted previously, the assessed value is the figure that is multiplied against the actual tax rate to determine the amount of tax a property owner is required to pay.The assessed value is the ‘value that is finally determined’ by the assessor for the assessment period and is the value that limits the assessor’s advocacy and evidence.Section 138.060.By restricting the assessor from advocating for a higher assessed valuation than that finally determined by the assessor for the relevant assessment period, the legislature prevents an assessor from putting a taxpayer at risk of being penalized with a higher assessment for challenging an assessor’s prior determination of the value of the taxpayer’s property.”State ex rel. Ashby Road Partners, LLC et al v. STC and Muehlheausler, 297 S.W.3d 80, 87-88 (Mo 8/4/09)