State Tax Commission of Missouri
BRANSON HEIGHTS APARTMENTS,
CHUCK PENNEL, ASSESSOR,
TANEY COUNTY, MISSOURI,
DECISION AND ORDER
Decision of the Taney County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE.Complainant presented substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization and establish fair market value.
True value in money for the subject property for tax years 2011 and 2012 is set at $410,000, residential assessed value of $77,900.
Complainant represented by Attorney, Richard D. Dvorak, Tomes & Dvorak, Overland Park, Kansas.
Respondent represented Pro Se.
Case decided by Senior Hearing Officer W. B. Tichenor.
Complainant appeals, on the ground of overvaluation, the decision of the Taney County Board of Equalization, which sustained the valuation of the subject property.The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2011.1. The Hearing Officer, 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 Taney County Board of Equalization.
2.Submission Upon Complainant’s Evidence.By Order dated 2/25/14, Respondent was given until and including March 18, 2014, to inform the Hearing Officer as to whether Respondent wished to cross-examine
Complainant’s witness or whether Respondent would waive the right to cross-examined and consent to submission of the appeal for decision based upon the Complainant’s evidence.Said order provided that failure to respond to the Order would be deemed to be a waiver of the right to cross-examine and consent for submission of the appeal for
decision based upon the evidence tendered by Complainant.Respondent made no response on or before 3/18/14.Right of cross-examination is deemed to have been waived and that consent has been given for rendering of decision based upon Complainant’s exhibits.
3.Identification of Subject Property.The subject property is identified by map parcel number 08-9.0-31-004-006-003.000.It is further identified as being located at 1450 Herschend Dr., Branson, Missouri.It
is otherwise known as Branson Heights Apartments.2
4.Description of Subject Property.The subject property consists of a tract land improved by a low income (subsidized housing) 24 unit apartment facility, containing net leasable area of 17,028 square feet consisting of 9 – 1 bedroom, 572 square feet apartments and 15 – 2 bedroom, 792 square feet apartments.3
5.Assessment.The Assessor appraised the property at $765,263, an assessed residential value of $145,400.The Board of Equalization sustained the assessment.
6.Complainant’s Evidence.Complainant offered into evidence Exhibits A and B.Exhibit A consisted of a State Tax Commission Subsidized Housing Worksheet, with supporting documents.Exhibit A was developed by Jeffery D. McCormick.Exhibit B was the written direct testimony of Jeffrey D. McCormick. 5
7.No Evidence of New Construction & Improvement.There was no evidence of new construction and improvement from January 1, 2011, to January 1, 2012, therefore the assessed value for 2011 remains the assessed value for 2012.6
8.Presumption of Correct Assessment Rebutted.Complainant’s evidence was substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2011, to be $410,000.See, Presumption In Appeal and Complainant Proves Value, infra.
9.Respondent’s Evidence.Respondent elected to not present any evidence on the issue of the fair market value of Complainant’s property
CONCLUSIONS OF LAW AND DECISION
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.7
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.8 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. 9
Presumption In Appeal
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. 10 This presumption is a rebuttable rather than a conclusive presumption.It places the
burden of going forward with some substantial evidence on the taxpayer – Complainant.When some substantial
evidence is produced by the Complainant, “however slight”, the presumption disappears and the Hearing Officer, as trier of facts, receives the issue free of the presumption. 11 The presumption is not evidence of value.
The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the Board’s valuation is erroneous and what the fair market value should have been placed on the property.12
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. 13 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.14
Upon presentation of the Complainants’ evidence 15 the presumption in this appeal disappeared.
The development of the income capitalization approach established the fair market value that should have been placed on the property as of 1/1/11.No evidence was presented that rebutted the conclusion of value in Complainant’s evidence. The case is decided free of the presumption.
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. 16 True value in money is defined in terms of value in exchange and not value in use. 17 It is the fair market value of the subject property on the valuation date.18 Market value is the most probable price interms 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. 19
Commission Determines Methodology
It is within the State Tax Commission’s discretion to determine what method or approach it shall use to determine the true value in money of property. 20 It is also within the State Tax Commission’s authority to ascertain the correct or means of determining value according to a particular method or approach that it adopts to ascertain valuation, and it is within the Commission’s discretion to determine what factors should be considered in fixing the “true value in money” for property under a valuation method or approach adopted for use in a particular case. 21
The relative weight to be accorded any relevant factor in a particular tax assessment case is for the State Tax Commission to determine. 22 State Tax Commission decisions must declare the propriety of and the proper
elements to consider in adopting a valuation approach, and must provide a definite indication as to the weight accorded each approach or method, i.e., how the final decision is weighed between the various approaches, methods,
elements and factors.23
The determination of “true value in money” of any property is afactual issue for the State Tax Commission. 24
It is within the authority and expertise of the Tax Commission to determine which valuation methodology best represents value in a given situation or for a particular category of properties.25 After carefully considering the benefits and risks associated with subsidized housing, the State Tax Commission, in Maryville Properties 26
determined that calculating value based upon actual income, actual expenses, and actual interest and capitalization rates was the best way to recognize all benefits and risks associated with subsidized housing.
In Lake Ozark Village v. Whitworth 27 we stated:In this case, and all subsequent subsidized housing cases, the correct methodology for valuing subsidized housing projects is the methodology set out in Maryville Properties.
That methodology is accurate because (1) rent restrictions are considered through the use of actual income rather than market income; (2) additional management requirements and expenses are accounted for through use of actual expenses which are in excess of market expenses; and (3) the actual loan‑to‑value ratio and the subsidized interest rate demonstrates and accounts for any and all risks involved in the property as well as the benefits flowing to the
property.It is “economic reality.”
Complainant’s evidence complied with previous decisions of the Commission on subsidized housing properties.
Complainant Proves Value
Complainant presented evidence of value based upon the development of the methodology set out in Maryville Properties to arrive at an indicated value of $408,617, rounded to $410,000. 28 The evidence presented met the required standard.Therefore, the value determined by the Assessor and affirmed by the Board of Equalization must be set aside and the assessed value calculated based upon the Complainant’s concluded fair market value.
The assessed value for the property as of January 1, 2011 is $77,900. 29
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Taney County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2011 and 2012 is set at $77,900.
Application for Review
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.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. 30
The Collector of Taney 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 April 25, 2014.
STATE TAX COMMISSION OF MISSOURI
W. B. Tichenor
Senior Hearing Officer
1 Thevalue as of 1/1/11 remains the value as of 1/1/12 unless there is new construction and improvement to the property. Section 137.115.1, RSMo
2 Complaint for Review of Assessment, BOE Decision dated 7/25/11; Exhibit A
3 Exhibit A
4 Complaint for Review of Assessment, BOE Decision dated 7/25/11; Exhibit A – Income Value Worksheet
5 Mr. McCormick is the General Manager, Second Vice President of MACO Management Company, Incorporated (MACO).He runs the day to day operation of MACO, which manages approximately 450 properties.MACO manages the subject property.Mr. McCormick has responsibility relative to the decisions to buy and sell property for the portfolio of MACO. During his 7 years with MACO he has overseen the selling of approximately 20 property, and the acquisition of approximately 25 properties.In each of these instances he determined the value for the sales and purchases.
6 Section 137.115.1, RSMo
7 Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.
8 Article X, Sections 4(a) and 4(b), Mo. Const. of 1945
9 Section 137.115.5, RSMo – residential property at 19% of true value in money; commercial property at 32% of true value in money and agricultural property at 12% of true value in money
10 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)
11 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.
12 Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
13 See, Cupples-Hesse, supra. Substantial and persuasive evidence is not an extremely high standard of evidentiary proof. It is the lowest of the three standards for evidence (substantial & persuasive, clear and convincing, and beyond a reasonable doubt). It requires a small amount of evidence to cross the threshold to rebut the presumption of correct assessment by the Board.The definitions, relevant to substantial evidence, do not support a position that substantial and persuasive evidence is an extremely or very high standard.
“Substantial evidence: Evidence that a reasonable mind would accept as adequate to support a conclusion; evidence beyond a scintilla.”Black’s Law Dictionary, Seventh Edition, p. 580 The word scintilla is defined as “1. a spark,2. a particle; the least trace.” Webster’s New World Dictionary, Second College Edition.Black’s definition at 1347 is “A spark or trace <the standard is that there must be more than a scintilla of evidence>.”There must be more than a spark or trace for evidence to have attained the standard of substantial.Once there is something more than a spark or trace the evidence has reached the level of substantial.Substantial evidence and the term preponderance of the evidence are essentially the same.“Preponderance of the evidence.The greater weight of the evidence; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”Black’s at 1201
Substantial evidence is that a reasonable mind would accept as adequate to support the conclusion.
Preponderance is sufficient to incline a fair and impartial mind to one side of the issue rather than the other, i.e.
support the proposed conclusion.
14 Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo.App. 1975)
15 ExhibitA & Exhibit B
16St. 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)
17 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)
18 Hermel, supra
19 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.
20 Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, 896; Chicago, Burlington & Quincy Railroad Co. v. State Tax Commission, 436 S.W.2d 650, 657 (Mo. 1968), cert den. 393 U.S. 1092 (1969); St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1997).
21 Hermel, Inc. v. State Tax Commission, supra.
22 St. Louis County v. State Tax Commission, 515 S.W. 446, 450 (Mo. 1974).
23 St. Louis County v. State Tax Commission, 515 S.W.2d 446, 451(Mo. 1974).
24 O’Flaherty v. State Tax Commission, 698 S.W.2d 2, 3 (Mo. banc 1985).
25 Hermel, supra.
26 Maryville Properties v. Nelson, 97-04500, 99-74503, 01-74500, 83 S.W.3d 608 (Wd 2000)
27 Lake Ozark Village, 97-4700, 99-47003, and 01-47000
28 Exhibits A & B
29 $350,000 x .19 (residential assessment ratio) = $66,500
30 Section 138.432, RSMo