State Tax Commission of Missouri
BRANSON MANOR, LTD,)
)
Complainant,)
)
v.)Appeal(s) Number 07-89503 & 07-89504
)
JAMES STRAHAN, ASSESSOR,)
TANEY COUNTY, MISSOURI,)
)
Respondent.)
ORDER
AFFIRMING HEARING OFFICER DECISION
UPON MOTION TO REOPEN EVIDENTIARY HEARING
AND/OR APPLICATION FOR REVIEW
HOLDING
On August 29, 2008, Hearing Officer Maureen Monaghan entered her Decision and Order (Decision) affirming the assessments by the Taney County Board of Equalization.Complainant timely filed its Motion to Reopen Evidentiary Hearing and/or Application for Review of the Decision.Respondent timely filed his Reply in Opposition.Complainant filed Response to Respondent’s Reply.Complainant appeared by Counsel Richard D. Dvorak, Overland Park, Kansas.Respondent appeared by Counsel Robert Paulson, County Counselor Taney County, Missouri.Motion to Reopen Evidentiary Hearing is denied.Hearing Officer Decision Affirmed.
FINDINGS OF FACT
Procedural History
1. Complaints for Review of Assessment were timely filed on August 16, 2007.
2. The subject property in Appeal No. 07-89503 was identified by map parcel number 08-9.0-32-003-020-008.000, with an assessed commercial value of $18,480.No street address was provided for this property.The subject property in Appeal No. 07-89504 was identified by map parcel number 17-3.0-05-002-006-001.00, street address of 2818 Old County Road, Branson, Missouri, with an assessed residential value of $571,770.
3. Complaints were acknowledged by letter dated August 27, 2007.
4. Order to Complete Worksheet, and Order Setting Discovery and Exchange Schedules was issued on January 2, 2008.The Worksheet was to be completed and returned to the Commission on or before March 3, 2008.Exhibits were to be filed and exchanged on June 16, 2008.Written direct testimony was to be filed and exchanged on July 16, 2008.The Order stated “Written direct testimony must be as complete and accurate as if it were oral testimony.”[1]
5. Complainant filed exhibits A, B and C identified as exhibits for Appeal 07-89504.No exhibits were filed in Appeal 07-89503.
6. Respondent did not file a Worksheet or Exhibits.
7. By order dated June 27, 2008, Appeal 07-89503 was dismissed.
8. On July 7, 2008, the Commission received Complainant’s Motion to Set aside Order Dismissing Appeal.Said Motion stated in paragraph 3, “Appeal Nos. 07-89504 and 07-89503 are adjoining properties with common ownership.The exhibits submitted by the taxpayer for Appeal No. 07-89504 are the same for Appeal No. 07-89503.”
9. By Order dated July 14, 2008, Senior Hearing Officer W. B. Tichenor granted the Motion to Set aside the Order Dismissing Appeal 07-89503.Said order advised the exhibits filed in Appeal 07-89504 were received as exhibits in Appeal 07-89503.Parties were further advised written direct testimony was to be filed by July 16, 2008.
10. Complainant timely filed the written direct testimony of Robert Marx.Respondent did not file any written direct testimony.
11. By Order dated August 13, 2008, the Appeals were assigned to Senior Hearing Officer
W. B. Tichenor for further proceedings.Parties were advised as follows:
“Appeals are submitted upon complainant’s exhibits and written direct testimony, unless Counsel for Respondent advises the Hearing Officer in writing on or before August 22, 2008, that he wishes to cross-examine Complainant’s witness.In the event, Respondent wishes to conduct cross-examination, the Hearing Officer will set the appeals for evidentiary hearing by a later order.If Counsel for Respondent does not advise in writing of his desire to cross-examine the witness, he will be deemed to have waived the evidentiary hearing and consented to submission of the appeals upon the Complainant’s documents filed.”
12. The Order of August 13, 2008, identified Complainant’s exhibits as follows:
Exhibit A – State Tax Commission Worksheet, with explanation
Exhibit B – Income and Expenses Statements
Exhibit C – HUD Agreements
Exhibit D – Written Direct Testimony of Robert Marx
13. The Order of August 13, 2008, advised that Respondent did not submit exhibits or written direct testimony and was precluded from offering evidence on the issue of valuation.[2]
14. Counsel for Respondent did not advise the Commission in writing of his desire to cross-examine Complainant’s witness.On August 22, 2008, Senior Hearing Officer delivered the appeal files to Hearing Officer Monaghan with instructions to render a decision.
15. On August 29, 2008, Hearing Officer Monaghan issued her Decision affirming the valuations determined by the Assessor and sustained by Board of Equalization.[3]
16. On September 29, 2008, Complainant filed its Motion to Reopen Evidentiary Hearing and/or Application for Review.
17. By Order dated September 30, 2008, Respondent was given until and including
October 31, 2008, to file Response to Complainant’s Motion.
18. Respondent filed his Reply in Opposition to Complainant’s Motion on October 31, 2008.
19. Complainant filed Response to Respondent’s Reply On November 14, 2008.
Complainant’s Exhibits
20. Complainants exhibits consisted of the following documents:
Exhibit A:
1. STC Worksheet for Parcel I.D. 17-3.0-05-002-006-001.00, showing a Final Value of $745,200 (1 page).
2. Unsigned statement dated June 11, 2008 giving Taxpayer’s conclusion of value as of January 1, 2007 of $745,200 (1 page).
3. Letter dated March 3, 2008 to Dick Millspaugh from John T. Robertson and Robert E. Marx of Bliss Associates (Bliss Letter), estimating an equity dividend rate of 9% as of March 3, 2008 (3 pages).
Exhibit B:
1. Branson Manor Statement of Profit and Loss for period ending December 31, 2006 (3 pages).
2. Branson Manor Rent Roll Subsidy, dated 12/26/06 (3 pages).
Exhibit C:Regulatory Agreement, dated March 17, 2003 between Branson Manor LP and Secretary of Housing and Urban Development (16 pages).
Exhibit D:Written Direct Testimony of Robert Marx, stating his opinion that the appropriate “equity dividend rate” for the Branson Manor Property was 9.00% (2 pages).
CONCLUSIONS OF LAW
AND
DECISION
Motion to Reopen Evidentiary Hearing
The Commission will first address Complainant’s Motion to Reopen Evidentiary Hearing.The arguments put forth in Complainant’s Motion are not clearly divided between its Motion to Reopen and its alternative Application for Review.Therefore, the Commission has gleaned from Complainant’s pleading the following points raised under the Motion to Reopen:
1. Complainant did not stipulate under 12 CSR 30-3.050 to the case being submitted on a written stipulation of facts in lieu of an oral hearing.
2. A hearing officer’s decision under Section 138.431.4, RSMo and 12 CSR 30-3.080 can only be issued after affording the parties reasonable opportunity for fair hearing.
3. A hearing officer’s decision based solely on exhibits and written direct testimony does not qualify as a contested case under the Missouri Administrative Procedure Act, thereby impairing Complainant’s opportunity for judicial review.
The Commission will address each point individually.
Stipulation Under 12 CSR 30-3.050
Complainant’s first point in support of its Motion to Reopen is irrelevant to the case. Subsection (5) of 12 CSR 30-3.050 provides a procedure for an appeal to be decided upon a written stipulation of facts in lieu of an oral hearing.No stipulation of facts was presented.The case was not decided under a stipulation of facts.Therefore, the Decision rendered by Hearing Officer Monaghan does not fall under this Commission Rule.Complainant’s argument provides no basis upon which the case should be reopened to permit additional evidence from Complainant.
Reasonable Opportunity for Fair Hearing
The second argument is that Section 138.431.4, RSMo[4] and 12 CSR 30-3.080(2)[5] require a reasonable opportunity for fair hearing.The Commission finds that the provisions of both the statute and the rule were met in this instance.The Order of August 13, 2008, clearly informed the parties that the evidentiary hearing would be deemed waived and the case submitted on the documents filed unless Respondent desired to conduct cross-examination of Complainant’s witness.[6]Written direct testimony, by Commission Rule, must be as complete as if given orally.No other direct testimony is allowed at hearing.The purpose of the Commission Rule is to allow for full and fair cross-examination at hearing.[7]
The Commission Rule regarding filing of exhibits and written direct testimony is clear.“Any exhibit or written direct testimony which has not previously been exchanged in accordance with this rule will be excluded from admission into evidence at the evidentiary hearing.”[8]Respondent had filed no exhibits or written direct testimony.Therefore there was no cross-examination to be conducted by Complainant, since there was no witness who could testify on behalf of Respondent.The only thing that could be conducted at an evidentiary hearing was the cross-examination of Complainant’s witness by Respondent’s Counsel.If Counsel for Respondent did not wish to cross-examine Complainant’s witness, no useful purpose would be served by having a hearing officer travel to Taney County and call a hearing to order, only to have Mr. Paulsen inform the hearing officer he did not wish to cross-examine the witness.
In like manner, Complainant had submitted its exhibits and written direct testimony.It was precluded under the Commission Rule from offering into evidence any other documents or direct testimony not previously filed and exchanged.It was within the sound discretion of the Senior Hearing Officer to issue his Order dated August 13, 2008, for the case to be submitted on the documents filed if Counsel for Respondent did not desire to cross-examine Mr. Marx.Full opportunity for hearing was provided consistent with the statute and the rules of the Commission.
Submission of exhibits and written direct testimony presented the direct case for the Complainant.The Commission procedure for filing exhibits and written direct testimony provided for the Complainant its hearing for its case in chief.The fact that there was not a live hearing at which the parties’ attorneys were not present does not change the fact Complainant’s direct case had its hearing.Respondent elected to not cross-examine Complainant’s witness.Therefore, there was no right to a redirect examination of Complainant’s witness.Nor was there any right to submit additional evidence that could have and should have been presented for Complainant’s case in chief as exhibits or written direct testimony.
Impairment of Opportunity for Judicial Review
Complainant’s final argument is that the Commission proceeding in this instance has impaired the opportunity for judicial review under the Administrative Procedure Act.The argument is not well taken.Commission decisions are subject to judicial review in accordance with Sections 536.100 to 536.140, RSMo.[9]Complainant timely pursued and exhausted its administrative remedy.With the issuance of this Order, Complainant has standing to seek judicial review of the Commission’s decision.[10]
Motion to Reopen Hearing Denied
Complainant was given a complete opportunity to present all documents and direct testimony to establish the relief sought for in these appeals.Commission Rule 12 CSR 30-3.060 provides that opportunity.The rule establishes that Complainant was permitted to present its case in chief.Its documents and written direct testimony were received into evidence.Complainant’s case was heard.
A live oral hearing was not required upon Respondent’s election to waive its right to cross-examination.Complainant was precluded from offering any exhibits or testimony that had not been submitted in compliance with the Commission Order setting the exhibit exchange.[11]When a Complainant fails to present sufficient evidence to meet its burden of proof the fault lies not in the Commission’s procedure.
There is no requirement that Respondent cross-examine the Complainant’s witness.Respondent in this instance apparently was satisfied to stand on the presumption of the Board’s correct assessment.It is clear Respondent felt no need to cross-examine Mr. Marx on his limited testimony regarding an equity dividend rate.Mr. Marx did not give an opinion as to the fair market value of either property for January 1, 2007.It would have been an exercise in futility to convene a hearing when Respondent’s counsel was not going to cross-examine the witness and when Complainant was precluded from offering testimony which it had neglected to file as ordered.
Complainant’s request to reopen the hearing could be for no other purpose than to elicit additional testimony from Mr. Marx or some other individual that properly should have been filed and exchanged as ordered.Complainant asserts it desires a reopening of the hearing process for “an opportunity to be heard, a chance to explain and clarify any points that may not be clear to the Hearing Officer in reviewing the documents presented.”[12]It was the responsibility of Complainant to present its case so that there would be no further need to explain and clarify.
Complainant argued “Had Complainant been afforded a hearing, it was and is prepared to discuss the value calculations and provide adequate and substantial foundation regarding the correctness of the calculations using the Maryville methodology.”[13]The point is the Commission rule is quite clear – “Written direct testimony must be as complete and accurate as if it were oral testimony.”[14]Complainant’s failure to take advantage of its opportunity to present a proper case by filing exhibits and complete written direct testimony does not now warrant allowing a second bite at the evidentiary apple.Complainant’s direct testimony should have provided the required discussion and foundation to establish a prima facie case.Complainant was afforded every opportunity consistent with the Commission rule to present its case.The Motion to Reopen is for no other purpose than to submit evidence and testimony that should have been pre-filed and which is precluded under the Commission rule.
Motion to Reopen Hearing denied.
Application for Review
Complainant addressed three points with regard to the Hearing Officer Decision that form the basis for its Application for Review.The three points relate to (1) Finding of Fact 7, (2) Finding of Fact 9, and (3) Complainant’s Burden of Proof.
Finding of Fact 7
Hearing Officer Monaghan found, “Neither party provided the Hearing Officer with a description of the subject properties.”[15]Complainant does not assert the Hearing Officer erred in this finding.In fact Complainant admits the truth of the finding.
Complainant only argues if a hearing had been held it would have “provided testimony to Officer’s Monaghan’s inquiry.”Complainant then sets forth information concerning Branson Manor that was not filed as ordered by the Commission.[16]Complainant misses the point.The Finding of Fact is not an inquiry.It is a finding that Complainant failed, although given the opportunity through the Exchange Schedule, to provide the basic and foundational information concerning the subject properties.
The information and description provided in Complainant’s Motion is information that could have and should have been provided through a document or written direct testimony and prefiled in accordance with the Commission scheduling order.It was not the lack of an oral
hearing that prevented Complainant from introducing such evidence.It was Complainant’s failure to prefile exhibits or testimony addressing such matters.
The Hearing Officer did not err in this Finding of Fact.The record establishes the Finding of Fact as correct.Complainant’s point is not well taken.
Finding of Fact 9
Hearing Officer Monaghan found, “The Worksheet requires the Complainant’s actual income, including rental income, subsidies and other sources, actual vacancy and collection, and expenses over a three year period. The Worksheet also requires determination of an overall capitalization rate using the loan to value ratio, interest rate, equity ratio, equity dividend rate and effective tax rate.”[17]As with Finding of Fact 7, Complainant does not assert error in the finding.
Complainant’s argument under this point is to offer information nowhere to be found in the evidentiary record.The explanation presented in the Motion to Reopen/Application for Review is again information that should have been provided either in an exhibit or written direct testimony prefiled in accordance with the order of the Commission.It should have been provided in the Complainant’s case in chief.Complainant had every opportunity to do so, but for whatever reason elected to simply file incomplete information.Exhibits and direct testimony not exchange in accordance with the Commission rule are excluded from evidence.[18]
Complainant’s Burden of Proof
Complainant’s final argument relates to the Hearing Officer’s conclusions of law under Complainant’s Burden of Proof.Complainant lifted two sentences out of a paragraph of the Decision as the basis for his argument.The portion of the Decision referenced must be considered in its entirety.
“A taxpayer does not meet his burden if evidence on any essential element of his case leaves the Commission “in the nebulous twilight of speculation, conjecture and surmise.”[19]Taxpayer lists Exhibit A as the State Tax Commission Worksheet which was ordered to be completed by the parties.Exhibit A is not the State Tax Commission Worksheet.It fails to provide three years of actual income and expenses and it incorrectly determines the capitalization rate. The Taxpayer failed to provide the loan to value ratio, interest rate, and equity ratio. The other exhibits are supporting documents for the information contained in Exhibit A, the Worksheet.The other exhibits do not provide an opinion of valuation.Further, it is unknown if the Exhibits pertain to one property or both properties.Since one property is classified as commercial, it might be assumed that the Exhibits do not pertain to that property.
The Hearing Officer is left to mere speculation, conjecture and surmise.Decisions in appeals before the Commission cannot be based on such elements.Since the Hearing Officer was not provided with a description of the properties or sufficient information to calculate the proper capitalization rate, the Hearing Officer cannot find value as to the residential property in case 07-89504.Since no information was provided in case 07-89503, Hearing Officer is unable to make any determination of value.
Complainant failed to meet its burden of proof.”[20]
Complainant asserts that the Hearing Officer “… cross-examined Complainant’s evidence without Complainant being present to respond or provide rebuttal testimony…”[21]The conclusions of the Hearing Officer are not a cross-examination of Complainant’s evidence.Complainant does not argue that any of the conclusions reached are not in fact correct under the very limited amount of evidence submitted in compliance with the Commission scheduling Order. Complainant’s response is to once again claim if a hearing had been held it would have provided “testimony.”
In other words, Complainant concedes the Hearing Officer made correct determinations on this point based on the evidence submitted.Complainant wants a further opportunity to correct its omissions and failure to provide the evidence necessary to meet its burden of proof. The fact concluded from the record in these appeals and the Motion to Reopen/Application for Review is Complainant failed to avail itself of its opportunity to present exhibits and testimony to establish a prima facie case on the issue of the true value in money for the two properties.The arguments put forth in the Motion to Reopen/Application for Review amount to an admission that Complainant failed to present sufficient evidence to carry its burden of proof.That is all the Hearing Officer concluded.
Presumption of Correct Valuation
Complainant finally argues that “There no longer exists any presumption of correctness of the BOE assessment.[22]In developing this argument Complainant relies upon Section 138.431.2, RSMo which provides in relevant part, “There shall be no presumption that the assessor’s valuation is correct.”The Hearing Officer never concluded that there was a presumption that the assessor’s valuations were correct.
The Board of Equalization did affirm the values originally determined by the assessor.However, the values before the Hearing Officer were those establish by the Board decisions, albeit they were the same as the Assessor had originally determined.Apparently the Board was not persuaded by whatever evidence Complainant presented in its BOE hearing that the true values in money for the two properties were as claimed by Complainant.
The presumption, properly stated in the Decision, is “of validity, good faith and correctness of assessment by the County Board of Equalization.”[23] Complainant notes the long standing proposition that the law presumes that a public official properly carries out his duty.[24]In this instance, the public officials comprising the Board of Equalization are presumed to have properly carried out their duty in setting the value for the properties under appeal.Absent substantial and persuasive evidence to rebut that presumption Complainant cannot prevail.The Commission finds nothing in this record upon which it can conclude that the presumption of the Board’s correct assessment was rebutted.
Hearing Officer Decision Supported By Record
A review of the record in the present appeal provides support for the determinations made by the Hearing Officer.There is competent and substantial evidence to establish a sufficient foundation for the Decision of the Hearing Officer.A reasonable mind could have conscientiously reached the same result based on a review of the entire record. The Commission finds no basis to support a determination that the Hearing Officer acted in an arbitrary or capricious manner or abused her discretion as the trier of fact and concluder of law in this appeal.[25]
No Evidence of Value in Appeal 07-89503
The three exhibits and written direct testimony fail to provide an opinion of fair market value for the property in Appeal 07-89503 (Parcel No. 08-9-32-3-20-8).The worksheet in Exhibit A is identified as relating to Parcel ID: 17-3-0-05-002-006-001.000 (Appeal 07-89504).The letter dated June 11, 2008, in Exhibit A references to the conclusion of value shown on the worksheet.Therefore it does not provide any evidence of true value in money for the property in Appeal 07-89503.The Bliss Letter in Exhibit A provides no opinion of fair market value for either the property in Appeal 07-89503 or 07-89504.Complainant failed to carry its burden of proof as the moving party in Appeal 07-89503.The Hearing Officer did not err in her determination in this appeal that the presumption of correct assessment was not rebutted, when there was absolutely no evidence presented concerning the true value in money for the property under appeal in Appeal 07-89503.
Exhibits Fail To Prove Value in Appeal 07-89504
The worksheet in Exhibit A is not identified by the written direct testimony filed herein.There is no evidence to establish the person who prepared the worksheet.Exhibit D established that “Savage and Browning LLC had prepared the direct capitalization income approach to value for the property.”The contact person is identified as Dick Millspaugh of Savage and Browning LLC.Although there is no evidence to establish that Mr. Millspaugh actually prepared the worksheet or the June11th statement.
It was not established that Mr. Millspaugh is a state certified appraiser in Missouri.The worksheet and the June 11, 2008, statement meet the statutory definitions of appraisal or appraisal report.[26]Exhibit A failed to provide the Missouri Real Estate Appraisers Commission certification or license number of the person or persons who developed the worksheet and
June 11th statement, or to provide a statement setting forth the basis for exemption from licensure and certification for such person pursuant to Section 339.501.5, RSMo.[27]
The testimony of Mr. Marx only addresses an opinion of an equity dividend rate that was utilized in the Exhibit A worksheet.Mr. Marx offers no opinion of value of either of the properties as a state certified appraiser.According to the March 3, 2008, letter of Mr. Robertson and Mr. Marx, the effective date of their opinion and their appraisal report[28] was March 3, 2008.Therefore, the opinion as to an “equity dividend rate” was for a date fifteen months after the valuation date of January 1, 2007.
The June 11th statement advises that the “capitalization rate for 2007 was determinedby an independent appraiser.”However, the Bliss Letter estimated an “equity dividend rate of 9%” not an overall capitalization rate.An overall capitalization rate and an equity dividend rate are two different things.[29]An equity dividend rate is an element of constructing an overall capitalization rate. The testimony of Mr. Marx establishes that Savage and Browning LLC “needed an independent opinion of the equity dividend rate for use in building the appropriate capitalization rate for the equity portion of the financing.”[30] (Emphasis Added).It is clear Mr. Marx understands the difference between equity dividend and overall capitalization.However, the capitalization rate utilized in the worksheet is simply the 9% equity dividend rate.That is not an overall capitalization rate.
The individual or individuals who prepared the worksheet in Exhibit A did not build a capitalization rate.The worksheet simply added a equity dividend rate to an effective tax rate to arrive at a “Total Rate.”The Income and Expense Worksheet provided to the parties with the Commission Order of January 2, 2008, contained the following grid:
Capitalization |
2004 |
2005 |
2006 |
Loan to Value x Interest Rate |
|
|
|
Equity x Equity Dividend Rate |
|
|
|
Effective Tax Rate |
|
|
|
Overall Capitalization Rate |
|
|
|
This grid provides the proper elements to be calculated to build an overall capitalization rate.Complainant’s worksheet did not calculate the elements called for by the Commission’s worksheet grid.There was no calculation of Loan to Value times an Interest Rate.There was no calculation of Equity times the Equity Dividend Rate.There was an amount given as the Effective Tax Rate.However, there is no documentation substantiating the factor given.There are no supporting calculations to establish how the rate of 1.9% was determined.Such deficiencies render the conclusion of value in Complainant’s worksheet as totally meaningless.
The Hearing Officer found the worksheet unpersuasive to establish the true value in money for either or both of the properties under appeal.The Commission is likewise unpersuaded.
Summary & Conclusion
Complainant was provided full opportunity consistent with the Commission rules and Scheduling Order to present all exhibits and written direct testimony necessary to establish a prima facie case for the true value in money for the properties in each appeal.Complainant was given a full hearing on the exhibits and written direct testimony it submitted.The evidence submitted was deficient to meet the Complainant’s burden of proof to establish fair market value.A live oral hearing was not required given Respondent’s election to waive cross examination of Complainant’s only witness.Complainant was precluded under the Commission rule from offering additional evidence that had not be prefiled and exchanged as ordered.
ORDER
The Commission upon review of the record and Decision in this appeal, finds no grounds upon which the Decision of the Hearing Officer should be reversed or modified.Accordingly, Complainant’s Motion to Reopen the Hearing is denied and the Decision is affirmed.The Decision and Order of the hearing officer, including the findings of fact and conclusions of law therein, is incorporated by reference, as if set out in full, in this final decision of the Commission.
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 date of the mailing set forth in the Certificate of Service.
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 of Taney County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in 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 March 3, 2009.
STATE TAX COMMISSION OF MISSOURI
Bruce E. Davis, Chairman
Jennifer Tidwell, Commissioner
Charles Nordwald, Commissioner
DECISION AND ORDER
HOLDING
Decision of the Taney County Board of Equalization sustaining the assessment made by the Assessor is SUSTAINED.Hearing Officer finds Complainant did not rebut the presumption of correct assessment by the Board. True value in money for the subject properties for tax years 2007 and 2008 is set at:
07-89503 |
Commercial |
$57,750 |
$18,480 |
07-89504 |
Residential |
$3,009,316 |
$571,770 |
Complainant appeared by Counsel, Richard Dvorak.
Respondent appeared by Taney County Counselor, Robert Paulson.
Case submitted on exhibits filed and decided by Hearing Officer Maureen Monaghan.
ISSUE
The Commission takes these appeals to determine the true value in money for the subject property on January 1, 2007.
SUMMARY
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 Assessor determined an appraised value of $57,750, assessed value of $18,480, as commercial property, in appeal number 07-89503.The Assessor determined an appraised value of $3,009,316, assessed value of $571,770, as residential property, in appeal number 07-89504.Complainant proposed a value of $37,750, assessed value of $12,080, as commercial property, in appeal number 07-89503.The Complainant proposed a value of $1,184,400, assessed value of $379,008, as residential property (although they used the commercial assessment rate to compute their assessed value), in appeal number 07-89504.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
Complainant’s Evidence
Complainant submitted the following exhibits.No objection was made.The exhibits are received into evidence.
Exhibit |
Description |
A |
STC Worksheet |
B |
Income and Expense Worksheet |
C |
HUD Agreement |
D |
Written Direct Testimony of Robert Marx |
Respondent’s Evidence
Respondent offered no exhibits or written direct testimony in response to the Commission Order of January 2, 2008.
FINDINGS OF FACT
1.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.By Order dated August 13, 2008, Counsel for Respondent was given until
August 22, 2008, to advise the Hearing Officer in writing, that he wished to cross-examine Complainant’s witness.Failure to so advise the Hearing Officer would be deemed waiver of the evidentiary hearing and consent to submission of the appeal upon Complainant’s Exhibits.Counsel for Respondent did not advise the Hearing Officer that he desired to cross-examine Complainant’s witness.
3.The subject property in appeal number 07-89504 is located at2818 Old County Road,Branson,Missouri.The property is identified by parcel number 17-3.0-05-002-006-001.The location of subject property in appeal number 07-89503 is unknown.The property is identified by parcel number 08-9.0-32-003-020-008.
4.According to the documents provided by the Complainant there are eighty-three units in an apartment complex designated as a tax credit low-income housing project.[31]
5.The subject property in appeal number 07-89504 is classified as residential property.The subject property in appeal number 07-89503 is classified as commercial property.
6.There was no evidence of new construction and improvement from January 1, 2007, to January 1, 2008.
7.Neither party provided the Hearing Officer with a description of the subject properties.
8.On January 2, 2008, the parties were ordered to complete an Income and Expense Worksheet provided by the State Tax Commission.The parties were ordered to file their worksheets by March 3, 2008.
9.The Worksheet requires the Complainant’s actual income, including rental income, subsidies and other sources, actual vacancy and collection, and expenses over a three year period. The Worksheet also requires determination of an overall capitalization rate using the loan to value ratio, interest rate, equity ratio, equity dividend rate and effective tax rate.
10.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.
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.[32]
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.[33]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.[34]Exhibits A and B do not constitute substantial and persuasive evidence to rebut the presumption of correct assessment by the board.
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.[35]It is the fair market value of the subject property on the valuation date.[36]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.[37]
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.[38]It is also within the State Tax Commission’s authority to ascertain the correct or modern 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.[39]The relative weight to be accorded any relevant factor in a particular tax assessment case is for the State Tax Commission to determine.[40]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.[41]The determination of “true value in money” of any property is a factual issue for the State Tax Commission.[42]
Proper Methodology
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.”
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. After carefully considering the benefits and risks associated with subsidized housing, the State Tax Commission, in Maryville Properties, 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.
Complainant’s Burden of Proof
In order to prevail, Complainant must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2007.[43]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.”[44]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[45]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.[46]
A taxpayer does not meet his burden if evidence on any essential element of his case leaves the Commission “in the nebulous twilight of speculation, conjecture and surmise.”[47]Taxpayer lists Exhibit A as the State Tax Commission Worksheet which was ordered to be completed by the parties.Exhibit A is not the State Tax Commission Worksheet.It fails to provide three years of actual income and expenses and it incorrectly determines the capitalization rate. The Taxpayer failed to provide the loan to value ratio, interest rate, and equity ratio. The other exhibits are supporting documents for the information contained in Exhibit A, the Worksheet.The other exhibits do not provide an opinion of valuation.Further, it is unknown if the Exhibits pertain to one property or both properties.Since one property is classified as commercial, it might be assumed that the Exhibits do not pertain to that property.
The Hearing Officer is left to mere speculation, conjecture and surmise.Decisions in appeals before the Commission cannot be based on such elements.Since the Hearing Officer was not provided with a description of the properties or sufficient information to calculate the proper capitalization rate, the Hearing Officer cannot find value as to the residential property in case 07-89504.Since no information was provided in case 07-89503, Hearing Officer is unable to make any determination of value.
Complainant failed to meet its burden of proof.
ORDER
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization forTaneyCountyfor the subject tax day is AFFIRMED.
The assessed value for the subject properties for tax years 2007 and 2008 is set:
07-89503 |
Commercial |
$18,480 |
07-89504 |
Residential |
$571,770 |
Complainant may file with the Commission an application for review of this decision within thirty days of the mailing of such decision.The application shall contain specific 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, MO65102-0146, 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 appeal is based will result in summary denial. [48]
The Collector of Taney County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending a 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 29, 2008.
STATE TAX COMMISSION OFMISSOURI
Maureen Monaghan
Hearing Officer
[3] Appeal 07-89503 Assessed Commercial Value of $18,480;
Appeal 07-89504 Assessed Residential Value of $571,770.
[4] Unless an appeal is voluntarily dismissed, a hearing officer, after affording the parties reasonable opportunity for fair hearing, 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.
[5] A hearing officer, after affording the parties reasonable opportunity for fair hearing, shall issue a decision and order affirming, modifying or reversing the determination of the board of equalization, correcting any assessment which is unlawful, unfair, improper, arbitrary or capricious.”
[23] Decision. p. 4, citing to 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).
[25] Hermel, Inc. v. STC, 564 S.W.2d 888 (Mo. 1978); Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Holt v. Clarke, 965 S.W.2d 241 (Mo. App. W.D. 1998); Smith v. Morton, 890 S.W.2d 403 (Mo. App. E.D. 1995); Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).
[28] It is unclear if the reference to the appraisal report is the worksheet in Exhibit A.It appears that is not the case, since the worksheet appears to be dated June 11, 2008, and the Marx testimony omits citing to the worksheet as his appraisal.
[29] See, The Appraisal of Real Estate, Twelfth Edition, The Appraisal Institute, pp.489-490; The Dictionary of Real Estate Appraisal, Third Edition, Appraisal Institute, pp. 121 & 255-256; Real Estate Appraisal Terminology, Revised Edition, Society of Real Estate Appraisers, pp. 92 & 179.
[33] 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).
[34] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
[35] 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).
[37] 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.
[38] 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).
[44] 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).