State Tax Commission of Missouri
|CENTRAL PARK SQUARE INC.,||)|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
Central Park Square Inc. (Complainant) presented substantial and persuasive evidence to establish the productivity value or true value in money (TVM) for the subject property on January 1, 2017, to be $5,072. The classification of the subject property is agricultural. The subject property’s assessed value for tax years 2017-2018 using the statutory assessment ratio of 12% is set at $609.
Complainant appeared by counsels Peter Corsale, Ryan McCarty, Jason Turk and Patrick Keefe.
Jake Zimmerman, Assessor of St. Louis County, (Respondent) appeared by counsel Jeremy Shook.
Case heard and decided by Chief Counsel Maureen Monaghan (Hearing Officer).
The State Tax Commission (STC) takes this appeal to determine (1) whether the property was overvalued; (2) whether there was an intentional plan by the assessing officials to assess the properties under appeal at a ratio greater than 32% of TVM, or at a ratio grossly excessive to the average 2017 commercial assessment ratio for St. Louis County; and (3) whether the property should be classified as agricultural rather than commercial.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the STC.
- Evidentiary Hearing. The issue of overvaluation and classification was submitted on exhibits. The issue of discrimination was presented at an evidentiary hearing on December 18-19, 2018, at 1 North Brentwood Blvd, Clayton, St. Louis County, Missouri upon agreement of the parties.
- Identification of Subject Property. The subject property is identified by 16350 Main Circle Drive, St. Louis County, Missouri. The parcel/locator number is 18T340322.
- Description of Property. The property is a 4.9 acres of land. The land is used for growing crops. The property was used for growing crops on January 1, 2017.
- Assessment. Respondent determined a TVM for the subject property of $1,440,500 and classified the property as commercial. Respondent assessed the property at the statutory commercial rate of 32% of TVM, or $460,960.
- Board of Equalization. On September 20, 2017, the St. Louis County Board of Equalization (BOE) notified Complainant that it had “reviewed and considered all evidence submitted….” The BOE found that the appeals to them were timely, that Complainant had standing to appeal, and that “there is no presumption that the Assessor’s valuation is correct.” Based on all the evidence presented, the Board determined the TVM of the property to be $1,440,500. The BOE applied the statutory assessment ratio of 32%.
- Classification. The property is used for agricultural purposes devoted primarily to the raising and harvesting crops.
- True Value in Money. Complainant presented substantial and persuasive evidence to establish the subject property’s TVM, productivity value for Grade 1 of $1035 per acre, as of January 1, 2017 to be $5,072.
- Discrimination. Complainant, having established the property as agricultural classification, did not present substantial and persuasive evidence establishing discrimination.
- Assessed Valuation The assessed value of the subject property as of January 1, 2017 using the productivity value of Grade 1 ($1035) and the statutory ratio for agricultural property of 12% is $609.
Complainant offered into evidence the following exhibits as to valuation and classification:
|A||Photographs of the Subject Parcel|
|B||Receipt for fertilization and agricultural activities including soil testing|
|WDT||Written Direct Testimony (WDT) Randy Ruppel (Ruppel)|
Respondent did not object to Exhibits A and B or the WDT and all were admitted into evidence.
Ruppel testified that he owns Ruppel Brothers Landscaping. He performs various landscaping services including custom farming. He described custom farming as farming land owned by others. All the crops grown and harvested on the land belongs to the owner of the land. He provides the equipment and services needed to grow and harvest crops.
Ruppel testified that he performs custom farming on the subject property. He grows winter wheat on the property. He testified that he has the wheat planted by October and he will harvest it between June and July the following year. He planted winter wheat on the subject property in October 2016. In July 2017, he harvested the wheat. Between planting and harvest, he attends the crops by inspection and fertilization.
He utilizes all the land for horticultural purposes. He describes the soil as being good and not rocky. The parcels suffer little from flooding or erosion.
As to the claim of discrimination, Complainant and Respondent each presented evidence in the form of a ratio study prepared by an expert in the field of mass appraisal and assessment ratio studies. Ratio studies provide information regarding the level and equity of assessments. Ratio studies use a statistically significant number of properties within the same class as the subject property and compare an assessor’s value for those properties to a market value proxy for those properties. The market value proxy is either the sale prices of similarly classified properties in the jurisdiction within a relevant time period or an independent appraisal of randomly selected properties. In this appeal, the ratio studies utilized recent sales of commercial properties. In the ratio studies and testimony, the experts used the following terms:
- Appraisal Level: Overall ratio of assessor’s values to market values. Level measurements provide information about the degree to which goals of legal requirements are met. Estimates of appraisal level are based on measures of central tendency.
- Assessed Value: Legally authorized fraction of market value.
- Assessment: Determination of true value, classification and location within taxing districts for ad valorem taxation.
- Coefficient of Dispersion (COD): Measures the average percentage of deviation of the ratios from the median ratio. A lower COD implies a lesser amount of variability or more equity in assessments.
- Computer-Assisted Mass Appraisal (CAMA): A process that uses a system of integrated components and software tools necessary to support the appraisal of a universe of properties through the use of mathematical models that represent the relationship between property values and supply/demand factors.
- Equalization: The process by which an appropriate governmental body attempts to ensure that property under its jurisdiction is assessed at the same assessment ratio or at the ratio or ratios required by law.
- Mean: The arithmetic average. It is created by adding together all the individual samples and dividing by the number of samples.
- Median: The middle observation when the values of the data are arrayed. It divides the data into two parts.
- Price-Related Bias (PRB): It is used to measure assessment equity (regressivity/progressivity). It measures the relationship between assessment-sales ratios and value in percentage terms. For example, a PRB of .05 indicates that, on average, assessment ratios increase by 5% whenever values double.
- Price Related Differential (PRD): It is calculated to measure assessment regressivity or progressivity. It is found by dividing the mean by the weighted mean. The comparison tests for equity between low value properties and high value properties. A PRD above 1.00 suggest that the assessment values placed on high-value parcels are relatively lower than the assessment values placed on low-value parcels.
- Progressivity: Taxation is imposed in such a manner that the tax rate decreases as the amount subject to taxation decreases.
- Ratio Study: Sales or appraisal based study designed to evaluate appraisal performance to determine if statutory requirements are met. Studies can be used to evaluate the degree of discrimination and to adjust assessed values on appealed properties to the common level.
- Regressivity: Taxation is imposed in such manner that tax rate decreases as the amount subject to taxation increases.
- Stratification: Dividing the population into subsets or strata.
- True Value in Money (TVM): Also referred to as appraised value, market value, or fair market value.
- Weighted Mean: It is the sum of the assessed values divided by the sum of the individual indicators of market value.
Complainant submitted the following exhibits as to the level of assessment of commercial properties in St. Louis County, and rebuttal and surrebuttal for all issues:
|A||Written Direct Testimony (WDT) of Robert Gloudemans (Gloudemans)|
|B||Gloudemans 2017 Ratio Study of St. Louis County Commercial Properties|
|D||St. Louis County Sales Validation & Verification Guidelines|
|E||Standard on Ratio Studies|
|F||Standard on Mass Appraisal of Real Property|
|G||Deposition Designations of Sandy Youtzy (Youtzy)|
|H||Deposition Designations of John Gillick (Gillick)|
|I||St. Louis County Council Order 1-19-16 approving 2016-2017 Assessment Maintenance Plan and attaching January 1, 2016 – December 31, 2017 STL County Assessment Maintenance Plan|
|K||Email 8-10-2016 from Youtzy to STC Local Assistant Manager Jeff Schmidt Advising of Attached Residential and Commercial Cost Data|
|L||WDT of Steve Weber (S. Weber)|
|Q||Map of St. Louis County Commercial Areas|
|R||St. Louis County 2016 Certified and Final Data Files|
|S||St. Louis County 2017 Preliminary Assessment and Data Files|
|T||St. Louis County 2017 Certified and Final Data Files|
|U||St. Louis County Commercial Sales Lists|
|V||WDT of Steven Hottle (S. Hottle)|
|W||Curriculum Vitae of S. Hottle|
|X||August 25, 2018 Letter to S. Hottle from Gloudemans|
|Y||Attachment to Letter – Valid Solds and Unsolds Sorted by NBHD, LUC, & GBA|
|Z||Attachment to Letter – Value Changes by NBHD & Property Type|
|AA||Summary of Locator No. 23Q440942|
|BB||Summary of Locator No. 14N120324|
|CC||Summary of Locator No.09J130677|
|DD||Summary of Locator No. 14N410430|
|EE||Summary of Locator No. 29V420059|
|FF||Summary of Locator No.17V320178|
|GG||Summary of Locator No. 10K240106|
|HH||Summary of S. Weber Review|
|II||Sale #5 Review|
|JJ||Sale #6 Review|
|KK||Sale #55 Review|
|LL||Sale #105 Review|
|NN||Sale #119 Review|
|OO||Sale #195 Review|
|PP||Sale #199 Review|
|Sale #346 Review|
|RR||Sale #348 Review|
|SS||Sale #398 Review|
|TT||October 2017 Assessment Roll|
|UU||Complainant’s Joint Deposition Designation of Youtzy|
|VV||Written Rebuttal Testimony (WRT) (BOE-Only) Gloudemans|
|WW||2017 Final Review Instructions|
|XX||Group Exhibit XX Respondent’s Emails and Spreadsheets|
|YY||Group Exhibit YY Review Sheets – Respondents Production 00001-07350|
|ZZ||WRT of Gloudemans|
|AAAA||WRT of S. Hottle|
|GGGGG||Written Surrebuttal Testimony (WST) of S. Hottle|
|IIIII||Email of Richard Brunk, attorney for the BOE|
|KKKK||Scope of Josh Myers (Myers) contract|
Complainant called Sandy Youtzy (Youtzy) as a witness. Youtzy is the Chief Administrative Manager at the St. Louis County Assessor’s Office. (Tr. 10) She testified as to Respondent’s commercial valuation process, personnel and CAMA. Respondent’s CAMA, which Respondent’s office personnel refers to as IAS (independent appraisal system), utilizes the income and the cost approaches to value commercial property. (Tr. 14) Youtzy testified that she supervises the County’s commercial valuation manager. (Tr. 11) The position of commercial valuation manager was vacant during the reassessment for 2017. (Tr. 11) She testified that there were additional vacancies in 2016-2017 including the sales validation position and CAMA modeler. (Tr. 11, 17-18 Ex G p. 11-16) The modeler analyzes market data and makes changes to the CAMA.
A CAMA requires the most up-to date information. (Tr. 14) Youtzy was questioned on the failure of the Assessor’s office to collect information in preparation of the commercial valuation for the 2017 cycle. Youtzy stated there was no rent survey conducted for the 2017 assessment cycle. (Tr. 15) There was no income and expense survey performed for the 2017 cycle. (Tr. 15) There was no adjustment for the cost of land data from 2015 to 2017. (Tr 15-16) Youtzy was questioned as to regular review of the CAMA’s valuations for 2017. Assessors conduct quarterly ratio studies to monitor performance of their CAMA, identify potential areas of concern, and assist in market analysis. It is part of the calibration process for the CAMA. (Tr. 21) Youtzy testified that Respondent did not conduct quarterly ratio studies. (Tr. 20)
Youtzy testified that the process for commercial valuation is that the CAMA sets values then reviewers go in and look at each valuation individually. (Ex G p. 47) There are approximately 12,000 improved commercial properties in St. Louis County. (Tr. 33) Review appraisers were allowed to go into the IAS on individual commercial properties and change values. (Tr. 26) Review appraisers made changes without supervision, notes, or documentation. (Tr. 29, Ex. G p. 19) Youtzy testified that she has no idea how many property values were changed during the review process. (Tr. 51)
Complainant called John Gillick as a witness. (Tr. 58) He is a commercial assessment analyst for Respondent. (Tr. 59) He took that position in March 2016. (Tr. 59) His duties include validating commercial sales. (Tr. 59) He testified that the ideal situation would be to verify sales in 2-3 months. (Tr. 85) When he took the position in 2016, Respondent had sales dating back to 2012 that were unverified. (Tr. 85) In January 2017, he emailed the commercial review appraisers who were conducting final reviews for 2017. (Tr. 75) In that email, Gillick provided sales of commercial properties to be used as comparable sales during the final review process. (Tr. 76) The sales provided to the review appraisers included unverified sales. (Tr. 78)
Gloudemans testified on behalf of Complainant. He is a partner in Almy, Gloudemans, Jacobs and Denne. He is a tax consultant specializing in property tax assessment administration and has been engaged in such work for over 40 years. (Exhibit A, pp 1-2) He was hired to analyze the assessment of commercial property in St. Louis County for tax year 2017. More specifically, he was hired to determine the average or common level of assessment for commercial property for tax years 2017-2018. (Exhibit A, p. 7) Gloudemans prepared a report of his findings. (Exhibit B)
To analyze the assessment of commercial property in St. Louis County for tax year 2017, Gloudemans used sales of commercial property in St. Louis County that occurred from July 2016 through June 2017. (Exhibit A p.9) The study utilized data from the St. Louis County Assessor’s Office regarding sales of commercial properties and assessment data. (Exhibit A p. 7)
Hottle Appraisal Company verified the commercial sales used in the study. (Exhibit A p. 9) The verification procedures were compliant with the IAAO Standard of Verification and Adjustment of Sales and the IAAO Standard on Ratio Studies. (Exhibit A p. 9) A total of 228 valid sales were used for the study. (Exhibit A p. 10) Two sales were removed from the list of sales as outliers. (Exhibit A p. 14) After reviewing the sales, Gloudemans opined the following measures of central tendency:
Gloudemans testified that two themes emerged from his study. First, he found extreme regressivity in commercial assessments in St. Louis County meaning properties with higher values were assessed at a lower assessment ratio than properties with lower valuations. Second, Respondent selectively appraised sold properties. It was his opinion that the use of 2017 values “provides unreliable and biased ratio statistics.” (Exhibit A p. 8)
Gloudemans produced a second study using a method provided by IAAO when there is an indication of selectively reappraising sold properties, also known as sales chasing. (Exhibit A p. 8) Sales chasing is when sold and unsold properties are not appraised in the same manner, i.e., parcels that sell are selectively reappraised based solely on their sale prices. Sales chasing makes a ratio study unreliable as it biases it and gives it misleading indicators. (Tr. p. 173) Gloudemans testified that the IAAO suggests methods for detecting sales chasing and methods for compensating for sales chasing when conducting ratio studies. (Exhibit A p. 20)
The most common method used to detect sales chasing is comparing value changes for sold and unsold properties. (Exhibit A p. 20) Gloudemans looked at value changes for sold and unsold properties. Gloudemans found the median increase in the values of sold properties was 3.93% while there was no significant change in the values of unsold properties. (Exhibit A p. 21) Gloudemans opined that the differential in value changes for sold and unsold indicated the presence of sales chasing and the practice of sales chasing was practically significant.
Gloudemans conducted a second ratio study to address any impact of sales chasing on the results of the ratio study. One method for compensating for sales chasing is to use current sales prices and prior year values adjusted for reappraisal activity or assessment value changes in the population. The percentage increase or decrease in the prior year’s appraised values for the population is used to adjust the prior-year’s values for the sample. (Exhibit A p. 24)
Following the prescribed method, Gloudemans (1) filtered sales to remove properties that had changes in use, new construction, demolitions or other significant changes; (2) used certified 2016 values in place of 2017 values; and (3) adjusted measures of central tendency upward based on the overall change in values for the population. (Exhibit A p. 8)
Gloudemans new ratio study used 191 sales based on the certified 2016 values with the upward adjustment. Two sales were removed as outliers, leaving 189 sales for ratio analysis. (Exhibit A, p. 13) He also adjusted the mean and weighted mean upward by 3.56% to account for the use of the 2016 assessment roll and the differences in the market between 2016 and 2017. (Exhibit A p. 28)
Gloudemans reported the following findings for commercial assessments in St. Louis County in 2017 in his second study:
Gloudemans stratified the measures by geographical regions, value and property type. (Exhibit B p. 37)
Gloudemans recommended use of the weighted mean, weighted by geographical area, as the appropriate measure of common level of assessment. (Tr. 112) As an alternative, the value-weighted median would be recommended. (Tr. 112) His recommendation for the use of the weighted mean was based upon effective tax rate equalization for the purpose of equalizing the amount of taxes paid. (Tr. 130) He testified that if he wanted to find a typical ratio, or common level of assessment, for commercial properties in St. Louis County, he would look at the median. (Tr. 130)
Gloudemans testified as to his opinion as to the assessment performance of the Respondent. Gloudemans testified that during the course of his study he learned that:
- Respondent did not have a CAMA modeler for 2017 and relied on 2 individuals to fill this roll (Exhibit A p. 29);
- Respondent’s commercial sales analyst position was vacant and when one was hired there was a backlog of old sales to verify; (Exhibit A p. 29)
- Respondent did not conduct an income and expense survey;
- Respondent carried the cost tables from 2015 over to 2017; and
- Respondent’s commercial review appraisers had authority to alter the values with little to no oversight. The review appraisers changed values for 99 of the 226 valid sales. The PRD for those 99 sales is 1.200 versus 1.081 for the other 127 sales. (Exhibit A p. 30)
Gloudemans was critical of Respondent’s assessments. Gloudemans testified that Respondent’s poor assessment practices have an adverse impact on the reliability of the assessor’s valuation. (Tr. 126) He felt Respondent’s CAMA system was inherently flawed due to the lack of up-to-date market data, staff vacancies, and related inability to conduct current market analysis. (Exhibit A p. 29)
Besides finding Respondent’s assessment practices were lacking and contending Respondent engaged in sales chasing, Gloudemans testified Respondent’s commercial assessments are highly regressive. (Tr. 126) High-value properties are generally valued at a lower percentage of their fair-market value than lower-value properties. (Tr. 126)
Complainant and other property owners subject to this hearing do not consist of all high-value properties or all low value properties. (Tr. 115, 128) Gloudemans testified that there is no threshold for which properties are valued too low and which are valued too high. (Tr. 127) In other words, he cannot tell us which Complainants are paying more than their fair share of taxes or which ones are paying less. (Tr. 153)
Respondent presented the following exhibits as to the issue of valuation and the level of assessment of commercial properties in St. Louis County, which were admitted into evidence:
|1||WDT of Youtzy|
|2||Spreadsheet of 2017 Commercial Appeals to the St. Louis County BOE|
|3||Spreadsheet of PAR Commercial Appeals that Waived their BOE Hearing|
|4||WDT of Josh Myers (Myers)|
|5||Curriculum Vitae of Myers|
|6||Gloudemans’ Ratio Study|
|7||WDT of Gloudemans|
|8||Spreadsheet of “Discrimination Only” Complainants|
|9||Spreadsheet of Gloudemans’ Sales that also Filed Tax Appeals in 2017|
|Spreadsheet of Complainants Who Filed Appraisals as Evidence of Value|
|14||WDT of Myers|
|15||Sales Ratio Study of the St. Louis County 2017 Commercial Reassessment, Prepared by Myers|
|16||IAAO’s Standard on Ratio Studies|
|17||Spreadsheet Containing Commercial Property Sales Used by Myers in Preparing His Sales Ratio Study|
|18||WDT of Gillick|
|19||Gillick Professional Qualifications|
|20||IAAO’s Standards on Verification and Adjustment of Sales|
|21||St Louis County Sales Validation & Verification Guidelines|
|22||WRT of Myers|
|23||Diagram showing Median Sales Ratios and Confidence Intervals|
|24||WRT of Gillick|
|25||Spreadsheet of Valid/Invalid Sales|
|26||Sales Packets of St. Louis County and S. Hottle (Hard Copy)|
|27||Spreadsheet of Sales that Occurred after Final Review|
|28||Spreadsheet of S. Weber and Hottle Comparables|
|29||Respondent’s Counter-Designations of Gillick Deposition|
|30||Respondent’s Counter-Designations of Youtzy Deposition|
|33||Respondent’s Sales Packets|
|35||Neighborhood Review Spreadsheet|
|36||Respondent’s Counter-Designations of Youtzy Deposition|
|37||Information on Gloudemans’ sale 246|
|38||Information on Gloudemans’ sale 655|
|39||Information on Gloudemans’ sale 21|
Myers testified for Respondent. He is a Statistical Consultant specializing in property tax and assessment analysis. (Exhibit 4 p 1) He has a master’s degree in statistics. His past employment includes working for the City of Norfolk, Virginia, as a CAMA Modeler Analyst. (Exhibit 4 p 2) Myers has been a member of the IAAO Editorial Review Boards and Technical Standards Committee. (Exhibit 5 p. 5)
Myers was asked to perform ratio studies for commercial and residential properties in St. Louis County for the 2017-2018 Assessment Cycle. (Exhibit 6) Myers received approximately 590 sales of commercial properties that sold from June 2016 through June 2017. (Exhibit 15 p. 11) He filtered the sales for those that were valid or probably valid. (Exhibit 15 p. 11) He filtered out sales with values determined by the BOE or STC in prior assessment years. (Exhibit 15 p. 11) Myers also removed outliers. (Exhibit 15 p. 11) After filtering, he had 185 sales to use in his study. (Exhibit 15 p. 11)
Myers conducted his study and reported the following measures of central tendency:
(Exhibit 15 pp 15-16)
Myers also tested for selective reappraisal (sales chasing). (Exhibit 14 p. 11-12) He tested by comparing value percentage changes between the Assessor’s certified values from 2015 and the Assessor’s certified values from 2017 for sold and unsold properties. (Exhibit 14 p. 12) Myers found the median percent change of the sold versus unsold properties was different by only a few percentage points, 3.384, and median absolute deviation was 3.858. (Exhibit 14 p. 13) Although his testing indicated statistically significant sales chasing, he did not find it to rise to the level of practically significant, therefore, he did not conduct a second study. (Exhibit 14 p. 13-14)
Myers stated there were six reasons he did not find the sales chasing to be practically significant. (Exhibit 14 p. 14)
- The IAAO standard for COD is from 5%-20% and his COD was 21.410%. If the sales chasing would have been practically significant, the COD would have been narrower;
- Only one sale had a sale price identical to the total appraised value and only three other sales had a total appraised value within $5000 of the sale price;
- The distribution of sales ratios does not contain any large clusters of ratios around any one value or otherwise have an atypical shape;
- 176 sales out of the 194 sales had certified appraised values in both 2015 and 2017; 58 of those sales (33%) had a 2017 appraised value that was farther away from the sale price than it was in 2015;
- 39 of the 176 sales that had certified appraised values in both 2015 and 2017 (22%) had their values move closer to the sale price in the 2017 reassessment but still had sales ratios outside the bounds of 80% and 120%; and
- 91 out of 194 sales (47%) are either less than 80% or greater than 120%. If selective reappraisal was rampant, then it would be unlikely for almost half of the sales to be outside a range this broad.
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, including the application of any abatement. The Hearing Officer shall issue a decision and order affirming, modifying or reversing the determination of the Board of Equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious. Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.
Official and Judicial Notice
Agencies shall take official notice of all matters of which the courts take judicial notice. Section 536.070(6) RSMo. Courts will take judicial notice of their own records in the same cases. State ex rel. Horon v. Bourke, 129 S.W.2d 866, 869 (1939); Barth v. Kansas City Elevated Railway Company, 44 S.W. 788, 781 (1898). In addition, courts may take judicial notice of records in earlier cases when justice requires or when it is necessary for a full understanding of the instant appeal. Burton v. Moulder, 245 S.W.2d 844, 846 (Mo. 1952); Knorp v. Thompson, 175 S.W.2d 889,894 (1943); Bushman v. Barlow, 15 S.W.2d 329, 332 (Mo. banc 1929) State ex rel St. Louis Public Service Company v. Public Service Commission, 291 S.W.2d 95, 97 (Mo. banc 1956). Courts may take judicial notice of their own records in prior proceedings involving the same parties and basically the same facts. In re Murphy, 732 S.W.2d 895, 902 (Mo. banc 1987); State v. Gilmore, 681 S.W.2d 934, 940 (Mo. banc 1984); State v. Keeble, 399 S.W.2d 118, 122 (Mo. 1966).
Weight to be Given Evidence
The Hearing Officer is not bound by any single formula, rule or method in determining true value in money and is free to consider all pertinent facts and estimates and give them such weight as reasonable they may be deemed entitled. The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide. St. Louis County v. Sercurity Bohomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).
Opinion Testimony by Experts
If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, with knowledge, skill, experience, training, or education may testify thereto. The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, but the facts or data need not be admissible evidence. Section 490.065, RSMo; State Board of Registration for the Healing Arts v. McDonagh, 123 S.W.3d 146 (Mo. 2004); Courtroom Handbook on Missouri Evidence, Wm. A Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc, 842 S.W.2d 133 (Mo. App. E.D. 1992)
The Hearing Officer, as the trier of fact, may consider the testimony of an expert witness and give it as much weight and credit as deemed necessary when viewed in connection with all other circumstances. Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. W.D. 1991). The Hearing Officer, as the trier of fact, is not bound by the opinions of experts but may believe all or none of the expert’s testimony or accept it in part or reject it in part. Exchange Bank of Missouri v. Gerlt, 367 S.W.3d 132, 135-36 (Mo. App. W.D. 2012)
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. Article X, Sections 4(a) and 4(b), Mo. Const. of 1945. The constitutional mandate is to find the true value in money for the property under appeal. By statute, real property and tangible personal property are assessed at set percentages of true value in money: residential property at 19%; commercial property at 32%; and agricultural property at 12%. Section 137.115.5 RSMo.
Complainant’s Burden of Proof
There is a presumption of validity, good faith and correctness of assessment by the BOE. Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968). The taxpayer is the moving party seeking affirmative relief, therefore, the taxpayer bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.” Westwood Partnership, 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. W.D. 1991).
“Substantial and persuasive controverting evidence is required to rebut the presumption, with the burden of proof resting on the taxpayer.” Cohen, 251 S.W.3d at 348. Substantial evidence can be defined as such relevant evidence that a reasonable mind might accept as adequate to support a conclusion. Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is evidence that has sufficient weight and probative value to convince the trier of fact. Cupples Hesse Corp., 329 S.W.2d at 702. The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief. Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975). See also, 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).
Under Missouri statutory law, property shall be classified as agricultural and horticultural property when “real property [is] used for agricultural purposes and devoted primarily to the raising and harvesting of crops . . .” Section 137.016.1(2) RSMo. The classification is determined by the actual use put to the property. Northtown Village v. Don Davis, Assessor, Jasper County. Mo., Appeal No. 03-62558 (May 27, 2004).
Land devoted primarily to the raising and harvesting of crops is valued by its productivity value. The STC sets forth those valuations, based upon grades, in the Code of State Regulations.
Investigation by Hearing Officer
In order to investigate appeals filed with the STC, the Hearing Officer 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. Section 138.430.2 RSMo (2000), as amended. The Hearing Officer’s decision regarding the assessment or valuation of the property may be based solely upon her inquiry and any evidence presented by the parties or based solely upon evidence presented by the parties. Id.
The Hearing Officer reviewed the testimony and photographs provided to establish the productivity value for the subject parcels.
To obtain a reduction in assessed valuation based upon alleged overvaluation, the Complainant must prove the true value in money of the subject property on the tax day. Hermel, Inc., v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978). True value in money is defined as the price that the subject property would bring when offered for sale by one willing but not obligated to sell it and bought by one willing or desirous to purchase but not compelled to do so. Rinehart v. Bateman, 363 S.W.3d 357, 365 (Mo. App. W.D. 2012); Cohen v. Bushmeyer, 251 S.W.3d 345, 348 (Mo. App. E.D. 2008); Green County v. Hermel, Inc., 511 S.W.2d 762, 771 (Mo. 1974). True value in money is defined in terms of value in exchange and not in terms of value in use. Stephen & Stephen Properties, Inc. v. State Tax Commission, 499 S.W.2d 798, 801-803 (Mo. 1973). In sum, true value in money is the fair market value of the subject property on the valuation date. Hermel, Inc., 564 S.W.2d at 897.
Complainant presented evidence of TVM through the testimony of a witness that was using the parcel for agricultural purposes and testified that the parcel is devoted primarily to the raising and harvesting of crops. Respondent, not having the burden of proof, chose not to present evidence as to TVM.
Missouri Code of Regulations, 12 CSR 30-4.010 provides for the agricultural land productivity values. Grade 1 is prime agricultural land. It is favorable to production. The value is determined to be $1035 per acres. Complainant’s evidence was substantial and persuasive evidence of TVM of the property on January 1, 2017. Subject property’s TVM is determined to be $5,072. The property is classified as agricultural. The assessed value using the statutory assessment rate of 12% is $609.
Commercial Ratio (Discrimination)
A property owner may seek relief under the claim of discrimination by proving the assessment was calculated at a greater percentage of value than other property within the same class. Systematic undervaluation, whether by an intentional plan or through use of an assessment ratio so grossly excessive as compared to the average ratio as to be inconsistent with an honest exercise of judgment by state officials of other taxable property in the same class, contravenes the constitutional right of one to be taxed upon the TVM of his property. Sperry Corp. v. State Tax Comm’n, 695 S.W.2d 464, 468 (Mo. banc 1985). When an assessor estimates TVM lower than the actual market value for a significant number of properties of the same sub-classification within the jurisdiction, the consequence is that the taxpayers whose properties were undervalued pay less than their fair share of taxes, while the taxpayers whose properties were either accurately valued or overvalued pay more than their fair share of taxes. When such disparity is so grossly excessive as to be entirely inconsistent with an honest exercise of judgment, it has the effect of intentional discrimination.
The STC is required to correct any assessment or valuation that is arbitrary, capricious, improper, or unfair. Section 138.430 RSMo. To prevail on a claim of discrimination in assessment, the Complainant must (1) prove the true value in money of their property on January 1, 2017; and (2) show an intentional plan of discrimination by the assessing officials resulting in an assessment of that property at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction or show that the level of an assessment is so grossly excessive as to be inconsistent with an honest exercise of judgment. Savage v. State Tax Commission, 722 S.W. 2d 72 (Mo. banc 1986); Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003).
True Value in Money (TVM)
Given the two-part test for proving a claim of discrimination in the context of ad valorem taxation as stated by Missouri courts, the first requirement is finding the TVM of the subject property. (See Overvaluation) Complainant presented substantial and persuasive evidence to establish the TVM of the property on January 1, 2017 was $5,072.
The second part of the test for proving a claim of discrimination is to show an intentional plan of discrimination by the assessing officials resulting in an assessment of the subject property at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction or show that the level of assessment of the subject property is so grossly excessive as to be inconsistent with an honest exercise of judgment. There was no evidence of an intentional plan of discrimination therefore it must be determined whether the subject property’s level of assessment was grossly excessive as to be inconsistent with an honest exercise of judgment.
Once TVM of the subject property is considered and the actual assessment ratio for the subject property is calculated, it must be determined whether the level of the assessment of the subject property was discriminatory because it was so grossly excessive as to be inconsistent with an honest exercise of judgment. “By requiring that the level of an assessment be so grossly excessive as to be inconsistent with an honest exercise of judgment in cases in which intentional discrimination is not shown, the courts and the STC refrain from correcting assessments which reflect no more than de minimus errors of judgment on the part of assessors.” Mid-America Financial Corp. v. Zimmerman, 481 S.W.3d at 571 (internal quotation omitted). “This standard recognized that while practical uniformity is the constitutional goal, absolute uniformity is an unattainable idea.” Id. (internal quotation omitted)
Both parties retained experts to perform sales ratio studies to determine the common level of assessment of commercial properties in St. Louis County in 2017. Both experts developed a ratio study using commercial sales from July 2016 through June 2017. Both experts relied upon validation of those sales by another party. Both experts developed measures of central tendency to determine the assessment level for commercial properties for the 2017-2018 assessment cycle.
Since the subject property was misclassified as commercial and the evidence presented was substantial and persuasive to establish the correct classification of the property is agricultural, the claim of discrimination is deemed moot.
Complainants alleged three grounds for appeal: overvaluation, misclassification and discrimination. Subject properties were classified as commercial. The testimony established that the properties are used for agricultural purposes and devoted primarily to the raising and harvesting of crops. A review of the exhibits provided the information necessary for grading the property. The aerial photographs show the topography. The testimony of Ruppel establishes the property is level, suitable for agricultural purposes with little or no rocks. The land has minimum slopes, little or no damage from flooding or erosion, and is suitable for most crops.
Complainant also appealed alleging violation of Article X, Section 3 of the Missouri Constitution in that there was an intentional plan by assessing officials to assess the properties at a ratio greater than the statutory commercial ratio of 32% of TVM or at a ratio grossly excessive to the average 2017 commercial assessment for St. Louis County (discrimination). Since it has been established that the property was misclassified,
The assessed valuation(s) for the subject property is (are) SET ASIDE.
The assessed value for the subject property for tax years 2017 and 2018 is set at $609.
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 for this Decision. The application shall contain specific facts or law as grounds upon which it is claimed the decision is erroneous. Said application must be in writing addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, or emailed to Legal@stc.mo.gov, and a copy of said application must be sent to each person listed below in the certificate of service.
Failure to state specific facts or law upon which the application for review is based will result in summary denial. Section 138.432, RSMo.
The Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 139.031.8 RSMo.
Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed. Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.
SO ORDERED June 4, 2019.
STATE TAX COMMISSION OF MISSOURI
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 4th day of June, 2019, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.
 A consolidated hearing was held as to the issue of discrimination involving commercial property owners. Commercial property owners were represented by tax representative agencies Joseph C. Sansone Company (Sansone) or Property Assessment Review (PAR). Counsels for Sansone in the discrimination hearing include Peter Corsale and Ryan McCarty. Counsel for Sansone as to valuation claim is Jason Turk. Counsel for PAR in the discrimination hearing as well as the valuation claim is Patrick Keefe.
 Additional grounds for appeal were included on the Complaint for Review of Assessment. No evidence was presented on those grounds and therefore they are deemed abandoned.
 Acreage according to parcel’s property record card for 2017.
 Exhibits C, J, N, O, P, MM and JJJJJ were withdrawn by Complainant. Hearing Officer sustained the County’s objections to Exhibit M titled Copy of PreBOE Ratio 06012017 and PreBOE Ratio Sales Data 1 and the exhibit was excluded.
 Tr. P. 108
 Effective tax rate is the ratio between the TVM and current tax bill. A parcel’s tax bill is determined by the property’s TVM, assessment ratio, and the tax levy set by each political subdivisions in which the parcel is located. An effective tax rate will vary within a county due to the various political subdivisions, i.e., school districts, cities, libraries, etc., located within each county.
 Exhibits 11 (PAR Marketing Materials), 12 (Appraisals produced by Complainants in discovery), 13 (Spreadsheet of Complainant parcels that produced appeals in discovery)
 137.345.5 Provides that in every instance where a taxpayer has appealed to the BOE or the STC and that appeal has been successful, then in the next following and all subsequent years the basis upon which the assessor must base future assessments of the subject property shall be the basis established by the successful appeal and any increases must be established from that basis.