STATE TAX COMMISSION OF MISSOURI
|COMMERCE TOWER PLACE, LLC||)|
|GAIL MCCANN BEATTY, ASSESSOR,||)|
|JACKSON COUNTY, MISSOURI||)|
DECISION AND ORDER
The assessment for ad valorem taxation, of Gail McCann Beatty, Assessor Jackson County, Missouri (Respondent) is SET ASIDE. Commerce Tower Place, LLC, (Complainant) and Respondent presented substantial and persuasive evidence to allow the Hearing Officer to determine the assessed value of the subject property subject to ad valorem taxation.
Complainant appeared by Counsel Steve Horn.
Respondent appeared by Counsel Tamika Logan.
Case heard and decided by Senior Hearing Officer John Treu (Hearing Officer).
Complainant appealed Respondent’s determination of the assessed value of the subject property for ad valorem tax purposes. Complainant contends: a) Respondent failed to freeze the assessed value at the pre-improved value for ad valorem taxation, b) Respondent’s percentage classifications for residential and commercial portions of the subject property were incorrect, and c) Respondent misapplied the statutory assessed value percentages to the residential and commercial portions of the subject property. (Complainant’s Post Evidentiary Legal Brief). The State Tax Commission (STC) takes this appeal to determine the assessed value of the subject property for ad valorem property tax purposes.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
- Complainant timely appealed to the STC.
- Evidentiary Hearing. The issue of the proper assessed value of the subject property for ad valorem property tax purposes was presented at an evidentiary hearing held on June 18, 2019, at the Jackson County Courthouse, Kansas City, Missouri. The parties subsequently briefed the issues.
- Identification of Subject Property. The subject property is identified as 29-220-32-02-01-1-00-000 located at 911 Main Street, Kansas City, Missouri. The subject property is a mixed use redevelopment with 355 apartments, an early childhood learning center, and a university located at the library stop on Main Street at 911 Main, Kansas City, Missouri. The subject property contains 31 habitable floors of which 24 floors are residential, 1 floor (the second floor) consists a common area, and 6 floors are commercial. There are 355 separate apartments and more than 360 separate mailing addresses.
The subject property is subject to tax abatement pursuant to Chapter 99 of the Missouri Revised Statutes. Construction rehabilitation began on the subject property in 2015. In 2017, the apartments first opened along with two commercial spaces. Construction was completed before January 1, 2018.
- Respondent valued the subject property at $8,037,720 ($2,315,520 assessed value), as of January 1, 2018
- Board of Equalization. No appeal to the BOE was undertaken due to an asserted late notice of increase in value.
- Complainant’s Evidence. Complainant offered as evidence the following exhibits:
|B||Temporary Certificate of Occupancy 03/01/17||Admitted|
|C||Temporary Certificate of Occupancy 04/17/17||Admitted|
|D||Inspection Report 09/28/17||Admitted|
|G||2017 Tax Bill||Admitted|
|H||Application for Refund of Taxes||Admitted|
|I||Land Clearance for Redevelopment Authority Certificate of Qualification for Tax Abatement||Admitted|
|J||2018 Tax Bill||Admitted|
|M||2018 Tax Payment Receipt||Admitted|
|N||Stipulation Regarding 2017 Assessed Value of Subject Property||Admitted|
|O||2019 Reassessment Notice||Admitted|
|P||Jackson County Records Regarding Subject Property||Admitted|
|R||Tax Comparison Chart||Admitted|
Respondent objected to exhibits G, H, and exhibits L-R. The objections were overruled and the exhibits were admitted to be given such weight as the Hearing Officer deemed appropriate, if any. All other exhibits were admitted without objection.
Justin Wade (“Wade”) testified on behalf of Complainant. Wade is an independent contractor for Complainant. Wade is the building director. His duties include managing commercial tenants; managing building systems; working with vendors and contractors; and dealing with accounting issues such as the issues in this appeal. Wade testified the subject property consist of 81% residential use and 19% commercial use.
Complainant offered no evidence as to the true value in money (“TVM”) of the subject property as it existed prior to any new construction, as of January 1, 2018. Complainant also offered no evidence as to the TVM of the subject property as it existed on January 1, 2018, other than a belief that such was incorrect. When Wade was asked “[w]hat do you think is the actual value of the property?” he responded “I cannot provide an accurate assessment of that without a professional appraiser beside me who specializes in determining the value of property. I do not have the skillset to provide you with that information.” When Wade was asked “[b]ut you don’t have an opinion of value?” he responded, “I can’t give you one that would be—I cannot give you a sufficient answer in this context. I cannot give you an answer and say that it would be this amount based off of this, this, and this. I cannot give you that. Like I said, I do not have that expertise. But I can say that in my limited opinion and my limited expertise, that it’s clearly too high.”
- Respondents’ Evidence. Respondent offered as evidence the following exhibits:
|1||Value Screenshot from Respondent’s Sigma Program||Admitted|
|2||Cost Approach Screenshot from Respondent’s Sigma Program||Admitted|
|3||Income Approach Screenshot from Respondent’s Sigma Program||Admitted|
|4||Permit Screenshots from Respondent’s Sigma Program||Admitted|
The exhibits were admitted without objection. Luke Walters (“Walters”) testified for Respondent. Walters is a commercial real estate supervisor for Respondent. His job duties include supervising commercial real estate appraisers, assigning tasks, and preparing for appeals. Walters is a certified general real estate appraiser in both Missouri and Kansas. Walters identified exhibits 1 through 4. Finally, Walters stated the market value determined by Respondent was an “appropriate market value.”
The total assessed value for tax year 2017 was $2,315,520 of which $532,256 was attributed to the land and $1,783,264 ($2,315,520 – $532,256) was attributed to the pre-rehabilitation improvement. Exhibit 1. The TVM of the subject property for tax year 2017 was $7,236,000 with $1,663,300 attributed to the land and $5,572,700 attributed to the pre-rehabilitation improvement. Exhibit 1.
For tax year 2018 Respondent determined a total taxable assessed value for ad valorem tax purposes of $2,315,520, the same as in 2017. Respondent determined a land TVM of $1,819,750 ($527,700 commercial and $1,292,050 residential) (29% commercial and 71% residential). Exhibits 1 & 2. Respondent determined a taxable land assessed value of $414,354. Exhibit 1. $1,901,167 of taxable assessed value was attributed to the improvement ($2,315,520 – $414,354).
- Assessed Value Subject to Ad Valorem Taxation Rebutted. Complainant and Respondent presented substantial and persuasive evidence to allow the Hearing Officer to determine the assessed value, of the subject property, subject to ad valorem taxation.
CONCLUSIONS OF LAW AND DECISION
The STC has authority to hear this appeal and to 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 BOE, 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.
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%; agricultural property at 12%; personal property at 33.33%. Section 137.115.5.
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 reasonably 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. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. State Tax Comm’n, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. State Tax Comm’n, 436 S.W.2d 650 (Mo. 1968).
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).
Complainant’s Burden of Proof
To obtain a reduction in assessed valuation based upon an alleged overvaluation, the Complainant must prove the true value in money of the subject property on the subject tax day. Hermel, Inc., v. State Tax Comm’n, 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); Greene 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 Comm’n, 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.
“’True value’ is never an absolute figure, but is merely an estimate of the fair market value on the valuation date.” Drury Chesterfield, Inc., v. Muehlheausler, 347 S.W.3d 107, 112 (Mo. App. E.D. 2011), citing St. Joe Minerals Corp. v. State Tax Comm’n, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993). “Fair market value typically is defined as the price which the property would bring when offered for sale by a willing seller who is not obligated to sell, and purchased by a willing buyer who is not compelled to buy.” Drury Chesterfield, Inc., 347 S.W.3d at 112 (quotation omitted).
A presumption exists that the assessed value fixed by the BOE is correct. Rinehart, 363 S.W.3d at 367; Cohen, 251 S.W.3d at 348; Hermel, Inc., 564 S.W.2d at 895. “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 Comm’n, 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).
There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a STC 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.” 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 Comm’n, 804 S.W.2d 387, 392 (Mo. App. W.D. 1991).
Methods of Valuation
Proper methods of valuation and assessment of property are delegated to the STC. It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case. See, Nance v. State Tax Comm’n, 18 S.W.3d 611, 615 (Mo. App. W.D. 2000); Hermel, Inc., 564 S.W.2d at 897; Xerox Corp. v. State Tax Comm’n, 529 S.W.2d 413 (Mo. banc 1975). Missouri courts have approved the comparable sales or market approach, the cost approach, and the income approach as recognized methods of arriving at fair market value. St. Joe Minerals Corp. v. State Tax Comm’n, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. State Tax Comm’n, 789 S.W.2d 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm’n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. 1974).
Land Clearance for Redevelopment Authority Law
“The Land Clearance for Redevelopment Authority Law [Section 99.300 – 99.715], is aimed at rehabilitating deteriorating municipal areas in concert with private enterprise. [Section 99.310]. Private enterprise is given assistance and encouragement through the LCRA by being granted tax abatement on those properties which qualify under the act. [Section 99.700]. The act is to be construed liberally to effectuate the purposes found in the act, [99.650], and the powers conferred by the law are in addition to those conferred by other law. [99.660].” 20th & Main Redevelopment v. Kelley, 774 S.W.2d 139 (Mo. banc 1989). The “valuation of the property before rehabilitation begins is the applicable number which is to be used in determining tax relief.” Id.
Pursuant to Section 99.710 RSMo. “the city or county assessor’s statement, as issued under section 99.705, shall be the maximum total assessed valuation of all real property included in the plans, a copy of which shall remain on file in his office, for each year for a period of ten years from the date on which the statement was issued.” Nevertheless, pursuant to 99.715 RSMo. “[i]n no event shall section 99.710 prevent the assessor from increasing or decreasing the assessed valuation of the real property other than the new construction or rehabilitation approved in the certificate of qualification.”
Complainant contends a) Respondent failed to freeze the assessed value at the pre-improved value for ad valorem taxation, b) Respondent’s percentage classifications for residential and commercial portions of the subject property were incorrect, and c) Respondent misapplied the statutory assessed value percentages to the residential and commercial portions of the subject property. These are the sole issues to be addressed.
Complainant offered no evidence as to the pre-rehabilitation TVM of the subject property, as of January 1, 2018. Complainant also offered no evidence as to the TVM of the subject property as it existed on January 1, 2018, other than a belief that such was incorrect. Consequently, Complainant did not rebut the TVM determinations of Respondent. Nevertheless, Complainant’s witness Wade testified the subject property consist of 81% residential use and 19% commercial use. Respondent did not dispute this. Therefore, the assessed value subject to ad valorem property tax as of January 1, 2018 must be based upon these percentages.
The assessed value subject to ad valorem property tax, as of January 1, 2018, must be based upon the pre-rehabilitation land and pre-rehabilitation improvement. The subject property land has remained the same. Respondent determined a land TVM of $1,819,750 ($527,700 commercial and $1,292,050 residential) which calculates to 29% being attributable to commercial use and 71% being attributable to residential. Respondent’s percentage classification resulted in a determined taxable land assessed value of $414,354. By attributing the correct 19% commercial use and 81% residential use to Respondent’s land TVM of $1,819,750 and by then applying the statutory assessed value percentage rates set forth in Section 137.115.5 RSMo. a taxable land assessed value of $390,700 results.
Regarding the pre-rehabilitation improvement, Respondent determined a TVM of $5,941,145. By attributing 19% commercial use and 81% residential use to Respondent’s pre-rehabilitation TVM and by then applying the statutory assessed value percentage rates set forth in Section 137.115.5 RSMo., a taxable pre-rehabilitation improvement assessed value of $1,901,167 results.
The pre-rehabilitation land assessed value ($390,700) plus the pre-rehabilitation improvement assessed value ($1,901,167) equal $2,291,867. This amount is less than the 2017 pre-rehabilitation assessed value of $2,315,520.
The assessed valuation for the subject property, subject to ad valorem property tax, as determined by Respondent for the subject tax day is SET ASIDE. The assessed valuation for the subject property, subject to ad valorem property tax as of January 1, 2018, is set at $2,291,867.
Application for Review
A party may file with the STC an application for review of this decision within thirty days of the mailing date set forth in the Certificate of Service for this Decision. The application shall contain specific facts or law as grounds upon which it is claimed the decision is erroneous. Said application must be in writing addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.
Failure to state specific facts or law upon which the application for review is based will result in summary denial. Section 138.432, RSMo
The Collector of Jackson County, Missouri, 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, this 16th day of October, 2019.
STATE TAX COMMISSION OF MISSOURI
Senior Hearing Officer
|Land Assessed Value (based upon 29% commercial & 71% residential)(Total Land Market Value of $1,819,750)||$168,864||$245,490|
|Land Assessed Value Total||$414,354|
|Land SHOULD BE (based upon 19% commercial & 81% residential)||110,641||280,059|
|Total Taxable Assessed Value (Split)||$463,104||$1,852,416|
|Total Taxable Assessed Value (Total)(Ultimately Wrong)||$2,315,520|
|(minus) Taxable Land Value Total (Ultimately Wrong)(Wrong %’s)||$414,354|
|Total Assessed Value Attributed to “Frozen” Improvement Portion in ’18||$1,901,167|
|TVM of “Frozen” Improvement in ’18||$5,941,145|
|Total Assessed Value Attributed to “Frozen” Improvement Portion in ’18||$1,901,167|
|Total to Land for Frozen Valuation||$390,700|
|TOTAL TAXABLE ASSESSED VALUE||$2,291,867|
|***Improvement TVM and Assessed Values Stays Same with Land Value Reduced***|
|TVM of Frozen Improvement in ’18||$5,941,145|
|Total Taxable Assessed Value (Split)|
|Total Taxable Assessed Value (Total)||$2,315,520|
|(minus) Taxable Land Value Total||$532,256|
|Taxable Assessed Value Attributed to Pre-Rehabilitation Improvement in ’17||$1,783,264|
|TVM of Improvement in ’17||$5,572,700|