Cornerstone Ind. Fund v. Muehlheausler (SLCO)

June 24th, 2008

State Tax Commission of Missouri






v.)Appeal Number 04-10166











On June 24, 2008, Senior Hearing Officer Luann Johnson entered her Decision and Order (Decision) setting aside the assessment by the St. Louis County Board of Equalization and determining a value of the property of $2,960,000 and the proper level of assessment for the subject property for the subject tax year was 26.75%.

Complainant timely filed his Application for Review of the Decision.Respondent was given until and including August 25, 2008, to file his Response.Respondent timely filed their Response.

Complainant states as grounds for the appeal:

(1)The Hearing Officer’s discovery order requiring Complainant to produce valuation evidence is contrary to Section 138.060, RSMo and 12 CSR 30-3.075; and

(2)The Hearing Officer erred in finding the true value of the subject property and applying the stipulated assessment ratio to that value.


Standard Upon Review

The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but 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. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).

The Commission will not lightly interfere with the Hearing Officer’s Decision and substitute its judgment on the credibility of witnesses and weight to be given the evidence for that of the Hearing Officer as the trier of fact.Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Lowe v. Lombardi, 957 S.W.2d 808 (Mo. App. W.D. 1997); Forms World, Inc. v. Labor and Industrial Relations Com’n, 935 S.W.2d 680 (Mo. App. W.D. 1996); Evangelical Retirement Homes v. STC, 669 S.W.2d 548 (Mo. 1984); Pulitzer Pub. Co. v. Labor and Indus. Relations Commission, 596 S.W.2d 413 (Mo. 1980); St. Louis County v. STC, 562 S.W.2d 334 (Mo. 1978); St. Louis County v. STC, 406 S.W.2d 644 (Mo. 1966).


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 his discretion as the trier of fact and concluder of law in this appeal.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.2d403 (Mo. App. E.D. 1995); Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).

Valuation Evidence

The Complainant initially appealed on the basis of overvaluation and discrimination.The Complainant dismissed its overvaluation claim on August 1, 2007, leaving only a discrimination claim.Complainant claimed that the subject property is assessed at the correct true value, but other similarly situated commercial properties in the county are assessed at a lower true value.In other words, Complainant claims that their property is overassessed, and, hence, discriminated against.

Claims of discriminatory assessment are well-known in Missouri law.Savage, supra; Koplar v. State Tax Com’n, 321 S.W.2d 686 (Mo. 1959); Cupples Hesse, supra; and, State ex rel. Platz v. State Tax Commission, 384 S.W.2d 565 (Mo. 1964).If discrimination is shown, and if Taxpayers demonstrate that their property is overassessed, then their property taxes will be lowered. Savage, 722 S.W.2d at 79 (taxpayer has the right to have his “assessment reduced to the percentage of that value at which others are taxed”).Absent such a showing, there is no relief to award to the taxpayer.

To make a successful claim under discrimination, the Complainant must establish that his property has been assessed at a greater percentage of value than other property, generally, within the same class within the taxing jurisdiction for the assessment cycle.Koplar v. State Tax Commission, 321 S.W.2d 686, 690, 695 (Mo. 1959).The difference in the assessment ratio of the subject property and the average assessment ratio in the subject county must be shown to be grossly excessive.Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986).No other methodology is sufficient to establish discrimination.Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696 (Mo. 1958).

To establish discrimination, the taxpayer had to prove the average level of assessment for commercial property in St. Louis County for subject tax year.This is done by (a) independently determining the market value of a representative sample of residential properties in St. Louis County; (b) determining the assessed value placed on the property by the assessor’s office for the relevant year; (c) dividing the assessed value by the market value to determine the level of assessment (assessment ratio) for each property in the sample; and (d) determining the mean and median of the results.Koplar v. State Tax Commission, 321 S.W.2d 686, 690 (Mo. 1959).The taxpayer then must prove the assessment ratio on the property under appeal.This is done by proving the true value in money for the subject property and then dividing that into the assessed value set by the Assessor for subject tax year to determine the assessment ratio on the subject property.The difference between the actual assessment level of the subject property and the average level of assessment for all commercial property, taken from a sufficient representative sample in St. Louis County must demonstrate a disparity that is grossly excessive.Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986).No other methodology is sufficient to establish discrimination.Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696 (Mo. 1958).

The Hearing Officer ordered the parties to produce evidence as to the average assessment ratio and valuation of the subject property.Complainant argues that the Hearing Officer exceeded her authority and violated Section 138.060, RSMo when she ordered the Complainant to produce valuation. Section 138.060, RSMo provides that:

“At any hearing before the state tax commission or a court of competent jurisdiction of an appeal of assessment from a first class charter county or a city not within a county, the assessor shall not advocate nor present evidence advocating a valuation higher than that value finally determined by the assessor or the value determined by the board of equalization, whichever is higher, for that assessment period.”


Complainant argues that evidence showing market value of their property is irrelevant.Their theory is that once discrimination is shown to exist in the county, the trier of fact must presume that any protesting taxpayer is the victim of discrimination, not a beneficiary of discrimination like all the other properties in the county, and a lower value must be assigned to their property.

Applying §138.060, RSMo as urged by Complainant means that the Tax Commission must assume that all properties are assessed at their market value.Under the Complainant’s theory, if they are able to show countywide discrimination, then every commercial property owner inSt. LouisCountywho sought relief as the Complainant has, would be presumed to be suffering discrimination, and the assessment for that property – and the resulting property taxes – would be reduced.Following Complainant’s argument is inherently inconsistent.If underassessment is so widespread that there is countywide discrimination, why is the Commission prohibited from determining if a particular piece of property is already enjoying underassessment, and, therefore, no harm?The individual property evidence is not only relevant, it is indispensable.

Requiring evidence of value and discrimination is well within the Tax Commission’s authority.Under §138.430.2, the Tax Commission “may inquire of the owner of the property . . . regarding any matter or issue relevant to the valuation, subclassification or assessment of the property.”Evidence of the market value of the property demonstrates whether the Assessor set the property’s value above, below, or right at its market value.If the property is assessed at less than its market value, then the property is actually underassessed, and is enjoying lower taxes.It may not be suffering from discrimination.

Section 138.060.1 RSMo does not prohibit the necessary elements of proof in a discrimination case.Section 138.060.1, RSMo does not prohibit a ratio study, nor does it prohibit proof of discrimination by evidence as to market value.Section 138.060 does not prohibit the Commission from requiring proof that the individual property is suffering discrimination.Section 138.060 does not limit the assessor from using valuation evidence “to defend against a claim of disparate treatment.”Nothing in the language of §138.060 prevents the assessor from challenging the ratio study, nor does the statute prevent the assessor from arguing that a taxpayer’s market value evidence for his property shows no discrimination.

Finding True Value

The evidence on the record establishes that Complainant’s property was undervalued.The Assessor originally valued the property, and the Board of Equalization sustained the valuation, at $2,742,600.The evidence on the record was substantial and persuasive to establish that the true value of the property for the subject tax year was $2,960,000.

The evidence on the record, by stipulation of the parties, establishes that the average assessment ratio for commercial property in St. Louis County for the subject tax year was not at 32% but at 26.75%.

The correct assessment value for the subject property for the tax year is $791,800.(The true value of the property – $2,960,000 – multiplied by the stipulated assessment ratio of 26.75%.)

The Complainant argues that the Hearing Officer should not have made a determination of the assessed value using the actual market value of the subject property but should have used the original undervaluation of the property.This means that not only would the Complainant be assessed at the lower commercial ratio of 26.75% (as opposed to the statutory 32% assessment ratio) but that lower ratio would be used with a lower than market value.The end result would be that the subject property would be assessed at an even lower ratio that the other commercial property in the county.


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, the Decision is affirmed.

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 of this Order.

The Collector of St. Louis County shall continue to hold the disputed taxes pending an Order from the Commission as to whether a Petition for Judicial Review of the Order has been filed.

SO ORDERED September 23, 2008.


Bruce E. Davis, Chairman

Jennifer Tidwell, Commissioner

Charles Nordwald, Commissioner








The assessed value determined by the Board of Equalization is set aside.The Commission finds the market value of the subject property for tax year 2004 to be $2,960,000 (assessed value $791,800).



Complainant appealed its 2004 assessment on the basis of discrimination, i.e., that Complainant was assessed at a higher percentage of market value than a statistically significant number of other properties within the same class within the county.An evidentiary hearing was held the week of September 26, 2007, before Senior Hearing Officer Luann Johnson.At hearing, Respondent withdrew his valuation exhibits and agreed to allow a determination of market value based upon Complainant’s appraisal report.Complainant’s appraisal report indicated a market value for the subject property of $2,960,000. Ex. A.Further, at said hearing, the parties stipulated and agreed that the proper assessment level for the subject property for the subject tax year was 26.75%.Tr. 351.Therefore, the correct assessed value for the subject property for tax year 2004 was $791,800.

The level of assessment was stipulated rather than adjudicated and, therefore is not binding upon the Commission in future cases involving different parties and counsel.


The value placed upon the subject property for tax year 2004 is hereby SET ASIDE.

The clerk is hereby ordered to place the correct value of $2,960,000 (assessed value $791,800) on the subject property for tax year 2004.

A party may file with the Commission an application for review of this decision within thirty (30) 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, 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 appeal is based will result in summary denial.Section 138.432, RSMo 2000.

If an application for review of this decision is made to the Commission, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the Commission and an order to the Collector to release and disburse the impounded taxes, unless said taxes have been disbursed pursuant an order of the circuit court under the provisions of Section 139.031.8, RSMo.§139.031.3, RSMo.If no application for review is received by the Commission within thirty (30) days, this decision and order is deemed final and the Collector of St. Louis 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.If any or all protested taxes have been disbursed pursuant to Section 139.031(8), RSMo, either party may apply to the circuit court having jurisdiction of the cause for disposition of the protested taxes held by the taxing authority.

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 24, 2008.

ADVANCE \d4<span
style=’font-size:10.0pt’>STATE TAX COMMISSION OF MISSOURI

Luann Johnson

Senior Hearing Officer