STATE TAX COMMISSION OF MISSOURI
| FRANCESCO R. RUSSO & ERIC D. LOUGIN, | )
) |
|
| Complainants, | ) | |
| ) | ||
| v. | ) | Appeal No. 17-20072 |
| )
) |
||
| STEPHEN J. CONWAY, ASSESSOR, | ) | |
| CITY OF ST. LOUIS, MISSOURI | ) | |
| ) | ||
| Respondent. | ) |
ORDER
AFFIRMING HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
HOLDING
On June 8, 2018, Senior Hearing Officer Amy Westermann (Hearing Officer) entered her Decision and Order (Decision) setting aside the decision of the Board of Equalization of the City of St. Louis (BOE) and finding that Francesco Russo and Eric Lougin (Complainants) presented substantial and persuasive evidence to rebut the presumption of correct classification of the subject property. Complainants subsequently filed their Applications for Review of the Hearing Officer’s Decision and Order. On August 9, 2018 Stephen Conway, Assessor of the City of St. Louis (Respondent), filed a Response in Opposition to Complainant’s Application for Review. Complainant Loughlin subsequently filed two Responses (Replies)
We AFFIRM the Decision and Order of the Hearing Officer. Segments of the Hearing Officer’s Decision may have been incorporated into our Decision without further reference.
FACTS AND PROCEDURAL HISTORY
The subject property is identified by parcel/locator number 22880600700. It is further identified as 3716 Grandel Square, St. Louis, Missouri. The subject property consists of a 6,012 square foot, three-story structure built in approximately 1888, which is used as a bed and breakfast and as a residence by Complainants. Both Respondent and the BOE set an assessed value for the subject property of $127,000, commercial, as of January 1, 2017.
Complainants alleged misclassification and intentional discrimination[1]. Complainants did not challenge the BOE’s determination of the true value in money (TVM) of the subject property. An Evidentiary hearing was conducted on March 1, 2018, in the 22nd Circuit Court, 10 N. Tucker Blvd., St. Louis, Missouri.
Complainants offered Exhibits A through PP[2] and Eric Lougin testified at the hearing. Mr. Lougin testified Complainants purchased the subject property and other parcels in 2005 for approximately $250,000. The parcels were classified as residential. Complainants renovated the property over a four to six year period to operate the property as a bed and breakfast. Mr. Lougin testified that the subject property has four guest rooms and Complainants reside in the subject property. Mr. Lougin testified the Assessor changed the classification of the property to commercial in 2017.
Respondent offered Exhibits 1 through 7[3] and the testimony of Chris Roth.
Roth testified the subject property is used as an owner-occupied bed and breakfast. He had conducted an exterior inspection of the subject property and viewed Complainants’ website to determine the number of rooms for rent, which he determined to be seven.
The Hearing Officer found Complainants’ presented substantial and persuasive evidence the subject property is a bed and breakfast inn in which the owner resides and uses as a primary residence with six or fewer rooms for rent and therefore the property’s proper classification is residential. By changing the classification from commercial to residential, the applicable statutory assessment ratio decreased from 32% of TVM to 19% of TVM.
CONCLUSIONS OF LAW
Complainant’s Points on Review
- The Hearing Officer erred in her statement that the Board of Equalization sustained the Respondent in that the Board of Equalization cannot sustain an illegal proceeding where Complainant’s were denied Due Process of law and where Respondent violated the United States and Missouri Constitutions.
- The Hearing Officer erred by omitting from her Findings of Fact Complainants’ allegation related to of serious criminal acts including withholding of evidence favorable to Complainants’ failure to implement tax abatement agreement; omitting Respondent’s false and deceptive statements regarding the existence of a Chapter 353 Redevelopment Agreement; computer tampering; evidence tampering; falsification of historic tax records; and perjury by the Appraiser.
- The Hearing Officer erred by concluding Complainants failed to prove by substantial and persuasive evidence an intention plan of discrimination by Respondent.
State Tax Commission’s (STC) Ruling
The STC, having thoroughly reviewed the whole record and having considered the Hearing Officer’s Decision and the Application for Review of Complainant affirms the Hearing Officer’s decision. Subject property is residential property and therefore the assessed valuation as determined by the BOE is set aside.
Respondent does not challenge the Findings of Fact or Conclusions of Law of the Hearing Officer finding the property was misclassified and finding the proper classification is residential.
There was not substantial and persuasive evidence that Respondent engaged in an intentional plan of discrimination, which resulted in an assessment of the subject property at a greater percentage of value than other property within the same class and the same taxing district. The STC lacks jurisdiction over alleged constitutional violations and alleged criminal violations.
Standard of Review
A party subject to a Decision and Order of a Hearing Officer with the State Tax Commission (STC) may file an application requesting the case be reviewed by the STC. Section 138.432 RSMo Cum. Supp. 2015. The STC may then summarily allow or deny the request. Section 138.432. The STC may affirm, modify, reverse, set aside, deny, or remand to the Hearing Officer the Decision and Order of the Hearing Officer on the basis of the evidence previously submitted or based on additional evidence taken before the STC. Section 138.432.
Presumption In Appeal
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. 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). This presumption is a rebuttable rather than a conclusive presumption. 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. Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
Complainant’s Burden of Proof
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.” 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). Such must be proven by substantial and persuasive evidence.
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. Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).
Weight to be Given Evidence
The Hearing Officer 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).
Classification of Real Property
According to Missouri law, “residential property” includes bed and breakfast inns in which the owner resides and uses as a primary residence with six or fewer rooms for rent. Section 137.016.1(1) RSMo (2016). The classification is determined by the actual use put to the property. Northtown Village v. Don Davis, Assessor, Jasper County. Mo., Appeal Nos. 03-62558 (May 27, 2004) (providing that the definitions in Section 137.016 (2000) illustrate that “the classification turns on the actual use put to the property.”)
Hearing Officer found that Complainants’ evidence was substantial and persuasive to rebut the presumption of correct assessment by the BOE regarding the classification of the subject property and to show the subject property is an owner occupied bed and breakfast which Complainants use as a primary residence with six or fewer rooms for rent.
Complainants received relief on this ground for appeal. The statutory assessed ratio for commercial property of 32% of the TVM is not applied to the subject property. The subject property is subject to the lower statutory assessed ratio for residential property of 19% of TVM.
Complainants’ do not contend that the Hearing Officer erred in this finding. Respondent did not file an application for review as to the Decision and Order; Respondent filed a reply to the Complainant’s Application for Revew.
Lack of Jurisdiction on Constitutional Issues
Complainants allege violatation of their constitutional rights. Deciding constitutional issues is beyond the authority of an administrative agency…” Fayne v. Department of Social Services, 802 S.W.2d 565, 567 (Mo.App.1991); Duncan v. Missouri Board for Architects, Professional Engineers and Land Surveyors, 744 S.W.2d 524, 530–31 (Mo.App.1988) “Administrative agencies lack the jurisdiction to determine the constitutionality of statutory enactments. City of Joplin v. Industrial Commission of Missouri, 329 S.W.2d 687 (Mo. banc 1959). Such jurisdiction is vested in the courts of Missouri.
Derivative Jurisdiction/ Criminal Violations
Complainants allege criminal conduct by the Respondent. “[A]dministrative bodies ‘have only such powers and jurisdiction as is specified in the applicable statutes.’” Armstrong-Trotwood, LLC v. State Tax Commission, 516 S.W.3d 830 (Mo. Banc 2017), citing Foster Bros. Mfg. Co. v. State Tax Comm’n of Mo., 319 S.W.2d 590, 594 (Mo. 1958). The State Tax Commission’s “’jurisdiction is derivative’ of the County Board when the Commission reviews appeals from the County Board.” Id. citing Foster Bros. Mfg. Co., 319 S.W.3d at 595; Westwood P’ship, 103 S.W.3d at 160. Jurisdiction of criminal acts is vested in the courts of Missouri.
Intentional Discrimination in Assessment
Complainants sought a reduction of their assessment based upon discrimination. To obtain a reduction in the assessment of real property based upon intentional discrimination, the complaining taxpayer must (1) prove the true value in money of the subject property as of the taxing date; and (2) show an intentional plan of discrimination by the assessor, which resulted in an assessment at a greater percentage of value than other property within the same class and the same taxing district.” Zimmerman v. Mid–America Financial Corp., 481 S.W.3d 564, 571 (Mo. App. E.D. 2015).
Complainants’ evidence at the evidentiary hearing was not substantial and persuasive to show an intentional plan of discrimination. There was not substantial and persuasive evidence to establish an intentional plan of discrimination by the assessor, which resulted in an assessment at a greater percentage of value than other property within the same class and the same taxing district.
To the extent Complainants’ are asserting the classification of the subject property as commercial property constituted intentional discrimination, Complainant’s relief would have been that granted by Hearing Officer due to the classification change, namely having the assessed value of the subject property lowered from 32% of TVM to 19% of TVM.
Summary & Conclusion
The Hearing Officer found that the Complainants presented substantial and persuasive evidence to rebut the BOE presumption regarding the classification of the property and that Complainants failed to present substantial and persuasive evidence of intentional discrimination. STC finds that a reasonable mind could have conscientiously reached the same result as the Hearing Officer based on a review of the entire record. 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).
ORDER
The Decision of the Hearing Officer 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 STC.
Segments of the Decision and Order of the Hearing Officer, including the findings of fact and conclusions of law therein, have been incorporated without reference, as if set out in full, in this final decision of the STC.
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 mailing date set forth in the Certificate of Service for this Order.
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 the City of St. Louis, 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.
SO ORDERED October 16, 2018.
STATE TAX COMMISSION OF MISSOURI
Bruce E. Davis, Chairman
Victor Callahan, Commissioner
Will Kraus, Commissioner
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 16th day of October, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.
Jacklyn Wood
Legal Coordinator
[1] Complainants sought leave to amend their Complaint for Review of Assessment to add a claim relating to abatement. The Hearing Officer issued an Order on January 19, 2018 denying the Motion. We incorporate by reference the Order of the Hearing Officer issued January 29, 2018 as if set forth herein verbatim in addressing this issue.
[2] Rulings on the admissibility of the Exhibits are set forth in the Decision and Order and incorporated by reference.
[3] Rulings on the admissibility of the Exhibits are set forth in the Decision and Order and incorporated by reference.
STATE TAX COMMISSION OF MISSOURI
| FRANCESCO R. RUSSO & ERIC D. LOUGIN, | )
) |
|
| ) | ||
| Complainants, | ) | |
| ) | ||
| v. | ) | Appeal No. 17-20072 |
| )
) |
Parcel/Locator No.
2288-06-0070-0 |
|
| STEPHEN J. CONWAY, ASSESSOR, | ) | |
| CITY OF ST. LOUIS, MISSOURI,
Respondent. |
)
) |
DECISION AND ORDER
HOLDING
The decision of the City of St. Louis Board of Equalization (BOE) is SET ASIDE with regard to classification of the subject property. Complainants Francesco R. Russo (Mr. Russo) and Eric D. Lougin (Mr. Lougin) (collectively referred to as Complainants) presented substantial and persuasive evidence to rebut the presumption of correct classification of the subject property. Complainants did not present substantial and persuasive evidence to establish discrimination in the assessment of the subject property.
Complainants appeared pro se.
Respondent Stephen J. Conway, Assessor, City of St. Louis, Missouri, (Respondent) appeared by counsel Georganna Ekpo.
Case heard and decided by Senior Hearing Officer Amy S. Westermann (Hearing Officer).
ISSUE
Complainants appealed on the grounds of misclassification and discrimination in assessment. Respondent initially set the assessed value of the subject property at $127,000, as commercial property, as of January 1, 2017. Subsequently, the BOE set the assessed value of the subject property at $127,000, as commercial property, thereby sustaining Respondent’s valuation. The State Tax Commission (STC) takes this appeal to determine the proper classification for the subject property as of January 1, 2017, and whether discrimination in assessment occurred.
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 State Tax Commission.
- Evidentiary Hearing. The issues of misclassification and discrimination were presented at an evidentiary hearing on March 1, 2018, in the 22nd Circuit Court, 10 N. Tucker Blvd., St. Louis, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 22880600700. It is further identified as 3716 Grandel Square, St. Louis, Missouri. (Complaint)
- Description of Subject Property. The subject property consists of a 6,012 square foot, three-story structure built in approximately 1888. (WTD of Chris Roth) The subject property is used as a bed and breakfast and as a residence by Complainants. (WTD of Chris Roth)
- Assessment. Respondent set an assessed value for the subject property of $127,000, commercial, as of January 1, 2017.
- Board of Equalization. The BOE set an assessed value for the subject property of $127,000, commercial, as of January 1, 2017.
- Complainant’s Evidence. Complainants did not challenge the BOE’s determination of the true value in money (TVM) of the subject property. Complainants opined that the subject propety’s proper classification as of January 1, 2017, was residential. To support their opinion of classification, Complainants offered as evidence the following exhibits:
| EXHIBIT | DESCRIPTION | OBJECTION
(Respondent made a continuing objection on the grounds of lack of relevance and lack of foundation with regard to the admission of all of Complainants’ exhibits and testimony) |
RULING |
| Exhibit A | Audio recording of Complainants’ hearing before BOE | Lack of relevance/foundation | Admitted to be given weight deemed necessary |
| Exhibit B | City of St. Louis Classification Specification for Real Property Appraiser I | Lack of relevance | Admitted to be given weight deemed necessary |
| Exhibit C | City of St. Louis Hotel/Motel Bed and Breakfast Business License for subject property dated 02/01/18 to 01/31/19 | No specific objection | Admitted |
| Exhibit D | City of St. Louis Department of Public Safety Certificate of Occupancy and Zoning dated June 10, 2013, stating subject property may be used/operated as “COMMERCIAL” and “BED & BREAKFAST (GUEST HOUSE 4 ROOMS) 1ST & 2ND FLS ONLY” | No specific objection | Admitted |
| Exhibit D-BIS | Application for permit to use subject property as a bed and breakfast dated 10/28/09 and 11/06/13, approving four rooms and containing remarks: “APPLICANT HAS TO REAPPLY TO ADD 3 ROOMS BACK WHEN THEY MEET REQUIREMENTS TO USE 3RD FLOOR.” | No specific objection | Admitted |
| Exhibit E | Section 137.016 RSMo defining “Residential property” | No specific objection | Admitted |
| Exhibit F | Section 315.005 RSMo defining “Guest room” | Lack of relevance because statute applies to hotels/motels and not to bed and breakfasts | Admitted to be given weight deemed necessary |
| Exhibit G | Google dictionary definition of “unit” | Lack of relevance; best evidence rule; speculation – statutes and case law define “unit” | Excluded |
| Exhibit H | Definitions and Frequently Asked Questions provided by Respondent to Complainants pursuant to a Sunshine Law Records Request; defining “All-Suite: Property with guestroom inventory that exclusively consists of rooms offering more space and furniture than a typical hotel room, including a designated living area or multiple rooms.” | Lack of relevance; cumulative to statute | Admitted |
| Exhibit I | Change of Assessment Notice dated May 2017 and notifying Complainants of change in appraised value and assessed value of subject property; assessing subject property at 32% of TVM; stating two different values and commercial classification for same taxing cycle beginning January 1, 2017 | No specific objection | Admitted |
| Exhibit II | Change of Assessment Notice dated May 2017 with interlineation and handwritten date May 2016 and notifying Complainants of change in appraised value and assessed value of subject property; assessing subject property at 19% of TVM; stating two different values and residential classification for same taxing cycle beginning Janary 1, 2017 | No specific objection | Admitted |
| Exhibit J | Spreadsheet from tax records for subject property showing classification codes consistent from 2007 to 2016 | No specific objection | Admitted |
| Exhibit J-BIS | 2016 Real Estate Tax Bill for subject property showing sub-class of property as residential | No specific objection | Admitted |
| Exhibit K | Printed version of website for subject property, http://www.grandcenterinn.com/private –rooms—suites.html | No specific objection | Admitted |
| Exhibit L | Cover letter dated June 21, 2017, from Respondent’s counsel to Complainants with two printed pages from a lodging reservation website, Reservations.com, showing a total of six rooms (four labeled as “rooms” and two labeled as “suites”) within the subject property available for rent | No specific objection | Admitted |
| Exhibit M | Cover letter dated June 27, 2017, from Respondent’s counsel to Complainants with 16 printed pages from a lodging reservation website, Bedandbreakfast.com, showing a total of seven rooms (four labeled as “rooms” and three labeled as “suites”) within the subject property available for rent | No specific objection | Admitted |
| Exhibit N | Written correspondence dated July 5-6, 2017, between Complainants and Respondent and printed pages from a lodging reservation website, AirBnB.com, showing a total of “4 Independent Apts.,” one of which was specifically described as having two bedrooms and two bathrooms and accommodating six individuals | No specific objection | Admitted |
| Exhibit O | Wikipedia definition of “Hearsay in United States law” | Lack of relevance; Hearing Officer determines what constitutes hearsay | Excluded |
| Exhibit P | Copy of Complainants’ Motion for Revision of Scheduling Order | No specific objection | Admitted |
| Exhibit Q | Letter dated June 16, 2017, from Complainants to Respondent purporting to document an in-person meeting between Complainants and then-Assessor Freddie Dunlap concerning the 2017 assessment and past assessments and requesting documentation and the Assessor’s Office’s refusal to provide the documentation requested | Lack of relevance; no relation to proving TVM of subject property on Janary 1, 2017, and no bearing on whether subject property was discriminated against when compared to other properties | Admitted to be given weight deemed necessary |
| Exhibit R | 2017 Appeal of Real Estate form for subject property filed with BOE alleging improper classification, assessment not equalized with similar adjacent properties, assessment not equalized with similar properties in same neighborhood, and parcel subject to tax abatement | No specific objection | Admitted |
| Exhibit S | 2017 Complaint for Review of Assessment form for subject property filed with STC | No specific objection | Admitted |
| Exhibit T | Findlaw.com annotation to the Fourteenth Amendment to the United States Constitution | No specific objection | Admitted |
| Exhibit U | General Warranty Deed dated October 12, 1999; Parcel Development Agreement dated October 12, 1999; Letter from Grand Center, Inc., purporting to confer tax abatement upon a proposed development in the 3700 block of Grandel Square | Lack of relevance; no relation to proving TVM of subject property on Janary 1, 2017, and no bearing on whether subject property was discriminated against when compared to other properties | Admitted for limited purpose of supporting Complainants’ claim of discrimination and not to establish existence of tax abatement for subject property |
| Exhibit V | Email correspondence between Attorney William T. Zorn on behalf of Complainants, Deputy Assessor Shawn T. Ordway, and Redevelopment Coordinator for the City St. Louis David Donald | Lack of relevance; no relation to proving TVM of subject property on Janary 1, 2017, and no bearing on whether subject property was discriminated against when compared to other properties | Admitted for limited purpose of supporting Complainants’ claim of discrimination and not to establish existence of tax abatement for subject property |
| Exhibit W | Copy of Assessment History of subject property from 2003 to 2006 | Lack of relevance; no relation to proving TVM of subject property on Janary 1, 2017, and no bearing on whether subject property was discriminated against when compared to other properties | Admitted for limited purpose of supporting Complainants’ claim of discrimination and not to establish existence of tax abatement for subject property |
| Exhibit X | City of St. Louis Commercial Report Form purporting to refer to tax abatement (mostly illegible) | Lack of relevance; no relation to proving TVM of subject property on Janary 1, 2017, and no bearing on whether subject property was discriminated against when compared to other properties | Excluded |
| Exhibit Y | STC Assessor’s Manual description of the Assessment Cycle and How the Tax is Determined | No specific objection | Admitted |
| Exhibit Z | Graph provided by Respondent during discovery showing the percent change in assessed value of residential and commercial properties in the City of St. Louis from 1997 to 2017 | No specific objection | Admitted |
| Exhibit AA | Change of Assessment Notice dated April 1, 2007, and notifying Complainants of change in appraised value and assessed value of subject property | No specific objection | Admitted |
| Exhibit BB | Change of Assessment Notice dated May 2009 and notifying Complainants of change in appraised value and assessed value of subject property | No specific objection | Admitted |
| Exhibit CC | Change of Assessment Notice dated May 2011 and notifying Complainants of change in appraised value and assessed value of subject property | No specific objection | Admitted |
| Exhibit DD | Change of Assessment Notice dated May 2012 and notifying Complainants of change in appraised value and assessed value of subject property | No specific objection | Admitted |
| Exhibit DD-BIS | Letter dated April 30, 2007, from the Office of the Assessor to Complainants documenting an adjustment to the assessment of the subject property | Lack of relevance; no relation to proving TVM of subject property on Janary 1, 2017, and no bearing on whether subject property was discriminated against when compared to other properties | Admitted |
| Exhibit EE | Statement of Personal Property Tax Delinquency issued by the City of St. Louis Collector of Revenue dated January 14, 2013, related to subject property | Lack of relevance; hearsay | Admitted |
| Exhibit EE-BIS | Copy of notes from meeting between representatives of eight bed and breakfast establishments in the City of St. Louis, Deputy Assessor Shawn T. Ordway, and 6th Ward Alderman Christine Ingrassia | Lack of relevance; no relation to proving TVM of subject property on Janary 1, 2017, and no bearing on whether subject property was discriminated against when compared to other properties | Admitted to be given weight deemed necessary |
| Exhibit EE-TER | STC Personal Property Manual description of tax situs, real property, and tangible personal property | No specific objection | Admitted |
| Exhibit FF | Change of Assessment Notice dated May 2013 and notifying Complainants of change in appraised value and assessed value of subject property | No specific objection | Admitted |
| Exhibit GG | Address and Property Information Data for 3733 Washington Blvd. for tax year 2013 | Lack of relevance | Excluded |
| Exhibit HH | Address and Property Information Data for 3740 Grandel Square for tax year 2013 | Lack of relevance | Excluded |
| Exhibit II | Change of Assessment Notice dated May 2017 and notifying Complainants of change in appraised value and assessed value of subject property | No specific objection | Admitted |
| Exhibits JJ, KK, LL | Comparable properties located at 3733 Washington Blvd.; 3740 Grandel Square; and 3724 Olive Street offered for purpose of showing that subject property was assessed at full market value while comparable properties all were undervalued | Lack of relevance because exhibits do not establish whether comparables are above, equal to, or below TVM of subject property; exhibits assume facts not in evidence in that Complainants did not conduct a ratio study, which is the only evidence that can show whether comparable properties were undervalued | Admitted to be given weight deemed necessary |
| Exhibit MM | STC Assessor’s Manual page 49 of 164 describing Office Review | Lack of relevance | Excluded |
| Exhibit NN | Withdrawn | N/A | N/A |
| Exhibits OO and PP | Printed Facebook pages displaying photographs and posts from Vince Schoemehl and Janese Henry | Lack of relevance | Excluded |
Respondent made a continuing objection to all of Complainants’ exhibits on the ground that Complainants failed to adhere to the Hearing Officer’s scheduling order issued on February 9, 2018 (February 9 Order), which required the parties to exchange “any and all evidence” they intended to present prior to the Evidentiary Hearing. Respondent argued that he did not receive any Written Direct Testimony (WDT) from Complainants prior to the Evidentiary Hearing pursuant to the February 9 Order. Respondent argued that Complainants’ exhibits lacked relvance and foundation because Respondent was not made aware of who would testify at the Evidentiary Hearing and how Complainants’ exhibits would be used in conjunction with any testimony. After hearing argument of the parties regarding the objection, the Hearing Officer generally overruled the objection and allowed Complainants to introduce live testimony and their exhibits subject to Respondent’s continuing objection. Respondent was allowed to make specific objections to exhibits as they were introduced, and the Hearing Officer ruled on specific objections as shown in the table, above. With regard to the admission of Complainants’ live testimony, the objections of relevance and foundation are hereby overruled because Respondent was provided ample opportunity to cross examine Complainants’ sole witness, Mr. Lougin, during the Evidentiary Hearing.
Mr. Lougin testified that, in 2005, Complainants had purchased multiple parcels classified as residential property, which included the subject property, for approximately $250,000.[1] Mr. Lougin testified that the subject property had been listed with a realtor and publicly advertised. Mr. Lougin testified that the subject property had not been listed for sale withing the three years prior to the Evidentiary Hearing. Mr. Lougin testified that the subject property had been appraised as residential property within the three years preceding the date of the Evidentiary Hearing but that he did not recall the appraisal amount. Mr. Lougin testified that Complainants had not made any improvements to the subject property between January 1, 2015, and January 1, 2017. Mr. Lougin testified that the subject property should be classified as residential property as of January 1, 2017.
Mr. Lougin testified that Respondent’s appraiser Chris Roth (the Appraiser) had assessed the subject property as commercial in March 2017. Mr. Lougin testified that the subject property did not have seven distinct guestrooms but had four units. Mr. Lougin testified that Respondent’s employees had used Complainants’ website to determine the number of rooms for rent but had misinterpreted the information on the website. Mr. Lougin testified that Complainant’s can’t and don’t have the ability to rent seven rooms within the subject property. Mr. Lougin testified that Complainants did not know the TVM of the subject property on January 1, 2017, but the evidence showed the ratio of assessment was higher on the subject property than on other neighboring properties.
On cross examination, Mr. Lougin testified that he has maintained the website for the subject property since 2010 or 2011. Mr. Lougin testified that he makes all of the changes to the website even though Mr. Russo also has access to the website. Mr. Lougin testified that the number of rooms available for rent on January 1, 2017, was four units. Mr. Lougin testified that he did not know who had provided information regarding the subject property to Reservations.com and did not know the source of the information on that website. Mr. Lougin testified that he had provided information regarding the subject property to AirBnB.com. Mr. Lougin testified that he did not know the source of the information on Bedandbreakfast.com. Mr. Lougin testified that Complainants track rentals through reservation software and did not provide any of the information from their reservation software to websites and such information might not accurately reflect rentals from a historical perspective. Mr. Lougin testified that the Appraiser had offered to verify the number of rooms but Complainants did not allow the Appraiser inside the subject property because he allegedly had previously made false statements. Mr. Lougin testified that if an inspection had been ordered through discovery, the case would not have proceeded to an evidentiary hearing.
Also on cross examination, Mr. Lougin disputed the accuracy of Respondent’s exhibits showing the subject property contained seven rooms. Mr. Lougin testified that, prior to and as of January 1, 2017, Complainants were renting four units within the subject property. Mr. Lougin testified that the Blue Suite and the Fox Suite are a single unit even though they can be booked either separately or in conjunction. Mr. Lougin testified that no doors separate the suites, which constitute one continuous space. Mr. Lougin testified that Complainants conduct their business such that guests have the ability to rent only half of the entire space but that Complainants cannot control whether guests actually roam throughout the entire space.
In rebuttal, Mr. Lougin testified that the subject property did not have seven units but had four units.
- Respondent’s Evidence. Respondent offered as evidence the following exhibits:
| EXHIBIT | DESCRIPTION | OBJECTION | RULING |
| WDT | Pre-filed written direct testimony of Respondent’s appraiser Chris Roth (the Appraiser) | No legal objection | Admitted |
| Exhibit 1 | Respondent’s 2017 Reassessment Guidelines on Classification of B&B (Short Term Stay) | No legal objection | Admitted |
| Exhibit 2 | 8 printed pages from website for subject property, http://www.grandcenterinn.com/private –rooms—suites.html; describing four suites and three rooms; describing Penthouse as not available to book now; including a disclaimer, “ACCOMMODATIONS SHOWN MAY NOT BE ALL AVAILABLE AT THE SAME TIME FOR RENT” | No legal objection | Admitted |
| Exhibit 3 | 8 printed pages from website for subject property, https://www.bedandbreakfast.com; stating seven rooms available but describing two suites and four rooms | No legal objection | Admitted |
| Exhibit 4 | 5 printed pages from a lodging reservation website, Bedandbreakfast.com, showing a total of seven rooms (four labeled as “rooms” and three labeled as “suites”) within the subject property available for rent | No legal objection | Admitted |
| Exhibit 5 | Residential Appraisal Card for subject property from 1962 showing subject property being used as a hotel with 12 rooms for rent and a one to three-room apartment for the owner’s living quarters | No legal objection | Admitted |
| Exhibit 6 | 2010 bed and breakfast permit issued by City of St. Louis Board of Public Service noting “Guest Rooms: 7 rooms” | No legal objection | Admitted |
| Exhibit 7 | Application to operate bed and breakfast with “7 ROOMS” within subject property dated October 28, 2009, and signed by Mr. Russo | No legal objection | Admitted |
In his live testimony, the Appraiser testified that subject property is used as a bed and breakfast and that he believes the subject property is owner occupied. The Appraiser testified that he viewed Complainants’ website to determine the number of rooms for rent. The Appraiser testified that he made the determination to change the classification of the subject property from residential to commercial and that his determination was not reviewed by anyone else in Respondent’s office. The Appraiser testified that he inspected the exterior of the subject property in March 2017 and considered only Complainants’ website in concluding the subject property had seven rooms to rent. The Appraiser testified that he spoke to Complainants but that they did not provide any additional information about the number of rooms for rent. The Appraiser testified that he had reviewed Complainants’ website prior to the BOE hearing and that the website had been changed to six rooms available for rent.
On cross examination, the Appraiser testified that he believed he spoke to Mr. Lougin on the day he conducted the exterior inspection of the subject property. The Appraiser testified that the person he spoke to “was worked up” and said he “needed to get a lawyer and get his papers in order.” The Appraiser reiterated that he believed the subject property was owner occupied. The Appraiser admitted that he was not a licensed appraiser but that he was not required to be licensed because he was employed by an assessor’s office.
- Presumption of Correct Assessment Rebutted – Proper Classification Established. Complainants presented substantial and persuasive evidence to rebut the presumption of correct assessment with regard to classification by the BOE and to establish that the proper classification of the subject property as of January 1, 2017, was residential.
- Discrimination in Assessment Not Established. Complainants did not present substantial and persuasive evidence establishing that Respondent engaged in an intentional plan of discrimination, which resulted in an assessment of the subject property at a greater percentage of value than other property within the same class and the same taxing district, or, that the level of assessment was so grossly excessive as to be inconsistent with an honest exercise of judgment; therefore, the claim of discrimination in assessment fails.
CONCLUSIONS OF LAW AND DECISION
Jurisdiction
The STC 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 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, RSMo.
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 his inquiry and any evidence presented by the parties or based solely upon evidence presented by the parties. Id.
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 (2000) as amended.
Classification of Real Property
According to Missouri law, “residential property” is all real property (1) improved by a structure which is used or intended to be used for residential living by human occupants; (2) vacant land in connection with an airport; (3) land used as a golf course; (4) manufactured home parks; (5) bed and breakfast inns in which the owner resides and uses as a primary residence with six or fewer rooms for rent; and (6) time-share units as as defined in Section 407.600 except to the extent such units are actually rented and subject to sales tax under Section 144.020.1(6); but residential property shall not include other similar facilities used primarily for transient housing. Section 137.016.1(1) RSMo (2016). The classification is determined by the actual use put to the property. Northtown Village v. Don Davis, Assessor, Jasper County. Mo., Appeal Nos. 03-62558 (May 27, 2004) (providing that the definitions in Section 137.016 (2000) illustrate that “the classification turns on the actual use put to the property.)
Discrimination in Assessment (Assessment Ratio)
To obtain a reduction in the assessment of real property based upon discrimination, the complaining taxpayer must (1) prove the true value in money of the subject property as of the taxing date; and (2) show an intentional plan of discrimination by the assessor, which resulted in an assessment at a greater percentage of value than other property within the same class and the same taxing district, or, in the absence of such an intentional plan, show that the level of assessment is “so grossly excessive as to be inconsistent with an honest exercise of judgment.” Zimmerman v. Mid–America Financial Corp., 481 S.W.3d 564, 571 (Mo. App. E.D. 2015), quoting Savage v. State Tax Comm’n of Missouri, 722 S.W.2d 72, 78 (Mo. banc 1986). Evidence of value and assessments of a few properties does not prove discrimination. Substantial evidence must show that all other property in the same class, generally, is actually undervalued. State ex rel. Plantz v. State Tax Commission, 384 S.W.2d 565, 568 (Mo. 1964). 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, 722 S.W.2d at 79. No other methodology is sufficient to establish discrimination. Cupples-Hesse, supra.
Where there is a claim of discrimination based upon a lack of valuation consistency, the complainant has the burden to prove the level of assessment for the subject property in the relevant tax year. This is done by independently determining the market value of the subject property and dividing the market value into the assessed value of the property as determined by the assessor’s office. The complainant must then prove the average level of assessment for residential property in St. Louis County for the relevant tax year. This is done by (a) independently determining the market value of a representative sample of residential properties in the 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 for each property in the sample; and (d) determining the mean and median of the results. This process is commonly known as a ratio study.
To establish discrimination, the difference between the actual assessment level of the subject property and the average level of assessment for all residential property, taken from a sufficient representative sample in St. Louis County must demonstrate a disparity that is grossly excessive. See Savage, supra.
Missouri courts have consistently held that (1) a taxpayer alleging discrimination must show the true value in money of his property as a necessary part of his discrimination claim; and (2) the proper method of determining discrimination is to compare the actual level of assessment of the subject property as determined by the assessor to the common level of assessment for the subject property’s subclass. Mid-America Financial Corp., 481 S.W.3d at 574, citing Savage, 722 S.W.2d at 72.
“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., 481 S.W.3d at 571 (internal quotation omitted). “This standard recognizes that while practical uniformity is the constitutional goal, absolute uniformity is an unattainable ideal.” Id. (internal quotation omitted).
In deciding whether the assessment of the subject property is “grossly excessive” or nothing more than a “de minimus error of judgment,” the STC must determine the common level of assessment for the class of property at issue within the taxing district. In Savage, 722 S.W.2d at 79, the Missouri Supreme Court reasoned:
The “common level of assessment” has been defined as a single ratio of true value used in assessing each property in a taxing district. [citation omitted] The “average level of assessment” means the “arithmetical mean of the varying percentages of true value applied by . . . the assessor in assessing properties within a taxing district.” [citation omitted]
A taxpayer has the right to have his “assessment reduced to the percentage of that value at which others are taxed[.]” [citation omitted]
The Missouri Supreme Court has held that the proper method of analyzing discrimination compares the common level of assessment for similarly-situated properties to the actual level of assessment imposed on the subject property. Mid-America Financial Corp., 481 S.W.3d at 571; Savage, 722 S.W.2d at 74. A necessary component of this comparison is the TVM of both the subject property and the similarly-situated properties, i.e., properties within the same class as the subject property. See Id.; see also Savage, 722 S.W.2d at 74. Once the TVM of the subject property and the similarly-situated properties has been determined, the STC can calculate at what percentage or ratio of TVM the subject property and the similarly-situated properties, respectively, have been assessed. Mid-America Financial Corp., 481 S.W.3d at 571. This determination requires a comparison not between the common level of assessment and the statutory assessment ratio, but between the common level of assessment and the actual level of assessment for the subject property. Id. at 574. Neither Missouri courts nor the STC has established a “bright-line” test to identify what constitutes a grossly excessive assessment as opposed to a mere de minimus error in judgment. Id. at 575. The assessment in each given case must be analyzed against the assessment under the median ratio to address the grossly excessive factor. Id. The STC has found a 5% disparity between the common level of assessment and the actual level assessment to be de minimus. Town and Country Racquet Club v. Morton, 1989 WL 41005 (Missouri State Tax Commission) (affirmed on appeal in Town & Country Racquet Club v. State Tax Commission of Missouri, 811 S.W.2d 403 (Mo. App. E.D. 1991).
Presumption in Appeal
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 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). This presumption is a rebuttable rather than a conclusive presumption. It places the burden of going forward with some substantial evidence on the taxpayer. When some substantial evidence is produced by the Complainant, “however slight,” the presumption disappears and the Hearing Officer, as trier of facts, receives the issue free of the presumption. United Missouri Bank of Kansas City v. March, 650 S.W.2d 678, 680-81 (Mo. App. 1983), citing State ex rel. Christian v. Lawry, 405 S.W.2d 729, 730 (Mo. App. 1966) (citations omitted). The presumption is not evidence of classification. The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the BOE’s determination was erroneous and what the determination should have been. See Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
Complainant’s Burden of Proof
A presumption exists that the assessment set 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 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).
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 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. W.D. 1991).
Generally, a property owner, while not an expert, is competent to testify to the reasonable market value of his own land. Cohen, 251 S.W.3d at 348-49; Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992). This implies that a property owner also is competent to testify as to the reasonable classification of his own land. “However, when an owner’s opinion is based on improper elements or foundation, his opinion loses its probative value.” Carmel Energy, Inc., 827 S.W.2d at 783. A taxpayer does not meet his burden if evidence on any essential element of his case leaves the STC “in the nebulous twilight of speculation, conjecture and surmise.” See Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. E.D. 1980).
In this case, Complainants did not challenge the BOE’s determination of the TVM of the subject property but challenged the BOE’s determination of classification. The BOE classified the subject property as commercial. Complainants presented substantial evidence, “however slight,” to support their argument that the subject property was misclassified by the BOE; thus, the presumption disappears and the Hearing Officer, as trier of facts, receives the issue free of the presumption. Respondent advocated that the BOE’s classification should be sustained and presented evidence to support the BOE’s classification.
Weight to be Given Evidence
The Hearing Officer is free to consider all pertinent facts 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 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).
Mr. Lougin testified on behalf of Complainants. Respondent presented the expert testimony of the Appraiser.
Hearsay
Black’s Law Dictionary, Seventh Edition (1999), p. 726, defines hearsay as follows: “Traditionally, testimony that is given by a witness who relates not what he or she knows personally, but what others have said, and that is therefore dependent upon the credibility of someone other than the witness. Such testimony is generally inadmissible under the rules of evidence.” McCormick on Evidence, Third Edition, (1984), p. 729, defines the term as; “a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.” The Courtroom Handbook on Missouri Evidence Missouri Practice, William A. Schroeder – 2012, Principle 800.c, p. 504,
follows the definition given by the Federal Rules and cited by McCormick. The out-of-court statement can take the form of either oral or written assertions. Therefore, documents which make assertions of facts are hearsay, just as well, as the speech of another person.
The hearsay rule provides that “no assertion offered as testimony can be received unless it is or has been open to test by cross-examination or an opportunity for cross-examination, except as otherwise provide by the rules of evidence, by court rules or by statute.” Black’s, supra – hearsay rule, p. 726. The rationale behind the rule is quite simply that out of court hearsay statements are not made under oath and cannot be subject to cross-examination. Accordingly, when various documents, such as but not limited to, Internet, newspaper and magazine articles are offered as exhibits in a hearing before the Commission, unless the document falls within one of the exceptions to the hearsay rule, upon objection such must be excluded.
Both parties presented documents purporting to be printed versions of Internet websites describing the subject property, which were admitted into evidence.
Discussion
Classification
In this case, Complainants’ evidence was substantial and persuasive to rebut the presumption of correct classification by the BOE and to establish that the subject property was owner occupied and had six or fewer rooms available for rent as of January 1, 2017. 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. Specifically, Complainants’ Exhibits K and L in conjunction with Mr. Lougin’s testimony established that the following accommodations were available for rent within the subject property: the Blue Suite, the Fox Suite, the Repertory Suite, the Contemporary Suite, the Sun Room, the Powell Room, and the Sheldon Room. Counted individually, one might conclude that seven rooms were available for rent as of January 1, 2017. However, Mr. Lougin’s testimony and Exhibit K established that the Blue Suite and the Fox Suite were connecting rooms separated by a dressing room and could be rented in conjunction as a single two-bedroom suite. Mr. Lougin’s testimony also established that Complainants did not control a guest’s access to the Blue Suite when the guest rented the Fox Suite or vice versa. From this evidence, one could reasonably conclude that the Blue Suite and the Fox Suite constituted a single room for rent, and, therefore, the subject property had six or fewer rooms available for rent as of January 1, 2017.[2]
Respondent’s evidence indicating that the subject property had seven rooms available for rent was inconclusive. The evidence of information gathered from websites was somewhat inconsistent in the descriptions of the rooms. The Appraiser did not inspect the interior of the subject property. The evidence from the various permits for the subject property indicated that the City of St. Louis would allow for the renting of seven rooms, but the permits did not establish that seven rooms were in fact for rent as of January 1, 2017.
Discrimination Claim
With regard to their claim of discrimination in assessment, Complainants’ evidence failed to establish the TVM of the subject property as of January 1, 2017 – the necessary first step of proving a claim of discrimination in assessment. Even accepting the BOE’s determination of TVM as correct, there was not substantial and persuasive evidence of an intentional plan of discrimination by Respondent resulting in an assessment at a greater percentage of value than other property within the same class and the same taxing district. The evidence instead showed that the appraised value and the assessed value of the subject property had increased and decreased repeatedly between 2005 and 2016 in a manner reflecting the rise and fall of the housing market during the Great Recession. There was no evidence that the level of assessment of the subject property was so grossly excessive as to be inconsistent with an honest exercise of judgment. Complainants’ claim of discrimination was based primarily upon the change of assessment notices for the subject property. (Exhibits W, AA, BB, CC, DD, FF, II) This evidence does not provide any independent information from which one could conclude that Respondent engaged in a pattern of assessing the subject property at a ratio higher than that of other residential properties in the City of St. Louis. Complainants’ evidence did not establish the ratio of assessment for a statistically significant number of other residential properties within the City of St. Louis. Consequently, Complainants’ discrimination claim fails.
ORDER
The classification of the subject property and its corresponding assessed value as determined by the BOE for tax year 2017 is SET ASIDE. The proper classification of the subject property as of January 1, 2017, is residential; thus, the subject property should be assessed at the statutory rate of 19% as of January 1, 2017.
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
Disputed Taxes
The Collector of the City of St. Louis, 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 8, 2018.
STATE TAX COMMISSION OF MISSOURI
Amy S. Westermann
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 8th day of June, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.
Jacklyn Wood
Legal Coordinator
[1] Although not specifically described or explained by either party, the record in this appeal reveals that the subject property was renovated by Complainants over a period of approximately four to six years in order to be operated as a bed and breakfast.
[2] In his post-hearing brief, Respondent argued that Complainants’ injected the issue of whether they resided in the subject property. In order for a property to qualify as a residential bed and breakfast under Section 137.016.1(1), the owner of the property is required to occupy the property. Complainant’s Exhibit N contained a printed version of the AirBnB.com website that Respondent had researched and had used to support Respondent’s re-classification of the subject property from residential to commercial. Exhibit N specifically stated, “Interaction with guests: Property Management on-site 24/7.” Additionally, in his WDT and in his live testimony, the Appraiser testified that the subject property was owner occupied and that the decision to reclassify the subject property as commercial was based on the number of rooms for rent. Based on this evidence, whether the subject property is owner occupied is not in question.