GBN Management v. Muehlheausler (SLCO)

June 24th, 2008

State Tax Commission of Missouri






v.)Appeal Number 03-12512












The evidence supports a finding that the average level of assessment for commercial properties inSt. LouisCountyduring tax years 2003 and 2004 was between 24 percent and 26 percent, say 25 percent.The evidence does not support a finding that Complainant’s assessment was higher than a statistically significant number of other similar properties in the taxing jurisdiction.



On or about September 17, 2003, Complainant, along with a number of other commercial taxpayers, represented by the Joseph C. Sansone Co., and T.L. Caradonna, Esq., filed complaints asserting that they had been discriminated against in the assessment of taxes.For our purposes, a claim of discrimination requires a showing that the taxpayer was assessed at a higher percentage of market value than a statistically significant number of other properties in the same category in the same taxing jurisdiction.

On February 23, 2004, at the request of the parties, proceedings were stayed pending a hearing in 2002 cases entitled Park 270 Partners et al. v. Muehlheausler, Appeal Nos. 02-10234, et al.Those cases did not go to hearing but, rather, settled. On June 22, 2005, the stays on the 2003 cases were lifted and discovery schedules were implemented.At that time, this group of appeals was entitled David and Barbara Mungenast, et al. v. Muehlheausler, Appeal Nos. 03-12463, et al.

On April 24, 2006, these cases were assigned to Senior Hearing Officer Luann Johnson.On July 21, 2006, Hearing Officer Johnson ordered that the parties confer and stipulate to a lead case.The parties failed to designate a lead case and, on August 24, 2006, David and Barbara Mungenast was designated as the lead case by the Commission.OnNovember 28, 2006, the Commission set a hearing date of October 9, 2007, for this group of cases.

Thereafter the parties engaged in exhaustive discovery and pleading practice addressing a multitude of legal issues.OnMarch 30, 2007, Complainants David and Barbara Mungenast filed a voluntary dismissal.To avoid expending additional time and resources needlessly, the Hearing Officer ordered that counsel for each side select three appeals to be designated as lead cases for the remainder of the appeals.The above appeal, along with five others, were ultimately designated as lead cases for this grouping.The hearing remained scheduled forOctober 9, 2007.

Prior to theOctober 9, 2007hearing, Counsel for Complainants requested an extension in order to attempt to facilitate settlement.The evidentiary hearing was continued toDecember 4, 2007.Prior to this hearing date, Counsel for Complainants informed the Commission that he would be withdrawing and that Complainants would be engaging substitute counsel.The hearing was continued toFebruary 12, 2008.Substitute counsel was engaged and on

January 31, 2008,the parties jointly requested a continuance to pursue settlement discussions.Counsel for Complainants advised that all lead cases, except the above-referenced case, would be dismissed.

After numerous conference calls, the parties agreed that the correct market value for the subject property, on January 1, 2003, andJanuary 1, 2004, was $1,100,000.However, the parties could not agree on the correct level of assessment.A hearing was scheduled forJune 3, 2008.OnMay 20, 2008, the parties agreed to waive hearing on the above matter and to allow the Commission to determine proper assessment level based on the evidence already submitted.



The issue in this case is the proper level of assessment for commercial property inSt. LouisCountyfor tax years 2003 and 2004.




Complainant’s Exhibits


Exhibit A – Discrimination

Ratio Study ofPublicPolicyResearchCenter

Exhibit B – Discrimination

Diskette of 2003 Sales

Exhibit C – Discrimination

Written Direct Testimony of Steven Gardner

Exhibit C-1 – Discrimination

Curriculum Vitae of Steven M. Gardner

Exhibit D – Discrimination

Written Direct Testimony of Richard R. Almy

Exhibit D-1 – Discrimination

Curriculum Vitae of Richard Almy

Exhibit E – Discrimination

Written Direct Testimony of John C. Hottle

Exhibit E-1 – Discrimination

Curriculum Vitae of John C. Hottle

Rebuttal Exhibit A – Discrimination

Ratio Study Procedures of theMissouriStateTax Commission


Respondent’s Exhibits

Exhibit 1 – Discrimination

Ratio Study ofPatrick M. O’Connor

Exhibit 2 – Discrimination

Tax Commission Ratio Study

Exhibit 3 – Discrimination

Written Direct Testimony of Patrick M. O’Connor

Exhibit 1 – Valuation

Appraisal Report of Thomas McReynolds

Exhibit 2 – Valuation

Written Direct Testimony of Thomas McReynolds

Rebuttal Exhibit 1 – Discrimination

Complainants’ Responses to Respondent’s Third Set of


Rebuttal Exhibit 2 – Discrimination

Contract for Consulting Services




OnJuly 3, 2007, Respondent filed his objections to Complainants’ Exhibits A and B and objections to the written direct testimony of Complainants’ witnesses Steven M. Gardner, Richard Almy, and John Hottle.Respondent argued (1) that Complainants’ Exhibit A (ratio study) failed to satisfy the requirements of Section 536.070(11), RSMo, inasmuch as witnesses Gardner and Almy did not testify as to the accuracy of the results of the study; and (2) a ratio study falls within the statutory definition of an appraisal report in Section 339.503, RSMo and 12 CSR 30-3.060; and that there has been no demonstration that witness Gardner nor anyone at PPRC had the requisite appraisal skills necessary to make such a determination; and (3) Exhibit B is also subject to the provisions of Section 536.070(11), RSMo; that witness Hottle failed to testify as to the accuracy of Exhibit B, and therefore, Exhibit B should be excluded from evidence for failure to comply with Section 536.070(11), RSMo.Finally Respondent made numerous objections to the written direct testimony of the various witnesses.

These objections were taken under advisement to be ruled upon at the October 9, 2007, hearing.These objections are now OVERRULED.The ratio study is appropriately supported to comply with Section 536.070(11), RSMo and is not an unauthorized appraisal report under Section 339.503, RSMo.

Respondent submitted Exhibits 1 and 3 pursuant to the Scheduling Order.On or about April 11, 2008 and May 15, 2008, Respondent moved to withdraw Exhibits 1 and 3.The motion was denied.On May 20, 2008, the parties agreed to waive hearing and to allow the Commission to determine the proper assessment level based upon the evidence already submitted.On June 3, 2008, the Respondent filed a Motion seeking to withdraw Exhibits 1 and 3.On June 4, 2008, the Complainant filed an Opposition to Respondent’s Motion.Respondent’s Motion is DENIED.Case, upon agreement of the parties, was submitted on the record before the Commission.



1.Jurisdiction over this appeal is proper.Complainant filed its appeal from the Board of Equalization in a timely manner.

2.The subject property is a 63,162 square foot site improved with a 24,614 square foot office and warehouse facility.The property is identified as parcel number 15O340096, more commonly known as 1977 Congressional Drive, Maryland Heights, Missouri.

3.The parties stipulate that the correct market value (true value in money) for the subject property on January 1, 2003, and January 1, 2004, was $1,100,000.

4.The assessed value, as determined by the St. Louis County Board of Equalization, for tax years 2003 and 2004 was $270,370.The Board’s assessment was based upon a market value of $844,910.The parties’ stipulation of market value tends to rebut the presumption in favor of the Board of Equalization.

5.By law, commercial properties are supposed to be assessed at 32 percent of their market values.

6.Respondent’s expert, Patrick O’Connor, indicated that his study revealed that the total appraised value-to-estimated market value was 23.9 percent rounded to 24 percent.An assessment-to-estimated market value ratio study is an appraisal ratio study.The assessments are tested against independently derived estimates of market value.Mr. O’Conner used 608 sales to form the basis of his ratio study.Mr. O’Connor suggested that the Respondent’s low assessment ratio was a product of reliance on the cost and income approaches to value rather than the sales comparison approach to value.Mr. O’Conner’s ratio study tends to rebut the presumption of correct assessment by the Board of Equalization.

7.Respondent also presented the State Tax Commission ratio study for commercial properties forSt. LouisCountyfor tax years 2003 to 2004.That study, based upon 37 sales, demonstrated a mean ratio of 34.45 percent and a median ratio of 32.59 percent.No evidence was adduced as to what sales were used and whether or not these sales were random and adequately represented the population.The Tax Commission ratio study tends to support the presumption of correct assessment by the Board of Equalization.

8.Complainant presented a ratio study prepared by Public Policy Research Center.Said study concluded that the actual level of assessment in the population is highly likely to fall within a range between 24 percent and 26 percent with 25 percent as the best point estimate.This study further concluded that Board value was only about 75 percent of market value.The study used a sample size of 235 properties.This ratio study tends to rebut the presumption of correct assessment by the Board of Equalization.

9.The larger ratio studies conducted by Mr. O’Connor and the Public Policy Research Center are entitled to more weight than the smaller study prepared by Tax Commission staff.While it is possible to use a smaller number of sales and still reach an accurate opinion of assessment level, unlike Complainant’s and Respondent’s ratio studies which are adequately supported, we have no evidence on the record which would support any conclusions concerning the accuracy of the Tax Commission ratio study.

10.The presumption in favor of the Board of Equalization is rebutted.The correct level of assessment forSt. LouisCountyfor tax years 2003 and 2004 is 25 percent as proposed by Complainant’s expert.

11.Complainant has failed to prove discriminatory treatment.Complainant’s property is assessed at 24.58 percent of market value. ($270,370 / $1,100,000 = 0.2458).



True Value in Money

Section 137.115, RSMo, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and purchased by one who is desiring to purchase but who is not compelled to do so.St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993); Missouri Baptist Children’s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993).It is the fair market value of the subject property on the valuation date.Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978).

Market Value

“Market value” is defined as “…[t]he most probable price which a property would bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

a.buyer and seller are typically motivated;

b.                  both parties are well informed or well advised, and acting in what they consider their best interests;


c.a reasonable time is allowed for exposure in the open market;

d.payment is made in terms of cash inUnited Statesdollars or in terms of financial arrangements comparable thereto; and

e.the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.”


Federal Register, vol. 55, no. 163, August 22, 1990, pages 34228 and 34229; also quoted in the Definitions section of the Uniform Standards of Professional Appraisal Practice, 1996 ed.Exhibits A-11 and A-12, at 2.


Taxpayer has Burden of Proof

There is no longer an automatic presumption regarding the correctness of an assessor’s valuation. Section 138.431.3. This statutory change from the previous situation in which the assessor’s valuation was presumed to be correct does not mean that there is now a presumption in favor of taxpayer. The taxpayer in a Commission tax appeal still bears the burden of proof and must show by a preponderance of the evidence that the property was improperly classified or valued. Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App.1991).

Taxpayers were the moving parties seeking affirmative relief, and as such, they bore the burden of proving the vital elements of their case, i.e., the assessments were “unlawful, unfair, improper, arbitrary or capricious.” Cupples Hesse Corp. v. State Tax Comm’n, 329 S.W.2d 696, 702 (Mo.1959); Westwood P’ship v. Gogarty, 103 S.W.3d 152, 161[8] (Mo.App.2003);84 C.J.S. Taxation §§ 710,726.

Substantial and Persuasive Evidence

Substantial evidence is that evidence which, if true, has probative force upon the issues, i.e., evidence favoring facts which are such that reasonable men may differ as to whether it established them, and from which the Commission can reasonably decide an appeal on the factual issues.Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).

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).

lang=EN-CA style=’mso-ansi-language:EN-CA’><span
style=’mso-spacerun:yes’> SEQ CHAPTER \h \r 1<span
lang=EN-CA style=’mso-ansi-language:EN-CA’>Discrimination

Where there is a claim of discrimination based upon a lack of valuation consistency, Complainant has the burden to prove:

1.The level of assessment for the subject property in 2003.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.

2.The average level of assessment for commercial property in St. Louis County in 2003.This is done by (a) independently determining the market value of a representative sample of commercial properties in St. Louis County; (b) determining the assessed value placed on the property 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.

3.That the disparity between (1) and (2) is grossly excessive.Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986).


An expert’s opinion must be founded upon substantial information, not mere conjecture or speculation, and there must be a rational basis for the opinion.Missouri Pipeline Co. v. Wilmes, 898 S.W.2d 682, 687 (Mo. App. E.D. 1995).

The testimony of an expert is to be considered like any other testimony, is to be tried by the same test, and receives just so much weight and credit as the trier of fact may deem it entitled to when viewed in connection with all other circumstances.The hearing officer, as the trier of fact, has the authority to weigh the evidence and is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert’s testimony and may accept it in part or reject it in part.Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. 1981); Scanlon v. Kansas City, 28 S.W.2d 84, 95 (Mo. 1930).


In order to prevail in a discrimination case, Complainant must establish that it was assessed at a higher percentage of true value in money than a statistically significant number of similar properties in the taxing jurisdiction.The most reliable evidence presented by the parties indicates that the proper assessment ratio is between 24 percent and 26 percent, with 25 percent being the ratio proposed by Complainant’s experts.Complainant was assessed at 24.58 percent of market value.Complainant’s assessment demonstrates that, although under-assessed, Complainant was nevertheless treated in the same manner as a statistically significant number of other similar properties in the taxing jurisdiction, i.e., there was no discrimination.

Not only does discrimination require a finding of unequal treatment, it also requires that that inequality be “so grossly excessive as to be inconsistent with an honest exercise of judgment in cases in which intentional discrimination is not shown”.Such a standard recognizes that while practical uniformity is the constitutional goal, absolute uniformity is an unattainable ideal.

We do not reach the issue of what would constitute a grossly excessive assessment, but being below the upper limit established by its own expert, Complainant’s assessment fails to meet this test.


The assessed value placed upon the subject property for tax years 2003 and 2004 is hereby AFFIRMED.

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, MO65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.

Failure to state specific facts or law upon which the appeal is based will result in summary denial.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.

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Luann Johnson

Senior Hearing Officer






Certificate of Service


I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 24thday of June, 2008, to:Thomas Campbell, 101 South Hanley, Suite 1600, Clayton, MO 63105, Attorney for Complainant; Edward Corrigan Associate County Counselor, County Government Center, 41 South Central Avenue, Clayton, MO 63105, Attorney for Respondent; Philip Muehlheausler, Assessor, County Government Center, 41 South Central Avenue, Clayton, MO 63105; John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.




Barbara Heller

Legal Coordinator