General Council of the Assemblies of God v. Rick Kessinger, Assessor Greene County

August 24th, 2017

STATE TAX COMMISSION OF MISSOURI

GENERAL COUNCIL OF THE )    
ASSEMBLIES OF GOD, )    
                      Complainant, )    
  )    
v. ) Appeal No. 16-33012 to 16-33022
  )    
RICK KESSINGER, ASSESSOR )    
GREENE COUNTY, MISSOURI, )    
  )    
                      Respondent. )    

 

ORDER

AFFIRMING DECISION OF THE HEARING OFFICER

UPON APPLICATION FOR REVIEW

 

On August 24, 2017, Senior Hearing Officer John Treu (Hearing Officer) entered his Decision and Order (Decision) affirming the assessment by Greene County Board of Equalization (BOE).

General Council of the Assemblies of God (Complainant) filed an Application for Review of the Decision.  Rick Kessinger, Assessor of Greene County, Missouri (Respondent), filed a Response.  Complainant replied.

Relevant Facts

            Complainant is incorporated as a Not for Profit in Missouri and is exempt from federal income tax as a 501(c) (3) organization.  Complainant is organized exclusively for charitable, religious and educational purposes.  Complainant owns the subject properties which consists of eleven parcels formerly known as the Central Bible College Campus in Springfield, Greene County, Missouri.  In 2013, Central Bible College merged or consolidated with other ministry trainings and relocated on another campus in Greene County.  Complainant has marketed the parcels for sale since the spring of 2014.

The properties were exempted from assessment until 2016.  In 2016, the parcels were assessed and classified as residential and commercial.  The valuation for the eleven parcels ranged from $8,800 to $9,500,600.  Ten of the parcels were vacant and unused in 2015.

Only Parcel 88-13-02-118-032 (Appeal No. 16-33022) had some use in 2015.  The parcel was valued at $9,500,600, assessed valuation of $2,956,130 ($122,850 residential and $2,833,280 commercial).   The parcel consists of 70.73 acres with improvements including fifteen buildings, tennis courts, softball fields, parking lots, and green space of undeveloped land and ponds.  Most of the buildings on Parcel 88-13-02-118-032 (Appeal No. 16-33022) were not used in 2015.  Those buildings include Pearlman Library, Horton Hall and other miscellaneous buildings.  There was no reported use of the tennis courts, vacant land or ponds.

Zimmerman Hall and Schmidgall Fitness Center were used in 2015 as well as the Dining Commons, Chapel, Flower Dorm and the parking lots.  The parking lots were used for fee based parking for the Fair, National Street Rod Association, and Ozark Antique Auto Club Swap Meet. The Dining Commons was used by Class Act Dessert Theatre in February 2015.  Flower Dormitory was used by the Drury Police Department for three days.  The Chapel was used for Alcoholics Anonymous for one event and for a wedding of an alum of the college.

Schmidgall Fitness Center, Forest Arnold Activity Center, and the softball fields were used for sports, tournaments, practices and camps.  The facilities were rented for $25-$35 per hour.  Club Bear, a private, girls, club volleyball was the primary user of the gym.  Their last use of the facility was in April 2015 and they did not renew their contract for 2016.  The activity center and softball fields were rented on occasion by coaches, schools and church leagues.

Zimmerman Hall had educational activities occurring in it during 2015.  Class Act, a home school organization, used a few rooms for music and drama classes through October 2015.  Debate and speech tournaments occurred in the hall on several days. The college charged the school district $2000 for the use.  The Evangel Film Crew used the hall and several other spaces for six days in early 2015.

CONCLUSIONS OF LAW

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; 12 CSR 30-3.080(4).  The STC may then summarily allow or deny the request.  Section 138.432; 12 CSR 30-3.080(5).  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; 12 CSR 30-3.080(5)(A).

The STC, having thoroughly reviewed the record and having considered the Decision of the Hearing Officer and the Application for Review of Complainant, finds that a reasonable mind could have conscientiously reached the same result as the Hearing Officer based on a review of the entire record.  Segments of the Hearing Officer’s Decision have been incorporated into our Decision without further reference.

 

DECISION

Complainant’s Points on Review

            Complainant’s Points of Review were numbered I through VIII and state as follows:

  1. The Hearing Officer erred in using a legal standard contrary to established Missouri law;
  2. The Hearing Officer erred in determining that the property was not dedicated unconditionally to the charitable activity;
  • The Hearing Officer erred by determining that Complainant offered no evidence of actual ministry in 2015;
  1. The Hearing Officer erred by sustaining legal objections submitted for the first time in Respondent’s Reply Brief;
  2. The Hearing Officer erred by determining that Complainant failed to meet its burden of proof regarding prongs 1 and 3 of the Franciscan test;
  3. The Hearing Officer erred in declaring Complainant’s evidence unpersuasive because it did not induce the belief in the Hearing Officer;
  • The Hearing Officer erred in giving deference to the County Board of Equalization; and
  • The Hearing Officer erred in determining that the evidence indicated only one parcel was used by Complainant and that there was no evidence of use of the property after October 2015.

Legal Standard

The Hearing Officer shall issue a decision and order affirming, modifying or reversing the determination of the Board of Equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious.  Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo. 

Complainant filed a Decision and Order of the Greene County Board of Equalization with each Complaint for Review of Assessment.  At the Evidentiary Hearing, counsel for the parties stated on the record that, due to some procedural irregularities unrelated to Complainant’s appeal that had occurred during the proceedings before the Board of Equalization, it appeared that the initial determination of Respondent had been sustained without a thorough review of the information that had been presented by the parties.  On appeal before the STC, the Complainant was allowed to present testimony and exhibits to support its opinion that the parcels fulfilled the requirements of exemption from ad valorem taxation for 2016.     

Upon appeal to the STC, Complainant was allowed to present testimony and exhibits to establish the use of the parcels fulfilled the requirements of exemption from ad valorem taxation.  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).

Evidence Offered and Received

Complainant argues that the Hearing Officer sustained objections after the hearing as to some of the evidence offered.  A review of the record failed to establish that the Hearing Officer sustained any objections by the Respondent after the close of the evidence.  The Decision sets forth that the Hearing Officer considered all evidence presented by the parties.  Further, the Hearing Officer, as required by law, set forth a thorough analysis of the evidence and the weight he gave to such evidence.

Complainant also contends that any evidence regarding use, or lack of use, in 2016 is irrelevant and should not be considered by the STC.  The STC may consider facts and events which occurred after the subject tax day. St. Louis County v. State Tax Commission, 515 S.W.2d 446, 453 (Mo.1974).  The issue before the STC was whether the use of the property was such to establish an exemption for religious, educational and/or charitable purposes.  The past use of the property would assist in the determination as to whether or not the property might establish exemption for the current tax year or in hindsight whether the property was used for charitable, religious or educational purposes during the tax year in question.

Exemption

Tax exemptions are not favored in the law and statutes granting exemptions are to be strictly, yet reasonably, construed against the one claiming the exemption. Missouri Church of Scientology v. State Tax STC, 560 S.W.2d 837, 844 (Mo. Banc 1987), State ex rel. Union Electric Co. v. Goldberg, 578 SW2d 921,923 (Mo. Banc 1979).   The Complainant advocates that their property qualifies for exemption for religious, educational and charitable purposes.

For property to be exempted for either of the three recognized exemptions, the property must be (1) owned and operated on a not for profit basis and (2) dedicated unconditionally to the qualifying use or exempt activity.   If the property is exempt for religious use the primary and inherent use of the property must be for “religious worship”.  “Religious worship” embodies as a minimum requirement a belief in a Supreme Being and references the rituals, customs, and practices required or believed necessary to carry out the faith’s belief in its Supreme Being.  If the property is exempt for charitable purposes the property must be used for the benefit of an indefinite number of people and directly or indirectly benefits society generally. Franciscan Tertiary Province of Missouri v. State Tax STC, 566 S.W.2d 213, 224 (Mo Banc 1978); Twitty v. State Tax STC, 896 S.W.2d 680, 684 (Mo. App. S.D. 1995).  If the property is exempt for educational purposes, the primary and inherent use of the property is to serve as an institution of learning with a course of study designed to impart to the students who attend a knowledge of the things broadly covered within the field of education;   State v. Holekamp, 151 S.W.2d 685 (1941).

Owner and Operated on a Not-for-Profit Basis

The property must be owned and operated on a not-for-profit basis. The Complainant provided evidence to substantiate that they own and operate on a not-for-profit basis.  Respondent cross-examined the witnesses regarding the fees collected from events using the parking lots and the fees for use of the activity center, gym, and rooms in Zimmerman Hall.  The witnesses testified as to the cost of maintaining the campus after vacating it.  Whether Complainant operates in the black is not dispositive in this appeal and therefore no further analysis is warranted.  There is no dispute that Complainant is a non-profit organization.

Property’s Dedication to Charitable, Educational and/or Religious Purpose

Exemption rests on the use of the property not merely the character of the owner. In order for a property to be exempt from taxation for state, county or local purposes, the property must be actually and regularly used exclusively for a charitable, religious or educational purpose.

The phrase “regularly used exclusively” has been interpreted to mean the primary inherent or dominate use of the property as opposed to a mere secondary and incidental use. There is no doubt that the limited activities such as the home school music class, the church softball league, or a bible study group may qualify as an educational, religious or charitable activity.

However, other activities occurring on the property are not found to be religious, education or charitable.  Activities such as collection of fees for parking for the Ozark Empire Fair, National Street Rod Association, Ozark Antique Auto Club Swap Meet, Street Machine Nationals and Ozark Farm Fest.  Club Bear is a club or private team volleyball.  They used the gym most often.  There was no evidence that the organization was educational, religious or charitable.  Complainant charged for the use of the gym.

The parcels were being marketed for sale in 2015. The parcels were vacant and unused except for some usage of three of the fifteen buildings on one of the parcels.  The use of only a fraction of the parcels – parts of three of the fifteen buildings on 70 plus acres, on a single parcel subject to this appeal – most of which sat vacant and unused along with the other ten parcels, does not establish a primarily inherent or dominate use of the property for religious, educational or charitable use.

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.

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  Greene 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.

SO ORDERED this 6th day of February, 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 6th day of February, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.

Jacklyn Wood

Legal Coordinator

 State Tax Commission of Missouri

 

GENERAL COUNCIL OF THE )
ASSEMBLIES OF GOD )
)
             Complainants )
)
v. ) Appeal Nos. 16-33012 to 16-33022
)
RICK KESSINGER,  ASSESSOR )
GREENE COUNTY, MISSOURI, )
)
             Respondent )

 

DECISION AND ORDER

HOLDING

Decision of the Greene County Board of Equalization (BOE) denying exemption is AFFIRMED.  General Council of the Assemblies of God (Complainant) failed to present substantial and persuasive evidence establishing the properties are exempt under Article X, Section 6 of the Missouri Constitution.

ISSUE

Complainant appealed on the grounds of exemption.  Complainant failed to present substantial and persuasive evidence to prove the subject properties were entitled to be exempt for tax year 2016.   The Hearing Officer was not persuaded by Complainant’s evidence.

Complainant appeared by counsel Michael Textor.

Rick Kessinger, Assessor of Greene County, Missouri (Respondent) appeared by Aaron Kluesmeyer.

Appeal heard by Senior Hearing Officer Amy Westermann and decided by Senior Hearing Officer John Treu (Hearing Officer).

EVIDENCE

            Complainant filed the following exhibits, which were admitted into the record:

EXHIBIT DESCRIPTION
Written Direct Testimony of Gary Rhoades
Written Direct Testimony of Cheryl Handley
Written Direct Testimony of Anthony Burrough
A Parcel Information
B Use of Properties by Fiscal Year (April 1 to March 31) & Summary of Events in 2015
C Articles of Incorporation of The General Council of the Assemblies of God
D Constitution and Bylaws of The General Council of the Assemblies of God
E Federal Exemption Letter (501) (c) (3)
F State of Missouri Exemption Letter
G Additional Statement
H Fiscal Year 2014 Profit Loss Statements (4/1/2013 to 3/31/2014)
I Fiscal Year 2015 Profit Loss Statements (4/1/2014 to 3/31/2015)
J Fiscal Year 2016 Profit Loss Statements (4/1/2015 to 3/31/2016)
K Central Bible College Shared Calendar 8/1/2013 through 10/31/2015

 

The Written Direct Testimony (WDT) of Gary Rhoades (Rhoades) broadly speaks of the general nature of Complainant, the activities on the subject properties, and the related amounts received and expended for certain activities.  Rhoades testified the properties are used:

by the General Council for religious activities, such as training for religious programs, hosting educational activities, serve a charitable purpose that serves an indefinite number of persons in the public.  Even though the events may only directly benefit a small number of persons, the use is still public since any member of the public who participates in the charitable activities of the General Council may be benefitted.  Also other members of the public who never come to the property for an activity are benefitted by the impact of the religious and educational activities, as those who are trained impact the lives of others.

 

The WDT of Cheryl Handley (Handley) and Anthony Burrough (Burrough) states how others simply showed up at unscheduled times at the subject properties for prayer, bible reading, bible study, or simply to visit the property.  Exhibits A, C through F and H through J address the non-profit nature and purpose of Complainant.  Exhibit G is legal argument proffered to support Complainant’s exemption application to Greene County, Missouri.

Exhibits B and K list the documented activities occurring on the subject properties.  The activities are summarized in the “Findings of Fact” below.

Respondent filed Exhibit 1 and 2.  Respondent subsequently withdrew the Exhibits and therefore they were not admitted into evidence.

An Evidentiary Hearing was conducted by Senior Hearing Officer Amy Westermann in these appeals on June 9, 2017.  The appeals were briefed and the Decision is issued by Senior Hearing Officer John Treu.

FINDINGS OF FACT

  1. Jurisdiction. Jurisdiction over these appeals is proper.  Complainant timely appealed to the State Tax Commission.
  2. Complainant. Complainant is a not-for-profit, 501(c) (3) exempt entity (Exhibit E).
  3. Evidentiary Hearing. The Evidentiary Hearing was held on June 9, 2017 at the offices of Complainant’s counsel, Lathrop & Gage, in Springfield, Missouri.
  4. Identification and Description of Subject Properties and Assessments. The subject properties in these appeals are real property located on the former Central Bible College campus in Springfield, Missouri.
Appeal Number Parcel Number Assessed Value Classification
16-33012 88-13-02-117-057 $642,400 Residential and Commercial
16-33013 88-13-02-117-013 $8,800 Commercial
16-33014 88-13-01-204-011 $171,600 Residential
16-33015 88-13-01-204-010 $21,800 Residential
16-33016 88-13-02-118-018 $63,000 Residential
16-33017 88-13-02-118-020 $23,000 Residential
16-33018 88-13-02-118-021 $23,000 Residential
16-33019 88-13-02-118-006 $58,300 Residential
16-33020 88-13-02-118-008 $34,700 Residential
16-33021 88-13-02-118-011 $48,900 Residential
16-33022 88-13-02-118-032 $9,500,600 Residential and Commercial

 

“Since 1924 the [subject] propert[ies] [constituted] the campus for Central Bible College [CBC] where college students were trained to go into ministry.  Evangel University, AG Theological Seminary and CBC merged or consolidated in 2013 [into Evangel University] and the primary operations of Evangel University are located at another campus in Springfield.”  (WDT of Rhoads).

  1. Use and Operation of the Properties.    Complainant is incorporated as a Not for Profit in Missouri and is exempt from federal income tax as a 501(c) (3) organization.  Complainant is organized exclusively for charitable, religious and educational purposes.  The evidence presented indicates that only parcel 88-13-02-118-032 was used by Complainant in 2015.  Therefore, the following parcels do not qualify for exemption:
16-33012 88-13-02-117-057
16-33013 88-13-02-117-013
16-33014 88-13-01-204-011
16-33015 88-13-01-204-010
16-33016 88-13-02-118-018
16-33017 88-13-02-118-020
16-33018 88-13-02-118-021
16-33019 88-13-02-118-006
16-33020 88-13-02-118-008
16-33021 88-13-02-118-011

 

The sole remaining parcel is parcel 88-13-02-118-032 (Appeal No. 16-33022).   The parcel consists of 70.73 acres with improvements including fifteen buildings, sporting fields, and supporting parking.  Only portions of this parcel were used in 2015.  The following sets forth the applicable buildings and areas on parcel 88-13-02-118-032 and their uses in calendar year 2015:

Building/Area Use(s)
Commuter Bldg. Bible Study, weekly from January to April, 2015
Schmidgall Fitness Ctr.

Forest Arnold Activ. Ctr.

Softball Fields

(all separate)

 Use by teams for sports games, tournaments, practices and camps ($25/hr. for small gym & $35/hr. for large gym in general)(Club Bear had a flat rate, season-long contract)(Emmanuel Assembly of God used one time for a game night)(New Covenant Fellowship Baptist Church used once)(Lighthouse Christian Eagles basketball one time in January, 2015)
Dining Commons Class Act Dessert Theatre one time in February, 2015
Flower Dorm Drury police class-three days
Chapel Alcoholics Anonymous-One use
Parking Lots Primarily for Fee Based Parking ($3/car, $5/truck or recreational vehicle)-  Ozark Empire Fair, National Street Rod Assoc., Ozark Antique Auto Club Swap Meet, Street Machine Nationals and Ozark Farm Fest (Convoy of Hope-Free use once in 2015)
Zimmerman Hall Addressed in separate chart below
Pearlman Library None
Horton Hall None
Other Misc. Buildings None
Tennis Courts None
Ponds None
Undeveloped Land None

 

In 2015, Zimmerman Hall was used in the follows ways, with all activities ceasing in October of 2015:

Zimmerman Hall
Activity Frequency
Class Act Music Studio Once weekly, January through May, 2015
Class Act Drama Camp Five days in July, 2015
Class Act Homeschool Once Weekly, August through October, 2015
Evangel Film Crew Six days from February to March, 2015
Ozark District Speech and Debate Four days in April, 2015
Annie Red Carpet Event Two days in April, 2015
Steve Anoa’l Church Team Visit One day in May, 2015
Emmanuel Assembly of God Church Once Weekly, June through October, 2015
Coker Graduation Party One day in July, 2015
MOA Meeting Club Bear One day in August, 2015

 

Of the fifteen building/areas on the parcel, the vast majority of use in 2015 occurred in only three buildings, Schmidgall, Forest Arnold and Zimmerman; on the softball field; and on the parking lots.  The groups utilizing Schmidgall, Forest Arnold, the softball field, and the parking lots mostly had no educational or religious affiliation.  Most were charged for the use.  Zimmerman Hall was used for some religious, charitable or educational purposes in 2015.  There was no evidence of use of parcel 88-13-02-118-032 after October of 2015.

Of great import is that the evidentiary record is devoid of any substantial and persuasive evidence of any desire or intent to utilize any of the subject properties in calendar year 2016 for any charitable, religious or education purposes.  Complainant offered no evidence of any intent to use the subject properties in the same manner they were used (or unused) in 2015.

  1. Properties for Sale. Complainant has at all times pertinent to these appeals been attempting to sell the subject properties (since the spring of 2014).  Complainant’s own witness acknowledged evidence that Complainant had internally looked to see if any part of Complainant’s organization could utilize the subject properties and that it was found not to be possible, resulting in the decision to list the subject properties for sale.
  2. Taxation of the Properties.   Respondent determined that Complainant’s subject properties were exempt for tax year 2015, but not for tax year 2016.  The BOE independently determined the subject properties were not exempt for tax year 2016.  The evidence was not substantial and persuasive to establish the properties qualified as exempt under Article X, Section 6 of the Missouri Constitution for tax year 2016.

CONCLUSIONS OF LAW AND DECISION

Jurisdiction

The Commission 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 Board of Equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious.  Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo. 

Complainants’ Burden of Proof

The burden of proof lies squarely on Complainant.  Complainant proposed that all of the parcels should be exempt from taxation on the ground that the parcels are used for religious, charitable, and educational purposes, with the exception of the residential portion of parcel 88-13-02-117-057.  The taxpayer in a STC appeal 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).

Complainant must meet this burden by producing evidence which is substantial and persuasive.  Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See, Cupples-Hesse, supra.   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).

Complainant’s evidence was not persuasive to the Hearing Officer to prove entitlement to exemption for tax year 2016.  The evidence was not persuasive in that it did not induce belief in the trier of fact, the Hearing Officer (see below).

Exemptions

Tax exemptions are not favored in the law and statutes granting exemptions are to be strictly, yet reasonably, construed against the one claiming the exemption. Missouri Church of Scientology v. State Tax Commission, 560 S.W.2d 837, 844 (Mo. Banc 1987), State ex rel. Union Electric Co. v. Goldberg, 578 SW2d 921,923 (Mo. Banc 1979).  The legal authority for property tax exemptions is located in Article X, Section 6, of the Missouri Constitution and at Section 137.100, RSMo.  The exemptions include:

…all property, real and personal, not held for private or corporate profit and used exclusively for religious worship, for schools and colleges, for purposes purely charitable, or for agricultural and horticultural societies…. Article X, Section 6, of the Missouri Constitution.

Religious Exemption

 

The legal test for a religious exemption is whether:

 

(1)        the primary and inherent use of the property is for “religious worship”.  “Religious worship” embodies as a minimum requirement a belief in a Supreme Being and references the rituals, customs, and practices required or believed necessary to carry out the faith’s belief in its Supreme Being; and

(2)       the property is owned and operated on a not-for-profit basis. CSCEA v. Nelson, 898 S.W.2d 547, 549 (Mo. banc 1995); Missouri Church of Scientology v. State Tax Commission, 560 S.W.2d 837, 842 (Mo. banc 1978); Temple Emanuel v. Morton, STC #88-11774.

 

Schools/Colleges Exemption

 

The legal test for a school/college exemption is whether:

(1)     the primary and inherent use of the property is to serve as an institution of learning with a course of study designed to impart to the students who attend a knowledge of the things broadly covered within the field of education; and

(2)     the property is owned and operated on a not-for-profit basis. State v. Holekamp, 151 S.W.2d 685 (1941).

 

Charitable Exemption

The legal test for a charitable exemption is whether:

(1)        The property is dedicated unconditionally to the charitable activity;

(2)       The property is owned and operated on a not for profit basis; and

(3)       The dominant use of the property is for the benefit of an indefinite number of people and directly or indirectly benefits society generally. Franciscan Tertiary Province of Missouri v. State Tax Commission, 566 S.W.2d 213, 224 (Mo Banc 1978); Twitty v. State Tax Commission, 896 S.W.2d 680, 684 (Mo. App. S.D. 1995).

 

The Hearing Officer is persuaded that the activities on parcel 88-13-02-118-032 in 2015 of a religious, educational and/or charitable nature by other organizations were de minimus, at best, and constituted nothing more than an incidental use, and that such activities did not evidence any intent or purpose of Complainant to use the property for a religious, educational and/or charitable manner in tax year 2016.

I. Owned and Operated on a Not-for-Profit basis

The property must be owned and operated on a not-for-profit basis. The property “must be dedicated unconditionally to the charitable activity in such a way that there will be no profit, presently or prospectively, to individuals or corporations. Any gain achieved in use of the building must be devoted to achievement of the charitable objectives of the project.” Franciscan Tertiary Province v. State Tax Commission, 566 S.W.2d 213, at 224 (Mo. banc 1978).

II. Actual and Regular Use for Charitable Purpose

In order for a property to be exempt from taxation for state, county or local purposes, the property must be actually and regularly used exclusively for a charitable purpose, as “charity” is defined by Salvation Army v. Hoehn, 188 S.W.2d 826, 830 (Mo. banc 1945): “. . . a gift, to be applied consistently with existing laws, for the benefit of an indefinite number of persons, either by bringing their hearts under the influence of education or religion, by relieving their bodies of disease, suffering or constraint, by assisting them to establish themselves for life, or by erecting or maintaining the public buildings or works or otherwise lessening the burdens of government.”  Exemption rests on the use of the property, not merely the charitable character of the owner.  The phrase “regularly used exclusively” has been interpreted to mean the primary inherent or dominate use of the property as opposed to a mere secondary and incidental use.  See, Bethesda Barclay House v. Ciarleglio, 88 S.W.3d 85 (Mo. App. E.D. 2002); Home Builders Ass’n of Greater St. Louis v. St. Louis Co. BOE, 803 S.W.2d 636 (Mo. App. E.D. 1991); Pentecostal Church of God of America v. Hughlett, 601 S.W.2d 666 (Mo. App.S. D. 1980); Barnes Hospital v. Leggett, 589 S.W.2d 241 (Mo. 1979).

Dedicated Unconditionally to the Charitable Activity

The property must be used such that it is available to an indefinite group of people, rendered at cost or less, which brings their hearts under the influence of education or lessens the burden of government.  “The public nature of a charity is diminished when it is systematically denied to those who need and can least afford the service.”  Evangelical Retirement Homes of Greater St. Louis, Inc. v. State Tax Commission, 669 S.W.2d 548, 554 (Mo. banc 1984).  Complainant did not offer evidence to meet this element of its burden of proof.

Benefit to Society

The record is devoid of any activity on any parcel in calendar year 2015, or even in calendar year 2016 which benefited society in general.

Discussion Regarding Exemption

The evidence submitted by Complainant was not substantial and persuasive to induce belief that the primary inherent or dominant use of the parcel 88-13-02-118-032 met this standard.  All of the subject parcels have been for sale since 2014.  The issue in these appeals is exemption for tax year 2016.  All activities in 2015 occurred on parcel 88-13-02-118-032.  Those activities primarily occurred in only 5 of the 15 buildings/areas of the parcel. Of the 5 buildings/areas, only Zimmerman Hall was used for some religious, educational or charitable activities.   Exhibits B and K reflect no activities occurring after October 2015.

While it is true that a property is not required to be used to its full capacity to be entitled to exemption, the totality of circumstances must be considered.  Whether parcel 88-13-02-118-032 was utilized in tax year 2015 constitutes only a portion of the analysis.  The types of uses in 2015 also constitute a portion of the analysis.  Of most import is whether the properties, including parcel 88-13-02-118-032 would be used for an exempt purpose in 2016.  Finally, the Hearing Officer had to consider the fact that all of the properties had been listed for sale since the spring of 2014.

Exhibit B and K provide an accounting of certain activities occurring on parcel 88-13-02-118-032 in tax year 2015.  Exhibit B does not induce belief in the Hearing Officer that such were done for any exempt purpose.  The income for the activities listed in Exhibit B was $53,502.  The expenses for the activities were only $10,150.  A profit of $43,352 was realized by Complainant for the activities listed in Exhibit B.

Exhibit K shows that in calendar year 2015 that a bible study took place for 4 hours, once a week until April 25, 2015.  Exhibit K also shows that Emanuel Assembly of God conducted church services, once a week from June 7, 2015 until October 11, 2015, at which time they ceased.  The WDT of Rhoades stated the “General Council has used the property in many of the same ways as prior to the relocation of the college operation” and that “some of the necessary operations have continued.”  What the WDT conspicuously does not state is any intent or purpose to continue these referenced uses in 2016.  No calendar of events or schedule for 2016 was offered for any reason, including, but not limited to show any intent by Complainant for continued use of any parcel for any exempt purpose in 2016.  And again, Complainant has and continues to attempt to sell the subject properties.  Moreover, all of the activities in 2015 occurred on parcel 88-13-02-118-032.

As stated above, Complainant contends that other unlisted activities took place on the subject properties.  Complainant stated that the “secondary uses dovetail and round out the General Council’s primary purpose because they allow the General Council to interact with and minister to more people in the community.” However, Complainant offered no evidence of any actual ministry during the purported additional activities in 2015.  Complainant also makes contentions regarding how the general public benefits from the purported unlisted activities. (See Evidence Section above [WDT Rhoades]) The statements are overly broad, general, imprecise, non-specific, and without documentary support.  Such claims are, at best, speculative and theoretical.

As set forth at the beginning of the Decision, tax exemptions are not favored in the law and statutes granting exemptions are to be strictly, yet reasonably, construed against the one claiming the exemption. Missouri Church of Scientology v. State Tax Commission, 560 S.W.2d 837, 844 (Mo. Banc 1987), State ex rel. Union Electric Co. v. Goldberg, 578 SW2d 921,923 (Mo. Banc 1979).  Complainant simply failed to put forth sufficiently precise evidence to meet its burden of proof.

In summary, Complainant failed to meet its burden of proof as to multiple required elements to qualify for exemption of the subject properties.  It is essential to note that Complainant’s failure to prove any single element is sufficient for denial of exemption.  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).    Although the properties at issue in these appeals were at one point utilized for the religious and educational purposes of such properties, the record is devoid of any evidence of any intent for active and actual utilization of the subject properties for religious, charitable and/or religious purpose in tax year 2016.  Given the fact that the record is devoid of any evidence of any intent for religious, educational and/or charitable utilization of the subject properties in 2016, prongs one and three of the Franciscan Test are not met and the properties are taxable.  Consequently, Complainant is denied exempt status for ad valorem tax purposes as to the subject properties for tax year 2016.

 ORDER

The assessed valuations for the subject properties for the tax year 2016 are AFFIRMED.

Application for Review

A party may file with the Commission an application for review of this decision within thirty days of the mailing date set forth in the Certificate of Service for this Decision.  The application shall contain specific facts or law as grounds upon which it is claimed the decision is erroneous.  Said application must be in writing addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, 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 Greene County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 139.031.8, RSMo.

Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed.  Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.

SO ORDERED this 24th day of August, 2017.

STATE TAX COMMISSION OF MISSOURI

John Treu

Senior Hearing Officer

 

Certificate of Service

 

I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 24th day of August, 2017, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.

 

RKessinger@greenecountymo.com; aklusmeyer@lowtherjohnson.com; mtextor@lathropgage.com

 

Jacklyn Wood

Legal Coordinator