State Tax Commission of Missouri
| GREEN MOUNTAIN HOLDING, LLC, | ) | |
| ) | ||
| Complainant, | ) | |
| ) | ||
| v. | ) | Appeal Number 14-10858 |
| ) | ||
| JAKE ZIMMERMAN, ASSESSOR, | ) | |
| ST LOUIS COUNTY, MISSOURI, | ) | |
| ) | ||
| Respondent. | ) |
DECISION AND ORDER
HOLDING
Determination of assessed value made by the Assessor is SET ASIDE. Complainant presented substantial and persuasive to establish the true value in money for the subject property for tax year 2014 was $1,075,000, commercial assessed value of $344,000.
Complainant appeared by counsel James Gamble.
Respondent appeared by counsel Ed Corrigan
Case heard and decided by Hearing Officer Maureen Monaghan.
Counsel for Respondent filed a brief after hearing. Complainant’s counsel waived filing.
ISSUE
Complainant appeals, on the grounds of overvaluation. The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2013. The value as of January 1 of the odd numbered year remains the value as of January 1 of the following even numbered year unless there is new construction and improvement to the property. Section 137.115.1 RSMo
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. Complainant purchased the property on October 24, 2014. Complainant filed an appeal on December 29, 2014. 12CSR30-3.010 The Complainant is a real party in interest due to their purchase of the property in 2014 and their obligation to pay property taxes in 2014. Ownership as of January 1, 2013 or January 1, 2014 is not a jurisdictional requirement. Respondent argues that parcel 27M210255 did not exist on January 1, 2013 therefore the State Tax Commission has no jurisdiction. Pursuant to the documents filed with the Motion to Dismiss filed by Respondent on the eve of the hearing, the parcel number (27M210255) existed at the time of the recording of the deed and a certificate of value. Further, the Assessor assigned a true value and assessed value for subject parcel (27M210255) in 2014 and a tax bill was issued on the subject parcel (27M210255).
- Evidentiary Hearing. Evidentiary Hearing in this appeal occurred on May 13, 2016.
- Identification of Subject Property. The subject property is identified by map parcel number 27M210255. It is further identified as 9701 Landmark Parkway Drive, St. Louis County, Missouri.
- Description of Subject Property. The subject property consists of a 2.74 acre tract of land improved by a two story, multi-tenant office building constructed in 1987. The leasable area is 45,126 square feet and includes a 24 space basement level parking garage. There are an additional 145 spaces of surface parking. As of the date of value the property was vacant. The improvement is of average quality but in below average condition. There were items of deferred maintenance as well including HVAC, tuck pointing, retaining wall, and parking lot repairs. The property also suffers from functional obsolescence in that it is not wet-sprinkled, there are HVAC and electrical issues, and the property will need to meet ADA accommodations.
- Assessment. The Assessor appraised the property at $1,728,000, an assessed commercial value of $552,960.
- Complainant’s Evidence. The Complainant submitted Exhibit A – Appraisal Report – and Exhibit B – Written Direct Testimony of certified Appraiser Russell Lauer. The appraiser developed the sales comparison and income approaches to value. The appraiser concluded an opinion of value of $1,075,000.
- No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2013, to January 1, 2014, therefore the assessed value for 2013 remains the assessed value for 2014. Section 137.115.1, RSMo.
- Respondent’s Evidence. An exchange order was issued on January 2, 2015 for filing of exhibits on September 28, 2015. Due to a change in Complainant’s counsel, the exhibit schedule was amended and exhibits were due November 9, 2015, objections were due December 7, 2015, and surrebuttal was due January 7, 2016. Respondent filed no objections. At the hearing, Respondent offered Exhibit 1 a certificate of value. Complainant objected as the filing was out of time, hearsay, and lack of foundation. Objections were sustained.
- True Value established. Complainant’s evidence was substantial and persuasive to establish the true value in money as of January 1, 2013, to be $1,075,000.
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. Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.
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 and tangible personal property are assessed at set percentages of true value in money. Section 137.115.5, RSMo – residential property at 19% of true value in money; commercial property at 32% of true value in money and agricultural property at 12% of true value in money.
Complainants’ Burden of Proof
In order to prevail, Complainants must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2013. Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978). There is no presumption that the taxpayer’s opinion is correct. 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). A valuation which does not reflect the fair market value (true value in money) of the property under appeal is an unlawful, unfair and improper assessment.
Standard for Valuation
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 bought by one who is willing or desirous 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). True value in money is defined in terms of value in exchange and not value in use. Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 S.W.2d 376, 380 (Mo. App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973). It is the fair market value of the subject property on the valuation date. Hermel, supra. Market value is the most probable price in terms of money which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price is not affected by undue stimulus.
Implicit in this definition are the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby:
- Buyer and seller are typically motivated.
- Both parties are well informed and well advised, and both acting in what they consider their own best interests.
- A reasonable time is allowed for exposure in the open market.
- Payment is made in cash or its equivalent.
- Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
- The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction. Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; See also, Real Estate Valuation in Litigation, J. D. Eaton, M.A.I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80; Uniform Standards of Professional Appraisal Practice, Glossary.
Methods of Valuation
Proper methods of valuation and assessment of property are delegated to the Commission. It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case. See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra; Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975). Missouri courts have approved the comparable sales or market approach, the cost approach and the income approach as recognized methods of arriving at fair market value. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STC, 789 S.W.2d 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm’n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. Div. 2 1974).
Complainant’s Certified, General Appraiser and Appraisal Report
The Complainant presented the testimony and report of a general certified appraiser. The appraiser valued the subject property using the sales comparison approach and the income approach. In both approaches, the appraiser determined that the 100% vacancy and deferred maintenance would require making an adjustment to the indication of value. The appraiser adjusted for deferred maintenance. The adjustments included replacing the roof, tuckpointing, retaining wall repair, parking lot maintenance, ADA compliance requirements and sprinkler requirement. The total cost was $468,000; the appraiser used a $450,000 deduction in his calculations of value.
The appraiser, in the income approach, reviewed the market for comparable rentals. The appraiser referenced BOMA Office Leasing Guide and a listing agent to conclude a market rate of $19.50 per rentable square foot on a full service basis. The appraiser reviewed market surveys to opine a vacancy and collection rate of 12%. The appraiser estimated expenses using BOMA. The appraiser was unable to collect any information on the subject property as it had been vacant. After calculating a cap rate of $12.17% which included an effective tax rate, and making a deduction for the deferred maintenance, the appraiser concluded on an indication of value of $1,545,620. The appraiser then made a deduction for the cost to stabilize to opine a value of $1,065,000.
The appraiser also developed the sales comparable approach. The appraiser reviewed four comparable sales. The appraiser made adjustments for conditions of sale, location, size, quality and condition. The appraiser concluded an indication of value of $1,090,000 after making the adjustment for deferred maintenance. The appraiser gave more weight to the income approach resulting in an opinion of value of $1,075,000
Sale of Subject
Evidence of the actual sales price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time. The actual sale price is a method that may be considered for estimating true value. The actual sales price, between a willing seller who is not obligated to sell and a willing buyer who is not compelled to buy, establishes an outer limit on the value of real property. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526 (App. E.D. 1993).
The Respondent offered Exhibit 1, the certificate of value of the sale of the subject in 2014. The Complainant objected and the objections of failure to file on time, hearsay and lack of foundation were sustained. Respondent cross-examined the appraiser on the sale of the property. The certified general appraiser testified that he was aware that the property sold in 2014. He stated that the property was purchased prior to it being listed in the market. The purchasers current lease was expiring and they needed property in the area available to them in a short period. The Respondent did not establish that the property was a voluntary purchase between a willing seller who is not obligated to sell and a willing buyer who is not compelled to buy. In any event, the sale price would only establish an outer limit on the value of real property.
Weight to be Given Evidence
The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled. The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).
The Hearing Officer as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances. The Hearing Officer 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 accept it in part or reject it in part. St. Louis County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).
Opinion Testimony by Experts
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 State Tax Commission cannot ignore a lack of support in the evidence for adjustments made by the expert witnesses in the application of a particular valuation approach. Drey v. State Tax Commission, 345 S.W. 2d 228, 234-236 (Mo. 1961), Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W. 3d, 341, 348 (Mo. 2005).
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).
If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto.
The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data need not be admissible in evidence.
Section 490.065, RSMo; State Board of Registration for the Healing Arts v. McDonagh, 123 S.W.3d 146 (Mo. SC. 2004); Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. E.D. 1992).
ORDER
The assessed valuation for the subject property as determined by the Assessor for St. Louis County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax year 2014 is set at $344,000.
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 St. Louis 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 2nd day of August, 2016.
STATE TAX COMMISSION OF MISSOURI
Maureen Monaghan
Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 2nd day of August, 2016, to: Complainants(s) counsel and/or Complainant, the county Assessor and/or Counsel for Respondent and county Collector.
Jacklyn Wood
Legal Coordinator
Contact Information for State Tax Commission:
Missouri State Tax Commission
301 W. High Street, Room 840
P.O. Box 146
Jefferson City, MO 65102-0146
573-751-2414
573-751-1341 Fax