State Tax Commission of Missouri
HARMON INDUSTRIES,)
)
Complainant,)
)
v.) Appeal Number 10-63004
)
MARK REYNOLDS, ASSESSOR,)
JOHNSON COUNTY, MISSOURI,)
)
Respondent.)
DECISION AND ORDER
HOLDING
Decision of the Johnson County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE.True value in money for the subject property for tax year 2010 is set at $2,380,000, commercial assessed value of $761,600.
Complainant appeared by Counsel Charles J. Hyland, Hyland Law Firm, Overland Park, Kansas.
Respondent appeared by Johnson County Prosecuting Attorney, Lynn M. Stoppy.
Case decided by Senior Hearing Officer W. B. Tichenor.
ISSUE
Complainant appeals, on the ground of overvaluation and discrimination, the decision of the Johnson County Board of Equalization, which sustained the valuation of the subject property.The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2009.The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
1.Jurisdiction.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the Johnson County Board of Equalization.By Order dated 5/4/11, Respondent failed to inform the Hearing Officer in writing if Respondent wished to cross-examine Complainant’s witness, accordingly case is taken up for decision under Complainant’s Exhibits A through G.[1]
2.Discrimination Claim Abandoned.Exhibits A through G provided no basis upon which it could be concluded that the Assessor or the Board of Equalization had assessed the property under appeal at an assessment ratio greater than 32% [2] or the average assessment ratio for commercial property in Johnson County.No evidence was presented to establish that the average assessment ratio for commercial property in Johnson County for the 2009 assessment cycle was at a rate less than the statutory rate of 32%.Accordingly, the claim of discrimination is deemed to have been abandoned by Complainant.
3.Assessment.The Assessor appraised the property at $5,216,415, a commercial assessment of $1,669,253.The Board sustained the assessment.
3.Subject Property.The subject property is located at 609 North Enterprise Drive, Warrensburg, Missouri.The property is identified by map parcel number 11-40-20-3.09.It is otherwise known as the GE Transportation – Warrensburg Facility.The property consists of a 15 acre tract improved with a one-story office/warehouse building (95,252 square feet) and supporting amenities, constructed in 2000.A complete description of the property and photographs are provided in Exhibit F – Introduction – Identification of the Property, p. 1; Property Data, pp. 1 – 13.
4.Complainant’s Evidence.Complainant submitted the following exhibits which are received into the record.
|
EXHIBIT |
DESCRIPTION |
|
A |
Copy of Protest Letter – 11/8/10; STC Acknowledgement Letter – 8/30/10 |
|
B |
BOE Decision Letter – 7/20/10; Complaint for Review of Assessment; Page from STC Pamphlet on Appeals before the Commission. |
|
C |
Complaint for Review of Assessment; BOE Minutes – 7/19/10 |
|
D |
Property Record Card on Subject Property |
|
E |
Information presented to BOE |
|
F |
Appraisal Report – Laird Goldsborough |
|
G |
Written Direct Testimony – Laird Goldsborough |
|
H |
Written Direct Testimony – Rich Rankin – Complainant’s Property Manager |
No objections were made to the exhibits.The Exhibits are received into the record.
There was no evidence of new construction and improvement from January 1, 2009, to January 1, 2010, therefore the assessed value for 2009 remains the assessed value for 2010.[3]
Complainant’s evidence was substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2009, to be $2,380,000.
5.Respondent’s Evidence.Respondent did not file and exchange any exhibits or written direct testimony in the appeals.
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.[4]
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.[5]The constitutional mandate is to find the true value in money for the property under appeal. By statute real and tangible personal property is assessed at set percentages of true value in money.[6]In an overvaluation appeal, true value in money for the property being appealed must be determined based upon the evidence on the record that is probative on the issue of the fair market value of the property under appeal.The only evidence on the record in this appeal that is probative on the issue of the fair market value of the property under appeal consists of the Roos/Goldsborough appraisal and written direct testimony of Mr. Goldsborough, Complainant’s expert witness.Accordingly, consistent with the constitutional mandate, the Hearing Officer must find the true value in money for the subject property based upon those sources.
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[7]This presumption is a rebuttable rather than a conclusive presumption.It places the burden of going forward with some substantial evidence on the taxpayer – Complainant.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.[8]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.[9]Upon presentation of the Complainant’s evidence[10] the presumption in this appeal disappeared.The case is decided free of the presumption.
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.[11]True value in money is defined in terms of value in exchange and not value in use.[12]It is the fair market value of the subject property on the valuation date.[13]Market value is the most probable price in terms of money which a property should bring in 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:
1.Buyer and seller are typically motivated.
2.Both parties are well informed and well advised, and both acting in what they consider their own best interests.
3.A reasonable time is allowed for exposure in the open market.
4.Payment is made in cash or its equivalent.
5.Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
6.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.[14]
Complainant’s appraisers concluded value for the property under appeal under the Standard for Valuation.[15]
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.[16]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.[17] Complainant’s appraisers considered the cost approach but elected to not develop it.[18]The sales comparison[19] and income approaches[20] were developed by the appraisers, and valuation was concluded giving most weight to the sales comparison approach.
Opinion Testimony by Experts
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.[21]
Laird Goldsborough was qualified by his knowledge, skill, experience, training and education to testify as an expert on the subject of the fair market value of the subject property as of January 1, 2009.The facts and data upon which Mr. Goldsborough based his opinion of value were of a type reasonably relied upon by experts in the appraisal of real estate and they are found to be otherwise reliable.Therefore, the opinion of value concluded by the appraiser was competent and relevant evidence on the issue before the Hearing Officer on the fair market value of the property under appeal.
Complainant Proves Value of $2,380,000
In order to prevail, Complainant 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, 2009.[22]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.”[23]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[24]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.[25]
The Roos/Goldsborough appraisal constituted substantial and persuasive evidence of what a willing buyer and seller would have paid for the property under appeal on January 1, 2010.However, although this appeal is to set value for the 2010 tax year, the valuation date was January 1, 2009, not January 1, 2010.Real property in Missouri is assessed every two years as of January 1 of each odd-numbered year.[26]The Hearing Officer concludes that neither Counsel for Complainant, nor Complainant’s appraisers were aware of this fact.The fact that the appraisers’ opinion of value was in point of fact a year later than required does not in and of itself render that opinion without probative value.
The dates of sales of the comparable properties utilized in the sales comparison approach were as follows: July 2009, February 2007, June 2009, August 2009, February 2007, and October 2007.All of these sales dates were relevant to a valuation as of January 1, 2009.The appraisers concluded, “No adjustment for market conditions were made, as there is no discernible pattern of appreciation for these facilities.”[27]The Per Square Foot sales prices for the comparables were: $21.58, $15.00, $21.00, $27.78, $16.94, and $18.82.
In their conclusion of value under the sales comparison approach, the appraisers were of the opinion that the appropriate range that the subject should be placed was between $21 and $27 per square foot.This places the property in the range of the 2009 sales.Appropriate for a 1/1/09 valuation.The final conclusion of a per square foot value of $25.00 is value supported by the 2009 sales.The Hearing Officer concludes that notwithstanding the appraisers’ valuation date of 1/1/10, the evidence is equally probative as to the fair market value of the subject property on January 1, 2009.Accordingly, it is determined that Exhibit F meets the standard of substantial and persuasive evidence to establish value of the subject property as of January 1, 2009, to be $2,380,000.
ORDER
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Johnson County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax year 2010 is set at $761,600.
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, 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 application for review is based will result in summary denial. [28]
Disputed Taxes
The Collector of Johnson 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.If no Application for Review is filed with the Commission within thirty days of the mailing date set forth in the Certificate of Service, the Collector, 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.
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 July 20, 2011.
STATE TAX COMMISSION OFMISSOURI
_____________________________________
W. B. Tichenor
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 20th day of July, 2011, to:Charles Hyland, 7300 W. 110th Street , Overland Park, KS 66210, Attorney for Complainant; Lynn Stoppy, Prosecuting Attorney, Johnson County Justice Center, 101 W. Market, Warrensburg, MO 64093, Attorney for Respondent; Mark Reynolds, Assessor, 300 North Holden, Suite 204; Diane Thompson, Clerk, 300 North Holden, Suite 205; Ruthane Small, Collector, 300 North Holden, Suite 201, Warrensburg, MO 64093.
___________________________
Barbara Heller
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
[2] Commercial property is assessed at 32% of true value in money (fair market value), Section 137.115.5(1), RSMo
[7] 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)
[8] United Missouri Bank of Kansas City v. March, 650 S.W.2d 678, 680-81 (Mo. App. 1983), citing to State ex rel. Christian v. Lawry, 405 S.W.2d 729, 730 (Mo. App. 1966) and cases therein cited.
[9] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
[11] 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).
[12] 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).
[14] 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.
[16] 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).
[17] 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).
[21] 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).
[23] 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).