State Tax Commission of Missouri
HOLLISTER DEVELOPERS, LLC )
Complainant , )
-vs- )Appeal No. 13-89544
CHUCK PENNELL, ASSESSOR, )
TANEYCOUNTY, MISSOURI )
DECISION AND ORDER
Decision of the Taney County Assessor is AFFIRMED.Parties submit case on documents.Case heard and decided by Senior Hearing Officer Luann Johnson.
Complainant appeals, on the ground of overvaluation, the decision of the Taney County Assessor, setting value at $2,863,052 (assessed value $543,980).Complainant asserts its right to appeal under 12 CSR 30-3.010.1(B)(1).
Complainant asserts a value of $1,900,000 (assessed value $361,000).
Partnership income tax returns for
Profit and loss statement for 2013
Partnership income tax returns for
Breakdown of income and expenses
Tax bill for 2013
Rent roll analysis for 2013
FINDINGS OF FACT
1.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission, from the decision 2013 assessment made by the Taney County Assessor, pursuant to 12 CSR 30-3.010.1(B)(1).
2.The Assessor appraised the property at $2,863,052, a residential assessment of $543,980.(Residential property is assessed at 19% of market value.Section 137.115 RSMo.)
3.The subject property is a 56 unit apartment complex identified as parcel 17-3.0-08-004-002-003.000, located at 195 College View Drive, Hollister, Taney County, Missouri, more commonly known as College View
4.Complainant presented no appraisal report.Instead,it presented an income and expense statement for tax year 2013 and requested that we capitalize net operating income at 9%. The problem with this approach is fourfold.First, the tax day is January 1, 2013.Economic conditions as of January 1, 2013 are relevant.Economic conditions as of December 31, 2013 are not so relevant, unless they are shown to mirror January 1 conditions.Second, we have no market
data upon which to reach any conclusions as to market rent, market vacancy rates and market expenses for the subject property.Third, Complainant’s expenses include real estate taxes which are properly a part of the capitalization rate and should not be an expense category.Fourth, we have no basis to conclude that 9% is the appropriate capitalization rate.
Complainant also presented partnership income tax returns for 2012 and 2013, which are of no value whatsoever in determining market value for real property.
5.Respondent presented no evidence.
6.No evidence was presented demonstrating new construction and property improvements between January 1, 2013 and January 1, 2014.
CONCLUSIONS OF LAW AND DECISION
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 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, Section 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 is assessed at set percentages of true value in money. (Section 137.115 RSMo)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.
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 SW2d 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, upra.) 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. (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.)
Complainant’s Burden of Proof
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, 2013. (Hermel, supra) 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). Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.(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 SW2d 50,53 (Mo. App. 1975)
The owner of property is generally held competent to testify to its reasonable market value.(Rigali v. Kensington Place Homeowners’ Ass’n, 103 S.W.3d 839, 846 (Mo. App. E.D. 2003); Boten v. Brecklein, 452 S.W.2d 86, 95 (Sup. 1970).The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.(Cohen v. Bushmeyer, 251 S.W.3d 345, (Mo. App. E.D., March 25, 2008); Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992); State, ex rel. Missouri Hwy & Transp. Com’n v. Pracht, 801 S.W.2d 90, 94 (Mo. App. E.D. 1990); Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965).
Market value is based upon value in exchange, not value in use.When called upon to determine market value,
we must look at market data.There is no presumption in favor of the owner.And, when the owner fails to present data based upon a proper foundation, an owner’s opinion is entitled to no weight. We cannot create an appraisal report from raw data.From the 2013 profit and loss statement, we get questions such as:What is market rent?What is market vacancy?Do most apartment complexes spend $27,000 a year on cable/internet?What would an apartment complex have to do to incur $700 to $800 a month in leasing fees?What are they leasing?Is $2,000 a month a reasonable
management/on-site management fee?What are the high “turn over” expenses each month? Is $10,000 a year a lot for a water bill?What about $7,000 a year for electric?Why is 9% an appropriate capitalization rate?
Complainant has failed to present substantial and persuasive evidence in support of its opinion of value.
The assessed valuation for the subject property for tax years 2013 and 2014 is 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.
The Collector of Taney 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 this 16th day of May, 2014.
STATE TAX COMMISSION OF MISSOURI
Senior Hearing Officer
Section 138.432, RSMo.