STATE TAX COMMISSION OF MISSOURI
| JARBOE REALTY & INVESTMENT CO., INC., | ) | |
| ) | Appeal No. 15-10194 | |
| Complainant, | ) | & 15-11025 |
| ) | ||
| v. | ) | |
| ) | ||
| JAKE ZIMMERMAN, ASSESSOR, | ) | |
| ST. LOUIS COUNTY, MISSOURI, | ) | |
| ) | ||
| Respondent. | ) |
ORDER
AFFIRMING HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
HOLDING
On November 30, 2017, Senior Hearing Officer John Treu (Hearing Officer) entered his Decision and Order (Decision). Jake Zimmerman, Assessor of St. Louis County, Missouri (Respondent) subsequently filed his Application for Review. Jarboe Realty & Investment Co., Inc., (Complainant) thereafter filed its Response to Respondent’s Application for Review. Respondent filed his Reply.
We affirm the Decision and Order of the Hearing Officer. Segments of the Hearing Officer’s Decision may have been incorporated into our Decision without further reference.
FINDINGS OF FACT
Properties’ History
The subject properties are located at 9170-9200 Latty Avenue, Hazelwood, St. Louis County, Missouri. The combined land area is 10.85 acres. It is improved with office-industrial buildings of 69,856 square feet, rail spur, and parking. The properties have an extensive history of contamination.
Uranium materials were processed near the St. Louis airport for the U.S. Military during and immediately after World War II. In 1966, “uranium-bearing residues” were placed in storage on the subject property. The residues were processed on the site until 1970. Areas next to the subject property suffered some contamination due to winds carrying dust from the residue to nearby land. A creek adjacent to the property – Coldwater Creek – was also contaminated due to the subject property flooding and wash off to the creek.
The U.S. Army Corp of Engineers (USACE) cleaned the property. The cleanup included removal of improvements and soil. The contaminated soil was moved from 9200 Latty to 9170 Latty. New buildings were constructed on 9200 Latty after the property was determined to be clear of radioactive contamination.
Although the property was determined to be clear of contamination, testing of the properties continued. Contamination was noted again. Cleanup was performed from 2001-2013. 9170 Latty was used by the USACE to store equipment and contaminated soils during the cleanup process. The cost for cleanup was $39,000,000.
Four buildings are located on the subject parcels. Most of the improvements are located on 9200 Latty; however, Building 4 was constructed on both parcels.
Due to the contamination, new construction has not occurred on the parcels except for a restroom being added in Building 4 in 2016. The USACE was required to approve and perform the destruction of the slab flooring and removal of contaminated soils so that a restroom could be installed.
Every three months the property is checked for radon levels. Rodney Jarboe (Owner) testified that he is required to sign a tolling agreement for the cost of the cleanup. The excess land located on 9170 Latty has been approved for unlimited use and unlimited exposure (UUUE). The improvements located on 9170-9200 have not been approved for UUUE.
Assessment History
| YEAR | Respondent | BOE | STC |
| 2011 | $131,400 | ||
| 2013 | $1,054,200 | $882,900 | $131,000 |
| 2015 | $882,000 | $681,300 | $131,000[1] |
| 2017 | $1,328,800[2] |
The properties were valued by the Respondent at or below $131,400 until 2013. In 2013, the Respondent increased the TVM over one million dollars. Complainant appealed to the State Tax Commission (STC). We found:
“The Complainant presented substantial and persuasive evidence that the assessment was incorrect…. The properties have been subject to remediation for over 50 years. Although remediation efforts have been extensive, radioactive contamination exists on both tracts of land…Neither parcel has been completely classified as Unlimited Use and Unlimited Exposure (UUUE). … Markets are driven by both subjective and objective factors, including, but not limited to various stigmas, unknowns, and fears. The presence of radioactive waste on the property would have an impact on the marketability of the property. Upon review of the record, we find… the subject properties lacked the value assigned by the Respondent…”
Due to the lack of market information for contaminated properties and unmarketability of the properties, we found the Complainant was prevented from establishing market value. Due to the unusual circumstances, we found the assessments in 2013 to be unfair, arbitrary and capricious and we ordered the Respondent to return the properties to their prior TVM.
Complainants’ Evidence
| Exhibit | Description |
| A | Remedial Action Summary dated 2/19/14 |
| B | Post Remedial Action Report dated 9/25/13 |
| C | Formerly Utilized Sites Remedial Action Program Summer 2012 |
| D | Formerly Utilized Sites Remedial Action Program Winter 2013 |
| E | Aerial View of 9170 Latty, Locator Number 10K510090,Appeal No. 15-11025 |
| F | Aerial View of 9200 Latty, Locator Number 10K510023, Appeal No. 15-10194 |
| G | FUSRAP parcel map |
| H | FUSRAP parcel map showing remaining areas of contamination |
| I | FUSRAP parcel map showing remaining areas of contamination |
| J | FUSRAP parcel map showing remaining areas of contamination |
| K | FUSRAP parcel map showing remaining areas of contamination |
| L | FUSRAP parcel map showing remaining areas of contamination |
| M | Written Direct Testimony (WDT) Michael Wolken (Realtor) |
| N | WDT Joe Camerer (Camerer), Appraiser |
| O | Appraisal Report of Camerer |
| P | WDT Rodney Jarboe (Owner) |
| Q | WDT Stephen Jeffery (Attorney) |
| R | Opinion Letter from Jeffrey that Complainant is responsible for cleanup |
| S | FUSRAP dated 2/11/15 |
| T | Decision and Order in STC # 13-14744 and 13-134745 |
| U | Application for Review in STC # 13-14744 and 13-134745 |
| V | Flood Photographs and Site Impact |
| W | Transcript in STC # 13-14744 and 13-134745 |
Wolken testified on behalf of Complainant[3]. He is a commercial real estate broker and has been licensed for forty years. He currently works at NAI Desco, the world’s largest commercial real estate organization. Wolken has known Owner for several years and has brokered other property for Owner. He listed subject properties for him seven years ago. After learning the properties were more contaminated than the Owner was led to believe, the properties were taken off the market. He advised the owner that the properties were unsaleable because of the contamination.
Wolken testified that there was:
“no market for leasing or sale of properties that are contaminated by radioactive materials. The contamination would have to be disclosed in a presentation to any potential tenant or buyer. My firm would not accept a listing for these properties….There are sufficient other sites available in the general area, such that a person seeking to lease or bu[y] a site for that use would not be compelled to consider these properties.”
Camerer also testified. He is a Missouri Certified General Appraiser. He has been an appraiser for almost twenty-five years. Camerer appraised the property and is the author of Exhibit O. It is his opinion that, because the property “cannot be fully cleaned until the buildings are removed and the contamination under them is excavated,” any analysis of the value buildings provides no benefit to the appraisal. Camerer considered all three approaches to value but did not develop the income approach or the cost approach as the properties “cannot be fully cleaned up until the buildings are removed.” The only valuation method reasonable to develop is to consider the land value after removal of the buildings and cleanup. Since the cost of removal of buildings and cleanup of the remaining contaminants is estimated at exceeding the sale price of the 10.85 acres, it is his opinion that the properties have no market value.
Camerer states in his report that even after the property is entirely cleaned up, “a certain level of stigma will remain with the site.” The market would shy from a risk of building on the subject site when they can invest in another property without a history of remediation of ratioactive materials.
Owner testified as to his history with the property and to its current status. Owner stated that the USACE leased the excess land at 9170 Latty for storage of equipment and contaminated soils. USCAE removed their equipment, contaminated soil, and additional soils due to the contaminants leaching from the storage in 2011. The last payment he received from the lease was in February 2012.
The Owner testified that the cleanup process is ongoing due to the contamination, which remains on both parcels. The parcels do not have UUUE designation. He cannot fully use the properties. For example, he wanted to add a restroom in Building 4 in 2015. He needed permission from USACE to make the improvement. USACE was required to remove the floorings and contaminated soils so that plumbing could be installed. The Owner believes he could be liable for the cleanup and any damages suffered from the contamination.
Owner testified that the buildings and land are not suitable for his current business. The properties are too large and the expenses, including property taxes, exceed his current revenues. He testified that he uses the properties because he could not sell them. He sold other properties he owned and moved his business into the subject parcels.
Aside from the issues with the radioactive contamination, the property suffers from flooding due to its proximity to Coldwater Creek. The properties flood on an annual basis.
Jeffrey is an attorney admitted to practice in Missouri and Illinois. He has 29 years of experience in environmental law. He represented Owner regarding the radiological impacts on the property. The Hearing Officer excluded the testimony of the witness as to his legal conclusion that the Owner is liable for the costs of remediation and the remediation efforts are ongoing and contamination remains on the property. However, the Hearing Officer provided that post-hearing briefing could include law supporting the opinion utilizing Jeffrey’s analysis.
Respondent’s Evidence
Respondent presented evidence and the following exhibits:
| Exhibit | Description |
| 1 | Appraisal Report |
| 2 | Residential Risk and Dose Assessment for Improvements and Soil |
| WDT | Russell Lauer (Lauer) |
Lauer testified on behalf of Respondent. He has thirty-one years of experience as an appraiser. He appraised subject property. The appraiser used the sales comparison approach to value for 9200 Latty and the cost approach to value 9170 Latty. Mr. Lauer was aware of the contamination of the property and the issue of flooding. He opined values of $190,000 for 9170 Latty and $630,000 for 9200 Latty for total value of $820,000[4].
Lauer made several assumptions when valuing the properties:
- The boundary line between the parcels would be redrawn. The division would result in all the improvements being located at 9200 Latty. After the new boundaries were established, 9170 would be a vacant lot.
- All 9170 Latty is UUUE and there “are no use restrictions on this site.”
- Parcels are free and clear of all liens, encumbrances, and restrictions.
- The property will not operate in violation of any government regulations.
- There are no regulations of any government entity to control or restrict the use of the property;
- USACE is responsible for past and future cleanup.
Based upon the assumptions, Lauer reviewed sales of 4 improved properties from 2013-2015. He made downward adjustments ranging from 10-20% to the sale comparables to account for the continued contamination that is in excess of remediation goals. After considering all sale comparables, their adjustments and the redrawing of the boundary of the property, Lauer concluded a value of $630,000.
For 9170 Latty, Lauer reviewed sales of 4 unimproved properties from 2000-2014. Lauer made an upward adjustment to one property for flooding. Lauer made no adjustments to account for the property’s history of contamination. After considering all sale comparables, their adjustments and the redrawing of the boundary of the property, Lauer concluded a value of $127,019. Lauer determined the fencing and storage building on the vacant property would add an additional $60,000 of value for a total value of $190,000 for 9170 Latty.
Lauer’s opinion of value for both parcels is $822,000.
CONCLUSIONS OF LAW
Respondent’s Points on Review
Respondent alleged that the Hearing Officer’s Decision is erroneous, arbitrary, capricious, unreasonable, constitutes an abuse of discretion and is contrary to Missouri law in that:
- “Hearing Officer does not mention that the last round of work to remediate the environmental contamination of the property began on January 7, 2009, by the United States Army Corps of Engineers and was completed on January 30, 2013;”
- “Hearing Officer also states that neither parcel has been completely classified as Unlimited Use and Unlimited Exposure (UUUE) by the Corps of Engineers.”
- “Hearing Officer relies upon the opinion of Michael Wolken that the property cannot be sold or leased due to contamination and because no financing can be found. The Senior Hearing Officer excluded the testimony about financing because Mr. Wolken had no experience in banking or financing, and did not have credentials to offer opinions related to financing. Wolken’s opinion that there was no market for the property was based on his lack of success in selling the property when he marketed it in the past. His listing of complainant’s property for sale was well over seven years ago, which was prior to completion of cleanup. Moreover, the Senior Hearing Officer cites to the same testimony of Mr. Wolken that the STC rejected in its Decision related to the value of the property in 2013.”
- “Hearing Officer mischaracterizes the Complainant’s appraisal evidence. The Complainant’s appraiser opined that the property was worthless, …, because of his assertion that the potential liability for cleanup costs exceeds the value of the property. Camerer actually placed a value on the property of $354,470 without liability for cleanup costs.”
- “Hearing Officer states that restrictions and notice of the contamination are recorded on the properties, and that a lien/deed restriction has been placed on the property for the cleanup costs incurred. Indeed, no such lien or deed restrictions have been recorded.”
- “Hearing Officer states that the owner has been unable to sell or lease the land because of contamination. There was no evidence that an attempt was made following completion of the cleanup in 2013.”
- “Hearing Officer placed a value on the property which was not supported by evidence or law.”
Standard of Review
A party subject to a Decision and Order of a Hearing Officer with the State Tax Commission may file an application requesting the case be reviewed by the Commission. Section 138.432 RSMo Cum. Supp. 2015; 12 CSR 30-3.080(4). The Commission may then summarily allow or deny the request. Section 138.432; 12 CSR 30-3.080(5). The Commission 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 Commission. Section 138.432; 12 CSR 30-3.080(5)(A).
For the reasons that follow, the STC finds Respondent’s arguments to be unpersuasive. The STC, having thoroughly reviewed the whole record and having considered the Hearing Officer’s Decision, the Application for Review of Respondent, Complainant’s Response opposing the Application for Review, and Respondent’s Reply, concludes that the Hearing Officer’s Decision was correct and proper.
Discussion
- “Hearing Officer does not mention that the last round of work to remediate the environmental contamination of the property began on January 7, 2009, by the United States Army Corps of Engineers and was completed on January 30, 2013;”
The Hearing Officer’s decision set forth the lengthy history of this property and the contamination found therein including the remediation. An example of such is found on Page 3 of the Decision and Order:
“Cleanup was performed from 2001 to 2013 for accessible soils and for structural surface contamination. 9170 Latty Avenue was leased by the Corp of Engineers to store equipment and contaminated soil during the cleanup period. The Corp removed their equipment and contaminated soil and ended their lease in February 2012.”
- “Hearing Officer also states that neither parcel has been completely classified as Unlimited Use and Unlimited Exposure (UUUE) by the Corps of Engineers.”
The evidence shows that the vacant land on 9170 Latty Ave may have met UUUE goals, but residual contamination remains on that parcel due to Building 4 being located on 9170 Latty Ave. and Building 4 has residual contamination. The Hearing Officer’s statement that neither parcel has been completely classified as UUUE is correct.
- “Hearing Officer relies upon the opinion of Michael Wolken that the property cannot be sold or leased due to contamination and because no financing can be found. The Senior Hearing Officer excluded the testimony about financing because Mr. Wolken had no experience in banking or financing, and did not have credentials to offer opinions related to financing. Wolken’s opinion that there was no market for the property was based on his lack of success in selling the property when he marketed it in the past. His listing of complainant’s property for sale was well over seven years ago, which was prior to completion of cleanup. Moreover, the Senior Hearing Officer cites to the same testimony of Mr. Wolken that the STC rejected in its Decision related to the value of the property in 2013.”
The Decision and Order sets forth that the Hearing Officer consider Wolken’s testimony regarding his withdrawal of the listing due to the contamination and his belief that the property cannot be sold due to the contamination and further than there is no market for contaminated properties. Wolken’s opinion was substantiated by Camerer who also testified that there is no market for contaminated properties. The only testimony excluded was in regards to financing for the property.
Further, Wolken’s testimony was not excluded in 2013. His testimony was relied upon in the 2013 Decision as well.
- “Hearing Officer mischaracterizes the Complainant’s appraisal evidence. The Complainant’s appraiser opined that the property was worthless, …, because of his assertion that the potential liability for cleanup costs exceeds the value of the property. Camerer actually placed a value on the property of $354,470 without liability for cleanup costs.”
Exhibit N, WDT of Camerer, Answer 24 states: “In my opinion, the value of the subject property as of January 1, 2015 is $0.” Exhibit A, appraisal report of Camerer, page 70 states, “…it is my opinion that the property has ‘No Market Value.’” The exhibits stand for themselves as to the opinion of Camerer that the subject parcels market value is $0.
- “Hearing Officer states that restrictions and notice of the contamination are recorded on the properties, and that a lien/deed restriction has been placed on the property for the cleanup costs incurred. Indeed, no such lien or deed restrictions have been recorded.”
The Hearing Officer does include such statement on page 4, Finding of Fact 3. The Hearing Officer made such finding based upon the Owner’s testimony. The finding is disregarded and not relied upon in the STC’s Decision on Application for Review. Whether or not a lien or deed restrictions have been recorded is not dispositive in this appeal. The market reaction to the stigma, the testimony of the witnesses and the appraisal reports are relied upon for the final conclusion.
- Hearing Officer states that the owner has been unable to sell or lease the land because of contamination. There was no evidence that an attempt was made following completion of the cleanup in 2013.
Hearing Officer found the testimony of Owner and Realtor persuasive. The Owner testified that he had a business at the location and when he sold the business, the new owner would not remain at the site. The Owner testified that although his operations are not suited for that location, he had no choice but to sell his other real property and move the operations to this location since he could not sell or lease the property.
The Realtor and Owner testified as to prior marketing of the property. The Hearing Officer found the testimony that the stigma of the property impacts the marketability and salability of the property. The stigma and its impact is supported by the testimony of Complainant’s appraiser.
Commission defers to the Hearing Officer appointed to the appeal on issues involving the credibility of witnesses and the weight to be given to their testimony. T.H. v Sonic Drive In of High Ridge, 388 SW3d 585, (Mo. App. ED 2012).
- Hearing Officer placed a value on the property that was not supported by evidence or law.
The properties have been subject to remediation for over 50 years. Although remediation efforts have been extensive, radioactive contamination exists on both parcels. Neither parcel has been completely classified as Unlimited Use and Unlimited Exposure (UUUE). The Complainant presented substantial and persuasive evidence that the assessment was incorrect.
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).
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).
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). The opinion should be the product of reliable principles and methods applied properly to the facts of the case.
Valuation
Markets are driven by both subjective and objective factors, including, but not limited to various stigmas, unknowns and fears. The presence of radioactive waste on the property would have an impact on the marketability of the property. Upon review of the record, we find that the testimony of Complainant’s Certified Appraiser and Real Estate Broker was substantial and persuasive to support the conclusion that the subject properties lacked the value assigned by Respondent and the BOE in tax year 2015.
The STC is charged with correcting any assessment shown to be unlawful, unfair, arbitrary or capricious. Green County v. Hermel, Inc., 511 S.W.2d 762 (S.Ct. 1974) In 2011, Parcel 10K510023 was valued by Respondent at $100,000 and Parcel 10K510090 was valued by the Respondent at $31,400; a total market value of $131,400. In 2013, the parcels were valued by the Respondent at a combined value of $1,054,800, an increase in one assessment cycle of 800%. The Complainant appealed the 800% increase and requested the valuation be returned to the prior cycle’s true value ($131,400). The STC found the valuations for 2013 to be unfair, arbitrary and capricious in decisions 13-14744 & 13-14745. STC ordered TMV assigned by the Respondent in tax years 2011-2012 be placed on the properties for 2013-2014 due to the significant increase in valuation, radioactive contamination, and the onus of producing market evidence in these circumstances.
In 2015, Respondent again increased the TMV of the subject parcels. Respondent increased the TMV to $882,000. At hearing, Respondent’s expert testified to a TVM of only $822,000. Respondent states that the appraisal was to support the BOE’s valuation of $882,000. Respondent’s appraiser’s conclusions of value were based upon incorrect assumptions. The appraiser’s opinions were based upon a redrawing of the property boundaries so that the buildings were all located on one parcel and therefore the other parcel would be UUUE. The TVM of the STC is a retrospective determination of value, as the STC must determine the TVM, as the parcels existed on January 1, 2015. On January 1, 2015, both parcels had improvements, both parcels suffered from contamination and neither parcel was completely approved UUUE.
Lastly, the evidence presented clearly demonstrates that the owner does not enjoy his full “bundle of legal rights” typically enjoyed by the owner of real property. Complainant does not have the right of control, enjoyment or disposition of the parcels. The evidence demonstrated this when the owner testified that he was required to notify the USACE to install a bathroom.
DECISION
Testimony was received from two qualified appraisers with very different opinions of value. The underlying assumptions made by the appraisers are at the heart of the differences of opinion of value. One believes there is liability, one does not. One appraiser does not believe that there is any stigma of the property – although contamination is still present after fifty plus years of remediation. One appraiser believes there can be financing, one does not. One appraiser finds that the UUUE allowing full use of a portion of the property and the restrictions on the other portion of the property allows the property to be valued with little to no adjustments. The other appraiser placed more weight on a buyer wanting the full bundle of rights – being able to use the property in any manner they choose including being able to install bathrooms without needing the approval and assistance of the USACE. One appraiser based value on the property as it existed on January 1, 2015, the other appraiser based his opinion on the boundary lines being redrawn.
Respondent’s appraiser’s assumption as to the boundaries of the parcels is faulty as this is a retrospective appraisal. One cannot go back in time and make changes to the parcels to make them more marketable. The reality is that the two lots are adjacent, one building straddles both parcels, and the parcels, therefore, must be sold together along with the radiation contamination underneath.
Due to the lack of market information for contaminated properties and unmarketability of the properties, we found the Complainant was prevented from establishing market value. Due to the unusual circumstances, we again find the assessments in 2015 to be unfair, arbitrary and capricious.
Summary & Conclusion
We once again acknowledge the unique characteristics and history associated with this property and appeal. Once again the Complainant presented substantial and persuasive evidence that the properties’ values are impacted by the negative stigma of radiation contamination. There was no evidence of a change of circumstances. Respondent’s argument that parcel lines could be redrawn so that some of the property might be valued without the stigma of the contamination is not the appeal before us. STC values the parcels as they existed on the valuation date.
A review of the record in the present appeal provides ample support for the determinations made by the Hearing Officer. A reasonable mind could have conscientiously reached the same result based on a full review of the entire record. The Commission finds no basis to support a determination that the Hearing Officer acted in an erroneous, arbitrary, capricious, or unreasonable manner, or that he abused his discretion as the trier of fact and concluder of law in this appeal. Hermel, Inc. v. STC, 564 S.W.2d 888 (Mo. 1978); Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Holt v. Clarke, 965 S.W.2d 241 (Mo. App. W.D. 1998); Smith v. Morton, 890 S.W.2d 403 (Mo. App. E.D. 1995); Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).
The Hearing Officer did not err in his determinations as challenged by Complainant.
ORDER
The Decision of the Hearing Officer is AFFIRMED. It is ordered that the valuation of the properties be set at the prior cycle’s (2013-2014) values for the 2015-2016 cycle. Segments of the Decision and Order of the Hearing Officer, including the findings of fact and conclusions of law therein, have been incorporated without 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 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.
SO ORDERED April 3, 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 3rd day of April, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.
Jacklyn Wood
Legal Coordinator
[1] Decision of the Hearing Officer in this appeal.
[2] Appeal is pending with the State Tax Commission.
[3] The Hearing Officer excluded testimony regarding financing of the property. The witness was allowed to testify as to the marketability of the subject parcels.
[4] Respondent states that he does not offer the evidence for valuation purposes but to support the “highest value” (BOE’s value of $882,000). Tr. P. 10 lines 21-23.
State Tax Commission of Missouri
| JARBOE REALTY & INVESTMENT CO. | ) | Appeal No. 15-10194 |
| JARBOE REALTY & INVESTMENT CO. LLC | ) | 15-11025 |
| ) | ||
| Complainants, | ) | |
| ) | ||
| v. | ) | |
| ) | ||
| JAKE ZIMMERMAN, ASSESSOR, | ) | |
| ST. LOUIS COUNTY, MISSOURI, | ) | |
| ) | ||
| Respondent. | ) |
DECISION AND ORDER
HOLDING
Decision of the County Board of Equalization (BOE) is SET ASIDE. Complainants presented substantial and persuasive evidence to rebut the presumption of correct assessments by the Board of Equalization and allow the establishment of a true value in money (TVM).
Jarboe Realty & Investment Co. and Jarboe Realty & Investment Co., LLC (Complainants), appeared by counsel Patrick Keefe.
Jake Zimmerman, the Assessor of St. Louis County (Respondent) appeared by counsel Priscilla Gunn.
Case heard and decided by Senior Hearing Officer John Treu (Hearing Officer).
ISSUE
Complainants appeal, on the ground of overvaluation, the decision of the St. Louis County BOE, which determined a TVM which was the same as the TVM set by Respondent. Complainants contend the properties have no TVM.
The Commission takes this appeal to determine the TVM for the subject property on January 1, 2015. 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. Complainants timely appealed to the State Tax Commission from the decisions of the St. Louis County BOE.
- Evidentiary Hearing. The Evidentiary Hearing occurred on September 6, 2017 in St. Louis County.
- Identification of Subject Property. The subject properties are identified by map parcel numbers 10K510090 and 10K510023. They are further identified as 9170-9200 Latty Ave, St. Louis County, Missouri. The properties are adjacent. Parcel 10K510023, 9200 Latty Avenue (Appeal 15-11025) is 5.352 acres improved with warehouse and office space. Parcel 10K510090, 9170 Latty Avenue (Appeal 15-10194) is 5.502 acres improved with a building that is partially on parcel 10K510023, 9200 Latty Avenue, an out-building and chain link fence.
The property is currently owner-occupied with small manufacturing companies –Creative Polymers, Inc and Replications Unlimited, LLC – which are located on 9200 Latty Avenue.
From 1942 to 1957, Mallinckrodt LLC processed uranium materials for U.S. military purposes. In 1946, land near the St. Louis Airport was used to store residues and scrap from the processing plant. In 1966, “uranium-bearing residues” were purchased and placed in storage at 9170 Latty Avenue; named by the U.S. Corp of Engineers (Corp) as Hazelwood Interim Storage Site Property or HISS. The residues were processed and shipped to out-of-state locations. The processing continued until 1970. It was estimated that at the end of processing, 10,000 tons of raffinate and 8700 tons of leached barium sulfate remained at the site. The property was tested in 1979. The property suffered from thorium and radium contamination in and around the buildings and soil. The owner at the time demolished one building, excavated portions of the property, paved areas and constructed several new buildings on 9200 Latty. The excavated materials were moved to 9170 Latty. In 1981, testing in the area occurred again. Contamination in the area was again found. Contaminated soil from areas on Latty Avenue was excavated and stored at 9170 Latty Avenue. Both 9200 and 9170 Latty were included in an expedited cleanup plan ordered by US Congress. Cleanup was performed from 2001 to 2013 for accessible soils and for structural surface contamination. 9170 Latty Avenue was leased by the Corp of Engineers to store equipment and contaminated soil during the cleanup period. The Corp removed their equipment and contaminated soil and ended their lease in February 2012.
Due to the improvements on 9170- 9200 Latty being constructed after the soil was contaminated, radioactive contamination remains around and under the improvements. Restrictions and notice of the contamination are recorded on the properties. 9200 Latty is more impacted by the remaining contamination due to the number of buildings on the property; 9170 Latty is impacted due to the contamination of “Building 4” which is located partially on 9170 Latty and partially on 9200 Latty
The contamination still surrounds the buildings and other areas as indicated on the FUSRAP maps. The property owner may or may not be responsible for clean-up costs. The contamination was up to 12 feet below grade, required the construction and removal of a rail spur to move the materials. It required remediation of the improvements as well. The removal of the contaminant soil alone has an average cost of removal of $765 per cubic meter with a total cost of $39,000,000. A lien/deed restriction has been placed on the property for those costs.
- Assessment. The properties were classified as commercial real property and valued as follows:
Parcel 10K510023, 9200 Latty Avenue (Appeal 15-11025)
| Year | Land Value | Improvement Value | Total | BOE |
| 2011 | $87,000 | $13,000 | $100,000 | N/A |
| 2015 | Unknown | Unknown | $660,700 | $460,000 |
Parcel 10K510090, 9170 Latty Avenue (Appeal 15-10194)
| Year | Land Value | Improvement Value | Total | BOE |
| 2011 | $500 | $30,900 | $31,400 | N/A |
| 2015 | Unknown | Unknown | $221,300 | $221,300 |
In 2011, Parcel 10K510023 and 10K510090 were valued by Respondent separately, as set forth above, for a total TVM of $131,400. In 2013, the parcels were valued by the Respondent at a combined value of $1,054,800. An increase in one assessment cycle of 800%. The STC returned the values to the 2011 values of $131,400. In 2015, the parcels were valued by Respondent separately, as set forth above, for a total TVM of $882,000. In 2015, the parcels were valued by the BOE separately, as set forth above, for a total TVM of $681,300.
- Complainants’ Evidence.
Exhibit A: Remedial Action Summary dated February 19, 2014 – 42 page report with attachments regarding the remedial actions for the subject properties.
Exhibit B: Post- Remedial Action Report dated September 25, 2013 authored by the U.S. Army Corps of Engineers
Exhibits C and D: FUSRAP (Formerly Utilized Sites Remedial Action Program) Updates The St. Louis Sites dated Summer 2012 (Ex C), Winter 2013 (Ex D)
Exhibits E – L: Parcel Views
E – 9170 Latty
F – 9200 Latty
G – FUSRAP parcel map
H – FUSRAP parcel map showing areas of remaining contamination.
I – FUSRAP parcel map showing areas of remaining contamination.
J – FUSRAP parcel map showing areas of remaining contamination.
K – FUSRAP parcel map showing areas of remaining contamination.
L – FUSRAP parcel map showing areas of remaining contamination.
Exhibit M: Written Direct Testimony (WDT) Mr. Michael J. Wolken – Real Estate Broker. Mr. Wolken has listed, leased and sold properties for the Complainants in the past. He had the subject properties listed at one time. After Mr. Wolken learned of the contamination, he withdrew from the contract to broker the property. It is his opinion that the properties cannot be sold or leased due to the contamination – there is no market for such properties and there is no financing for the properties because of the contamination. Some portions excluded as beyond his personal knowledge and experience.
Exhibit N: WDT Mr. Joe Cramer – Certified General Appraiser. Mr. Cramer testified that the subject properties have a TVM of $0. This valuation was influenced by the fact the properties are contaminated by radioactive materials and due to other negative impacts.
Exhibit O: Appraisal Report of Joe Cramer
Exhibit P: WDT Mr. Rodney Jarboe – Owner of the property. He purchased the property after the property was contaminated and experienced one cleanup. Improvements were constructed believing the property was not contaminated. However, the property was still contaminated and the small remedial measures made by the owner did not remove much of the contamination.
The owner has been unable to sell or lease the land because of the contamination. At one time he sold a business (Futura) located at the properties. The purchaser of the business moved the operations off the subject property. The owner testified that he sold other properties he owned and moved his other manufacturing businesses into the improvements on 9200 Latty. His manufacturing businesses are too small for the improvements but could not lease the properties to anyone else. There are deed restrictions on the property due to the contamination.
Exhibit Q: Excluded.
Exhibit R: Excluded.
Exhibit S: FUSRAP Update dated February 11, 2015 (after valuation date).
Exhibit T: Decision & Order in Appeals 13-14744 & 13-14745.
Exhibit U: Application for Review Decision in Appeals 13-14744 & 13-14745.
Exhibit V: Flood Pictures and Site Impact.
Exhibit W: Transcript of Evidentiary Hearing in Appeals 13-14744 & 13-14745.
- No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2015, to January 1, 2016; therefore, the assessed value for 2014 remains the assessed value for 2015. Section 137.115.1, RSMo.
- Respondent’s Evidence. Respondent offered no exhibits as a case-in-chief. The Respondent offered rebuttal exhibits:
WDT of Mr. Russell J. Lauer– Certified General Appraiser: Mr. Lauer testified that the subject properties could be appraised. He testified that the soils at 9170 Latty Ave. have met the Army Corps of Engineers remediation goals of unlimited use and unlimited exposure. He testified that regarding 9120 Latty Ave. that the Army Corps of Engineers has determined such safe for its current industrial use, although such do not meet the Army Corps of Engineers remediation goals. Lauer opined a TVM for both parcels, as of January 1, 2015. Lauer opined a TVM of $190,000 for 9170 Latty Ave. Lauer opined a TVM of $630,000 for 9200 Latty Ave. based upon his belief the property owner was no longer liable for any cleanup costs.
Exhibit 1: Appraisal Report of Russell Lauer.
Exhibit 2: Residual Risk and Dose Assessment for Futura Buildings and Inaccessible Soil.
Rebuttal WDT of Russell Lauer.
- Presumption of Correct Assessment Rebutted. Complainants’ evidence was substantial and persuasive to rebut the presumption of correct assessment by the Board.
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.
Presumption In Appeal
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. 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). 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. Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
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).
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, 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).
Standard for Valuation
Section 137.115, RSMo, requires that property be assessed based upon its TVM 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).
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).
Substantial and Persuasive Evidence as to Negative Adjustment
The subject properties are impacted by contamination and the possible prospect of liability for clean-up costs, whether well-founded or not. In 2013, these parcels were the subject of both a Decision and Order of a Hearing Officer and upon Application for Review, a Decision by the Commissioners. The subject properties are impacted by a negative influence (contamination) and by prospective concerns (liability for clean-up cost and stigma). Complainants’ evidence was supportive of the properties TVM being negatively impacted.
The Complainants presented substantial and persuasive evidence that the assessment was incorrect. The properties consist of 11 acres with improvements including a warehouse, office space and out-buildings. The properties are unusual in that they were used to store and process “uranium-bearing residues”. The properties have been subject to remediation for over 50 years. Although remediation efforts have been extensive, radioactive contamination exists on both tracts of land and such contamination exceeds the Corps of Engineers’ remediation goal. Neither parcel has been completely classified as Unlimited Use and Unlimited Exposure (UUUE).
The real estate broker, Mr. Wolken, testified that he initially listed the properties for sale but withdrew the listing after learning of the contamination. He opined that the properties cannot be sold or leased due to the contamination; there is no market for contaminated property and there is no financing for contaminated properties. He has been an active, real estate broker since 1977. He is the past Chairman of the Missouri Real Estate Commission, member and past Chapter President of the Society of Industrial and Office Realtors, past President of the Commercial Division of the St. Louis Association of Realtors and National Association of Realtors.
The broker’s opinion that the property was not marketable was confirmed by a certified, general appraiser. Mr. Cramer testified the subject properties have a TVM of $0. This valuation was influenced by the fact the properties are contaminated by radioactive materials and due to other negative impacts.
Markets are driven by both subjective and objective factors, including, but not limited to various stigmas, unknowns and fears. The presence of radioactive waste on the property would have an impact on the marketability of the property. The testimony of Complainants’ certified appraiser and real estate broker was substantial and persuasive to support the conclusion that the subject properties lacked the value assigned by Respondent and the St. Louis County Board of Equalization in tax year 2015. However, the Hearing Officer is not persuaded the subject properties have a TVM of $0.
The Hearing Officer is persuaded the concerns relating to and the negative impact of the contamination are proper elements and proper to consider in valuation. The Hearing Officer finds that the TVM of the subject properties is severely diminished due to fears of liability for cleanup costs, whether well-founded or not, and the stigma associated with contamination existing on the subject properties. However, Complainants opined value of $0 is not persuasive to the Hearing Officer. Consequently, the TVM of the properties will be set at the value determined by the STC after Application for Review, dated September 13, 2016. Parcel 10K510023 is set at $100,000, $32,000 assessed value. Parcel 10K510090 is set at $31,000, $9,920 assessed value.
ORDER
The assessed valuation for the subject property as determined by the Assessor and modified by the Board of Equalization for St. Louis County for the subject tax day is SET ASIDE. Parcel 10K510023 is set at $100,000, $32,000 assessed value. Parcel 10K510090 is set at $31,000, $9,920 assessed value.
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 30th day of November 2017.
STATE TAX COMMISSION OF MISSOURI
John J. 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 30th day of November, 2017, to: Complainants(s) counsel and/or Complainants, the county Assessor and/or Counsel for Respondent and county Collector.
Jacklyn Wood
Legal Coordinator