State Tax Commission of Missouri
|JARBOE REALTY & INVESTMENT CO.||)||Appeal No. 15-10194|
|JARBOE REALTY & INVESTMENT CO. LLC||)||15-11025|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
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).
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|
Parcel 10K510090, 9170 Latty Avenue (Appeal 15-10194)
|Year||Land Value||Improvement Value||Total||BOE|
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
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.
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
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.