State Tax Commission of Missouri
|KEMP WATERFORD MANORS, LLC,||)|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
Kemp Waterford Manors, LLC, (Complainant) presented substantial and persuasive evidence to establish the true value in money (TVM) of the subject property for 2017-2018 at $15,250,000. The property was properly classified as residential. The assessed value using the statutory assessment rate of 19% is $2,897,500. Complainant did not present substantial and persuasive evidence to establish the property was assessed at a ratio grossly excessive to the average 2017 residential assessment ratio for St. Louis County.
Complainant appeared by counsel Patrick Keefe.
Jake Zimmerman, Assessor of St. Louis County, (Respondent) appeared by counsel Jeremy Shook.
Case heard and decided by Chief Counsel Maureen Monaghan (Hearing Officer).
The State Tax Commission (STC) takes this appeal to determine whether the property was overvalued and whether there was an intentional plan by the assessing officials to assess the subject property at a ratio greater than 19% of TVM or at a ratio grossly excessive to the average 2017 residential assessment ratio for St. Louis County.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the STC.
- Evidentiary Hearing. The issue of overvaluation was submitted on exhibits. The issue of discrimination was presented at an evidentiary hearing on December 20, 2018, at 1 North Brentwood Blvd, Clayton, St. Louis County, Missouri upon agreement of the parties.
- Identification of Subject Property. The subject property is identified by parcel/locator number 24P230181 and is also identified by address 1000 Dogwood Creek Court, Valley Park, St. Louis County, Missouri. (Complaint for Review of Assessment) The property is a 25.17 acre lot improved by the Waterford Manor Apartment Complex. The complex was constructed in 1986. It has a total living area of 196,120 square feet. There are 244 units with 1-2 bedrooms. (Exhibit A)
- Assessment. Respondent determined a TVM for the subject property of $19,090,300 and classified the property as residential. Respondent assessed the property at the statutory residential rate of 19% of TVM, or $3,627,157.
- Board of Equalization. On September 20, 2017, the Board of Equalization of St. Louis County (BOE) notified Complainant that they “reviewed and considered all evidence submitted…” The BOE found that the appeal to them was timely, that Complainant had standing to appeal, and that “there is no presumption that the Assessor’s valuation is correct. Based on all the evidence presented, the Board determined the value of your property for 2017 is as follows…” The TVM as determined by the BOE was $18,515,000. The BOE applied the statutory assessment ratio of 19% for an assessed value of $3,517,850.
- True Value in Money. Complainant presented substantial and persuasive evidence establishing the true value of the subject property as of January 1, 2017 to be $15,250,000.
- Discrimination.Complainant did not present substantial and persuasive evidence establishing the level of their assessment was grossly excessive as to be inconsistent with an honest exercise of judgment. The assessed value of the subject property is set at $2,897,500.
To obtain a reduction in assessed value based upon overvaluation, the complaining taxpayer must prove the TVM for the subject property as of the taxing date. To obtain a reduction in assessed value based upon discrimination, the complaining taxpayer must (1) prove the true value in money for the subject property as of the taxing date; and (2) show an intentional plan of discrimination by the assessor, which resulted in an assessment at a greater percentage of value than other property within the same class and the same taxing district, or, in the absence of such an intentional plan, show that the level of assessment is “so grossly excessive as to be inconsistent with an honest exercise of judgment.” Zimmerman v. Mid-America Financial Corp, 481 S.W.3d 564, 571 (Mo. App. E.D. 2015), quoting Savage v. State Tax Comm’n of Missouri, 722 S.W.2d 72, 78 (Mo. banc 1986)
The Hearing Officer issued two Orders for the filing of exhibits in this appeal: one order required the filing of exhibits related to the TVM of the subject property while the other order required the filing of exhibits related to the level of assessment for residential properties in St. Louis County for 2017.
As to the TVM of the subject property, Complainant presented evidence in the form of an appraisal. As to the residential property assessments in St. Louis County for 2017, Complainant and Respondent each presented evidence in the form of a ratio study prepared by an expert in the field of mass appraisal and assessment ratio studies. Ratio studies provide information regarding the level and equity of assessments. Ratio studies use a statistically significant number of properties within the same class as the subject property and compare an assessor’s value for those properties to a market value proxy for those properties. The market value proxy is either the sale prices of similarly classified properties in the jurisdiction within a relevant time period or an independent appraisal of randomly selected properties. In this appeal, the ratio studies utilized recent sales of residential properties. In the ratio studies and testimony, the experts used the following terms:
- Appraisal Level: Overall ratio of assessor’s values to market values. Level measurements provide information about the degree to which goals of legal requirements are met. Estimates of appraisal level are based on measures of central tendency.
- Assessed Value: Legally authorized fraction of market value.
- Assessment: Determination of true value, classification and location within taxing districts for ad valorem taxation.
- Coefficient of Dispersion (COD): Measures the average percentage of deviation of the ratios from the median ratio. A lower COD implies a lesser amount of variability or more equity in assessments.
- Computer-Assisted Mass Appraisal (CAMA): A process that uses a system of integrated components and software tools necessary to support the appraisal of a universe of properties through the use of mathematical models that represent the relationship between property values and supply/demand factors.
- Equalization: The process by which an appropriate governmental body attempts to ensure that property under its jurisdiction is assessed at the same assessment ratio or at the ratio or ratios required by law.
- Mean: The arithmetic average. It is created by adding together all the individual samples and dividing by the number of samples.
- Median: The middle observation when the values of the data are arrayed. It divides the data into two parts.
- Price-Related Bias (PRB): It is used to measure assessment equity (regressivity/progressivity). It measures the relationship between assessment-sales ratios and value in percentage terms. For example, a PRB of .05 indicates that, on average, assessment ratios increase by 5% whenever values double.
- Price Related Differential (PRD): It is calculated to measure assessment regressivity or progressivity. It is found by dividing the mean by the weighted mean. The comparison tests for equity between low value properties and high value properties. A PRD above 1.00 suggest that the assessment values placed on high-value parcels are relatively lower than the assessment values placed on low-value parcels.
- Progressivity: Taxation is imposed in such a manner that the tax rate decreases as the amount subject to taxation decreases.
- Ratio Study: Sales or appraisal based study designed to evaluate appraisal performance to determine if statutory requirements are met. Studies can be used to evaluate the degree of discrimination and to adjust assessed values on appealed properties to the common level.
- Regressivity: Taxation is imposed in such manner that tax rate decreases as the amount subject to taxation increases.
- Stratification: Dividing the population into subsets or strata.
- True Value in Money (TVM): Also referred to as appraised value, market value, or fair market value.
- Weighted Mean: It is the sum of the assessed values divided by the sum of the individual indicators of market value.
As to the issue of TVM for this appeal, Complainant submitted the following exhibits:
|B||Written Direct Testimony of Joe Camerer|
Complainant presented the testimony of Joe Camerer (Camerer). Camerer is a Missouri Certified General Appraiser. He has been an appraiser since 1994. Camerer appraised the subject property. He considered all three approaches – income, cost and sale comparison – to value. After development of the appropriate approaches to value, the appraiser reconciled the valuations and opined a TVM for the subject property on January 1, 2017, of $15,250,000.
Complainant submitted the following exhibits as to the level of assessment of residential properties in St. Louis County, and rebuttal and surrebuttal for all issues:
|A||Written Direct Testimony (WDT) of Robert Gloudemans (Gloudemans)|
|B||Ratio Study of Residential Properties in St. Louis County as of January 1, 2017|
|C||“sales.txt” data file from July 2018 Certified Assessment Roll|
|D||“assessment.txt” data file from July 2017 Certified Assessment Roll|
|E||“STLCO_REAL_DATA_DICTIONARY.pdf” data file from July 2018 Certified Assessment Roll|
|F||Respondent’s Supplemental Responses to Requests for Admissions|
|G||IAAO Standard on Mass Appraisal of Real Property (2013)|
|H||July 2017 Certified Assessment Roll (CD-ROM)|
|I||July 2018 Certified Assessment Roll (CD-ROM)|
|J||2017 Residential Comp Sheets (DVD-ROM)|
|K||Written Rebuttal Testimony (WRT) Gloudemans|
|L||WRT Scott Wolpert (Wolpert)|
|M||Excluded Sales Analysis|
|N||Excluded Sales Data Packages|
|O||Prior Sales Sample Set|
|P||Prior Sales Analysis|
|Q||Prior Sales Data Packages|
|R||WRT Brad Weber (B. Weber)|
|S||Assessor’s 2017 Comp Sheets|
|T||Assessor’s 2017 Comp Sheet Spreadsheet|
|U||Comp Sheet Analysis|
|V||2012-2013 St. Louis County Assessment Maintenance Plan|
|W||2014-2015 St. Louis County Assessment Maintenance Plan|
|X||2016-2017 St. Louis County Assessment Maintenance Plan|
|Y||Deposition Designations of Kevin Johnson|
|Z||“Res Sales_All_07012016 through 06302017_05022018.xlsx” data file (Kevin Johnson Deposition Exhibit A)|
|AA||“List of Choices – Field Review Flag and Partial” screen capture (Kevin Johnson Deposition Exhibit B)|
|DD||Respondent’s Certification of the 2017 St. Louis County Assessment Roll accepted by the Commission|
|KK||Written Surrebuttal Testimony (WST) B. Weber|
|LL||Property Inspection Analysis|
|NN||Deposition of Sandy Youtzy|
|OO||Value evidence in Appeal 17-17724|
|PP||Value evidence in Appeal 17-16627|
|Value evidence in Appeal 17-19017|
|RR||Value evidence in Appeal 17-14497|
|SS||Value evidence in Appeal 17-17604|
|TT||Email to Richard Brunk, Attorney for BOE|
At the start of the hearing, the parties stipulated to the admission of exhibits L, M, N, O, P, Q, R, S, T, U and Y. All remaining exhibits were admitted into evidence.
To analyze the level of assessment of residential property in St. Louis County for tax year 2017, Complainant presented the testimony of Gloudemans, an expert in the field of appraisal, mass appraisal, and assessment ratio studies. Gloudemans reviewed Respondent’s process for mass appraisal. He explained that Respondent uses comparable sale algorithms to appraise single-family properties. Respondent’s values are based on comparable sales with regression models to adjust for differences between a subject property and comparable properties. The system identifies the five most comparable sale properties for each subject parcel. Sale prices for the comparables are reduced by 5%. (Tr. 34. Ex. 11) Each comparable is then adjusted to the subject parcel based on the regression model. After the sale comparable’s price is adjusted, the model computes a weighted average of the adjusted prices creating a “sixth value estimate. The regression-estimated value is taken as a seventh estimate. The system then drops the two lowest and two highest of the seven estimates and averages the middle three to obtain the final estimate of value, termed ‘market value’ on comp sheets.” (Exhibit B p. 11)
To conduct his ratio study, Gloudemans used sales of residential property in St. Louis County that occurred from July 2016 through June 2017. (Exhibit A p. 8) The study utilized data from the St. Louis County Assessor’s Office regarding sales of residential properties. (Exhibit C p. 2) Gloudemans used the Respondent’s July 2018 Certified Assessment roll which contained the records of sales of residential properties, the July 2017 St. Louis County Certified Assessment Roll which contained Respondent’s certified 2017 assessed values (prior to the BOE’s decision and determination of TVM), and the codes and abbreviations used in Respondent’s rolls. Gloudemans used that information to match assessment and sales data, select appropriate sales, conduct a price trend analysis, calculate assessment ratios and determine assessment levels.
Gloudemans used only sales Respondent assigned a sales validation code of “X” (valid sale). Gloudemans did not use sales assigned code “V” or “P” because those sales had not been affirmed as valid or invalid. He rejected sales appearing to involve change in assessment status or new construction. He excluded properties with extreme sales ratios. Gloudemans testified that he had a sufficient number of sales for statistical accuracy. (Exhibit A p. 9)
Gloudemans computed measures of central tendency for his ratio study – median and weighted mean.
|Measure of Central Tendency|
|Median, time adjusted||.897|
|Weighted mean, time adjusted||.890|
|COD, time adjusted||.100|
The advantage of the median is that it is not influenced by extreme ratios. The advantage of the weighted mean is that it accounts for value related differences in the assessment levels but it can be inordinately affected by outlier ratios particularly if they occur for high-value sales. (Exhibit A, pp. 10-11) Gloudemans testified that, in this study, the median ratio is preferred measure because of its resistance to outliers. (Exhibit A, p. 11) The median, according to Gloudemans, is 89.7%. Gloudemans estimated the common level of assessment of residential property in St. Louis County for 2017-2018 was 17%. (The statutory ratio of 19% multiplied by the median of .897 which equates to 17.043%.)
Gloudemans opined that Respondent’s target valuation was 95% not 100% of TVM. His opinion is based upon Respondent’s adjusting sale prices down 5% when entered into the CAMA. (Tr. 34) The downward adjustment to the sales entered into CAMA reduces values produced by the CAMA by 5%. The reduced valuation applies equally to all properties. (Tr. 22-23) If the Respondent targeted 100% TVM by not adjusting sale prices by -5% when entered into CAMA, Gloudeman’s ratio study would have produced a median of 94.7%. (Tr. 25)
Respondent filed the following exhibits in regards to the issue of valuation:
|1V||Written Direct Testimony (WDT) of Sandy Youtzy (Youtzy)|
|2V||PAR Residential Properties that waived BOE hearings|
|3V||WDT Josh Myers (Myers)|
|5V||Robert Gloudemans’ (Gloudemans) Ratio Study|
|7V||Spreadsheet of sales in Gloudemans study|
|8V||Spreadsheet of Myer’s sales|
|9V||Spreadsheet of sales used by Gloudemans that filed appeals|
|10V||PAR Marketing Materials|
Respondent also filed the following exhibits pertaining to the level of assessment of residential properties in St. Louis County:
|2||Sales Ratio Study of the St. Louis County 2017 Residential Reassessment|
|3||IAAO Standard on Ratio Studies|
|4||Spreadsheet Residential ‘basis’ properties|
|5||Spreadsheet of Residential “changed properties”|
|6||Spreadsheet of Residential Sales used by Myers in his Study|
|7||WDT Kevin Johnson (Johnson)|
|8||IAAO Standards on Verification and Adjustment of Sales|
|9||St. Louis County Sales Validation & Verification Guidelines|
|14||Spreadsheet Revised List of Sales|
Prior to the hearing, the parties agreed that testimony and exhibits from the hearing regarding the level of assessment for commercial properties in St. Louis County for 2017-2018 related to Exhibit 10V would be included in the record for this appeal. The parties stipulated to the admission of Exhibits 7, 8, and 9. The remaining exhibits were admitted into evidence.
Respondent did not submit evidence of the subject property’s TVM.
Myers testified as to the level of assessment of residential properties in St. Louis County. Myers reported that there were 25,419 sales (Exhibit 1 p. 7) of residential properties which occurred between July 2016 and June 2017. Myers selected sales which were (1) coded “X” or “P” by the Respondent; (2) classified as residential property only; (3) never assigned a value as determined by the BOE or STC (“basis”); (4) not physically changed; (5) not listed as exempt or having a zero value; (6) no improvements without land values; and (7) not subject to occupancy provisions or construction work in progress. (Exhibit 2 p. 12)
Myers study used 9,808 sales in his initial analysis. Myers trimmed sales for outliers resulting in a final number of 9,697 sales. (Exhibit 1 p. 9) Myers reported the following findings for residential assessments in St. Louis County in 2017 (Exhibit 2):
|Measure of Central Tendency||Sales Weighted by Location (School District)||Unweighted|
After reviewing Gloudemans’ rebuttal testimony, Myers made changes to his own ratio study. Myers testified that he, as part of his ratio study, initially removed 3,555 sale properties due to changes to the characteristics of the property between the date of valuation and the date of sale. After reviewing Gloudemans’ rebuttal testimony, Myers discovered the dates reporting when physical characteristics changed were not as precise as he initially believed. (Exhibit 13 p. 1)
Due to the review of Gloudemans’ testimony, Myers reduced the number of sales removed from his study from 3,555 to 64. Myers conducted a second study using 13,181 sales. He amended his initial conclusions. His new results are as follows (Exhibit 13 p. 2):
|Measure of Central Tendency||Ratio Study based on 13,181 sales|
Myers testified that he relied on the median as the appropriate measure of central tendency. (Exhibit 13 p. 2) Myers testified that the median ratio of assessor’s value-to-sales price for residential properties in St. Louis County for the 2017-2018 assessment cycle is 90.192%. (Exhibit 13 p. 2) The resulting common level of assessment for residential property is 17.136%. (The statutory ratio of 19% multiplied by the median of .90192 equates to 17.136%.) He testified that IAAO recommends an acceptable range of 90-110% for the appraisal level. Using the IAAO recommended range, the acceptable assessment range for residential properties would be 17.1-20.9%. (Exhibit 13 p. 4)
Myers testified that the assessor targeted a 95% level of assessment for residential properties. (Tr. 172) The reduced level was due to Respondent entering sales into CAMA after reducing the sale prices by -5%. (Exhibit 11, p. 3, Tr. 214) “What it essentially amounts to is a target of 95 percent, but that doesn’t necessarily mean that their median ratio is at 95 percent. In fact, my study says it’s 90.2 percent.” (Tr. 72) The 5% downward adjustment to comparable sales affects all St. Louis County residential properties valued by its comparable sales model, not just the sale properties. (Ex. 11 p. 3)
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, including the application of any abatement. 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.
Official and Judicial Notice
Agencies shall take official notice of all matters of which the courts take judicial notice. Section 536.070(6) RSMo. Courts will take judicial notice of their own records in the same cases. State ex rel. Horon v. Bourke, 129 S.W.2d 866, 869 (1939); Barth v. Kansas City Elevated Railway Company, 44 S.W. 788, 781 (1898). In addition, courts may take judicial notice of records in earlier cases when justice requires or when it is necessary for a full understanding of the instant appeal. Burton v. Moulder, 245 S.W.2d 844, 846 (Mo. 1952); Knorp v. Thompson, 175 S.W.2d 889,894 (1943); Bushman v. Barlow, 15 S.W.2d 329, 332 (Mo. banc 1929) State ex rel St. Louis Public Service Company v. Public Service Commission, 291 S.W.2d 95, 97 (Mo. banc 1956). Courts may take judicial notice of their own records in prior proceedings involving the same parties and basically the same facts. In re Murphy, 732 S.W.2d 895, 902 (Mo. banc 1987); State v. Gilmore, 681 S.W.2d 934, 940 (Mo. banc 1984); State v. Keeble, 399 S.W.2d 118, 122 (Mo. 1966).
Weight to be Given Evidence
The Hearing Officer is not bound by any single formula, rule or method in determining true value in money and 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. Sercurity Bohomme, 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
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, but the facts or data need not be admissible evidence. Section 490.065, RSMo; State Board of Registration for the Healing Arts v. McDonagh, 123 S.W.3d 146 (Mo. 2004); Courtroom Handbook on Missouri Evidence, Wm. A Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Sourthern Industries, Inc, 842 S.W.2d 133 (Mo. App. E.D. 1992)
The Hearing Officer, as the trier of fact, may consider the testimony of an expert witness and give it as much weight and credit as deemed necessary when viewed in connection with all other circumstances. Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. W.D. 1991). The Hearing Officer, as the trier of fact, is not bound by the opinions of experts but may believe all or none of the expert’s testimony or accept it in part or reject it in part. Exchange Bank of Missouri v. Gerlt, 367 S.W.3d 132, 135-36 (Mo. App. W.D. 2012)
Basis of Assessment
The Constitution mandates that real property and tangible personal property be assessed at its value or such percentage of its value as may be fixed by law for each class and for each subclass. Article X, Sections 4(a) and 4(b), Mo. Const. of 1945. The constitutional mandate is to find the true value in money for the property under appeal. By statute, real property and tangible personal property are assessed at set percentages of true value in money: residential property at 19%; commercial property at 32%; and agricultural property at 12%. Section 137.115.5 RSMo.
Complainant’s Burden of Proof
There is a presumption of validity, good faith and correctness of assessment by the BOE. Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968). The taxpayer is the moving party seeking affirmative relief, therefore, the taxpayer bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.” Westwood Partnership, 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. W.D. 1991).
“Substantial and persuasive controverting evidence is required to rebut the presumption, with the burden of proof resting on the taxpayer.” Cohen, 251 S.W.3d at 348. Substantial evidence can be defined as such relevant evidence that a reasonable mind might accept as adequate to support a conclusion. Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is evidence that has sufficient weight and probative value to convince the trier of fact. Cupples Hesse Corp., 329 S.W.2d at 702. 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). See also, 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).
To obtain a reduction in assessed valuation based upon alleged overvaluation, the Complainant must prove the true value in money of the subject property on the tax day. Hermel, Inc., v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978). True value in money is defined as the price that the subject property would bring when offered for sale by one willing but not obligated to sell it and bought by one willing or desirous to purchase but not compelled to do so. Rinehart v. Bateman, 363 S.W.3d 357, 365 (Mo. App. W.D. 2012); Cohen v. Bushmeyer, 251 S.W.3d 345, 348 (Mo. App. E.D. 2008); Green County v. Hermel, Inc., 511 S.W.2d 762, 771 (Mo. 1974). True value in money is defined in terms of value in exchange and not in terms of value in use. Stephen & Stephen Properties, Inc. v. State Tax Commission, 499 S.W.2d 798, 801-803 (Mo. 1973). In sum, true value in money is the fair market value of the subject property on the valuation date. Hermel, Inc., 564 S.W.2d at 897.
Complainant presented evidence of TVM through the testimony and report of a Missouri Certified General Appraiser who opined the TVM of the property on January 1, 2017, was $15,250,000. Respondent, not having the burden of proof, chose not to present evidence as to valuation.
Complainant’s evidence was uncontested and was substantial and persuasive evidence of TVM of the property on January 1, 2017. Subject property’s TVM is determined to be $15,250,000. The property is classified as residential. The assessed value using the statutory assessment rate of 19% is $2,897,500.
Residential Ratio (Discrimination)
A property owner may seek relief under the claim of discrimination by proving the assessment was calculated at a greater percentage of value than other property within the same class. Systematic undervaluation, whether by an intentional plan or through use of an assessment ratio so grossly excessive as compared to the average ratio as to be inconsistent with an honest exercise of judgment by state officials of other taxable property in the same class, contravenes the constitutional right of one to be taxed upon the TVM of his property. Sperry Corp. v. State Tax Comm’n, 695 S.W.2d 464, 468 (Mo. banc 1985) When an assessor estimates TVM lower than the actual market value for a significant number of properties of the same sub-classification within the jurisdiction, the consequence is that the taxpayers whose properties were undervalued pay less than their fair share of taxes, while the taxpayers whose properties were either accurately valued or overvalued pay more than their fair share of taxes. When such disparity is so grossly excessive as to be entirely inconsistent with an honest exercise of judgment, it has the effect of intentional discrimination.
The issue is whether the assessments are in violation of the Missouri Constitution and the Fourteenth Amendment of the Constitution of the United States, so as to deprive and deny the Complainants the equal protection of the laws. “The purpose of the equal protection clause of the Fourteenth Amendment is to secure every person within the state’s jurisdiction against intentional and arbitrary discrimination, whether occasioned by express terms of a statute or by its improper execution through duly constituted agents.” Sunday Lake Iron Co v. Wakefield Tp, 247 U.S. 350, 38 S.Ct. 495, 62 L.Ed. 1154 (1918).
The STC is required to correct any assessment or valuation that is arbitrary, capricious, improper, or unfair. Section 138.430 RSMo. To prevail on a claim of discrimination in assessment, the Complainant must (1) prove the true value in money of their property on January 1, 2017; and (2) show an intentional plan of discrimination by the assessing officials resulting in an assessment of that property at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction or show that the level of an assessment is so grossly excessive as to be inconsistent with an honest exercise of judgment. Savage v. State Tax Commission, 722 S.W. 2d 72 (Mo. banc 1986); Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003).
True Value in Money (TVM)
Given the two-part test for proving a claim of discrimination in the context of ad valorem taxation as stated by Missouri courts, in the instant appeal, the first requirement is finding the TVM of the subject property. (See Overvaluation) Complainant presented substantial and persuasive evidence to the TVM of the property on January 1, 2017 was $15,250,000, assessed value of $2,897,500.
Once TVM of the subject property is considered and the actual assessment ratio for the subject property is calculated, it must be determined whether the level of the assessment of the subject property was discriminatory because it was so grossly excessive as to be inconsistent with an honest exercise of judgment. “By requiring that the level of an assessment be so grossly excessive as to be inconsistent with an honest exercise of judgment in cases in which intentional discrimination is not shown, the courts and the STC refrain from correcting assessments which reflect no more than de minimus errors of judgment on the part of assessors.” Mid-America Financial Corp. v. Zimmerman, 481 S.W.3d at 571 (internal quotation omitted). “This standard recognized that while practical uniformity is the constitutional goal, absolute uniformity is an unattainable idea.” Id. (internal quotation omitted)
Both parties retained experts to perform sales ratio studies to determine the common level of assessment. Both experts used residential sales from July 2016 through June 2017. Both experts relied upon the validation process of the Respondent. Both experts relied on the median as the measure of central tendency to determine the assessment level for residential properties for the 2017-2018 assessment cycle. Complainant’s expert found the median ratio of Respondent’s value-to-sales price for residential properties in St. Louis County for the 2017-2018 assessment cycle was 89.7% and Respondent’s expert found the median ratio to be 90.192%. The resulting levels of assessment opined by the experts were similar at 17.043% and 17.136% respectively.
Neither Missouri courts nor the STC has established a “bright-line” test to identify what constitutes a grossly excessive assessment as opposed to a mere de minimus error in judgment. Mid-America Financial Corp. at 575. IAAO’s Standard on Ratio Studies states that “[w]hile the theoretically desired level of appraisal is 1.00, an appraisal level between 0.90 and 1.10 is considered acceptable for any class of property.” (p. 17) The performance standards should be a range around the legally required level of appraisal in a property class. Performance standards that allow “reasonable variation from 100 percent of market value is to recognize uncontrollable sampling error and the limiting conditions that may constrain the degree of accuracy that is possible and cost-effective within an assessment jurisdiction. Further, the effect of performance standards on local assessors must be considered in light of expectations of public policy and resources available.” (Id p. 34) The range should be 90 to 110 percent of the legally required level of appraisal. (Id p. 34)
For residential properties, the statutory level of assessment is 19%. After presentation of substantial and persuasive evidence of TVM, the TVM of the subject property was reduced to $15,250,000. The assessed value, applying the 19% statutory residential rate, is $2,897,500. The experts opined levels of appraisal of 89.7% and 90.192% or levels of assessment of 17.043% and 17.136% respectively.
To obtain a reduction in assessed valuation based upon alleged overvaluation, the Complainant must prove the TVM of the subject property on the subject tax day. A claim of discrimination requires Complainant to prove (1) the TVM of their property on tax day and (2) show an intentional plan of discrimination by the assessing officials resulting in an assessment of that property at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction or show that the level of an assessment is so grossly excessive as to be inconsistent with an honest exercise of judgment.
Complainant did present substantial and persuasive evidence to establish the TVM of the property on January 1, 2017 was $15,250,000. The statutory residential assessed ratio is 19% of TVM. The assessed value of the subject property is $2,897,500.
Complainant carries the burden to present substantial and persuasive evidence that the subject property was assessed at a level that was grossly excessive to the common level of assessment for residential properties in St. Louis County. The experts reported common levels of assessment for similarly-situated properties in St. Louis County in 2017 over 17%. (17.043% and 17.136%, respectively) Complainant did not present substantial and persuasive evidence to establish the level of assessment of the subject property, 19%, was grossly excessive as compared to the common level of assessments of residential properties, over 17%.
While a property that is overvalued is entitled to its remedy of correcting its value, it is not entitled to an additional adjustment based on discrimination if discrimination is not established by substantial and persuasive evidence. State ex rel Ashby Road Partners, LLC v. State Tax Comm’n, 297 S.W.3d 80, 85 (Mo. banc 2009)
The assessed value for the subject property is $2,897,500.
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, or emailed to Legal@stc.mo.gov, and a copy of said application must be sent to each person 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 April 19, 2019.
STATE TAX COMMISSION OF MISSOURI
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this19th day of April, 2019, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.
 Exhibits BB, CC, EE, FF, GG, HH, II, and JJ were withdrawn at the close of the hearing.
 International Association of Assessing Officers
 Respondent values residential properties of 2-4 units using a gross rent multiplier method. Respondent values residential properties of more than 4 units using an income approach method. Vacant residential land is valued using comparable sales. All properties were included in the ratio study. (Tr. 59-61)
 Sales included multi-unit residential property and vacant land.
 There are 370,000 residential parcels in St. Louis County. Gloudemans used 12,748 sales of residential property in his study (Exhibit B p. 8).
 PAR – Property tax representation agency engaged by Complainant and other residential properties owners who also filed an appeal on the claim of discrimination.
 Two pages were removed from the exhibit prior to its admission.
 No Exhibit 10 was offered
 The Commercial level of assessment hearing took place December 18-19, 2018. Mr. Keefe and Mr. Shook were counsels participating in those hearings.