State Tax Commission of Missouri
|KRESCO MAUNE, LLC||)||Appeal #||15-15795|
|JAKE ZIMMERMAN, ASSESSOR||)|
|ST. LOUIS COUNTY, MISSOURI.||)|
DECISION AND ORDER
Decision of the County Board of Equalization sustaining the assessment made by the Assessor is AFFIRMED. Complainant did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization.
True value in money for the subject property for tax years 2015 and 2016 is set at $1,129,800, commercial assessed value of $361,530.
Complainant appeared by attorney Apollo Carey
Respondent appeared by attorney Ed Corrigan
Case heard and decided by Senior Hearing Officer John Treu.
Complainant appeals, on the ground of overvaluation the decision of the St. Louis County Board of Equalization, which reduced the valuation of the subject property. The Commission takes this appeal to determine the true value in money for the subject property on January 1, 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. Complainant timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.
- Identification of Subject Property. The subject property is identified by map parcel number or locator number 14N510503. It is further identified as 11749 Dunlap Industrial Drive, St. Louis, St. Louis County, Missouri. It is located in the Maryland Heights area. (Complaint for Review of Assessment)
- Description of Subject Property. The subject property is a one-story, multi-tenant industrial warehouse built in 1970. It has approximately 32,940 square feet of gross square footage. (Written Direct Testimony of Kara Villhard)
- Assessment. The Assessor valued the property at $1,129,800, as commercial property. The Board of Equalization sustained the assessor’s valuation of the property at $1,129,800, as commercial property. (Complaint for Review of Assessment)
- Complainant’s Evidence. Complainant offered into evidence the following and all were received into the evidentiary record with all objections overruled:
|WDT||Testimony of Kara Villhard|
|A||Picture of Subject Property|
|B||Chart Re: Eleven Purported Comparable Properties|
|C||Pictures and Information Re: Eleven Purported Comparable Properties|
|D||Map Showing Location & Information Re: Eleven Purported Comparable Properties|
|WDT||Sur-Rebuttal Testimony of Kara Villhard|
Kara Villhard is a licensed real estate salesperson. As Ms. Villhard is not a licensed appraiser, she did not develop a cost, sales comparison or income approach to value the subject property. Ms. Villhard stated “[w]e do not challenge that the County’s opinion of value is supported by the income of the property”. Ms. Villhard provided eleven sales of what she characterized as “comparable industrial warehouse sales”. She calculated a dollar per square foot sales price for each comparable. The range of per square foot prices was from $2.50 to $37.77. Ms. Villhard “[threw] out the three extremely low sales which [didn’t] appear to be representative of an arm’s length transaction” and then “average[d] [the] price per square foot” to come up with a value of “$28.69 per square foot”. (Written Direct Testimony of Kara Villhard)
- 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 2015 remains the assessed value for 2016. Section 137.115.1, RSMo.
- Respondent’s Evidence. Respondent offered into evidence the following and all were received into the evidentiary record with all objections overruled:
|1||Rebuttal Written Direct Testimony of Richard Germano|
|2||Qualification of Richard Germano|
|3||Desk Review of Comparable Sales Data Provided by Complainant|
|4||St. Louis County Real Estate Information Re: Subject Property|
|5-15||St. Louis County Real Estate Information & Other Information Re: Eleven Purported Properties|
Respondent disputes the accuracy of many of Kara Villhard’s calculations and asserted numbers. For purposes of this Decision and Order, Ms. Villhard’s calculations and asserted numbers will be utilized.
- Presumption of Correct Assessment Not Rebutted. Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board of Equalization.
- Case Submitted On Record. The parties waived an Evidentiary Hearing and the case was submitted on the record.
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.
Issuance of Decision Absent Evidentiary Hearing
The Hearing Officer, after affording the parties reasonable opportunity for fair hearing, shall issue a decision and order affirming, modifying or reversing the determination of the Board of Equalization, correcting any assessment which is unlawful, unfair, improper, arbitrary or capricious. Section 138.431.5 RSMo; 12 CSR 30-3.080 (2). Both parties agreed to submit this case upon the record. The filing of exhibits and written direct testimony establishes the basis upon which opportunity for an evidentiary hearing can be held. The Complainant has the burden to present substantial and persuasive evidence. The Hearing Officer considered all the exhibits and written direct testimony, including rebuttal filed and then proceeded to ascertain if said exhibits, written direct testimony and rebuttal met the standard of substantial and persuasive evidence to establish the market value of the property.
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 and tangible personal property are assessed at set percentages of true value in money. Section 137.115.5, RSMo – residential property at 19% of true value in money; commercial property at 32% of true value in money and agricultural property at 12% of true value in money.
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). This presumption is a rebuttable rather than a conclusive presumption. It places the burden of going forward with some substantial evidence on the taxpayer – Complainant. 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).
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, 2015. 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). A taxpayer does not meet his burden if evidence on any essential element of his case leaves the Commission “in the nebulous twilight of speculation, conjecture and surmise.” See, Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980).
Standard for Valuation
Section 137.115, RSMo, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so. St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993); Missouri Baptist Children’s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993). True value in money is defined in terms of value in exchange and not value in use. Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), (internal citation omitted). It is the fair market value of the subject property on the valuation date. Hermel, supra. Market value is the most probable price in terms of money which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price is not affected by undue stimulus.
Implicit in this definition are the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby:
- Buyer and seller are typically motivated.
- Both parties are well informed and well advised, and both acting in what they consider their own best interests.
- A reasonable time is allowed for exposure in the open market.
- Payment is made in cash or its equivalent.
- Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
- The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction. Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; See also, Real Estate Valuation in Litigation, J. D. Eaton, M.A.I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80; Uniform Standards of Professional Appraisal Practice, Glossary.
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).
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 he may deem it entitled to when viewed in connection with all other circumstances. The Hearing Officer 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 accept it in part or reject it in part. St. Louis County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).
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).
The income approach determines value by estimating the present worth of what an owner will likely receive in the future as income from the property. The income approach is based on an evaluation of what a willing buyer would pay to realize the income stream that could be obtained from the property when devoted to its highest and best use.
Complainant did not develop an income approach. However, Complainant’s witness specifically stated that the income of the property would support the valuation assigned by the County.
Comparable Sales Approach
The comparable sales approach uses prices paid for similar properties in arms-length transactions and adjusts those prices to account for differences between the properties. Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character. This approach is most appropriate when there is an active market for the type of property at issue such that sufficient data is available to make a comparative analysis. Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W. 3d, 341, 347 (Mo. 2005) (internal citations omitted).
There is inherent in the sales comparison methodology significant weaknesses when being applied to large commercial properties. See, The Appraisal Institute, The Appraisal of Real Estate, 13th Edition, at 300-301(2008). Although price per square foot of gross building area or price per cubic foot of gross building volume may be an appropriate starting point in the sales comparison approach, this is where “systematic analysis begins”. Id at 305-306. Once the “appropriate unit of comparison” is established, adjustments to the comparable sales must be looked at. Id at 305-306. “Ideally, if all comparable properties are identical to the subject property, no adjustments will be required. However, this is rarely the case, especially for nonresidential properties”. Id at 307.
In the present appeal Complainant presented 11 sales, but did not develop a sales comparison approach to valuation. Complainant submitted no evidence regarding the various particularities of each purported comparable and such will not be assumed by the Hearing Officer. The range of per square foot prices was from $2.50 to $37.77. Complainant failed to present a developed sales comparison approach valuation to support any market value opinion. It is Complainant’s burden to put forth sufficient substantial and persuasive evidence. Complainant did not meet its burden of proof.
Opinion Testimony by Experts
The facts upon which an expert’s opinion is based, like the facts sufficient to support a verdict, must measure up to the legal requirements of substantiality and probative force; the question of whether such opinion is based on and supported by sufficient facts or evidence to sustain the same is a question of law for the court. Robinson v. Empiregas Inc. of Hartville, 906 S.W.2d 829 (S.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).
Complainant Fails to Prove Value
Complainant failed to present substantial and persuasive evidence to establish a fair market value as of January 1, 2015 for the subject property. Complainant’s expert developed an opinion of value relying solely upon the sales price per square foot of purported comparable properties and advocates for a value of $28.69 per square foot to be assigned. See footnote #1, No adjustments were made to such purported comparables by Kara Villhard, Complainant’s expert. The fact that no adjustments were made is not consistent with generally accepted guidelines for the appraisal of property of the subject’s type as stated above in “Comparable Sales Approach”. Complainant’s evidence regarding the purported comparables was neither substantial nor persuasive. 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). Complainant’s evidence did not induce belief in the Hearing Officer.
Moreover, due to the type of property involved, the Hearing Officer, in his purview, determines that the income approach to valuation would be the most reliable method of valuation in this particular case. Pertinent to this is that, Complainant’s expert specifically stated that “[w]e do not challenge that the County’s opinion of value is supported by the income of the property.” (Written Direct Testimony of Kara Villhard) Therefore, the Board of Equalization presumption was not rebutted by Complainant.
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Louis County for the subject tax day is AFFIRMED.
The assessed value for the subject property for tax years 2015 and 2016 is set at $361,530.
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 1st day of November, 2016.
STATE TAX COMMISSION OF MISSOURI
Senior Hearing Officer
Delivery or Notice was made via mail, email, fax, or personally on November 1st, 2016, to the following Individuals of this Order
 Complainant’s evidence related to six (6) different Complaints for Review of Assessment. The appeals are 15-15778, 15-15780, 15-15795, 15-15804, 15-15916 & 15-15925. All of the properties are industrial properties, 9 of which are warehouses, one is classified as manufacturing and one is “Flex Space” which presumably can be utilized as a warehouse.
 Complainant’s evidence related to six (6) different Complaints for Review of Assessment. The appeals are 15-15778, 15-15780, 15-15795, 15-15804, 15-15916 & 15-15925. The Written Direct Testimony of Kara Villhard was that the value of each based upon their respective assessed values were $39/sf., $31/sf., $34/sf., $34/sf. & $38/sf. According to the Written Direct Testimony of Kara Villhard, of Complainant’s eleven (11) purported comparables, comparable #5 had a sales price of $37.50/sf., comparable #6 had a sales price of $34.07/sf. & comparable #11 had a sales price of $37.77/sf. Kara Villard advocates a value of $28.69/sf. for all six (6) properties appealed.
 9/6/2016 Order noted that 339.053 RSMo. requires that broker price opinions and comparative market analysis must “specifically state it is not an appraisal”. The Hearing Officer noted that Complainant “could cure such prior to an Evidentiary Hearing (or submission on the record).” Complainant did not cure such deficiency. Nevertheless, given the Decision is Affirming the St. Louis County BOE, such will be disregarded for the time.