STATE TAX COMMISSION OF MISSOURI
|Krystal Images, LLC||)|
|Complainant,||)||Appeal No. 19-11358|
|v.||)||Parcel No. 12M530524|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
Krystal Images, LLC (Complainant) appeals the St. Louis County Board of Equalization’s (BOE) decision classifying the subject property as commercial property and finding the true value in money (TVM) on January 1, 2019, was $350,200. Complainant alleges misclassification and asserts the subject property should have been classified as residential property. Complainant produced substantial and persuasive evidence of misclassification. The BOE decision regarding classification is set aside and property is re-classified as residential property as of January 1, 2019.
The parties waived an evidentiary hearing and submitted the appeal on the record. Complainant and Respondent filed briefs on January 18, 2021. Complainant filed a response brief on February 1, 2021.
FINDINGS OF FACT
- The Subject Property. The subject property is located at 4008 Fee Fee Road in Bridgeton, Missouri. The subject property consists of a 9,627 square foot lot (0.221 acres) and a two-story, split-level building. The first floor is approximately 2,350 square feet. The second floor is approximately 1,300 square feet. The split level is approximately 425 square feet.
- Assessment and Valuation. Respondent classified the subject property as commercial property with a TVM of $350,200. The BOE affirmed Respondent’s assessment.
- Complainant’s Evidence. Complainant submitted the written direct testimony (WDT) and written surrebuttal testimony (WST) of Jay Robinovitz, who is Complainant’s sole member and manager. Complainant also submitted Exhibits A through G. Robinovitz’s WDT, WST, and Complainant’s Exhibits A through G are admitted into evidence.
Complainant purchased the subject property in 2012. (WDT at 5). Prior to Complainant’s purchase, the property was used as a firehouse. (WDT at 6) The first floor was used as a garage for the firetruck and as an exercise room. (WDT at 8) The second floor was used as a sleeping, eating and living space for on-duty firefighters. (WDT at 9)
As of January 1, 2019, Robinovitz used the first floor as a “garage for my vehicles and my personal workout area.” (WDT at 10) As of January 1, 2019, the second floor consisted of “a living area with two bedrooms, a kitchen, a living room, a bathroom and an exercise room.” (WDT at 11) The split level was used as space for a pool table. (WDT at 12) Robinovitz uses “the split level and the second floor as anyone would use a home,” including gatherings “with friends and family” and occasional overnight stays. (WDT at 20) As of January 1, 2019, the building had water, gas, sewer, electricity, internet service, heating, and air conditioning. (WDT at 21-22) Complainant does not conduct business or earn income from the subject property. Complainant does not lease any portion of the subject property to anyone. (WDT at 26-28)
Complainant’s Exhibits A through F are photographs depicting the kitchen, living room, bathroom, second-floor exercise room, both bedrooms, and the split level. The photographs depict the condition of the rooms as of January 1, 2019. (WDT at 19)
The kitchen included refrigerators, a stainless steel stove and oven, a microwave oven, a sink, cabinetry, small kitchen appliances, and pots and pans for cooking. (Ex. A, WDT at 13) The living room was carpeted and included a chair, sectional, footstools, lighting, décor, and a television. (Ex. B, WDT at 14) The bathroom included a vanity, sink, wall-mounted mirror, shower, and toilet. (Ex. C, WDT at 15) The second-floor exercise room was carpeted and decorated. (Ex. D, WDT at 11, 16). Both bedrooms were carpeted and have a bed, furniture, décor, and window drapes. (Exs. E, F; WDT at 17, 18) There are no photographs of the first floor garage and workout area.
Exhibit G is an aerial view of the subject property showing its location relative to roadways, commercial establishments, and residential areas. Exhibit G shows the subject property is near St. Andrews Assisted Living Center and three hotels. (WST at 6, 7) The nearest residential subdivisions are across Interstate 70 and across St. Charles Rock Road. (Ex. G, WST at 8)
- Respondent’s Evidence. Respondent submitted Exhibits 1 and 2 and Rebuttal Exhibits 3 through 8. The exhibits are admitted into evidence and summarized as follows:
|Exhibit 1||BOE Findings and Notice of Decision affirming Respondent’s assessment of the subject property as commercial property.|
|Exhibit 2||“Commercial/Industrial Review Document” dated November 2, 2020, and including property data and modeling data attributing potential gross income, effective gross income, and net operating income to the subject property. Exhibit 2 estimates a capitalization rate and calculates a “total indicated value” of $350,200.|
|Rebuttal Exhibit 3||“Appraisal Qualifications of Albert Lincoln” listing Lincoln’s experience, education, and professional affiliations.|
|Rebuttal Exhibit 4||City of Bridgeton ordinance regarding the “M-3 Planned Manufacturing District.” The ordinance lists permitted land uses and imposes a minimum one acre lot size. Residential use is not listed as a permitted land use.|
|Rebuttal Exhibit 5||Sales Verification Questionnaire in which Robinovitz answers “personal garage” in response to question asking for his “intended use at the time of the sale.”|
|Rebuttal Exhibit 6||“Commercial Occupancy Permit Application” dated November 27, 2012. Robinovitz signed the Application on behalf of Complainant. The Application requests the applicant to: “PLEASE LIST INTENDED USE FOR THIS BUILDING; IF ANY PART IS A STORAGE AREA, LIST ALL MATERIAL(S) TO BE STORED ON THE PREMISES[.]” Robinovitz listed “Storage of vehicles/motorcycles.”|
|Rebuttal Exhibit 7||“Certificate of Occupancy” dated July 30, 2013. The Certificate notes the subject property is zoned “M-3” and lists the “Proposed construction or land use” as “COMMERCIAL OCCUPANCY-MOTOR VEHICLE SALES.” The Certificate imposed no conditions of use and provides only that the subject property is “suitable for occupancy” for the proposed use.|
|Rebuttal Exhibit 8||An aerial overhead map of the subject property and surrounding area showing the subject property is located in a triangle of land surrounded by Interstate 70, St. Charles Rock Road, and Lindbergh Boulevard. The surrounding properties are commercial.|
Respondent also submitted the “Rebuttal Written Direct Testimony of Albert Lincoln.” (RWDT) Lincoln testified that prior to Complainant’s purchase of the subject property in December 2012, it was classified as commercial and exempted from assessment while operating as a firehouse. (RWDT at 9) Lincoln testified that residential living is not one of the permitted land uses in the “M-3” zoning as reflected in Rebuttal Exhibit 4. (RWDT at 10) Lincoln testified that Rebuttal Exhibits 5-7 show Robinovitz intended to use the subject property as a “personal garage” and that the City of Bridgeton approved occupancy of the property for commercial use. (RWDT at 11) Lincoln further testified “[i]t is highly unlikely there would be a permanent residence” in the subject property’s area because of “zoning restrictions and that most residents would find the noise and traffic unacceptable for family life.” (RWDT at 12)
- Classification. The BOE decision is set aside. The BOE misclassified the subject property as commercial property as of January 1, 2019. The subject property was residential property as of January 1, 2019.
CONCLUSIONS OF LAW
- Assessment. Real property is assessed at set percentages of its TVM as of January first of each odd-numbered year. Section 137.115.1. Residential real property is assessed at 19% of its TVM. Section 137.115.5(1)(a). Commercial real property is assessed at 32% of its TVM. Section 137.115.5(1)(c). In this case, relevant date for determining classification is January 1, 2019.
- Evidence. The hearing officer is the finder of fact and determines the credibility and weight of the evidence. Kelly v. Mo. Dep’t of Soc. Servs., Family Support Div., 456 S.W.3d 107, 111 (Mo. App. W.D. 2015). The finder of fact in an administrative hearing determines the credibility and weight of expert testimony. Hornbeck v. Spectra Painting, Inc., 370 S.W.3d 624, 632 (Mo. banc 2012). The hearing officer “may inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, subclassification or assessment of the property.” Section 138.430.2.
Complainant objected to Lincoln’s written direct testimony on grounds it speculative and offers an inadmissible legal conclusion regarding uses permitted by the zoning ordinance. “Legal conclusions are not admissible facts.” Scott v. Ranch Roy-L, Inc., 182 S.W.3d 627, 635 (Mo. App. E.D. 2005). Complainant’s objection is sustained to the extent Lincoln’s RWDT offers a legal conclusion interpreting the ordinance.
- Complainant’s Burden of Proof. The taxpayer bears the burden of proof and must show by a preponderance of the evidence that the property was misclassified. Westwood P’ship v. Gogarty, 103 S.W.3d 152, 161 (Mo. App. E.D. 2003). The BOE’s classification of the subject property is presumptively correct. Rinehart v. Bateman, 363 S.W.3d 357, 367 (Mo. App. W.D. 2012). “Substantial and persuasive controverting evidence is required to rebut the presumption, with the burden of proof resting on the taxpayer.” Id. (internal quotation omitted). “Substantial evidence is that evidence which, if true, has probative force upon the issues, and from which the trier of fact can reasonably decide the case on the fact issues.” Savage v. State Tax Comm’n, 722 S.W.2d 72, 77 (Mo. banc 1986) (internal quotation omitted). Evidence is persuasive when it has “sufficient weight and probative value to convince the trier of fact.” Daly v. P.D. George Co., 77 S.W.3d 645, 651 (Mo. App. E.D. 2002); see alsoWhite v. Dir. of Revenue, 321 S.W.3d 298, 305 (Mo. banc 2010) (noting the burden of persuasion is a “party’s duty to convince the fact-finder to view the facts in a way that favors that party”).
- Classification. In pertinent part, Section 137.016.1(1) defines “residential property” as “all real property improved by a structure which is used or intended to be used for residential living by human occupants….” Section 137.016.1(3) defines “Utility, industrial, commercial, railroad and other real property” as “all real property used directly or indirectly for any commercial, mining, industrial, manufacturing, trade, professional, business, or similar purpose….” “Determining whether a property’s use falls within one of the subclassification definitions set forth in section 137.016.1 is an issue of fact for the STC.” Rinehart, 363 S.W.3d at 366.
- Complainant Produced Substantial and Persuasive Evidence of Misclassification.
Complainant produced substantial and persuasive evidence showing the property was misclassified as commercial property when in fact it was “used” for residential living as of January 1, 2019. Robinovitz testified he uses the structure “as anyone would use a home – I enjoy my time there with friends and family sharing food, fun, and exercise. Sometimes I or my guests spend the night.” Robinovitz’s testimony that he used the structure for gatherings with family and friends, including overnight stays, is fully consistent with finding the property was “used … for residential living” for purposes of establishing residential classification pursuant to Section 137.016.1(1).
Exhibits A through F confirm Robinovitz’s testimony that he used the subject property like a home. Exhibits A through F show that as of January 1, 2019, the structure contained a kitchen, a furnished living room, a bathroom, a second-floor exercise room, and two furnished and decorated bedrooms. The kitchen, living room, bathroom, and bedrooms provide eating, living, and sleeping spaces. Collectively, Robinovitz’s testimony and Exhibits A through F show that as of January 1, 2019, the subject property was improved with a structure “used … for residential living by human occupants” as required for residential classification pursuant to section 137.016.1(1).
Respondent asserts Exhibits 4-7 demonstrate the subject property is not residential. (Compl. Br. at 2) These exhibits establish only that the subject property was zoned for commercial use as of January 1, 2019, and that in 2012 and 2013 Robinovitz stated he planned to use the property as a “personal garage” to store vehicles or for “motor vehicle sales.” Neither of these facts negate finding that the subject property was used as residential property as of January 1, 2019.
Section 137.016 does not define residential or commercial property according to zoning. The only reference to zoning in section 137.016 is in the context of determining the classification of property that is “vacant, unused, or held for future use … or for which a determination as to its classification cannot be made under the definitions set out in subsection 1 of this section[.]” Section 137.016.5. Section 137.016.5 provides eight factors for classifying otherwise unclassified property. Specifically, Section 137.016.5(3) provides “a zoning classification shall not be considered conclusive, if upon consideration of all factors, the zoning classification does not reflect the immediate most suitable economic use of the property.” Section 137.016.5(3) therefore expressly contemplates classifications inconsistent with current zoning and relegates it to one of eight non-dispositive factors. Bateman v. Rinehart, 391 S.W.3d 441, 448 (Mo. banc 2013). Because Complainant produced substantial and persuasive evidence showing the property met the statutory definition of “residential property” as of January 1, 2019, the fact the subject property was zoned for commercial use is a non-factor in this case.
Respondent’s argument that Robinovitz admitted he did not intend to use the subject property as a residence is also unpersuasive. Respondent focuses on Robinovitz’s answer to a Sales Questionnaire in 2012 and his application for an occupancy permit in 2013. (Compl. Br. at 2-3) These statements precede the relevant January 1, 2019, classification date by over five years and do not establish the use or intended use of the structure as of the valuation date.
Finally, there is no evidence the property was used “directly or indirectly for any commercial, mining, industrial, manufacturing, trade, professional, business, or similar purpose” justifying commercial classification pursuant to Section 137.016.1(3). Robinovitz’s use of the property for family and social gatherings is not indicative of commercial use. The fact Complainant derives no income from the property is not indicative of commercial use. The only indicia for commercial classification is the fact the subject property is zoned for commercial use. Zoning is not dispositive. The net result is that Respondent produced no evidence rebutting Complainant’s evidence showing the property was improved by a structure used or intended to be used for residential living as of January 1, 2019.
Complainant produced substantial and persuasive evidence establishing the subject property was residential property as of January 1, 2019.
CONCLUSION AND ORDER
The BOE’s decision is set aside. The subject property was residential property as of January 1, 2019, and is reclassified as residential property assessed at the statutory rate of 19%.
Application for Review
A party may file with the STC an application for review of this decision within 30 days of the mailing date set forth in the certificate of service for this decision. The application “shall contain specific detailed grounds upon which it is claimed the decision is erroneous.” Section 138.432. The application must be in writing, and may be mailed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, or emailed to Legal@stc.mo.gov. A copy of the 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.
The Collector of St. Louis County, and 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 the disputed taxes have been disbursed pursuant to a court order under the provisions of section 139.031.
SO ORDERED April 9, 2021.
STATE TAX COMMISSION OF MISSOURI
Eric S. Peterson
Senior Hearing Officer
State Tax Commission
Certificate of Service
I hereby certify that a copy of the foregoing has been electronically mailed and/or sent by U.S. Mail on April 9, 2021, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.
Contact Information for State Tax Commission:
Missouri State Tax Commission
421 East Dunklin Street
P.O. Box 146
Jefferson City, MO 65102-0146
 Complainant timely filed a complaint for review of assessment. The State Tax Commission (STC) has authority to hear and decide Complainant’s appeal. Mo. Const. art. X, sec. 14; Section 138.430.1, RSMo 2000. All statutory citations are to RSMo 2000, as amended.
 All citations to the WDT and WST refer to the numbered questions and answers.
 Question 20 asked Robinovitz to “[d]escribe how you use the property.” Robinovitz testified he “uses” the property like a home. This testimony is phrased in the present tense and does not necessarily relate to how the property was used as of January 1, 2019. The totality of Robinovitz’s testimony, as well as Complainant’s exhibits, focus on the property as it was on January 1, 2019. Considered in context, Robinovitz’s testimony that he “uses” the property like a home is reasonably construed as relating to his use of the property as of January 1, 2019.
 Complainant timely filed written objections to Lincoln’s RWDT answers to Questions 10 and 11. As explained in the Conclusions of Law, Complainant’s objections are overruled.