State Tax Commission of Missouri
LARRY & PAMELA DAPPRICH, )
v. ) Appeal No. 11-89510
JAMES STRAHAN, ASSESSOR, )
TANEY COUNTY, MISSOURI, )
AFFIRMING HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
On November 14, 2012, Senior Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) affirming the assessment by the Taney County Board of Equalization and denying Complainants’ claim of exemption for taxation under Section 137.100(5), RSMo.
Complainants filed their Application for Review of the Decision. Respondent was given until and including December 31, 2012, to file his Response. No Response was filed.
CONCLUSIONS OF LAW
Standard Upon Review
An application must contain specific facts or law as grounds upon which it is claimed the decision is erroneous. Failure to state specific facts or law upon which the appeal is based will result in summary denial. 
The application for review submitted by Mr. Dapprich did not make any specific allegation as to any material error in fact or law by the Hearing Officer. The application for Review was a compilation of information which was not tendered as evidence in the appeal. The Hearing Officer does not commit reversible error for not considering information that was never before the Commission as evidence. Accordingly, the application for review must be summarily denied.
A review of the record provides support for the determinations made by the Hearing Officer. There is competent and substantial evidence to establish a sufficient foundation for the Decision of the Hearing Officer. A reasonable mind could have conscientiously reached the same result based on a review of the entire record. The Commission finds no basis to support a determination that the Hearing Officer acted in an arbitrary or capricious manner or abused his discretion as the trier of fact and concluder of law in this appeal.
The Hearing Officer did not err in his determination that the subject property did not qualify for tax exemption under section 137.100 RSMo.
The Commission upon review of the record and Decision in this appeal, finds no grounds upon which the Decision of the Hearing Officer should be reversed or modified. Accordingly, the Decision is affirmed, exemption is denied. The Decision and Order of the hearing officer, including the findings of fact and conclusions of law therein, is incorporated by reference, as if set out in full, in this final decision of the Commission.
Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of the mailing date set forth in the Certificate of Service for this Order.
If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts unless disbursed pursuant to Section 139.031.8, RSMo.
If no judicial review is made within thirty days, this decision and order is deemed final and the Collector of Taney County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal.
SO ORDERED March 12, 2013.
STATE TAX COMMISSION OF MISSOURI
Bruce E. Davis, Chairman
Randy B. Holman, Commissioner
Victor Callahan, Commissioner
DECISION AND ORDER
Assessment by Assessor that subject property was not tax exempt was sustained by the Taney County Board of Equalization. Hearing Officer finds subject property to not be exempt under Section 137.100(5), assessment AFFIRMED.
Assessed value for tax years 2011 and 2012 is set at $218,110, $1,440 – residential and $216,670 – Commercial.
Complainants appeared by Counsel, Harry Styron, Styron & Shilling, Ozark, Missouri.
Respondent appeared by Counsel, Jason Coatney, Keck & Austin, Springfield, Missouri.
Complainant appeals the decision of the Taney County Board of Equalization which sustained the assessment of the subject property. Complainant contends that the subject property is exempt from taxation under the provisions of Section 137.100(5). The Commission takes this appeal to determine whether the subject property is exempt from taxation under the controlling statute and case law. The Hearing Officer, having considered all of the competent evidence upon the whole record and Complainant’s Brief, enters the following Decision and Order.
FINDINGS OF FACT
1. Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Taney County Board of Equalization.
2. Evidentiary Hearing. The appeal was set for Evidentiary Hearing on August 7, 2012, at the Taney County Justice Center, Forsyth, Missouri. By phone conversation with Counsel for Complainants and appearance by Counsel for Respondent, the parties waived the evidentiary hearing and agreed to the submission of the case on the exhibits prefiled with the Commission and any briefs to be filed. Complainants filed their Memorandum of Law on September 10, 2012. Respondent did not file a Response.
3. Subject Property. The subject property is identified by map parcel number 08.3.0-08-000-000-018.000. It is located at 418 Buchanan Road, Branson, Missouri. The size of the parcel and the description of the improvements are unknown from the exhibits filed by the parties.
4. Assessment. The Assessor assessed the property at $1,440 residential, a true value in money of $7,580, and $216,670 commercial, a true value in money of $677,090. The Board of Equalization sustained the assessment.
5. Complainant’s Evidence. Complainant filed and exchanged the following exhibits, which are received into the record:
Limited Exemption from Missouri Sales and Use Tax, dated 3/14/07
IRS 501 (c) (3) Letter, dated 6/3/03
Commercial Ground Lease, dated 10/1/05
There was no evidence of new construction and improvement from January 1, 2011, to January 1, 2012, therefore the assessed value for 2011 remains the assessed value for 2012.
6. Exhibit A – Sales and Use Tax Exemption Letter. The Branson Sports Club Inc. is exempt from Missouri Sales and Use Tax on purchases and sales. This does not establish that the subject property qualifies as exempt from ad valorem taxation under section 137.100 (5) and the controlling case law.
7. Exhibit B – 501 (c) (3) Letter. The Branson Sports Club, Inc. is exempt from Federal Income Tax under section 501(c)(3) of the Internal Revenue Code. This does not establish that the subject property qualifies as exempt from ad valorem taxation under section 137.100 (5) and the controlling case law.
8. Exhibit C – Commercial Ground Lease (Lease). The following relevant facts appear from the Lease:
a. Larry & Pam Dapprich are the Lessors and sole owners of the land at 418 Buchanan Road, Branson, Missouri.
b. The Lease is “. . . for the purpose of conducting in and on such premises a lawful non profit business and for no other purpose. . ..”
c. The term of the Lease is for 99 years, from 10/1/05 to 10/1/2104. The rent is $100 per year.
d. On termination of the Lease for any cause, Lessor shall become the owner of any building or improvements on the Premises.
9. Exemption Not Proven. Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the subject property to be exempt from taxation. See, Complainants Fail To Prove Exemption, infra.
10. Respondent’s Evidence. Respondent filed and exchanged the following exhibits which are received into the record.
Copy BOE Computer Screen – Subject Property – 2008 Tax Year
Copy BOE Computer Screen – Subject Property – 2008 Tax year
Quit Claim Deed, dated 5/7/03 – Subject Property
BOE Court Order, dated 6/27/11 – 2008 Regular Abatement
BOE Minutes, dated 13/23/08
Information (31 pages) from http://bransonsportsclub.com
Real Estate Deed of Trust, dated 4/17/08
Written Direct Testimony – James Strahan
CONCLUSIONS OF LAW
The Commission has jurisdiction to hear this appeal and correct any assessment 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.
Burden of Proof
Complainants have the burden to present substantial evidence to rebut the presumption of correct assessment by the Board of Equalization. In order to meet this burden in an appeal seeking exemption from taxation, the Complainants must meet the substantial burden to establish that the property falls within an exempted class under the provisions of Section 137.100. It is well established that taxation is the rule and exemption from taxation is the exception. Exemption is not favored in the law. Complainants seeks exemption of its property from taxation pursuant to Section 137.100(5):
“The following subjects are exempt from taxation for state, county or local purposes:
. . .
(5) All property, real and personal, actually and regularly used exclusively for religious worship, for schools and colleges, or for purposes purely charitable and not held for private or corporate profit, except that the exemption herein granted does not include real property not actually used or occupied for the purpose of the organization but held or used as investment even though the income or rentals received there from is used wholly for religious, educational or charitable purposes;”
Complainants’ substantial burden of proof has not been met in the present case.
Complainants Fail To Prove Exemption
No Evidence of Actual Charitable Use
Complainants presented no evidence as to the actual use of the property under appeal. There is no evidence upon which the Hearing Officer can logically find that the subject property is “actually and regularly used exclusively for religious worship, for schools and colleges or for purposes purely charitable and not held for private or corporate profit.” There is no evidence that the use of the property by Complainants, or even the Branson Sports Club, Inc (BSC). relates to religious worship. Nor did Complainants provide any evidence that Complainants or the BSC has been conducting a school or college on the subject premises.
There was no evidence tendered by Complainants of any use that would qualify as “purely charitable.” Complainants’ argument as presented in their Memorandum of Law, at page 3, is that exemption should be granted because the facility is used for “providing facilities for youth sports.” There was no evidence as to how providing facilities for youth sports qualified as a charitable use of the property. Furthermore, Complainants provided no substantiating evidence as to what activities take place on the Complainant’s property that constituted youth sports.
From Respondent’s Exhibit 6, the Hearing Officer is able to conclude that the facility on Complainants’ property is used to conduct bingo every Tuesday, albeit proceeds “support Youth Development Programs” at the BSC. Apparently, there are also basketball and volleyball camps and martial arts classes (teens & adults). Costs for Basketball lessons range from $40 to $350 depending on the number of session an individual purchases. Sports shirts are sold through the BSC website. No information was provided as to fees charged for other activities and events. The payment system for payment of fees is through PayPal on the website. After school sports camps are available at a cost of $25 per week per child for a 2 hour session. Activities on days school is not in session are available at $15 per day. No evidence was presented to establish how the activities are provided on a charitable basis or how the activities and events qualify as a charitable activity.
Property Used as Commercial Rental Property
The Complainants’ use of the property is as a commercial rental property. The subject property is held for private profit, both present and prospective, specifically the annual rent and ultimately the use of a building constructed and maintained at no cost to Complainants. All costs associated with the operation of the property are covered by the Lessee. BSC pays all taxes and assessments, as additional rental. BSC pays the cost for all repairs and maintenance to the improvements, even those occurring from destruction to any of the improvements. All utilities are the responsibility of BSC. Insurance for the replacement of all improvements, as well as personal injury liability insurance, are paid by BSC.
In other words, all costs for the renting of the subject property are covered by the tenant. There are no real administrative costs to collecting the annual rent and cashing the check. The Lease on the subject is a triple net lease.
Franciscan Tertiary Test
In order to meet the burden of proof that the subject property is used “exclusively for … purposes purely charitable, and not held for private or corporate profit….” Complainants must meet the three prong test set forth by the Missouri Supreme Court in Franciscan Tertiary Province v. STC. The court said:
The first prerequisite for property to be exempt as charitable under §137.100 is that it be owned and operated on a not-for-profit basis. It must be dedicated un-conditionally to the charitable activity in such a way that there will be no profit, presently or prospectively, to individuals or corporations.
Another prerequisite for charitable exemption is that the dominant use of the property must be for the benefit of an indefinite number of people, for the purpose, as expressed in Salvation Army, of “relieving their bodies of disease, suffering, or constraint…or by erecting or maintaining pubic buildings…lessening the burdens of government.” 188 S.W.2d at 830…. Thus it is required that there be the element of direct or indirect benefit to society in addition to and as a result of the benefit conferred on the persons directly served by the humanitarian activity.
The three conditions of the test to be met under Franciscan are:
- Property must be owned and operated on a not-for-profit basis;
- Property must be actually and regularly used exclusively for a charitable purpose; and
- Property must be used for the benefit of an indefinite number of persons and for society in general, directly or indirectly.
Owned and Operated
The subject property is not owned by a not-for-profit entity. Complainants assert that BSC is the “owner” of the building which is one of the structures on Complainants property. Although, Complainants argue that section 137.100 (5) does not require ownership, nevertheless Franciscan does. However, Complainants admit that BSC “leases a building” from Complainants. The question arises as to how Complainants lease a building which they do not own? The answer simply is the building used by BSC is an improvement on the real property is owned by Complainants. The subject property consists of the land and the improvements thereon.
“137.010. The following words, terms and phrases when used in laws governing taxation and revenue in the state of Missouri shall have the meanings ascribed to them in this section, . . .
(4) “Real property” includes land itself, whether laid out in town lots or otherwise, and all . . . , buildings, structures, improvements and fixtures of whatever kind thereon, . . .”
The BSC does not own the subject real property. It only holds a possessory interest (leasehold) in the real property. The “operation” of the property as it applies to Complainants is as a for profit commercial leased property. Complainants failed to establish by substantial and
persuasive evidence that the ownership and operation of the subject property is on a not-for-profit basis.
Actual and Regular Use
The Complainants’ actual and regular use of the subject property is as a commercial leased property. In the words of the Salvation Army case at 830, the dominate use of a property, to be exempt under a claim of charitable use, is to be a use that benefits individuals “either by bringing their hearts under the influence of education or religion, by relieving their bodies from disease, suffering, or constraint, by assisting them to establish themselves for life, or by erecting or maintaining public buildings or works or otherwise lessening the burdens of government.”
Complainants failed to present any evidence that establishes that the BSC use of Complainants’ building qualifies under any of the categories of benefits required under Franciscan/Salvation Army. There is no evidence that the BSC activities in Complainants’ building bring the hearts of persons under the influence of education or religion. There is no evidence that the BSC activities in Complainants’ building relieve individuals’ bodies from disease, suffering, or constraint. There is no evidence that the BSC activities in Complainants’ building assist individuals to establish themselves for life. There is no evidence that the BSC activities in Complainants’ building have anything to do with erecting or maintaining public buildings or works or otherwise lessening the burdens of government. Accordingly, the use of the Complainants’ building by the BSC does not meet the second condition of the Franciscan test.
Benefit Indefinite Number of Persons and Society in General
The dominate use of the Complainants’ property having failed to pass muster under the second condition of the required test, it cannot satisfy the final condition either. The required benefit to an indefinite number of persons and society in general must be a benefit which is attached to, and a result of a dominate charitable use of the property. Given that none of the required charitable activities recognized by the applicable case law have been proven to be the dominate use of the property under appeal, or even Complainant’s building there is no “benefit” to an indefinite number of persons or society in general.
Summary and Conclusion
Complainants’ property is not owned by a not-for-profit entity it is owned by two private individuals. Complainants’ property is not operated on a not-for-profit basis. The dominate use of the subject property is not for a religious, educational or charitable use. The dominate use of the property does not bestow a religious, educational or charitable benefit upon an indefinite number of persons and society in general. The use of Complainants’ property does not qualify for exemption for ad valorem taxes under section 137.100 (5), RSMo and the required test under the Franciscan case.
The assessment of the subject property made by the Assessor and sustained by the Board of Equalization for Taney County for the subject tax day is AFFIRMED.
The assessed value of the subject property for tax years 2011 and 2012 is set at $218,110, $1,440 – residential and $216,670 – Commercial.
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. 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 appeal is based will result in summary denial. 
The Collector of Taney 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 November 14, 2012.
STATE TAX COMMISSION OF MISSOURI
W. B. Tichenor
Senior Hearing Officer
 Received by the Commission (email) 11/25/12 – 11:17 PM.
 Section 138.432, RSMo.
 Hermel, Inc. v. STC, 564 S.W.2d 888 (Mo. 1978); Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Holt v. Clarke, 965 S.W.2d 241 (Mo. App. W.D. 1998); Smith v. Morton, 890 S.W.2d 403 (Mo. App. E.D. 1995); Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).
 BENCH ORDER, dated 8/8/12 – email transmission to respective Counselors – 6:33 AM.
 The Complaint for Review of Assessment gave the address of the property under appeal as 414 Buchanan Rd. Exhibits 1 & 2 give the owner (Complainant’s) address as 418 Buchanan Rd. Exhibits A, B, 3, 4 and 7 give the mailing address for Complainants as 414 Buchanan Road. Exhibit C identifies the Complainants as the sole owner of land located at 418 Buchanan Rd, and the leased premises are identified by that address. Exhibit 6 gives the address of the Branson Sports Club as 418 Buchanan Rd.
 No further description was provided by either party upon which the Hearing Officer could ascertain the size of the tract or the improvements existing on the property.
 Residential property is assessed at 19% of its true value in money (appraised value, fair market value) – Section 137.115.5, RSMo.
 Commercial property is assessed at 32% of its true value in money (appraised value, fair market value) – Section 137.115.5, RSMo.
 BOE Decision, dated 7/27/11
 The Expiration Date on the document was 12/14/09
 Section 137.115.1, RSMo.
 Corrected 2008 assessment from $1,440 Assessed Residential and $216,670 Assessed Commercial to $1,440 Assessed Residential and $$13,690 Commercial
 Exhibit 8 was identified in Exhibit 9 as a compact disc containing a recording of the official BOA meeting. No such Exhibit was ever received by the Commission.
 Article X, Section 14, Missouri Constitution of 1945; Sections 138.430, 138.460(2), RSMo.
 Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.
 Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, 895 (Mo. banc 1978).
 State ex rel. Council Apartments v. Leachman, 603 S.W.2d 930, 931 (Mo. 1980).
(See, Missouri Church of Scientology v. STC, 560 S.W.2d 837, 844 (Mo. banc 1977); CSCEA v. Nelson, 898 S.W.2d 547, 548 (Mo. banc 1995), citing Scientology).
 Exhibit C – Item 13
 Exhibit C – Item 15
 Exhibit C – Item 16
 Exhibit C – Item 22
 A net lease under which the lessee assumes all expenses of operating the property, including both fixed and variable expenses. The Dictionary of Real Estate Appraisal – Third Edition, Appraisal Institute (1993), p. 374
 566 S.W.2d 213, 223-224 (Mo. banc 1978).
 Id. At 224.
 Memorandum of Law, p. 1
 The interest held by the lessee (the tenant or renter) through a lease covering the rights of use and occupancy for a stated term under certain conditions. The Dictionary of Real Estate Appraisal – Third Edition, Appraisal Institute (1993), p. 204
 The assessment on the property has both a residential and commercial component. The evidence is totally lacking to establish what structure exists on the property that apparently is being used for a residential purpose and supposedly not by the BSC.
 Section 138.432, RSMo.