Lodge of the Four Seasons, LLC, v. Marty McGuire, Assessor, Camden County, Missouri

May 6th, 2022


LLC, ) Appeal No. 21-47000
) Parcel No. 01-8.0-27.0-000.0-014-001.000
Complainant, )
v. )
Respondent. )


          Lodge of the Four Seasons, LLC, (Complainant) appeals the Camden County Board of Equalization’s (BOE) decision finding the true value in money (TVM) of the subject property on January 1, 2021, was $11,198,375. Complainant asserts the TVM was $5,020,000.[1]

The evidentiary hearing was via WebEx on April 22, 2022.  Complainant was represented by attorney Patrick Keefe.  Respondent appeared pro se.


1. The Subject Property. The subject property is a resort hotel and conference center located at the Lake of the Ozarks.   There are 285 guestrooms and an exhibit hall.  The exhibit hall consists of approximately 20,000 square feet.  The resort offers a total of 65,000 square feet of meeting and function space.  (Ex. A at 5)   The hotel is not franchised.

          In addition to guestrooms and meeting space, the resort offers food and beverage venues, retail areas, a spa, fitness center, an indoor/outdoor swimming pool, and patio areas that can be used for outdoor functions.  The guestrooms and other amenities utilize personal property items such as furniture, equipment, and other items collectively referred to as “FF&E.”  (Ex. A at 22)

The resort was constructed in 1964.  Several additions and renovations have been completed over the years.  The facilities are in average condition for their age.  The physical condition of the subject is inferior to most other resorts in the Lake of the Ozarks area.  (Ex. A at 25)

          The resort is situated on approximately 90.7 acres.  Approximately 50.7 acres are necessary to support resort operations.  The remaining 40 acres are considered excess land.

2. Assessment and Valuation. The BOE determined the TVM of the subject property as of January 1, 2021, was $11,198,375.

3. Complainant’s Evidence. Complainant introduced Exhibit A and Exhibit B.  Exhibit A is an appraisal report prepared by Gary Andreas.  Exhibit B is Andreas’ written direct testimony.  Respondent did not object to either exhibit.  Exhibit A and Exhibit B were admitted into evidence.

Andreas is a licensed Missouri appraiser.  Andreas concluded the highest and best use of the subject property as improved is “continued use as a resort until economic conditions justify alternative development.”  (Ex. A at 28)    Andreas utilized the Rushmore Method to estimate the TVM of the subject’s improvements was $2,460,000 as of January 1, 2021.  Andreas utilized the sales comparison approach to estimate the TVM of the 40 acres of excess land was $2,560,000 as of January 1, 2021.  Andreas estimated the TVM of the subject property value as of January 1, 2021, was $5,020,000.

Improvement Value

          To value the subject’s improvements, Andreas utilized a “strict application of the Rushmore methodology as previously approved by the Missouri Tax Commission.”  (Ex. A at 30)  The first step in the Rushmore Method is estimating the subject’s net operating income (NOI) by determining the average daily rate (ADR) for rooms, the occupancy rate, and expenses.

The ADR is influenced by supply and demand.  (Ex. A at 23)  The primary demand for hotel rooms in the subject’s market is from business travelers, tourists, and groups.   Occupancy levels decreased due to the COVID-19 pandemic and “were expected to remain constant or decrease minimally from the 2020 level in 2021.”  (Ex. A at 25)  The ADR for rooms was “expected to experience some growth in 2021with the strongest growth coming in the luxury segments and the weakest growth being experienced in the mid-market full-service segment.” (Id.)

The ADR increased in 2020 even as demand decreased due to the COVID-19 pandemic.  (Ex. A at 25-26)   The reason for this anomaly is two-fold.  First, room rates for transient leisure travel are generally higher than group rates.   Second, in 2020, group demand decreased substantially more than leisure travel, resulting in a higher percentage of rented rooms being occupied by leisure travelers paying higher room rates.  (Id. at 26)  For the subject property, this was reflected in an increase in the ADR from $119.62 in 2018 to $143.32 in 2020.  (Id.)   Andreas also considered local market data from four comparable properties which had 2020 ADRs ranging from $112 to $158.  (Id. at 23)  Andreas used the subject’s actual performance, local market data, published rate expectations, and the upward trend in ADRs, to estimate the subject’s ADR at $150.50.  (Ex. A at 26) The subject’s ADR was $150.50.

The subject’s 2020 occupancy was 45.8%, up from 43.7% in 2019.  (Ex. A at 26) The four comparable properties had 2020 occupancy rates ranging from 54% to 70%, with an average range of 54% to 56%.  (Ex. A 23)  Andreas estimated the occupancy rate for the subject was approximately 46.2 percent, which equates to 48,100 room rentals.   (Id. at 26)   Multiplying 48,100 rented rooms by the $150.50 ADR results in room revenue of $7,239,050, rounded to $7,239,100.  (Ex. A at 37).

In addition to room revenue, the subject property generates income from food and beverage sales, retail, and miscellaneous sources such as parking and telecommunications fees.  (Ex. A at 34, 37)  When added to the $7,239,050 in room revenue, the estimated gross income generated by the subject property is $12,862,400.  (Id. at 37)  Andreas relied on the subject’s actual expenses to estimate total expenses of $10,521,200, leaving an NOI of $2,341,200.  (Id.)

As required by the Rushmore Method, Andreas then deducted the management fees and the contributory value of the FF&E.  Management fees for hotel properties typically range from 3.5 percent to 5 percent of total revenue.  (Ex. A at 38)  Andreas applied a 4 percent management fee, resulting in a $514,496 deduction from the NOI.  Andreas did not deduct a franchise fee because the subject property is not franchised.

Next, Andreas estimated a deduction both for the “return of” personal property and the “return on” personal property.  The return of personal property reflects its replacement cost.  The return on personal property reflects the annual cost of capital used to purchase the personal property.  (Ex. A at 39-40)

A deduction for the return of personal property is necessary because FF&E must be replaced periodically.  Andreas assumed a 7-year life for the subject’s FF&E and that each of the 285 rooms had $25,000 in FF&E, for a total replacement cost of $7,125,000.  (Ex. A at 40) The replacement cost-per-room was based on published market data.  (Id.)  Andreas utilized a straight line calculation over the 7-year estimated life span to estimate an annual return of personal property of $1,017,857.  (Id.)

Andreas estimated the return on personal property to account for the cost of the capital used to purchase the FF&E.  The return on personal property was estimated at 9.07% and was based on the band of investment and debt service coverage techniques considered in conjunction with local tax rates.  Andreas used Respondent’s assessed value of the subject’s personal property to estimate “a market value of $324,270 attributable to the FF&E.”  (Ex. A at 41)  Multiplying the market value ($324,270) by the rate of return (9.07%) results in an estimated return on personal property of $29,418.  (Id.)  Adding the return of and the return on the subject’s FF&E results in a $1,047,275 deduction from the NOI.  Andreas applied an additional reserve for replacement of 4%, or $514,496 per year, for structural component replacement.  (Id.)

Andreas’ final estimate of net income attributable to the real property was $264,933.  This sum is calculated as follows:

Total Net Income:                                    $2,341,200

Income Attributable to the Business:         ($514,496)

Income Attributable to Personal Property:  ($1,047,275)

Structural Component Replacement:          ($514,496)

Net Income Attributable to Real Property:    $264,933

(Ex. A at 42)

Finally, Andreas utilized the band of investment technique to estimate an unloaded capitalization rate of 9.02 percent.  Adding the effective tax rate yielded a loaded capitalization rate of 10.75 percent.  Capitalizing the $264,933 of net income attributable to the real property yields an estimated value of $2,464,760, which Andreas rounded to $2,460,000.  The value of the subject property’s improvements as of January 1, 2021, was $2,460,000.

Excess Land Value

          Andreas used the sales comparison approach to value the 40 acres of excess land.  The excess land does not have lake frontage, but does have frontage on Horseshoe Bend Parkway.  Andreas stated “the most common and appropriate unit of measure for the subject is the price [per] acre with appropriate adjustments made for lake frontage.”  (Ex. A at 44)  Andreas’ land value estimate was based on three listings and three sales of land on or near Lake of the Ozarks.  (Id.)  The listings and sales are summarized as follows, with emphasis on the linear feet of lake and road frontage:

Listing 1 10 acres $675,000 No lake frontage 300′ road frontage
Listing 2 34.49 acres $7,200,000 1,500′ lake frontage 100′ road frontage
Listing 3 23.60 acres $1,300,00 600′ lake frontage 300′ road frontage
Sale 1 6.34 acres $640,000 550′ lake frontage 567′ road frontage
Sale 2 3.20 acres $580,000 745′ lake frontage 46′ road frontage
Sale 3 19 acres $1,820,000 435′ lake frontage 1,500′ road frontage

(Ex. A at 54)

The three sales occurred in 2017.  Andreas applied 5% time of sale adjustments to Sales 1 and 3 and a 5.5% adjustment to Sale 2 to account for the fact the sale closed earlier in 2017 than Sales 1 and 3.  In addition to time of sale adjustments, Andreas adjusted for location, size, topography, access, zoning, lake and road frontage, and utilities.  The adjusted range of listing prices ranged from $38,600 to $83,500 per acre.  The adjusted range of sale prices ranged from $58,300 to $76,500 per acre.  (Ex. A at 54)

Although the adjustment grid includes both listings and sales, Andreas states the “[t]he adjusted sales indicate a per-acre value ranging from $38,600 to $76,500; averaging $63,817 and indicating a weighted average of $65,651.”  (Ex. A at 54; emphasis added)   Andreas concluded the value of the 30 acres of excess land was $64,000 per acre, resulting in an estimated value of $2,560,000 as of January 1, 2021.  (Id.)

4. Respondent’s Evidence. Respondent presented no exhibits.  Respondent served as the sole witness.  Respondent testified his office valued the subject property with the Vanguard system, which generated a value of approximately $11,200,000.  Respondent testified that value was likely “low.”  Respondent offered no other testimony supporting this opinion.

5. Value. The TVM of the subject property as of January 1, 2021, was $5,020,000.


 1. Assessment and Valuation. Commercial real property is assessed at 32% of its TVM as of January 1 of each odd-numbered year. Section 137.115.5(1)(c).  “True value in money is the fair market value of the property on the valuation date, and is a function of its highest and best use, which is the use of the property which will produce the greatest return in the reasonably near future.”  Snider v. Casino Aztar/Aztar Mo. Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005) (internal quotation omitted).  The fair market value is “the price which the property would bring from a willing buyer when offered for sale by a willing seller.”  Mo. Baptist Children’s Home v. State Tax Comm’n, 867 S.W.2d 510, 512 (Mo. banc 1993).  “True value in money is defined in terms of value in exchange not value in use.” Tibbs v. Poplar Bluff Assocs. I, L.P., 599 S.W.3d 1, 7 (Mo. App. S.D. 2020) (internal quotation omitted).  “Determining the true value in money is an issue of fact for the STC.”  Cohen v. Bushmeyer, 251 S.W.3d 345, 348 (Mo. App. E.D. 2008).

“For purposes of levying property taxes, the value of real property is typically determined using one or more of three generally accepted approaches.”  Snider, 156 S.W.3d at 346.  The three generally accepted approaches are the cost approach, the income approach, and the comparable sales approach.  Id. at 346-48.  The STC has wide discretion in selecting the appropriate valuation method but “cannot base its decision on opinion evidence that fails to consider information that should have been considered under a particular valuation approach.”  Id., at 348.

The State Tax Commission utilizes the “Rushmore Method” to estimate the TVM of hotels.  Yogijikrupa Hospitality-C LLC, v. Assessor, Taney County, Mo., Appeal No. 19-89506, 2021 WL 4977443, at *5 (Mo. St. Tax Comm’n 2021) (noting “[t]he STC has long recognized the Rushmore Method under the income approach for the valuation of hotel properties”).[2]  The Rushmore Method enables a valuation of hotel real estate by deducting the value of a franchise affiliation and the FF&E required to operate a hotel.  In this case, there is no franchise and, therefore, no deduction for franchise value.  Nonetheless, the Rushmore Method applies because it provides the established method for deducting personal property value by subtracting the contributory value of the subject’s FF&E.

The Rushmore Method deducts the contributory value of the FF&E by estimating both the replacement cost and the return generated by the FF&E, referred to as the “return on” the FF&E.  The replacement cost is typically reflected in a reserve for replacement.  The return on the FF&E is typically estimated by (1) using the market value of the personal property as shown on the assessment rolls; (2) actual appraisal of the personal property; or (3) using the depreciated book value of the personal property.  Prestige Hotels v. Cox, Appeal No. 20-79023 (Mo. St. Tax Comm’n, Feb. 25, 2022).

2. Evidence. “Although technical rules of evidence are not controlling in administrative hearings, fundamental rules of evidence are applicable.” Mo. Church of Scientology v. State Tax Comm’n, 560 S.W.2d 837, 839 (Mo. banc 1977). 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).

3. 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 or overvalued.  Westwood P’ship v. Gogarty, 103 S.W.3d 152, 161 (Mo. App. E.D. 2003).  The BOE’s valuation is presumptively correct. Tibbs, 599 S.W.3d at 7.  The “taxpayer may rebut this presumption by presenting substantial and persuasive evidence that the valuation is erroneous.”  Id. (internal quotation omitted).  The taxpayer also must prove “the value that should have been placed on the property.” Id.           “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 also White v. Dir. of Revenue, 321 S.W.3d 298, 305 (Mo. banc 2010) (noting the burden of persuasion is the “party’s duty to convince the fact-finder to view the facts in a way that favors that party”).

4. Complainant Produced Substantial and Persuasive Evidence of Overvaluation. Andreas followed the Rushmore Method to estimate the value of the subject property.  Andreas’ appraisal determined the subject property’s market-based NOI and then utilized the Rushmore Method to deduct both the “return of” and the “return on” the FF&E.  Andreas capitalized the net income attributable to the real property ($264,933) with a market-based capitalization rate (10.75%) to estimate the TVM of the subject’s real property was $2,464,760, rounded to $2,460,000.  Andreas’ conclusion that the TVM of the hotel real property was $2,460,000 as of January 1, 2021, is based on substantial and persuasive evidence.

Andreas correctly used the sales comparison approach to estimate the TVM of the 40 acres of excess land.  While Andreas utilized both listings and sales of comparable vacant land, the conclusion that the subject’s excess land is worth $64,000 per acre is persuasively supported by the adjusted price per acre of the three comparable sales, which ranged from 58,300 to $76,500 per acre.  (Ex. A at 54)[3]  Andreas’ conclusion that the TVM of the subject’s 40 acres of excess land was $64,000 per acre – $2,560,000 in total – as of January 1, 2021, is based on substantial and persuasive evidence.

Respondent introduced no evidence contesting Andreas’ methodology, data, or analysis.  Complainant’s evidence is substantial, persuasive, and essentially uncontested.  Complainant produced substantial and persuasive evidence rebutting the BOE value and showing that the TVM of the subject property as of January 1, 2021, was $5,020,000.


The BOE’s decision finding the TVM of subject property on January 1, 2021, was $11,198,375 is set aside. The TVM of the subject property on January 1, 2021, was $5,020,000.

Application for Review

A party may file 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.

Disputed Taxes

The Collector of Camden 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 May 6, 2022.

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 May 6, 2022, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.

Amy S. Westermann

Chief Counsel


[1] Complainant timely filed a complaint for review of assessment. The State Tax Commission (STC) has authority to hear and decide Complainant’s appeals.  Mo. Const. art. X, sec. 14; Section 138.430.1, RSMo 2000.  All statutory citations are to RSMo 2000, as amended.

[2] The Rushmore Method is also widely accepted by courts across the country.  Glenpointe Assoc. et al. v. Township of Teaneck, 31 N.J. Tax 596, 645 (2020) (holding the Rushmore method is generally used to value hotels); Wisconsin & Milwaukee Hotel, LLC v. City of Milwaukee, 936 N.W.2d 403 (Wis. App. 2019) (holding the “Rushmore approach to value hotels” complied with state law); CHH Cap. Hotel Partners, LP v. D.C., 152 A.3d 591, 597 (D.C. 2017) (the Rushmore method is a “well-established and broadly accepted” method “well-conceived to yield a fair and accurate estimate of market value”); RRI Acquisition Co. v. Supervisor of Assessments of Howard Cty., 2006 WL 925212, at *5 (Md. Tax Feb. 10, 2006) (applying Rushmore and holding a deduction for return on FF & E from income is required); Marriott Corp. v. Bd. of Cty. Comm’rs of Johnson Cty., 972 P.2d 793, 796 (Kan. App. 1999) (holding the Rushmore method was the appropriate method to value a hotel and noting it “has been accepted in a number of litigated matters and rejected in none that have been brought to our attention”); In re J.F.K. Acquisitions Group, 166 B.R. 207, 209 (Bankr.E.D.N.Y.1994) (utilizing the Rushmore method and noting the appraiser who developed the method is an “eminent expert in the field of hotel appraisers”).

[3] Authoritative appraisal texts indicate that in addition to closed sales, an appraiser may consider “listings or pending sales” in developing a sales comparison approach.  Appraisal Institute, The Appraisal of Real Estate 377 (14th ed. 2013).  Missouri courts, however, define the comparable sales approach in terms of actual sales; specifically, the “prices paid for similar properties in arms-length transactions” with adjustments accounting “for differences between the properties.”  Snider, 156 S.W.3d 347–48; see also In re Marriage of Patrick, 201 S.W.3d 591, 597 (Mo. App. S.D. 2006) (stating a listing “is an offer to sell and, as such, may not be used to support a comparable sale approach to valuation of property”).