STATE TAX COMMISSION OF MISSOURI
|MAIN STREET MARKET COMPANY,||)|
|Complainant,||)||Appeal No. 20-48500|
|)||Parcel No. 05-6.0-24.00-004-006-003.00|
|GARY RECTOR, ASSESSOR,||)|
|CARTER COUNTY, MISSOURI||)|
DECISION AND ORDER
Main Street Market Company (Complainant) appeals the 2020 assessment by the Assessor of Carter County (Respondent) finding the true value in money (TVM) of the subject property on January 1, 2020, was $1,390,481. Complainant proposes a value of $850,000. Complainant did not produce substantial and persuasive evidence of overvaluation. Respondent’s assessment is AFFIRMED.
The evidentiary hearing was conducted on July 8, 2021, at The Landing resort in Van Buren, Missouri. Complainant was represented by attorney Wallace Duncan. Respondent was represented by attorney Travis Elliot
FINDINGS OF FACT
- The Subject Property. The subject property is located at 101 Riverview Bluff Drive in Van Buren, Missouri. The subject property consists of an approximately four-acre lot improved with a grocery store and gas station. The grocery store includes deli service. The grocery store and gas station were constructed in 2019.
- Assessment and Valuation. Respondent classified the subject property as commercial and determined the TVM as of January 1, 2020, was $1,390,481, with an assessed value of $444,953.
- Complainant’s Evidence. Complainant introduced Exhibits A through K and the testimony of Lanny Burke and Janet Burke. Exhibits A through J were admitted into evidence, Exhibit K was not. Complainant’s exhibits are summarized as follows.
|Exhibit A||Written Direct Testimony of Lanny Burke|
|Exhibit B||2020 Carter County tax receipt and property record card (PRC) showing the assessed value of 0.69 acres and other real property associated with Current River Express was $109,820.|
|Exhibit C||2020 Carter County tax receipt and PRC showing the assessed value of 6.23 acres and other real property associated with Simmons Grocery & Hardware was $206,220.|
|Exhibit D||2020 Wright county tax receipt showing the assessed value of 1.89 acres and other real property associated with Town & Country Supermarket in Mountain Grove was $216,020. The exhibit includes a 2021 PRC showing a “total” value of $734,580 with an assessed value of $235,070.|
|Exhibit E||2020 Wright county tax receipt showing the assessed value of 1.89 acres and other real property associated with the Town & Country Supermarket in Hartville was $402,740. The exhibit includes a 2021 PRC showing a “total” value of $1,374,100, with an assessed value of $439,710.|
|Exhibit F||2020 Shannon County tax receipt showing the assessed value of 2.39 acres and other real property associated with the Town & Country Supermarket in Winona was $129,440. The exhibit includes a 2021 PRC showing a “total” value of $404,500, with an assessed value of $129,440.|
|Exhibit G||2020 Shannon County tax receipt showing the assessed value of 1.13 acres and other real property associated with the Cube Stop Express was $47,580. The exhibit includes a 2021 PRC showing a “total” value of $148,700, with an assessed value of $47,580.|
|Exhibit H||2020 Reynolds County tax receipt showing the assessed value of 3 acres and other real property associated with the Town & Country Supermarket in Ellington was $89,740. The exhibit includes a 2021 PRC showing an “appraised” value of $280,450, with an assessed value of $89,740.|
|Exhibit I||Respondent’s Notice of Change in Assessed Value of Real Property (Impact Notice) dated June 16, 2020, notifying Lanny and Janet Burke that the 2020 appraised value of the subject property increased to $1,390,481 from the 2019 appraised value of $10,000 and that the BOE appeal deadline was July 14, 2020.|
|Exhibit J||Copy of envelope in which the Impact Notice was mailed to the Burkes. The envelope bears a postmark from June 16, 2020, and June 17, 2020 postmark from St. Louis.|
|Exhibit K||February 26, 2020, letter in which the Burkes reported $1,840,000 in “costs on the new store at 101 River View Bluff.” The exhibit includes Mr. Burke’s handwritten notations itemizing costs for gravel ($12,000), dirt work ($110,000), rock breaking ($25,000), inventory ($300,000 – $350,000), gas ($64,000), house moving ($15,000), and a survey ($6,000).|
Respondent objected to Exhibit K because it was not disclosed or exchanged prior to the evidentiary hearing as required by the scheduling order. Although Respondent’s objection was sustained, Exhibit K and the related testimony at the hearing were heard and are preserved in the record pursuant to Section 536.070(7), RSMo 2000.
Mr. Burke testified that he and Ms. Burke are Complainant’s sole shareholders. Complainant owns the subject property. (Ex. A at 4) Complainant purchased the subject property for $280,000. (Ex. A at 13) At the time of purchase, the four acre lot was improved with a house. (Ex. A at 12) Complainant removed the house and constructed the grocery store and gas station in 2019. The new store opened for business on June 26, 2019. (Ex. A at 17) Mr. Burke reported $1,840,000 in construction costs to Respondent, but testified only $850,000 of those costs are attributable to the real estate. (WDT at 22)
Mr. Burke testified he and his wife did not receive the Impact Notice in Exhibit I prior to leaving for vacation on July 13, 2021, and that they first learned of the increased assessment on July 21, 2021. (Ex. A at 31) Mr. Burke proposed a value of $850,000 based on the assessments of “comparable” properties. (Ex. A at 38-43)
Ms. Burke testified Complainant used some coolers from a previous store in the grocery store on the subject property. On cross-examination, Ms. Burked testified she had no opinion of the value of the coolers as of January 1, 2020.
- Respondent’s Evidence. Respondent’s evidence consists of Exhibits 1 through 11 and Respondent’s testimony. Each of Respondent’s exhibits were admitted into evidence, and are summarized as follows.
|Exhibit 1||Main Street Market Property Report Card, Work Index, and Sketch|
|Exhibit 2||February 26, 2020 letter from Mr. Burke reporting $1,840,000 in development costs|
|Exhibit 3||Impact Notice|
|Exhibit 4||Respondent’s WDT|
|Exhibit 5||Respondent’s written rebuttal testimony (WRT)|
|Exhibit 6||Complaint for Review of Assessment|
|Exhibit 7||Complainant’s 2020 Carter County Real Estate Tax Statement|
|Exhibit 8||Complainant’s 2020 Business and Manufacturing Equipment Personal Property Declaration|
|Exhibit 9||Main Street Market Photo|
|Exhibit 10||2019 Impact Notice|
|Exhibit 11||Complainant’s 2019 Carter County Real Estate Tax Receipt|
Respondent testified his office utilized the Hunnicutt appraisal system to estimate the TVM of the subject property. (Resp. WDT at 2:32) The Hunnicutt system estimates the cost of an improvement, adjusts that cost for a number of factors, and then provides a basis for calculating depreciation. (Resp. WDT at 2:44-46) The initial cost estimate is based on construction units assigned to the type of materials and construction. (Resp. WDT at 3:40-41) The number of construction units assigned varies by the type of material and the proportion of the building constructed with a given material.
After inspecting and measuring the building, Respondent utilized the Hunnicutt system to estimate the TVM of the subject property. Respondent explained the process as applied to the subject property. For instance, Respondent testified the Hunnicutt system assigns 36 construction units to brick. The subject property’s exterior walls are 25% brick. To calculate the construction units attributable to brick, Respondent multiplied the brick construction units (36) by 0.25, resulting in a total of 9.5 construction units. (Resp. WDT at 3:45-46; 4:1-2)
Next, Respondent used the Hunnicutt system to calculate adjustments based on specific building attributes and specific uses, such as the deli and gas station. (Resp. WDT at 4:25-34) After considering the various property improvements and specific uses, Respondent determined a base cost of $895,709 plus $271,632 of extra features, resulting in a replacement cost new of $1,167,341. Respondent deducted 1% for physical condition because the improvement were essentially new, resulting in a depreciated replacement cost of $1,155,668. (Resp. WDT at 7:16)
Respondent utilized the same system to determine the values of the gas station canopy ($14,199), parking areas ($149,067), curbing ($8,454), light poles ($4,039), lights ($3,674), and gas tanks ($14,579). (Resp. WDT at 7:33-46; 8:1-40) After adding the land value ($40,800), Respondent calculated “a total value of $1,390,481.” (Resp. WDT at 9:3) Respondent’s testimony at the hearing was consistent with his written testimony.
- Value. The TVM of the subject property on January 1, 2020, under the economic conditions as of January 1, 2019, was $1,390,481.
CONCLUSIONS OF LAW
- 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). In an even-year appeal, the TVM of the “property as newly constructed or improved shall be determined as of January 1 of the odd-numbered year.” 12 CSR 30-3.001(2); 12 CSR 30-3.015(1). An “improvement consists of any change to the physical characteristics of the property, whether that change is one that causes an increase or a reduction in value.” 12 CSR 30-3.001(3). “The valuation of the property shall take into consideration the new … improvements and shall assign to … [the] improvements the value which would have been attributed to new … improvements on January 1 of the odd-numbered year as though they had existed on that date.” 12 CSR 30-3.001(2)(A).
“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; see also St. Louis Cty. v. Sec. Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977). 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.” Snider, 156 S.W.3d at 348.
- Section 137.180. Complainant filed a motion to reconsider the March 19, 2021, order overruling Complainant’s motion to set aside or void the assessment and tax computation. Complainant’s initial motion to dismiss was overruled because it relied on statutory provisions inapplicable to Carter County. Complainant’s motion to reconsider cites Sections 137.180.3 and 137.180.4. Both statutes provide that “following the receipt of software necessary for the implementation” of certain statutory requirements, an assessor “shall forthwith notify” property owner of an increased assessment “on or before” June 15 either by mail or in person. The Impact Notice was dated June 16, 2020. Complainant asserts the late notice renders the assessment void. Complainant is incorrect.
Complainant cites Twelve Oaks Motor Inn, Inc. v. Strahan, 96 S.W.3d 106, 110 (Mo. App. S.D. 2003) for the proposition an assessment is void when the assessor’s failure to provide the statutory notice deprives a taxpayer of the opportunity to exhaust administrative remedies. In Strahan, the court held the assessor’s notice “clearly and unambiguously” notified the taxpayer of the increased assessment. Id. at 111. Because the notice was sufficient, the court further held the STC correctly determined it lacked authority to hear and decide the appeal because the taxpayer did not appeal the assessment to the Board. Id. Strahan did not address whether an impact notice dated one day after the statutory deadline renders the assessment void.
Further, the instant appeal demonstrates Complainant was not denied an administrative remedy. Here, the BOE appeal deadline was July 13, 2020, and the Impact Notice was dated June 16, 2020. As noted in the March 19, 2021, order overruling Respondent’s motion to dismiss, 12 CSR 30-3.010(1)(B)1(a) authorizes a direct appeal to the STC if an assessor does not notify the taxpayer of the increased assessment “prior to thirty (30) days before” the BOE appeal deadline. Complainant filed an appeal directly with the STC as authorized by 12 CSR 30-3.010(1)(B)1(a) and, therefore, was not deprived of an administrative remedy. The increased assessment is not void. Complainant’s motion to reconsider the March 19, 2021, order overruling Complainant’s motion to set aside or void the assessment and tax computation is overruled.
- 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 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. “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).
Respondent lodged a timely and specific objection to Mr. Burke’s testimony to the extent it offered an opinion regarding the value of purported comparable properties. A property owner is competent to testify as to the value of his or her land. Cohen v. Bushmeyer, 251 S.W.3d 345, 349 (Mo. App. W.D. 2008). Although a property owner may testify as to the value of their own property, “they may not support that opinion by reference to comparable sales unless they qualify as an expert.” State ex rel. Missouri Highways & Transportation Comm’n v. Boer, 495 S.W.3d 765, 769 (Mo. App. S.D. 2016) (internal quotation omitted).
In his written direct testimony, Mr. Burke offered an opinion of value based on comparable assessments, not comparable sales. As explained below, Mr. Burke’s opinion of value is not based on a recognized approach to value and is not substantial and persuasive evidence of value. To the extent it is objectionable, Mr. Burke’s testimony is nonetheless “heard and preserved in the record, together with any cross-examination with respect thereto and any rebuttal thereof[.]” Section 536.070(7).
Respondent also timely objected to Complainant’s Exhibit K. Exhibit K included handwritten notations that were not disclosed either at the time for initial disclosures or the exhibit exchange deadline set by the scheduling order. Respondent’s objection to Exhibit K is sustained. The exhibit and related testimony at the hearing are preserved in the record pursuant to Section 536.070(7). Exhibit K, while taken into the record pursuant to Section 536.070(7), will not be considered as evidence supporting Complainant’s claim.
- 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 taxpayer also must prove “the value that should have been placed on the property.” Tibbs, 599 S.W.3d at 7.
The taxpayer’s evidence must be both substantial and persuasive. 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”).
- Complainant Did Not Produce Substantial and Persuasive Evidence of Overvaluation.
Complainant did not produce substantial and persuasive evidence of value under any recognized approach to value. First, Complainant produced no evidence of actual or market-based income and expenses to support a value estimate by the income approach.
Second, Complainant did not produce substantial and persuasive evidence showing the TVM of the subject property according to the cost approach. Mr. Burke testified that prior to assessment, he reported development costs of $1,840,000 to Respondent but only $850,000 were attributable to the real estate. There are no invoices, bids, or financial statements supporting this cost estimate. The only documentation supporting this estimate is Mr. Burke’s handwritten notations on Exhibit K. Because Respondent’s objection to Exhibit K is sustained, Exhibit K is not in evidence. Mr. Burke’s testimony is not substantial and persuasive evidence of the TVM of the subject property.
Finally, Complainant did not produce substantial and persuasive evidence of value under the 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.” Snider, 156 S.W.3d at 347-48. “Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character.” Id. Complainant produced no evidence of any sales, comparable or otherwise. Instead, Complainant relied exclusively on the assessments of other grocery store and gas station properties in Carter, Reynolds, Shannon, and Wright counties. These assessments were not sales, and the lack of market-based sales data is a fundamental omission undermining the Burke’s opinion of value.
This is not to say that assessment data can never be evidence of value. While assessment data is often not a good indicator of market value, “in some areas and for some property types, assessed value may approximate market value.” Appraisal Institute, The Appraisal of Real Estate (14th ed. 2013) 197. Here, there is no evidence the assessment of properties in other counties reflects the market value of the subject property situated in Carter County. Nor is there evidence showing the two Carter County assessments reflect the market value of the subject property. The lack of market data to support the assessment data is crucial because the crux of Complainant’s claim is precisely that Respondent’s assessment does not accurately reflect the market value of the subject property. Thus, Complainant is at once claiming that the same assessor who substantially overvalued its property nonetheless accurately valued other properties in the county. The lack of market data renders Complainant’s overvaluation claim and proposed value unpersuasive.
Even if assessment data were equated with sales data – which they are not – Complainant offered no evidence of adjustments to account for property differences. There is no evidence the alleged comparable properties in Carter County and three other counties are identical to the subject property. Absent proof these properties are identical to the subject property, adjustments are required. Therefore, to the extent Complainant’s evidence of other assessments is relevant, the lack of any market-based adjustments to account for property differences undermines any residual relevance of Complainant’s assessment data. Complainant’s evidence of value is neither substantial nor persuasive.
CONCLUSION AND ORDER
Complainant did not produce substantial and persuasive evidence of overvaluation or of the value that should have been placed on the subject property. The TVM of the subject property on January 1, 2020, based on the economic conditions as of January 1, 2019, was $1,390,481.
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 Carter 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 July 30, 2021.
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 July 30, 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 filed a complaint for review of assessment. The State Tax Commission (STC) has authority to hear and decide Complainant’s appeal. 12 CSR 30-3.010(1)(B)1(a).
 All statutory citations are to RSMo 2000, as amended.
 All citations to Mr. Burke’s written direct testimony in Exhibit A refer to the numbered question and answer.
 All citations to Respondent’s WDT refer to the page number and numbered line in the left margin.
 Even if Exhibit K were considered and taken at face value, it would not be substantial and persuasive evidence of overvaluation. There is no documentation supporting the deductions in the handwritten notations. Moreover, deducting the amounts reflected in the handwritten notations results in a cost estimate of $1,258,000. This cost estimate would not support Complainant’s proposed value of $850,000.