State Tax Commission of Missouri
|MAPLE TREE CENTER, LLC,||)|
|v.||)||Appeal Numbers 09-10971 & 11-13623|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
ORDER AFFIRMING HEARING OFFICER DECISION
On June 29, 2015, Hearing Officer Maureen Monaghan issued her order setting aside the value placed upon the subject property by the St. Louis County Board of Equalization. Complainant subsequently filed an Application for Review consisting of five (5) pages.
Standard Upon Review
A party subject to a Decision and Order of a Hearing Officer with the State Tax Commission may file an application requesting the case be reviewed by the Commission. The Commission may then summarily allow or deny their request. The Commission may affirm, modify, reverse or set aside the decision. The Commission may take any additional evidence and conduct further hearings.
Complainant asserts that “the Hearing Officer erred in finding that the true value in money of the subject property was (a) $4,200,000, rather than $3,290,000 for 2009-10, and (b) $3,477,400 rather than $2,680,000 for 2011-12, because Complainant’s value was supported by competent and substantial evidence upon the whole record…” Complainant additionally notes two criticisms of the Hearing Officer of the appraisals, such being “that (a) in the income approach, the vacancy rate was higher than market, and (b) in the sales comparison approach, the values per square foot were lower than the range. (Decision and Order at 8.)”
It is noted by the Commission that the statement in subsection “(b)” is not an accurate representation of what was intended in the Decision and Order. The Decision and Order actually states, “[a]fter adjustments, the appraiser had a range of per foot sales prices. The appraiser used a lower per square foot price range.” Such does not actually state that the per square foot price range utilized by the appraiser was “lower than the range” of the appraiser but that instead the appraiser chose a per square foot amount that was in the lower part of the range.
Complainant’s counsel asserts that adjustments by Complainant’s appraiser were justified because of “the overriding fact that one date of value is January 1, 2009, when the economy had begun it descent into the most significant recession since the 1930’s, the effects of which were still significant as of January 1, 2011”. Complainant’s Application for Review, Pages 2 & 3. As set forth below, such assertion is without basis in fact within the record before the State Tax Commission.
DISCUSSION AND RULING
Complainant’s Burden of Proof
To meet Complainant’s burden of proof, if any evidence on any essential element of Complainant’s case leaves the Commission “in the nebulous twilight of speculation, conjecture and surmise” Complainant’s burden is not met. See, Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980). As set forth below, the Decision of the Hearing Officer is AFFIRMED.
Weight to be Given Evidence
Neither the Hearing Officer nor the Commission is 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 and the Commission 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). In the present appeal, the Hearing Officer simply did not believe the vacancy rate assigned by Complainant’s appraiser to be substantial and persuasive.
Opinion Testimony by Experts
An expert’s opinion must be founded upon substantial information, not mere conjecture or speculation, and there must be a rational basis for the opinion. Missouri Pipeline Co. v. Wilmes, 898 S.W. 2d 682, 687 (Mo. App. E.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 and Commission, 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); Scanlon v. Kansas City, 28 S.W. 2d 84, 95 (Mo. 1930).
Upon review of all pertinent information, including a review of the appraisal reports for the years 2009 and 2011, regarding the subject property, the Commission determines the Decision of the Hearing Officer should be affirmed. The statement by Complainant’s counsel that “the overriding fact that one date of value is January 1, 2009, when the economy had begun it descent into the most significant recession since the 1930’s, the effects of which were still significant as of January 1, 2011”, is not supported by any evidence found in the record. The evidence shows that Mr. Hottle, in his appraisal report, stated:
There are no adverse external conditions which affect the subject, and there are no adverse conditions which would detract from its continued marketability. However there has been an economic downturn which has occurred since the fall of 2008. This has imposed a negative impact on all types of property values in the entire metropolitan area... Hottle Appraisal for 09-10971, Page 9.
Additionally, although some variance from the submarket rates of 9.2% and 10.1% for 2009 and 2011 respectively, may be justified, the Commission, in its best judgment, finds no credible justification for the use of the 25% and 30% percent vacancy and collection loss rate regarding the subject property utilized by Mr. Hottle.
In both the 2009 and 2011 appraisals by Mr. Hottle, he noted the access of the subject to be “[g]ood, adequate, cross easements” yet he found “ingress and egress is very difficult because of the traffic flow along the roadways”. Hottle Appraisals. He noted the functional utility of the subject to be average with the roof marked as average. Regarding the subject property he stated “[o]verall the subject is considered to be in average condition”. Id. Although, he noted, “evident roof leakage in many of the bays”. Id.
In the appraiser’s Sales Comparison Approach he made adjustments to the comparables, yet used a per square foot value lower than the average of the comparables he had already adjusted. No adequate, substantial or persuasive evidence was submitted to justify such.
In the appraiser’s Income Approach he utilizes a vacancy rate higher than the sub-market partially because a major tenant was going to be leaving sometime in the year 2009. However, conspicuously missing is any adequate, substantial and persuasive evidence that this fact was known to Complainant, let alone the market on January 1, 2009.
Additionally problematic is the fact that in the 2011 appraisal report it is noted that many tenants owe back rent and that such tenants vacated prior to the expiration of their leases. Hottle Appraisal, Page 12. These would constitute accounts receivables. Thus, to count such tenant spaces as truly vacant would not be appropriate, as lease income was still being owed for such spaces. Whether the tenant is actually utilizing the space is irrelevant in the event the tenant is still responsible for making a lease payment. In the event lease payment receivables for empty spaces are in fact not still being generated, the appraisal report does not make such clear, in light of the statement at the beginning of this paragraph.
One could find that Complainant’s burden was not met. See, Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980). However, the Commission finds that the Hearing Officer found sufficient, substantial and persuasive evidence to determine a true market value of the properties as of January 1, 2009 and January 1, 2011 when the Hearing Office could have found in favor of Respondent and determined the burden of proof was not met in light of the problems with the appraisal reports. The Commission nevertheless agrees with the Decision of the Hearing Officer.
The Decision and Order of the Hearing Officer, including the findings of fact and conclusions of law therein, is AFFIRMED. True value in money for 2009-2010 is determined to be $4,200,000, commercial assessed value of $1,344,000. True value in money for 2011-2012 is determined to be $3,477,400, commercial assessed value of $1,112,770
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 St. Louis 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 this 17th day of November, 2015
STATE TAX COMMISSION
Bruce E. Davis, Chairman
Randy Holman, Commissioner
Victor Callahan, Commissioner
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 17th day of November, 2015, to:
James Gamble, Attorney for Complainant; email@example.com
Edward Corrigan, Attorney for Respondent; firstname.lastname@example.org
Jake Zimmerman, Assessor, email@example.com
Mark Devore, Collector, firstname.lastname@example.org
State Tax Commission of Missouri
|MAPLE TREE CENTER LLC ,||)|
|v.||)||Appeal Numbers 09-10971& 11-13623|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
St. Louis County Board of Equalization’s assessment SET ASIDE in 2009 and AFFIRMED for 2011. Complainant presented substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization in 2009.
True value in money for the subject property for tax years 2009-2010 is set at $4,200,000, commercial assessed value of $1,344,000 and for tax years 2011-2012 is set at $3,477,400, commercial assessed value of $1,112,770.
Complainant appeared by counsel, James Gamble. Respondent appeared by Attorney Priscilla Gunn.
Case heard and decided by Hearing Officer Maureen Monaghan.
Complainant appeals, on the grounds of overvaluation and discrimination, the decision of the County of Board of Equalization. The Complainant abandoned their discrimination claim. Having considered all of the competent evidence upon the whole record, the Hearing Officer finds that the Complainant presented substantial and persuasive evidence as to overvaluation. The following Decision and Order is entered.
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the County Board of Equalization.
- Schedule and Procedure. The State Tax Commission issued an Order setting forth the schedule and procedures for this appeal on August 15, 2014. The Schedule and Procedure required that each party file and exchange exhibits and written direct testimony to establish their case in chief on or before March 5, 2015. Complainant and Respondent filed and exchanged the exhibits set out below under Evidence. Parties had until April 7, 2015, to file objections and rebuttal exhibits. Neither party objected to the exhibits filed. Parties were ordered to file, on or before May 5, 2015, a request for hearing. Complainant requested cross examination and hearing, however, the Respondent’s only exhibit was excluded from evidence. The appeals were taken under advisement with the exhibits submitted.
- Subject Property. The subject properties are identified as parcel number 22T510430. It is located at 15854 Clayton Rd, St Louis, Missouri. The property consists of 319,730 square feet of land with a single story multi-tenant retail space of 69,748 sf rentable area. The property was constructed in 1974.
|Appeal||Assessor’s Value||AV||BOE’s Value||AV|
- Evidence. Complainant filed with the Commission the following documents: Exhibit A – Appraisal Report and Exhibit B – Written Direct Testimony of John Hottle. Respondent filed Exhibit 1 – an appraisal report by R.A. Buckles with an effective date of April 1, 2012. The Exhibit was excluded from evidence.(see Order dated May 4, 2015)
- The true value of the properties as of January 1, 2009, was $4,200,000. The Board of Equalization’s finding of value for 2011 is affirmed.
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.
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 is assessed at set percentages of true value in money. Section 137.115.5, 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) 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 Respondent did not file any rebuttal exhibits. Therefore, the Hearing Officer simply considered the exhibits filed and then proceeded to ascertain if said exhibits met the standard of substantial and persuasive evidence to establish the market value of the property.
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), citing, Equitable Life Assurance Society v. STC, 852 S.W.2d 376, 380 (Mo. App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973). 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 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
Mr. Hottle conducted an appraisal of the property under appeal consistent with this standard.
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) The Hearing Officer is persuaded that the valuation presented in the appraisal is based upon appropriate and sound appraisal practice and therefore constitutes substantial and persuasive evidence to rebut the presumption of the Board’s valuation in 2009 and provide evidence to establish a value.
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); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm’n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. Div. 2 1974).
The appraiser appraised the property developing the income and the sales comparison approach. The methodologies utilized were appropriate for the appraisal problem presented in the present appeal.
Complainant Provides Evidence of Value
In order to prevail, Complainant 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 of the reassessment year. 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).
Complainant’s appraiser developed the income and sales comparison approach. The appraiser reviewed the market for rents, vacancy, cap rates and comparable sales. In the income approach the appraiser relied on market rents, actual expenses and actual vacancy rates. To develop a capitalization rate, the appraiser reviewed sales. The subject’s market experienced a vacancy rate of 9.2% in 2009 and 10% in 2011. A major tenant was vacating the building therefore the appraiser used a vacancy rate of 25% in 2009 and 30% in 2011. Although the time to secure a major tenant would be longer than securing a tenant for smaller space, the appraiser provided no additional reason for not using the market vacancy rate. Adjustment of the vacancy to market, provides an indication of value of approximately $4,200,000 in 2009 and over $3,477,400 in 2011. As to the sales comparison approach, the appraiser found comparables, made adjustments to the sales for market, location, size, quality of tenant and condition. After adjustments, the appraiser had a range of per foot sales prices. The appraiser used a lower per square foot price range. If one uses the average square foot price, the resulting value supports a finding of value of $4,200,000 in 2009 and supports the Board’s finding of value in 2011.
The assessed valuation for the subject property as determined by the Board of Equalization for St. Louis County for the subject tax day is SET ASIDE in 2009 and AFFIRMED in 2011. Assessed value for the subject property for tax years 2009-2010 is set at $1,344,000 and for tax years 2011-2012 is set at $1,112,770.
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.
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 June 29, 2015.
STATE TAX COMMISSION OF MISSOURI
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 29th day of June, 2015, to: Complainants(s) counsel and/or Complainant, the county Assessor and/or Counsel for Respondent and county Collector.