STATE TAX COMMISSION OF MISSOURI
| MCP-FARMINGTON, LLC, | ) | |
| ) | ||
| Complainant, | ) | |
| ) | ||
| v. | ) | Appeal No. 18-84000 |
| ) | ||
| DAN WARD, ASSESSOR | ) | |
| ST. FRANCOIS COUNTY, MISSOURI, | ) | |
| ) | ||
| Respondent. | ) |
DECISION AND ORDER
HOLDING
The assessment made by the Board of Equalization of St. Francois County (BOE) is SET ASIDE. MCP-Farmington, LLC, (Complainant) presented substantial and persuasive evidence establishing that the subject property is exempt from ad valorem taxation under Section 137.100 RSMo.
Complainant appeared by counsel Jeffrey Hunt.
Dan Ward, the Assessor of St. Francois County, Missouri appeared pro se.
Case heard and decided by Senior Hearing Officer John Treu (Hearing Officer).
ISSUE
Complainant appealed Respondent’s ad valorem taxation of the subject property on the grounds that the subject property qualified for exemption in 2018 because the subject property is a solar energy system not for resale or, in the alternative, that Respondent overvalued the subject personal property.
The Hearing Officer, having considered all of the competent evidence upon the whole record, including the “Stipulation of the Parties on the Record and Judgment,” enters the following Decision and Order.
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the STC.
- Evidentiary Hearing. The issue of exemption was presented at an evidentiary hearing on June 5, 2019, at the St. Francois County Courthouse Annex, Farmington, Missouri.
- Identification of Subject Property. The subject property is located in St. Francois County, Missouri. The property is identified by account number 316832. The property consists of solar panels, racking sections, inverters, combiner boxes, transformers and a data acquisition system.
- Assessment. Respondent’s appraised value of the personal property of Complainant was $657,810, as of January 1, 2018.
- Board of Equalization. The Board of Equalization of St. Francois County (BOE) determined the value of the personal property of Complainant was $657,810.
- Complainant’s Evidence. Complainant filed the following Exhibits:
| Exhibit | Description | Admitted |
| A | Corporate Structure | Yes |
| B | Sections 137.100 | Yes |
| C | Engineering, Procurement and Construction Agreement | Yes |
| D | Master Renewable Power Purchase Agreement | Yes |
| E | Renewable Power Purchase Agreement between Missouri Joint Municipal Electric Utility Commission, MCP-Farmington, LLC, and GCMC Solar Power VI, LLC | Yes |
| F | Interconnection and Operating Agreement | Yes |
| G | Addendum to Interconnection and Operating Agreement | Yes |
| H | Membership Interest Purchase Agreement | Yes |
| I | Fourth Addendum to Membership Interest Purchase Agreement | Yes |
| J | Assignment and Assumption of Membership Interests | Yes |
| K | Application to Tax Exemption | Yes |
| L | Business Assessment List | Yes |
| M | May 16, 2018 Letter from Respondent to Complainant | Yes |
| N | June 27, 2018 Letter from Complainant to Respondent | Yes |
| O | BOE Appeal | Yes |
| P | BOE Decision | Yes |
| Q | Complaint for Review of Assessment | Yes |
| R | Excerpt from Assessors Manual | Yes |
| S | February 16, 2018 Letter from Respondent to Complainant (Letter Written to Complainant before Exhibit M) | Yes |
| T | Protest Letter, Payment Under Protest and Tax Statement | Yes |
| U | MCP-Rolla, LLC v. Stoltz Order Affirming Hearing Officer Decision Upon Application for Review (Granting Exemption) | Yes |
| V | WDT of Mark Gardner | Yes |
Mark Gardner (Gardner) testified on behalf of the Complainant. He is the Chairman of Gardner Enterprises and Managing Member of Gardner Capital Solar Development. The subject property is located at 4609 Korber Road, Farmington, Missouri. The subject property is a solar energy producing system constructed for Complainant. The system was producing energy at all times pertinent to this action. The energy is sold to Missouri Joint Municipal Electric Utility Commission (MJMEUC) of which the City of Farmington is a member. There is a 25 year agreement for supplying power; however, the City of Farmington has the option to purchase the system in seven (7) years.
7. Respondent’s Evidence. Respondent’s filed the following:
| Exhibit | Description | Admitted |
| 1 | Written Direct Testimony (WDT) Dan Ward | Yes |
| 2 | WDT Mindy Wooldridge | Yes |
| 3 | WDT Susie Skaggs | Yes |
Respondent testified that he was of the opinion Complainant should be treated like all other utilities selling power. Respondent testified because Complainant sells the energy produced by its solar energy system to others, the solar energy system is for sale. He also testified that he believes Complainant’s solar energy system is for sale because of the option for a third party to force Complainant to allow the purchase of the solar energy system.
8. Taxation of theProperty. Complainant’s evidence was substantial and persuasive to establish that the subject property qualifies as exempt from ad valorem taxation under Section 137.100 RSMo. as a solar energy system not for resale.
CONCLUSIONS OF LAW AND DECISION
Jurisdiction
The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary, or capricious, including the application of any abatement. 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.
Presumption in Appeal
There is a presumption of validity, good faith and correctness of assessment by the BOE. Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STC, 308 S.W.2d 748, 759 (Mo. 1958). This presumption is a rebuttable rather than a conclusive presumption. The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the BOE’s valuation is erroneous and what the fair market value should have been placed on the property. Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
Exemptions
Taxation of property is the rule and exemption from taxation is the exception. United Cerebral Palsy Ass’n of Greater Kanas City v. Ross, 789 S.W.2d 798, 799 (Mo. banc 1990). Tax exemptions are not favored in the law, and statutes granting exemptions are to be strictly, yet reasonably, construed against the one claiming the exemption. Missouri Church of Scientology v. State Tax Commission, 560 S.W.2d 837, 844 (Mo. banc 1987), State ex rel. Union Electric Co. v. Goldberg, 578 S.W.2d 921, 923 (Mo. banc 1979). A property owner who claims the exemption bears a substantial burden to prove that his property falls within the exempted class. United Cerebral Palsy Ass’n of Greater Kanas City, 789 S.W.2d at 799.
Complainant states that their property is exempt under statutory authority in Section 137.100 (10) which reads:
137.100. Certain property exempt from taxes. – The following subjects are exempt from taxation from state, county or local purposes: … (10) Solar energy systems not held for resale.
Discussion
There is no definition in Missouri Revised States for “solar energy systems not held for resale.” Other states have defined “solar energy system” as:
| State | Definition of Solar Energy System |
| California | Any solar collector or other solar energy device whose primary purpose is to provide for the collection, storage and distribution of solar energy for space heating, space cooling, electric generation or water heating. Cal.Civ.Code § 801.5 |
| Massachusetts | A device or structure design feature, a substantial purpose of which is to provide for the collection, storage and distribution of solar energy for space heating, space cooling, electric generation or water heating. M.G.L.A. 40A § 1A |
| Nebraska | A complete design or assembly consisting of a solar energy collector, an energy storage facility when used, and components for the distribution of transformed energy to the extent that they cannot be used jointly with a conventional energy system. Neb.Rev.St. § 66-905 |
| Nevada | A facility or energy system that uses photovoltaic cells and solar energy to generate electricity. N.R.S. 701B.150 |
| New Hampshire | A system which utilizes solar energy to heat or cool the interior of a building or to heat water for use in a building and which includes one or more collectors and a storage container. “Solar energy system” also means a system which provides electricity for a building by the use of photovoltaic panels. N.H. Rev. Stat. § 72:61 |
| Oklahoma | A system primarily designed to provide heating or cooling, electrical or mechanical power, or any combination thereof by means of collecting, transferring or storing solar generated energy for such purposes. Such term shall include passive structural and nonstructural features which are designed to provide a calculated net energy gain to a structure from renewable energy sources, commonly referred to as “passive solar energy systems”, but shall not include those parts of a structural system which would be required regardless of the energy source being utilized. Solar energy may be derived from either direct processes or indirect processes using wind energy systems.
68 Okl.St.Ann. § 2357.1 |
| Utah | A system of apparatus and equipment capable of collecting and converting incident solar radiation into heat, or mechanical or electrical energy, and transferring these forms of energy by a separate apparatus to storage or to point of use, including, but not limited to, water heating, space heating or cooling, electric energy generation or mechanical energy generation. U.C.A. 1953 § 57-13-1 |
| Washington | Any device or combination of devices or elements which rely upon direct sunlight as an energy source, including but not limited to any substance or device which collects sunlight for use in (1) The heating or cooling of a structure or building; (2) The heating or pumping of water; (3) Industrial, commercial, or agricultural processes; or (4) The generation of electricity. A solar energy system may be used for purposes in addition to the collection of solar energy. These uses include, but are not limited to, serving as a structural member or part of a roof of a building or structure and serving as a window or wall. RCWA 35A.63.015 |
Respondent contends that the subject property does not qualify as “not held for resale” because the energy produced by the solar energy system is sold to others and because a third party has an option to force Complainant to allow its purchase of the solar energy system at a later date.
There is not contention that the actual solar energy system (solar panels, racking sections, inverters, combiner boxes, transformers and a data acquisition system) of Complainant has ever been listed for sale or that it is currently listed for sale. Instead, Respondent contends that the energy produced is sold and that the solar energy system has the possibility of being sold at some point in time. No evidence was offered that Complainant is currently holding the solar energy system so that it may sell the physical, tangible assets. No evidence was offered that Complainant desires to sell the solar energy system. The sale of the energy produced by the solar energy system does not equate with the sale of the physical, tangible solar energy system. Consequently, the Hearing Officer is persuaded the subject property reasonably falls within the phrase, “solar energy systems not held for resale” and is exempt from taxation.
ORDER
The subject property is a solar energy system not held for resale and is therefore exempt from taxation under Section 137.100 RSMo.
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, or emailed to Legal@stc.mo.gov, and a copy of said 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, RSMo.
Disputed Taxes
The Collector of St. Francois 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 June, 20th, 2019.
STATE TAX COMMISSION OF MISSOURI
John Treu
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 20th day of June, 2019, to:
Complainants, jhunt@rosenblumgoldenhersh.com
County Assessor, dward@sfcgov.org
County Collector, collector@sfcgov.org
County Clerk, coclerk@sfcgov.org
Elaina McKee
Legal Coordinator