Mercantile Properties, et al. v. Bushmeyer (SLCY)

October 23rd, 2012



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State Tax Commission of Missouri



U.S. Bank, N.A.,)




v.                                                                            ) Appeal Number 11-20026 through 11-20028










Decision of the St. Louis City Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE.True value in money for the subject property for tax year 2011 set at $36,730,000; assessed commercial value of $11,753,600.Complainant appeared by Counsel Jim Gamble, St. Louis, Missouri.Respondent appeared by Associate City Counselor Rich Kismer.Evidentiary hearing was conducted by Hearing Officer Maureen Monaghan.


Complainant appeals, on the ground of overvaluation, the decision of the St. Louis City Board of Equalization, which sustained the valuation of the subject property.The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2011.The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.


1.Jurisdiction.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the St. Louis City Board of Equalization.A hearing was conducted on May 9, 2012, at the St. Louis City Administration Building, St. Louis, Missouri.The Complainant filed a post-hearing brief on August 14, 2012; Respondent filed their response on September 14, 2012; Complainant filed their reply on October 2, 2012.



Assessor’s Value

Board’s Ruling

Complainant’s Proposed Value


$56,100,000 – true value

$17,952,000 – assessed value


$29,080,600 – true value

$9,305,800 – assessed value


$235,000 – true value

$75,200 – assessed value


$121,900 – true value

$39,000 – assessed value


$1,538,400 – true value

$492,300 – assessed value


$797,300 – true value

$255,100 – assessed value


$57,873,400 – true value

$18,519,500 – assessed value


$29,999,800 – true value

$9,599,900 – assessed value

3.Subject Property.The subject property is located at 700 Washington Ave, 405 N. 7th Street, and 415 N. 7th Street, St. Louis, Missouri, commonly known as One U.S. Bank Plaza.The subject property is improved with a Class A 35 story high-rise glass and steel office tower and attached five level concrete 374 space parking garage.The office tower contains 641,497 net rentable square feet; the parking garage is 144,122 square feet; the total square footage equals 877,722.The improvements were constructed in 1974-1975 with renovations from 2009-2011.There is 21,980 square feet of excess land that is landscaped.

4.Complainant’s Evidence.Complainant submitted the following exhibits which were received into evidence:




Self-Contained Appraisal – Keith McFarland – $31,000,000


Written Direct Testimony – Keith McFarland

Complainant also submitted the following exhibits on rebuttal:



Rebuttal A

Appraisal Real Estate 11th Edition

5.Respondent’s Evidence.Respondent submitted the following exhibits which were received into evidence:




Summary Appraisal – Adam Woehler – $53,900,000


Written Direct Testimony – Adam Woehler

6.Highest and Best Use:The highest and best use of the property as improved is its continued use as an office building.

7.Cost ApproachNeither party’s appraiser developedthe cost approach to value.

8.Sales Approach Both appraisers developed the sales approach to value and used the same four sales.Upon completion of the adjustments to the comparable properties the range between the appraisers was $57.44 to $76.68 per square foot.Both appraisers reviewed the sale of property at 800 Market.Both appraisers made the fewest adjustments to that sale.The sale price of the property was $63.80 per square foot.After adjustments, the Complainant’s appraiser concluded a value of $57.42 per square foot for the comparable property and the Respondent’s appraiser concluded on a value of $65.08 per square foot.Using the actual sale price of the comparable property, the subject property’s indicated value would be $63.80 x 641,497 = $40,927,508.Using the average of the appraisers’ indicated values, the subject property’s estimated value would be $61.25 x 641,497=$39,291,691.

9.Income and Expenses.Both appraisers developed the income approach to value.The income approach to value is the most appropriate approach to value for the subject property.The appraisers’ estimates of income were similar.Reviewing both appraisers’ calculations, Hearing Officer finds a rate of $16.05 per square foot is an appropriate rental rate for the subject property.The appraisers agree that a 10% vacancy and collection rate should apply.

The subject property earns additional income from expense reimbursements, parking income and other sources.Both appraisers reviewed the actual expense reimbursements of the subject property, however, the Respondent’s appraiser did not review the leases for the terms thereby causing him to overestimate the expense reimbursements. Reimbursed expenses are determined to be 45 cents per square foot for 90% of the building. The appraisers agree that parking revenue is $481,123 and other sources of income is $173,204.

The appraisers differed on their determination of expenses.The history of the property would indicate an expense rate of $7.98 per square foot however this amount does not include a reserve for replacement or insurance.An additional $.45 per square foot would account for these additional and appropriate expenses.

The Complainant’s appraiser determination of a capitalization rate is appropriate and complies with previous decisions of the State Tax Commission.Capitalization rates should reflect the market and include a determination as to the handling of property taxes.The appraiser may review sales and authoritative sources.Typically a review of sales and authoritative sources provides a range for the capitalization rate.The appraiser will need to address property taxes when selecting and applying a capitalization rate.After applying a capitalization rate of 12.24%, the resulting indicated value of the improvements would be $39,040,124.35.

The value indicated does not include the excess land.The subject property has 21,980 square feet of excess land.After a review of sales of comparable properties, the Complainant’s appraiser’s properties are more comparable and are not impacted by foreclosure or other action and therefore a determination of value of $41.00 per square foot is appropriate.The value indication for the land would be $900,000. (Value of subject property = $900,000 + $39,040,124.35 = $39,940,124.35)

The subject property is in need of improvements.The appraiser for the Complainant opined that the condition of the improvements is rated as average to fair due to the owner occupied space being dated.The improvements also suffer from not being ADA compliant and not having sprinkler systems.It is be appropriate to make an adjustment for ADA compliance and safety requirements as the City may not allow occupancy or transfer if those updates are not completed.The appraiser included the determined costs for those required items.($3,211,510)

The Complainant’s appraiser did not provide support for the amount of deductions for updated finishings in the owner occupied areas.

The Hearing Officer’s determination of value under the income approach is:










Exp Reimbursement
























Excess Land











Say $36,730,000

10.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.[1]



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.[2]

Presumption In Appeals

There is a presumption of validity, good faith and correctness of assessment by the City Board of Equalization.[3]This presumption is a rebuttable rather than a conclusive presumption.The presumption places the burden of producing substantial evidence to rebut the presumed fact on the party against whom the presumption operates.When substantial evidence is produced rebutting a presumed fact, the case is decided on the basis of the evidence as if no presumption existed[4].In other words, the fact finder would determine the issue by considering the evidence that rebutted the presumption as well as the evidence that gave rise to the presumption.[5]

As applied to a State Tax Commission case, a presumption exists that the assessed value of real property affixed by the Board of Equalization is correct, and substantial and persuasive controverting evidence is required to rebut the presumption, with the burden of proof resting on the taxpayer.[6]Upon the taxpayer meeting that burden, the Hearing Officer determines the issue by considering the evidence presented by the taxpayer (the evidence rebutting the presumption) as well as the evidence that gave rise to the presumption (the evidence presented by the Assessor after the close of the taxpayer’s direct evidence).

The Complainant presented substantial and persuasive evidence to rebut the presumption of correct assessment.The Hearing Officer then determined the value of the property by considering the evidence presented by the taxpayer and the Assessor.

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.[7]True value in money is defined in terms of value in exchange and not value in use.[8]It is the fair market value of the subject property on the valuation date.[9]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:

1.Buyer and seller are typically motivated.

2.Both parties are well informed and well advised, and both acting in what they consider their own best interests.


3.A reasonable time is allowed for exposure in the open market.


4.Payment is made in cash or its equivalent.


5.Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.


6.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.[10]


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.[11]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.[12]The income approach to value is the most appropriate approach to value for the subject property.The sales approach supports the value as determined using the income approach.

Section 137.345(5)

“5. In every instance where a taxpayer has appealed to the board of equalization or the state tax commission the assessment of the taxpayer’s property, real or personal, and that appeal has been successful, then in the next following and all subsequent years the basis upon which the assessor must base future assessments of the subject property shall be the basis established by the successful appeal and any increases must be established from that basis.”

The Complainant appealed the decision of the St. Louis City Board of Equalization for 2009.The appeals in 2009 (09-20007, 09-20008, and 09-20009) addressed the same three parcels as in the appeals from 2011 (11-20026 to 11-20027).On November 21, 2011, the 2009 appeals were disposed of through a stipulation of the parties on two of the appeals and the third appeal in 2009 was dismissed.Since the appeals were not resolved until after the assessor closed the tax books in 2011 and they were not resolved prior to the Board’s decision on the assessments in 2011, the Assessor could not base the assessments on the 2009 stipulations.The appraisal reports submitted by the parties in 2011 provided sufficient basis for varying from those stipulated values.


The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Louis City for the subject tax day is SET ASIDE.

The assessed value for the subject property for tax years 2011 and 2012 is set at $11,753,600; classified as commercial property.

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, MO65102-0146, 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. [13]

Disputed Taxes

The Collector of St. Louis City, 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 October 23, 2012.



Maureen Monaghan

Hearing Officer

Certificate of Service


I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 23rd day of October, 2012, to:James Gamble, 8909 Ladue Road, St. Louis, MO 63124, Attorney for Complainant; Rich Kismer, Associate City Counselor, 314 City Hall, St. Louis, MO 63103, Attorney for Respondent; Ed Bushmeyer, Assessor, 120 City Hall, St. Louis, MO 63103; Gregory Daly, Collector, 110 City Hall, St. Louis, MO 63103.


Barbara Heller

Legal Coordinator

Contact Information for State Tax Commission:

Missouri State Tax Commission

301 W. High Street, Room 840

P.O. Box 146

Jefferson City, MO 65102-0146


573-751-1341 Fax

[1] Section 137.115.1, RSMo.


[2] Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.


[3] 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)


[4] Deck v. Teasely, 322 S.W.3d 536 (SC 2010)


[5] Berra v. Danter, 299 S.W.3d 690, (Mo. App. ED 2009)


[6] Cohen v. Bushmeyer, 251 SW3d 345 (Mo. App. ED 2008), Rinehart v. Bateman, 363 S.W.3d 357 (Mo. App. WD 2012)


[7] 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).


[8] 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).


[9] Hermel, supra.


[10] 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.


[11] 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)


[12] 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).


[13] Section 138.432, RSMo.