STATE TAX COMMISSION OF MISSOURI
|Complainant,||)||Appeal No. 19-11512|
|)||Parcel No. 17W230142|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS COUNTY, MISSOURI||)|
DECISION AND ORDER
Nathan Fleck (Complainant) appeals the St. Louis County Board of Equalization’s (BOE) decision finding the true value in money (TVM) of the subject commercial property on January 1, 2019, was $185,000. Complainant claims the subject property is overvalued and should be classified as residential property. Complainant asserts the TVM of the subject property on January 1, 2019, was $122,300. Complainant did not produce substantial and persuasive evidence of overvaluation or misclassification. The BOE’s decision is AFFIRMED.
Complainant appeared pro se. Respondent appeared by counsel Steven Robson.
FINDINGS OF FACT
- Authority. The BOE issued its decision on October 4, 2019. Complainant filed a complaint for review of assessment within 30 days of the BOE decision.
- The Subject Property. Complainant owns the subject property. The subject property is real property located in the Spirit Valley Business Park at 600 Spirit East Drive, Unit B3, in Chesterfield, Missouri. The subject property is a storage unit subject to condominium declarations dated June 1, 2016, and recorded on August 4, 2016. Complainant purchased the subject property in February 2017 for $185,000. (Exhibit 2).
- Assessment. Respondent assessed the subject property as commercial property and determined the appraised value was $154,500 as of January 1, 2019.
- Board of Equalization. The BOE determined the appraised value of the subject property was $185,000, commercial, as of January 1, 2019.
- Complainant’s Evidence. Complainant submitted Exhibit A to support his overvaluation claim. Respondent objected to Exhibit A because it was not submitted by the exhibit exchange date set forth in the scheduling order. The objection was overruled and Exhibit A was admitted into evidence, to be given the weight deemed appropriate in light of all of the evidence.
Exhibit A consists of a spreadsheet showing the sale price, sale date, and recent assessments of 41 other units in the complex. Complainant testified the data were drawn from publicly available records compiled by St. Louis County. Exhibit A includes a graph showing the sale price per square foot and the “2019 Tax per Sq. Ft.” of other units in the complex. The sale price of the units listed in Exhibit A range from $90.00 per square foot to $228.00 per square foot. Complainant testified Exhibit A indicates decreasing market values for nearby storage units.
According to Exhibit A, the subject property is 1,400 square feet. Complainant testified that the subject property’s value as of January 1, 2019, was $122,300, which equates to approximately $87.00 per square foot. In addition to the subject property, Exhibit A lists 19 other 1,400 square foot units which sold between October 2016 and April 2020. The sale prices ranged from $242,500 to $130,000. The median sale price was $154,000, which equates to $110 per square foot. Exhibit A does not indicate whether the other units are identical or have different configurations, amenities, and features compared to the subject property.
Complainant testified the subject property should be classified as residential property. Complainant testified that the subject property is a storage unit that generates no income and is used for storing a recreational vehicle, tools, and other personal property. Complainant conceded that as of January 1, 2019, the subject property was not used or intended be used for human habitation and that the condominium declarations prohibit residential use.
- Respondent’s Evidence. Respondent submitted Exhibits 1 – 10. Each exhibit was admitted into evidence. The exhibits are as follows:
|Exhibit 1||BOE Findings and Notice of Decision valuing the subject property at
$185,000 as of January 1, 2019.
|Exhibit 2||Certificate of Value showing Complainant purchased the subject property in 2017 for $185,000.|
|Exhibit 3||Permit issued in 2017 showing plumbing work was completed at the subject property.|
|Exhibit 4||Permit issued in 2017 showing electrical work was completed at the subject property.|
|Exhibit 5||Permit issued in 2017 showing interior finish work was completed at the subject property.|
|Exhibit 6||Permit issued in 2017 showing mechanical interior finish work was completed at the subject property.|
|Exhibit 7||Certified copy of City of Chesterfield ordinance showing the subject property is located in an area zoned as a “Planned Industrial District.”|
|Exhibit 8||Certified copy of City of Chesterfield ordinance showing the subject property is included in the Spirit Valley Business Park.|
|Exhibit 9||Spirit Valley Business Park indentures and declarations providing, at Article 19.1, that “Lots shall only be used for those business or commercial uses” permitted by the City of Chesterfield Zoning Code.|
|Exhibit 10||Condominium declarations providing, at Article 4, section 4.01(a) and (b), that the subject property can only be used for “parking, garaging, and storing vehicles or “storing other items” and that “The Units may not be used as residences or to operate a business.”|
|Exhibit 11||State Tax Commission decision and order in appeals 18-10948 through 18-10968 concluding other condominium storage units in the Spirit Valley Business Park were properly classified as commercial property.|
Exhibits 7 and 8 show the subject property is located in a planned industrial district. Exhibits 9 and 10 show that the subject property can only be used for “business or commercial uses” and “may not be used as residences or to operate a business.”
- Value and Classification. The TVM of the subject property on January 1, 2019, was $185,000. The subject property was properly classified as commercial property as of January 1, 2019.
CONCLUSIONS OF LAW
The STC has authority to hear and decide Complainant’s appeal. Mo. Const. art. X, sec. 14; section 138.430.1, RSMo 2000.
The hearing officer is the finder of fact and determines both the credibility and weight of the evidence. Kelly v. Missouri Dep’t of Soc. Servs., Family Support Div., 456 S.W.3d 107, 111 (Mo. App. 2015); see also section 536.090 (requiring all decisions and orders in contested cases to include “findings of fact”). “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).
Following the evidentiary hearing, Respondent submitted Exhibit 11. Exhibit 11 is a decision and order involving other storage units in the subject property’s condominium. “Agencies shall take official notice of all matters of which the courts take judicial notice.” Section 536.070(6). Courts may take judicial notice of records in a related case. Skaggs Chiropractic, L.L.C. v. Ford, 564 S.W.3d 633, 635 n.2 (Mo. App. S.D. 2018). The decision and order in Exhibit 11 is officially noticed. Although the decision and order in Exhibit 11 is officially noticed, Exhibit 11 has no precedential value because an administrative agency “is not bound by its previous decisions, so long as its current decision is not otherwise unreasonable or unlawful. Laclede Gas Co.’s Verified Application to Re-Establish & Extend the Fin. Auth. Previously Approved By the Comm’n v. Mo. Pub. Serv. Comm’n, 526 S.W.3d 245, 252 (Mo. App. W.D. 2017). The underlying appeal is resolved according the evidence adduced at the evidentiary hearing.
- 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 overvalued or misclassified. Westwood P’ship v. Gogarty, 103 S.W.3d 152, 161 (Mo. App. E.D. 2003). The assessed value determined by the BOE is presumptively correct and the taxpayer must produce “substantial and persuasive” evidence to rebut the presumption. Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W. 3d 341, 346 (Mo. banc 2005). The taxpayer has the burden to establish 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 a “party’s duty to convince the fact-finder to view the facts in a way that favors that party”).
- Complainant Did Not Prove Overvaluation
Commercial real property is assessed at 32% of its “true value in money” as of January first of each odd-numbered year. Sections 137.115.1, 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, 156 S.W.3d at 346 (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).
“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 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 (internal quotation omitted). Adjustments are necessary to reconcile differences and enable a market based comparison of properties with varying characteristics. For instance, if a feature of the comparable property is superior to the subject property, the sale price of the comparable property must be adjusted downward. Conversely, if a feature of the comparable property is inferior to the subject property, the sale price of the comparable property must be adjusted upward.
Exhibit A does not include market-based adjustments accounting for differences between the subject property and the other units listed in Exhibit A. Exhibit A includes no information regarding differences between the subject property and the other units and omits the necessary market-based adjustments. Therefore, Exhibit A does not constitute substantial and persuasive evidence rebutting the BOE’s presumptively correct valuation and does not establish the “value that should have been placed on the property.” Snider, 156 S.W.3d at 346; see also In re Marriage of Patrick, 201 S.W.3d 591, 598 (Mo. App. S.D. 2006) (holding the circuit court properly disregarded a “comparative market analysis” that failed to make monetary adjustments to account for property differences because the analysis “did not meet the requirements of the comparable sale approach method for valuation of real estate”). Complainant’s overvaluation claim is denied.
- Complainant Did Not Prove Misclassification
Section 137.016.1(3) defines “Utility, industrial, commercial, railroad and other real property” as “all real property used directly or indirectly for any commercial, mining, industrial, manufacturing, trade, professional, business, or similar purpose….” In pertinent part, Section 137.016.1(1) defines “residential property” as “all real property improved by a structure which is used or intended to be used for residential living by human occupants….” “All other real property not included in the property listed in subclasses (1) and (2) of Section 4(b) of Article X of the Missouri Constitution, as such property is defined in this section, shall be deemed to be included in the term “utility, industrial, commercial, railroad and other real property.” Section 137.016.1(3). “Determining whether a property’s use falls within one of the subclassification definitions set forth in section 137.016.1 is an issue of fact for the STC.” Rinehart v. Bateman, 363 S.W.3d 357, 366 (Mo. App. W.D. 2012).
Complainant’s claim that the subject property should be classified as residential property fails for two independently sufficient reasons. First, Exhibits 7-10 demonstrate the subject property is not residential. Exhibit 7 shows the subject property is located in a planned industrial district. Exhibits 9 shows the subject property can only be used for “business or commercial uses.” The condominium declarations in Exhibit 10 show the subject property and other units in the condominium “may not be used as residences or to operate a business.” Exhibit 10 is critical because condominium declarations are recorded “and executed in the same manner as a deed.” Section 448.2-101.1. The condominium declarations in Exhibit 10 contractually preclude Complainant from using the subject property as a residence. Cf. Hazelcrest III Condo. Ass’n v. Bent, 495 S.W.3d 200, 205-07 (Mo. App. E.D. 2016) (affirming a judgment for breach of contract based on violations of condominium declarations). Exhibits 7-10 negate Complainant’s argument the subject property should have been classified as residential property.
Second, Complainant testified the subject property was not used or intended to be used as a residence as of January 1, 2019. This testimony constitutes a “clear, unequivocal admission of fact” that the subject property was not residential. See Goudeaux v. Bd. of Police Comm’rs of Kansas City, 409 S.W.3d 508, 519 (Mo. App. W.D. 2013) (holding a “clear, unequivocal admission of fact” during trial is binding and dispenses with the need for additional proof). Because determining whether a property’s use qualifies as residential or commercial is a question of fact, Complainant’s admission that the subject property is not used or intended to be used for human habitation as of January 1, 2019 is a “clear, unequivocal admission of fact” that the property’s use does not qualify as “residential property” pursuant to section 137.016.1. See Rinehart, 363 S.W.3d at 366 (noting that whether a property’s use falls within one of the section 137.016.1 subclassification definitions is “an issue of fact for the STC”).
In a post-hearing brief, Respondent notes section 137.016.5 provides that when classification cannot be determined under the section 137.016.1 definitions, the property “shall be classified according to its immediate most suitable economic use” according to eight statutorily enumerated factors. Respondent argues the statutory factors demonstrate the subject property is properly classified as commercial property.
It is unnecessary to address the section 137.016.5 factors in this case. The subject real property must be classified as residential, agricultural, or commercial. Mo. Const. art. X, sec. 4(b); section 137.016.1. Complainant’s sole claim – that the property was residential – was refuted conclusively by Respondent’s exhibits and Complainant’s admission. Because Complainant failed to prove the property was residential, and neither party asserts the property is agricultural, there is no basis in the record for concluding the subject property is not properly classified as commercial property. Under these circumstances, there is no classification ambiguity requiring an analysis of the section 137.016.5 factors. Complainant did not prove misclassification.
CONCLUSION AND ORDER
The BOE’s decision is affirmed. The subject property was properly classified as commercial property. The TVM of the subject property on January 1, 2019, was $185,000 commercial (assessed value $59,200).
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.
The Collector of St. Louis 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 October 30, 2020.
STATE TAX COMMISSION OF MISSOURI
Eric S. Peterson
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been electronically mailed and/or sent by U.S. Mail on October 30, 2020, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.
 All statutory citations are to RSMo. 2000, as amended, unless indicated otherwise.
 During the hearing, Respondent orally moved to dismiss Complainant’s misclassification claim on ground Complainant did not produce evidence of misclassification. Because the BOE’s decision is affirmed, Respondent’s motion is overruled as moot.
 “Sections 448.1-101 to 448.4-120 apply to all condominiums created within this state after September 28, 1983.” Section 448.1-102.1. “The provisions of sections 448.005 to 448.210 do not apply to condominiums created after September 28, 1983.” Section 448.1-102.2.