STATE TAX COMMISSION OF MISSOURI
|NGB Investments, LLC||)|
|Complainant.,||)||Appeal No. 19-30155 through 19-30164|
|GAIL MCCANN BEATTY, ASSESSOR,||)|
|JACKSON COUNTY, MISSOURI||)|
DECISION AND ORDER
The decisions of the County Board of Equalization of Jackson County, Missouri (BOE) independently valuing the subject properties in these appeals at either a lower true valuation in money (TVM) than or the same TVM as the Assessor are AFFIRMED. NGB Investments, LLC (Complainant) did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.
TVM for the subject properties for tax years 2019 and 2020 are set at $230,000, residential assessed value of $43,700, respectively.
Complainant appeared by attorney Bradley Constance.
Gail McCann Beatty, Assessor of Jackson County, Missouri (Respondent) appeared by attorney Tamika Logan.
Case heard and decided by Senior Hearing Officer John Treu.
Complainant appeals on the ground of overvaluation the decisions of the BOE which lowered the valuations of some of the subject properties and affirmed Respondent’s valuations of some of the subject properties. The STC takes these appeals to determine the TVM for the subject properties on January 1, 2019. The value as of January 1 of the odd numbered year remains the value as of January 1 of the following even numbered year unless there is new construction and improvement to the property. Section 137.115.1 RSMo.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
- Authority. Authority over these appeal is proper. Complainant timely appealed to the STC from the decision of the BOE.
- Evidentiary Hearing. The Evidentiary Hearing was held on September 25, 2020 via Webex.
- Identification of Subject Property. The subject property is identified by map parcel number and physical address as follows:
|54-410-14-08-00-0-00-000||110 SW. Rose Garden Lane|
|54-410-14-07-00-0-00-000||102 SW. Rose Garden Lane|
|19-30157||54-410-14-05-00-0-00-000||108 SE Rose Garden Lane|
|19-30158||54-410-14-06-00-0-00-000||100 SE Rose Garden Lane|
|19-30159||54-410-12-21-00-0-00-000||125 SE Rose Garden Lane|
|19-30160||54-410-12-22-00-0-00-000||133 SE Rose Garden Lane|
|19-30161||54-410-12-23-00-0-00-000||141 SE Rose Garden Lane|
|19-30162||54-410-13-20-00-0-00-000||134 SW Rock Garden Lane|
|19-30163||54-410-13-21-00-0-00-000||142 SW Rock Garden Lane|
|19-30164||54-410-13-22-00-0-00-000||150 SW Rock Garden Lane|
(Ex. Complaints for Review of Assessment)
- Description of Subject Property. The subject properties are duplexes. Complainant offered no evidence of the particulars of the subject properties other than that they are substantially similar to each other and other properties resolved at the BOE in size, finish, plans and all built on a plat.
- Assessment and BOE. The TVM set by the Assessor and BOE are as follows:
- Complainant’s Evidence. Complainant offered into evidence Exhibit A through E. Exhibit A consisted of a chart showing parcel numbers, parcel addresses, BOE appeal numbers, State Tax Commission appeal numbers, BOE values, and Complainant’s values. Exhibit B consisted of a chart and map showing parcels appealed, parcels sold by Complainant, and closing statements for the sold parcels. Exhibit C consisted of a chart showing parcel values from income analysis standpoint. Exhibit D consisted of a chart and map showing parcels appealed and other parcels listing the values of the latter parcels as stipulated by Jackson County and approved by BOE on the same day Complainant’s appeals were heard. Exhibit E consisted of a substantially identical structure constructed on all parcels identified in the exhibits, including those which are the subject of the appeals, those previously sold by Complainant, and those which Jackson County stipulated a value of $200.000 and approved by the BOE.
Exhibits A, B, C, and E were admitted without objection. Exhibit D was objected to as to relevance. Exhibit D was admitted to be given the weight the Hearing Officer deemed appropriate.
Helene Banesberger, the principle of Complainant, testified. She testified that the properties sold are essentially the same to the subject properties in size, finish, built upon the same plans and built on a plat. As to Exhibit C she testified that she did not know anything about the capitalization rate utilized in the calculation. She acknowledged that parcels 127 and 133, identified in the exhibits were older and slightly smaller than the subject properties appeals. She also testified the parcels sold were not listed on MLS but were sold to a family friend(s) wanting to get into the investment market. She testified she came up with an asking price and the buyer agreed to the price.
Complainant’s counsel argued that the BOE process was unfair because substantially similar properties were valued differently during the BOE process.
- No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2019, to January 1, 2020, therefore the assessed value for 2019 remains the assessed value for 2020. Section 137.115.1.
- Respondent’s Evidence. Respondent offered no exhibits. Darlene Lachey testified that the proper method under the income approach for properties such as Complainant’s is to utilize a gross rent multiplier (GRM) instead of a capitalization rate. She testified that based upon a general GRM for the area around the subject property that a TVM of $240,000 would result for the subject properties. She acknowledged that she had not done a full analysis of the subject properties or of the other properties mentioned by Complainant.
- Presumption of Correct Assessment Not Rebutted. Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the BOE and establish the TVM as of January 1, 2019. See, Presumption In Appeal, infra.
CONCLUSIONS OF LAW AND DECISION
STC Authority Over Ad Valorem Taxation Appeals
The STC has authority to hear this appeal and to correct any assessment that 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.
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 are assessed at set percentages of true value in money. Section 137.115.5. residential property at 19% of true value in money; commercial property at 32% of true value in money and agricultural property at 12% of true value in money.
Presumption In Appeal
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. 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. It places the burden of going forward with some substantial evidence on the taxpayer – Complainant. When some substantial evidence is produced by the Complainant, “however slight”, the presumption disappears and the Hearing Officer, as trier of facts, receives the issue free of the presumption. United Missouri Bank of Kansas City v. March, 650 S.W.2d 678, 680-81 (Mo. App. 1983), citing to State ex rel. Christian v. Lawry, 405 S.W.2d 729, 730 (Mo. App. 1966) and cases therein cited. The presumption is not evidence of value. The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the Board’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).
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See, Cupples-Hesse, supra. Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact. The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief. Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).
Complainant’s Burden of Proof
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 properties on January 1, 2019. Hermel, supra. There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a STC 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). A valuation which does not reflect the fair market value (true value in money) of the property under appeal is an unlawful, unfair and improper assessment.
The Assessor’s original values in these appeals were either left the same or lowered by the BOE. Accordingly, the taxpayer must rebut that presumption in order to prevail. The taxpayer must establish by substantial and persuasive evidence that the value concluded by the BOE is in error and what the correct value should be.
Methods of Valuation
Proper methods of valuation and assessment of property are delegated to the STC. 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, 615 (Mo. App. W.D. 2000); Hermel, Inc., 564 S.W.2d at 897; 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. 1974).
“For purposes of levying property taxes, the value of real property is typically determined using one or more of three generally accepted approaches.” Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005), citing St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977). “Each valuation approach is applied with reference to a specific use of the property – its highest and best use.” Snider, 156 S.W.3d at 346-47, citing Aspenhof Corp., 789 S.W.2d at 869. “The method depends on several variables inherent in the highest and best use of the property in question.” Snider, 156 S.W.3d at 347. “Each method uses its own unique factors to calculate the property’s true value in money.” Id.
“The ‘comparable sales approach’ uses prices paid for similar properties in arms-length transaction and adjusts those prices to account for difference between the properties. Id. at 348. “Comparable sales consist of evidence of sales reasonable related in time and distance and involve land comparable in character.” Id. (quotation omitted). “This approach is most appropriate when there is an active market for the type of property at issue such that sufficient data [is] available to make a comparative analysis.” Id.
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 interest;
- 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.
The income approach determines value by estimating the present worth of what an owner will likely receive in the future as income from the property. The income approach is based on an evaluation of what a willing buyer would pay to realize the income stream that could be obtained from the property when devoted to its highest and best use. This approach is most appropriate in valuing investment-type properties and is reliable when rental income, operating expenses and capitalization rates can reasonably be estimated from existing market conditions. The initial step in applying the income approach is to find comparable rentals and make adjustments for any differences. Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W. 3d, 341, 347 (Mo. 2005) (citations omitted).
Investigation by Hearing Officer
In order to investigate appeals filed with the STC, 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. The Hearing Officer’s decision regarding the assessment or valuation of the property may be based solely upon his inquiry and any evidence presented by the parties, or based solely upon evidence presented by the parties. Section 138.430.2.
Weight to be Given Evidence
The Hearing Officer is not bound by any single formula, rule or method in determining true value in money and is free to consider all pertinent facts and estimates and give them such weight as reasonable 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. Sercurity Bohomme, 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).
Complainant Fails to Prove TVM
Complainant failed to present substantial and persuasive evidence to establish the TVM of the subject properties as of January 1, 2019. Complainant did not offer an appraisal. Complainant did offer Exhibit C presenting a rudimentary income approach to valuation; however, such was not prepared by a licensed appraiser and the witness stated she did not develop the capitalization rate within Exhibit C. As the capitalization rate is vital in the income approach to value, Exhibit C is of no persuasiveness. Furthermore, Complainant offered no evidence of market rents and market expenses. Instead, Complainant offered only the actual rents and expenses of the subject properties with no indication that such represent market based revenues and expenses. The values that the parties agreed to relating to other properties in settlement negotiations do not prove the TVM of the subject properties.
The assessed valuation for the subject properties as determined by the BOE for the subject tax day are AFFIRMED.
The assessed value for the subject properties for tax years 2019 and 2020 are set as follows:
|Appeal Number||BOE TVM||Assessed Value|
Application for Review
A party may file with the STC 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.
The Collector of Jackson 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.
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 this 16th day of October, 2020.
STATE TAX COMMISSION OF MISSOURI
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 16th day of October, 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.