State Tax Commission of Missouri
|NINE EAST, LLC||)|
|v.||)||Appeal Numbers 09-11102 & 13-13166|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
AFFIRMING HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
On July 17, 2015, Hearing Officer Maureen Monaghan, entered her Decision and Order (Decision) AFFIRMING the Board of Equalization value for tax years 2009-2010 and 2013-2014 and respectively setting a commercial value of $2,400,000 (assessed value $768,000) and $2,048,300 (assessed value $655,460).
Complainants timely filed an Application for Review of the Decision. Respondent timely filed its Response.
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’s Claims of Error
Complainants generally puts forth that the Decision was in error because “the Hearing Officer erred in finding that the true value in money of the subject property was (a) $2,400,000 rather than $1,650,000 for 2009-10, and (b) $2,048,300 rather than $1,570,000 for 2013-14, because Complainant’s values were supported by competent and substantial evidence upon the whole record…”
Discussion and Rulings
First, neither the Hearing Officer nor the State Tax Commission are obligated to adopt or believe the opinions of an expert witness. Neither the Hearing Officer nor the Commission can 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 Hearing Officer and the Commission, as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as they may deem it is entitled, if any. The Hearing Officer and Commission are 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).
In these particular appeals the Hearing Officer did not believe the vacancy rate utilized by Complainant’s appraisers was proper. Therefore, she found that Complainant did not meet its burden of proof in either appeal to overcome the Board presumptions and thus affirmed the decisions of the St. Louis County Board of Equalization. The Hearing Officer specifically stated that:
[t]he appraiser developed an opinion using the income and sales comparison approach relying primarily on the income approach. For the 2009 appraisal, the appraiser used a 30% vacancy rate and an 11% cap rate. The appraiser set forth in his appraisal report that the commercial office space was stable in the submarket and the subject was competitive property. Although the subject was only 10% occupied at the time, the appraiser provided no support for using a greater than market vacancy rate (appraiser used 30% and the market was at 7.9%)
Decision of July 17, 2015 (Bold and Underline added by Commission for emphasis in quote above). Thus, the Hearing Officer properly doubted the accuracy of the vacancy rate utilized by Complainant’s appraiser.
Complainant’s counsel, in the Application for Review, performs mathematical calculations with criticisms to model if the Hearing Officer were to have used the submarket rates for tax periods 2009-10 and 2013-14. For 2009-10 he calculates a value of $2,322,260 “almost $77,740 less than the Board’s value”. Such $77,740 constitutes a mere 3.3% (rounded up) of the Board’s value. Thus, this figure supports the valuation of the Board and the affirming of the Board’s value. Regarding 2013-14 Complainant’s counsel calculates a value of $2,156,480 with a collection loss and $2,225,950 without a collection loss. Such figures exceed the Board of Equalization value by 5.28% and 8.67% (both round down) respectively. Instead of adopting such figures, the Hearing Officer simply affirmed the Board of Equalization value. The State Tax Commission determines that such values support the Board of Equalization value and will not set aside the Hearing Officer’s Decision and increase the true market value and resulting assessed value of the subject property for 2013-14.
Summary and Conclusion
The appraisal of property is not an exact science. The more market based information provided by the appraisers, the better decision a Hearing Officer can make. Appraisers taking shortcuts in traditional valuation methods hinder such process as do lack of adequate explanation and justification for morphing market based valuations into a mix of market & property specific valuation when using a market based model. To function correctly, income approach models must be utilized as intended, as much as possible, with the numerator (income) being based upon sound numbers and the same assumptions as the denominator (market capitalization rate). By quoting the submarket and actual vacancy rates and then simply making a very generalized statement about the subject to select a vacancy rate to be applied, which is above the market vacancy rate, Complainant leaves the Commission “in the nebulous twilight of speculation, conjecture and surmise” Complainant’s appraisal was clearly lacking. Complainant’s burden is not met. See, Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980).
Complainant has failed to state any error warranting a change in the Hearing Officer’s value. Additionally, after a review of the record, the State Tax Commission determines that the Hearing Officer was correct in all respects.
The Decision and Order of the Hearing Officer, including the findings of fact and conclusions of law therein, is AFFIRMED and incorporated by reference, as if set out in full, in this final decision of the Commission.
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 1st day of December, 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 sent electronically or mailed postage prepaid this 1st day of December, 2015, to: Complainants(s) counsel and/or Complainant, the county Assessor and/or Counsel for Respondent and county Collector.
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
State Tax Commission of Missouri
|NINE EAST LLC,||)|
|v.||)||Appeal Number 09-11102 & 13-12166|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
St. Louis County Board of Equalization’s assessment AFFIRMED.
True value in money for the subject property for 2009-2010 is set at $2,400,000, commercial assessed value of $768,000. True value in money for the subject property for 2013-2014 is set at $2,048,300, commercial assessed value of $655,460.
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 did not present 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 April 3, 2015. Complainant and Respondent filed and exchanged the exhibits set out below under Evidence. Parties had until May 5, 2015, to file objections and rebuttal exhibits. Neither party objected to the exhibits filed. Parties were ordered to file, on or before June 2, a request for hearing. Complainant requested a hearing. The Respondent’s evidence was a document. No cross examination is possible. The appeal was taken under advisement with the exhibits submitted.
- Subject Property. The subject property is identified as parcel number 17V510214. It is located at 702 Spirit 40 Park Dr, St. Louis, MO. The property consists of 2.79 acre site with an office building of 30,084 sf. (29,616 net leasable area).
- Assessment. The Assessor and Board of Equalization determined the following true market value:
2009-2010: Assessor $2,756,200 BOE $2,400,000
2013-2014: Assessor $2,109,800 BOE $2,048,300
- 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- BOE Decision.
- The True Market Value of the property as of January 1, 2009, was $2,400,000 and as of January 1, 2013 was $2,048,300.
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 a 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
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)
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 Fails to Prove 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 for the years 2009 and 2013. 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).
The appraiser developed an opinion using the income and sales comparison approach relying primarily on the income approach. For the 2009 appraisal, the appraiser used a 30% vacancy rate and an 11% cap rate. The appraiser set forth in his appraisal report that the commercial office space was stable in the submarket and the subject was competitive property. Although the subject was only 10% occupied at the time, the appraiser provided no support for using a greater than market vacancy rate (appraiser used 30% and the market was at 7.9%) The appraiser’s conclusion of value for 2009 is not supported by substantial and persuasive evidence.
Complainant’s appraisal evidence was similar for 2013. The appraisals do not meet the required evidentiary standard to rebut the presumption of correct assessment by the Board and to establish the true value in money or to allow the establishment of value as of January 1, 2009 and 2013 of the subject property.
The assessed valuation for the subject property as determined by the Board of Equalization for St. Louis County for the subject tax day is AFFIRMED. True value in money and assessment value for the subject property for the various tax years are as follows:
2009-2010 is set at $2,400,000, commercial assessed value of $768,000.
2013-2014 is set at $2,048,300, commercial assessed value of $655,460.
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 July 17, 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 17th day of July, 2015, to: Complainants(s) counsel and/or Complainant, the county Assessor and/or Counsel for Respondent and county Collector.