State Tax Commission of Missouri
| NISMARK, LLC, | ) | |
| ) | ||
| Complainants, | ) | |
| v. | ) | 09-10758 |
| ) | ||
| JAKE ZIMMERMAN, | ) | |
| ST. LOUIS COUNTY, MISSOURI, | ) | |
| ) | ||
| Respondent. | ) |
ORDER AFFIRMING HEARING OFFICER DECISION UPON APPLICATION FOR REVIEW
On January 5, 2016, Hearing Officer Maureen Monaghan, entered her Decision and Order (Decision) sustaining the Board of Equalization values for the applicable tax years Such Decision sets forth the fact finding and legal determination of the Hearing Officer. Both Complainant and Respondent were and are represented by counsel in this appeal.
Complainants timely filed their Application for Review of the Decision, Respondent timely filed its Response and Complainant chose not to file a Reply. All errors cited in the Application for Review relate to the application of Section 137.345.5 RSMo.
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.
DECISION
Respondent’s Claims of Error
Complainants, through counsel, put forth the following alleged errors in the Decision.
- The Hearing Officer erred in holding that a settlement is not a successful appeal within the meaning of section 137.345.5 RSMo.
- The Hearing Officer erred in holding that Respondent did not have the burden of proving that he had complied with section 137.345.5 RSMo.
- The Hearing Officer erred in holding that Complainant’s evidence as to the market trends predicting the values of the subject properties was not substantial and persuasive.
Discussion and Rulings
Neither the Hearing Officer nor the State Tax Commission is obligated to adopt or believe the opinions of an expert witness. 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)). It is clear that the Hearing Officer utilized her discretion in determining what parts of Mr. Weber’s “trending” study she found substantial and persuasive.
Successful Appeal
“A successful appeal is an appeal where the case is submitted to the Commission and a decision is rendered finding true value in money as the taxpayer proposed and advocated.” Burkemper v. SLCo (2002 WL 561033). In Burkemper, the property owner appealed to the State Tax Commission. The property owner and assessor agreed to a value to settle the appeal. The Commission approved the stipulation. As stated in such case:
The legislative interpretation of Section 137.345.5 RSMo by the Commission is that:
- It applies to contested cases where the Commission actually renders a Decision;
- It applies to what is the appropriate basis (methodology), i.e., cost, sales comparison, or income approach, for the valuing of the property; and
- It applies in light of and under the overarching and controlling mandate to find the fair market value of the property under appeal.
To conclude otherwise ignores the market and inflation and thereby ignores the requirements of Section 137.115 RSMo requiring properties be assessed at a percentage of true value.
Complainants reference Shipman v. DNS Electronic Materials, Inc., 267 S.W.3d 751 (Mo. App. 2008) and argue that the reasoning in Burkemper should not be utilized. Such opinion by the Missouri Court of Appeals states in pertinent part:
The plain and ordinary meaning of “basis” as used in section 137.345.5 requires that there be some substantive connection between the valuation of property established through a successful appeal and subsequent assessments of that property. It must be the “basis.” Section 137.345.5 requires that “any increases must be established from that basis.” To meet the statutory requirement, there must be evidence of some change in circumstances regarding the property, such as new improvements, zoning or land use changes, or changes in market or economic conditions from the time of the successful appeal to the time of the future assessment. It is not legally sufficient for an assessor to pay lip-service to the mandate of section 137.345.5. … This does not mean that an assessor cannot ever increase the assessed value of a property following a successful appeal or that the assessor is required to use the same methodology of appraisal used by the taxpayer in his or her successful appeal of an assessment. Such a rigid interpretation of section 137.345.5 would make it impossible to achieve the mandate of the Missouri Constitution, Article X, Section 3, that taxes “shall be uniform upon the same class or subclass of subjects within the territorial limits of the authority levying the tax.” It would also make it impossible for assessors to follow the mandate of section 137.115. Section 137.345.5 is not meant to penalize the assessor for not prevailing in an appeal of an assessment, but rather to provide some relief for the taxpayer who does successfully appeal an assessment. It places a check on an assessor that loses an assessment appeal for a property from simply reassessing that property at a value that is essentially unrelated to that determined in the appeal. There is nothing in the statute that requires an assessor in a subsequent assessment to use the same methodology used by an expert in a successful appeal, but the newly assessed value must be based on that set by the appeal.”
The DNS Court did not find all elements of Burkemper to be incorrect. It merely clarified the standard. Furthermore, the DNS scenario was extremely fact intensive and is distinguishable from the present action.
“The cardinal rule of statutory construction requires the court to ascertain the true intention of the legislature, giving reasonable interpretation in light of the legislative objective. BCI Corporation v. Charlebois Construction Co., 673 S.W.2d 774, 780 (Mo. banc 1984). “If reasonably possible, all provisions must be harmonized.” Bartley v. Special School District of St. Louis County, 649 S.W.2d 864, 867 (Mo. banc 1983). Statutes relating to the same subject matter are considered in pari materia. State ex rel. Director of Revenue, State of Missouri v. Gaertner, 32 S.W.3d 564, 566 (Mo. banc 2000). “The doctrine requires that statutes relating to the same subject matter be construed together even though they are found in different chapters or were enacted at different times. KC Motorcycle Escorts, L.L.C. v. Easley, 53 S.W.3d 184, 187 (Mo. App. 2001). By reading Section 137.345.5 RSMo, Art. X Sections 4(a) and 4(b) of the Missouri Constitution of 1945, Section 137.115 RSMo. and all other pertinent statutes and constitutional provisions in harmony, a settlement, especially one not based upon establishing the true market value of the property, does not constitute a successful appeal.
Burden of Proof
Complainants contend that it is Respondent and not Complainants who should bear the burden of proof regarding compliance with Section 137.345.5 RSMo. Such contention is in conflict with the Board of Equalization presumption in favor of a Board’s determination, under Hermel, Inc. v. STC, 564 W.W.2d 888 (Mo. banc 1978), Shipman v. DNS Electronic Materials, Inc., 267 S.W.3d 751 (Mo. App. 2008) and Johnson v. State, 366 S.W.3d 11 (Mo. banc 2012). The burden of proof regarding any alleged non-compliance with Section 137.345.5 RSMo. rests squarely upon Complainant.
Complainant’s Evidence Not Substantial and Persuasive
Complainants rely upon Shipman v. DNS Electronic Materials, Inc., 267 S.W.3d 751 (Mo. App. 2008). There was no evidence of change of any circumstances in DNS. In the case at bar, some evidence of a change of market or economic conditions were evident from Complainant’s study; albeit, general in nature and not sufficiently specific to meet Complainant’s burden as to the subject properties. The “trending” study by Steven Weber, owner of Property Assessment Review, lacked sufficient indicia of reliability in that it only reviewed properties by location and not by age or type.
As noted by the Hearing Officer, the market for commercial property (e.g. retail, warehouse, office and industrial) varies widely. As to a potential buyer, the type of property is very significant, as is age and condition. The study includes “new construction” information; although no information regarding the new construction is known. The Hearing Officer noted that the study failed to include demolition; although, the witness conceded that demolition of properties within St. Louis County occurs each cycle.
The Hearing Officer also noted that the Complainants failed to establish that Mr. Weber was an expert in the field of mathematics or statistics. Given the type of study Mr. Weber submitted, a “trending” study, special education, training and/or experience in mathematics or statistics would be necessary to qualify Mr. Weber as an expert for such type study. Complainant presented no evidence of any education, training or experience in statistics or other applied mathematics regarding Mr. Weber.
The Commission agrees that Mr. Weber’s “trending” study does not equate to substantial and persuasive evidence that the assessor had not used or considered the prior cycle values and that such did not rebut the presumption of correct assessment by the BOE.
Summary and Conclusion
After review of the evidence presented, it is clear that the Hearing Officer made a considered and well reasoned determination of value based upon the evidence before her. The State Tax Commission has reviewed the record which is properly before it and finds that there was no error made. Respondent has failed to state any error warranting a change in the Hearing Officer’s value.
ORDER
The Decision and Order of the Hearing Officer, including the findings of fact and conclusions of law therein, are 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.
STATE TAX COMMISSION
Bruce E. Davis, Chairman
Victor Callahan, Commissioner
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 26th day of April, 2016, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.
Jacklyn Wood
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
573-751-2414
573-751-1341 Fax
State Tax Commission of Missouri
| NISMARK LLC, | ) | Appeal No. | 09-10758 |
| ) | |||
| Complainants, | ) | ||
| v. | ) | ||
| ) | |||
| JAKE ZIMMERMAN, | ) | ||
| ) | |||
| ST. LOUIS COUNTY, MISSOURI, | ) | ||
| Respondent | ) |
DECISION AND ORDER
HOLDING
The assessment made by the St. Louis County Board of Equalization (BOE) is SUSTAINED. Complainant failed to present substantial and persuasive evidence to establish the true (market) value of the subject property, discrimination, or that they were entitled to relief under Section 137.345.5 RSMo.
Complainant is represented by counsel James Gamble. Respondent is represented by counsel, Priscilla Gunn. Parties submitted the case under exhibits filed and briefing completed in Appeal 09-10759 et al. Case heard and decided by Hearing Officer Maureen Monaghan.
ISSUE
Complainant appeals on the grounds of overvaluation, discrimination and Section 137.345.5 RSMo. The Complainant abandoned the grounds of overvaluation and discrimination. The Commission takes the appeals under Section 137.345 RSMo. The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over the appeal is proper.
- Evidentiary Hearing. The appeal was taken under advisement on exhibits submitted at the request of the parties.
- Assessments. The Assessor determined the market value to be $3,554,660, a commercially assessed value of $1,137,470. The Board of Equalization sustained the value.
In 2007, the Complainant filed an appeal with the County Board of Equalization (BOE). The Complainant and other property owners (total of 450 parcels) entered into a stipulation with the Assessor for a reduction of the true value equaling 4%.[1]
- Complainant’s Evidence.
| Exhibit | Description |
| A | Written Direct Testimony of Steve Weber |
| B | Board of Equalization Decision 2007 |
| C | Spreadsheet of Steve Weber’s “Trending” Formula by School District |
| D | Property Record Card 2007 |
| E | Property Record Card 2009 |
| F | Admissions with Assessor’s Objections (Rebuttal) |
The record was made in appeal 09-10759. The parties agreed that the record would apply to this appeal. Parties agreed the appeal would be submitted on exhibits. Exhibit F is a rebuttal exhibit.
Steven Weber testified on behalf of the Complainant. Mr. Weber is a real estate tax representative and consultant; he is a principal of Property Tax Assessment Review. Mr. Weber developed the information in Exhibit C. Mr. Weber described the exhibit as a table prepared from the Assessor’s records to “derive trending factors to test whether the Assessor based his assessment of the subject property for 2009 on the appraised value established by the Board of Equalization in 2007.” There are 31 columns on Exhibit C.
Column 1 – County Wide and lists seven school districts
Column 2 – Mr. Weber testified that his analysis began with the Assessor’s assessed value of commercially classified properties in 2007 – aggregate assessed value county wide and by seven school districts[2]. (Column 2 – “2007 AV as of 6/1/07”)
Column 3 – The next column, “2007 Post BOE AV”, lists the same information (values county-wide and by school district) after the Board of Equalization (BOE) issued decisions.
Columns 4 and 5 – The next columns are the value of new construction for 2008 and 2009 in the aggregate county wide and by school district.
Column 6 – Assessor’s assessed value as of 7/1/09 in the aggregate county wide and by school district.
Column 7 – Post – BOE assessed value in 2009 in the aggregate county wide and by school district.
Columns 8 and 9 – To calculate the change in the assessed values in 2009, he subtracted new construction for 2008 and 2009 from the 2009 assessed value and compared it with the 2007 assessed value. He compared it with the pre-BOE value and the post-BOE value.
Columns 10 thru 21 repeat this process for years 2009 to 2013.
Columns 22 thru 27 – Mr. Weber divided the Assessor’s or the BOE’s Change less new construction by the prior Assessor’s or BOE’s value.
Columns 28-32 – Mr. Weber multiplied the “appropriate individual assessment cycle factors together to arrive at accumulative factors for the 2011 and 2013 cycles.”
Mr. Weber relied on the pre-Board of Equalization trending factors to form his opinion as to whether the Assessor used the 2007 Board decision as the basis for his values in 2009 and subsequent years. As an example, in Appeal No. 09-10758, the pre-BOE valuation was $3,072,000, the post-BOE valuation was $2,949,100, the “trending factor” for the school district in which the property is located is .9039. Mr. Weber testified that the value for 2009-2010 should have been $2,665,700 and not $2,949,100.
Mr. Weber testified that Exhibits D and E, property record cards, were reviewed to determine if the Assessor’s staff noted any significant changes in the property.
- Respondent’s Evidence.
| Exhibit | Description |
| 1 | Board of Equalization Decision 2009 |
| 2 | Memorandum of Settlement |
| 3 | 2007 PAR Settlement |
| 4 | Written Direct Testimony of Sandy Youtzy |
The term of the settlement was a reduction of the value by 4% of each of 450 parcels subject to the settlement.
- Record. The record was made in appeal 09-10759. The parties agreed that the record would apply to the subject appeal.
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. 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.
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 property. 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). 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.
Section 137.345.5 RSMo.
Section 137.345.5 RSMo states:
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 parcel was subject to a “mass” stipulation the terms of which were a 4% reduction of each of the parcel’s value. Complainant seeks relief under Section 137.345 RSMo arguing that a reduction in value due to a stipulation is a “successful appeal” as contemplated under Section 137.345.5 RSMo. “A successful appeal is an appeal where the case is submitted to the Commission and a decision is rendered finding true value in money as the taxpayer proposed and advocated.” Burkemper v. SLCo (2002 WL 561033). In Burkemper, the property owner appealed to the State Tax Commission. The property owner and assessor agreed to a value to settle the appeal. The Commission approved the stipulation. The Commission did not hold an evidentiary hearing therefore the Commission made no determination of value based upon information presented. The following cycle the property owner appealed and argued that the prior cycle’s value (the Commission’s approved stipulated value) should have been the basis of the valuation of the Assessor. The Commission denied the appeal ruling that a stipulation between the parties is not a successful appeal. The Commission went on:
To apply Section 137.345.5, in the manner contended by Complainants would mean that if the Assessor stipulates to a value for a given property and no changes are made in the property by way of additions and updatings, etc., the value stipulated to, not the method for valuation determined by a decision in the appeal, becomes the basis for all future assessments. Complainants contend that since they have made no additions or updatings to the subject that it has not increased in value from the stipulated value of 1999. Such a position, of course, ignores simple inflation in value. But, more importantly, this position ignores the actual impact and workings of the market area for the subject property.
The legislative interpretation of Section 137.345.5 RSMo by the Commission is that:
- It applies to contested cases where the Commission actually renders a Decision;
- It applies to what is the appropriate basis (methodology), i.e., cost, sales comparison, or income approach, for the valuing of the property; and
(3) It applies in light of and under the overarching and controlling mandate to find the fair market value of the property under appeal.
To conclude otherwise ignores the market and inflation and thereby ignores the requirements of Section 137.115 RSMo requiring properties be assessed at a percentage of true value.
The subject parcel was included in what the parties describe as a “mass settlement” of 450 appeals before the BOE in 2007. Any and all parcels included in the agreement had a reduction in their valuation of 4%. There was no agreement as to the proper methodology and there was no agreement that the resulting valuations represented true value. If the parcel number was included in the 11 page list of properties, the property’s value was automatically reduced by 4%. Section 137.345 RSMo, as interpreted in Burkemper, is not applicable.
Complainants reference Shipman v. DNS Electronic Materials, Inc., 267 S.W.3d 751 (2008). In DNS, the Assessor appraised the property at $13 million in 2001. The BOE sustained the Assessor’s value. DNS appealed to the State Tax Commission. The State Tax Commission, after a full evidentiary hearing, found that the true value to be $3.9 million in 2001. The following cycle, in 2003, the Assessor appraised the property at $12 million. DNS appealed to the State Tax Commission. The State Tax Commission, after a hearing in which the Complainant argued that Section 137.345.5 RSMo mandated the finding of value of $3.9 million. The case was appealed to the Circuit Court. The Court found that Section 137.345.5 RSMo requires that the valuation determined by the Commission in 2001 be the basis of valuation for 2003. The Court found that “basis” requires some substantive connection between the valuation of the property established through a successful appeal and subsequent assessments of that property. The Court found that since the Assessor’s value was three times higher in 2013 than 2011 ($3.9 million to $12 million) the Assessor’s claim that he based his valuation on the prior decision was simply “lip service.” Due to the threefold increase, the Court required some evidence that the property changed – circumstances, improvements, zoning, land use change, market or economic conditions.
The Court concluded that the purpose of the statute was to provide relief for a taxpayer who is successful in his appeal. “It places a check on an assessor that loses an assessment appeal…” However, the Court went on to state that a rigid interpretation of the statute would make it impossible to achieve the mandates of the Missouri Constitution and revised statutes that taxes be uniform and based upon true value of the property.
DNS is distinguishable from the circumstances of these appeals. First, in DNS there was a full and fair hearing regarding the true value of the property. Appraisal information was presented establishing that the Assessor was incorrect in his valuation. In the appeals at bar, there was a mass settlement rather than any finding of true value of the properties. A mass settlement was certainly not contemplated or the intent of the legislature when passing Section 137.345, to find otherwise would frustrate the very purpose of such statute. Second, there was no evidence of change of any circumstances in DNS. In the case at bar, we have evidence of a change of market or economic conditions as set forth in the Complainant’s study. Lastly, a threefold increase as seen in DNS would indicate an intentional plan by the assessing officials to ignore the prior decision of the State Tax Commission (or BOE) or show that the increase in the assessment was so grossly excessive as to be inconsistent with an honest exercise of judgment .
Even if Section 137.345 RSMo was applicable, the Complainant’s evidence was not substantial and persuasive evidence and provides no evidence that the Assessor did not base his assessments on prior assessments. The “trending” study performed has no appraisal basis unlike the ratio studies in which the IAAO sets forth the requirements to ensure the study is reliable and is properly based. Among the issues with the Complainant’s study is that it only reviews the property by location and not by age or type. For commercial property, the type of property is a significant indicator of market value. The market for retail, warehouse, office, industrial, etc may vary widely. The type of property is probably much more significant to a potential buyer than which school district the property is located. Age and condition is also a factor. The study includes “new construction” information, although no information regarding the new construction is known. The study fails to include demolition although the witness conceded that demolition of properties within St. Louis County occurs each cycle. Demolition of properties would include removal of improvements due to an informed decision for a higher use of the property, from fires, and from natural causes including the tornados of St. Louis County in 2010, 2011 and 2013. Lastly, the Complainants failed to establish that Mr. Weber was an expert in the field of mathematics or statistics. No evidence was presented in his education, training or experience in statistics or other applied mathematics. The trending study which the author states was used to determine if the assessor had a “defensible” position does not equate to substantial and persuasive evidence that the assessor had not used or considered the prior cycle values if it was required of the assessor and does not rebut the presumption of correct assessment by the BOE.
ORDER
The assessed valuation for the subject property is SUSTAINED.
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
Disputed Taxes
The Collector of St. Louis 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 this 5th day of January, 2016.
STATE TAX COMMISSION OF MISSOURI
Maureen Monaghan
Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 5th day of January, 2016 to: Complainants(s) counsel and/or Complainant, the county Assessor and/or Counsel for Respondent and county Collector.
Jacklyn Wood
Legal Coordinator
[1] The stipulation involving 450 appeals includes 09-10758.
[2] There are 23 school districts in St. Louis County.