State Tax Commission of Missouri
|DIANA BLUNK, ASSESSOR,||)|
|MERCER CO., MISSOURI,||)|
DECISION AND ORDER
Decision of the Mercer County Board of Equalization (BOE) sustaining the assessment, including classification, made by the Assessor is AFFIRMED. Complainant failed to present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.
Noeon, LLC (Complainant) was represented by attorney Brandon Greer.
Diana Blunk, the Assessor of Mercer County (Respondent) was represented by attorney Patricia Hughes.
Case heard on the record and decided by Senior Hearing Officer John Treu. (Hearing Officer)
Complainant appeals, on the ground of misclassification, the decisions of the Mercer County BOE, which sustained the classifications of various elements of the subject property. The Commission takes this appeal to determine classifications for the subject property.
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 this appeal is proper. Complainant timely appealed to the State Tax Commission from the decisions of the Mercer County BOE. The appeal was submitted on the record by agreement of the parties.
- Identification of Subject Property. The subject property is located at 14251 Highway P, Mercer, Mercer County, MO. The property is identified by map parcel number 06040190000003. (Exhibit 1)
- Description of Subject Property. The subject property site consists of 127.2 acres, improved with a home, a garage with “lean”, multiple agricultural pole buildings and shed and three large steel utility buildings. The utility buildings measure 40’ X 60’ (2,400 square feet), 60’ X 60’ (3, 600 square feet) and 50’ X 100’ (5,000 square feet). The 60’ X 60’ (3, 600 square feet) and 50’ X 100’ (5,000 square feet) utility buildings are the subject of this appeal. (WDT of Blunk)
- Assessor & BOE. Respondent classified the home, the garage with “lean” and one acre of land as residential. Respondent classified the agricultural pole buildings and shed, the 40’ X 60’ steel building and the remainder of the land as agricultural. Respondent classified the 60’ X 60’ and 50’ X 100’ steel buildings as commercial. The BOE affirmed the classification determinations of the Assessor. (Exhibit 1 and Complaint for Review of Assessment)
- Complainant’s Evidence. Complainant offered into evidence the following:
|A||Written Direct Testimony (WDT) of Gina Langan|
|B||Photographs of Subject Property taken in 2016|
|C||Photographs of Subject Property taken in 2016|
|D||Photographs of Subject Property taken in 2016|
|E||USDA Soil Report for Subject Property|
|F||USDA Soil Groups Guide|
|G||12 CSR 30-4.010-STC Agricultural Land Values|
|H||Articles of Incorporation|
|Rebuttal J||Rebuttal WDT of Gina Langan|
The WDT and the exhibits were received into evidence without objection.
- Respondent’s Evidence. Respondent offered into evidence the following:
|1||Property Record Card|
|3||NOEN Articles of Incorporation|
|4||Exterior Photographs Taken in March, 2017|
|5||Photographs Taken April 21, 2017|
|6||Letter from Christopher Langan|
|7||Interrogatory Answers 8 and 9|
|8||Discovery Responses to Request for Production of Documents|
|9||Information from Web Site|
The WDT and the exhibits were received into evidence without objection. Respondent’s WDT and exhibits contain testimony that Respondent was not allowed to enter the buildings the subject of these appeals until April 21, 2017 and that Respondent was not allowed to touch anything or move any tarps to see what was underneath. Complainant disputes that Respondent was ever denied entry into the buildings in its Reply Brief; however, Complainant offered no WDT or exhibits disputing Respondent’s contention of denial of entry. Arguments of Complainant’s counsel do not constitute evidence.
Respondent also noted seeing “a lot of HP boxes.” Such also evidenced that Complainant keeps no income or expense statements of their alleged agricultural use. Respondent’s Exhibit 6 states that the 50’ X 100’ steel utility building was initially developed as a media studio for audio and video production. The photographs submitted by Respondent show that the two utility buildings, the subject or these appeals, being utilized for storage of non-agricultural type products, large unutilized spaces and extremely limited use for storage of agricultural type products.
- Presumption of Correct Assessment Not Rebutted. Evidence presented was not substantial and persuasive to rebut the presumption of correct assessment by the BOE and to establish the classification of the entire parcel as agricultural or alter the agricultural grade of the parcel.
CONCLUSIONS OF LAW AND DECISION
The STC has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious, including the application of any abatement. The Hearing Officer shall issue a decision and order affirming, modifying or reversing the determination of the BOE, 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.
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 BOE, correcting any assessment which is unlawful, unfair, improper, arbitrary or capricious. Section 138.431.5 RSMo; 12 CSR 30-3.080 (2). Both parties agreed to submit these appeals upon the record. The filing of exhibits and written direct testimony establishes the basis upon which opportunity for an evidentiary hearing can be held. The Complainants have the burden to present substantial and persuasive evidence. The Hearing Officer considered all the exhibits and written direct testimony and then proceeded to ascertain if said exhibits and written direct testimony met the standard of substantial and persuasive evidence to establish proper classifications for the subject properties.
Burden of Proof
A presumption exists that the assessment by the BOE is correct. Rinehart, 363 S.W.3d at 367; Cohen, 251 S.W.3d at 348; Hermel, Inc., 564 S.W.2d at 895. “Substantial and persuasive controverting evidence is required to rebut the presumption, with the burden of proof resting on the taxpayer.” Cohen, 251 S.W.3d at 348. Substantial evidence can be defined as such relevant evidence that a reasonable mind might accept as adequate to support a conclusion. Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is evidence that has sufficient weight and probative value to convince the trier of fact. Cupples Hesse Corp., 329 S.W.2d at 702. 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). See also, 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).
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.” Westwood Partnership, 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. W.D. 1991).
Under Missouri statutory law, property shall be classified as agricultural and horticultural property when “real property [is] used for agricultural purposes and devoted primarily to the raising and harvesting of crops . . .” Section 137.016.1(2) RSMo. The classification is determined by the actual use put to the property. Northtown Village v. Don Davis, Assessor, Jasper County. Mo., Appeal Nos. 03-62558 (May 27, 2004) [providing that the definitions in Section 137.016 (2000) illustrate that “the classification turns on the actual use put to the property”].
The subject parcel is classified as mixed use – residential, agricultural and commercial. Complainant seeks to have the 60’ X 60’ (3,600 square feet) and 50’ X 100’ (5,000 square feet) steel buildings classified as agricultural. Complainant failed to establish these buildings are “used for agricultural purposes and devoted primarily to the raising and harvesting of crops . . .” Section 137.016.1(2) RSMo. Complainant’s photographs, taken sometime in 2016 showing a single shelving unit of feed stored in one barn, one tractor parked in another barn and another tractor parked in a third barn with two hay bales does not constitute substantial and persuasive evidence of an primary agricultural use of the buildings in question. The buildings are quite large and the photographs show, at best, an extremely small use of the subject buildings which could be interpreted as agricultural use pursuant to Section 137.016.1(2).
Complainant argues in its brief and reply brief that it is misclassified asserting that no commercial activity occurs on the subject property and thus Respondent’s classification of the subject property as “other/commercial” is improper.
Pursuant to Section 137.016 RSMo., real property is classified as “[r]esidential property,” “[a]gricultural and horticultural property,” or “[u]tility, industrial, commercial, railroad and other real property.” “Exempt” status under 137.100 RSMo. is not a classification. Section 137.016 (1) RSMo. defines “[r]esidential property” as
all real property improved by a structure which is used or intended to be used for residential living by human occupants, vacant land in connection with an airport, land used as a golf course, manufactured home parks, bed and breakfast inns in which the owner resides and uses as a primary residence with six or fewer rooms for rent, and time-share units as defined in section 407.600, except to the extent such units are actually rented and subject to sales tax under subdivision (6) of subsection 1 of section 144.020, but residential property shall not include other similar facilities used primarily for transient housing. For the purposes of this section, “transient housing” means all rooms available for rent or lease for which the receipts from the rent or lease of such rooms are subject to state sales tax pursuant to subdivision (6) of subsection 1 of section 144.020[.]
Section 137.016 (2) RSMo. defines “[a]gricultural and horticultural property” as
all real property used for agricultural purposes and devoted primarily to the raising and harvesting of crops; to the feeding, breeding and management of livestock which shall include breeding, showing, and boarding of horses; to dairying, or to any other combination thereof; and buildings and structures customarily associated with farming, agricultural, and horticultural uses. Agricultural and horticultural property shall also include land devoted to and qualifying for payments or other compensation under a soil conservation or agricultural assistance program under an agreement with an agency of the federal government. Agricultural and horticultural property shall further include land and improvements, exclusive of structures, on privately owned airports that qualify as reliever airports under the National Plan of Integrated Airports System, to receive federal airport improvement project funds through the Federal Aviation Administration. Real property classified as forest croplands shall not be agricultural or horticultural property so long as it is classified as forest croplands and shall be taxed in accordance with the laws enacted to implement Section 7 of Article X of the Missouri Constitution. Agricultural and horticultural property shall also include any sawmill or planing mill defined in the U.S. Department of Labor’s Standard Industrial Classification (SIC) Manual under Industry Group 242 with the SIC number 2421;
Section 137.016 (3) defines “[u]tility, 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, including all property centrally assessed by the state tax commission but shall not include floating docks, portions of which are separately owned and the remainder of which is designated for common ownership and in which no one person or business entity owns more than five individual units. 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”. (Underline added for emphasis)
Usage is determinative as to whether real property is “[r]esidential property” or “[a]gricultural and horticultural property.” If real property is not “[r]esidential property” and not “[a]gricultural and horticultural property,” it is “[u]tility, industrial, commercial, railroad and other real property.” See Section 137.016 (3) RSMo. below.
Complainant did not offer substantial and persuasive evidence of that the subject property should be classified as “[r]esidential property” or “[a]gricultural and horticultural property.” Complainant failed to establish by substantial and persuasive evidence that the BOE was incorrect in their determinations regarding classification.
In Missouri, all real property actively used for agricultural purposes is assessed at 12% of its productive value. Section 137.017, RSMo. Statutory guidance for determining such productive values is set out in Section 137.021 RSMo In short, the process works as follows:
- The University of Missouri provides the State Tax Commission with estimated values for each of the eight agricultural grades based upon “. . . soil surveys, soil productivity indexes, production costs, crop yields, appropriate capitalization rates, and any other pertinent factors . . .”
- On or before December 31, of the odd-numbered year, the State Tax Commission promulgates a rule indicating the proper value for each of several grades of agricultural land.
- If such rule is not disapproved by the general assembly, they shall take effect on January first of the next odd-numbered year.
The agricultural land productive values are contained in Title 12, Division 30, Chapter 4 of the Code of State Regulations.
In other words, where land is actually used for an agricultural purpose, it is to be assigned the appropriate agricultural land productivity grade or value.
Since the Complainant failed to establish by substantial and persuasive evidence that the property was agricultural property, the determination of grade of the property is unecessary.
The assessment for the subject property as determined by the BOE 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
The Collector of Mercer 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 22nd day of September, 2017
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 22nd day of September, 2017, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.