Perryville Senior Housing v. Charles Triller, Assessor Perry County

October 30th, 2017



Complainant, )
v. ) Appeal No. 15-77000
Respondent. )






The assessment made by the Board of Equalization of Perry County (BOE) is SET ASIDE.  Evidence presented was substantial and persuasive to rebut the presumption of correct assessment by the BOE. True Value in Money (TVM) of the subject property as of January 1, 2015, was $750,000, assessed value of $142,500.

Perryville Senior Housing (Complainant) appeared by counsel Richard Dvorak.

Charles Triller, Assessor, Perry County, Missouri, (Respondent) appeared in person and by counsels Richard Reed and Jennifer Wu.

Case heard and decided by Chief Counsel Maureen Monaghan (Hearing Officer).


Complainant appealed on the ground of overvaluation, TVM of the subject property on January 1, 2015.  Respondent set the TVM of the subject property, as residential property, at $1,929,994.  Complainant appealed to the BOE. The BOE determined a TVM for the property of $1,800,000.

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 or improvement to the property.  Section 137.115.1 RSMo   The State Tax Commission (STC) takes this appeal to determine the true value in money for the subject property on January 1, 2015.

The parties agreed to hear the appeal in St. Louis County on July 31, 2017.  Further, the parties agreed to present the evidence and argument in a consolidated hearing and briefing with Appeal 15-47507.  The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following findings of fact and conclusions of law.

Complainant’s Evidence.

 Complainant proposed a TVM of $520,000.  To support its opinion of value, Complainant offered the following as evidence:

Exhibit A Appraisal Report of Troy Smith
Exhibit B Written Direct Testimony of Troy Smith


Respondent did not object to Complainants’ exhibits, which were received into the record.

Troy Smith (Smith) is a Missouri State Certified General Real Estate Appraiser.  He opined a value of the property as January 1, 2015.  Smith considered all three approaches but only developed the cost approach and income approach.

For the cost approach, Smith developed an opinion of value for the land then calculated the replacement cost new using Marshall Valuation Services.  Included in the cost approach is depreciation- both functional and economic.  Smith calculated an economic obsolescence of $2,856,773.  The economic obsolescence was based upon the required income ($332,368) to support a replacement cost new of $3,640,817 and the property’s limitation as to a net operating income (NOI) ranging from $57,554 to $65,771.

For the income approach, Smith determined the revenue potential for the property.  The appraiser then determined a vacancy and collection loss and operating expenses.  Operating expenses were based upon operating history of the subject and similar properties.  The last step in the income approach was developing a capitalization rate.  Smith reviewed for similar properties. The equity dividend rates ranged from 6.55% to 15.81%.  The appraiser also developed a band of investment method which indicated a range of 7.87 to 8.37%.  The actual loan terms of the subject are 9%, 95% loan-to-value.    The appraiser also included an effective tax rate of .97%.  After consideration of all pertinent information, he concluded an overall capitalization rate of 8.97%.

The appraiser’s concluded value was $520,000.  (Smith allocated $36,000 of the value to furniture, fixtures and equipment (FF&E). FF&E included appliances such as the refrigerator and oven, which may not have been declared as personal property but as a fixture of the property.

Respondent’s Evidence.

Respondent proposed a TVM of $4,100,000.  Respondent presented the following exhibits:

Exhibit 1 Written Direct Testimony of Glen Medlin
Exhibit 2  Appraisal Report of Glen Medlin
Exhibit 2A Substitute page
Exhibit 3 Sale on page 38 of Exhibit 2 in Appeal 15-77000
Exhibit 4 Sale on page 39 of Exhibit 2 in Appeal 15-77000
Exhibit 5 Sale on page 40 of Exhibit 2 in Appeal 15-77000
Exhibit 6 Sale on page 41 of Exhibit 2 in Appeal 15-77000
Exhibit 7 Map on page 42 of Exhibit 2 in Appeal 15-77000
Exhibit 8 Sale on page 39 of Exhibit 2 in Appeal 15-47507
Exhibit 9 Sale on page 40 of Exhibit 2 in Appeal 15-47507
Exhibit 10 Sale on page 41 of Exhibit 2 in Appeal 15-47507
Exhibit 11 Sale on page 42 of Exhibit 2 in Appeal 15-47507
Exhibit 12 Map on page 43 of Exhibit 2 in Appeal 15-47507
Exhibit 13 Appeal 15-77000 Calculations
Exhibit 14 Appeal 15-77000 Calculations using cost new x2
Exhibit 15 Substitute page 64 for Appeal 15-77000
Exhibit 16 Substitute page 61 for Appeal 15-47507


Exhibits 1 and 2 were admitted into evidence.  

Respondent presented the testimony and opinion of value of Glen Medlin. (Medlin)   Medlin is a General Real Estate Appraiser.  Medlin performed a cost and income approach to value.  The sales approach was not developed due to the lack of sales of similar properties.

According to Medlin, the land was purchased in May 2009 for $360,000 and the improvements cost $4,264,937.  The property was developed as part of government programs for affordable housing.  The developers receive annual tax credits of $387,000 from federal programs and $360,000 from the State of Missouri for a period of ten years in exchange for constructing the apartments and restricting rentals for low income housing.

For the cost approach, Medlin concluded a land value of $277,000.  Medlin then used Marshall Valuation Service to conclude an estimate of TVM of $4,360,000.

For the income approach, Medlin considered:

  1. The original purchase price of the land;
  2. A loan on the property of $3.61 million at 6% interest which was paid in December 2010;
  3. MHDC loan which initially started with monthly payments of 1% interest on a principal of $475,000. The loan as monthly installments of $1,520.79 at 1% interest and a balloon payment of $11,158 in December 2030; and
  4. Tax Credits of $747,000.

Medlin advocated that the tax credits are not independent of the ownership of the real property.  Medlin believes that the credits are “an integral part of the ownership of the real property, cannot be severed from the real property ownership, and contribute to the subject property’s fair market value.”

Medlin reported NOI for the subject ranging from $41,433 to $68,588 from 2012 thru 2015.  The appraiser reconciled the range to $58,746.  For capitalization rates, Medlin reviewed for market interest rates on apartments which indicated a rate of 5%.  The appraiser also developed the band of investment method and determined effective tax rate.  Medlin concluded on an overall cap rate of 7.85% which indicated a TVM of $748,600 “from the Rental Operations” (Exhibit 2 p. 64).  Medlin opined an “Indicated Value From Tax Credits = $3,277,600”.  The resulting TVM was $4,026,200.


  1. Jurisdiction. Jurisdiction over this appeal is proper.  Complainant timely appealed to the STC.
  2. Identification of Subject Property. The subject property is identified by parcel/locator number 11-6.0-024-002-005-002.21000.  It is further identified as 1608 West St. Joseph, Perryville, Perry County, Missouri.
  3. Description of Subject Property. The subject property consists of a 4.37 acre tract of land improved by a 7 building multi-tenant apartment complex with 36 units and a clubhouse/leasing office.  The improvements were constructed in 2009.  The construction was funded by low income housing tax credits.  (LIHTC)

Each apartment unit is 2 bedrooms and 2 bath of approximately 1,120 square feet.  The housing is designated for persons over 55.  Rental rates for the subject are established by the Missouri Housing Development Commission.  The rates are $395.00 per month.  There is a waiting list for the apartments and therefore the vacancy is negligible.  Vacancy consists of the time to prepare a vacated unit for the next tenant.  The NOI for the subject property has ranged from $57,552 to $65,771 from 2012 to 2014.  (Exhibit A)

  1. Assessment. Respondent set a TVM for the subject property of $1,929,994 as of January 1, 2015.
  2. Board of Equalization. The BOE determined a lower TVM for the property at $1,800,000.
  3. Presumption of Correct Assessment Rebutted.  Evidence presented was substantial and persuasive to rebut the presumption of correct assessment by the BOE.
  4. 7.   The income approach is the most persuasive approach to value for the subject property using an NOI of $60,000 and an overall capitalization rate of 8%.  The TVM of the subject property was $750,000 as of January 1, 2015. See Conclusions



The STC has jurisdiction to hear this appeal and to correct any assessment that 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

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

To obtain a reduction in assessed valuation based upon an alleged overvaluation, the Complainant must prove the true value in money of the subject property on the subject tax day.  Hermel, Inc., v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978).  True value in money is defined as the price that the subject property would bring when offered for sale by one willing but not obligated to sell it and bought by one willing or desirous to purchase but not compelled to do so.  Rinehart v. Bateman, 363 S.W.3d 357, 365 (Mo. App. W.D. 2012); Cohen v. Bushmeyer, 251 S.W.3d 345, 348 (Mo. App. E.D. 2008); Greene County v. Hermel, Inc., 511 S.W.2d 762, 771 (Mo. 1974).  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:

  1. Buyer and seller are typically motivated.


  1. Both parties are well informed and well advised, and both acting in what they consider their own best interests.


  1. A reasonable time is allowed for exposure in the open market.


  1. Payment is made in cash or its equivalent.


  1. Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.


  1. 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.


Presumption in Appeal

A presumption exists that the assessed value fixed 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 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.”  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).

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 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 deemed necessary when viewed in connection with all other circumstances.  Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. W.D. 1991).  The Hearing Officer, as the trier of fact, is not bound by the opinions of experts but may believe all or none of the expert’s testimony or accept it in part or reject it in part.  Exchange Bank of Missouri v. Gerlt, 367 S.W.3d 132, 135-36 (Mo. App. W.D. 2012).

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 used depends on several variables inherent in the highest and best use of the property in question.”  Snider, 156 S.W.3d at 347.


Income Approach

            Section 137.115, RSMo, requires that property be assessed based upon its TVM 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). 

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.

When applying the income approach to valuing business property for tax purposes, it is not proper to consider income derived from the business and personal property; only income derived from the land and improvements should be considered.  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. Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W. 3d, 341, 347 (Mo. 2005).

For ad valorem purposes, the property should be valued using actual rents and expenses, comparing those to market rents and expenses of similar properties, and looking to the market to develop a capitalization rate.



            Both appraisers considered all three approaches to value. Both appraisers concluded that the sales comparison approach would not be appropriate for the subject property due to the lack of comparable sales and the adjustments necessary to account for the Land Use Restriction Agreement. Both appraisers developed the cost and the income approaches to value.  Both appraisers placed most weight on the income approach.  (Exhibit 2, p 65; Exhibit A p 27)  Although the appraisers differed on their opinion of NOI, the most striking difference was their consideration of the tax credits.  Complainant’s appraiser did not consider the tax credits when calculating the TVM for the subject property.  Respondent’s appraiser did consider the tax credits.

Missouri Courts previously addressed the issue of tax credits of LIHTCs and the consideration in TVM for ad valorem purposes.  The Court stated that “LIHTCs make no direct contribution to the market value of these housing projects.  They are intangible property.  There is no statutory authority for consideration of these tax credits in real estate tax appraisal in Missouri.  ….. [t]his benefit is personal to the owner and not directly tied to the real estate”.  Maryville Properties v. Nelson, 83 SW3d 608, 617 (Mo. App. W.D. 2002).


             LIHTCs are not characteristics of the real property; they are intangible property.  Intangible property is not subject to ad valorem tax and therefore is not included in the TVM determination before the STC.

The cost approach is not persuasive in the valuation of the subject property due to the limitations on the allowable income for the property and the various agreements required with LIHTCs.  The sales approach was deemed unreliable to both certified appraisers due to the lack of sales of similar properties and the adjustment necessary if comparing the subject to other residential rental properties.  The income approach was relied upon by both parties and information as to the income approach is substantial and persuasive.  The property is an income generating property and therefore such approach is appropriate as long as the economic realities of the property are considered.  The economic realities cannot be ignored; they “must be taken into consideration and account when making a determination of value for ad valorem tax purposes.”  Missouri Baptist Children’s Home v. STC, 867 S.W.2d 510 (Mo. 1993). Mississippi Lime Company v. Clement F. Donze, Assessor, Ste. Genevieve County, Missouri, 2001 WL 256223 (Mo. St. Tax Com)

A review of the actual income and expenses of the subject property from 2012-2014 (Ex. A p 21, Ex 2 pp 55-56) indicates a NOI of $60,000 is appropriate.  Both appraisers reviewed Realty Rates (6.55% – 15.81%), developed the Band of Investments methodology (.07867-.10857), and reviewed the real estate tax rates (.96-.97%) for the subject for their capitalization rates.  The Complainant’s appraiser, using such resources, developed a range of capitalization rates from 8.72% to 9.22%.  The Respondent’s appraiser, using such resources, developed an overall capitalization rate of 7.85%.

Given the market information provided by each party, an overall capitalization rate of 8% is appropriate.   The indicated value using the information provided in the appraisal reports is:

NOI $60,000
Capitalization Rate 8%
Indicated Market Value of the Subject property $750,000


The TVM for the subject property as determined by the BOE is SET ASIDE.  The assessed value for the subject property for tax years 2015-2016 is set at $142,500 residential ($750,000 TVM).

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 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 Perry 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 October 30, 2017.


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 30th day of October, 2017, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.


Jacklyn Wood

Legal Coordinator