State Tax Commission of Missouri
|RAINY DAY LLC,||)|
|v.||)||Appeal No. 13-13840|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
Decision of the County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE. Complainant presented substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization. True value in money for the subject property for tax years 2013 and 2014 is set at $2,600,000, commercial assessed value of $832,000.
Complainant appeared by counsel Thomas L. Caradonna.
Respondent appeared by counsel Ed Corrigan.
Case heard and decided by Hearing Officer Maureen Monaghan.
Complainant appeals, on the grounds of overvaluation and discrimination, the decision of the St. Louis County Board of Equalization, which reduced the valuation of the subject property. The Complainant abandoned their claim of discrimination. The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2013. 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
- Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.
- Evidentiary Hearing. The parties waived Evidentiary Hearing.
- Identification of Subject Property. The subject property is identified by map parcel number 15N531453. It is further identified as 11650 Lakeside Crossing Ct., Maryland Heights, Missouri, 63146.
- Description of Subject Property. The subject property consists of 5.41acres of land improved by an office/warehouse building with 89,996 square feet of gross leasable area. The property was constructed in 2003 as a single-tenant property.
- Assessment. The Assessor appraised the property at $4,527,900, commercial assessed value of $1,448,930. The Board of Equalization reduced the value to $3,600,000, a commercial assessed value of $1,152,000.
- Complainant’s Evidence. The Complainant submitted Exhibit A (Appraisal Report) and Exhibit B (Written Direct Testimony of Certified Appraiser John C. Hottle). The appraiser omitted the cost approach due to the effective age of the improvements. The appraiser developed the sales comparison approach and the income approach to value, relying primarily on the income approach. The appraiser concluded an opinion of value of $2,600,000.
- No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2013, to January 1, 2014; therefore, the assessed value for 2013 remains the assessed value for 2014. Section 137.115.1, RSMo.
- Respondent’s Evidence. Respondent did not submit any evidence.
- Presumption of Correct Assessment Rebutted. Complainant’s evidence was substantial and persuasive to rebut the presumption of correct assessment by the Board.
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 are assessed at set percentages of true value in money. Section 137.115.5, RSMo – 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). 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).
Upon presentation of the Complainant’s evidence (Exhibit A) the presumption in this appeal disappeared. The submission of the appraisal report, performed by a state certified real estate appraiser, established the Board’s value was in error. The appraisal established the fair market value that should have been placed on the property.
Complainants’ Burden of Proof
In order to prevail, Complainants 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, 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). 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.
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.
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 Complainant presented the testimony and report of a general certified appraiser. The appraiser valued the subject property using the sales comparison approach and the income approach. The Respondent did not present evidence of value of the property.
The Complainant’s appraiser relied upon the income approach to value as a buyer of this property would rely on this information in the market place. The appraiser reviewed the actual lease for the property. The appraiser also reviewed eight industrial warehouse properties with rents that were most similar to the subject property. The comparable rents used in the appraiser’s analysis were single and multi-tenant office warehouses, bulk warehouses, and service centers. Market rents ranged from $2.00 to $4.75 per square foot with an average rent of $2.96 per square foot. The appraiser estimated income and expenses for the subject property to arrive at a net operating income. The appraiser employed the direct capitalization method of the income approach because the subject property was an existing office/warehouse building. The appraiser utilized market research, including investor surveys, comparable sales while under lease, and economic conditions to determine a capitalization rate. The appraiser selected a 9.5% overall capitalization rate. The resulting indication of value was $2,600,000. The appraiser concluded that the income approach provided a reliable estimate of value for the land and building based upon typical rates of return sought by investors for these types of facilities in the market place. The appraiser estimated the projected economic rental of the facility by comparing the subject property to similar type industrial facilities on a regional basis, finding this approach to be more reflective of the current market and to have more reliable data. The appraiser believed the final value estimate using this approach to be the best indicator of value based upon these assumptions.
The appraiser developed the sales comparison approach by reviewing six similar type properties in similar market areas and applied adjustments for their differences. The resulting indication of value was $3,150,000. However, the appraiser noted that the sales comparables required a large amount of net and gross adjustments because very few comparable sales have sold since the market downturn in 2008. According to the appraiser, the subject property was located in a declining market, and most industrial properties that were selling were owner occupied, rather than leased spaces, with minimal financing or all cash deals. The appraiser considered older sales and current listings of multi-tenant industrial properties.
The Respondent did not present any evidence of value.
There is a presumption of validity, good faith, and correctness of assessment by the County Board of Equalization. The Complainant has the duty to provide substantial and persuasive evidence. The Complainant met its burden through the presentation of a witness who was a state certified general real estate appraiser with more than 30 years of appraisal experience regarding a variety of properties, including residential, commercial, industrial, agricultural, institutional, and recreational properties. The appraiser conducted a site visit to physically inspect the subject property and examined documentation and information relevant to the property to form his opinion of value.
The assessed valuation for the subject property as determined by the Assessor and modified by the Board of Equalization for St. Louis County for the subject tax day is SET ASIDE for an assessed value of $832,000.
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 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 17th day of March, 2016.
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 March, 2016, 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