State Tax Commission of Missouri
|REUTERS AMERICA, INC.,||)|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS CO., MISSOURI,||)|
AFFIRMING DECISION OF THE HEARING OFFICER
UPON APPLICATION FOR REVIEW
On June 16, 2016, Chief Counsel Maureen Monaghan, acting as Hearing Officer (Hearing Officer), entered her Decision and Order (Decision) setting aside the assessment by the Board of Equalization of St. Louis County (BOE). The Hearing Officer found that Complainant had rebutted the board presumption by presenting substantial and persuasive evidence, which included the written direct testimony and appraisal of a Missouri certified general appraiser, John Hottle.
Jake Zimmerman, Assessor of St. Louis County, (Respondent) filed an Application for Review of the Decision. Complainant filed a Response. Respondent filed a Reply.
CONCLUSIONS OF LAW
Standard of Review
A party subject to a Decision and Order of a Hearing Officer with the State Tax Commission (STC) may file an application requesting the case be reviewed by the Commission. Section 138.432 RSMo Cum. Supp. 2015; 12 CSR 30-3.080(4). The Commission may then summarily allow or deny the request. Section 138.432; 12 CSR 30-3.080(5). The Commission may affirm, modify, reverse, set aside, deny, or remand to the Hearing Officer the Decision and Order of the Hearing Officer on the basis of the evidence previously submitted or based on additional evidence taken before the Commission. Section 138.432; 12 CSR 30-3.080(5)(A).
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, 515 S.W.2d at 450; Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968). Likewise, the Commission is free to consider all pertinent facts and give them such weight as reasonably the Commission deems them entitled.
The Commission, having reviewed the record and having considered the Decision of the Hearing Officer and the briefs of the parties, enters its Decision.
Respondent’s Points on Review
In the Application for Review, Respondent sets forth the following claims of error:
(1) The Hearing Officer erred “in concluding that complainant met its burden of presenting substantial and persuasive evidence to overcome the presumption of correctness of the BOE decision” that “[t]he appraisal report and written direct testimony of both of complainant’s appraisers is in direct conflict with Mr. Hottle’s testimony” and that “[t]he conflict places in question the accuracy of the entire appraisal report;”
(2) Respondent was prejudiced because Complainant did not produce a lease or offer a lease into evidence despite the fact such had been requested in discovery; and
(3) Complainant’s evidence was not substantial and persuasive in that the opinion of value on behalf of Complainant “is highly questionable” due to the way Complainant’s appraiser utilized the sales comparison approach after determining a highest and best use.
For the reasons that will now be set forth in response to Respondent’s Application for Review, the Commission finds Respondent’s arguments to be unpersuasive to warrant either a modification or overturning of the Decision.
Factual and Procedural History
- Subject Property. The subject property is identified by map parcel number 17N420454. It is further identified as 788 Office Parkway, St. Louis County, Missouri. The subject property consists of a 2.52 acre tract of land improved with a commercial building of 20,726 square feet constructed in 1974. The building at the date of valuation was 100% occupied by a tenant. As of January 1, 2011, the lease had 18 months remaining.
- Complainant’s Evidence. The Complainant submitted an Appraisal Report and the Written Direct Testimony of a certified, general appraiser. The appraiser developed the sales comparison approach to opine a market value for the property. The appraiser developed a value of the property as improved since there was a lease in place as of January 1, 2011. The appraiser concluded an opinion of value of $1,240,000.
- Respondent’s Evidence. The Respondent submitted an Appraisal Review Report, Written Direct Testimony and qualification of a general, certified appraiser. The appraiser did not inspect the property or form an opinion of value. The Respondent’s appraiser noted that Complainant’s appraiser found the property’s highest and best use as demolished yet did not form an opinion of land value minus demolition costs.
- Respondent and Board of Equalization Valuation. The Respondent appraised the property at $1,113,400 for land and $1,173,400 for the improvements for a total of $2,286,800. The Board of Equalization sustained the valuations.
- Land Value Minus Demolition Costs. A valuation utilizing the method proposed by Respondent’s appraiser (land value minus demolition costs), utilizing the Respondent’s and Board of Equalization’s value of land ($1,113,400) would result in a valuation of the subject property which is less than was concluded by Complainant’s appraiser ($1,240,000), even before the deduction of demolition costs.
We have reviewed the whole record in this case and find that the Hearing Officer did not err as Respondent alleged in his application for review. The valuation by Complainant’s appraiser, which valuation was adopted by the Hearing Officer, was based upon a sound analysis of the subject property. Such opinion of value by Complainant’s appraiser exceeded the land valuation of the Respondent and the BOE by over $120,000. Respondent’s appraiser additionally believed that demolition costs should be deducted from the land valuation. No evidence regarding demolition costs was offered into the record. Nevertheless, the valuation determined by the Hearing Officer would exceed the resulting valuation proposed by Respondent’s appraiser even more if demolition cost were deducted from the land valuation. Consequently, whether Complainant’s appraiser’s valuation was flawed, which the Commission sees no evidence of in the record, Respondent received the benefit of a higher valuation than proposed by Respondent’s own appraiser.
Finally, regarding the purported prejudice of the lease not being produced, such was not appropriately preserved. Respondent did not file any motion, either orally or in writing prior to or during the evidentiary hearing regarding the lease. Additionally, the Commission finds that such issue was harmless to the ultimate outcome of this appeal.
Assessment of Property
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 provides for residential property to be assessed at 19% of true value in money; commercial property to be assessed at 32% of true value in money; and agricultural property to be assessed at 12% of true value in money.
Summary & Conclusion
A review of the record in the present appeal provides ample support for the determination made by the Hearing Officer. The Commission finds no basis to support a determination that the Hearing Officer acted in an erroneous, arbitrary, capricious or unreasonable manner, or that she abused her discretion as the trier of fact and concluder of law in this appeal. Hermel, Inc. v. STC, 564 S.W.2d 888 (Mo. 1978); Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Holt v. Clarke, 965 S.W.2d 241 (Mo. App. W.D. 1998); Smith v. Morton, 890 S.W.2d 403 (Mo. App. E.D. 1995); Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).
Upon review of the record and the Decision in this appeal, the Commission finds no grounds upon which the Decision of the Hearing Officer should be reversed or modified. Accordingly, the Decision is affirmed. The Decision and Order of the Hearing Officer, including the findings of fact and conclusions of law therein, is 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 November 15th, 2016.
STATE TAX COMMISSION OF MISSOURI
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 15th day of November, 2016, to:
Complainant’s(s’) counsel and/or Complainant; the Respondent County Assessor and/or Counsel for the Respondent County Assessor; and the County Collector.
Contact Information for State Tax Commission:
Missouri State Tax Commission
P.O. Box 146
301 W. High Street, Room 840
Jefferson City, MO 65102
State Tax Commission of Missouri
|REUTERS AMERICA INC,||)||Appeal Number 11-13808|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
Decision of the County Board of Equalization 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 2011 and 2012 is set at $1,240,000, commercial assessed value of $396,800.
Complainant appeared by counsel James P. Gamble.
Respondent appeared by counsel Priscilla Gunn.
Case heard and decided by Hearing Officer Maureen Monaghan.
Complainant appeals, on the grounds of overvaluation the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property. The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2011. 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. Evidentiary Hearing in this appeal occurred on May 16, 2016.
- Identification of Subject Property. The subject property is identified by map parcel number 17N420454. It is further identified as 788 Office Parkway, St. Louis County, Missouri.
- Description of Subject Property. The subject property consists of a 2.52 acre tract of land improved with a commercial building of 20,726 square feet constructed in 1974. The building at the date of valuation was 100% occupied by a tenant. The property was used as a call center since 2007. As of January 1, 2011, the lease had 18 months remaining. The lease expired in 2012 and was not renewed. The property was listed but due to the unique nature of the building which was specifically designed for the call center use, the property was not leased or sold. The building was demolished in 2015.
- Assessment. The Assessor appraised the property at $2,286,800 ($1,113,400 for land and $1,173,400 for the improvements). The Board of Equalization sustained valuation.
- Complainant’s Evidence. The Complainant submitted Exhibit A – Appraisal Report – and Exhibit B – Written Direct Testimony of certified, general appraiser John Hottle. The appraiser has been appraising property since 1971 with membership in the Appraisal Institute and St. Louis Association of Realtors. The appraiser developed the sales comparison approach to opine a market value for the property. The appraiser did not develop the income approach as the property was used as a call center; such function would not be marketable for lease and therefore the income approach was not developed. The appraiser concluded an opinion of value of $1,240,000.
The appraiser analyzed the highest and best use of the property as if improved. The appraiser considered whether the owner should continue using the property without modifications, make modifications to the building or demolish the building. Although the improvements posed no physical or legal limitations, the improvements were not financially feasible. The appraiser concluded that since the property, as is, without a tenant, the improvements should be removed and redeveloped.
Since there was a lease in place as of January 1, 2011, the appraiser developed a value of the property as improved. The appraiser reviewed five comparable sales and determined that the property would sell for $60 per square foot or $1,240,000.
- No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2011, to January 1, 2012, therefore the assessed value for 2011 remains the assessed value for 2012. Section 137.115.1, RSMo.
- Respondent’s Evidence. Respondent submitted Exhibits 1 (Professional qualifications of George Smith), 2 (Appraisal Review), and 3 (Written Direct Testimony of George Smith.) The witness is a general, certified appraiser. The appraiser did not inspect the property or form an opinion of value. The Respondent’s appraiser noted that the Complainant’s appraiser found the property’s highest and best use as demolished yet did not form an opinion of land value minus demolition costs. The Complainant’s appraiser explained that since the property was under lease as of January 1, 2011 and therefore could not be demolished, he did not do a land valuation.
- Presumption of Correct Assessment Rebutted. Complainant’s evidence was substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2011 at $1,240,000.
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).
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, 2011. 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. The appraiser also developed the sales comparison approach. After reviewing market sales, the appraiser concluded a value of $60 per square foot for an indication of value of $1,240,000.
Respondent did not present an appraisal or valuation evidence. Respondent presented a review appraisal. The reviewer did not inspect the property or form an opinion of value. The reviewer was critical of the certified appraiser for not forming an opinion of the property as if vacant since the appraiser determined the highest and best use was to remove the improvements. The reviewer provided some valid critique in regards to the appraisal report, however, it was not fatal to the opinion of market value. Respondent presented no evidence to refute the opinion of the certified appraiser or substantiate their critique.
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).
The assessed valuation for the subject property as determined by the Board of Equalization for St. Louis County for the subject tax day is SET ASIDE.
The value for the subject property for tax years 2011 and 2012 is set at $1,240,000, assessed value of $396,800.
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 June 16, 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 June 16, 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