State Tax Commission of Missouri
RONNIE’S PLAZA, INC.)
)
Complainant,)
)
v.) Appeal Number 09-12765
)
JAKE ZIMMERMAN, ASSESSOR,)
ST. LOUIS COUNTY, MISSOURI,)
)
Respondent.)
DECISION AND ORDER
HOLDING
Decision of the St. Louis County Board of Equalization reducing the assessment made by the Assessor is SET ASIDE.The true value for the subject property is set at $6,750,000, commercial assessed value of $2,160,000.
Complainant is represented by Counsel, Thomas Rynard, Jefferson City, Missouri.
Respondent is represented by Associate County Counselor Edward Corrigan.
Decision rendered by Hearing Officer Maureen Monaghan.
ISSUE
Complainant appeals, on the ground of overvaluation, the Hearing Officer enters the following Decision and Order.
EVIDENCE
Complainant submitted the following exhibits and the exhibits were admitted into evidence:
|
Exhibit |
Description |
|
A |
CV of Douglas Zink |
|
B |
Appraisal Report |
|
C |
Written Direct Testimony Douglas Zink |
Respondent presented no evidence.
FINDINGS OF FACT
1.Jurisdiction.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the St. Louis City.
2.Assessment Assessor determined a true value for the propertyat $9,262,300, commercial classification.The Board of Equalization reduced the true value to $8,210,000.
3.Subject Property.The subject property is a 14.4 acre site improved with 83,042 square feet of retail space.The improvements were built in 1984.
4.Sales ofRetail Properties.There were few sales of retail properties on January 1, 2009.The market for the properties began slowing in 2007 and sales not already negotiated were non-existent on January 1, 2009.Due to the economic and market conditions, there were few sales of properties with comparable locations, demographics and size and in a relevant time period and market conditions.The subject property, valued under the sales comparison approach, would be valued within a range from $6,477,276 to $7,058,570.
5.Income and Expenses.Properties in the area had occupancy rates of 89%.The subject property’s occupancy rate was 51%.A buyer would consider the market’s occupancy rate and expect that they could improve the retail occupancy of the subject property.Market rents and expenses are appropriate.The subject property would be valued, using the income approach, at $6,750,000.
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.[1]
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.[2]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.[3]
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 on January 1, 2009.[4]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.”[5]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[6]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.[7]
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.[8]True value in money is defined in terms of value in exchange and not value in use.[9]It is the fair market value of the subject property on the valuation date.[10]Market value is the most probable price in terms of money which a property should bring in 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:
1.Buyer and seller are typically motivated.
2.Both parties are well informed and well advised, and both acting in what they consider their own best interests.
3.A reasonable time is allowed for exposure in the open market.
4.Payment is made in cash or its equivalent.
5.Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
6.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.[11]
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.[12]
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.[13]
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.[14]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.[15]
Cost Approach Not Appropriate for Present Appraisal Problem
The valuation of property under the cost approach is based on the estimated reproduction cost of the improvements less depreciation.The approach works best for new improvements and where sales and income data is limited.The improvement is not new and the appraiser provided income data for similar commercial retail properties and sales for valuation purposes therefore the cost approach is not appropriate for valuing this property.
Sales Approach Appropriate to Substantiate Value
The sales comparison approach is appropriate when a number of properties that are similar to the subject have been sold and the sale date is close in time to the valuation date.In other words, the sales comparison approach is only as reliable as there are sufficient sales during a relative time period and location.The sales provided by the appraiser were similar type properties however they were not located near the subject property, demographics differed, and the sales occurred prior to impact of negative market or economic conditions.The adjusted sales prices ranged from $78.57 to $84.64 per square foot providing a value range of $6,477,276 to $7,058,570.Given the limitations of comparability, the sales comparison approach can only be used to substantiate a value as determined by the income approach.
Income Approach Appropriate for Present Appraisal Problem
The strongest and most compelling approach to value for the subject property is the income approach. The income approach is based on the theory that an investor will pay no more for a property than what income may be received from an investment with similar income and risks.
The appraiser reviewed the properties rental rates as well as the market.He determined that although the subject property’s occupancy was 51%, the market occupancy rate was 89% and therefore a buyer would presume that they would achieve a higher occupancy level than historic performance.He reviewed expense information for retail properties and concluded on appropriate market expense data.
Lastly, the appraiser concluded on a capitalization rate.The overall rate was based upon the class of the shopping center, sales of similar properties, investor surveys, and a band of investment calculation.The appraiser, after reviewing all sources of information, concluded on an overall rate of 11.29%.The rate is reasonable given the type of property, age of the property, market conditions and current occupancy level of the property.
The resulting value by the income approach is $6,750,000.
Conclusion
The strongest and most compelling approach to value for the subject property is the income approach. The income approach is based on the theory that an investor will pay no more for a property than what income may be received from an investment with similar income and risks.The appraiser’s testimony and report were substantial and persuasive.
ORDER
The assessed valuation for the subject property as determined by the Board of Equalization for the St. Louis County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2009 and 2010 is set at $2,160,000.
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, MO65102-0146, 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. [16]
Disputed Taxes
The Collector of the 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 June 13, 2012.
STATE TAX COMMISSION OFMISSOURI
_____________________________________
Maureen Monaghan
Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 13th day of June, 2012, to:Thomas Rynard, 308 E. High Street, Suite 301, Jefferson City, MO 65101, Attorney for Complainant; Edward Corrigan, Associate County Counselor, Attorney for Respondent, 41 South Central Avenue, Clayton, MO 63105; Jake Zimmerman, Assessor, 41 South Central Avenue, Clayton, MO 63105; John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.
___________________________
Barbara Heller
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
[2] 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).
[3] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
[5] 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).
[8] 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); See Also, Exhibit A, p. 8 – Definition of True Value in Money.
[9] 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).
[11] 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; Exhibit 1, p. 8.
[12] 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).
[13] 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).
[14] 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).
[15] 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).
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