SCP 2006-C23-182 LLC v. Cox (Platte)

March 5th, 2014

State Tax Commission of Missouri


SCP 2006-C23-182 LLC,














Appeal Number 11-79021



















Decision of the Platte County Board of Equalization sustaining the assessment made by the Assessor is SUSTAINED.True value in money for the subject property for tax years 2011-2012 set at $3,643,000, assessed commercial value of $1,165,760.Complainant appeared by Counsel Richard Dvorak, Overland Park, Kansas.Respondent appeared by Counsel John R. Shank, Platte City, Missouri.Evidentiary hearing was conducted by Hearing Officer Maureen Monaghan.Case decided by Hearing Officer Monaghan.


Complainant appeals, on the ground of overvaluation, the decision of the Platte 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 Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.


1.Jurisdiction.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the Platte County Board of Equalization.A hearing was conducted on April 16, 2013, at the Platte County Administration Building, Platte City, Missouri.Complainant filed a post hearing brief.

2.Assessment.The Assessor appraised the property at $3,643,000, assessed commercial value of $1,165,760.The Board sustained the assessment.[1]

3.Subject Property.The subject property is located at 8421 NW Prairie View Road, Kansas City, Missouri.The property is identified by locator number 20-1.0-12-100-004-015-000.The site is approximately 67,954 square feet.The improvement is a single tenant retail building of approximately 13,488 square feet constructed in 2006.It was constructed as a CVS drug store for CVS under a build to suite/purchase-lease back agreement.It is located in Zona Rosa, a mixed use development.

4.Complainant’s Evidence.Complainant submitted the following exhibits which were received into evidence:




Appraisal Report $2,290,000


WDT Gerald Maier, MAI


5.Respondent’s Evidence.Respondent submitted the following exhibits which were received into evidence:




Appraisal Report


WDT Brian Everly




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.[2]

Presumption in Appeals

There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[3]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.[4]

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.[5]True value in money is defined in terms of value in exchange and not value in use.[6]It is the fair market value of the subject property on the valuation date.[7]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.[8] 

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.[9]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.[10]

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, 2011.[11]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.”[12]

Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[13]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.[14]

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.[15]

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.[16]


Both parties presented appraisal reports by certified appraisers.Both appraisals suffered from deficiencies in their reporting.Neither party presented a persuasive appraisal report.

The subject property is a build to suit property with a lease in place that represents the cost to construct the project rather than the market.Both appraisers developed all three approaches to value, but relied most heavily on the income approach.

The income approach determines the 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 buying would pay to realize the income stream that could be obtained from the property when devoted to its highest and best use….” [17] The approach is most appropriate in valuing investment type properties and is reliable when rental income, operating expenses and capitalization rates can reasonable be estimated from existing market conditions.

The income approach presented by each appraiser was the weakest in information provided to support their conclusion of value.The Complainant’s appraisal lacked supportive data in several areas. Respondent’s appraiser’s basis of value was flawed in that he relied on the subject property’s information and information from other national chain drug stores.

The Complainant’s appraiser grouped rentals in three categories.The first category was referred to as “first generation leases.”The circumstances regarding the lease and the terms of the lease reflect a sale leaseback for build to suit properties. The terms of these leases may not reflect actual market and instead reflect the cost to construct and the financing of the purchase of the property.The second category of leases is referred to as second generation leases.These properties involve a new tenant coming into the structure after renovations were made by the owner.The third category involves rentals in which the tenant takes the space “as-is.”The appraiser also reviewed former CVS spaces around the country.

After categorizing the leases, the appraiser reviewed the market and selected 9 leases.Some of the comparables are single retail; most of the comparables were part of a multi tenant building. None are first generation, build to suit spaces.The appraiser also looked at 2 other leases, one of which was in the subject’s area.In the leases, the tenant pays no base rent; the rent is based upon sales of the retail tenant.

The appraiser reviewed the leases and made adjustments to the rental rates of the properties.The adjustments made by the appraiser included adjustments made for allowances, terms of the lease, size, age, condition, location and quality of the building.The gross adjustments made to the comparable rental rates ranged from 20% to 83% with the majority of adjustments being at least 50%. No market data was provided to support the adjustments made by the appraiser.

The Respondent’s appraiser’s analysis was flawed.He relied on information from rental information from CVS and Walgreens spaces.Some of the rents used were estimated by the appraiser.The appraiser made no adjustment for the financial arrangements in a build to suit buyback or review market rates for single tenant retail spaces.

The vacancy rates selected by the appraisers were similar in that the Complainant’s appraiser used 8.5% and the Respondent used 8% which he found to be the average retail vacancy rate in the market.

The appraisers used very different expense information.The Respondent’s appraiser used 10% without providing any supporting documentation for the determination.The Complainant’s appraiser used $6.39, or a 30% figure.A chart and explanation was provided.The chart indicated a minimum expense of $3.88, average expense of $5.76 per square foot and a maximum of $8.85.The appraiser set out individual expenses and his estimate for the individual expenses which added up to the $6.39.However, the explanation provided no market support and did not explain how the market data provided may or may not have been indicative of a single space tenant.

The capitalization rates by the Complainant and Respondent differed.However, due to the lack of support of the income and expense data the accuracy of the capitalization rate is inconsequential.

In conclusion, the Respondent’s appraisal was not persuasive as it was premised on a theory to use and only compare with national drug store chains to determine the market value.

Properties like the subject are custom built property for the occupant and the lease terms reflect the recoupment of the custom construction.The rents are usually above market. The cost of the construction and rental are part of an overall business operation of the tenant and works in their business plan.The occupants business plan may not reflect the actual market.The appraiser’s approach to valuation was incorrect.[18]The Complainant’s premise was correct in that the appraiser recognized that the appraisal was for market value and not value in use but his lack of support within the report left the hearing officer without substantial and persuasive evidence to support the conclusion reached by his analysis.

Both appraisers developed the sales comparison approach as support to their income approach; the sales approaches suffered the same fatal defects.Sales approach to value uses prices paid for similar properties in arm’s-length transactions and adjusts those prices to account for difference between the properties.The approach is most appropriate when there is an active market for the type of property at issue such that sufficient data is available to make a comparative analysis.

Once again, the Complainant’s appraiser categorized the market sales.The first category was the similar to the subject.The properties were “build to suit” with a lease in place; property arrangements with lease buy backs which are not market sales.The second category was a second generation lease in which the property was purchased and a tenant was occupying the building.The last type of category was a fee simple – a sale of a vacant retail property.The Complainant’s appraiser reviewed the market and noted that there were not many sales for a comparative analysis especially for time adjustments.

The appraiser selected nine sales.The sales were single space and multi tenant spaces.The appraiser made no adjustments for market as the appraiser did not find sufficient data although he reported rental rates did increase.He made adjustments for age, location, size, and quality.For the adjustment for the age of the property, the appraiser used the age life method.There was no data from the market to support the methodology.To adjust for the location and lot size, the appraiser took the subject sale square foot price and compared with it with the comparable sale square foot price.(The actual sale price of the subject property sometime prior to 2006, according to the appraiser, is unknown.)For the building size, the appraiser explained that he adjusted 10% for doubling or halving the square footage and made 5% increment adjustments.The gross adjustments ranged from 27%-148%, 7 out of the 9 sales were adjusted 50-149%.

The Respondent’s appraiser only used sale of drug stores – CVS and Walgreens – and no other single tenant structure.Given the financing arrangements of these types of sales, the data cannot be relied upon as to reflect market.

“The facts upon which an expert’s opinion is based, like the facts sufficient to support a verdict, must measure up to the legal requirements of substantiality and probative force; the question of whether such opinion is based on and supported by sufficient facts or evidence to sustain the same is a question of law for the court.”[19]An expert’s opinion must be founded upon substantial information, not mere conjecture or speculation, and there must be a rational basis for the opinion.[20]

A presumption exists in favor of the correctness of the valuation of the tax assessor.To obliterate the presumption, substantial controverting evidence is required.[21]The Complainant’s evidence, their appraisal, was not substantial and persuasive.There were not sufficient facts or evidence to support the expert’s opinion.The facts upon which an expert’s opinion is based, like the facts sufficient to support a verdict, must measure up to the legal requirements of substantiality and probative force.

Further the credibility of the witness was challenged by the Respondent.The appraiser, during cross examination, admitted that he was denied an appraiser license in the State of Arizona and was disciplined by the Kansas Real Estate Appraisal Board.The Hearing Officer, as the trier of fact, may consider the testimony of an expert 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.[22]


The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Platte County for the subject tax day is SUSTAINED.

The assessed value for the subject property for tax years 2011 and 2012 is set at $1,165,760, classified as commercial property.

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 appeal is based will result in summary denial. [23]

Disputed Taxes

The Collector of Platte 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 December 17, 2013.


Maureen Monaghan

Hearing Officer



[1] Complaint for Review of Assessment 

[2] Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo

[3] 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) 

[4] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959) 

[5] 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). 

[6] 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). 

[7] Hermel, supra. 

[8] 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. 

[9] 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) 

[10] 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). 

[11] Hermel, supra 

[12] 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) 

[13] See, Cupples-Hesse, supra

[14] Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975) 

[15] 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). 

[16] 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). 

[17] Equitable life Assurance Society v. State Tax Commission, 852 SW2d 376, 380 (Mo. App. 1993) 

[18] Exhibit A, Addendum H, You Can’t Get the Value Right if You Get the Rights Wrong, Lennhoff 

[19] Robinson v. Empire Gas Inc. of Hartville, 906 S.W.2d 829 (Mo. App. S.D. 1995). 

[20] Missouri Pipeline Co. v. Wilmes, 898 S.W. 2d 682, 687 (Mo. App. E.D. 1995).[21]Hermel, Inc v. State Tax Commission, 564 S.W.2d 888 (S.Ct. 1978), Nance v. Tax Commission, 18 S.W.3d 611 (App. WD 2000) 

[22] 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). 

[23] Section 138.432, RSMo.