State Tax Commission of Missouri
| SHAWMET HOMES, INC. | ) | Appeal No. 18-32000 | |
| ) | Parcel/Locator: 18-209-00-03-002.00 | ||
| Complainant | ) | ||
| ) | |||
| v. | ) | ||
| ) | |||
| CATHY RINEHART, ASSESSOR | ) | ||
| CLAY COUNTY, MISSOURI, | ) | ||
| ) | |||
| Respondent | ) |
DECISION AND ORDER
HOLDING
The assessment made by the Board of Equalization of Clay County (BOE), Missouri, is SET ASIDE. Complainant Shawmet Homes, Inc. (“Complainant”) presented substantial and persuasive evidence establishing that the subject property was exempt from ad valorem taxation under Article X, Section 6 of the Missouri Constitution and Section 137.100, RSMo as of January 1, 2018.
Complainant appeared by counsel Wayne Tenenbaum.
Respondent, Cathy Rinehart, Assessor of Clay County, Missouri appeared by counsel Patricia Hughes.
Case heard and decided by Senior Hearing Officer John Treu (Hearing Officer).
ISSUE
The State Tax Commission (STC) takes this appeal to determine whether the subject property was exempt pursuant to Article X, Section 6 of the Missouri Constitution and Section 137.100, RSMo. for tax year 2018.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
- Complainant timely appealed to STC.
- Evidentiary Hearing. The issue of tax-exempt status for the subject property was presented at an evidentiary hearing on April 26, 2019, in Liberty, Clay County, Missouri.
- Identification and Description of Subject Property. Complainant owns the subject property located at 4029 N. Bellaire Avenue. The subject property is a housing facility known at Parvin Estates (“the subject property”). Complainant acquired land in Clay County, Missouri (Exhibit AL). The subject property was built in the early 1970’s. It was designed as a low income family housing project and continues to operate as such to the present time. It is composed of 300 apartment/townhouse units broken down as follows:
1 bedroom-no basement 36 units
1 bedroom with basement 164 units
3 bedroom with basement 76 units
4 bedroom with basement 24 units
TOTAL 300 units.
103 of these units are designated as Section 8 units and the other 197 are not.
- Respondent valued the subject property’s true value in money (TVM), as of January 1, 2018, and denied exemption to the subject property.
- The BOE also found the subject property not to be exempt.
- Complainant’s Evidence. Complainant asserts the subject property is exempt from ad valorem taxation because Complainant is a not-for-profit organization which owns and operates the property for a charitable purpose. Complainant offered the following evidence to support its assertion:
| Exhibit | Description | Ruling |
| A | Certificate of Good Standing- Missouri | Admitted |
| B | Certificate of Good Standing- Kansas | Admitted |
| C | Articles of Incorporation | Admitted |
| D | By-laws | Admitted |
| E | Revised and Restated By-laws | Admitted |
| F | IRS 501(c)(3) Status Letter | Admitted |
| G | Audited Financial Statements for Fiscal Year 2017 | Admitted |
| H | Audited Financial Statements for Fiscal Year 2016 | Admitted |
| I | Audited Financial Statements for Fiscal Year 2015 | Admitted |
| J | IRS Form 990 for Fiscal Year 2017 | Admitted |
| K | Rent Roll as of 1/1/2018 | Admitted |
| L | Rent Subsidy Calculations | Admitted |
| M | Multi-Year Turnover Statistics | Admitted |
| N | Management Agreement | Admitted |
| O | Real Estate Appraisal Report (to confirm physical characteristics) | Admitted |
| P | Renewal Contract | Admitted |
| Q | Rent Comparability Study | Admitted |
| R | IRS 501(c)(3) Status Letter for Phoenix Family Housing (Phoenix) | Admitted |
| S | Phoenix 2017 Annual Report | Admitted |
| T | Parvin Estates Services Agreement with Phoenix | Admitted |
| U | Phoenix- Families First Program Details | Admitted |
| V | Phoenix- Summary of Family First Services | Admitted |
| W | Parvin- Welcome Letter from Phoenix | Admitted |
| X | Phoenix- HIKE Reading Achievement Program | Admitted |
| Y | Phoenix/Parvin Program Highlights January – March 2018 | Admitted |
| Z | Grants Benefitting Residents of Parvin | Admitted |
| AA | Dental Program | Admitted |
| AB | Written Direct Testimony of Clifton R. Cohn | Admitted |
| AC | Curriculum Vitae of Clifton R. Cohn | Admitted |
| AD | Written Direct Testimony of Keith M. Kramer | Admitted |
| AE | Curriculum Vitae of Keith M. Kramer | Admitted |
| AF | Written Direct Testimony of Jim Glynn | Admitted |
| AG | Curriculum Vitae of Jim Glynn | Admitted |
| AH | Written Direct Testimony of Kimber Myers-Givner | Admitted |
| AI | Curriculum Vitae of Kimber Myers-Givner | Admitted |
| AJ | Rent Comparability Study | Admitted |
| AK | Parvin Rent Discount Calculation | Admitted |
| AL | Deed | Admitted |
| AM | List of On-Site Employees | Admitted |
| AN | HUD Guidelines | Admitted |
| AO | Appraisal Institute of Real Estate Manual Excerpt | Admitted |
Shawmet Homes, Inc. is a Kansas not-for-profit corporation, qualified to do business in the State of Missouri. It is certified as a Not-For-Profit entity for federal tax purposes. (Exhibit F) It was formed in 1971 as a cooperative effort between Shawnee Mission Housing Council (a low income housing advocate), the Atonement Lutheran Church of Overland Park, Kansas, and Metropolitan Lutheran Ministries of Kansas City, Missouri.
The subject property is managed, by Yarco Company, Inc. (Yarco). The United States Department of Housing and Urban development (“HUD”) has approved Yarco as a manager of HUD mortgaged properties and approved the fees paid to Yarco for its services by Complainant. Policy decisions regarding the subject property are made by Complainant’s Board of Directors (“Board”). Yarco is responsible for the management of operations.
Respondent’s witness Keith M. Kramer (“Kramer”), who has over 40 years of experience in analyzing and appraising low income housing projects, quoted from The Appraisal of Real Estate, Appraisal Institute, 14th Edition, 2015, at p. 481, as follows:
Management services may be contracted or provided by the property owner. The management expense may have two components: a professional property management fee and other expenses related to the operation of the asset. The property management fee is usually expressed as a percentage of effective gross income, which conforms to the local pattern of such charges for typical management. For some property types, there may be additional management expenses such as on-site supervision and the cost of maintaining and operating on-site facilities such as officer or managers’ apartments. These additional management expenses, in conjunction with other management expenses such as the cost of telephone service, clerical help, legal or accounting services, printing and postage, and advertising and promotion, may be accounted for elsewhere in the expense statement. Management expenses may be included among recoverable operating expenses in certain markets for some property types.
Mr. Kramer testified this was standard accounting practice for low income housing projects such as the subject. He stated it is frequent for him to see management expense divided into a management fee and other management expenses such as on-site salaries.
Complainant’s witness Clifton R. Cohn (“Cohen”) also testified there was a management contract between Complainant and Yarco. Complainant’s Exhibit N, sets out the duties Yarco is to perform and establishes a fee for those services, which fee was set in accordance with HUD guidelines. (See Complainant’s Exhibit AN) Yarco has agreed to accept a management fee which is less than the fee calculated according to HUD guidelines. (Exhibit AN).
Pursuant to HUD requirements, Kramer has been employed to conduct periodic rental studies (Complainant’s Exhibits Q and AJ) to ensure that no rents exceed market levels. Complainant’s Board has told Yarco to establish rents so that no tenant pays more than 30% of his or her gross income for rent and utilities. The rents have been established as set forth in Complainant’s Exhibit AK. The rents are below market in the aggregate. This is done to further the charitable goals of Complainant. Cohn testified the Board expected him to abide by these principals and he followed them. ((Transcript, p. 50).
James D. Glynn (“Glynn”) testified. Glynn is a long time member of the Board of Complainant, has served a term as President of that Board and has over 40 years of experience in the not-for-profit world. He testified the mission of the subject property is to provide high quality, secure, dignified housing and other community social, financial, community supports that will help and enrich the people that live there. (Transcript, p.88, lines 14 thru 18). Glynn testified another goal is to improve the life of the tenants, and raise up their living standards, if possible, and equip them to live a better life. He testified Complainant has been very welcoming of immigrants and that Complainant has welcomed a disproportional number of political refugees from all over the world, which he described as a vulnerable group, because they struggle with language, they need jobs, they need housing, and they need communities. Glynn stated the refugee tenants need a nurturing, caring community around them.
Complainant has entered into an agreement with Phoenix Family Housing Corporation (Phoenix), a California chartered not-for-profit corporation providing social and related services to residents of low and moderate income multifamily and senior housing projects (Written Direct Testimony of Kimber Myers Givner, MSW, JD [“Myers-Givner”], p.1 – Also see Complainant’s Exhibit R). Pursuant to the contract with Phoenix the following services and programs are provided to Complainant’s residents at no cost to the residents:
Youth Development Programs such as after school and out of school serving youth at the housing community that will provide a safe, constructive environment designed to promote self-confidence, and self-esteem, enhance character development, provide useful social skills and encourage an understanding, respect and appreciation for others. Youth Development Programs further include personalized tutoring and access to computers to help them with school projects and to learn computer skills. In addition, activities may include arts and crafts, mentoring, sports and recreational activities, community gardening, music, art and dance classes, cooking and nutrition classes, Girl and Boy Scouts and local recreational/educational field trips in the community.
HIKE (Help Instill the Key to Education) Reading Program – This innovative intervention program addresses the problem of extremely low reading proficiency among youth in the community. Literacy-infused activities, as well as one-on-one reading coaching take place in the HIKE Reading Lab on site, under the direction of a qualified reading Specialist. Youth are regularly assessed to track improvement and to assist in creating customized curriculum for each child.
Families First Programs – Enhances life skills and employment skills as part of the comprehensive program of services available to the residents. A life skills curriculum will include elements on building self-esteem, personal finances, conflict resolution, consumer skills, and social and group interaction. Employability skills training will include instruction in resume writing, preparation for job interviews, how to find and retain employment, and appropriate employment conduct. In addition, Families First Programs offer adult education and literacy classes through collaboration with literacy partners in the community
Nutrition Education and Meal Preparation – On-site instruction programs will be available to all residents. As part of the Youth Development Programs, on-site meals may be available to youth if eligible to qualify for such services. This service may be coordinated and provided by the on-site Service Coordinator who is trained and approved by the Harvester’s Kid’s Café program. Through collaboration with Harvesters, the Service Coordinator will order and distribute meals to youth in the community. Nutritious meal preparation classes will also be available to all youth participating in the Youth Development program as part of the after-school and out of school programming.
Food Pantry Assistance – A food pantry will be available to the residents through collaboration with Harvesters Community Food Network. The food pantry will be stocked with non-perishable food items, cleaning supplies and other household items. Residents who are experiencing difficult times will have access to the pantry on an as needed basis. In addition, the coordinator will work directly with the property management team to identify those residents whose basic needs are not being met, or who have cleaning issues, to ensure that they have adequate food and/or supplies.
Computer Lab – An on-site computer lab will be available that will allow for many on-going program opportunities. Computer training classes will be offered to both youth and adults in a comfortable, non-threatening environment. Basic instruction, as well as direct training on various software applications and internet usage will be provided. All residents will be welcome to utilize the lab through direct instruction or independently. Residents will also have access to the internet for educational, research or informational purposes.
Case Management – Case management will be provided by Phoenix Family staff members and emergency assistance referrals and resources will be provided to residents where necessary. The Service Coordinator will partner with local community agencies that provide emergency funds to help residents with rent, utility and medical assistance.
Special Activities – In addition to direct services, special activities will be coordinated throughout the year. Such events may include holiday parties, barbecues, back to school events, community celebrations and potluck dinners. Further, day trips an outings will be offered to the residents, including, but not limited to, recreational, educational and cultural programs offered within the community.
Communication – The Service Coordinator will create a monthly newsletter, calendar, and informational fliers for the residents. The monthly newsletter consists of information on events, activities, and helpful tips or announcements from the Service Coordinator as well as the management team. The monthly calendar accompanies the newsletter and details the events for the monthly. The Service Coordinator also creates fliers throughout the month to serve as a reminder of upcoming events and activities.”
Complainant occasionally utilizes the eviction process when other avenues, including rental assistance, have been exhausted. The process is also utilized in cases of drug use and other dangerous behavior, as the subject property is a community. The rules are for the protection and well-being of all of the residents.
- Respondent’s Evidence. Respondent offered the following evidence to support her assertion:
| Exhibit | Description | Ruling |
| 1 | Exemption Analysis Report | Admitted |
| 2 | Shawment 2017 Application for Tax Exemption | Admitted |
| 3 | List of Rent and Possession/Unlawful Detainer Actions | Admitted |
| 4 | Property Record Card | Admitted |
| 5 | Yarco Website for Parvin Estates (“Parvin”) | Admitted |
| 6 | Parvin Website | Admitted |
| 7 | Rent Roll 1/1/2018 | Admitted |
| 8 | Management Agreement | Admitted |
| 9 | Phoenix Family Services Agreement | Admitted |
| 10 | Fiscal Year 2017 Audited Financial Statement | Admitted |
| 11 | Shawmet Homes IRS Form 990 | Admitted |
| 12 | Written Direct Testimony of Lucas Wallingford | Admitted |
| 13 | Fictitious Name Registration of Parvin | Admitted |
| 14 | Personal Property Tax Declaration 2010-2019 | Admitted |
| 15 | Multi-Housing News Article | Admitted |
| 16 | HUD Guidance on Use of Criminal Records | Admitted |
| 17 | Sample Clay County Circuit Court Rent and Possession Action | Admitted |
Various objections were made to some of Respondent’s exhibits. The exhibits were admitted to be given such weight at the Hearing Officer deemed appropriate.
Respondent exhibits and testimony emphasize Complainant has no employees and that the management company engaged by Complainant conducts all activities and coordinates all services for Complainant. The exhibits and testimony also emphasize the fact that credit history, the ability to get utilities, and criminal history are utilized in evaluating potential residents. Finally, Respondent’s exhibits and testimony asserts other organizations provide services to the residents of the subject property and that Complainant is reimbursed by HUD for a large portion of the total rent Complainant receives.
- Partial Stipulation. The parties entered into a Partial Stipulation that stipulated the true value in money (TVM) of the subject property, as of January 1, 2018 was $4,500,000 ($855,000 assessed value).
- Tax- Exempt Status Established. Complainant’s evidence was substantial and persuasive to establish that the subject property were tax-exempt as of the date of assessment on January 1, 2018.
CONCLUSIONS OF LAW
Authority
The STC has authority to hear this appeal and correct any assessment which 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 Board of Equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious. Mo. Const. art. X, sec. 14, 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 residential property at 19%; commercial property at 32%; and agricultural property at 12%. Section 137.115.5 RSMo.
Presumption in Appeal
There is a presumption of validity, good faith and correctness of assessment by the BOE. Hermel, Inc. v. State Tax Comm’n, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. State Tax Comm’n, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. State Tax Comm’n, 308 S.W.2d 748, 759 (Mo. 1958).
Burden of Proof
Complainant has the burden to present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization. Hermel, Inc. v. State Tax Comm’n, 564 S.W.2d 888, 895 (Mo. banc 1978). In order to meet this burden in an appeal seeking exemption from taxation, the Complainant must meet the substantial burden to establish that the property falls within an exempted class under the provisions of Section 137.100. State ex rel. Council Apartments v. Leachman, 603 S.W.2d 930, 931 (Mo. 1980).
Exemption Not Favored
It is well established that taxation is the rule and exemption from taxation is the exception. Exemption is not favored in the law. (See, Missouri Church of Scientology v. State Tax Comm’n, 560 S.W.2d 837, 844 (Mo. banc 1977); CSCEA v. Nelson, 898 S.W.2d 547, 548 (Mo. banc 1995), citing Scientology).
Property Exempt from Taxation
The following subjects are exempt from taxation for state, county or local purposes:
(5) All property, real and personal, actually and regularly used exclusively for religious worship, schools and colleges, for purposes purely charitable and not held for private or corporate profit, except that the exemption herein granted does not include real property not actually used or occupied for the purpose of the organization but held or used as investment even though the income or rentals received therefore is used wholly for religious, educational or charitable purposes.
Section 137.100(5), RSMo.
Investigation by Hearing Officer
In order to investigate appeals filed with the STC, the Hearing Officer may inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, subclassification, or assessment of the property. Section 138.430.2 RSMo. The Hearing Officer’s decision regarding the assessment or valuation of the property may be based solely upon his inquiry and any evidence presented by the parties or based solely upon evidence presented by the parties. Id.
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 reasonable 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. State Tax Comm’n, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. State Tax Comm’n, 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)
Complainant’s Burden of Proof
A presumption exists that the exemption status and 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 Comm’n, 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. Id. 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 an appeal 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 Comm’n, 804 S.W.2d 387, 392 (Mo. App. W.D. 1991).
Exemptions
Taxation of property is the rule and exemption from taxation is the exception. United Cerebral Palsy Ass’n of Greater Kansas City v. Ross, 789 S.W.2d 798, 799 (Mo. banc 1990). Tax exemptions are not favored in the law, and statutes granting exemptions are to be strictly, yet reasonably, construed against the one claiming the exemption. Missouri Church of Scientology v. State Tax Comm’n, 560 S.W.2d 837, 844 (Mo. banc 1987), State ex rel. Union Electric Co. v. Goldberg, 578 S.W.2d 921, 923 (Mo. banc 1979). A property owner who claims the exemption bears a substantial burden to prove that his property falls within the exempted class. United Cerebral Palsy Ass’n of Greater Kansas City, 789 S.W.2d at 799.
Article X, Section 6 of the Missouri Constitution exempts from taxation all real and personal property of the state, counties, and other political subdivisions and nonprofit cemeteries. The Constitution also provided that all real and personal property, not held for private or corporate profit and used exclusively for religious worship, for schools and colleges, for purposes purely charitable, or for agricultural and horticultural societies may be exempted from taxation by general law. The legislature by enactment of Section 137.100 RSMo., has exempted property not held for private or corporate profit and used exclusively for religious worship, for schools and colleges, for purposes purely charitable, and for agricultural and horticultural societies.
Charitable Exemption
The legal test for a charitable exemption is whether:
- The property is dedicated unconditionally to the charitable activity;
- The property is owned and operated on a not-for-profit basis; and
- The dominant use of the property is for the benefit of an indefinite number of people and directly or indirectly benefits society generally. Franciscan Tertiary Province of Missouri v. State Tax Comm’n, 566 S.W.2d 213, 224 (Mo. banc 1978); Twitty v. State Tax Comm’n, 896 S.W.2d 680, 684 (Mo. App. S.D. 1995).
In Franciscan Tertiary Province of Missouri v. State Tax Comm’n, 566 S.W.2d 213, 224 (Mo. banc 1978) the entire Missouri Supreme Court analyzed multiple types of situations for exemption. However, the Court explicitly stated:
[t]he general nature of the owning organization other than that it is not-for-profit cannot be said to determine whether the use of the particular property is charitable or not and that the property must be owned and operated on a not-for-profit basis. It must be dedicated unconditionally to the charitable activity in such a way that there will be no profit, presently or prospectively, to individuals or corporations. (emphasis added)
It is manifestly clear that by using the word “and” instead of “or” in the “owned and operated” terminology the court was stating very clearly that for the property to be exempt it has to both be “owned” and “operated” on a not-for-profit basis.
- Owned and Operated on a Not-for-Profit Basis
The property must be owned and operate on a not-for-profit basis. The property “must be dedicated unconditionally to the charitable activity in such a way that there will be no profit, presently or prospectively, to individuals or corporations. Any gain achieved in use of the building must be devoted to achievement of the charitable objective of the project.” Franciscan Tertiary Province v. State Tax Comm’n, 566 S.W.2d at 244 (Mo. banc 1978). This does not mean that the property or charity cannot operate “in the black.”
- Actual and Regular Use for Charitable Purpose
In order for a property to be exempt from taxation for state, county, or local purposes, the property must be actually and regularly used exclusively for a charitable purpose, as charity is defined by Salvation Army v. Hoehn, 188 S.W.2d 826 (Mo. banc 1945). “Charity” is therein defined as “… a gift, to be applied consistently with existing laws, for the benefit of an indefinite number of persons, either by bringing their hearts under the influence of education or religious, by relieving there bodies of disease, suffering or constraint, by assisting them to establish themselves for life, or by erecting or maintaining the public buildings or works or otherwise lessening the burdens of government.” Salvation Army at 830. Exemption rest on the use of the property not merely the charitable character of the owner. The phrase “regularly used exclusively” has been interpreted to mean the primary, inherent, and dominate use of the property as opposed to a mere secondary and incidental use. See Bethesda Barclay House v. Ciarleglio, 88 S.W.3d 85 (Mo. App. E.D. 2002); Home Builders Ass’n of Greater St. Louis v. St. Louis Co. BOE, 803 S.W.2d 636 (Mo. App. E.D. 1991); Pentecostal Church of God of America v. Hughlett, 601 S.W. 2d 666 (Mo. App. S.D. 1980); Barnes Hospital v. Leggett, 589 S.W.2d 241 (Mo. 1979); Missouri United Methodist Retirement Homes v. State Tax Comm’n, 522 S.W.2d 745 (Mo. 1975).
- Dedicated Unconditionally to the Charitable Activity
The property must be used such that it is available to an indefinite group of people, rendered at cost or less, which brings their heats under the influence of education or lessens the burden of government. “The public nature of a charity is diminished when it is systematically denied to those who need and can least afford the service.” Evangelical Retirement Homes of Greater St. Louis, Inc. v. State Tax Comm’n, 669 S.W.2d 548, 554 (Mo. banc 1984).
- Benefit to Society
To fulfill the Franciscan test, the subject property must benefit society in general. Complainant has the burden to put forth substantial and persuasive evidence of how the subject property benefit society.
Discussion
The Hearing Officer is persuaded that Complainant meets all requirements of Franciscan Tertiary Province of Missouri v. State Tax Comm’n, 566 S.W.2d 213, 224 (Mo. banc 1978). The subject property is owned and operated on a not-for-profit basis. The fact that Complainant contracts with a management company to manage the subject property does not change this fact.
Like the present appeal, the properties in Franciscan, Pentecostal Church of God v. Hughlett, 737 S.W.2d 728 (Mo. 1990), and Senior Citizens of Bootheel Services, Inc. v. Dover, 811 S.W.2d 35 (Mo. App. 1991) utilized HUD funding. The residential facilities in these were utilized for housing the elderly and handicapped pursuant to an agreement with HUD. The Court cited Franciscan as the “seminal case for the proposition that the provision of housing for aged and handicapped persons who are unable to bear the full cost is a charitable purpose,” entitled to exemption. Id. In Pentecostal the Court stated “Franciscan was designed to give general approval to housing projects for the elderly and handicapped. It should not be read grudgingly.” The Court rejected an argument that because the corporate entity did not make any gift or donation, that it was not entitled to exemption.
The Hearing Officer is persuaded the subject property is dedicated unconditionally to charitable activity. The subject property provides low cost housing. A service coordinator assists the subject property’s residents in obtaining outside services and connecting residents with community resources. Reasonable screening procedures are untaken to maintain the safety, security and welfare of the residents.
Finally, the Hearing Officer is persuaded the dominant use of the subject property is charitable and that the charitable activities of Complainant benefits an indefinite number of people and directly or indirectly benefits society generally.
Complainant’s evidence was substantial and persuasive to support tax-exemption of the subject property as of January 1, 2018. Complainant met the charitable purposes test set forth above.
ORDER
The subject property were exempt from ad valorem taxation under Article X, Section 6 of the Missouri Constitution and Section 137.100, RSMo as of January 1, 2018 and the BOE decision is therefore SET ASIDE.
Application for Review
A party may file with the State Tax 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, or emailed to legal@stc.mo.gov, and a copy of said application must be sent to each person 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 Clay 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 29, 2019.
STATE TAX COMMISSION OF MISSOURI
John Treu
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 29th day of October, 2019, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.
Elaina McKee
Legal Coordinator