STATE TAX COMMISSION OF MISSOURI
| SPRINGFIELD SOLAR 1, LLC, | ) | |
| ) | ||
| Complainant, | ) | |
| ) | ||
| v. | ) | Appeal No. 17-33023 |
| ) | ||
| RICK KESSINGER, ASSESSOR | ) | |
| GREENE COUNTY, MISSOURI, | ) | |
| ) | ||
| Respondent. | ) |
ORDER
AFFIRMING HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
HOLDING
On February 1, 2019, Senior Hearing Officer Amy Westermann, (Hearing Officer) entered her Decision and Order (Decision) setting aside the decision of the Board of Equalization of Greene County (BOE). Rick Kessinger, Assessor, Greene County, Missouri (Respondent) subsequently filed his Application for Review of Hearing Officer’s Decision and Order. Springfield Solar 1, LLC. (Complainant), thereafter filed its Response to Respondent’s Application for Review
We AFFIRM the Decision and Order of the Hearing Officer. Segments of the Hearing Officer’s Decision may have been incorporated into our Decision without further reference.
FACTS AND PROCEDURAL HISTORY[1]
Complainant appealed Respondent’s assessment of the subject property for the tax year 2017 on the basis that the subject property was exempt from taxation.[2] The subject property is a solar energy system (“Equipment”) located at 2915 North Farm Road 209, Strafford, Missouri. The Equipment is a solar energy system comprised of photovoltaic solar panels, mounting poles, inverters, and a concrete slab for the inverters. The Equipment is located on real property owned by City Utilities of Springfield, Missouri (“Parcel”); the Parcel is exempt from ad valorem taxation. On or about September 17, 2013, Complainant and City Utilities of Springfield, Missouri entered into a Renewable Power Purchase Agreement (“PPA”), which included a lease between City Utilities, as Lessor, and Complainant as Lessee. A true and correct copy of the PPA was attached as Exhibit B to the Amended Joint Stipulation of Facts filed by the parties to this appeal. City Utilities issued a Missouri Project Exemption Certificate to Complainant dated October 2, 2013 for the purchase of the Equipment.
Respondent assessed the Equipment for the tax year 2017. While the Equipment was purchased and installed in 2014, Respondent did not become aware of its existence until November 2015 and did not become aware Complainant owned the Equipment until spring of 2017, so Respondent did not assess the equipment in prior years.
The Equipment is not held for resale in the ordinary course of Complainant’s business. The electricity sold by Complainant to City Utilities of Springfield, Missouri is not tangible property.
This appeal was decided on stipulated facts and cross-motions for summary judgment. The parties stipulated to thirteen facts for purposes of summary judgment. Complainant filed a Motion for Summary Judgment and, subsequently, an Amended Motion for Summary Judgment, arguing the Equipment was exempt from ad valorem taxation pursuant to Section 137.100(10) as a “solar energy system not held for resale.” Respondent filed a cross Motion for Summary Judgment, arguing the exemption contained in Section 137.100(10) is unconstitutional and void pursuant to Article X, Section 6 of the Missouri Constitution.
The Senior Hearing Officer granted Complainant’s Amended Motion for Summary Judgment and denied Respondent’s cross Motion for Summary Judgment. The Senior Hearing Officer ruled the Equipment is a “solar energy system not held for resale” and exempt from taxation pursuant to Section 137.100(10)
RESPONDENT’S POINT ON REVIEW
Respondent alleges that the Hearing Officer’s Decision is erroneous in that Section 137.100(10) is unconstitutional pursuant to Article X, Section 6 of the Missouri Constitution.
STC’s Ruling
Deciding constitutional issues is beyond the authority of an administrative agency…” Fayne v. Department of Social Services, 802 S.W.2d 565, 567 (Mo.App.1991); Duncan v. Missouri Board for Architects, Professional Engineers and Land Surveyors, 744 S.W.2d 524, 530–31 (Mo.App.1988) “Administrative agencies lack the jurisdiction to determine the constitutionality of statutory enactments. City of Joplin v. Industrial Commission of Missouri, 329 S.W.2d 687 (Mo. banc 1959).
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 STC. Section 138.432 RSMo Cum. Supp. 2015. The STC may then summarily allow or deny the request. Section 138.432. The STC 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 STC. Section 138.432.
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 Commission, 560 S.W.2d 837, 844 (Mo. banc 1987), State ex rel. Union Electric Co. v. Goldberg, 578 SW2d 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.
Section 137.100 RSMo. states that “[t]he following subjects are exempt from taxation for state, county or local purposes: … (10) Solar energy systems not held for resale.”
Respondent contends that Article X, Section 6, of the Missouri Constitution “sets out the universe of property exempt from taxation.” St. Charles County v. Curators of University of Missouri, 25 S.W.3d 159, 162 (Mo. banc 2000). Article X, Section 6 exempts the following property:
All property, real and personal, of the state, counties and other political subdivisions, and nonprofit cemeteries, and all real property used as a homestead as defined by law of any citizen of this state who is a former prisoner of war, as defined by law, and who has a total service-connected disability, shall be exempt from taxation; all personal property held as industrial inventories, including raw materials, work in progress and finished work on hand, by manufacturers and refiners, and all personal property held as goods, wares, merchandise, stock in trade or inventory for resale by distributors, wholesalers, or retail merchants or establishments shall be exempt from taxation; and all property, real and personal, not held for private or corporate profit and used exclusively for religious worship, for schools and colleges, for purposes purely charitable, for agricultural and horticultural societies, or for veterans’ organizations may be exempted from taxation by general law. In addition to the above, household goods, furniture, wearing apparel and articles of personal use and adornment owned and used by a person in his home or dwelling place may be exempt from taxation by general law but any such law may provide for approximate restitution to the respective political subdivisions of revenues lost by reason of the exemption….
Respondent continues stating that since 1945, the Missouri Constitution has included the following pertinent statement:
All laws exempting from taxation property other than the property enumerated in this article, shall be void.
The Constitution, argues Respondent, removed the discretion of the General Assembly to grant property exemptions. Since “solar energy systems not held for resale” is not found in the Constitution and the General Assembly does not have the power to exempt property from taxation, Section 137.100(10) is unconstitutional and void according to Respondent.
Summary & Conclusion
Deciding constitutional issues is beyond the authority of an administrative agency…” Fayne v. Department of Social Services, 802 S.W.2d 565, 567 (Mo.App.1991); Duncan v. Missouri Board for Architects, Professional Engineers and Land Surveyors, 744 S.W.2d 524, 530–31 (Mo.App.1988) “Administrative agencies lack the jurisdiction to determine the constitutionality of statutory enactments. City of Joplin v. Industrial Commission of Missouri, 329 S.W.2d 687 (Mo. banc 1959).
The Hearing Officer found that the Complainant presented substantial and persuasive evidence establishing that the subject property is exempt from ad valorem taxation under Section 137.100 (10). The Hearing Officer’s conclusion, under the directives from the Missouri Revised Statutes, was reasonable and not arbitrary as a Hearing Officer is not authorized to determine the constitutionality of Section 137.100 (10).
ORDER
The Decision of the Hearing Officer 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 STC.
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 Greene 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 April 9, 2019.
STATE TAX COMMISSION OF MISSOURI
Bruce E. Davis, Chairman
Victor Callahan, Commissioner
Will Kraus, Commissioner
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 9th day of April, 2019, to: Complainants(s) counsel and/or Complainants, the County Assessor and/or Counsel for Respondent and County Collector.
Jacklyn Wood
Legal Coordinator
[1] In his application for review, Respondent set out the procedural history and the facts. Complainant, in its response, states that it agrees with the summary provided by Respondent. The Facts and Procedural History are those agreed upon by the parties.
[2] Complainant also appealed on grounds of overvaluation, but the overvaluation claim was rendered moot by the Senior Hearing Officer’s ruling that the subject property was exempt from ad valorem taxation. There was also a dispute between the parties as to whether the subject property was real or personal property. However, the parties subsequently agreed the subject property was properly classified as personal property.
STATE TAX COMMISSION OF MISSOURI
| SPRINGFIELD SOLAR 1, LLC | ) | ||
| ) | |||
| Complainant, | ) | ||
| ) | |||
| v. | ) | Appeal No. | 17-33023 |
| ) | Parcel No. | 88-11-06-200-061[1] | |
| RICK KESSINGER, ASSESSOR | ) | ||
| GREENE COUNTY, MISSOURI, | ) | ||
| ) | |||
| Respondent. | ) |
DECISION AND ORDER[2]
HOLDING
The assessment made by Respondent Rick Kessinger, Assessor, Greene County, Missouri, (Respondent) of the subject property for tax year 2017 is SET ASIDE. Upon the parties’ cross-motions for summary judgment, suggestions in support, and the uncontroverted statements of fact, Complainant Springfield Solar 1, LLC, (Complainant) is entitled to judgment as a matter of law because the subject property owned by Complainant is exempt from ad valorem taxation for tax year 2017 pursuant to Section 137.100(10)[3].
Complainant represented by Counsel Robert Droney.
Respondent represented by Counsel Aaron Klusmeyer.
Case decided by Senior Hearing Officer Amy S. Westermann (Hearing Officer).
ISSUE
Complainant appealed Respondent’s ad valorem taxation of the subject property on the grounds that the subject property qualified for exemption in 2017 because the subject property is a solar energy system not held for resale and the subject property had been misclassified as commercial real property but should be classified as business personal property.[4]
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission (STC).
- Evidentiary Hearing. The issue of exemption was presented through the parties’ cross motions for summary judgment and statements of uncontroverted fact rather than through and evidentiary hearing.
- Identification of Subject Property. The subject property is located at 2915 North Farm Road 209, Strafford, Greene County, Missouri. The real property on which the subject property is situated is identified by parcel number 88-11-06-200-061 (Complaint for Review of Assessment; Amended Joint Stipulation of Facts). The subject property is described as a solar energy system comprised of photovoltaic solar panels, mounting poles, inverters, and a concrete slab for the inverters. (Amended Joint Stipulation of Facts)
- Assessment. Respondent’s appraised value of the subject property was $1,600,000, as of January 1, 2017.
- Board of Equalization. The BOE did not review the valuation because Complainant was not notified of the subject property’s placement on the tax roll until November 4, 2017, after the deadline for filing an appeal with the BOE had passed.
- Complainant. Complainant is a for-profit organization that sells energy produced by the subject property. (Missouri Secretary of State Missouri Business Filings at https://bsd.sos.mo.gov/BusinessEntity/BusinessEntityDetail.aspx?page=beSearch&ID=3521438, last retrieved December 10, 2018) The energy sold is not tangible property. (Amended Joint Stipulation of Facts)
- Factual Background Established through Motions for Summary Judgment, Suggestions in Support, Statements of Fact, and Exhibits. Complainant and Respondent filed their Joint Stipulation of Facts and their Amended Joint Stipulation of Facts. Later, Complainant and Respondent filed their cross motions for summary judgment, suggestions in support, suggestions in opposition, and exhibits.
Complainant leased the parcel of real property on which the subject property is situated from City Utilities of Springfield, Missouri (CU), a tax-exempt entity. (Amended Joint Stipulation of Facts) The subject property could be removed from the parcel of real property. (Id.) The parcel of real property owned by CU is exempt from ad valorem taxation. (Id.)
Complainant and CU entered into a Renewable Power Purchase Agreement on September 17, 2013. CU issued a Missouri Project Exemption Certificate to Complainant on October 2, 2013, for the purchase of the subject property. (Amended Joint Stipulation of Facts) Complainant purchased and installed the subject property on the parcel of real property in 2014; however, Respondent did not assess the subject property until tax year 2017. Respondent first became aware of the subject property in November 2015 but did not obtain information about the ownership of the subject property until the spring of 2017. (Id.)
In Complainant’s Motion for Summary Judgment (Complainant’s Motion), Complainant argued the subject property constitutes tangible personal property that qualifies as a solar energy system not held for resale. Complainant argued that Section 137.100(10) exempts from taxation all “solar energy systems not held for resale”; thus, the subject property is exempt from ad valorem taxation. (Complainant’s Motion)
In Respondent’s Motion for Summary Judgment (Respondent’s Motion), Respondent argued “solar energy systems not held for resale” are not specifically exempted from taxation by Article X, Section 6 of the Missouri Constitution; therefore, Section 137.100(10) purporting to exempt “solar energy systems not held for resale” from taxation is unconstitutional and void. Respondent also filed his Response to Complainant’s Statement of Uncontroverted Facts admitting the facts alleged by Complainant’s Statement of Uncontroverted Facts and agreeing with the Amended Joint Stipulated Facts. Respondent also filed his Suggestions in Opposition to Complainant’s Motion arguing that Complainant’s Statement of Uncontroverted Facts did not establish that the subject property is “not held for resale” as required to fit within the plain language of Section 137.100(10).
Complainant thereafter filed its Amended Motion for Summary Judgment along with its Amended Statement of Uncontroverted Facts (Complainant’s Amended Motion) and Affidavit of Markus Wilhelm (Wilhelm). Wilhelm attested that the subject property is not held for resale in the ordinary course of Complainant’s business. (Id.)
Respondent subsequently filed his Response to Complainant’s Amended Motion and Suggestions in Opposition (Respondent’s Response).[5] In his Response, Respondent argued that regardless of whether the subject property falls under the statutory definition of “[s]olar energy systems not held for resale,” Section 137.100(10) is “unconstitutional and void.” Respondent argued that Article X Section 6 of the Missouri Constitution sets out the universe of property exempt from taxation and that “[s]olar energy systems not held for resale” is not enumerated in Article X Section 6; therefore, such property is not exempt from taxation and Section 137.100(10) is void.
- Taxation of the Property. Based upon the parties’ cross-motions for summary judgment, suggestions in support, and the uncontroverted statements of fact, Complainant is entitled to judgment as a matter of law because the subject property owned by Complainant is exempt from ad valorem taxation for tax year 2017 under Section 137.100(10). Complainant’s Amended Motion is granted; Respondent’s Motion is denied.
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 BOE, 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.
In any county or the City of St. Louis, the owner of the subject property may appeal directly to the STC where the assessor fails to notify him of an initial assessment or an increase in assessment from the previous year prior to 30 days before the deadline for filing an appeal to the BOE, including instances in which real property was transferred and the prior owner was notified. 12 CSR 30-3.010(1)(B)(1).
In this appeal, the parties do not dispute that Complainant did not receive notice that the subject property would be placed on the tax assessment rolls 30 days before the deadline for filing an appeal with the BOE passed; thus, direct appeal to the STC under these circumstances was proper.
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 property and tangible personal property are assessed at set percentages of true value in money: residential property at 19%; commercial property at 32%; and agricultural property at 12%. Section 137.115.5.
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 Commission, 560 S.W.2d 837, 844 (Mo. banc 1987), State ex rel. Union Electric Co. v. Goldberg, 578 SW2d 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.
According to Section 137.100, in pertinent part, the following subjects are exempt from taxation for state, county, or local purposes:
(10) Solar energy systems not held for resale.
In determining whether property is eligible for exemption, Missouri courts are mindful that each tax exemption case is peculiarly one which must be decided upon its own facts, turning upon the particular record presented. Rollings v. Shipman, 341 S.W.3d 777, 780 (Mo. App. E.D. 2011). The burden is on the property owner to prove that his property is exempt from taxation. Rollings, 341 S.W.3d at 780.
Discussion
The legal authority for property tax exemptions is located in Article X, Section 6, of the Missouri Constitution of 1945, which provides:
Section 6.1. All property, real and personal, of the state, counties and other political subdivisions, and nonprofit cemeteries, and all real property used as a homestead as defined by law of any citizen of this state who is a former prisoner of war, as defined by law, and who has a total service-connected disability, shall be exempt from taxation; all personal property held as industrial inventories, including raw materials, work in progress and finished work on hand, by manufacturers and refiners, and all personal property held as goods, wares, merchandise, stock in trade or inventory for resale by distributors, wholesalers, or retail merchants or establishments shall be exempt from taxation; and all property, real and personal, not held for private or corporate profit and used exclusively for religious worship, for schools and colleges, for purposes purely charitable, for agricultural and horticultural societies, or for veterans’ organizations may be exempted from taxation by general law. In addition to the above, household goods, furniture, wearing apparel and articles of personal use and adornment owned and used by a person in his home or dwelling place may be exempt from taxation by general law but any such law may provide for approximate restitution to the respective political subdivisions of revenues lost by reason of the exemption. All laws exempting from taxation property other than the property enumerated in this article, shall be void. The provisions of this section exempting certain personal property of manufacturers, refiners, distributors, wholesalers, and retail merchants and establishments from taxation shall become effective, unless otherwise provided by law, in each county on January 1 of the year in which that county completes its first general reassessment as defined by law….
The Constitution authorizes exemptions, and the legislature enacts them at Section 137.100 by expressly listing categories of exemptions. The Missouri Supreme Court has held that statutes exempting from taxation property which is not among the types enumerated in the Constitution are unconstitutional. See Arsenal Credit Union v. Giles, 715 S.W.2d 918 (Mo. banc 1986).
Respondent contends that the statute is not constitutional as the provision – solar energy system not held for resale – is not enumerated in the Constitution. All property is presumed to be subject to ad valorem taxes; in other words, “taxation is the rule and exemption therefrom the exception.” Missouri Church of Scientology, 560 S.W.2d at 844. The Courts have further explained that the strict construction applies to corporations organized for profit and gain but not those performing a public service. Washington University v. Baumann, 108 S.W.2d 403 (1937).
An administrative tribunal has no authority to decide the issue of the statute’s validity. Missouri Bluffs Golf Joint Venture v. St. Charles County Bd. of Equalization, 943 S.W.2d 752 (Mo. App. E.D. 1997); City of Joplin v. Industrial Commission of Missouri, 329 S.W.2d 687 (Mo. banc 1959). The State Tax Commission takes directive from the Missouri Revised Statutes in rendering its opinion.
ORDER
The subject property is a solar energy system not held for resale and is exempt from taxation under Section 137.100(10).
Application for Review
A party may file with the Commission an application for review of this decision within 30 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. The 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.
Disputed Taxes
The Collector of Greene 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 1st day of February, 2019.
STATE TAX COMMISSION OF MISSOURI
Amy S. Westermann
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 1st day of February, 2019, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.
Jacklyn Wood
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
[1] The parcel number references the real property parcel on which the subject property is situated.
[2] On May 9, 2018, the Hearing Officer issued an Order staying proceedings in this appeal pending a determination in another similar appeal before the STC, MCP-Rolla, LLC, v. Bill Stoltz, Assessor, Phelps County, Missouri, 2018 WL 3132699 (Mo.St.Tax.Com.). The stay is hereby lifted and the ruling on the parties’ cross motions is incorporated into this Decision and Order.
[3] All statutory references are to RSMo 2000, unless otherwise noted.
[4] Complainant also alleged that the subject property had been overvalued. (Complainant for Review of Assessment) Given the determination concerning the exempt status of the subject property, the claim of overvaluation is moot.
[5] On January 3, 2019, the Hearing Officer entered her Decision and Order in the instant appeal setting aside the assessment made by Respondent on the basis of the parties’ cross-motions for summary judgment, suggestions in support, and the uncontroverted statements of fact. On January 9, 2019, Respondent filed his Motion to Set Aside Decision and Order (Motion to Set Aside) along with Exhibit 1 on the ground that Respondent never received Complainant’s Amended Motion for Summary Judgment and Amended Statement of Uncontroverted Facts and was therefore deprived of the opportunity to respond prior to the issuance of the Decision and Order dated January 3, 2019. Complainant consented to Respondent’s Motion. Pursuant to Respondent’s Motion to Set Aside along with Exhibit 1, which demonstrated that Complainant had inadvertently misdirected the email containing its Amended Motion for Summary Judgment and Amended Statement of Uncontroverted Facts and that Respondent never received the email, the Hearing Officer granted Respondent’s Motion to Set Aside. The Hearing Officer further allowed Respondent to file his Response to Complainant’s Amended Motion for Summary Judgment and Amended Statement of Uncontroverted Facts no later than 5:00 p.m., January 25, 2019. The Hearing Officer specifically ordered that no additional filings would be allowed or accepted while the appeal is pending before her. Respondent timely filed his Response.