State Tax Commission of Missouri
|SR PROPERTIES IV, LLC,||)|
|)||Appeal No. 18-10948 through 18-10968|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
The assessment made by the Board of Equalization of St. Louis County (BOE) is AFFIRMED. SR Properties IV, LLC (Complainant) did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE based upon misclassification. The subject properties are properly classified as utility, industrial, commercial, railroad and other real property.
Complainant is represented by counsel Cathy Steele.
Jake Zimmerman, Assessor of St. Louis County Missouri (Respondent) is represented by counsel Steven Robson.
Case heard on the record and decided by Senior Hearing Officer John Treu (Hearing Officer).
Complainant appealed on the ground of misclassification. Respondent classified the subject properties as utility, industrial, commercial, railroad and other real property as defined in Section 137.016.1(3) RSMo. The BOE classified the subject properties as commercial. The assessed value, based upon true value in money (TVM) and classification, as of January 1 of the odd numbered year remains the assessed value as of January 1 of the following even numbered year unless there is new construction or improvement to the property. Section 137.115.1 RSMo The State Tax Commission (STC) takes this appeal to determine the classification for the subject properties as the properties existed on January 1, 2017.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over these appeals is proper. Complainant timely appealed to the STC.
- Evidentiary Hearing. The parties agreed to submit the appeals on a joint stipulation of facts and briefs. Neither party requested oral argument. The sole issue in the appeals is classification. TVM is not in dispute.
- Parties Stipulated Facts. The parties filed a “Joint Stipulation of Facts” stating:
- The location of the properties on appeal is Spirit Valley Business Park, hereinafter referred to as “SVBP”, in Chesterfield, St. Louis County, Missouri. SVBP Indentures and Declaration were recorded on 7/14/08 in Book 17946 Page 2152 of the St. Louis County Records.
- The parcels on appeal are condominium units developed by SR Properties IV, LLC under a Declaration of Condominium called “The Place Condominiums”, recorded on 8/4/16 in Book 22131 Page 1375 of the St. Louis County Records.
- The Place Condominiums are subject to the SVBP Indentures, the City of Chesterfield Zoning Code and City of Chesterfield Ordinances 2413 and 2456.
- The SVBP Indentures state: Lots shall be used only for those business and commercial uses permitted under the site specific Ordinances and the Zoning Code of the City of Chesterfield, Missouri. Ordinance No. 2456 is the site specific Ordinance for these parcels.
- Article IV Section 4.01(a) Restrictions on Use and Improvements of The Place Condominiums states:
Each Unit not owned by the Declarant (Complainant herein) shall be occupied only by the Owners or, subject to the provisions of Section 4.01(v) hereof, pertaining to the leasing of Units, by the tenant, guest, or employee of any Owner. Each Unit shall be used only for parking, garaging and storing vehicles and other items approved by the Association and related incidental uses only (but only if such related incidental uses are permitted in City Zoning Ordinance Nos. 2413 and 2456) and shall not be used for other purposes.
- Article 4.01 (b) states: The Units may not be used as residences or to operate a business.
- All units when sold are framed, air conditioned and heated. They have electric, lights, plumbing and Wi Fi.
- Units when finished can include kitchens, bathrooms with showers, lofts, sound systems, cable and Wi Fi.
- Owners of finished units make use of them in the following ways: as extensions of their homes and garages, they store cars and other collections that they own including boats and RVs. Since they have the space to work on vehicles they can install lifts and store their tools. They also use them as man-caves (or she-sheds as the case may be). Some have put in a loft with a staircase from the ground floor. Many have refrigerators, flat screen TVs, comfortable couches and a sound system. Some have pool or ping pong tables or other games.
- In addition to storing and showing their collections, owners can entertain and hang out in their condos designed for their use.
- The common area of the condominium complex is called “The Lounge” and has bathrooms, couches and tables, televisions, a bar and a refrigerator. This is for use of the owners. Common elements include the land constituting the property and all the walkways, driveways, entrances, exits, all surface level parking, all landscaped areas and refuse areas that are located within the property.
- The Place is governed and maintained by Unit Owners Association, a not for profit entity.
- The parcels on appeal were appealed to the Board of Equalization in 2018 and the Board decisions upheld the Assessor’s values and classification (commercial) for all appeals.
- Owners do not reside in the units.
- Owners do not operate businesses out of the units.
- The unit owners do not have business licenses at the unit address.
- The unit owners do not collect or pay sales tax.
- STC Appeal 17-112825, Loc. No. 17W230285, owned by John M. Groves, is a condo in The Place Condominiums development. By stipulation it was reclassified from commercial to residential for the 2017/18 reassessment cycle. As of May 8, 2019 it remains classified as residential for the 2019 reassessment cycle.
- During 2018 five parcels on appeal herein sold to individual owners: 18-10952, 18-10956 and 10957, 18-10965 and 18-10966.
- Since its development twenty (20) of the thirty-four (34) condo units have sold to owners.
- The immediate prior use of the real property was vacant land in the Business Park, most likely classified as agricultural. Prior to the incorporation of the Business Park, much of the land was agricultural.
- As stated the property is located in the SVBP. The parcels in the SVBP are a mixture of commercial and agricultural.
- SVBP is zoned for Planned Industrial and the uses in Attachment A of Ordinance 2456 range from (a.) Animal hospitals to (nn.) Warehousing with many commercial uses listed.
- The 34 units in “The Place Condominiums” total 51,869 sq. ft. an average of 1,525 sq. ft. per unit. The actual sizes range from 713 sq. ft. to 4,180 sq. ft.
- All public services are available: water, sewer, electric, cable and Wi- Fi.
- Access to the location is good. The park is just south of Olive Blvd. It is located next to the Spirit of St. Louis Airport. There is good access to Hwy 64/40 and to Rte. 109.
- 27. Parties Stipulation of Fair Market Value of Parcels
Appeal Nos. Locator Nos. 2018 FMV
- 18-10948 17W230153 $122,300
- 18-10949 17W230164 $122,300
- 18-10950 17W230175 $217,200
- 18-10951 17W230186 $358,300
- 18-10952 17W230203 $122,300
- 18-10953 17W230212 $122,300
- 18-10954 17W230221 $122,300
- 18-10955 17W230230 $122,300
- 18-10956 17W230263 $358,300
- 18-10957 17W230296 $116,500
- 18-10958 17W230304 $122,300
- 18-10959 17W230313 $122,300
- 18-10960 17W230322 $122,300
- 18-10961 17W230331 $122,300
- 18-10962 17W230340 $164,800
- 18-10963 17W230351 $ 97,900
- 18-10964 17W230384 $ 84,700
- 18-10965 17W230414 $ 68,800
- 18-10966 17W230423 $ 75,500
- 18-10967 17W230432 $ 85,800
18-10968 17W230461 $ 99,000
4. Assessment. Respondent classified the subject properties as utility, industrial, commercial, railroad and other real property.
5. Board of Equalization. The BOE classified the subject properties as utility, industrial, commercial, railroad and other real property.
6. Presumption of Corrected Assessment Not Rebutted. Complainant’s evidence was not substantial and persuasive to prove the proper classification of the property was residential as defined in Section 137.016.1(1) RSMo.
CONCLUSIONS OF LAW AND DECISION
The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary, or capricious, 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. Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.
Issuance of Decision Absent Evidentiary Hearing
The Hearing Officer, after affording the parties reasonable opportunity for fair hearing, shall issue a decision and order affirming, modifying or reversing the determination of the BOE, correcting any assessment which is unlawful, unfair, improper, arbitrary or capricious. Section 138.431.5 RSMo. The parties filed a “Joint Stipulation of Facts.” Such establishes the basis upon which opportunity for an evidentiary hearing can be held. The Complainant has the burden to present substantial and persuasive evidence. The Hearing Officer considered all the facts in determining that judgment should be entered in Respondent’s favor.
Presumption in Appeal
There is a presumption of validity, good faith and correctness of assessment by the BOE. 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). This presumption is a rebuttable rather than a conclusive presumption. When considering a claim of misclassification, the presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the BOE’s determination of classification is erroneous. Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
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. 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 RSMo.
Complainant’s Burden of Proof
To obtain a reduction in assessed valuation based upon alleged misclassification, the Complainant must prove the proper classification of the subject property on the subject tax day. Hermel, Inc., v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978). A presumption exists that the assessment 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 Commission, 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. Cupples Hesse Corp., 329 S.W.2d at 702. 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 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.” 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 Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. W.D. 1991).
Weight to be Given Evidence
The relative weight to be accorded any relevant factor in a particular case is for the Hearing officer to decide. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).
Missouri Constitution and Section 137.016.1 RSMo
The Missouri Constitution outlines that there are three classifications under class 1 real property: (1) residential property, (2) agricultural property and (3) utility, industrial, commercial, railroad, and all other property not included in (1) and (2). Mo. Const. Art. X § 4(b).
The Missouri legislature gives further definitions to these classes in Section 137.016.1 RSMo. “Residential property” is defined as “all real property improved by a structure which is used or intended to be used for residential living by human occupants.” “Utility, industrial, commercial, railroad and other real property” is defined as “all real property used directly or indirectly for any commercial, mining, industrial, manufacturing, trade, professional, business, or similar purpose, including all property centrally assessed by the state tax commission but shall not include floating docks, portions of which are separately owned and the remainder of which is designated for common ownership and in which no one person or business entity owns more than five individual units.” Section 137.016.1 (3) further states that “[a]ll other real property not included in the property listed in subclasses (1) and (2) of Section 4(b) of Article X of the Missouri Constitution, as such property is defined in this section, shall be deemed to be included in the term “utility, industrial, commercial, railroad and other real property.”
If the classification of a property cannot be made under the definitions set forth in Section 137.016.1(1) and (3), Section 137.016.1 (5) provides that the classification will be its immediate most suitable economic use after consideration of:
(1) Immediate prior use, if any, of such property;
(2) Location of such property;
(3) Zoning classification of such property; except that, such zoning classification shall not be considered conclusive if, upon consideration of all factors, it is determined that such zoning classification does not reflect the immediate most suitable economic use of the property;
(4) Other legal restrictions on the use of such property;
(5) Availability of water, electricity, gas, sewers, street lighting, and other public services for such property;
(6) Size of such property;
(7) Access of such property to public thoroughfares; and
(8) Any other factors relevant to a determination of the immediate most suitable economic use of such property.
Complainant contends that the proper classification of the properties is residential. The facts, considered as a whole, persuade the Hearing Officer that the subject properties are properly classified as utility, industrial, commercial, railroad and other real property.
The subject properties do not fall under the definition of residential properties. Consequently, in applying the provisions of 137.016.1 (3) the subject properties are to be treated as utility, industrial, commercial, railroad and other real property properties as “real property not included in the property listed in subclasses (1) and (2) of Section 4(b) of Article X of the Missouri Constitution.”
Pursuant to 137.016.1 (5) the “immediate most suitable economic use” is determined by eight factors. The following table sets forth each factor with the facts that the Hearing Officer finds the most persuasive and a conclusion as to whether such facts weigh in favor of a residential designation (Residential); a utility, industrial, commercial, railroad and other real property designation (Commercial); or whether such facts are neutral (Neutral).
|Immediate prior use, if any, of such property.||The subject properties were part of the Spirit Valley Business Park (SVBP) since 2008. The Business Park properties were all intended to be used only for business and commercial purposes.||Commercial|
|Location of such property.||The subject properties are located within the SVBP and access to the location is good while being next to the Spirit of St. Louis Airport and major thoroughfares. Because the subject properties are within the SVBP, it is surrounded by SVBP properties, which are, when developed, meant for business and commercial purposes.||Commercial|
|Zoning classification of such property; except that, such zoning classification shall not be considered conclusive if, upon consideration of all factors, it is determined that such zoning classification does not reflect the immediate most suitable economic use of the property.||The subject properties are zoned as “Planned Industrial” and are meant for business and commercial purposes. Here, there has been significant effort and expertise expended in creating the SVBP and developing the special business district to be within a planned industrial zoning area. The creators of the subject properties operated under various indentures and ordinances and made a business decision to develop the properties. The most suitable economic use is as they are currently being used after having been developed for sale.||Commercial|
|Other legal restrictions on the use of such property.||Restrictions on the property exists due to the indentures and ordinances involved. Owners are prevented from residing in the properties and are prevented from operating a business out of the properties.||Commercial|
|Availability of water, electricity, gas, sewers, street lighting, and other public services for such property.||The subject properties have electricity, heating and air conditioning, lights, plumbing, and internet access. The amenities add to the enjoyment of the owners in their use of the properties as non-residences and not as dwelling units.||Commercial|
|Size of such property.||The sizes of the condominium units range from 713 square feet to 4,180 square feet.||Neutral|
|Access of such property to public thoroughfares.||Access is good to public thoroughfares.||Neutral|
|Any other factors relevant to a determination of the immediate most suitable economic use of such property.||The subject properties at all times pertinent where and are located in the SVBP and were slotted for business or commercial development. The subject properties were developed and sold as luxury garage condominiums for owners to make use of with restrictions against operating a business and/or residing there. The Condominium restrictions state: “Each Unit shall be used only for parking, garaging and storing vehicles and other items approved by the Association and related incidental uses only.”||Commercial|
After a full consideration of the eight factors as set forth above the Hearing Officer is persuaded that the subject properties are properly classified as utility, industrial, commercial, railroad and other real property. Although the subject properties have some amenities of a residence, such amenities also exists in other type properties. The eight factors weigh in favor of a classification of utility, industrial, commercial, railroad and other real property. Additionally, pursuant to Section 137.016.1 (3) the subject properties fall within the phrase “[a]ll other real property not included in the property listed in subclasses (1) and (2) of Section 4(b) of Article X of the Missouri Constitution, as such property is defined in this section, shall be deemed to be included in the term “utility, industrial, commercial, railroad and other real property.”
The classification for the subject properties as determined by the BOE are AFFIRMED. The subject properties are properly classified as utility, industrial, commercial, railroad and other real 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, 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.
The Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 139.031.8 RSMo.
Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed. Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.
SO ORDERED May 24, 2019.
STATE TAX COMMISSION OF MISSOURI
John J. 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 24th day of May, 2019, to:
Counsel for Complainant, Cathy Steele, firstname.lastname@example.org
County Assessor, email@example.com
Counsel for Respondent, firstname.lastname@example.org
County Collector, email@example.com