St. John’s United Church of Christ

State Tax Commission of Missouri

 

ST. JOHN’S UNITED CHURCH OF CHRIST,)

)

Complainant,)

)

v.) Appeal Number 08-10000

)

MICHAEL BROOKS, ACTING ASSESSOR,)

ST. LOUIS COUNTY, MISSOURI,)

)

Respondent.)

 

DECISION AND ORDER

 

HOLDING

 

Assessment by Assessor that subject property was not tax exempt was sustained by County Board of Equalization.Hearing Officer finds subject property to not be exempt under Section 137.100(5), assessment AFFIRMED.Complainant appeared by Counsel, Michael McDonald, St. Louis, Missouri.Respondent appeared by Counsel, Stephanie Hill, Associate County Counselor.Case heard and decided by Senior Hearing Officer, W. B. Tichenor.

ISSUE

The Commission takes this appeal to determine whether the subject property is exempt from taxation under Section 137.100 (5) RSMo for the tax years 2007 and 2008.

SUMMARY

Complainant appeals the decision of the County Board of Equalization.Respondent assessed the subject property as residential property.This assessment was sustained by the Board of Equalization.Complainant contends that the subject property is exempt from taxation under the provisions of Section 137.100(5).An evidentiary hearing was conducted on January 28, 2010, before W. B. Tichenor, Senior Hearing Officer, at the St. Louis County Government Center, Clayton,Missouri.The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

FACTS

1.Jurisdiction.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.

2.Assessment.The Assessor assessed the property at $286,300, residential assessed value of $54,400.[1]The Board of Equalization sustained the assessment and denied exemption.[2]

3.Subject Property.The subject property is located at 16923 Hickory Forest Lane, Ballwin, Missouri.The property is identified by parcel number 23V531461.The property is a single-family residence.[3]

4.Complainant’s Evidence.The following exhibits were received into evidence on behalf of Complainant.

 

5.Respondent’s Evidence.The following exhibits were received into evidence on behalf of Respondent.

 

At the close of hearing at the request and instruction of the Hearing Officer, Counsel for Respondent provided the Hearing Officer and Counsel for Complainant a copy of the Assessor’s Information sheet on the subject property establishing the Appraised and Assessed Values for the subject property for Tax years 2007 and 2008.This document was marked as Exhibit 12 and made a part of the record.

6.Complainant’s Not-For-Profit Status.Complainant is a not-for-profit benevolent organization under Chapter 352 RSMo.[4]Complainant is exempt from Missouri Sales and Use Tax on purchases.[5]The ad valorem real estate tax is not a sales or use tax.Exemption from sales and use taxes on purchases does not exempt real estate from taxation under section 137.100 RSMo.[6]

7.Ownership History.On January 1, 2007, the subject property was owned by David A. and Theresa L. Peters.[7]On August 10, 2007, the property was purchased by Complainant to be used as a home for Senior Pastor, Kevin Gregory.[8]On November 5, 2007, the property was conveyed by General Warranty Deed from Complainant to Kevin P. and Laura M. Gregory, husband and wife.[9]

8.Ownership and Use.From January 1, 2007, to August 11, 2007, the subject property was not owned and operated for a religious, charitable or educational purpose.The property was used as a private residence.From August 12, to November 5, 2007, the subject property was owned by Complainant and apparently was used as a residence by Complainant’s Senior Pastor.From November 5, 2007, the property has been owned by Kevin and Laura Gregory as their residence.

9.Assessment Date.The assessment date for real property in Missouri is January first of each year.[10]

10.Property Not Exempt.The subject property was not owned and operated by a not-for-profit entity on January 1, 2007, or January 1, 2008.It was not being used for any religious, charitable or educational purpose on either of those dates.The use of the property on the two assessment dates was as a residence and did not benefit an indefinite number of people or society in general, or did not relieve the burdens of government.

CONCLUSIONS OF LAW

Jurisdiction

The Commission has jurisdiction to hear this appeal and correct any assessment shown to be unlawful, unfair, arbitrary or capricious.[11]

Burden of Proof

Complainant has the burden to present substantial evidence to rebut the presumption of correct assessment by the Board of Equalization.[12]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.[13] It is well established that taxation is the rule and exemption from taxation is the exception.Exemption is not favored in the law.[14]Complainant seeks exemption of its property from taxation pursuant to Section 137.100(5):

The following subjects are exempt from taxation for state, county or localpurposes:

 

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(5) All property, real and personal, actually and regularly used exclusively 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 — charitable purposes;

 

****

 

Complainant’s substantial burden of proof has not been met in the present case.

Franciscan Tertiary Test

In order to meet its burden of proof that the subject property is used “exclusively for … purposes purely charitable, and not held for private or corporate profit….”Complainant must

meet the three prong test set forth by the Missouri Supreme Court in Franciscan Tertiary Province v. STC.[15]The court said:

The first prerequisite for property to be exempt as charitable under §137.100 is that it be owned and operated on a not-for-profit basis.It must be dedicated un-conditionally 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 attainment of the charitable objectives of the project…. [A]n exemption will not be granted covering property which houses a business operated for the purpose of gaining a profit, even though it is turned over to a parent organization to be used for what are admittedly independently…charitable purposes.

 

The requirement that the property must be operated as a not-for-profit activity does not mean that it is impermissible for the project at times or even fairly regularly to operated in the black rather than on a deficit basis, provided, of course, that any such excess of income over expenses, is achieved incidentally to accomplishment of the dominantly charitable objective and is not a primary goal of the project, and provided further that all of such gain is devoted to the charitable objectives of the project.

 

Another prerequisite for charitable exemption is that the dominant use of the property must be for the benefit of an indefinite number of people, for thepurpose, as expressed in Salvation Army, of “relieving their bodies of disease, suffering, or constraint…or by erecting or maintaining pubic buildings…lessening the burdens of government.” 188 S.W.2d at 830…. Thus it is required that there be the element of direct or indirect benefit to society in addition to and as a result of the benefit conferred on the persons directly served by the humanitarian activity.[16]

 

The three tests to be met under Franciscan are:

1.Property must be owned and operated on a not-for-profit basis;

2.Property must be actually and regularly used exclusively for a charitable purpose; and

3.Property must be used for the benefit of an indefinite number of persons and for society in general, directly or indirectly.

The subject property did not meet any of the three tests as of January 1, 2007, or

January 1, 2008.Therefore, it does not qualify for exemption from ad valorem real estate taxes for 2007 or 2008.

ORDER

The assessment of the subject property made by the Assessor and sustained by the Board of Equalization for St. Louis County for the subject tax day is AFFIRMED.

The assessed value of the subject residential property for tax years 2007 and 2008 is set at $54,400.

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.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, 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. [17]

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 February 26, 2010.

STATE TAX COMMISSION OF MISSOURI

 

 

_________________________________

W. B. Tichenor

Chief Hearing Officer

 

 

Certificate of Service

 

I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 26^thday of February, 2010, to:Michael McDonald, 14802 Pleasant Ridge Ct., Chesterfield, MO 63017, Attorney for Complainant;Stephanie Hill, Associate County Counselor, Attorney for Respondent; Philip Muehlheausler, Assessor; John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.

 

 

___________________________

Barbara Heller

Legal Coordinator