St. Louis Leased Housing Assoc. Etal v. Freddie Dunlap, Assessor St. Louis City

September 7th, 2017

State Tax Commission of Missouri


ST. LOUIS LEASED HOUSING ASSOC. V LLLP, ) Appeal Nos. 16-20000 to 16-20001
ST. LOUIS LEASED HOUSING ASSOC. LIHTC ) Appeal Nos. 16-20002 to 16-20013
             Complainants )
v. )
             Respondent )






The assessment of the City of St. Louis is AFFIRMED.  St. Louis Leased Housing Association V LLLP and St. Louis Leased Housing Association LIHTC (Complainants) did not present substantial and persuasive evidence to establish their proposed true value in money (TVM) for the subject properties.

Complainants appeared by attorney Kevin Breer.

Freddie Dunlap, Assessor of the City of St. Louis, (Respondent), appeared by attorney Abby Duncan.

Case heard and decided by Senior Hearing Officer John Treu. (Hearing Officer)


Complainants appeal on the ground of overvaluation.  The Commission takes these appeals to determine the TVM for the subject properties on January 1, 2015[1].

The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.


  1. Jurisdiction. Jurisdiction over this appeal is proper.  Complainants did not receive notice of the assessments or tax bills for property tax year 2015 until July 12, 2016. On August 8, 2016, Complainants timely appealed to the State Tax Commission in regards to the 2015 assessments.
  2. Evidentiary Hearing. The Evidentiary Hearing was held on July 19, 2017, in the City of St. Louis Assessor’s Office in St. Louis, Missouri.
  3. Identification of Subject Properties. The subject properties (Arcade Building) and are made up of fourteen parcels (fourteen units).  The Arcade Building is located at 800 Olive Street, St. Louis, Missouri. Units 1 and 2 are owned by St. Louis Leased Housing Associates V, LLLP.  Units 3 through 14 are owned by St. Louis Leased Housing Associates, LIHTC, LLLP.  (Ex. A & 1)
Appeal Parcel Number – Classification Address/Unit Valuation by Assessor
16-20000 01920000260 – Commercial 800 Olive St, Unit 1 $1,746,800
16-20001 01920000270 – Residential 800 Olive St, Unit 2 $402,530
16-20002 01920000280 – Residential 800 Olive St, Unit 3 $42,030
16-20003 01920000290 – Residential 800 Olive St, Unit 4 $29,760
16-20004 01920000310 – Residential 800 Olive St, Unit 5 $122,910
16-20005 01920000320 – Residential 800 Olive St, Unit 6 $122,910
16-20006 01920000330 – Residential 800 Olive St, Unit 7 $29,930
16-20007 01920000340 – Residential 800 Olive St, Unit 8 $123,080
16-20008 01920000350 – Residential 800 Olive St, Unit 9 $115,680
16-20009 01920000360 – Residential 800 Olive St, Unit 10 $95,570
16-20010 01920000370 – Residential 800 Olive St, Unit 11 $95,570
16-20011 01920000380 – Residential 800 Olive St, Unit 12 $95,570
16-20012 01920000390 – Residential 800 Olive St, Unit 13 $95,570
16-20013 01920000410 – Residential 800 Olive St, Unit 14 $95,570


  1. Description of Subject Property. The subject is also known as the “Arcade Building.”  The site is approximately 34,670 square feet improved with an eighteen story building of approximately 500,000 square feet.  It is listed as a Historic Landmark and cannot be razed.  The building is of masonry construction.  On January 1, 2015, the improvement was a “shell” as reconstruction had just begun. The Arcade Building now contains fourteen (14) condominiums, Webster University downtown campus, and two hundred and eighty-two (282) apartments.  (Exhibits A and 1)
  2. Sale of Subject. Arcade Building was purchased by the Land Clearance for Redevelopment Authority (LCRA) of the City of St. Louis in 2010.  Prior to such date the building had sat vacant for decades.  The LCRA solicited proposals for the purchase and rehabilitation of the Arcade Building.  The only bid, other than from the LCRA, was $1.00.  This bid was rejected.  However, on July 1, 2013, the LCRA entered into a redevelopment agreement with one of the Complainants as the redeveloper (referred to hereafter as “Complainants” due to both Complainants being subsidiaries of Dominion Development.)

Units 1 and 2 and Units 3 through 14 were purchased pursuant to two sales contracts.  Both sales closed on August 17, 2014.   The total purchase price for all units was $9,190,000.  Pursuant to the First Amendments to the Sales Contracts, $1,000,000 was allocated to land value, $0 to the improvement, with the remainder allocated to qualified rehabilitation expenses (QREs).  The QREs allowed Complainants to qualify for Federal Historic Tax Credits. The agreement additionally allowed the Complainants to secure subsidies such as Low Income Housing Tax Credits, New Market Tax Credits, below market loans (at 1% interest or less), and twenty (20) years of tax abatements.

The sales contracts were contingent upon the LCRA providing a “clean” certificate (a No Further Action Letter from the Missouri Department of Natural Resources) showing that the LCRA had completed all environmental clean-up on the building prior to closing.  The sales contracts did not contemplate any additional expenditures for environmental clean-up on the part of Complainants.  (Testimony, WDT Smith, Surrebuttal WDT Huggett, Exhibit A and Exhibit B)

  1. Assessment. The Assessor assessed the Arcade Building collectively at $1,828,280 ($1,466,680 residential, $361,600 commercial) or a total TVM of $8,849,368.
  2. Complainants’ Evidence. Complainants offered into evidence the following:
Written Direct Testimony (WDT) Troy Smith
Exhibit A Appraisal Report (including Redevelopment Agreement, Sales Contracts and Amendments to Sales Contracts)
Surrebuttal WDT Jeff Huggett


All of Complainants’ evidence were admitted into the record without objection.

Jeff Huggett (Huggett) is the Vice President and project Partner, Development & Acquisitions, of Dominion Development (Dominion) and Vice President of both Complainants.  Complainants are both entities of Dominion. Huggett testified that he is responsible for identifying and developing opportunities for Dominion and that he first looked at the Arcade Building in 2012.  He testified that Dominion, located in Minneapolis, Minnesota, is in the business of developing properties for profit and owns properties in twenty-three (23) states.  He testified that a profit was contemplated when purchasing the Arcade Building, yet he thought the building had no value.

Exhibit A, the summary appraisal report by Troy Smith (Smith), opined a TVM as of January 1, 2015, of $0.00.  Smith is a Missouri State Certified General Real Estate Appraiser and a Member of the Appraisal Institute.  The appraisal report consists of nine (9) pages, plus the addenda. Mr. Smith did not undertake a cost approach due to the age of the Arcade Building.  Mr. Smith did not undertake an income approach because the Arcade Building had not yet been developed on January 1, 2015.  Mr. Smith purported to undertake a sales comparison approach.    However, such only consisted of Smith investigating numerous land and building sales in the Arcade Building market and various other market factors followed by Smith making inexact, general assertions.  Smith did not make any market-based adjustments to account for the similarities and differences between the comparable properties and the subject property. Smith did express that he found that most of the sales included intangible incentives, such as tax credits and below market financing and his opinion that “without the intangible incentives, the market value of [the comparable] properties would be significantly lower, if not zero.”  However, no exhibit was offered to show that any actual calculations were undertaken by Smith.  Moreover, his opinion did not rule out a positive TVM for the comparables.

In looking at the Arcade Building in particular, Smith noted the multiple forms of subsidies and the below market financing that Complainants could secure.  He opined that such were necessary to make the redevelopment of the Arcade Building economically feasible.  He noted that the total cost of redevelopment was estimated at $103,825,000.  Smith specifically addressed the fact that as to the QREs, the City of St. Louis actually provided, and paid for, the majority of the clean-up work prior to Complainants taking title, and that the remainder of the clean-up work was paid for by the previous developer (Pyramid, prior to LCRA ownership).  Finally, he noted that the purchase agreement was clear that the City of St. Louis was required to pay for the clean-up work prior to Complainants taking title.

In Smith’s valuation conclusion, he looked to the allocated land value of $1,000,000 in the sales contracts.  Smith determined that since the Arcade Building is on the National Historic Registry, and cannot be razed, and because the building requires over $100,000,000 in rehabilitation, the land would ultimately have no value.  Smith ended his valuation conclusion by again noting the significant intangibles purportedly required for economic feasibility and the fact that Complainants had the requirement to complete the over $100,000,000 rehabilitation to conclude an opined value of $0.00.   (Testimony, Exhibit A and WDT of Smith)

  1. Respondent’s Evidence. Respondent offered into evidence the following:
WDT Ryan Brennan
Exhibit 1 Appraisal Report
Exhibit 2 Assessor Documents (assessment history of Arcade Bldg.)
Exhibit 3 Guide to Foreclosure Sales
Exhibit 4 APB Valuation
Exhibit 5 Sales of Apartment and Office Buildings
Exhibit 6 List of Historical Rehab Projects
Exhibit 7 Certificate of Value (Arcade Building)
Exhibit 8 Declaration of Condominium
Exhibit 9 Plat of Arcade Building
Exhibit 10 Special Warranty Deed
Exhibit 11 Special Warranty Deed
Exhibit 12 Sellers Closing Statement
Rebuttal WDT Ryan Brennan


The WDT of Brennan and Exhibits 1 through 7 were admitted into the record without objection.  Complainants objected to Exhibits 8 through 12 and the Rebuttal WDT of Brennan as such were not timely produced to Complainants.  Complainants’ objections were overruled as to Exhibits 8 and 9 and such were admitted into the record.  Complainants’ objections as to Exhibits 10, 11, 12, and the Rebuttal WDT of Brennan were sustained.

Exhibit 1, the appraisal report by Ryan Brennan (Brennan) opined a TVM as of January 1, 2015, of $8,414,600.  Brennan is an employee of the City of St. Louis Assessor’s Office.  His title is “Real Property Appraiser II.”  Brennan also relied on the sales comparison approach to opine his TVM.  Brennan considered five comparable sales under this approach and stated all required significant rehabilitation.  On cross-examination, Brennan acknowledged he was not certain which, if any, of his five comparables had environmental issues like the Arcade Building.  Brennan noted in his appraisal that “[a] combination of tax credits, T.I.F., abatements, and special financing tend to be associated with most of the rehabilitation projects.

Exhibit 2 evidenced the assessment history of the Arcade Building, with Respondent consistently assessing such based upon a TVM of $8,849,247 from 2008 until 2014.

Finally, Exhibits 3 through 9 were source materials for Respondent’s appraisal report.  Exhibits 3 and 4 consisted of source/reference materials.  Exhibits 5 and 6 consisted specific listing of certain sales.  Exhibit 7 consisted of Certificates of Value filed regarding the Arcade Building by Complainants and previous purchasers.  Exhibit 8 consisted of the condominium declaration and by-laws of the Arcade Building.  Exhibit 9 consisted of the plat of the Arcade Building.

  1. Presumption of Correct Assessment Not Rebutted. Complainants’ evidence was not substantial and persuasive to establish the TVM as of January 1, 2015, to be $0.00, as proposed.



The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious.  The hearing officer shall issue a decision and order affirming, modifying or reversing the determination of the board of equalization and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious.  Article X, Section 14, Mo. Const. of 1945; 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 TVM for the property under appeal.  By statute real and tangible personal property are assessed at set percentages of TVM. Section 137.115.5, RSMo – residential property at 19% of TVM; commercial property at 32% of TVM and agricultural property at 12% of TVM.

Complainants’ Burden of Proof

In order to prevail, Complainants must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2015.  Hermel, supra.   Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See, Cupples-Hesse, supra.   Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact.  The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief.   Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).

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, a Complainant bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.”  See, Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003); Daly v. P. D. George Co., 77 S.W.3d 645 (Mo. App. E.D. 2002); Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003); Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991).  A valuation which does not reflect the TVM of the property under appeal is an unlawful, unfair, and improper assessment.  A Complainant does not meet its burden if evidence on any essential element of his case leaves the Commission “in the nebulous twilight of speculation, conjecture, and surmise.”  See, Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980).

Standard for Valuation

Section 137.115, RSMo, requires that property be assessed based upon its TVM which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so.  St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993); Missouri Baptist Children’s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993)  TVM is defined in terms of value in exchange and not value in use.  Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 S.W.2d 376, 380 (Mo. App. 1993.  It is the fair market value of the subject property on the valuation date. Hermel, supra.  Market value is the most probable price in terms of money which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price is not affected by undue stimulus.

Implicit in this definition are the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby:

  1. Buyer and seller are typically motivated.


  1. Both parties are well informed and well advised, and both acting in what they consider their own best interests.


  1. A reasonable time is allowed for exposure in the open market.


  1. Payment is made in cash or its equivalent.


  1. Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.


  1. The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction.  Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; See also, Real Estate Valuation in Litigation,  J. D. Eaton, M.A.I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80; Uniform Standards of Professional Appraisal  Practice, Glossary.


Weight to be Given Evidence

            The Hearing Officer is not bound by any single formula, rule or method in determining TVM, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled.  The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide.  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).

The Hearing Officer as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances.  The Hearing Officer is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert’s testimony and accept it in part or reject it in part.  St. Louis County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).

Methods of Valuation

Proper methods of valuation and assessment of property are delegated to the Commission.  It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case.   See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra; Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975).  Missouri courts have approved the comparable sales or market approach, the cost approach and the income approach as recognized methods of arriving at fair market value.   St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STC, 789 S.W.2d 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989).

Complainants Fail to Prove Value

Complainants failed to present substantial and persuasive evidence to establish the TVM of the Arcade Building as of January 1, 2015, to be $0.00 as proposed by Complainants.   Complainants’ appraiser developed an opinion of value in an appraisal report.  However, the appraiser’s opinion of TVM was not supported by the evidence.

Prior to Complainants owning the Arcade Building, the LCRA had solicited bids.  A bid of $1.00 was made by a potential purchaser.  The LCRA rejected such bid.  However, such bid provides some indication the Arcade Building may have some value, however small.

The fact that the Arcade Building has some value was supported by Complainants’ own witness.  Huggett testified that Dominion is in the business of developing properties for a profit and Dominion owns properties in twenty-three (23) states.  Huggett also stated that he is responsible for identifying and developing opportunities for profit.    He testified that a profit was contemplated by Dominion when purchasing the Arcade Building.  Contemplated profit does not support a TVM of $0.00

Additionally, Complainants’ appraiser specifically addressed the fact that as to the QREs, the City of St. Louis actually provided and paid for the majority of the clean-up work prior to Complainants taking title and that the remainder of the clean-up work was paid for by the previous developer (Pyramid, prior to LCRA ownership).  Complainants’ appraiser noted that the purchase agreement was clear that the City of St. Louis was required to pay for the clean-up work prior to Complainants taking title.  Therefore, environmental issues were not a detriment as to the TVM of the Arcade Building on January 1, 2015, as any cost associated with such were the responsibility of the City of St. Louis.

Moreover, Complainants’ appraiser did not say the comparable properties would have a TVM of $0.00 after any intangible incentives were subtracted.  Instead, he stated that “without the intangible incentives, the market value of [the comparable] properties would be significantly lower, if not zero.” 

The totality of Complainants’ evidence did not induce belief in the Hearing Officer that the Arcade Building has a TVM of $0.00.  The Hearing Officer is persuaded that based upon Complainants’ contemplated profit from their purchase of the Arcade Building that a profitable income stream in the future was expected.  Such expected profitable income stream has some value above $0.00.  Complainants’ other evidence was inexact and would require speculation, conjecture, and surmise, in favor of Complainants to conclude a TVM of $0.00. Consequently, the Hearing Officer concludes that the Arcade Building had some value in the market above $0.00 on January 1, 2015.


The assessed valuation for the subject property as determined by the Assessor for the City of St. Louis County for tax year 2015 is AFFIRMED.

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, 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, RSMo

Disputed Taxes

The Collector of the City of St. Louis, 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 7th day of September, 2017.




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 7th day of September, 2017, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.


Jacklyn Wood

Legal Coordinator


[1] Appeal does not address the assessment of the property in 2016.