STATE TAX COMMISSION OF MISSOURI
| TURKEY CREEK GOLF CENTER, LLC, | ) | |
| Complainant, | ) | |
| ) | Appeal No. 20-46500 | |
| ) | Parcel No. 27-02.0-09.0-00-000-006.000 | |
| v. | ) | |
| ) | ||
| JODY PASCHAL, ASSESSOR, | ) | |
| CALLAWAY COUNTY, MISSOURI, | ) | |
| Respondent. | ) |
DECISION AND ORDER
Turkey Creek Golf Center, LLC, (Complainant) appeals the Callaway County Board of Equalization’s (BOE) decision finding the true value in money (TVM) of the subject property on January 1, 2020, was $2,114,180. Complainant produced substantial and persuasive evidence showing the TVM of the subject property on January 1, 2020, was $1,210,000. The BOE decision is SET ASIDE.[1]
FINDINGS OF FACT
- The Subject Property. The subject property is located at 1616 Oilwell Road in Jefferson City, Missouri. The subject property consists of an 85 acre lot improved with a driving range, an 18-hole mini-golf course, and two 9-hole par three courses. Additional improvements include a 3,572 square-foot pro shop, a 4,000 square-foot storage building, and an approximately 17,100 square-foot event center. The main floor of the event center is approximately 10,000 square feet. The remaining floor space is located on a mezzanine level.
The entire 85 acres lies in the Missouri River flood plain and is subject to periodic flooding. Most of the subject property lies in Flood Zone AE. Historically, this zone has a one percent chance of flooding in any year. (Ex. A at 18) The frequency of floods has increased in recent years due to urbanization and the associated impervious surfaces. Four of the highest recorded Missouri River crests in have occurred within the last 30 years. (Ex. A at 21)
The subject property includes approximately 8.5 acres of land that is elevated and subject to less flood risk. This elevated area includes the event center, pro shop, storage building, miniature golf course, and parking. (Ex. A at 17, 20)
In 2019, the subject property was almost entirely inundated for several consecutive months. The only area that remained dry was the 8.5 acres of elevated land associated with the event center. The access roads were inundated, leaving the event center accessible only by boat. The 2019 flood significantly damaged the driving range and one of the par three courses, leaving both in poor condition. The other par three course was in fair condition following the 2019 flood. (Ex. A at 55-60)
- Assessment and Valuation. Respondent determined the TVM on January 1, 2019, was $2,538,820. Complainant appealed Respondent’s 2019 assessment in 2020. The BOE determined the TVM on January 1, 2020, was $2,114,180.
- Complainant’s Evidence. Complainant’s evidence consists of Exhibits A through F and the testimony of Daniel Baumgartner and appraiser Robert Norris. Baumgartner is a member of Turkey Creek Golf, LLC. Each exhibit was admitted into evidence.
| Exhibit A | Robert Norris appraisal report. |
| Exhibit B | Twelve photographs depicting the 2019 flooding on various portions of the subject property. |
| Exhibit C | Five photographs showing the extent of the 2019 flooding in areas adjacent to or near the subject property. |
| Exhibit D | Complainant’s initial disclosures. |
| Exhibit E | May 23, 2019, newspaper article describing flooding near the subject property. |
| Exhibit F | January 11, 2020, newspaper article noting the flooding and heavy snow affecting the Jefferson City area in early 2020. |
Baumgartner Testimony
Baumgartner testified the 2019 flood inundated most of the subject property for approximately five months and that as of January 1, 2020, the property was in “really bad shape.” Baumgartner further testified that approximately 8.5 acres are elevated and remained above the 2019 flood. On cross-examination, Baumgartner testified the flood waters had receded by January 1, 2020.
Exhibit A
Norris concluded continued use of the subject property as a banquet facility and recreation area is “a highest and best use of the site.” (Ex. A at 68) Norris reconciled value indications from the cost approach and the sales comparison to estimate the fair market value of the subject property as of January 1, 2020, was $1,210,000. (Ex. A at 108) Norris noted the subject property’s golf facilities are impacted by stagnation in the golf industry. The golf industry has not recovered from the 2008 recession. Since 2009, rounds played have declined. Between and 2006 and 2019, course closures outpaced course openings by over tenfold, and at an increasing rate. (Ex. A at 9-10) Norris factored the lagging demand for golf courses into his external obsolescence analysis. Norris also factored the subject property’s flood risk into his obsolescence analysis. (Ex. A at 87)
On direct examination, Norris testified his appraisal focused on the 8.5 acres of elevated land because the remaining land associated with the golf facility improvements offers little contributory value to the property as a whole.
Cost Approach
To estimate value by the cost approach, Norris first estimated the value of the 8.5 acres of elevated land. Norris utilized three comparable land sales. The sales are summarized as follows:
Address Sale Date Sale Price Acres Price per Acre
| 6850 Algoa Road,
Jefferson City, MO |
10/2013 | $130,000 | 9.2 | $13,100 |
| 5329 Monticello Road, Jefferson City, MO | 10/2016 | $220,000 | 5.6 | $39,568 |
| 3025 Robinson Road, Jefferson City, MO | 6/2017 | $210,000 | 15.9 | $13,241 |
Norris applied a downward adjustment of 20% to each comparable because each is less susceptible to flooding than the subject property. (Ex. A at 80-81)[2] After adjusting for time of sale, location, and the availability of utilities, Norris calculated a net upward adjustment of 15% for each sale, yielding a value range of $12,500 to $20,000 per acre. Norris concluded the subject property’s land value was $15,000 per acre. Based on the conclusion the 8.5 acres of land associated with the event center was the primary driver of value, Norris estimated the land value as of January 1, 2020, was $127,500. (Ex. A at 80)
Norris determined the improvement value by estimating the replacement cost new, less depreciation (RCNLD). Norris utilized the Marshall Valuation Service cost manual to determine the replacement cost new of the pro shop, warehouse, event center, golf courses, driving range. Norris then deducted external obsolescence due to the 2019 flooding, flood risk, and physical deterioration of the improvements. The RCNLD for the pro shop, warehouse and event center are as follows:
RCN Ext. Obs. Phys. Det. RCLND
| Pro Shop | $234,748 | 35% | 30% | $106,810 |
| Warehouse | $109,080 | 35% | 15% | $60,267 |
| Event Center | $1,302,227 | 35% | 2% | $813,243 |
(Ex. A at 88-89)
Norris’ cost approach assumes the gross building area for the event center is 10,020 square feet. (Ex. A at 84, 89) Norris’ sales comparison approach, however, accounts for the approximately 7,000 square foot mezzanine level and assumes the event center consists of 17,190 square feet. (Ex. A at 98)
Norris also utilized the Marshall Valuation Service manual to estimate the RCNLD of the driving range, 18-hole mini-golf course, and two 9-hole par three courses. Norris applied substantial deprecation to each of these improvements due to their limited remaining economic life and significant flood damage. Norris estimated the RCNLD of the golf facilities was $113,425. (Ex. A at 90)
To determine a value estimate from the cost approach, Norris added the land value ($127,500), building values ($813,243), and the golf facilities ($113,425) for a total indicated value of $1,221,246, rounded to 1,221,200. (Ex. A at 90)
Sales Comparison Approach
To determine the contributory value of the event center, Norris analyzed four sales involving land and an event center or a similar space. Two of the comparable sales are located relatively near the subject property in Cole County. One is in Greene County and the other is in Cape Girardeau County. (Ex. A at 91-92)
The comparable sales ranged from $312,500 to $735,000, and involved properties with gross building areas ranging from 5,624 square feet to 12,125 square feet. (Ex. A at 99) Norris adjusted for differences in location, construction materials, quality, age, condition, gross building area and, flood zone. The adjusted sale prices per square foot of gross building area ranged from $34.55 to $49.38 per square foot. Norris estimated the event center on the subject property would fall in the higher end of this range at approximately $45.00 per square foot of gross building area, for an indicated contributory value of $773,600 ($45.00 x 17,190 SF).[3] (Ex. A at 98)
Norris performed the same analysis to determine the contributory value of the pro shop. The pro shop comparables are located in Jefferson City. The comparable properties had gross building areas ranging from 2,381 to 4,859 square feet and sold for between$160,000 to $185,000, (Ex. A at 106) The adjusted sale prices per square foot of gross building area ranged from $32.76 to $41.76 per square foot. Norris gave equal weight to the three comparable to estimate a value of approximately $37.50 per square foot of gross building area, for an indicated contributory value of $132,500 ($37.50 x 3,312 SF).
Norris did not estimate an indicated value based solely on the sales comparison approach. Norris noted the sales comparison approach was limited by the lack of sales of similar mixed use properties. Nonetheless, Norris concluded the sales comparison approach was useful for estimating the land value and contributory value of the subject property’s primary building improvements. (Ex. A at 107)
Reconciliation
The cost approach indicated a value of $1,221,200. Due to the multi-use nature of the subject property, Norris relied on the contributory values of the warehouse and golf facilities as determined by the cost approach to inform his sales comparison approach. Norris added the land value and contributory values of the event center and pro shop as determined by the sales comparison approach. The total indicated value from this blended approach was $1,199,000. (Ex. A at 108)
Norris assigned equal weight to the cost approach and his blended sales comparison approach to conclude a final estimated value of $1,210,000. (Ex. A at 108)
- Respondent’s Evidence. Respondent’s evidence consists of Exhibit 1, Exhibit 2, and the testimony of appraiser Kyle Newland. Exhibit 1 is Newland’s restricted appraisal report. Exhibit 2 is a deed of trust providing that the subject property secures a loan in the amount of $1,969,876.96.
Newland concluded the highest and best use of the subject is continued use as an event center with continued use of the remaining land for recreational purposes. (Ex. 1 at 17) Like Norris, Newland “assumed that the golf course operations do not create any additional value to the property.” (Ex. A at 17) Newland estimated the TVM of the subject property as of January 1, 2019, was $2,200,000.
Newland valued the property as two portions. The first portion is the event center, clubhouse, and storage buildings and the surrounding 30 acres. Newland testified he included the 30 acres as part of the event center because it supported the event center by providing a more appealing setting for the center. Because most comparable sales lacked similar storage buildings, Newland excluded the storage building from the gross building area and valued it as an additional feature. The first portion Newland valued was the 17,096 square foot event center, the 3,572 square foot clubhouse, and the surrounding 30 acres of land. The second portion consists of the remaining 55 acres of “excess land area.” (Ex. 1 at 17) Newland “noted that the excess 55 acres are restricted in utility given the location within the flood zone, existing site improvements (i.e. cart paths, irrigation, electrical), and topography (gently rolling with 5 ponds), and thus would have limited appeal for the most probable alternate uses (i.e. agricultural and industrial).” (Ex. A, introductory letter at 3)
Sales Comparison Approach
Newland compared the event center and surrounding 30 acres of land to six sales involving land and event centers or a similar space. The comparable sales ranged from $312,500 to $4,500,000, and involved properties with gross building areas ranging from 5,624 square feet to 49,025 square feet. Newland adjusted for differences in location, land area, gross building area, quality, effective age, functional utility, parking, and “other features.” The adjusted sale prices per square foot of gross building area ranged from $83.50 to $117.87 per square foot. Based in part on the construction cost of the subject’s event center facility ($1.8 million, or $105/sf), Newland applied “$100 to $110 per square foot to the subject’s total area of 20,668 square feet” to estimate “a true value in money range of $2,066,800 to $2,273,480, which is rounded to $2,050,000 to $2,250,000.” (Ex. 1 at 22) The adjusted values did not account for flood damage and risk.
Newland testified the 2019 flood was “tragic” and a “devastating event.” He further testified none of the comparable sales utilized in his analysis were in a flood plain. Newland noted he utilized a valuation date of January 1, 2019, which was prior to the 2019 flood. On cross-examination, Newland testified he “would not be surprised” if the “value was different” on January 1, 2020, due to the flooding.
Cost Approach
Like Norris, Newland’s land value estimate assumes a substantial portion of the property provides no contributory value. Newland considered four sales of vacant land to determine the land value for the 30 acres associated with the event center. The land sale prices ranged from $260,000 to $1,229,600 for parcels ranging from 30.24 acres to 99.40 acres. (Ex. 1 at 24) Newland adjusted for differences in location, size, frontage, shape/utility, topography, zoning, and “other” differences. The net adjustments ranged from -45% to 60%. The adjusted sale prices per acre ranged from $7,865 to $19,163. Newland concluded the 30 acres associated with the event center fell within the lower end of this range, and estimated the land at $10,000 per acre, for a total “contributory value of $300,000.” (Ex. 1 at 25)
To determine the “excess land value” of the remaining 55 acres, Newland utilized the same four comparable sales used to estimate the value of the 30 acres associated with the event center. The net adjustments relative to the remaining 55 acres ranged from -70% to -35%. The adjusted sale prices per acre ranged from $4,290 to $13,840. Newland concluded the remaining 55 acres had a market value of $5,000 per acre, yielding “a contributory value of $275,000.” (Ex. 1 at 32-33)
To determine the improvement value, Newland relied on actual construction costs reported for the event center building, as well as the Marshall Valuation Service cost guide. Complainant reported the event center and supporting site improvements cost $1,800,000 to construct. (Ex. 1 at 26) Newland concluded the following replacement costs:
| Event Center | $1,800,000 |
| Clubhouse | $529,574 |
| Storage Building | $93,491 |
| Mini Golf | $265,328 |
| Site Improvements | $242,612 |
| Total | $2,931,005 |
Newland estimated depreciation with the age/life method. The age/life method is based on a weighted average of the effective age relative to the life expectancy of the various building and site improvement components. (Ex. 1 at 26) Newland estimated depreciation as follows:
|
Improvement |
Replacement Cost |
Effective Age |
Life Expectancy |
Physical Deterioration
(%) |
Physical Deterioration
($) |
| Event Center | $1,800,000 | 1 | 40 | 3% | $54,342 |
| Clubhouse | $529,574 | 15 | 35 | 43% | $226,960 |
| Storage Building | $93,491 | 5 | 25 | 20% | $18,698 |
| Golf Course | $265,328 | 10 | 15 | 67% | $176,885 |
| Site Improvements | $242,612 | 10 | 15 | 67% | $161,742 |
$2,931,005 21% $629,285
Newland also calculated depreciation by the market extraction method. The market extraction method estimates depreciation from sales data. Newland analyzed six sales to estimate an additional 25% of functional/external obsolescence, thus yielding an estimated total depreciation ranging from 40% to 50%. (Ex. 1 at 28) Newland’s cost approach summary is as follows:
50% Depreciation 40% Depreciation
| Replacement Cost | $2,950,000 | $2,950,000 |
| Less Depreciation | $1,475,000 | $1,180,000 |
| Depreciated Value | $1,475,000 | $1,770,000 |
| Land Value | $300,000 | $300,000 |
| Value Conclusion | $1,775,000 (rounded) | $2,050,000 (rounded) |
Newland reconciled his sales comparison approach and cost approach estimates to conclude the 30 acres of land and the associated improvement had a contributory value of $2,000,000. (Ex. 1 at 29) Newland applied a 30% discount to the 55 acres to account for its limited utility, yielding an estimated land value of $192,500. Adding the “excess land” value ($192,500) to the $2,000,000 value attributed to the 30 acres and associated improvements yields an estimated value of $2,192,500. Newland rounded this figure to $2,200,000 to arrive at his final value estimate under the cost approach. (Ex. 1 at 33). Newland testified that if his appraisal had been premised on the condition of the property as of January 1, 2020, he likely would have deducted more obsolescence due to the flood damage.
- Value. The TVM of the subject property on January 1, 2020, under the economic conditions as of January 1, 2019, was $1,210,000.
CONCLUSIONS OF LAW
- Assessment and Valuation. Commercial real property is assessed at 32% of its TVM as of January 1 of each odd-numbered year. Section 137.115.5(1)(c). In an even-year appeal, the TVM of the “property as newly constructed or improved shall be determined as of January 1 of the odd-numbered year.” 12 CSR 30-3.001(2); 12 CSR 30-3.015(1). An “improvement consists of any change to the physical characteristics of the property, whether that change is one that causes an increase or a reduction in value.” 12 CSR 30-3.001(3). “The valuation of the property shall take into consideration the new … improvements and shall assign to … [the] improvements the value which would have been attributed to new … improvements on January 1 of the odd-numbered year as though they had existed on that date.” 12 CSR 30-3.001(2)(A).
The flood damage resulted in a “change to the physical characteristics of the property.” The post-flood value of the subject property for the 2020 tax year is based on the economic conditions that existed on January 1, 2019.
“True value in money is the fair market value of the property on the valuation date, and is a function of its highest and best use, which is the use of the property which will produce the greatest return in the reasonably near future.” Snider v. Casino Aztar/Aztar Mo. Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005) (internal quotation omitted). The fair market value is “the price which the property would bring from a willing buyer when offered for sale by a willing seller.” Mo. Baptist Children’s Home v. State Tax Comm’n, 867 S.W.2d 510, 512 (Mo. banc 1993). “True value in money is defined in terms of value in exchange not value in use.” Tibbs v. Poplar Bluff Assocs. I, L.P., 599 S.W.3d 1, 7 (Mo. App. S.D. 2020) (internal quotation omitted). “Determining the true value in money is an issue of fact for the STC.” Cohen v. Bushmeyer, 251 S.W.3d 345, 348 (Mo. App. E.D. 2008).
“For purposes of levying property taxes, the value of real property is typically determined using one or more of three generally accepted approaches.” Snider, 156 S.W.3d at 346. The three generally accepted approaches are the cost approach, the income approach, and the comparable sales approach. Id. at 346-48; see also St. Louis Cty. v. Sec. Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977). The STC has wide discretion in selecting the appropriate valuation method but “cannot base its decision on opinion evidence that fails to consider information that should have been considered under a particular valuation approach.” Snider, 156 S.W.3d at 348.
- Evidence. The hearing officer is the finder of fact and determines the credibility and weight of the evidence. Kelly v. Mo. Dep’t of Soc. Servs., Family Support Div., 456 S.W.3d 107, 111 (Mo. App. W.D. 2015). “Although technical rules of evidence are not controlling in administrative hearings, fundamental rules of evidence are applicable.” Mo. Church of Scientology v. State Tax Comm’n, 560 S.W.2d 837, 839 (Mo. banc 1977).
- Complainants’ Burden of Proof. The taxpayer bears the burden of proof and must show by a preponderance of the evidence that the property was misclassified or overvalued. Westwood P’ship v. Gogarty, 103 S.W.3d 152, 161 (Mo. App. E.D. 2003). The BOE’s valuation is presumptively correct. Tibbs, 599 S.W.3d at 7. The “taxpayer may rebut this presumption by presenting substantial and persuasive evidence that the valuation is erroneous.” Id. (internal quotation omitted). The taxpayer also must prove “the value that should have been placed on the property.” Id. “Substantial evidence is that evidence which, if true, has probative force upon the issues, and from which the trier of fact can reasonably decide the case on the fact issues.” Savage v. State Tax Comm’n, 722 S.W.2d 72, 77 (Mo. banc 1986) (internal quotation omitted). Evidence is persuasive when it has “sufficient weight and probative value to convince the trier of fact.” Daly v. P.D. George Co., 77 S.W.3d 645, 651 (Mo. App. E.D. 2002); see also White v. Dir. of Revenue, 321 S.W.3d 298, 305 (Mo. banc 2010) (noting the burden of persuasion is the “party’s duty to convince the fact-finder to view the facts in a way that favors that party”).
- Complainant Produced Substantial and Persuasive Evidence of Overvaluation.
Norris’ appraisal report is substantial and persuasive evidence showing that the post-flood TVM of the subject property as of January 1, 2020, was $1,210,000. Norris’ value estimate accounts for the 2019 flood damage in both the cost and sales comparison approaches. Norris’ external obsolescence analysis expressly considers the flood damage while his sales comparison approach includes adjustments to account for the additional flood risk affecting the subject property. Likewise, Norris accounted for the reduced demand for golf facilities. Finally, Norris fully accounted for the mixed-use nature of the subject property by extracting the contributory value of the event center and pro shop based on comparable sales data and while relying on the cost approach to determine the contributory value of the remaining improvements.
Two aspects of Norris’ analysis require further explanation. First, the subject property consists of 85 acres but Norris valued only the 8.5 acres of elevated land associated with the event center. Norris’ analysis focused on the 8.5 acres because the remaining land consists largely of the golf courses inundated in the 2019 flood and which provide little or no contributory value. Both Norris and Newland agreed the golf operations provided no contributory value. Norris reasonably concluded that the elevated 8.5 acres and associated improvements was the primary determinant of the value of the subject property.
Second, Norris utilized a gross building area of 10,020 square feet for the cost approach but utilized a gross building area of 17,190 square feet for the sales comparison approach. (Ex. A at 84, 98) Norris’ cost approach omitted the approximately 7,000 square feet of mezzanine space in the event center. This omission undermines his cost approach estimate. Nonetheless, Norris’ blended sales comparison approach includes the mezzanine area and, critically, arrives at a value estimate relevant to January 1, 2020, by accounting for the demonstrated flood damage and risk.
Newland’s appraisal is thorough, but less persuasive. Newland valued the property as of January 1, 2019, without accounting for the damage to the subject property caused by the 2019 flood. Newland acknowledged the severity of the flooding. He testified the flood was a “tragic” and “devastating event.” Moreover, Newland testified that, unlike the subject property, none of his comparable sales were located in a flood plain. On cross-examination, Newland testified he “would not be surprised” if the “value was different” on January 1, 2020, due to the flooding. Specifically, Newland testified that if he had accounted for the flooding, he likely would have deducted additional obsolescence. Newland’s testimony that the flooding would have likely lowered his value estimate undermines the persuasiveness of his appraisal for purposes of this appeal.
Newland’s valuation is also premised on the assumption the 30 acres of land surrounding the event center contributes substantially to the overall value of the subject property. Newland’s assumption that the 30 acres supports the event center is less persuasive than Norris’ conclusion the event center is supported by the 8.5 acres of elevated land that is subject to less flood risk and which was not inundated and substantially damaged in 2019.
Finally, in his closing statement, Respondent stated his “best estimate” of the market value of the subject property is $1,500,000. Respondent’s closing statement is not evidence. It is, however, an acknowledgment that the $2,114,180 BOE value Respondent seeks to affirm exceeds his own estimate of the TVM of the subject property.
Complainant produced substantial and persuasive evidence showing that the TVM of the subject property on January 1, 2020, based on the economic conditions as of January 1, 2019, was $1,210,000.
CONCLUSION AND ORDER
The BOE’s decision is set aside. The TVM of the subject property on January 1, 2020, based on the economic conditions as of January 1, 2019, was $1,210,000.
Application for Review
A party may file with the STC 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 detailed grounds upon which it is claimed the decision is erroneous.” Section 138.432. The application must be in writing, and may be mailed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, or emailed to Legal@stc.mo.gov. A copy of the 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.
Disputed Taxes
The Collector of Callaway County, and 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 the disputed taxes have been disbursed pursuant to a court order under the provisions of section 139.031.
SO ORDERED August 13, 2021.
Eric S. Peterson
Senior Hearing Officer
State Tax Commission
Certificate of Service
I hereby certify that a copy of the foregoing has been electronically mailed and/or sent by U.S. Mail on August 13, 2021, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector
Elaina Mejia
Legal Coordinator
Contact Information for State Tax Commission:
Missouri State Tax Commission
421 East Dunklin Street
P.O. Box 146
Jefferson City, MO 65102-0146
573-751-2414
Fax 573-751-1341
[1] Complainant timely filed a complaint for review of assessment. The State Tax Commission (STC) has authority to hear and decide Complainant’s appeal. Mo. Const. art. X, sec. 14; Section 138.430.1, RSMo 2000. All statutory citations are to RSMo 2000, as amended.
[2] A downward adjustment is applied to account for a superior characteristic of a comparable property. Conversely, an upward adjustment is applied to account for an inferior characteristic of a comparable property. These adjustments permit a like kind comparison.
[3] In the cost approach analysis, Norris utilized a gross building area of 10,020 square feet. (Ex. A at 40, 84)