State Tax Commission of Missouri
|v.||)||Appeal Number 07-10996|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
St. Louis County Board of Equalization’s assessment SET ASIDE. Complainant presented substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization.
True value in money and assessment ratio for the subject property for tax year(s):
|True Value 2007-2008||Assessment Ratio||Assessed Value|
Complainant appeared by counsel, Thomas Campbell.
Respondent appeared by Attorney Edward Corrigan.
Case heard and decided by Hearing Officer Maureen Monaghan.
Complainant appeals, on the grounds of overvaluation and discrimination, the decision of the County. Having considered all of the competent evidence upon the whole record, the Hearing Officer finds that the Complainant presented substantial and persuasive evidence as to overvaluation and discrimination. The following Decision and Order is entered.
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the County Board of Equalization.
- Schedule and Procedure. The State Tax Commission issued an Order setting forth the schedule and procedures for this appeal. The Schedule and Procedure required that each party file and exchange exhibits and written direct testimony to establish their case in chief on or before December 4, 2015. Complainant and Respondent filed and exchanged the exhibits set out below under Evidence. Parties had until December 21, 2015 to file objections and rebuttal exhibits. Neither party objected to the exhibits filed. Respondent was ordered to file, on or before January 5, 2016, a Certification of Hearing indicating a good faith intention to require a hearing. Respondent failed to file with the Commission.
- Subject Property. The subject property is identified by map parcel number: 110630306 and is further identified as 3333 Foerster Rd, Bridgeton, St. Louis County, Missouri.
- Assessment. The Assessor appraised the property at $4,037,900, an assessed commercial value of $1,292,130. The Board of Equalization sustained the valuation.
- Complainant’s Evidence. Complainant filed with the Commission the following documents: Exhibit A – Appraisal Report of Certified Appraisers John Hottle and Michael Robinson, Exhibit B – Written Direct Testimony of John Hottle, and Exhibit C – Written Direct Testimony of Michael Robinson.
- Respondent’s Evidence. Respondent filed no exhibits.
- The State Tax Commission previously found that the median level of assessment for commercial property in St. Louis County in 2007 is 29.4%. The previous decision is incorporated by reference.
- The true value of the property as of January 1, 2007, was $2,630,000
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. 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 true value in money for the property under appeal. By statute real and tangible personal property is assessed at set percentages of true value in money. Section 137.115.5, 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 board of equalization, correcting any assessment which is unlawful, unfair, improper, arbitrary or capricious. Section 138.431.5 RSMo; 12 CSR 30-3.080 (2) The filing of exhibits and written direct testimony 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 Respondent did not request a hearing, did not file objections to the Complainant’s exhibits or file any rebuttal exhibits. Therefore, the Hearing Officer simply considered the exhibits filed and proceeded to ascertain if said exhibits met the standard of substantial and persuasive evidence to establish the market value of the property.
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. 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)
Standard for Valuation
Section 137.115, RSMo, requires that property be assessed based upon its true value in money 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).
True value in money 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); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973). 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 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:
- Buyer and seller are typically motivated.
- Both parties are well informed and well advised, and both acting in what they consider their own best interests.
- A reasonable time is allowed for exposure in the open market.
- Payment is made in cash or its equivalent.
- Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
- 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
Mr. Hottle and Mr. Robinson conducted an appraisal of the property under appeal consistent with this standard.
Weight to be Given Evidence
The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, 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) The Hearing Officer is persuaded that the valuation presented in the appraisal is based upon appropriate and sound appraisal practice and therefore constitutes substantial and persuasive evidence to establish the value concluded of $2,630,000.
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), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm’n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. Div. 2 1974).
The appraisers appraised the property developing the income approach and the sales approach. The appraisers omitted the cost approach due to the effective age of the improvements and because that approach would have no meaningful bearing on the property. The subject property is an office/warehouse building on 9.52 acres of land. It has 43,880 square feet of rentable area. It was constructed in 1999. The appraisers relied on market data that existed as of January 1, 2007, to determine the value as of that tax date. No sales or listings of the subject property were found within three years prior to the date of value.
In developing the income approach, the appraisers reviewed the leases of four comparable properties to conclude an average rate of $6.55 per square foot of rent. After considering adjustments, the appraisers concluded an economic rental rate of $7.00 per square foot on a triple net basis. In the fourth quarter of 2006, the market vacancy rate was 7.6%, and the subject was 100% occupied by the owner. The appraisers utilized a vacancy and collection rate of 7.6%. The appraisers chose to employ the direct capitalization method of the income approach to estimate the subject property’s value. The appraisers reviewed similar properties that sold while under lease and applied a vacancy rate and market expenses to determine that a capitalization rate of 9.0% should be applied to the subject property. The appraisers then loaded an effective tax rate based on the numerous tax rates specific to the subject’s location within the taxing authorities. The income approach indicated a rounded value of $2,860,000.
In developing the sales approach, the appraisers reviewed the sales of four comparable properties. Adjustments were made for the differences between the comparables and the subject property, resulting in an average sale price of $62.00 per square foot. However, after all factors were considered, including conditions of sale, market conditions, location, age, size, condition, design, and land-to-building ratio, a rate of $60.00 per square foot was applied to the subject property. The sales approach indicated a rounded value of $2,630,000. The appraisers believed the value according to the sales approach was the best indicator of value because the final value estimate under this approach resulted from comparing the subject property to sufficient sales of similar facilities within the local market.
The methodology utilized was appropriate for the appraisal problem presented in the present appeal.
Complainant Proves Value
In order to prevail, Complainant 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, 2007. Hermel, supra 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.” 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).
The Complainant’s appraisal evidence meets the required evidentiary standard to rebut the presumption of correct assessment by the Board and to establish the true value in money as of January 1, 2007, of the subject property.
In order to obtain a reduction in assessed value based upon discrimination, the Complainant must (1) prove the true value in money of their property on January 1, 2007; and (2) show an intentional plan of discrimination by the assessing officials resulting in an assessment of that property at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction or show that the level of an assessment is so grossly excessive as to be inconsistent with an honest exercise of judgment. Savage v. State Tax Commission, 722 S.W.2d 72 (Mo. banc 1986); Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003.)
There is no evidence that there was an intentional plan of discrimination by the assessing officials so we must determine if the Complainant has presented substantial and persuasive evidence to show that the level of their assessment is so grossly excessive as to be inconsistent with an honest exercise of judgment. “By requiring that the level of an assessment be so grossly excessive as to be inconsistent with an honest exercise of judgment in cases in which intentional discrimination is not shown, the courts and the Commission refrain from correcting assessments which reflect no more than de minimus errors of judgment on the part of assessors. Such a standard recognizes that ‘[w]hile practical uniformity is the constitutional goal, absolute uniformity is an unattainable ideal’.” Savage v. State Tax Commission, 722 S.W.2d 72 (Mo. banc 1986).
In a discrimination case, the Commission evaluates the difference between the average level of assessment for a particular class of real property and the actual assessment imposed on the property of the taxpayer alleging discrimination. Savage 722 S.W.2d at 79. The Commission has held that the average level of assessment for commercial properties in St. Louis County in 2007 was 29.4%. See In The Matter of the 2007 and 2008 Commercial Assessment Ratio of Properties in St. Louis County v. Zimmerman State Tax Commission Appeal 07-08 Ratio (“2007 Ratio Case”). To prevail and be entitled to a remedy in a discrimination case, the taxpayer must show that the differential between the Assessor’s assessment on the taxpayer and the average level of assessment is grossly excessive. The subject property’s assessed value as determined by the Assessor was $1,292,130 using a valuation of $4,037,900 and an assessment ratio of 32%. The subject property’s assessed value using the true value of $2,630,000 and a median assessment ratio of 29.4% is $773,220. The difference between the assessed values is $518,910. The property’s assessment ratio therefore was 49% in 2007.
The Complainant has established that the assessment was more than a de minimus error in judgment on the part of the assessor and thereby established their right to have his “assessment reduced to the percentage of that value at which others are taxed…” (Sioux City Bridge Co. v. Dakota County, Neb, 43 S.Ct.190 (1923)) in other words, the taxpayer’s assessed valuation should be set at the assessment “placed upon the general mass of other taxable property in the county.”
The assessed valuation for the subject property as determined by the Board of Equalization for St. Louis County for the subject tax day is SET ASIDE. The assessed value for the subject property for tax years 2007 and 2008 is set at $773,220.
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.
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 March 2, 2016
STATE TAX COMMISSION OF MISSOURI
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 2nd day of March 2016, to: Thomas Campbell, 100 South Fourth Street, Suite 1000, St. Louis, MO 63102, Attorney for Complainant; Edward Corrigan, Associate County Counselor, Attorney for Respondent, County Government Center, 41 South Central Avenue, Clayton, MO 63105; Jake Zimmerman, Assessor, County Government Center, 41 South Central Avenue, Clayton, MO 63105; Mark Devore, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.