W.D. & D. Enterprises d/b/a Knoll Greenhouses v. Holman (Jefferson)

 

W.C. & D. ENTERPRISES, )

D/B/A KNOLL GREENHOUSES, )

)

Complainant, )

)

v. ) Appeal Number 01-34021

)

RANDY HOLMAN, ASSESSOR, )

JEFFERSON COUNTY, MISSOURI, )

)

Respondent. )

DECISION AND ORDER

Holding: The majority of the subject property is actively used for the growing and acclimatization of plants — which are horticultural products. Accordingly, 8.34 acres of the parcel, building #1, and building #2 are reclassified as agricultural property. The assessment on remainder of the property is unchanged.

SUMMARY

The subject property in this appeal consists of a 9.34 acre parcel improved with three buildings. The parcel has approximately 1,400 feet of frontage on the intersection of State Highway 21 and Old Highway 21 and 500 feet of frontage on West Outer 21 Road. Approximately half of the parcel is level and cleared and the remainder slopes down and would require extensive fill for development. The first building is a 15,000 square foot pre-engineered steel column and steel frame structure with concrete floors constructed such that there is appropriate lighting, heating, and cooling to provide a suitable environment for plants. The second building is a 6,000 square foot wood frame building with a concrete floor. The third building is a 900 square foot wood frame building with a concrete floor.

The decision letter from the Jefferson County Board of Equalization, issued on October 12, 2001, reflects that for the 2001 assessment the Assessor valued the parcel at a market value of $487,600 and classified the subject property as commercial property. The Board of Equalization affirmed commercial assessment. Complainant appealed the assessment on grounds of overvaluation and misclassification, but waived the valuation issue at hearing. Complainant presented evidence in support of its assertion that the appropriate classification is agricultural. Respondent presented evidence in support of the existing assessment.

An evidentiary hearing was held on September 4, 2002, before the Tax Commission Hearing Officer Aimee Smashey, at the Jefferson County Courthouse in Hillsboro, Missouri. Complainant was represented by Roland Balzer, Attorney. Respondent was represented by David Senkel, Attorney.

Complainant’s Evidence

Complainant offered the testimony of Walter Knoll, shareholder of Complainant. Mr. Knoll provided testimony about the development of the subject property and the daily operations and use made of the subject facility.

Respondent’s Evidence

Respondent offered the appraisal and testimony of Mr. Terry L. Roesch. Mr. Roesch provided testimony about information he obtained during his site inspection concerning the operations and use of the subject property.

ISSUES

The material issues in this appeal are:

(1) What is/are the uses made of the subject property?

(2) Which property classification under Section 137.016, RSMo best fits the use(s) made of the property?

FINDINGS OF FACT

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

2. The subject parcel consists of 9.34 acres, about half of which is currently suitable for development due to topography, and three buildings.

3. The first building [Building #1] was built in 1985 – 1986 and contains 15,000 square feet of area. This structure was built to operate as a greenhouse in that it has:

(1) concrete floors which slope 1 degree to the South and 1 degree to the East such that water will drain;

(2) 12 bays and between each bay there is a trough to drain the water away from the plants;

(3) serpentine pipe in the floor to heat the roots of the plants;

(4) radiant heat in the ceiling to heat the leaves of the plants;

(5) air intakes on the South to cool the plants; and

(6) air discharge on the North for ventilation.

Complainant’s Exhibit A, 2 – 3.

4. The second building [Building #2] was built in 2000 and contains 6,000 square feet of area. This structure was built to house overflow of plants, storage of equipment and plant support products. Id., at 4.

5. The third building [Building #3] was built in 1999 and contains 900 square feet of area. It was paid for and is exclusively used by David Knoll, son of one of the owners of W.C. & D. Enterprises, for personal use.

6. Building #1 is actively used to grow and acclimate Complainant’s plants as well as maintaining plants of private individuals for rent over the winter months.

7. Building #1 routinely receives shipments of plants. Tr. 8. Once acclimatized, Complainant loads plants at the subject property on a daily basis and transports such plants to its six store locations in the St. Louis metro area. Complainant’s Exhibit A, at 3.

8. The subject property is not set-up to conduct retail sales on site in that there are no public hours, no sales force and no cash register. The employees on site are strictly plant technicians who care for the plants.

9. Building #2 is used to support the horticultural use of Building #1 in that it stores necessary equipment and plant support products.

CONCLUSIONS OF LAW AND DECISION

For property tax purposes, Missouri law provides that real property is to be classed into one of three categories — ‘residential property,’ ‘agricultural and horticultural property,’ and ‘utility, industrial, commercial, railroad, and other real property.’ Section 4(b), article X of the Missouri Constitution. The categories are defined by statute in Section 137.016.1, RSMo 2000. In relevant part, the statute provides:

As used in section 4(b) of article X of the Missouri Constitution, the following terms mean:

(1) “Residential property“, all real property improved by a structure which is used or intended to be used for residential living by human occupants, vacant land in connection with an airport, land used as a golf course, and manufactured home parks, but residential property shall not include other similar facilities used primarily for transient housing. For the purposes of this section, “transient housing” means all rooms available for rent or lease for which the receipts from the rent or lease of such rooms are subject to state sales tax pursuant to section 144.020.1(6), RSMo;

(2) “Agricultural and horticultural property“, all real property used for agricultural purposes and devoted primarily to the raising and harvesting of crops; to the feeding, breeding and management of livestock which shall include breeding and boarding of horses; to dairying, or to any other combination thereof; and buildings and structures customarily associated with farming, agricultural, and horticultural uses. Agricultural and horticultural property shall also include land devoted to and qualifying for payments or other compensation under a soil conservation or agricultural assistance program under an agreement with an agency of the federal government. Agricultural and horticultural property shall further include land and improvements, exclusive of structures, on privately owned airports that qualify as reliever airports under the Nation Plan of Integrated Airports System, to receive federal airport improvement project funds through the Federal Aviation Administration. Real property classified as forest croplands shall not be agricultural or horticultural property so long as it is classified as forest croplands and shall be taxed in accordance with the laws enacted to implement section 7 of article X of the Missouri Constitution;

(3) “Utility, industrial, commercial, railroad and other real property“, 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. All 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.”

Section 137.016.1, RSMo 2000. As illustrated in the definitions, the classification turns on the actual use put to the property.

The subject property is a 9.34 acre parcel about half of which was usable as of the tax date. Respondent’s Exhibit 2, at 18. The remainder would require extensive fill prior to development. Id. The parcel is improved with 3 buildings. The first building was built in 1985 – 1986 and contains 15,000 square feet of area. This structure was built to operate as a greenhouse in that it has:

(1) concrete floors which slope 1 degree to the South and 1 degree to the east such that water will drain;

(2) 12 bays and between each bay there is a trough to drain the water away from the plants;

(3) serpentine pipe in the floor to heat the roots of the plants;

(4) radiant heat in the ceiling to heat the leaves of the plants;

(5) air intakes on the south to cool the plants; and

(6) air discharge on the north for ventilation.

Complainant’s Exhibit A, 2 – 3. The second building was built in 2000 and contains 6,000 square feet of area. This structure was built to house overflow of plants, storage of equipment and plant support products. Complainant’s current plans are to convert this structure into a greenhouse. Id., at 4. The third building was built in 1999 and contains 900 square feet of area. It was paid for and is exclusively used by David Knoll, son of one of the owners of W.C. & D. Enterprises, for personal use. Complainant claims no ownership interest in this building.

Complainant presented credible evidence from one of its corporate shareholders, Mr. Walter Knoll, Sr., as to how the subject property has been used since its development. The primary structure of 15,000 square feet has been used to grow and acclimate Complainant’s inventory of plants as well as maintaining plants of private individuals for a $50.00 per month fee over the winter months. Tr. 10 -11. Complainant receives shipments of plants at the subject location. Tr. 8. Once acclimatized, Complainant loads plants at the subject property on a daily basis and transports such plants to its six store locations in the St. Louis metro area. Complainant’s Exhibit A, at 3. He further described the subject property operations in his direct testimony as follows:

Q: Are there any sales from your greenhouse or the subject property subject to this hearing?

A: No. All sales are from the stores and not the Arnold location. If someone would come in and ask, we would sell them something but we are not set up for this.

Q: Do you have any hours at the Arnold location which are open to the public?

A: No.

Q: Do you have any sales people at the Arnold location?

A: No.

Q: Do you have a cash register at the Arnold location?

A: No.

Q: How many employees do you have at the Arnold location?

A: About 7.

Q: What are their job duties?

A: They are plant technicians who are responsible for growing and caring for the plants.

Id.,, at 3 – 4. Mr. Knoll further indicated that the 6,000 square foot structure was a support building for Complainant’s operations at the subject property used for overflow of plants, storage of equipment and plant supports products such as soil, fertilizer, chemicals, and pots. The remaining 900 square foot structure is not used by Complainant. Id., at 4-5.

In developing the property in 1985 – 1986, Complainant built a pond for the purpose of supplying water to the greenhouse but this system never worked due to a ruptured pipe. Id., at 5. Respondent’s appraiser was informed by manager, David Knoll, that ornamental fish are raised in the pond and sold for water gardens. Respondent’s Exhibit 1, at 3. Mr. Walter Knoll testified at hearing that Complainant does not sell and has never sold ornamental fish out of the subject facility. Tr. 18. Despite what Mr. Roesch was informed, this Hearing Officer finds Mr. Walter Knoll’s testimony to be credible on this issue .

Due to the signage on the subject facility and Complainant’s Yellow Pages advertisement, questions were raised about whether the subject facility is actively used for direct sales to the public. The sign to the property identifies the Complainant’s various registered trade names and the location as a Tropical Plant Facility. See, Respondent’s Exhibit 2, Addendum at D. It makes no reference to public hours. Complainant’s witness indicated the “…main purpose of the sign is to route trucks in to make deliveries to [the subject] facility.” Tr. 8. The Yellow Pages advertisement for “Walter Knoll Florist,” a registered trade name of Complainant, expressly references the subject property as a branch location for “plant sales and rentals.” See, Respondent’s Exhibit 2, Addendum at R. The cross examination on this point set forth the following:

Q: Sir, I’m going to hand to you page R of the addendum to Mr. Roesch’s report and ask you if that is a reproduction of the Yellow Page advertisement for your business?

A: It is.

Q: Okay. And, sir, on the bottom here of page R, is there a reference to the [subject property]?

A: Yes, there is.

Q: Okay. And does it say underneath that, between the name Arnold Greenhouses and the phone number, does it say, “plant sales and rentals?”

A: Yes, it does.

Q: Sir, is it not true that all of the plants located at this facility are for sale?

A: No.

Q: They’re not?

A: Well, not at that facility.

Q: Well, do not people come in and buy plants at this facility?

A: No.

Q: None at all?

A: None at all is not a right statement, but —

Q: Okay. So people–

A: I mean, somebody can come in and they’ll look at plants. Okay. They are sold from my retail facilities where I have cash registers and sales people. I’m not going to say that a plant has never been sold there, but it is not a primary place — we don’t report sales from there, we do not sell from there. It is a facility where somebody might come in and look at plants, maybe even pick out a plant, but it is not — it is not a normal thing that we do.

Tr. 8-9. Despite Complainant’s representation in its advertisement, this Hearing Officer is not persuaded that there is currently an active retail use at the subject property.

Accordingly, this Hearing Officer finds that the 15,000 square foot greenhouse structure, the 6,000 square foot storage structure and 8.34 acres of the subject site are actively used for the growing of plants, which are horticultural products. The subject facility’s use as a plant maintenance or plant distribution center is actually strictly dependent on the facility having the appropriate environment for the continued growth and health of such plants. This portion of the subject parcel should be reclassified as agricultural and horticultural property. There was insufficient evidence on the record to establish that the remaining acre and the 900 square foot structure merit a reclassification.

ORDER

The assessed valuation for the subject property for tax year 2001, as determined by the Assessor and affirmed by the Board of Equalization, is SET ASIDE. The Clerk is HEREBY ORDERED to place a new assessed value on the books for tax years 2001 and 2002 as follows:

A party may file with the Commission an application for review of a hearing officer decision within thirty (30) days of the mailing of such decision. The application shall contain specific detailed grounds upon which it is claimed the decision is erroneous.

If an application for review of a hearing officer decision is made to the Commission, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the Commission. If no application for review is received by the Commission within thirty (30) days, this decision and order is deemed final and the Collector of Jefferson County as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal. If any protested taxes have been disbursed pursuant to Section 139.031(8), RSMo, either party may apply to the circuit court having jurisdiction of the cause for disposition of the protested taxes held by the taxing authority.

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 25, 2003.

STATE TAX COMMISSION OF MISSOURI

Aimee Smashey

Hearing Officer