STATE TAX COMMISSION OF MISSOURI
| WMP LCF, LLC, | ) | |
| Complainant, | ) | |
| ) | ||
| ) | Appeal No. 20-10005 | |
| v. | ) | Parcel No. 19Q410070 |
| ) | ||
| JAKE ZIMMERMAN, ASSESSOR, | ) | |
| ST. LOUIS COUNTY, MISSOURI, | ) | |
| Respondent. | ) |
DECISION AND ORDER
WMP LCF, LLC, (Complainant) appeals the St. Louis County Board of Equalization’s (BOE) decision finding the true value in money (TVM) of the subject commercial property for tax year 2020 was $12,335,500. Complainant claims the property is overvalued. Complainant did not produce substantial and persuasive evidence of overvaluation. The BOE decision is AFFIRMED.[1]
FINDINGS OF FACT
- Procedure. Complainant appealed Respondent’s 2019 assessment to the BOE. The BOE affirmed the 2019 assessment. Complainant appealed the 2019 assessment to the STC and then voluntarily dismissed that appeal.
Complainant appealed the assessment to the BOE in 2020. The BOE affirmed Respondent’s assessment. Complainant filed the instant appeal with the STC and subsequently filed documentation and exhibits indicating new improvements were completed in 2019. Respondent filed a motion to dismiss. Complainant filed suggestions in opposition. Respondent filed a reply. As explained in the Conclusions of Law, Respondent’s motion to dismiss is overruled.
- The Subject Property. The subject commercial property is located at 425 South Woodsmill Road in St. Louis County. The subject property consist of a 6.20 acre lot improved with four-story, office building with a gross building area of approximately 87,197 square feet. In 2019, the owner made improvements to the office building enabling a tenant to occupy previously vacant space.
- Assessment and Valuation. Respondent classified the subject property as commercial and determined the TVM on January 1, 2019, was $12,335,500. The BOE determined the TVM for tax year 2020 was $12,335,500.
- Complainant’s Evidence. Complainant’s evidence consists of Exhibits A and B and the written direct testimony (WDT) of Luke Wolf and Keith McFarland.
Exhibit A is an appraisal report prepared by Keith McFarland and Michael Jersa. McFarland and Jersa are licensed appraisers. The appraisal report estimates the TVM of the subject property as of January 1, 2019, was $9,850,000. (Ex. A at 85)
Exhibit B consists of copies of an email, invoices, and lien waiver for improvements to the subject property totaling $487,638. The invoice is dated October 25, 2019, and indicates the value of the work completed as of the invoice date was $358,649.60. Wolf testified the improvements identified in Exhibit B “allowed us to use previously vacant portions of the building for which were receiving no rent. So that was a good thing. It’s always nice to have tenants in space where you didn’t have them before.” (Wolf WDT at 3)
The value estimate in Exhibit A is based on a reconciliation of values indicated by the income and sales comparison approaches. For the income approach, McFarland and Jersa determined market rent, expenses and capitalization rates to estimate a value of $9,938,353. They deducted $76,120 in deferred maintenance to calculate a TVM of $9,860,000 (rounded) as of January 1, 2019. (Ex. A at 74) For the sales comparison approach, McFarland and Jersa analyzed five comparable sales and made adjustments along eight parameters. After deducting deferred maintenance, the indicated value from the sales comparison approach was $9,820,000 as of January 1, 2019. (Ex. A at 76-83) The reconciled value estimate is $9,850,000. (Ex. A at 85).
McFarland and Jersa inspected the subject property in July 2020. (Ex. A at 4) The appraisal report does not account for improvements to the subject property completed in 2019. The report repeatedly states the value estimate is based on information showing the property was last renovated in 2010. (Ex. A at 4, 15, 41, 50, 54, 63, 82)
On cross-examination, McFarland testified the appraisal did not consider the 2019 improvements to the subject property:
Question: The appraisal report you are presenting today and your opinion of value, you are not offering an opinion of value for January first of 2019, as the property condition sat on January first of 2020?
Answer: Correct.
(Tr. 2 audio at 10:45) On re-direct examination, McFarland confirmed the value estimate in the appraisal report did not account for property improvements between January 1, 2019, and the July 2020 inspection. McFarland testified “as I understood it, there had been no measurable changes in the property.” (Tr. 2 audio at 12:42)
Exhibit A does not consider any new improvements to the subject property made during 2019 and does not value any such improvements as though they had been completed as of January 1, 2019. The final value estimate of $9,850,000 is independent of any improvements to the subject property made after January 1, 2019, and on or before December 31, 2019.
- Respondent’s Evidence. Respondent’s evidence consists of Exhibits 2 through 12. Exhibits 2 through 5 accompanied Respondent’s motion to dismiss. Exhibits 6 through 12 are rebuttal evidence. Respondent’s exhibits are admitted into record and are as follows:
| Exhibit 2 | 2019 BOE file and decision |
| Exhibit 3 | Complainant’s voluntary dismissal of 2019 STC appeal |
| Exhibit 4 | Complainant’s 2020 BOE appeal |
| Exhibit 5 | Complainant’s 2020 STC complaint for review of assessment |
| Exhibit 6 | City of Town & Country’s list of 2019 permits for the subject property |
| Exhibit 7 | Commercial occupancy permit |
| Exhibit 8 | Administrative telecommunications permit 19-0276 |
| Exhibit 9 | Commercial building permit 19-0277 |
| Exhibit 10 | Inspection card |
| Exhibit 11 | Administrative telecommunications permit 19-0671 |
| Exhibit 12 | Commercial building permit 19-0672 |
- Value. The TVM of the subject property on January 1, 2020, under the economic conditions as of January 1, 2019, was $12,335,500.
CONCLUSIONS OF LAW
- Motion to Dismiss. Respondent’s motion to dismiss alleges two grounds for dismissal: (1) Complainant failed to specifically plead new construction in the complaint for review of assessment; and (2) the STC lacks jurisdiction to hear and decide the appeal.[2] Respondent’s motion to dismiss is overruled.
Complainant’s Pleading is Sufficient
Section 137.115.1 provides the assessed value in the odd-numbered year applies in the following even-numbered year, “except for new construction and property improvements which shall be valued as though they had been completed as of January first of the preceding odd-numbered year.” Respondent asserts Complainant failed to plead a “claim of new construction” with sufficient specificity to inform Respondent of “the main jurisdictional underpinning of the current appeal.” (Motion at 3)
Respondent cites Turnbough v. Farmers Ins. Co., 720 S.W.2d 752 (Mo. App. E.D. 1986) and Baker v. Empire Dist. Elec. Co., 24 S.W.3d 255 (Mo. App. S.D. 2000) for the proposition Complainant is not entitled to relief on a theory of recovery that was not pled. Turnbough and Baker do not support Respondent’s argument.
Turnbough and Baker involved circuit court actions subject to the pleading requirements of the Rules of Civil Procedure. The Rules of Civil Procedure “by their terms do not apply to proceedings in administrative agencies.” Harter v. Missouri Pub. Serv. Comm’n, 361 S.W.3d 52, 56 (Mo. App. W.D. 2011); see also Rule 41.01(a) (providing that Rules 41 through 101 apply to civil actions in the circuit court, court of appeals, and the Supreme Court).[3] The pleading requirements for the underlying appeal are set by Section 536.063 and 12 CSR 30-3.010, neither of which was at issue in Turnbough or Baker.
Section 536.063 governs pleadings in administrative contested case proceedings. Section 536.063(2) provides:
Any writing filed whereby affirmative relief is sought shall state what relief is sought or proposed and the reason for granting it, and shall not consist merely of statements or charges phrased in the language of a statute or rule; provided, however, that this subdivision shall not apply when the writing is a notice of appeal as authorized by law[.]
(Emphasis added).
The statutory requirement that a contested case pleading must state the “reason for granting” relief is inapplicable because a complaint for review of assessment is “a notice of appeal as authorized by law.” Specifically, 12 CSR 30-3.010(1)(A) provides an “appeal shall be initiated by filing a complaint on forms prescribed by this commission and directed to the State Tax Commission.” (Emphasis added). The regulation also provides that “any complainant may attach to commission forms any additional written pleading deemed appropriate by complainant.” Id. The taxpayer thus has the option of providing additional information in the complaint, but is not required to do so.
Complainant initiated the instant 2020 appeal by timely filing a complaint for review of assessment form as required by 12 CSR 30-3.010(1)(A). Complainant provided all the information required by the single-page complaint form, including selecting “overvaluation” in the section entitled “Grounds For Appeal.” The timely complaint for review of assessment effectuated Complainant’s “right to appeal from the local boards of equalization to the state tax commission under rules prescribed by the state tax commission[.]” Section 138.430.1. By timely filing an appeal on forms prescribed by the STC, Complainant invoked the STC’s authority to “investigate all such appeals and … correct any assessment or valuation which is shown to be unlawful, unfair, improper, arbitrary or capricious.” Id.
Nonetheless, Respondent asserts Complainant’s timely filed complaint for review of assessment is insufficient. Respondent asserts 12 CSR 30-3.025(3) is “instructive” on this issue and illustrates the deficiency in Complainant’s pleading. (Motion at 3)
Respondent acknowledges 12 CSR 30-3.025(3) was rescinded in July 2018. The rule formerly provided for a verified statement “tending to demonstrate that the commission should reconsider the appropriateness of the value in the even-numbered year.” The rescinded rule has no bearing on Complainant’s appeal. See State ex rel. Garden View Care Ctr. v. Missouri Health Facilities Rev. Comm., 926 S.W.2d 90, 92 (Mo. App. W.D. 1996) (holding an appeal from a preliminary writ of prohibition was moot because the administrative regulation at issue was rescinded).
Finally, Respondent asserts State ex rel. Zimmerman v. Blanc, 548 S.W.3d 396 (Mo. App. W.D. 2018) held that a taxpayer must allege new construction or improvements on the STC appeal form. (Response at 2 n.2) Blanc did not hold that the STC lacks authority to hear and decide an even-year appeal solely because a taxpayer does not include additional information regarding improvements or new construction in the complaint for review of assessment. To the contrary, Blanc held the STC had authority to hear an even-year appeal but, like the BOE, lacked authority to change the assessment in an even-year appeal because the record was devoid of documentation in the form of pleadings, transcripts, or exhibits indicating the taxpayers claimed new construction or improvements. Id. at 403-04. Indeed, the taxpayers in Blanc conceded “that neither new construction nor improvements have been claimed.” Id. at 403 n.10. The court’s subsequent observation that the taxpayers also did not allege new construction or improvements on the STC appeal form simply illustrated what the taxpayers conceded; namely, that at no point was there any claim of new construction or improvements invoking the STC’s authority to change the assessment in an even-year appeal. Blanc therefore stands for the proposition that while the STC has the authority to hear and decide even-year appeals from the BOE, the remedy in an even-year appeal is limited by the requirement of new construction or improvements during the odd year. Blanc, 548 S.W.3d at 404. Blanc does not support Respondent’s argument that Complainant’s appeal was insufficient to invoke the STC’s statutory authority to hear and decide the instant appeal. Section 138.430.1.
Section 138.135.2
Respondent also asserts Section 138.135.2 divests the STC of authority to hear and decide Complainant’s appeal. Section 138.135.2 provides:
In any county of the first classification with a population of at least nine hundred thousand inhabitants, when there is an order of the board of equalization or the state tax commission, including a settlement order, relating to the assessment of property, the assessment shall remain the same for the subsequent even-numbered year unless there has been new construction or property improvements between January first of the odd-numbered year and January first of the following even-numbered year.
(Emphasis added).
Section 138.135.2 does not limit the STC’s authority to hear even-year appeals. The statute simply limits the availability of a remedy in an even-year appeal where there has been a BOE or STC order “relating to” the assessment “unless there has been new construction or property improvements” in the preceding odd-numbered year. Blanc, 548 S.W.3d at 404.[4]
Respondent also argues the “[p]ublic policy of preserving judicial resources dictates” that an even-year appeal should be considered only if there is an increased assessment or there is property damage indicating a diminution of value.[5] (Motion at 6-7) Respondent’s appeal to public policy ignores the plain language of the governing statutes and regulations. Those statutes and regulations authorize the STC to hear and decide an appeal from a BOE decision so long as the complaint for review of assessment is timely filed. Complainant effectuated its statutory right to appeal by timely filing a completed complaint for review of assessment form as required by 12 CSR 30-3.010(1)(A). Complainant’s 2020 appeal to the STC, therefore, was “plainly authorized by section 138.430.” Blanc, 548 S.W.3d at 403. Respondent’s motion to dismiss is overruled.
- 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). The assessed value in the odd-numbered year “shall apply in the following even-numbered year, except for new construction and property improvements which shall be valued as though they had been completed as of January first of the preceding odd-numbered year.” Section 137.115.1. 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). If there is new construction or improvement, “[t]he 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).
“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).
- 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).
Complainant filed a request to take “judicial notice” of copies of six St. Louis County records regarding electrical work for tenant improvements at the subject property. In pertinent part, Section 536.070(6) provides “[a]gencies shall take official notice of all matters of which the courts take judicial notice.” Missouri courts may take judicial notice of public records. Borrson v. Missouri-Kansas-Texas R. Co., 172 S.W.2d 835, 837 (Mo. 1943). Respondent did not object. The work permits are officially noticed.
- Complainant’s 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 Did Not Produce Substantial and Persuasive Evidence of Overvaluation.
In this even-year appeal, new construction or property improvements made in the odd-numbered year “shall be valued as though they had been completed as of January first of the preceding odd-numbered year.” Section 137.115. While Complainant introduced evidence documenting their claim of new improvements, Complainant did not introduce substantial and persuasive evidence showing the value of the subject property as though the improvements existed on January 1, 2019.
The appraisal report in Exhibit A provides a value estimate as of January 1, 2019, based on the assumption the property was last renovated in 2010. The appraisal report does not consider the 2019 improvements. Complainant’s appraiser testified the value estimate in Exhibit A does not consider improvements made in 2019. Complainant did not produce substantial and persuasive evidence of the subject property’s value as though improvements made in 2019 were in place as of January 1, 2019, as required by Sections 137.115 and 138.153.2.
CONCLUSION AND ORDER
The BOE’s decision is affirmed. The TVM of the subject property for tax year 2020 remains at $12,335,500 per the 2019 assessment.
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 St. Louis 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] Administrative agencies do not exercise jurisdiction and, instead, are “merely conferred statutory authority to take certain actions.” Cass Cty. v. Dir. of Revenue, 550 S.W.3d 70, 74 (Mo. banc 2018). The STC’s limited statutory authority is fundamentally different than jurisdiction exercised by the courts, which is derived from Article V of the Missouri Constitution. See J.C.W. ex rel. Webb v. Wyciskalla, 275 S.W.3d 249, 252 (Mo. banc 2009) (noting jurisdiction is “based upon constitutional principles”). Unlike the courts’ jurisdictional power, the STC’s exercise of statutorily granted quasi-judicial authority “extends only to the ascertainment of facts and the application of existing law thereto in order to resolve issues within the given area of agency expertise.” State Tax Comm’n v. Admin. Hearing Comm’n, 641 S.W.2d 69, 75 (Mo. banc 1982).
[3] The only exceptions are certain rules pertaining to discovery, which have been adopted by regulation. 12 CSR 3-030; Section 536.073.2.
[4] Complainant asserts Blanc was wrongly decided and is merely “persuasive authority” in an appeal from a St. Louis County assessment. (Sugg. in Opp. at 8) Complainant relies on the fact Rule 84.15 provides “the decision of a majority of a division of that district shall be the decision of the district.” Complainant’s argument is premised on the incorrect assumption that a decision from the Western District is binding only within the Western District’s territorial jurisdiction. Per Article V of the Missouri Constitution, the districts of the court of appeals “are not separate courts but simply different districts of a unitary court of appeals.” Akins v. Dir. of Revenue, 303 S.W.3d 563, 567 n.4 (Mo. banc 2010). Blanc is binding precedent.
[5] Respondent cites a 2009 STC hearing officer decision and order to support this argument. (Motion at 6) Administrative agency decisions are not precedent. Spire Missouri, Inc. v. Pub. Serv. Comm’n, 618 S.W.3d 225, 235 (Mo. banc 2021).