Health Midwest RMC,	)
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Complainant,	)
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v.	)		Appeal Number 04-49000
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CURTIS KOONS, ASSESSOR,	)
CASS COUNTY, MISSOURI,	)
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Respondent.	)

Decision of the Cass County Board of Equalization sustaining the assessment made by the Assessor, SET ASIDE, Hearing Officer finds true value in money for the subject property for tax year 2004 to be $6,660,000 assessed value of $2,112,000.

Complainant represented by Counsel, Brian T. Howes, Kansas City, Missouri.

Respondent represented by Counsel, Teresa Hensley, Prosecuting Attorney.

Case decided by Hearing Officer W. B. Tichenor.

The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2004, under the economic conditions existing as of January 1, 2003.

Complainant appeals, on the ground of overvaluation, the decision of the Cass County Board of Equalization, which sustained the valuation of the subject property. The Assessor determined an appraised value of $12,185,460 (assessed value of $3,899,350, as commercial property). Complainant proposed a value of $6,600,000 (assessed value of $2,112,000).

Decision rendered on exhibits filed by Complainant.

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

Complainant filed the following exhibits:

Exhibit A, Appraisal Report, dated 10/5/04 of Jeffry F. Busche, Missouri State Certified Real Estate Appraiser.

Exhibit B, Purchase Price Allocation.

Exhibit C, General Ledger Adjustment.

Exhibit D, Cass County Property Record Card.

Exhibit E, Written Direct Testimony of Jeffry F. Busche.

All exhibits were received into evidence.

Respondent did not file any exhibits or written direct testimony.

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

2. Procedural History.

A. Commission Order setting Exchange Schedule was issued on August 24, 2004. Said order set February 18, 2005, as the date for parties to file and exchange exhibits and March 18, 2005, as the date for parties to file and exchange written direct testimony. Complainant timely filed exhibits and written direct testimony. Respondent made no filings of exhibits or written direct testimony.

B. Parties had until April 1, 2005, to file objections to exhibits and written direct testimony. Respondent filed no objections to Complainant’s exhibits or written direct testimony.

C. By Order dated March 23, 2005, Respondent was given until and including April 8, 2005, to advise the Commission in writing if Respondent desired to cross-examine Complainant’s witness. Respondent was advised in said Order, as follows:

D. No response to the April 8^th Order was given by Respondent.

3. Respondent Precluded From Offering Evidence. Commission Rule 12 CSR 30-3.060 precluded Respondent from offering any evidence or testimony at an evidentiary hearing, due to the failure to file and exchange exhibits and written direct testimony in accordance with the Commission’s Exchange Order.

4. Description of Property. The subject property is located at 17053 Outer Belt Road, Belton, Missouri. The property is identified by parcel number 4-03-07-300-00-019.000 and is generally known by the name Research Belton Hospital. The property consists of approximately 14 acres improved by a general acute care hospital facility, licensed for 71 beds, with typical land improvements associated with a hospital. The hospital building contains 75,210 square feet of gross building area. A complete detailed description is set out in Exhibit A, p. 1 and pp. 42 – 43, said description is incorporated by reference as if set out in full in this Decision and Order. Complaint for Review of Assessment, Exhibit A.

5. Sale of Subject. The subject property sold in combination with approximately a dozen other hospitals in the Kansas City metro area on April 1, 2003. The amount allocated to the Research Belton Hospital amounted to $7,230,000. However, this amount included $1.2 million value associated with a different parcel of real estate that is not under appeal, and was therefore, not included in Complainant’s appraisal. Therefore, the allocated value to the subject property from the April 1, 2003 sale was $6,030,000. Exhibit A, pp. 4-5; Exhibit E, Q & A 19.

6. Complainant Presented Substantial and Persuasive Evidence. Complainant’s evidence was substantial and persuasive to rebut the presumption of correct assessment by the Assessor and/or the Board and establish the true value in money as of January 1, 2004, under the economic conditions existing as of January 1, 2004, to be $6,600,000, assessed value of $2,112,000 as commercial property.

The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious. Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, RSMo. 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. Section 138.431.4, RSMo.

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).

The presumption in favor of the Board is not evidence. A presumption simply accepts something as true without any substantial proof to the contrary. In an evidentiary hearing before the Commission, the valuation determined by the Board, even if simply to sustain the value made by the Assessor (which is not presumed to be correct), is accepted as true only until and so long as there is no substantial evidence to the contrary.

According to statute, there is no presumption that the assessor’s valuation is correct. Section 138.431.3, RSMo. Notwithstanding the statutory provision of section 138.431.1, enacted by the legislature in 1992 (SB 630), the Supreme Court of Missouri has held, "A tax assessor’s valuation is presumed correct." Snider v. Casino Aztar/Aztar Missouri Gaming Corp., SC86181, 3/01/2005. Citing to Hermel, supra; and Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).

The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the assessor’s or Board’s valuation is erroneous and what the fair market value should have been placed on the property. Snider, Hermel & Cupples Hesse, supra.

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). 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 is 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.

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

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

4. Payment is made in cash or its equivalent.

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

6. 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.

In order to investigate appeals filed with the Commission, the Hearing Officer has the duty to inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, subclassification or assessment of the property. The Hearing Officer’s decision regarding the assessment or valuation of the property may be based solely upon its inquiry and any evidence presented by the parties, or based solely upon evidence presented by the parties. Section 138.430.2, RSMo.

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).

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).

If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto.

The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data need not be admissible in evidence. Section 490.065, RSMo; Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. E.D. 1992).

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, 2003. Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, at 897. Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See, Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). 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). See also, 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).

Missouri courts have approved the comparable sales or market approach, the cost approach (replacement or construction) 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).

Evidence of the actual sales price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time. The actual sale price is a method that may be considered for estimating true value. The actual sales price, between a willing seller who is not obligated to sell and a willing buyer who is not compelled to buy, establishes an outer limit on the value of real property. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526 (App. E.D. 1993).

The Commission, or hearing officer, may order an exchange of exhibits and written direct testimony in advance of an evidentiary hearing. Any exhibit or written direct testimony not filed in accordance with a Commission Order on exchange and filing of exhibits and direct testimony is excluded from admission into evidence at the evidentiary hearing. 12 CSR 30-3.060.

After affording parties a reasonable opportunity for an evidentiary hearing, 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 may be issued. Section 138.431.4 RSMo.

Complainant presented substantial and persuasive evidence to establish the fair market value of the subject property as of January 1, 2004. The subject property was appraised by a state certified real estate appraiser. Mr. Busche considered all three of the recognized approaches to value in addressing the appraisal problem. He correctly concluded that the income approach would not be appropriate for the present valuation issue. He developed both the cost approach and sales comparison. He reconciled the two values developed by these approaches. The Busche appraisal and testimony establishes that his appraisal was prepared and developed in conformity with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation and the Standards of Professional Practice of the Appraisal Institute and the American Society of Appraisers.

The sale of the subject in April, 2003 provides an indicator of value for this appeal. However, because it was included in a sale of eleven other hospitals and therefore an allocation of sales price was made to each hospital, there is less probative value to the allocated sales price than would be accorded if the subject hospital has sold by itself. The allocated value nevertheless provides some support for the conclusion of value by the appraiser.

Complainant’s appraisal presents an opinion of value for the subject property as of January 1, 2004. Because Missouri operates under a two year assessment cycle, the value for the 2004 assessment is to be established, baring new construction and improvements being made to a property during 2003, under the economic conditions existing as of January 1, 2003. Section 137.115, RSMo. The appraiser’s written direct testimony addresses the issue of valuation of the property as of both January 1, 2003, and January 1, 2004, by concluding the value of $6,600,000 to be representative of the fair market value of the property on both dates. See, Exhibit E, Q & A, 25, 41 & 45.

Respondent offered no evidence addressing the issue of the fair market value of the subject property. When Respondent fails to offer evidence of value, he appears to consent to the value presented by Complainant’s prima facie case (qui tacet consentire videtur - a party who is silent appears to consent). The evidence presented by Complainant rebutted the presumption that the Board of Equalization had properly assessed the Complainant’s property by sustaining the Assessor’s value, thus rebutting any presumption that may exist under case law that the Assessor’s value was correct.

Complainant met its burden of proof and establish the true value in money of the subject property as of January 1, 2004, under the economic conditions of January 1, 2003, to be $6,600,000, relying upon well accepted and recognized appraisal practice.

The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Cass County for the subject tax day is SET ASIDE.

The assessed value for the subject property for tax year 2004 is set at $2,112,000.

Respondent may file with the Commission an application for review of this decision within thirty (30) days of the mailing of such decision. The application shall contain specific grounds upon which it is claimed the decision is erroneous. Failure to state specific facts or law upon which the appeal is based will result in summary denial. Section 138.432, RSMo 2000.

If an application for review of this 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 Cass 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 or all 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 May 11, 2005.

STATE TAX COMMISSION OF MISSOURI

W. B. Tichenor

Hearing Officer