TWELVE OAKS MOTOR INN, INC.	)
	)
Complainant,	)
	)
v.	)		Appeal Number 04-89501
	)
	)
JAMES STRAHAN, ASSESSOR,	)
TANEY COUNTY, MISSOURI,	)
	)
Respondent.	)

Decision of the Taney County Board of Equalization reducing the assessment made by the Assessor, SET ASIDE, Hearing Officer sets true value in money for the subject property for tax year 2004 to be $1,500,000, assessed value of $480,000.

Complainant appeared by Counsel, Russell Schenewerk, Branson, Missouri.

Respondent appeared by Counsel, William McCullah, Taney County Special Counselor.

Case decided by Chief Counsel, R. Randall Turley, acting as hearing officer.

The Commission takes this appeal to establish the true value in money for the subject property on January 1, 2004, under the economic conditions existing on January 1, 2003, in compliance with the Writ of Mandamus of the Circuit Court of Taney County issued January 12, 2005, and Section 137.345.5, RSMo.

Complainant appeals, on the ground of overvaluation, the decision of the Taney County Board of Equalization, which reduced the valuation of the subject property. The Assessor determined an appraised value of $2,246,250 (assessed value of $718,800, as commercial property). The Board reduced the value to $2,156,400 (assessed value of $690,050). Complainant asserted that value was to be set in accordance with the Writ of Mandamus, issued January 12, 2005, by the Circuit Court of Taney County, in Case No. 04AF-CV00684. The parties filed various documents and pleadings.

Pursuant to Section 138.431.4, RSMo, this appeal has been assigned to Chief Counsel, R. Randall Turley for entering a Decision and Order. The Chief Counsel, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

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

1. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Taney County Board of Equalization for tax year 2004. No appeal for tax year 2003 was filed with the Commission from the Board of Equalization.

2. The subject property is located at 205 - 235 Schaefer Drive, Branson, Missouri. The property is identified by locator number 07-7.0-35-000-000-039.000. The property is otherwise known as the Twelve Oaks and Spinning Wheel Inns.

3. The property was the subject of an appeal for the 2001-02 assessment cycle, STC Appeal No. 01-89513, hereinafter referred to as the 2001 Appeal. Official notice is taken of the Decision and Order rendered in the 2001 Appeal, and it is incorporated by reference as if set out in full herein. The fair market value for the property was determined to be $1,500,000, under the income approach to value, based upon the actual income and expense history of the subject.

4. There was no evidence of new construction and improvement from January 1, 2003, to January 1, 2004. The determination of fair market value (true value in money) as of January 1, 2003, is controlling for the valuation of the property as of January 1, 2004. Section 137.115.1, RSMo.

5. By Order, dated January 12, 2005, the Circuit Court of Taney County entered its Writ of Mandamus, ordering Respondent, James Strahan, to:

(1) Comply with sections 137.345.5 and 137.076, RSMo by basing any future assessment of properties that have been successfully appealed to the State Tax Commission on the appraised values established by the Commission and to provide his calculations of any adjustments or changes in those values; and to

(2) Adjust the appraised value of Relator’s (Twelve Oaks Motor Inn, Inc.) property to a level consistent with the April 24, 2004 ruling of the State Tax Commission for the 2003-2004 and 2005-2006 real estate assessment cycles.

6. By Order, dated January 25, 2005, Complainant was to provide to Respondent, copy to the Commission, income and expense data on the subject property for the years 2001 and 2002 in a format that will permit an income approach to be performed to arrive at the fair market value of the subject property as of January 1, 2003, in accordance with the methodology utilized in the 2001 appeal and which formed the basis for the Commission’s decision on the fair market value in said appeal. Complainant complied with said Order, and filed the income and expense information on or about February 14, 2005.

7. By Order dated February 15, 2005, Respondent was given until and including March 1, 2005, to file with the Commission, copy to Counsel for Complainant a conclusion of the appraised of the subject property as of January 1, 2003, based upon the income approach, with a copy of the development of the income approach.

8. On February 28, 2005, Respondent filed his Conclusion of Appraised Value based upon an appraisal by J. Jeschke Appraisal to be $2,140,000.

9. The gross income for the subject property for the years 1998, 1999 and 2000 was respectively, $948,832, $961,432 and $913,345. Exhibit A, p. 22 – STC Appeal 01-89513. The projection of gross income attributable to real property for 2001 was $916,375. This amount was utilized in the income approach to arrive at the indicated fair market value of $1,500,000 for the 2001 appeal. Exhibit A, pp. 25, 28 – STC Appeal 01-89513.

10. The effective gross income based upon actual income of the subject for 2001 was $925,510 and for 2002 it was $909,196. Jeschke Appraisal, p. 93; Income and Expense statements for 2001 and 2002. A percentage of approximately 67% of effective gross income appropriately represents the stabilized expenses for the subject property. An amount equal to approximately 4.24% and 1.21% of effective gross income to account for return of and on FF & E (personal property) represents a stabilized deduction from net income from the subject’s operations. An amount equal to approximately 7.10% of effective gross income accounts for a stabilized deduction to arrive at net income attributable to real property. 2001 Appeal, DECISION, pp. 2-3; Exhibit A, p. 25, 2001 Appeal; 2001 & 2002 Income and Expense Statements.

11. An overall capitalization rate for the subject property, before adding the effective tax rate, falls in a range from 9.70% to 11.45%. 2001 Appeal DECISIONS, p. 3; Exhibit A, pp. 26-27, 2001 Appeal.

12. The actual income of the subject decreased from 2000 to 2003. The actual 2002 income was less than the income projected for 2001 to arrive at the indicated value of $1,500,000 in the 2001 appeal. Exhibit A, p. 25, 2001 Appeal; 2001 & 2002 Income and Expense Statements.

13. The true value in money (fair market value) of the subject property as of January 1, 2003, of $1,500,000 is consistent with the April 21, 2004, Decision and Order of the Commission, as ordered by the Circuit Court of Taney County in its January 12, 2005 ,Writ.

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.

Agencies shall take official notice of all matters of which the courts take judicial notice. Section 536.070(6), RSMo.

Courts will take judicial notice of their own records in the same cases. State ex rel. Horton v. Bourke, 129 S.W.2d 866, 869 (1939); Barth v. Kansas City Elevated Railway Company, 44 S.W. 788, 781 (1898). In addition, courts may take judicial notice of records in earlier cases when justice requires - Burton v. Moulder, 245 S.W.2d 844, 846 (Mo. 1952); Knorp v. Thompson, 175 S.W.2d 889, 894 (1943); Bushman v. Barlow, 15 S.W.2d 329, 332 (Mo. banc 1929) - or when it is necessary for a full understanding of the instant appeal. State ex rel St. Louis Public Service Company v. Public Service Commission, 291 S.W.2d 95, 97 (Mo. banc 1956). Courts may take judicial notice of their own records in prior proceedings involving the same parties and basically the same facts. In re Murphy, 732 S.W.2d 895, 902 (Mo. banc 1987); State v. Gilmore, 681 S.W.2d 934, 940 (Mo. banc 1984); State v. Keeble, 399 S.W.2d 118, 122 (Mo. 1966).

The decision in this appeal is controlled by section 137.354.5 as applied by the Circuit Court of Taney County in the case of State ex rel., Twelve Oaks Motor Inn, Inc. v. Strahan, O4AF-CV00684. The Commission in its Decision and Order in STC Appeal 01-89513 found the fair market value of the subject property based upon the income approach to value. The income approach developed in the 2001 appeal relied upon the actual income and expenses of the subject property to arrive at value. The value determined by the 2001 decision was $1,500,000.

Section 137.345.5 states the following:

"In every instance where a taxpayer has appealed to the board of equalization of the state tax commission the assessment of the taxpayer’s property, real or personal, and that appeal has been successful, then in the next following and all subsequent years the basis upon which the assessor must base future assessments of the subject property shall be the basis established by the successful appeal and any increases must be established from that basis."

Respondent in his Conclusion of Appraised Value, filed with the Commission on February 28, 2005, admitted that the increase in value on the subject property that he established for 2004 was not based upon the fair market value determined by the Commission of $1,500,000. Respondent averaged the per unit sales prices of five motels, added a value for undeveloped land. When the matter came before the Board of Equalization, Respondent proposed a reduction of three percent (3%) based upon his conclusion that from 2000 through 2002 there was a downward trend in motel and hotel sales in the Branson area market. The Board adopted the 3% reduction. Therefore, neither the Assessor nor the Board complied with the provisions of 137.345.5. Respondent’s Conclusion of Value, paragraphs 4 – 8. Respondent so admitted in the Circuit Court action. Writ of Mandamus, p. 2, paragraph 5.

The basis for Respondent’s assessment for the present appeal very simply was to be the fair market value of $1,500,000, as determined by the Commission. Section 137.345.5, RSMo; Writ of Mandamus. Upon being notified of the action of the Taney County Circuit Court in issuing its Writ of Mandamus, the Commission issued its Order for Respondent to adjust the appraised value of the subject property to a level consistent with the April, 21, 2004 ruling. Order, 2/15/05.

The income and expense data for 2001 and 2002 clearly demonstrates that the gross income for the property had declined from the income upon which the 2001 valuation had been made. Respondent nevertheless proffered a conclusion of value of $2,140,000 in response to the Commission Order. This was based upon an appraisal Respondent had commissioned sometime prior to February 2005. In other words, notwithstanding that the gross income for Twelve Oaks had been on a decline since 1998 to and including 2003 ($948,832 down to $847,013), Respondent failed to conform to the Commission Order and the Court Writ and concluded a value $640,000 higher than the valued determined for the 2001-02 assessment cycle. Said value having been based upon the actual performance of the subject motels.

Respondent’s conclusion of value of $2,140,000 overstated the fair market value in that the conclusion of value was not developed relying on the Commissions determination of value for 2001 and it did not make deductions for return of and on personal property and a deduction for going concern value. Simply applying the percentage adjustments for these factors found to be appropriate in the 2001 appeal to the income and expense figures which formed the basis for the $2,140,000 value, results in net operating income at a level similar to or less than the NOI upon which the 2001 value was based. The capitalization of the resulting NOI by either the 2001 appraisal capitalization rate or even the Jeschke appraisal capitalization rate does not provide an indicated value of $2,140,000, but a value that is more consistent with $1,500,000.

Respondent failed to comply with the Taney County Circuit Court’s Writ, Section 137.345.5, RSMo, and the Commission Order to establish value based upon the 2001 value as ordered by the Court, relying on Section 137.345.5.

Accordingly, Complainant’s property is to be valued for the 2004 tax year at a true value in money of $1,500,000.

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

The assessed value for the subject property for tax year 2004 is set at $480,000.

A party may file with the Commission an application for review of this decision within thirty (30) days of the mailing of the 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 Taney 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 12, 2005.

STATE TAX COMMISSION OF MISSOURI

R. Randall Turley

Chief Counsel