St. Louis County v. State Tax Commission

• Decision Date: 12 November 1974
• Docket Number: No. 58441,No. 2,58441,2
• Citation: St. Louis County v. State Tax Commission, 515 S.W.2d 446 (Mo. 1974)
• Parties: ST. LOUIS COUNTY, Missouri, a body corporate and politic, Appellant, v. The STATE TAX COMMISSION of Missouri et al., and WLB Holding Company, a corporation, Respondents
• Court: Missouri Supreme Court

Page 446

515 S.W.2d 446

ST. LOUIS COUNTY, Missouri, a body corporate and politic, Appellant, v.The STATE TAX COMMISSION of Missouri et al., and WLB Holding Company, a corporation, Respondents.

No. 58441.

Supreme Court of Missouri, Division No. 2.

Nov. 12, 1974.

Thomas W. Wehrle, St. Louis County Counselor, James H. White, Associate County Counselor, Clayton, for appellant.

Hearnes, Padberg, Raack, McSweeney & Slater by Edward P. McSweeney, St. Louis, for respondent, WLB Holding Co.

HOUSER, Commissioner.

The question is the true value in money as of January 1, 1972 for state and county taxes of Sierra Vista, an apartment complex in north St. Louis County, and two adjoining tracts of land, all owned by WLB Holding Company.The assessor placed a valuation of $2,939,340 on the improvements and $693,030 on the land, for a total valuation of $3,632,370 as of January 1, 1972, resulting in an assessment (on the basis of one-third of its true value in money) of $1,210,790.Taxpayer appealed to the county board of equalization, which sustained the assessment.Taxpayer filed a petition for review with the state tax commission.Following a hearing the commission lowered the assessment to $759,420.St. Louis County filed a petition for review by the circuit court to annul the commission's decision or in the alternative to reinstate the assessment of $1,210,790.The commission, named as a defendant, filed its return, attaching copies of all proceedings before it, including a transcript of the hearing and its findings of fact, conclusion of law, and decision.St. Louis County filed a motion to quash the commission's return for failure to include findings of fact, conclusions of law and a concise statement of the findings on which the agency based its order, as required by § 536.090, RSMo 1969, V.A.M.S., and requested remand to the commission with directions to make appropriate findings of fact and conclusions of law.The circuit court overruled the motion to quash and remand and affirmed the decision of the tax commission.St. Louis County appealed to this Court, which has jurisdiction because his appeal involves a construction of the revenue laws.Greene County, Missouri v. Hermel, Inc., 511 S.W.2d 762(Mo.1974)(No. 58,141, decidedJuly 22, 1974).

The county's first point is that the court erred in not quashing the commission's findings and conclusions and not remanding the proceedings to the commission for redecision, 'since the 'findings and conclusions' adopted by the commission violated Section 536.090 for want of a concise statement of findings on which the commission's decision was based.'

Section 536.090, RSMo 1969, V.A.M.S., requires that every decision of an agency in a contested case include or be accompanied by findings of fact and conclusions of law, and that '(t)he findings of fact shall be stated separately from the conclusions of law and shall include a concise statement of the findings on which the agency bases its order.'

Iron County v. State Tax Commission, 480 S.W.2d 65(Mo.1972), holds that such findings of fact must constitute a factual resolution of the matters in contest before the commission; must advise the parties and the circuit court of the factual basis upon which the commission reached its conclusion and order; must provide a basis for the circuit court to perform its limited function in reviewing administrative agency decisions; must show how the controlling issues have been decided, and that a mere recital or statement in chronological order of the events which transpired giving rise to the controversy is not sufficient.

Stephen & Stephen Properties, Inc. v. State Tax Commission, 499 S.W.2d 798(Mo.1973), holds that where various factors are in evidence bearing on a determination of 'the true value in money' of real estate in connection with its assessment for taxes the state tax commission must determine the question of law whether the factors are relevant to a determination of value, and if the factors are found to be relevant as a matter of law the commission must then decide their effect on the value of the property; that the commission's duty is not performed by stating its ultimate decision, but it must make findings of fact and conclusions of law which are an essential part of and the basis for its decision, from which the reviewing court may determine if the agency's decision is supported by competent and substantial evidence.

Taxpayer's case was based solely upon the income capitalization approach to valuation.Taxpayer's evidence consisted of the testimony of Thomas J. O'Toole, a qualified land appraiser, and Exhibit A, a written analysis of matters he considered pertinent to an estimation of fair market value of the apartments and adjacent land as of January 1, 1972.He concluded that the fair market value was $1,181,000.He considered the income approach as 'the only indication of value'--the only proper way to approach the valuation.He testified that the construction of all of the apartments was not completed as of January 1, 1972; that some of the buildings were still under construction.He estimated that the property was 70% completed, from a physical standpoint, and 50% completed 'income-wise.'He did not make his computation on the basis of the maximum income when all units would be completed and rented but only on the basis of the units actually completed on the assessment date.He did not consider vacancies, i.e., no consideration was given to the value of units completed but not yet rented, or on which rent deposits had not been made, as of that date.His income approach was not done on an annualized basis for the stated reason that it was not a completed project.He obtained from the auditor the actual income during 1971 from the units which on January 1, 1972 were actually completed and rented and computed the value of the whole property on the basis of that income.Some of the buildings yielded 1971 rent for 11 months; some for less.Mr. O' Toole's method of figuring was to take the actual gross income from rents and deposits for rent received in 1971, with no factor for vacancy or credit loss, deduct actual expenses, deduct for return to land (8% of land value), capitalize this figure at 11% (8 1/2% interest; 2 1/2% depreciation), and add the value of the land.

The county's case was based solely upon the reproduction cost method of valuation, plus the cost of the land as reported by the owner.The county's evidence consisted of the testimony of Messrs. Ray Gordon and John McDonald, qualified land appraisers.Mr. Gordon testified that as of January 1, 1972 all twenty-two apartment buildings were completed.The method used to arrive at the appraised value was to take the square foot area of the property and extract a square foot value from the Winsley manual as used in the assessor's office at that time to compute the appraised valuation.Dividing that number by three produces an assessment of land and improvements of $3,632,370.Both he and Mr. McDonald took exception to the method used by Mr. O'Toole in arriving at his valution.They considered that in fixing true value as of January 1, 1972 it was improper to ignore buildings 100% completed but not yet rented and buildings say 90% completed that would be completed and rented within a short time.Mr. Gordon testified that by simply using the income actually produced in 1971'you are giving some of the building away.'According to an exhibit prepared by the taxpayer one or more apartment buildings were completed as of the first days of February, March, April, May, June, July and October, 1971; as of January 1, 1972 twenty-one of the twenty-two buildings projected were completed, and those twenty-one buildings contained 221 of the 224 units contemplated in the completed project.

Following the hearing the commission filed the following:

'STATEMENT

'This is an appeal by WLB Holding Company, a corporation organized and existing under the laws of the State of Missouri, to the State Tax Commission of Missouri from the action of the County of St. Louis Board of Equalization affirming the assessment made by the Assessor of the County of St. Louis on real property owned by the corporation, and known as Sierra Vista Subdivision.After the action of the Board of Equalization, an appeal was filed with the State Tax Commission and is based on the contention that the assessment as affirmed by the Board of Equalization is for more than the property is worth, and should be decreased as of January 1, 1972.

'The hearing before the State Tax Commission was held September 21, 1972, in the St. Louis County Administration Building, Clayton, Missouri 63105.Appearing on behalf of Appellant was Edward P. McSweeney, of Padberg, Raack, McSweeney & Slater, 1015 Locust Street, St. Louis, Missouri 63101.Appearing for Respondent, St. Louis County, was Mr. James White, Associate County Counselor, St. Louis County Administration Building, Clayton, Missouri 63105.Members of the Commission present were J. E. Riney, Chairman, Carl E. Davis, Member, and Don G. Williams Member.

'FINDINGS OF FACT

'WLB Holding Company is a corporation which owns Sierra Vista Subdivision in St. Louis County, Missouri, an apartment complex which is subject to real property taxation under the laws of the State of Missouri.

'The subject tract, consisting of approximately 35.52 acres of vacant land, and approximately 14.69 acres improved with 22 two-story buildings containing 244 apartment units for a total of approximately 50.31 acres, was found by the St. Louis County Assessor to have an assessed valuation of $1,210,790 as of January 1, 1972.

'Appellant offered testimony per its Exhibit A, to the effect that, based upon the income approach the fair market value of the property on January 1, 1972, was $1,181,000, or an assessed valuation of $393,666.

'The County's testimony, based upon the cost approach, confirmed the Assessor's figures.

'The County's...