2003 BOARD OF EQUALIZATION 1 BOARD OF EQUALIZATION TO REVIEW PROPERTY VALUES Kay Brown, Clerk of Christian County, announces that the board of equalization will begin meetings at 9:00 am, July 7,2003 at the County Court House to hear those who disagree with the values of real estate and personal property established by the assessor for tax year 2003. The board tentatively plans to conclude the hearings by 4:00 pm, July 31, 2003; appointments must be made prior to that date. According to the assessor, the new assessments were est ablished, notices were sent to owners whose real property increased in value, and, as the law requires, the assessment books were returned to the county clerk. The next step in the property tax process is a review of assessments by the county board of equalization followed by setting of levies by the political subdivisions. Property owners who wish to appeal their assessments must do so by July 7, 2003 and should contact Dee Cloud, Commission Secretary at 581- 2112 for the necessary forms for such an appeal.. Property owners appearing before the board should be prepared to present evidence to establish what they believe to be the correct value oftheir property. If, after a decision Of the board, the property owner is still dissatisfied with the assessment, the appeal may be lodged with the State Tax Commission and thereafter to the circuit court. HEADLINER NEWS 4175813577 07/17/03 03:46pm P. 002 " Legal •Proof Community Publishers orMissouri, Inc. / ' Christian County Headliner News • Nixa News-Enterprise Please fax any changes or ad approval to: 417-581-3577 1/ · Phone 417-581-3541 CCO•907,12•1 x•7/23 BOARD OF EQUALIZATIONTO FtEVIEW PROPERTYVALUES Kay Brown, Clerk of Ch,liean : County, announces that the board : of equaltzatlon wlil begin meetings i at B.00 am, July 7,2003 at the County Courthouse to hear Ulose who disagree with tile values of real estate and personal property estab- lished by {ha assessor for tax year 2003. The board lentativelv olans to conclude the hearings by 4:00 lom, July 31, 2003; appointments must be made prior to that date, Accordlig to the assessor, Ihe new assessments were established, noticos were sent to owners whose real properly increased In value, i and, as the law requires, the : assessment books were returned to j the county dark. The next step In the properly [ax process Is a review of assessments by Ihe county board of equalizaUon followed by setting of levies by the pontical subdivistons Property owners who wish to appeal their assessments mimt do so by July 7,2003 and should con- tact Dee Cloud, Commission Secretary at 681-2112 for Ute nec· essary tomls [or such an appeal. Property owners appearing bebre the board should be prepared to present evklence to establish what 3 they believe to be the correct value 2 01 their propeny. 11, alter a dectslon of the board, Ihe property owner Is I still dissatisfied v,117 the assess- ment, the appeal may be lodged 1 vbith the State Ilax Commission and thereafter 10 Ula circuit court CCC•90742•lx•7123 Pro,of mustbccorrcatedandrcturnedvia•AXby:. F/'2 - ·14·*t - Cost per week: 4 7,0 - x_t.wccks TOTAL: 52 79772 Fot yiurconveniencc and to ensure accuracy please Email and Fax a hard copy of all Alture legals to: kactm@cpimo.com OATH OF OFFICE I, Bill Barnett , do solemnly swear that as a member of the Christian County Board ofEqualization will fairly And impartially equalize the valuation of all real estate and tangible personal properly taxable by the County. 6,66 4.COTAN STATE OF MISSOURI COUNTY OF CHRISTIAN Subscribed and sworn to before me on this 17 day of Julv , 2003 . Witness my hand and official seal The day above written. 4 41 BLec«J K@ B®Rn, County Clerk OATH OF OFFICE I, John Grubaugh , do solemnly swear that as a member of the Christian County Board ofEqualization will fairly And impartially equalize the valuation of all real estate and tangible personal property taxable by the County. n STATE OF MISSOURI l,/ COUNTY OF CHRISTIAN ,th Subscribed and sworn to before me on this 19 day of Julv , 2003 . Witness my hand and official seal The day above written. Al- 0- Ray *frown, County Clerk OATH OF OFFICE I, Sandra Bryant , do solemnly swear that as a member of the Christian County Board ofEqualization will fairly And impartially equalize the valuation of all real estate and tangible personal property taxable by the County. 6-114.44 6rt STATE OF MISSOURI COUNTY OF CHRISTIAN Subscribed and sworn to before me on this 178 day of Julv , 2003 . Witness my hand and official seal The day above written. Ka03rown, County Clerk OATH OF OFFICE I Lovd Todd do solemnly swear that as a member ofthe Christian County Board ofEqualization will fairly And impartially equalize the valuation ofall real estate and tangible personal property taxable by the County. tru STATE OF MISSOURI COUNTY OF CHRISTIAN Subscribed and sworn to before me on this 17th day of Julv , 2003 . Witness my hand and official seal The day above written. Kaq%?own, County Clerk OATH OF OFFICE I, Tom Chudomelka , do solemnly swear that as a member of the Christian County Board of Equalization will fairly And impartially equalize the valuation of all real estate and tangible personal property taxable by the County. /-7 / 4-4.. STATE OF MISSOURI COUNTY OF CHRISTIAN Subscribed and sworn to before me on this 170, day of Julv , 2003 . Witness my hand and official seal The day above written. 2Z4 cia- Kaydkown, County Clerk - 9-'...I 71*4 Minutes from the Board ofEqualization Thursday, July 17, 2003. The Board of Equalization met at 9:00 a.m., Thursday, July 17, 2003. Those present were Presiding Commissioner, John Grubaugh, Eastern Commissioner Tom Chudomelka, Western Commissioner, Bill Barnett, Assessor, Sandra Bryant, County Surveyor, LIoyd Todd, and County Clerk, Kay Brown. The hearing was on The Villas at Forest Park, L.P., and Mary H. Neal did not show up because she had previously sent a letter to the County Clerk in an attempt to resolve the matter. However the letter was overlooked by the Clerk and was not sent to the Assessor. Board member Tom Chudomelka moved to table any further discussion until Monday, July 21, 2003. Before reconvening the board will view the property and will discuss their findings on July 21, 2003. Tom Chudomelka moved to adjorn the meeting and Lloyd Todd, County Surveyor, seconded the motion, followed by John Grubaugh. and Bill Barnett. Minutes from the Board of Equalization Monday, July 21,2003 The Board of Equalization met at 9:00 a.m., Thursday, July 21,2003. Those present were Presiding Commissioner, John Grubaugh, Eastern Commissioner Tom Chudomelka, Western Commissioner, Bill Barnett, Assessor, Sandra Bryant, County Surveyor, Lloyd Todd, and County Clerk, Kay Brown. The Board had not viewed the property of The Villas at Forest Park, L.P., and wanted to adjourn the meeting until after the viewing. The Board reconvened at 2:30p.m., Thursday, July 21,2003after viewing tile property. Much discussion was raised about the "Dj'classification. Eastern Commissioner Tom, Chudomelka, moved to change the classification from "D-" to "D" . It was seconded by Western Commissioner, Bill Barnett, followed by John Grubaugh, and Lloyd Todd, County Surveyor. This change in status would change the assessed valuation from $99,110 to 102,720. In addition the depreciation rate was discussed that the rate could be raised but not at this time. Minutes by Kay Brown, County Clerk Minutes From the Board ofEqualization July 24,2003 The Board of Equalization met at 9:00 a.m., Thursday, July 24,2003. Those present were Presiding Commissioner, John Grubaugh, Eastern Commissioner Tom Chudomelka, Western Commissioner, Bill Barnett, Assessor, Sandra Bryant, County Surveyor, Lloyd Todd, and County Clerk, Kay Brown. The Board discussed Missouri Gas Energy's appeal. Tom Chudomelka made a motion to send the appeal to the state and John Grubaugh seconded the motion. KAY BROWN p,/3 inigission --OF CHRISTIAN COUNTY 100 W. CHURCH ROOM 206 OZARK, MO 65721 Phone: 581-6360 Fax: 581-8331 MEMORANDUM TO: CHRISTIAN COUNTY TAXPAYER. FROM: KAY BROWN, CHRISTIAN COUNTY CLERK DATE: JULY 15, 2003 RE: BOARD OF EQUALIZATION NOTICE PARCEL# Enclosed you will find a copy of Change in Assessed Value on the above parcel that has been approved by the Board of Equalization. This notification is being sent to you so that you are aware of the change in assessed value to your property. This notification is required by law. Please note that this form includes the appraised and assessed value of the Assessor on the left and the new value approved by the Board of Equalization on the right. The legal description of your property and the reason for the change is also listed. The Board will meet on the second Monday in August, to hear reason why change by said Board should not be made. You have a right to appeal your property tax assessment to the State Tax Commission of Midsouri. I have enclosed a postcard that you will need to fill out if you wish to file an appeal. You must file appeals to the Commission by September 306,2003. Questions regarding this change to your property should be directed to the Christian County Assessor's Office at 581-2440. For further infornlation concerning appealing your property tax assessment and to request an information booklet on Tax Appeals, you may write or call: State Tax Commission ofMissouri, 621 East Capitol Ave, Box 146, Jefferson City, MO 65102-0146 - (573) 751-1715 or http://www.dor. state.mo.us/stc. jes Jeffrey E. Smith Companies 206 Peach Way 573443-2021 RO. Box 7688 573442-4261 fax Columbia, Missouri 65205 May 16, 2003 Christian County Board of Equilization c/o Junior Combs Secretary to the Board ofEquilization 100 West Church Street, Rm 206 Ozark, MO 65721 RE: Branson Christian County, L.P. Parcel # 100614003001001001 Dear Mr. Combs: This letter is written to you in your capacity as Secretary to the Board of Equilization and is an appeal to that Board for the assessments ofparcels listed above. These parcels have been appealed to the State Tax Commission in the past and the appeals are still pending. It is our position that the Assessor has not used the appropriate method for valuing these parcel(s). For that reason, we are providing you with this appeal. Under the Missouri Statute, 137.275 R.S.Mo., "every person who thinks himself aggrieved by the assessment of his property may appeal to the County Board of Equilization, in person, by attorney or agent, or in writing." We prefer to present this appeal in writing. If the Board requires that we appear, please provide us notice of the date and time when appearance is required. Address that notice to Joey Holmgren, Jeffrey E. Smith Companies, P.O. Box 7688, Columbia, MO 65205. If appearance is necessary, please forward the decision of the Board of Equilization to the same address in writing. Sincerely, h NLA- Joey Holmgren Jeffrey E. Smith Companies A Jeffrey E. Smith Company les Jeffrey E. Smith Companies 206 Peach Way 573-443-2021 P.O. Box 7688 573442·4261 fax Columbia, Missouri 65205 May 30,2003 Christian County Board ofEquilization c/o Junior Combs Secretary to the Board ofEquilization 100 West Church Street, Rm 206 Ozark, MO 65721 RE: Branson Christian County II, L.P. Parcel # 100614003001001002 Dear Mr. Combs: This letter is written to you in your capacity as Secretary to the Board of Equilization and is an appeal to that Board for the assessments of the parcel listed above. Our desire is to add the above listed parcel (Branson Christian County II, L.P.) to the currently appealed property located in your county (Branson Christian County, L.P.) for 2003. Branson Christian County, L.P. was appealed to the State Tax Commission in the past and a final decision is still pending. It is our position that the Assessor has not used the appropriate method for valuing these parcel(s). For that reason, we are providing you with this appeal. Under the Missouri Statute, 137.275 R. S.Mo., "every person who thinks himself aggrieved by the assessment of his property may appeal to the County Board of Equilization, in person, by attorney or agent, or in writing." We prefer to present this appeal in writing. Efthe Board requires that we appear, please provide us notice of the date and time when appearance is required. Address that notice to Joey Holmgren, Jeffrey E. Smith Companies, P.O. Box 7688, Columbia, MO 65205. If appearance is necessary, please forward the decision of the Board ofEquilization to the same address in writing. Also enclosed are 2002 income / expense statements for both properties along with our position of the fair market value. Sincerely,. hquw Joey Holmgren Jeffrey E. Smith Companies A Jeffrey E. Smith Company O 01 to O h -0 0 0 80 1-ONOO©OCON . O 0 10 91- to 0 91· Ce) 00-00 -0000(ONO 1000 0 - 1 to 0 9 0-9 E g ocouS d W ci 4 ' '0000 4 0 ' Kood ' ® 6 9 d O 0 2 4 - 0 0 - 4. 4- 0 00 CO Er 't ,¥0 Door M Or--Noohcl-(R-LO 10- N LO 1-LOON 9 2 70 2 &1 jor i< ONvr MO 10 Cfr--Ld 10 1 te 0 0. 3 19 1 = r- N to 00 w -O 10 N ¢10 - r- p 0 W _0266 C) 7- CO to 0 -00 1. 004 0 0, 2 3 34 0 4 -OLD.h-(00}0) 10 ¢9 0 0 r 9 2 2 4 e co d N N 2- 2 Z 252- ri- 5%- 2 - 64 0 0.- Ek.ON- CD N O ··-· w e 9- 10 CNOr- - 00000 01 ZE, -I ./.I 0 6 Income / Expenses F 0 OD N co E 0 0 E 0 0 00 E 0 0 LL a,hs@ C 0 5.2 ..9 0 E 16 Z e c t: CD 0 E E 8 2. a & 1 0 0 -P W, 0 6. 1 0 22 ..0 02 8 0 E S %& 4 Jj 0 0, 83 0 S.*= 3 0, F !3) 9 2 2 <, g 00$285%0>v-@REG & E N a i e = 12 0 Thwag558® P x .03! 0 2 6- 9 1- :m M 0 2 2 1 1/ #..0, 111= 0.*2*2 g Etqzle°62298 0 ccwm m.2 e n 1 0 - 0 -1- &20 3 - c > = Of e O 0 -3 Of Of E O ul O-1-3-3-1-le b NN Brannon Christn Cnty, L.P. Income Statement-Accrual For the Period Ended December 31, 2002 Current Current rID YTD YTD Activity Budget Variance Balance Budget Variance Income Rental Income $ 16,960.00 $ 16,960.00 $ 203,520.00 $ 203,520.00 Vacancy Loes (1,294.00) (1.384.00] 90.00 (18,797.89) (16,608.00) (2,189.89) Rental Loge - HUD (12.34) 12.34 (50.00) (148.001 98.00 Rental Incentives (500.00) (500.00) (6,600.00) (6.600.00) Other Tenant Charges 150.00 291.66 (141.GG) 2,935.46 3,500.00 (564.54} Damages Charged 50.00 50.00 7,997.77 7,997.77 Laundry & Vending Income 9.84 45.64 136.con *--22L12 550.00 44.19 $ (525.32) a 189,599.5© Total Income $ 15,375.84 $ 15,901.16 $ 190,814.00 $ (1.214.47} Expences Advertising $ 444.27 $ 333.34 $ {110.93) $ 4,522.31 $ 4,000.00 $ (522.31) Auditing Expense 1,700.00 1,900.00 200.00 Auto - Mileage 39.89 (39.89) 111.43 (111.43) Bad Debt 250.00 (250.00) 580.00 (580.00) Depreciation 8,866.54 8,866.66 .12 106,212.792' 106,212.90 .11 Employee Benefits - 401K 60.00 92.75 32.75 300.00· 1,113.00 . 813.00 Employee Benefits - Health 250.72 138.00· {112.72) 2,828.58 1,656.00 (1,172.58) Fees - Asset Management 125.00 125.00 (2!:2.-23, 1,500.00 Fees - Management 1,680.00 1.680.00 20,160.00 Fees - Partnership Reporting 416.67 416.66 (.01) /%4000:ED 5,000.00 (.04) Furn. & Fixture Replacement 3,613.08 627.09 (2,985.99) ;92.79 7,525.00 (1.067.79) Grounds - Contract 92.00 6G6.64 574.64 4,453.96 6,000.00 1,546.04 Insurance - Fidelity Bond 9.13 9.66 .53 110.00 116.00 6.00 Insurance - Property & Liab. 544.60 494.66 (49.94} 6,385.25 5,93G.00 (449.25) Insurance - Umbrella 70.00 68.09 (1.91) 805.25 817.00 11.75 Insurance - Worker la Comp. 267.43 69.84 (197.59) 1.082.25 838.00 (244.25) Interest 1,168.41 1,168.41 14,143.99 14,143.99 Legal Expense 782.45 41.66 [740.79) -151.93- Soo.00 (354.93) Licenses. Fees, Permits 16.84 16.84 162.38 202.00 39.62 Maint. & Repair - Contract 1,537.16 713.25 (823.91) 9,788.68 8,559.00 (1,229.68) Maint. & Repair - Supply 802.30 672.00 (130.30) 5,583.86 8,064.00 2,480.14 Office Equipment 20.84 20.84 23.95 250.00 226.05 Office Supplies 65.44 83.34 17.90 903.57 1,000.00 96.43 Other Administrative Expense 41.66 41.6G 500.00 500.00 Painting & Decorating 122.38 375.00 252.62 7,476.69 4,500.00 (2.976.69] Payroll 2,036.95 2,112.25 75.30 26,173.05 25,347.00 (82G.05) Postage & Freight (4.73) 4.73 (4.731 4.73 Services 138.00 36.25 (101.75) 467.00 435.00 (32.00) Snow Removal (138.00) 566.66 704.66 164.36 1,700.00 1,535.64 Taxes - Payroll - FUTA 20.28 20.28 67.11 243.33 176.22 Taxes - Payroll - MCA 114.41 149.55 35.14 1,545.32 1,794.57 249.25 Taxes - Payroll - Medicare 26.76 17.98 18.78) 361.43 215.83 (145.60) Taxes - Payroll - SUTA 48.16 48.16 249.08 577.91 328.83 Taxes - Real Estate 1,205.06 1,579.25 374.19 18,576.81 18,951.00 374.19 Telephone Expense 83.64 116.66 33.02 970.85 1,400.00 429.15 Damages Expensed 3,731.99 (3,731.99} Training, Education & Seminar 41.66 41.66 402.54 500.00 97.46 Utilities - Electricity 345.60 201.25 (144.35) 3,144.57 2,415.00 1729.57) Utilities - Garbage 4.14 10.00 5.86 247.12 120.00 (127.12) Utilities - Sewer 507.28 494.41 (12.87) 7,748.77 5,933.00 (1.815.77) Utilities - Water 418.20 507.75 89.55 _...5.£68..04 6.093.00 424.96 Total Expenses $ 25,944.78 $ 22,623.50} 4 (3,321,28) CLZ32,796. $ 266,218.53 $ (6,577.48] Other Income Interest Income $ 2.045.87 $ 333.34 $ 1,712.53 $ 4,217.13 $ 4,000.00 $ 217.13 Other Income 132,26 ----11£22 Total Other Income $ 2.045.87 $ 333.34 $ 1,712.53 (11255.39 $ 4.000.00 $ 355.39 Net Income (Loss} $ (8.523,07) 111389.00} $ (2.134.07) S (78.841.09) $ (71.404.53) 8 (7.436.561 C (3600, pa,·,2 10 *Se.ves ·fa# rep (•«214,1+ 40- 1004. Confidential: For Internal Use Only Branmon Christn enty II. L.P. Income Statement-Accrual For the Period Ended December 31, 2002 Current Current YTD YTD YTD Activity Budget Varlance Balance Budget Variance Income Rental Income $ 21,680.00 $ 21,680.00 $ 260,160.00 $ 260,160.00 Vacancy Loss (907.98) (2,168.00) 1,260.02 (42,208.07) (26,016.00) (16,192.07) Rental Loss - HUD (115.00) (12.91) (102.09) (315.00) (155.00) (160.00} Rental Incentives (1,856.00) (1,856.00) (11,746.00) (11.746.001 Other Tenant Charges 350,00 333.34 16.66 3,341.38 4,000.00 (658.62) Damages Charged 674,88 674.88 10,693.23 10,693.23 Laundry & Vending Income 45.84 (45.84) _a==-81.112 550.00 31.02 Total Income $ 19,825.90 $ 19,878.27 $ (52.37) <5 220,506.56 238,539.00 $ {18,032.44] ExpenEes Advertising $ 506.75 $ 416.66 $ (90.09) $ 6,361.42 $ 5,000.00 $ (1,361.42) Auditing Expense 2,000.00 2,100.00 100.00 Auto - Mileage 83.98 (83.98) Bad Debt 1,263.00 (1,263.00) .4,420.57 (4,420.57) Depreciation 7,541.84 7,478.02 (63.82) £ 89,167.5€) 89,103.73 (63.82) Employee Benefits - 401K 40.00 62.16 22.16 200.00 746.00 546.00 Employee Benefite - Health 212.08 162.00 (50.08) 1.212.20 1,944.00 (283,20} Fees - Asset Management 125.00 125.00 O,500.li> 1,500.00 Feee - Management 2,240.00 2,240.00 26,880.00 26,880.00 Fees - Partnership Reporting 416.67 416.66 (.01) (108191-> 5,000.00 (.04) Purn. 4 Fixture Replacement 790.87 541.66 (249.21) -157613.04 6,500.00 686.96 Grounds - Contract 108.00 630.00 522.00 5,203.48 5,670.00 466.52 Insurance - Fidelity Bond 11.88 11.84 (.04) 143.00 142.00 {1.00} Insurance - Property & Liab. 538.86 472.59 (66,27) 6,267.25 5,671.00 (596.25) Insurance - Umbrella 1,061.66 83.25 (978.41) 939.50 999.00 59.50 Insurance - Worker's Comp. 196.09 48.91 (147.18) 794.17 587.00 (207.17) Interest 18,740.89 18.740.89 C;iXEiD 105.216.63 Legal Expense 41.66 41.66 84.55 500.00 415.45 Licensen, Fees, Permito 19.59 19.59 190.62 235.00 44.38 Maint. & Repair - Contract 2,181.37 578.91 (1,602.46) 8,892.19 6,947.00 (1,945.19) Maint. & Repair - Supply 983.44 514.09 (469.35} 7,356.47 6,169.00 (1,187.47) Office Equipment 16.66 16.66 30.55 200.00 169.45 Office Supplies 107.41 87.50 (19.91) 1,031.94 1,050.00 1B.06 Other Administrative Expense 1.00 12.50 11.50 216.93 150.00 (66.93) Painting & Decorating 547.50 515.16 (32,34) 10,829.16 6,182.00 (4,647.16) Payroll 1,739.75 1,730.93 (8.82} 20,589.86 20,771.00 181.14 Grounds Lease 416.67 416.66 (.011 5,000.04 5,000.00 (.04) Services 28.91 28.91 536.00 347.00 (189.00) Snow Removal GOD.00 600.00 203.77 1,800.00 1.596.23 Taxes - Payroll - FUTA 16.62 16.62 54.67 199.40 144.73 Taxes - Payroll - FICA 96.35 122.55 26.20 1,209.58 1,470.58 261.00 Taxes - Payroll - Medicare 22.53 29.08 6.55 282.87 348.95 66.08 Taxes - Payroll - SUTA 39.46 39.46 203.03 473.58 270.55 Taxes - Real Estate 1,021.92 1.621.16 599.24 18,854.79 19,454.00 599.21 Telephone Expense 98.18 141.66 43.48 1,139.61 1,700.00 560.39 Damages Expensed 104.88 (104.881 3,558.G8 13,558.68) Training, Education & Seminar 50.00 50.00 472.55 600.00 127.45 Utilities - Electricity 357.84 306.25 (51.59) 5,066.13 3,675.00 (1.391.13) Utilities - Garbage 4.86 8.34 3.48 311.59 100.00 (211.59) Utilities - Sewer 272.69 258.00 (14.69) 4,206.69 3,096.00 {1,110.69) Utilities - Water 272.11 243.34 (20&21 2. gu...aL 2.920.00 (65.54} Total Expenses $ 42,022.12 0 38,828.67 $ (3,193.45) ._355,53g 4 340,447.87 $ (15,082.77) Other Income Interest Income $ 15.40 $ 234.00 $ {218.60) $ 588.00 $ 2,808.00 $ (2,220.00) Other Income 146.99 Total other Income $ 15.40 $ 234.00 $ (218.60) (4736.29 $ 2,808.00 $ (2,071.01) Net Income (Loso) $ (22.180.82) S (18.716.40) S (3,464,42} $ {134.287.09) S (99.100.87) S (35.186.22) )10 reserve> 044- repla· 67/- 6,3 By S 6- r7 44% Computer Next Year Record f-€ /: 6 4 Property Record Card By By S Z-- By. $ $- LAW OFFICES OF LLOYD JOSEPH CARMICHAEL CARMICHAEL, GARDNER & NEAL LEGAL ASSISTANT: MARK E. GARDNER A PROFESSIONAL CORPORATION MARY H. NEAL SARA JURY 901 Sr. LOUIS 51'REET SUM'E 101 SPRINGFIELD, MISSOURI 65806 (4171 864-8000 FAX (417) 864-8001 June 23,2003 Kay Brown Christian County Clerk 206 Courthouse 100 W. Church St. Ozark, MO 65721 RE: BOE Hearing on The Villas at Forest Park, L.P. Dear Ms. Brown: I am currently scheduled to appear before the Board of Equalization on Thursday, July 17 at 9:00 a.m. with regard to the tax appeal filed on behalf of The Villas at Forest Park, L.P. Rather than appearing in person, I would like to present my argument through the enclosed letter to the members of the Board of Equalization. Please let me know if there is a problem with this. Otherwise, please see that the Board members receive the enclosed letter and attachments prior to the hearing date. Thank you for your assistance. Sincerely, 43\.64.\·«4- Mary H. Neal Enclosures F:\C\cgwprop_5470\TaxAssessment\Fores[Park\ClerkL.tr6-23 03.wpd LAW OFFICES OF LLOYD JOSEPH CARMICHAEL CARMICHAEL, GARDNER & NEAL LEGALASSISTANT: MARK E. GARDNER A PROPESSIONALCORPORATION MARY H. NEAL SARA JURY 901 ST, LOUIS S'mIET SUITE 101 SPRINGFIELD, MISSOURI 65806 (417) 864-8000 FAX (417) 564-8001 June 23,2003 Christian County Board of Equalization 206 Courthouse 100 W. Church Street Ozark, MO 65721 RE: The Villas at Forest Park, L.P. Assessment of Low-Income Housing Projects Dear Board Members: Please accept this letter in lieu of my appearance before the board with regard to the appeal of the assessment against the partnership named above. This partnership owns a low- income apartment project which has received state and federal low-income housing tax credits. Involvement in the Section 42 housing program requires that various restrictions be placed on operation of the project, and it is our contention that these restrictions significantly decrease the value of the property. For instance, the property can only be sold under certain circumstances and cannot be used for anything other than low-income housjng for a period of at least 15 years. As you are probably aware; the State Tax Commission in the Marvville Properties v. Pat Nelson matter has supported use of the capitalization of income approach for valuation of properties such as this and, in similar appeals, has provided a formula for calculation of taxes based on this approach. Copies of the relevant opinions and memoranda are enclosed along with income and expense information for this project for 2002 and a calculation of the appraised value based on this information. As you can see from the enclosed calculation, the appraised value under this approach is considerably less than the value which has been determined by the assessor. We believe that the Tax Commission will support the use of this method based on its prior determinations. Clearly, this property is different from other traditional housing projects, and the use of the normal valuation process simply doesn't produce an accurate reflection of market value. The F:\C\cgwprop..5470\TaxAssessment\ForesthrkABO£6-23-03.wpd 1 Christian County Board of Equalization June 23,2003 Page 2 Commission has approved use of the capitalization of income approach as a more reliable indicator of value for such projects, and we urge you to apply that method at this time. I appreciate your consideration of this matter. Sincerely, «44.©U.2 Mary H. Neal Enclosures F:\C\cgwprop_5470\TaxAssessment\ForestPark\BOEd-23-03.wpd TAX CALCULATION FOR VILLAS AT FOREST PARK, L.P. Based on Capitalization of Income Method as used by State Tax Commission in Maryville Properties, L.P. v. Pat Nelson, Assessor, Nodaway County .0101802 effective tax rate (from 2002) + .046097 capitalization rate as set forth in November 8,2002 memorandum of STC .0562772 total capitalization rate $ 155,125.00 total income Less 89,498.00 expenses (not including real property taxes, depreciation or mortgage) Less 9,244.00 contribution to replacement reserve $ 56,383 net income divided by .0562772 capitalization rate 1,001,880 appraised value multiplied by .0101802 effective tax rate $10,199 tax F:\CWgivp:op_5470WarA,sasmennE=:PailiT#Calculation.wpd Villas at Forest Park INCOME STATE;MENT FOR THE 12 PERIODS ENDED DECEMBER 31, 2002 PERIOD TO DATE YEAR TO DATE ACTUAL PERCENT ACI'UAL PERCENr Revenue RENTAL INCOME $12,135.00 96.1 % 148,065.97 95.4 NON REFUNDABLE SEC DEP INCOME 50.00 .4 500.00 .3 LAUNDRY INCOME .00 .0 900.00 .6 MISCELLANEOUS .00 .0 89.66 .1 CABLE INCOME 444.00 3.5 5,570.00 3.6 TOTAL Revenue 12,629.00 100.0 155,125.63 100.0 Gross Profit 12,629.00 100.0 155,125.63 100.0 Expenses MANAGEMENT SALARIES 1,022.68 8.1 12,687.18 MAINTENANCE SALERIES 995.74 7.9 12,190.81 ACCOUNTING-AUDITING .00 .0 8,297.00 ADVERTISING 75.00 .6 825.00 VACANT UNIT PREPARATION 45.00 .4 764.65 REPAIRS 210.23 1.7 2.965.66 CONTRACTOR SERVICES 250.00 2.0 2,310.26 GROUNDS 298.00 2.4 1,620.93 MAINT. SUPPLES, TOOLS, EQUIP. 91.41 .7 1,324.72 MISC. MANTENANCE COSTS 15.80 .1 1,007.21 OFFICE SUPPLIES & POSTAGE .- 19.02 .2 1,273.82 TELEPHONES/PAGERS 242.78 1.9 2,633.22 COMPUTER EXPENSE .00 .0 60.00 MISC. ADMINIS'IRATIVE COSTS 50.00 - 04 166.66 EMPLOYEE TRAVELAE.EAGE .00 .0 25.92 APPLICATIONEEES .00 .0 15.00 EMPLOYEE RECOGNmON .00 .0 49.04 LICENSES AND EES 20.00 .2 235.00 UTILITIES 1,389.36 11.0 15.003.52 GARBAGE COLLEC'nON 209.17 1.7 2,599.17 1.7 OWNER SUPPLIED CABLE TV 379.40 3.0 4,176.40 2.7 MISC OPERATING COSTS .00 .0 404.31 .3 EXTEUvm4ATING SERVICES .00 .0 600.00 .4 SECURITY SERVICES .00 .0 324.50 .Z REAL ESTATE TAXES 12,010.50 95.1 12,010.50 7.7 INSURANCE EXPENSE 494.83 3.9 4,641.44 3.0 MANAGEMENTPEE 2,212.00 17.5 13,296.00 8.6 DEPRECLATION EXPENSE 10,632.43 84.2 63,794.13 41.1 TOTAL Expenses 30,663.35 242.8 165,302.05 106.6 Net Income tom Operalions (18,034.35) (142.8) (10,I76.42) (6.6) Other Income & 1*pense MAJOR REPAIRS .00 .0 0,865.00) (1.8) IN'IEREST EXPENSE (1,310.69) (10.4) (8,008.69) (5.2) System Dale: 06/04/2003/ 11:32 am Page: 1 Appticallon Dale: 06/04/2003 User: BA/BEVERLY ANDERSON 1 Villas at Forest Park INCOME'STATEMENT FOR THE 12 PERIODS ENDED DECEMBER 31, 2002 PERIOD TO DATE YEAR TO DATE ACIUAL PERCENT ACTUAL PERCENT Other Income&Expense (Continued) PRINCIPALPAYMENTS - MHDC $.00 .0 % (28,850.70) (18.6) DEBT SERVICE .00 .0 28,850.70 18.6 IN'IERST INCOME-MHDC (490.48) (3.9) 887.78 .6 TOTAL Other Income & Expense (1,801.17) (14.3) (9,985.91) (6.4) Earnings before Income Tax (19,835.52) (157.1) (20,162.33) (13.0) Net Income (Loss) $(19,835.52) (157.1)% (20,162.33) (13.0) naartler#X exp CASE- Ve,ul•ZA contr; 6 u:Uor, 40 rep! acaw mt ruserve 4 92 44 ·for &06 k @*m Date: 06/04/2003/ 11 22 am Page: 2 Wplication Date: 06/04/2003 User: BA / BEVERLY ANDERSON Maryville Properties v. Nelson Pagel of 10 State Tax Commission of Missouri MARYVILLE PROPERTIES, L.P., Coniplainant, v. 1 Appeal Number 97-74500 PAT NELSON, ASSESSOR, NODAWAY COUNTY, MISSOURI,) Respondent. DECISION AND ORDER SUMMARY 'Ihis case was heard by Luann Johnson, Hearing Officer, on October 21, 1999, in the Nodaway County Courthouse Ailnex in Maryville, Missouri. Complainant was represented by Counsel, Cathy J. Dean. Respondent was represented by Counsel, Scott Ross. The property was originally valued by the Assessor at $758,300 (assessed value $144,080). That value was affirmed by the Board ofEqualization. Complainant asserts a value of $350,000 (assessed value $66,500). Respondent asserts a value of $770,000 (assessed value $146,300). The correct value for the property is $750,000 (assessed value $142,500). ISSUE The issue in this case is thetrue value inmoney ofthe subjectproperly on January 1, 1997, and January 1, 1998. Within this issue is the question of whether Section 515 low income housing tax credits (LIHTC) are intangibles separate and apart from the real property or, in tile alternative, are LIHTCs part of the transmissible value which the market recognizes and considers when making purchasing and sales decisions. The Commission previously discussed valuing subsidized housing when tax credits were not raised as an element of value. In that case weheld that interest subsidies run with the land and are a proper consideration in determining market value. This case addresses the new issue oftax credits and their impact oil market value of a property. This decision finds that the tax credits cannot be alienated from tile property; they are an integral part of the real property; enhance the market value of the property; and are properly included when determining market value for ad valorein taxation. HOLDING (1) All factors influencing the sale price of a particularpiece ofproperty are properly included in market value; (2) the true value in money of the subject property on January 1, 1997, and January 1, 1998, was $750,000 (assessed value $142,500) FINDINGS OF FACT The Improvements 1. The property is a 2.6 acre site improved with a 24-unit apartment coniplex, built in 1992. The improvements consist of six oile story buildings; each containing four two-bedroom units, identified as parcel number 22-9-29-33-04, more commonly known as 308 East Summit Drive, Maryville, Missouri. The largest building contains an office and laundry. Buildings sit on poured concrete. Exterior walls are frame with stucco panel on three walls and vinyl on tile rear wall. Interior walls and ceilings are sheetrock. Floors are covered witti http://www.dor. state. mo.us/ste/maryville_properties_v_nelson. htm 12/19/01 Mao,ville Properties v. Nelson Page 2 of 10 inexpensive carpet and sheet vinyl. Heating is provided by electric baseboard heaters. Air conditioning consists of window units furnished by tenants. Appliances, cabinets and other amenities are consistent with normal apartment units. The site fronts on Summit Drive. It is further improved with one large concrete parking lot which can accommodate 47 cars, or almost 2 cars per unit. The buildings are connected to the paiting area alid other buildings by six foot wide sidewalks and five foot wide service walks. The parking area is connected to Summit Drive by one, twenty foot wide concrete driveway. The topography is gently rolling and well graded. It is improved with attractive landscaping. Each building has 40 or 50 foot side yar·ds. Fronts are set back 24 to 38 feet. Rcar yards vary between 24.5 feet and 40 feet. Other amenities include a recreational area with picnic tables, a charcoalgrill, a swing and a basketball goal; three park benclies; an eight by eightmasonite storage Elled; bicycle rack; and good qualitymetal mail boxes. Security lights are located on the ends of each building and facing the recreational area. -' I 2. Interiors of the units are of "fair" quality while exteriors are ofliigher, "average" quality. 3. The actual age and the effective age ofthe development is five years. The'remaining economic life is estimated to be 45 yeats, Obsolescence 4. 'Functional obsolescence' is commonly recognized as being caused by internal property characteristics such as a poor floor plan, inadequate mechanical equipment, or functional inadequacy or superadequacy due to size or other characteristics. 17,e Appraisal of.Real.Ektate, 10th Edition, Appraisal Institute, 1992, p. 320. Functional obsolescence is a loss in value resulting from defects in design, It can also be caused by changes that, over time, have made some aspect of a structure, such as its material or design, obsolete by current standards. The defect may be curable or incurable, To be curable, the cost of replacingthe outmoded of unacceptable aspect must be the same as or less than the anticipated incrpase in value. Curable functional obsolescence is measured as the cost to cure the condition. 1772,*praisal of.Rea/Eitate, 106 Edition, Appraisal Institute, 1992, p. 352. The only observed functional obsolescence is from a shortage of storage space and the lack ofgarbage disposals and superadequate sidewalks, parking lot, and driveway. The fact that this property is a Section 5 15 low income housing project, subject to the benefits and restrictions applicable to such a project does not create functional obsolescence as that term should be understood in the appraisal industry. The financing ofthe property does not affect its physical ability to function. 5. "External obsolescence" is commonly recognized as being caused by conditions outside the property such as a lack of demands changing property uses in tile area, ornational economic conditions. External obsolescence can be caused by a variety of factors - e.g., neighborhood dectine; the property's location in a community, state, or region; or local market conditions. TheAPP,·aisal afRea/Estate, 1001 Edition, Appraisal Institute, 1992, p. 320. CU]rent market rents are insufficient to provide a competitive return to an owner. Typicall),, an external obsolescence adjustment for this situation would be required. Here, however, government subsidies compensate for below market rents. 'llze fact that this property is a Section 515 low income housing project, subject to the beiiefits and restrictions applicable to such a project, does not create external obsolescence as that term should be understood in the appraisal industry. Financing tools do not create external obsolescence. The Sale 6. The improvements were constructed as a federal Section 515 housing project, The developer syndicated the proper'ty as soon as construction was complete. That syndication consisted ofthe developer selling offa 99% limited partnership in tile property to a group ofinvestors for a price that was equivalent to approximately 50% of the value of tile tax credits. Tile limited partners are entitled to utilize 100% of the yearly tax credits for as long as they remain property owners. 1he developer, Jeffery Smith, remains as the general partner and his organizations manage the property. 7. Immediately following the completion ofthe project, the developer sold the project to Complainant for a cash payment of $150,000 and assumption of a mortgage in the amount of $727,000. This transfer constitutes a sale. http://www. dor.state.mo,us/stdmaryville_properties_v_nelson.htm 12/19/01 Maryville Properties v. Nelson Page 3 of 10 The Future Sale 8. Any future sale within tile next five and one-quarter years would be substantially similar to the initial sale. The purchaser would pay cash for the income tax credits and would assume the balance remaining on the mortgage. Section 515 Restrictions and Advantages 9. Section 515 projects have restrictions whicll include the requirement to charge below-market rents: restrictions on the use of tile property to low incoine housing for 50 years; added niallagemelit expenses; a limited return on the illitial investment to 8% per year; and increased governmental regulation and supervision. 10. Section 515 projects have advantages including a 50 year non-recourse loan at 97% of the project cost which creates high leverage and allows Complainant to turn the project over to the federal government at any time, without personal liability; an interest subsidy on the note reduces the actual interest rate to I % per annum and ofhets the below market rents; federal income tax credits of $30,765 per year remain for the next five and one-quarter years; state income tax credits of $6,163 per year remain for the next five and one-quarter years; and Complainant inay take accelerated depreciation on die improvements over 27 and one-half years to shelter the income generated by the project. The Valuation Date 11. Tile valuation date is January 1, 1997. Values beyond um period in which tax credits are available are not relevant to a determination ofths value ofthis property on January 1, 1997, because thepool of potential purchasers will change when the tax credits dissipate. Tax Credits 12. On thetax day, Janualy I, 1997, theproperty stillheld $159,899 in federal tax credits and $32,303 in state tax credits to be used over the remaining five and one-quarter years of the ten year period. 13. Tax credits run with the land. They are part ofthe real property. The market value oftlle tax credits is $134,282. Tax Shelter 14. Owners are allowed to depreciate the improvements over 27,5 years. This creates a larger than normal offset against income and results in a tax sheiterto the owners. The market value ofthe tax shelter is $49,128. The Market 15. The most likely purchaser ofthe property during the period when the tax credits ai·e in place is a sophisticated investor in the 39% income tax bracket who needs a one-to-one tax credit. The most likely purchaser ofthe property after the tax credits are expended would be a not-for-profit oi·ganization. 16. On the tax day, the property represented a remarkably safe and luci·ative investment opportunity. It was subject to an assumable, non-recourse mortgage with a balance of $719,799. The lender stood willing to finance 95% ofthe purchase price. This leverage- the ability ofthe buyer to use as little as possible ofhis own money to acquire the property and to pay the loan against it from its earnings - enhances its value. An interest subsidy offsets the portion of the rents that are below market, and the government stands ready to subsidize rents for those tenants whose income does not enable them to pay the base the rents. 17. A prudent purchaser would consider the government regulations, the restrictions on the use of tile property, the length of the restrictions and the remote risk that a tenant may not pay overage rent. Tlhat purchaser would also consider the availability of 95% financing at a 1% interestrate, the non-recourse nature of the loan, tlle ability to charge above market management fees for their own management company, the availability of one-to-one tax credits of $36,928 per year, and the availability of the tax shelter. The Sales Approach 18.There is no market involved in the purchase and sale ofthese properties in Missouri. Only one project has been placed on the market. This fact demonstrates that investors are unwilling to sell. This fact does not demonstrate that the properties are not capable of being sold. http:#www. dor.state.mo.us/sto/maryville_properties_v_nelson.htin 12/19/01 Maryville Properties v. Nelson Page 4 of 10 19. Complainant's sales ofapartment complexes which are not government subsidized and which are not rent restricted are not good sales comparables for the subject property because no reasonable seller would consider selling this pi·operty to a buyer who would not be willing to give value for the income tax credits and the tax shelter. 20. Respondent's comparable subsidized sales in Iowa are useful to denionstrate that subsidized rent-restricted projects are marketable. However, because ofthe varying degree ofsubsidy and restriction remaining on eacli sale, detel·mining the appropriate adjustments for each sale to attempt to estimate the market value for the subject property is speculative. Consequently, the sales approach is not a reliable indicator of value. The Cost Approach 21. Tile cost approach is not a reliable indicator of value for tllis property because it does not adequately account for the Value enhancing attributes of the property. With the government benefits in place, the vallie of the project actually exceeds the depreciated cost of construction. The Income Approach 22. An income approach is a reliable indicator of value for the subject property, if properly performed, Complaillanes income approach is not a reliable indicator of value because it fails to consider the value ofall of the property's attributes and because it incor'rectly applies the discounted cash flow. Respondenfs direct capitalization income approach correctly represents the value ofthe property. 23. An income approach for subsidized property should use actual income and expenses realized by the subsidized properly; it should use the loan-to-value ratio approved by the subsidizing agency based upon the subsidized mortgage rate; it should allow an appropriate equity dividend rate; and taxes should be included in the capitalization rate. An adjustment should be madie to the capitalized net operating income to reflect the market value of the income tax credits and the tax shelter created. Tile advantages ofusing actual income, expenses and financing terms are clear. An investor will look at the benefits and restrictions the properly actually carries when making a purchasing decision. Likewise, by using the actual expenses, including tile sigilificantly higiler management fees, and considering the contributions required for the reserve account, Complainanfs concerns about the high costs of operating the project are appropriately addressed. 24. The value ofthe subjectproperty is calculated as follows: Actilal Income $ 74,895 Actual Expenses (68.43%) , $ 51.252 = Net Operating incoine $ 23,643 = Mortgage Constant (95% loan @ 1%) = 0.024152 Equity Ijvidend (5% @ 15%) = 0.007500 = Effective'rax Rate = 0.010735 - Total Cap Rate = 0.042387 = Or 4.20% Value under direct capitalization 062,931 Plus: Value of'fax Credit $134,282 Value of'Pax Shelter $49.128 THie-Vitiib in Money $746,342 Say -I -- $750,000 Experts http:#www.dor.state.mo,us/stc/maryville-properties._v.Jelson.htm 12/19/01 Maryville Properties v. Nelson ' Page 5 of 10 25. Respondent's appraiser was qualified to be an expert. Complainant raised no owection to his testimony prior to or at the hearing. Prefiled direct testimony was received prior to the effective date of Section 339.501, RSMo and, but for delays caused by Complainant, the hearing in this case would have occurred before the effective date ofthar legislation. Two Year Cycle 26. No new improvements or property changes occurred between Janumy 1,]997, and January 1. 1998, that would require a change in the assessed value of the property for tax year 1998. · CONCLUSIONS OF LAW Tlie State Tax Commission had jurisdiction and authority to determine the proper method to use in valuing the subject property. . 'Ihe Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, mbitery or capric\ous, ArticleX, Section 14, Mo. Const. Of 1945: Sections 138.430, 138,432, RSMo. It is within the State Tax Commission's discretion to determine what method or approach it shall use to determine the true value in money of property. Hermel, Inc. v. State Tar Commission, 564 S.W.2d 888,896; Chicago, Bw·lington & Quincy Railroad Co. v. State Tox Commission, 436 S.W.2d 650,657 (Mo. 868), cert den. 393 U.S. 1092 (1969); & Louis Cozm v. SecurioBonhomme, Ina., 558 S.W,2d 655,659 (Mo. banc 1997)· It is also within tlie State Tax Commission's authority to ascertain the coirect or modern means of determining value according to a particular method or approach that it adopts to ascertain valuation, and it is within tile Comnlission's discretion to determine what fhctors should be considered in fixing the "true value in money" for property under a valuation method or approach adopted for use in a particular case. Hermet Inc. v. State Tar Commission, supra, The relative weight to be accorded any relevant factor in a partjcular tax assessment case is for the State Tax Commission to determine. St. Louis CounO; v. State Tax Commission, 515 S.W. 446,450 (Mo. 1974). State Tax Commission decisions must declare tile propriety of and the proper elements, to, ponsider in adopting a valuation approach, and must provide a definite indication as to the weight accorded each appro'ach or mettiod, i.e., how the final decision is weighed between the various approaches, methods, elements and factors. & Louis Couno, v. State Tax Commission. 515 S.WN 446, 451(Mo. 1974). The detennination of "true value in money" ofany property is a factual issue for the State Tax Commission, Oflahero, v. State Fox Commission, 698 S.W.2d 2,3 (Mo. banc 1985). Courts defer to State Tax Commission decisions. The Missouri Supreme Court, in Savage v, State Tax Commission ofjlfissouri 722 S.W.2d 72 (Mo. banc 1986), observed: Our review of the Commission's decision is ordinarily limited to whether that decision is "supported by competent and substantial evidence upon the whole record or whether it was arbitrary, capricious, unreasonable, unlawful or in excess of its jurisdiction." Eva,ige/ical Retirement Homes of Greater St. Louis, Inc. v. State Tax Com'n, 669 S,W ,ld 548,551 040, banc 1984); Section 536.140.01, RSMo. 1978. In matters ofproperty tax assessment, this Court has acknowledged "the wisdom of the General Assembly in providing an administrative agency to deal with this specialized field." State ex rel Cassi/4, v. Rhiej,, 576 S.W.2d 325,328 *to. banc 1979). Thus we recognize that the courts may not assess property for tax purposes, Drey v. State Tax Commission, 345 S.W.2d 228,238-9 (Mo. 1961), that proper methods of valuation and assessment of property are delegated to the Commission, C & D Investment Co. v. Bestor, 624 S.W.2d 835, 838 (Mo. banc 1981) and that on review, "[t]he evidence must be considered iii the light most favorable to tlie administrative body, together will all reasonable inferences which support it, and ifthe evidence would support either of t'wo opposed findings, tile reviewing court is bound by the administrative determination." Herma/, Inc. v. State Tax Commission, 564 S.WN 888,894 (Mo. banc 1978) (citation omitted). When read together. our cases demonstrate that this Court is loathe to substitute its judgment for the expertise ofthe Commission in matters of property tax assessment. Absent clear cause, we will "stay our hand[s]." Pie,7·e Chouteau Condominiums v. State Tax Commission, 662 S.Wad 513,517 (Mo. banc 1984). True Value in Money The courts have looked at the term "true value" and have concluded that Section 137.115, RSMo 1994 requires that http://www.dor. state.mo.us/stdmaryville_properties_v_nelson,htm 12/19/0 I Maryville Properties v. Nelson Page 6 of I 0 property be assessed based upon its true value in money which is defined as the price a propeny 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 Afinerals Coip. v. State Tax· Commission, 854 S.W,2d 526, 529 (Mo. App. E.D. 1993); Alissow·i Baptist Children's Home v. State Tax Commission, 867 S.W.ld 510, 512 (Mo, banc 1993), "True value" is an estimate of fair market value on tile valuation date, This definition has not changed from case to case. Herme/, Inc. v. State Tar Commission, 564 S.Wad 888, 897 (Mo. banc 1978) (Emphasis supplied), "A tax assessment, though presumed valid, will not be upheld where it is clear that the assessment does not take·into account all factors relevant to a determination of "true value in money." Stephen & Stephen Properte, Inc. v. State Tar Commission, 499 S.W.2d 798, 803 (1973) (citations omitted). Fee Simple A value assessment of the fee simple for real estate taxes includes every interest or estate therein. Doiman v. Minnich, 336 S.WN 500,505 (Mo. banc 1960). "Real property" includes the land itself. . .and all growing crops, buildings, structures, improvements and fixtures of whatever kind thereon...Section 137.010(3), RSMo. Real property includes leasehold interests. Ii·on Count, v. State Tax Commission, 437 S.W.2d 665 (1968). "Tangible property" includes every tangible thing being the subject of ownership whether animate or inanimate. other than money, and not forming part orparceI ofreal property as herein defined,,,Section 137.010(4), RSMo, "Intangible property" for the purpose of taxation, shall iticlude all properly other than real property and tangible personal property, as definedby this section...Section 137.010(2). Words and phrases contained in statutes are construed in their plain or ordinag and usual sense, but technical words and phrases having a peculiar and appropriate meaning in Iaw shall be understood according to their technical import. Section 1.090, RSMo. "Real property" or "premises" or "real estate" or "lands" is toextensive with lands, tenements and hereditaments. Section 1.020(161 RSMo. Real property is land, and generally whatever is erected or growing upon or affixed to land. Also rights issuing out of, anndxed to, and exercisable within or about land. A general term for lands, tenements, and hereditaments; property which, on the death ofthe owner intestate, passes to his heir. Black's Law Dictio,imy, 5th Edition, 1979. (Empliasis supplied) The impact of government benefits and restrictions must be considered when determining a propertys true value in money. .R#eo; E. Smith, et aL v. Johnno,North, 53 STC Proceedings & Decisions 435 (1998). In assessing fair market value oflow income housingprojects for state tax purposes, the court ts not constrained to determine inarket value as though real property ownership lacked tax credits and tax shetter features. Parkside Townhome Associates v. Board ofAssessment Appeals of York Coune, 711 A.ld6077,611 0998). Tax credits and interest subsidies affect the value of real estate and should not be ignored. The finaI estimate of value must represent all the interests, benefits, and rights inherent in ownership of the subjectreal property. Deeifield93 Investor Associates, LLC v. Ton of East Lyme,15 Cona.-L.14*. 51 (19991 cimg, Cascade Court Limited Partnership v. Noble, BTA No. 49295, et al. (Wash 1998), Folsom v, Counb, 0-*okane, 759 P.2d 1196 (Wash. 1 988); Afeadow/ana Lid. Dividend Housing Assn. v. City of Holtand, 473 N.W.ld 636 (1991). Tax Credits Are Not Intangible Property Requiring Segregation It is not enough for Complainant to label something as "intangible." The burden is upon the Complainant to establish that intangible pelsonal property actually exists. In Simon Propero, Group, L.P. v. Robert Boley. Appeals No. 95-3003 8 through 95-3 0041,95-30043 and 95-30044 (51 STC P&D 474, 483), we articulated the test to determine ttle presence of intangibles. That test is: (j) The intangible asset must be identfiable, Le., legally recognized: (2) lt niust be capable ofprivate ownei·ship; (3) k must be marketable, i.e. capable ofbeingjinanced and/orsold separate and apart ji·om the tangible http://www.dor.state.mo.us/stchnaryville_properties_v_nelson.htm 12/19/01 Maryville Properties v. Nelson Page 7 of 10 property; and (4) Practically. it must possess value, i.e., have the potential to earn income, or its existence is ofllo conseqi(elice. Looking at tlie tax credit in light of the above test it is clear that tax credits are not a sepante right of action. They cannot be bought or sold separate and apart from the real property. Iii fact, they cannot be alienated in any way from the physical property. While it is true that intangiblepe,·sonalpi·opero, is not taxable, it is not tne that evelything someone may choose to call an intangible is necessarily intangible personal property. In a similar case regarding tax abatements, we utilized this test holding: [Ilt is clear that an abatement ofreal estate taxes cannot be categorized as intangible property. Taxes run with the land and, therefore their abatement must also ron with the land. A landowner cannot sell the land and keep the tax abatement. Likewise, the landowner cannot sell tlie abatement and keep the land. If the abatements can be transferred at all, they must be transferred with the land. There is no property which can be severed fi·om the remainder ofthe real property. One MainP/azaFh·st.Plat v. Robert·.Boley, Appeal No. 95-30118 (February 6,1997)· There is no dispute that the tax credits at issue here cannot be severed from the real property. They are not intangible peisonal property. 111ey are a benefit that runs with the land. Complainant failed to meet burden of ProoL In order to prevail, a party must present an opinion of matter value and then must present substantial and persuasive evidence that its proposed value is indicative of the market value of the subject properly on January 1,1995, in order to have that value accepted. Hermel, Inc. v. mate Tax Commission, 564 S.W.ld 888, at 897. "Substantial" evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Cupples-Hesse Co,poration v. Store Te Commission, 329 S.W.2d 696,702 (Mo. 1959). "Persuasive" evidence is that evidence which has sufficielit weight and probative value to convince the trier offact. The persuasiveness ofevidellce does not depend on the quantity or amount thereof but on its effect in inducing belief. Brooks v. General Motois Assembly Dhision, 527 S.W.2d 50, 53 (Mo. App. 1975). DISCUSSION Property is assessed based upon its true value. True value is the price the property would sell for on the tax day. True value includes the whole bundle of rights that are transferred when real property is sold. Our Supreme Court has told us to consider the effects of a long-term lease when valuing real property and has even held tliat "it is often the long-term lease that gives value to the property." Baptist Childran'sHomev. Tax Commission, 867 S.W. 2d 510, 513 (1993). The only real issue here is "What would the property sell for on the tax day?" Complainanfs "intangible" arguments merely setup smoke screens to cloud the obvious. The burden to establish.the existence of an intangible asset is on the taxpayer. Intangible assets do not exist merely because an appraiser wants to classify something as intangible. Tlie test for the existence of an intatigible requires that there must actually be an asset which can be n·ansferred separate aild apartitom the rea! properly. if nothm& exists that can be separated from the real property, the alleged asset is merely a part of the real property's value. This is simply common sense. Rather than utilizing the above test to establish an intangible, Complainant seeks to create a non-taxable intangible by tlie process of elimination. Complainant asks us to define real properly to include only the land, bricks and mortar that form a part of the real property, arguing that this is the only definition allowed by Section 137.010, RSMo and seeking to distinguish between real property and real estate based upon definitions created by the Appraisal Institute. In requesting this definition, Coniplainallt ignores the fact tllat, in Missouri, fee simple includes the interests, benefits, rights and restrictions inherent in the ownership of land, bricks and mortar. Section 1.020(16), 89Afo; 11·bn Counoi, sumra (leasehold interest is within definition of real property). Missouri Baptist Childi·ens'Home, surora (long term lease may effect value)· Ifwe only valued land, bricks and mortar, we would never consider the impact of leases, rent restrictions, or any ofthe other elements associated with real property. As shown by Section 1.020(16), RSMo. "real property" and "real estate" are intercliangeable terms referring to the same thing. And, this is only reasonable. We cannot answer the question, "What would the property sell for?" unless we look at the bundle of rights that necessarily transfers upon the sale ofthe property. http://www. dor. State.mo.Us/st¢/maryville_propetties_v_nelson.htm 12/19/01 Maryvillp Properties v. Nelson Page 8 of 10 To accept Complainant's intangible argument would require that we value the property at something less than its market value. The problem with this argument can be demonstrated by considering all ofthe coniponents of real propety valuation. For instance, the location of a property could be labeled "intangible" yet no one questions that location adds value. Likewise, the view a property has or the availability of ser'vices can be called intangibies, but tliere is no question that these factors add value. Taking this train of thought to the next step,thebuilding permits thatwere required to start a project can be labeled "intangible" but a project would have no value without the existence oftlie permits. Likewise, the skilled labor necessary to constillct the project can be called "intangible" but no one questions that Iabbr is a factor in the value of any property. And, going one step further, the existence of competent management may be an "intangible" yet it is assumed to exist in any valuation of income producing property. Finally, what about the rents received from lite property? The right to receive a rental payment may be "intangible" but is always considered when valuing renital property. 'The tax credits are a benefit which run with the land, which the current owners utilize, and which a purchaser would be entitled to receive. Tax credits accrue to the ownefs benefit as an incident ofowneiship. Ihey are just another attribute of the property. They are no different from the rents which an owner is entitled to receive. The fact that the general partner sold the tax credits to the limited partners is not a relevant factor. By analogy, the general partner could have just as easily assigned the rents to the limited partners. We would not have assumed that the property had diminished value because he had assigned the rental income. Likewise, we will not assume that the property has lost some of its value merely because he sold and assigned the tax credits. It is obvious that Complainanfs argument must fail because it fails to address the true value or market value of the property. Having failed to present any substantial and persuasive evidence in support of a lower value or in support of its argument that Respondent was improperly valuing an intangible, Complainant has failed to meet its burden of proof. Therefore, the correct value for the subject property on January 1, 1997, and January 1,1998, was $750,000. ORDER The assessed valuation for the subject property for tax years 1997 and 1998, as determined by the Board of Equalization, is hereby SET ASIDE, 7110 Clerk is HEREBY ORDERED to place a new market value of $750,000 (assessed value $142,500) on the books for tax year 1997. The same value shall be placed on the tax books for tax year 1998. A parly may file with the Commission an application for review of a hearing officer decision within thirty (30) days of the mailmg of such decision. The application shall contain specific detailedgrounds upon which it is claimed the decision is erroneous. Failure to state specificfacts or lawitpon which fhe appeal is based will result in summary denial. 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 tlie final decision of the Commission. If no application for review is received by the Commission within thirty (30) days, this decision and order is deeined final and tile Collector of Nodaway 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 assessinent in tliis 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 ofths protested taxes held by the taxing authority. Any Finding ofFact which is a Conclusion ofLaw or Decision shall be so deemed. Any Decision which is a Finding of Fact or Conclusion ofLaw shalI be so deemed. SO ORDERED April 27,2000. STATE TAX COMMISSION OF MISSOURI Luann Johnson Heating Officer http://www.dor.state.mo.us/stc/maryville_properties_v_nelson,him 12/19/01 Maryville Properties v. Nelson Page 9 of I 0 ORDER DENYING APPLICATION FOR REVIEW OF HEARING OFFICER DECISION On April 27,2000, Hearing Officers Luann Johnson, entered her Decision and Order (Decision) setting aside the assessment by the Nodaway County Board ofEqualization and finding value for the subject property. Complainanes Grounds for Review Complainant filed its Application for Review ofthe Decision. The grounds stated in the-Application for Review were: I. TIle Hearing Officer erred in equating real property tax abatement with personal income tax credits, 2. I['llc Hearing Officer erred with respect to what constitutes real pmperty and what constitutes intangible personal property. 3. The Hearing Officer erred in valuing theownets interest in the property rather than valuing the property itself. 4. The Hearing Officer erred with respect to whether the Coinplainant carried its burden of proof. 5. The Hearing Officer erred in valuing the property resulting in an incorrect assessed value for the property. *** Commission Response The Commission's review of the Decision is upon the record and will ordinarily be limited to whether the findings, conclusions and decision ofthe Hearing Officer are supported by substantial and persuasive evidence and is not arbitrary, capricious or contrary to law. Hermel Inc. v. SE, 564 S.Wad 888 (Mo. 1978); Black v. Lombardi, 970 S.W.ld 378(Mo. App. E.D. 1998); Holt v. Clarke, 965 S.W.2d 241 (Mo. App. W.D. 1998); Sm#h v. Morton, 890 S.W.2d 403 (Ato. App. E.D. 1995).The Commission will review the Decision to determine whether facts found by the Hearing Officer are supported by substantial evidence upon the whole record and whethera reasonable mind could have conscientiously reached the same result based on a review of the entire record,Phelps v. Me#·opolitan St. Louis Sewer Dist., 598 S.Wad 163 (Mo. App. B.D. 1980). 'Ille Hearing Officer is not bound by zmy 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 aparticular case is for tlie Hearing Officer to decide. St. Louis Cozing v. Security Bonhomme, Inc., 558 S.W.2d 655,659 (Mo. banc 1977); St. Louis Cow®v. SIC, 515 S.W.2d 446,450 (Mo. 1974); Chicago, Burlington & Quing, Railroad Compam; 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 she may deem it entitled to when viewed in connection with ail 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 ofthe expert's testimoiiy and accept it in part or rejectit in part. Beardrle), v. Bea/·4Wey, 819 S.W.2d 400,403 (Mo. App. 199 t); Curnow v. S/oan, 625 S.W.2d 605,607 (Mo. banc 1981), The Commission will not lightly interfere with the Hearing Officer's Decision and substitute its judgment on the credibility of witnesses and weight to be given the evidence for that ofthe Hearing Officer as the trier of fact. Black v. Lombardi, 970 S.Wad 378 (A- 0..1 A. TAX CALCULATION FOR VILLAS AT FOREST PARK, L.P. Based on Capitalization of hicome Method as used by State Tax Commission in Maryville Properties, L.P. v. Pat Nelson, Assessor, Nodaw?y County .0101802 effective tax rate (from 2002) + .046097 capitalization rate as set forth in November 8,2002 memorandum of STC .0562772 total capitalization rate $ 155,125.00 total income Less 89,498.00 expenses (not including real property taxes, depreciation or mortgage) Less 9,244.00 contribution to replacement reserve $ 56,383 net income divided by .0562772 capitalization rate 1,001,880 appraised value multiplied by .0101802 effective tax rate $10,199 tax 7 52602 63%= 0 /2,0/00 2001 - 1209 5.35-80 ' FAC\(grop_547mra*An•=mentfore:lt•*rk\·raxealculAtion.wild ' 111'/0 U. 1 ./1 ......., LA, i. INC.)A0'- STATEMENT FOR THE 12 PERIODS ENDED DECEMBER 31. 2002 PERIOD TO DATE YEAR TO DATE ACTUAL PERCENT ACTUAL PERCENT Revenue RENTAL INCOME $12.135.00 96.1 % 148.065,97 95.4 NON REFUNDABLE SEC DEP INCOME 50.00 .4 500.00 .3 LAUNDRY INCOME .00 .0 900.00 .6 MISCELLANEOUS ,00 .0 89.66 .1 CABLE INCOME 444.00 3.5 5.570.00 3.6 TOTAL Revenue 12.629.00 100.0 155.125.63 100.0 Gross Profit 0 12,629.00 100.0 155,125.63, 100.0 Expenses f ·1 t, p 1 5/ki.·/ r aE Fs 6,6 r :.i. q. 1 8,2 MANAGEMENT SALARIES 1.022.68 8.1 + 12,687.18 MAINTENANCE SALERIES 995.74 7.9 -4- 12.190.81 7.9 ACCOUNTING-AUDITING .00 .0 + 8.297.00 5.3 ADVERTISING 75.00 .6 4 825.00 .5 NACANT UNIT PREPARATION 45.00 .4 ··. -( 764.65 .5 (REPAIRS 210.23 1.7 ,J, ---- 2.965.6¤ 1,9 CONTRACTOR SERVICES 250.00 2.0 .-2.310.26 1 1.5 GROUNDS 298.00 2.4 W ..1.620.93 1.0 MAINT. SUPPLIES, TOOLS. EQUIP. 91.41 .174 i .· 1.324.72 .9 MISC, MAINTENANCE COSTS 15.80 1· -1.007.21 J .6 bEFICE SUPPLIES & POSTAGE * 19.02 .2 4 1,273.82 .8 TELEPHONES/PAGERS 242.78 1.9 -1 2.633.22 1.7 COMPUTER EXPENSE .00 8 1 60.00 .0 MISC. ADMINISTRATIVE COSTS 1' 1,· /*· 50.00 .4 i 166.66 EMPLOYEE TRAVEL/MILEAGE . .00 .0 1 25.92 .0 APPLICATION FEES %9 5/toi 64 .00 .0 c 15.00 .0 EMPLOYEE RECOGNrnON .00 .0 4 49.04 .0 LICENSES AND PEES \ 20.00 .2 4 235.00 .2 umrrIES (0 11,0 J 15,003,52 9.7 6 6 .52)0,77) 1.389.36 1.7 ·| 2.599.17 1.7 GARBAGE COLLECTION 209.17 OWNER SUPPLIED CABLE TV \ ,; 379.40 3.0 4 4.176.40 2.7 MISC. OPERATING COSTS '· .00 .0 404.31 .3 EXTERMNATING SERVICES .00 ' 600.00 .4 .0 p.,1 P t'' D SECURITY SERVICES r .00 .0 . 1- 324.50 .2 REAL ESTATE TAXES , A |* 7 v, ; 12,010.50 95.1 110 --·12.010,50 4 7.7 INSURANCE EXPENSE 494.83 3.9 -1-· 4.641.44 3.0 MANAGEMENT FEE ' 2.212.00 17.5 4 13@96.00. 8.6 DEPRECIATJON EXPENSE . )4'·}' 10,632.43 84.2 ·- 63,794.133/ 41.1 i. TOTAL Expenses 30,663.35 242,8 165.302.05 106.6 Net Income from,Operhtions (18.034.35) (142.8) (10.176.42) (6.6) Other Income & Expense MAJOR REPAIRS 1 5,6,('i A.:.11 .00 .0 (2,865.00) (1.8) IN']EREST EXPENSE (1,310.69) (10.4) (8,008.69) (5.2) Syklom Date: 06/04/2003 / 11:32 am Page: 1 Anplication Dala: 06'04/2003 User. BA / BEVERLY ANDERSON INC· V STATEMENT V Ilkle 01 1 Ul Co 1 Cal r. FOR THE 12 PERIODS ENDED DECEMBER 31, 2002 PERIOD TO DATE YEAR TO DATE ACTUAL PERCENT ACTUAL PERCENT Other Income & Expense (Continued) PRINCIPAL PAYMENTS -MHDC $.00 .0 % (28.850,70) (18.6) DEBT SERVICE .00 -0 28,850.70 18.6 INTERST INCOME-MHDC (490.48) (3.9) (887.7) .6 TOTAL Other Income & Expense (1.801.17) (14.3) (9,985.91) (6.4) Earnings befom Income Tax (19.835,52) (157.1) (20.162.33) (13.0) Net Income (Loss) $(19,835.52) (157.1)% (20,162.33) (13.0) AJAIMonal expense - 0.2#\421 confribu:\Ion ·40 rept aeIl -mo·C•BO·0•0•0•040•4 1- f 111 ............M 2 M •0 4 4 +O 4 4 •0 u •0 - a 3 11 e •04.0 •0 -O •0 •0 -O ·O·0 -C W El ./-wwww-----1- 0............i logi - == 833@33333@380 o m m 10 1, f re m M N 10 W I m R i &3699333$93h l 0 10 -0 •0 4 •0 •04 4 4 4 4 D· VAVN-14444INA mi n rh th h· f• n· r• r» r• n• -- uUUUIJUWWWUW ¤ %*%%%4EEg%N n mi 11 0 00 00 0 000 050 dRi U U l, U U Ul U 1 Ln U,1 - 2*29-2IED 1 0, U kb:::k::*:*2 02.222222.21 R -IRe AM 7/01/94 20 0 / i --h..........6 El U ·0 •0 4 •0 •0 ·0 4 -0 ·0.0 •C 213321123832 o3 00000000¤000 City ofNixa South Gregg Rd Improvements Appraisal File 21402-18 8. Basis for Land Value Basis for value is a market comparison ofthe following 3 land sales Sale#10 Sterling Road, Nixa, MO south side at end of road 2,36 acres sold for $9,703 peracreon 5/31/01 to Geno Middleton requires upward adjustment for all public utilities re®ires upward adjustment for platting and zoning Sate #11 1522 S Gregg Road, Nixa, MO 3 acres sold for $10,000 per acre on 4/14/00 to Bert & Deborah Adams requires an upward adjustment for time requires upward adjustment for all public utilities requires upward adjustment for platting and zoning Sate #13 722 S Gregg Road, Nixa, MO 2 acres sold for $15,000 per acre on 4/23/99 to Lawrence Hedgpeth requires an upward adjustment for time Indicated value range is then $13,584 to $15,600 per acre. Preponderance of weight is on sale #3, which required no adjustment and is in close proximity, influenced by sale #1 and #2. Estimated value is then $15,000 per acre. Subject size of I.99 acres @ $15,000 per acrcis $29,850. p. Cnlculation of Value of Land to be ncrinired R/W Acquisition .05 acres @ $15,000 per acre x 1.00 $ 750 Trees 0 Fence L--Q total $ 750 Value before acquisition: Land $29,850 Improvements, not available Q Total $29,850 Value after acquisition: $29.100 Difference $ 750 Difference in value before acquisition lind value alter acquisition is $750, tile estimated compensation, JURISDICTIONAL EXCEPTION Undertho heading ofJurisdictional Exception the current edition ofUniform Standards ofProfessional Appraisal Practice states, "If any part of these standards is contrary to the law or public policy of any jurisdiction, only that part shall be void and of no force or effect in that jurisdiction." As designed for the internal use of a Local Public Agency under the direction ofthe Missoud Department ofTransportation, the Payment Estimate departs fromUniform Standards Rules 2-2 (b), (c), (d), '(f), (i) and 0). 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