% ...<3# 114·<. Board of Equalization 100 West Church. Room 200, Ozark. Mo. 65721 Board httpd/ChristianCountyMO.iqn,2.com - Agenda - Kay Brown 417-582-4340 Thursday, July 16, 2015 11:00 AM The Christian County Courthouse 1. Call to Order 1 -*ften866-Nani@ 4- - -' , 4 -t L Prds,int-Absent-- 6- STAr?W@27 ' Presiding Commissioner Ray Weter Western Commissioner Bill Barnett Surveyor Loyd Todd Board Member Brenda Hobbs Commissioner Sue Ann Childers Kyle Estes Jason Massengale 11. Public Portion 1. Un-Numbered Items (ID # 2390) B.O.E. Discussion -- -1 72, 7 - Board of Equotization Pagel Printed 7/22/2015 Christian County Commission 100 West Church St, Room 100 41[LED Ea Ozark MO 65721 July Term httP:UChristianCountyMO,iqm2.com - Agenda - Thursday, July 16, 2015 8:55 AM The Christian County Courthouse Posted @ on Notice is hereby given that the Christian County Commission will meet in regular session at: 100 W. Church Street Room 100 Ozark, MO 65721 On: July 16, 2015 L Convene IL Agenda Allttems on the Agenda include the Opportunity for Board Consideration, Discussion, And Possible Action 8:55 AM Christian County Commission Re: Approve Agenda for July 16, 2015 8:58 AM Kay Brown-County Clerk Re: Approve Minutes and Financials 9:00 AM Virginia Roberts-Christian County Master Gardeners Re: Plants and Landscaping Around the Judicial Facility 10:00 AM Christian County Commission Re: Discussion About GPS Trackers for the Sheriff's Office 11:00 AM Danny Gray-Christian County Assessor Re: Board of Equalization Meets to Approve Minutes and Discuss Cases III. Adjournment This notice of meeting was posted at the place of meeting and in the locked box located in the Christian County Courthouse lower level, a place readily accessible to the general public and remained posted at least 24 hours before the scheduled time of said meeting per the requirements of the Missouri Sunshine Law 610.020.1 RSMo. Board of Equalization 100 West Church. Room 200,0zark Mo. 65721 Board httpd/ChristianCountyMO.ignanom - Minutes - Kay Brown 417-582-4340 Thursday, July 16, 2015 11:00 AM The Christian County Courthouse 1. Call to Order Attendee.Name . - '9. 1 -: '+'.tilt . ..3 Title i'%4. v.{. .W...i 41:.' ::Stlitils·{4:0'- Arri„d11 Ray Weter Presiding Commissioner Present 11:00 AM Bill Barnett Western Commissioner Present 11:00 AM Loyd Todd Surveyor Absent 11:00 AM Brenda Hobbs Board Member Present 11:00 AM Sue Ann Childers Commissioner Present 11:00 AM Kyle Estes Present 11:00 AM Jason Massengale Present 11:00 AM 11. Public Portion 1. Un-Numbered Items (ID # 2390) B.O.E. Discussion COMMENTS - Current Meeting: The meeting was attended by Mr. Al Berry, Assessor Danny Gray and Deputy Clerk Mary Argiso. The Commission met with the B.O.E. members to discuss cases and to approve the board minutes for July 06, 2015 and July 09, 2015. Commissioner Weter entertained a motion for the approval of the board minutes for July 06, 2015. The Assessor provided copies to the board members and Commissioners the new appraised value calculations for Abby 1 & Abby 2. Abby 1 parcel # 10-0.6-14-003-001-001.001 new assessed value $1,491,200.00 Abby 2 parcel # 10-0.6-14-003-001-001.002 new assessed value $1,838,346.00 The assessor discussed the approach he used calculating the figures. He stated that today he would like to send a letter with the new figures. ATTACHMENTS: Abby 1&2 New Appralsed Values (PDF) Abby 1& 2 new appralsed values (PDF) Board of Equalization Pagel Printed 7/24/2015 t Board Minutes july 16, 2015 RESULT: ADOPTED [UNANIMOUS] MOVER: Sue Ann Childers, Commissioner SECONDER: Brenda Hobbs, Board Member AYES: Weter, Barnett, Hobbs, Childers, Estes, Massengale ABSENT: Loyd Todd 2. Motion To: Motion to adjourn COMMENTS - Current Meeting: Commissioner Weter entertained a motion to adjourn. RE5ULT: ADOPTED [UNANIMOUS] MOVER: Brenda Hobbs, Board Member SECONDER: Sue Ann Childers, Commissioner 64 AYES: Weter, Barnett, Hobbs, Childers, Estes, Massengale ABSENT: Loyd Todd - 3. Motion To: Motion to send letter re: Abby 2 new assessed value COMMENTS - Current Meeting: Commissioner Weter entertained a motion to send a letter with the new figures regarding Abby 2 parcel # 10-0.6-14-003-001-001.002 with the new assessed value $1,838,346.00. RESULT: ADOPTED [UNANIMOUS] MOVER: Sue Ann Childers, Commissioner SECONDER: Brenda Hobbs, Board Member AYES: Weter, Barnett, Hobbs, Childers, Estes, Massengale ABSENT: Loyd Todd 4. Motion To: Motion to send letter re: Abby 1 new assessed value COMMENTS - Current Meeting: Commissioner Weter entertained a motion to send a letter with the new figures regarding Abby 1 parcel # 10-0.6-14-003-001-001.001 with the new assessed value $1,491,200.00, and can appeal with the state. RESULT: ADOPTED [UNANIMOUS] MOVER: Sue Ann Childers, Commissioner * SECONDER: Kyle Estes AYES: Weter, Barnett, Hobbs, Childers, Estes, Massengale ABSENT: Loyd Todd 5. Motion To: Motion to approve board minutes for July 09, 2015. bird of Equalization Page 2 Printed 7/24/2015 Minutes July 16, 2015 Board COMMENTS - Current Meeting: The Commission met with the B.O.E. members to approve the board minutes for July 09, 2015. Commissioner Weter entertained a motion for approval. RESULT: ADOPTED IUNANIMOUS] MOVER: Bill Barnett, Western Commissioner SECONDER: Sue Ann Childers, Commissioner « AYES: Weter, Barnett, Hobbs, Childers, Estes, Massengale ABSENT:· loyd Todd : Poge 3 Printed 7/24/2015 Board of Equalization 2.ta: . .,44 Danny Gray Christian County Assessor €EE'*2 f ji 100 West Church Rm # 301 Ozark MO 65721 ' Te,#7*W --24,- Ph (417) 582-4320 Fax (417) 581-3029 Abby I 10-0.6-14-003-00.1-001.001 EGI 248,532 Expense 55% - 136.692 NOI 111,840 CAP Rate + 7.5% Value $1,491,200 , 1 6 Buck. 4 € #, Packet.. 41 2.1'.al 8 N (4 CU Ul N ·13 98 f. h h ·O h N £4 W !11 10 19 B N 7. 0- 0· 0- .1 0 el Ill 4 er .r a 10 W H M MMINMO 12 22 E M .O l. - M e W 5 £6 0 1-1 M M 19 O. n o w n r.1 DJ UU 0.1 4.1 £1.1 23 0 - -0 m 03 O.l N (U et- (11 0 B tr] 10 D tfil Into X 5 N al N 010 61110 Z AK A (11 t·- 11· 0, m D- .0 0, er 00*g O to 50 10 10 Lit O au 03 03 * .0 03 0 CD flill 2-3 ·0.0 N .0 BEMm 4 0 Mill-(U /O/0 Z MANK 19 10 1/ 11 h .lk oil m 8: rc Z W .1 4- 4 03 4 0 i 1.1 8 «] £0 e N 03 M ]11 0' 0• 0- 0- 0 D m O, 0-0- c. D. 4- 9 0. N.00 m N N N *04 2 Attachment: Abby 1& 2 new appraised values (2390 : B.O.E. Discussion) W = 6 \ 0 MOO 0 1.4 M 03.0,00303:+ -00 <0 Zo , 4- 4· •r O ¢4· D I -00 .000goto 2 000.-4 003 Z @g 4--1- ... ... r- rn r =00 9 2 -O 10 0000,0, Wo m al N € i 0 19 2 82 -·. 441 4 T Z b. M 41'.tv A O0- 0 0 != 000C 0 c----- Cl M 9000000 1-' 0 C i· 2 -•••• . m 01 m r.1 -• .1 n g- R i & O ' 1,1 D D •4 0 0 0 £2 0 W . yoocono IXA CITY ODOC M % 4 4 er + .0 121. Z S.iNEWEAOWdril O (2200 - 3 3 216 8 SE: C· 0 0-· W C·· D· 0. 0- 0-0-· 0- 0- • coa: T (U 11 2 !19 N 0. El--1-1-.-1*ls} £1- L EL 41 a. 2 -4 1 1% ·r.·r·,·r 2 0 . 1 1*E an· Li- 14 5 /4 14 14 1 LOT :C -4 M M •4· A ·D 00000 c., . te?*ket pg.t# . W#/02An&#Al Danny Gray f u Christian County Assessor 100 West Church Rm # 301 Ozark MO 65721 Ph (417) 582-4320 Fax (417) 581-3029 42544#12PS»,57 Abby n 10-0.6-14-003-001:001.002 · EGI Attachment: Abby 1& 2 new appraisea values (2390 : liu.t. w,scusslon, 306,391 Expense 55% - 168.515 NOI · · 137,876 CAP Rate + 7.5% Value $ 1,838,346 - 1+w 'ff r.4"1 g /9 70 1 ay Packet Pg. 6. r m T . 03 0 0 al 2 C. 0 M th 0- 40. .t /1 93 I 3 10 -4 0. W. 0- tr N M D P.1 19 b-J 2 gl -0 In 90 LU ul fi 0,9 MAO 04·h ra Ii' 10 r. 60 2 -4 4. 00 4 n 1,9 0 O 0 giL 0.1 W 0.1 ti J . 0 6 6 0 0 1 -1 10< 0 0· 03 th D] . ·O {11 W) lu m '.3 e El Z mIr O /1 14 0 Q U & 01 h 'UN • 19 r - 01 0. m g m E j 0 WO 01. ·0 8! E .ard o 2 ¥lm 4 2 ZD 0 i:ign u Le O.O 8 2 12 1- t·3 . M 9 M 10 -0 Jilb#*m,101:M# 4 th M m ie t.1 D h N En & i i · u n - - u : IX E ,. : 15 A m m 1 2 4 01 W N 1. 2 1 0 =52 4 . i, •OlD -0.-- ' 5 -' 4Attachment: Abby 1& 2 new appraised values (2390 : B.O.E. 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U. i in .a r d!0 D 8 8 123 [.-Packet Pg. 7 1 Danny Gray Christian County Assessor 100 West Church Rm # 301 Ozark MO 65721 Ph (417) 582-4320 Fax (417) 581-3029 Abby I 10-0.6-14-003-001-001.001 EGI 248,532 Expense 55% - 136.692 NOI 111,840 CAP Rate + 7.5% Value $1,491,200 C Muck-le· € ACREAGE CALC. DATE PRINTED 3.00 X 2.0.1 N N D 03 ·13 MINRely :1 Ill F li all :I i': 1 911:{ Il=IO M IWil: 1=1:enm-10-0.6-14-003-001-001.001 ACREAGE DEEDED 5/07/15 SIOE0 2 LU 6 /1. :@ 000000 /• h h 1%· ·0 r- al Z0 IiI D .3 M Wl M & 0% 0 0- -1 04 eu Cl· er q 4- Wpmr:}mrutio fo e € 91 e P -8 M n 19 9 19 o W 0/ 0 41 al w IN)"30¥ld)11 8 (u al ru * iu o 10 63 b-1 111 6-1 [9 Z 03(uatorutr] n. h N {11 r- 4· 3 0- O- 4 0- tr en./0 1 0 to 51 to 51 111 0 i DJ 03 03 .0 03 0 mitiiid 0 g = za ia - % ZD 1.COOQ Z u. h h N N h M h 14% h-h 18 M m 82 eC z 4· 9- •- 0.3 4- O 03 CO 03 (13 0319 Ch 010- 0- 0 bl 8 Ibo• 0- 0 0- 4. 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C! 1- i- 22 5 N< i! 0 7.. % # pr 4 t 1 O 40 -0 4 al .O 01 uhANK'.O 4 hi./*87 /. •-4 O -9- --- 0 0 0 N N N D- 03 • ..2 4- /2- 41 'r O 04 ' O 5- 0 Wn K ift lit 0.-8. o 0 Ir 8 fu {13 No· 0.1 g;ooF coS: 0 8;000000 4 11 m 6 n 14 82 ,- .O -£ .. 22 NETTY:.1-¥-r, 9 9 *4 m nommA€ 01 0 Z a 5 z 0,0 0 2 OOOC 33 2 L < M 000000 C. am ,6 £ M SEC 14 TWN 27 RNG 22 Z 52 4 V 9O It O m ·" ¥11 ri ...i -' n Ill iE ime ir] in to - u; o 0 1000000 Eg C t!61 0 2 0 ir AVAS = 0- B 0- B o. O- !2 03 O •-1 e. rr 0- e· 0-· 0· a KI .1 2% t= 0. 0 3 E- 1- h. J !- 0 E o. a. 2. <£ a. Z A- *r ···r -1- .1 ri 21 5 5 8- 5, Z D .d m < OC m %65'King:th# :000000 Danny Gray f #maw,WIMmmm j Christian County Assessor -11...../--/0 / 0 100 West Church Rm # 301 Ozark MO 65721 % -B Ph (417) 582-4320 Fax (417) 581-3029 4 ft)* . E ////4/'//./2./2-I. 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OROOS ctio,M·E 101 O 9 A mi ! 1 13 !0 N t· 011 CO+N: 1 Icolol . $ a § |Ii 11 s I it is 12 -E' 2.76 00;a·' 4.,9.2 42 m .2-3,-Elia·%-lr-* 14 did EHo | 31¥·-0 -0,-3 &*8· 0 0,10 - a o:o E:o t Ill 10,0 0 111 =,Z,< SLU 0,1 11.- 03•0 tol a>Iri·r·O - 7 •- 1 : BOO 'O'to W N. lei O) N N Blra) A N e (9. sc».ON- CV NI 1 10 G :10 M 01.-:AO1 0 •r M ;BIBIA E /1 N afil- 0.1 10:.4 arito r- N ef .-lw.0 N 9- 04 01.- - h 1-- 010.0 0 131 - Al Z. , t. 1 op O 0 1,- to;M N· 1 N|O (311011·- M W c:010'10 =r £1 = 0'-=t El =miz€3 :S·=-= 2-WW' O IO.r- 01 0 -3.1„ CO 10 (9 r- 49 0 CD co O H to r- r- Complainant's Exhibit A M v 0 6-11% ul It.9 ./1 0-1.-1 0 .111 to,ao,N O r- 'Lf)' O A O.010 0 diold o 1 1 1.1 Ii: i CO:0110 rt ©'CO O to •Tr! 01M1_._.A A Al 15 2 0, El f dild 46 . al"5 5* gi 8 121:= S! I .0. 0101,0 01 (\110.0,0 0 ON· 0 . 10 : 1 09 co 14- CO AILD:NIO Q O K WIE 2 2 0,0.0 0 0 9 2 Al r: 01 01 , r 0.010 0 1 - O Of- 1. ' I 11. 1 f ZE,11 Il I I Il D 8.=9= N:t•- gr' | |8|4 8|Aig R! 2i 1 10.1§13 0 Z g.mon. 5 xy|O Le O 0 529.- - 40!1 ,-1 0.00 0 0 -O lo i . Ito COIN (CD 0 =0*65 ..· E 2 E 2 LO N 91· 6 d 1 4103 5/IM- 5-2 01 15'El@ 4 e 0<46 El -131 J. Ril Z. I w - . e A ., r '010 0 0 0£ =26·&3 tilil I oE"M i ' 1 .O 2 -O 4 d i Ii 11 IC IO 1 1 la 'al ! m. 11 141 111.1 i ® 10 0 -3, li.113 -% 2.liii &-21% lia'*%€1 ia-12iatill .0 el 1 1 ·1212. 18'51&+ZIS :g :2 :3 Branson Christian County I, LP d/b/a Abbey Orchard I 1 10-0.6-14-003-001-001.001 EXHIBIT C 2011-2014 Income Statements r 50708818.1 C.4, 4 Branson Christian County, LP MHDC #RRHP-016 INCOME STATEMENTS For the Years Ended December 31, 2011 and 2012 1201/11 12/31/12 RENT REVENUE 5120 Rent Revenue- Gross Potential . $ 228,960 $ 231,908 5100T TOTAL RENT REVENUE 228,960 231,908 VACANCIES t-- 5220 Apartments (9,926) (429) 5250 Rental Concessions (307) 5290 Miscellaneous (13) (50 5200T TOTAL VACANCIES . (10,246) (479) 5152N NET RENTAL REVENUE 218,714 231,429 FINANCIAL REVENUE 5410 Financial Revenue - Project Operations 186 154 5440 Revenue from Investments - Replacement Reserve 931 579 5400T TOTAL FINANCIAL REVENUE 1,1 I7 733 · OTHER REVENUE 5910 Laundry and Vending Revenue 221 281 5920 Tenant Charges 11,625 12,741 5990 Miscellaneous Revenue 633 961 5900T TOTAL OTHER REVENUE , 12,479 13,983 5000T TOTAL REVENUE $ 232,310 $ 246,145 The accompanying notes are an integral part ofthese financial statements.*** 4 4/ Branson Christian County, LP MHDC #RRHP-016 INCOME STATEMENTS For the Years Ended December 31, 2011 and 2012 12/31/11 12/31/12 ADMINISTRATIVE EXPENSES 6203 Conventions, Meetings & Training' $ 1,774 $ 535 6210 Advertising and Marketing , 1,757 1,601 6311 Office Expenses , 1,287 1,031 6320 Management Fee/Bookkeeping/Accounting Services 21,490 22,997 6330 Manager or Superintendent Salaries IL528 18,935 6340 Legal Expenses - Project 4,931 3,341 6350 Audit Expenses 2,770 2,977 6360 Telephone Expense 1,545 2,021 6370 Bad Debts 5,056 8,184 6390 Miscellaneous Administrative Expenses 2,716 2,164 6263T TOTAL ADMINISTRATIVE EXPENSES . 60,854 63,786 UTILITIES 6450 Electricity 5,153 3,704 6451 Water - 8,246 9,020 6453 Sewer 11,531 13,087 6400T TOTAL UTILITIES, 24,930 25,811 IA OPERATING & MAINTENANCE EXPENSES 6510 Payroll 17,938 20,901 6515 Supplies 6,899 4,685 6520 Contracts 42,685 11,728 6525 Garbage and Trash Removal 79 60 6546 Heating/Cooling Repairs and Maintenance 570 6548 Snow Removal 1,039 156 6573 Exterminating 665 893 6580 Vacant Unit Preparation 3,160 2,493 6500T TOTAL OPERATING & MAINTENANCE EXPENSES 3,035 40,916 ¥A TAXES & INSURANCE 67I0 Real Estate Taxes 8,103 8,012 -- 6711 Payroll Taxes (Project's Share) 3,388 3,690- A- 6720 Property and Liability Insurance (Hazard) 7,282 7,53h 6721 Fidelity Bond Insurance 165 153 / 6722 Workmen's Compensation I,256 6723 Health Insurance & Other Employee Benefits 3,468 3,453 t 6790 Miscellaneous Taxes, Licenses, Permits & Insurance 1,016 1,422 ' 6700T TOTAL TAXES & INSURANCE $,678 25,326 FINANCIALEXPENSES 6820 Interest on Mortgage Payable 11,595 11,300 -f 6800T TOTAL FINANCIAL EXPENSES 11,595 11,300 6000T TOTAL COST OF OPERATIONS BEFORE DEPRECIATION 195,092 167,139 5060T PROFIT (LOSS) BEFORE DEPRECIATION $ 37,218 S 79,006 ***The accompanying notes are 211 integral part of these financial statements.*** 5 €., Branson Christian County, LP MHDC #RRHP-016 INCOME STATEMENTS For the Years Ended December 31, 2011 and 2012 1281/11 12/31/12 DEPRECATION & AMORTIZATION 6600 Depreciation $ 111,445 $ 119,059 -P pr TOTAL DEPRECIATION 111,445 119,059 OPERATING PROFIT OR LOSS (74,227) (40,053) ENTITY EXPENSES 7115 Asset Management, Partnership and Incenrive Fee ' 0,500) - (6,500 7190 Other Expenses - (92) TOTAL ENTITY EXPENSES (6.500) (6,592) A 3250 NET INCOME (LOSS) S (80,727) S (46,645) PART II 7001 Total mortgage principal payments required during the audit year (12 29,341 29,634 monthly payments). 7002 Total of 12 monthly deposits in the audit year into the Replacement 16,653 17,153 Reserve account. 7003 Replacement Reserve or Residual Receipts releases which are included 35,046 1,599 as expense items on this Profit and Loss Statement 7145 Debt Service for other loans (surplus cash/non-mhde/partner loans) 15,846 Cil,L+ POE + Y 6 12 - E-&4 13?mid 77%69 4- 4 'do - 972%017- + /19/097 - Dep/Zec21*j -0.119) IZES-aver M>Ig@L Q,t,t« la- ***The accompanying notes are an integral part of these financial statements.*** 6 1 t Branson Christian County, LP MHDC #RRHP-016 INCOME STATEMENTS For the Years Ended December 31, 2013 and 2014 2013 2014 RENT REVENUE 5120 Rent Revenue - Gross Potential $ 238,556 $ 241,248 5100T TOTAL RENT REVENUE 238,556 241,248 VACANCIES 5220 Apartments (2,732) 0,600) 5250 Rental Concessions - 00 5260 Rents Loss to Lease (2,673) (1,041) 5290 Miscellaneous (60) (32) 5200T TOTAL VACANCIES (5,465) (4,713) 5152N NEr RENTAL REVENUE 233,091 236,535 FINANCIAL REVENUE 5410 Financial Revenue-Project Operations 145 111 5440 Revenue from Investments - Replacement Reserve 616 639 5400T TOTAL FINANCIAL REVENUE 761 750 OTHERREVENUE 5910 Laundry and Vending Revenue 210 230 5920 Tenant Charges 9,527 10,393 5990 Miscellaneous Revenue 805 624 5900T TOTAL OTHER REVENUE 10,542 11,247 5000T TOTAL REVENUE $ 244,394 $ 248,532 *••Tile accompanying notes are an integral part of these financial statements.*** 4 f. i Branson Christian County, LP . MHDC #RRHP-016 INCOME STATEMENTS For the Years Ended December 31, 2013 and 2014 2013 2014 ADMINISTRATIVE EXPENSES 6203 Conventions, Meetings & Training $ 1,060 $ 1,741 6210 Advertising and Marketing 1,505 1,724 6311 Office Expenses 1,295 1,381 6320 Management Fee/Bookkeeping'Accounting Services 22,776 22,696 6330 Manager or Superintendent Salaries 19,129 18,930 6340 Legal Expenses-Project 670 300 6350 Audit Expenses 3,078 3,077 6360 Telephone Expense 2,167 2,021 6370 Bad Debts 2,999 3,637 6390 Miscellaneous Administrative Expenses 2,169 3,104 6263T TOTAL ADMINISTRATIVE EXPENSES 56,848 58.611' -i UTILITIES 6450 Electricity 3,990 4,098 6451 Water 7,491 11,689 6453 Sewer 10,028 9,243 6400T TOTAL UTILITIES 21,509 25,030 \A OPERATING & MAINTENANCE EXPENSES 6510 Payroll 20,683 20,356 6515 Supplies 3,728 6,050 6520 Contracts 13,831 14,352 6525 Garbage and Trash Removal 62 78 6546 Heating/Cooling Repairs and Maintenance 29 301 6548 Snow Removal 775 1,384 6573 Exterminating 834 909 6580 Vacant Unit Preparation 1,787 11,022 6500T TOTALOPERATING & MAINTENANCEEXPENSES 41,729 54,452 F. 6710 TAXES & INSURANCE 11 w - 7,973 7,956- | Real Estate Taxes 6711 Payroll Taxes (Project's Share) A -3,353 3,368 - A 6720 Property and Liability Insurance (Hazard) / 8,303 8,998 1 6721 Fidelity Bond Insurance / 141 106) 6722 Workmen's Compensation \ 871 1,056 ( rr 6723 Health Insurance & Other Employee Benefits / 5,003 4,085 ,1/ 6790 Miscellaneous Taxes, Licenses, Permits & Insurance l 1,743 1,690 6700T TOTAL TAXES & INSURANCE 27,387 27,259 6820 FINANCIAL EXPENSES d /P - 11,002 10,701 4 1|'A Interest on Mortgage Payable 6800T TOTAL FINANCIAL EXPENSES 11,002 10,701 6000T TOTAL COST OF OPERATIONS BEFORE DEPRECIATION 158,475 176,053 5060T PROFIT (LOSS) BEFORE DEPRECIATION $ 85,919 $ 72,479 •**The accompanying notes are an integral part ofthesc financial statements.••• 5 f.. Branson Christian County, LP MHDC #RRHP-016 INCOME STATEMENTS For the Years Ended December 31, 2013 and 2014 2013 2014 DEPRECATION & AMORTIZATION 6600 Depreciation $ 114,377 $ 111,107 TOTAL DEPRECIATION 114,377 111,107 OPERATING PROFIT OR LOSS (28,458) (38,628) ENTITY EXPENSES 7115 Asset Management, Partnership and Incentive Fee (6,500) (6,500) TOTAL ENTITY EXPENSES (6,500) (6,500) 3250 NET INCOME (LOSS) , $ (34,958) S (45,128) PART H 7001 Total mortgage principal payments required during the audit year (12 29,933 30,233 monthly payments). 7002 Total of 12 monthly deposits in the audit year into the Replacement 17,667 18,197 Reserve account. 7003 Replacement Reserve or Residual Receipts releases which arc included 3,103 10,600 as expense items on this Profit and Loss Statement 7145 Debt Service for other loans (surplus cash/non-mhdc/partner loans) 1211 2-0/4 0 (f,91.ip) Q<,)11) +7373 - (2VieT'img 7/106* - + 7,9 510 4-litod-l- - -%9< 1- - P f 0/76\ + /1 9/777 - 1) *4LKDAT54 - -1- 1 I \ 1/07 - 12- MfWivEr - (/91/97 30,7 2.7 1 •••The accompanying notes are an integral pan of these financial statements. *** 6 S . Branson Christian County I, LP d/b/a Abbey Orchard I 10-0.6-14-003-001-001.001 EXHIBIT D Land Use Restriction Agreement 50708818.1 4 1 Jeol. · ·;tARK 0301 PAGE 3243 ' ' 6 P. BRUCE HARRIS RECORDER OF DEEDS LIHTC# 93-034 rmm*Trn A- DECLARATION OF LAND USE RESTRICTION COVENANTS FOR LOW-INCOME HOUSING TAX CREDITS -E=22:9- 10..' 1 5 p. rn. THIS DECLARATION OF LAND USE RESTRICTION COVENANTS (this •Agreement"), dated as of the and their 14th day of December , 19-14 by Brar,Ron Chri stian Countv. L.P. grantees, successors and assigns (the "Owner") is hereby grhnted and dediared as a condition precedent to the allocation of low-income housing tax credits by the MISSOURI HOUSING DEVELOPMENT COMMISSION, a governmental instrumentality of the State of Missouri or any successor to its rights. duties and obligations (hereinafter sometimes referred to as the "Authority" or as "MHDC"). · WITNESSETH: WHEREAS, the Owner is the owner in fee simple of a 48 unit rental housing development located on lands in the City of Nixa , county of Chrig tiAn i State of· Missouri. which lands and improvements are mor'e particularly described in Exhibit A attached hereto, and commonly known as Abbev Orchard Apartments (the "Development") ; and WHEREAS, the Development may now or hereafter be financed by mortgage loans (the· "Mortgage Loan" whether one or more), the indebtedness of which shall be evidenced by mortgage nate(s), secured by mortgage(s) or other security instruments (which shall be mortgage liens on the Development) (said note(s), mortgage(s), or security instruments are collectively hereafter referred to as the •Loan Documents" whether one or more); and WHEREAS, the "Authority" has been designated by the Governor of the State of Missouri as the housing tax credit agency for the State of Missouri for the allocation of low-income housing tax credit dollars (the "Credit"); and WHEREAS, the Owner has represented to the Authority in Owner's Low-Income Housing Credit Application (the "Application") that Owner shall lease a minimum of 40 % of the units in the Development to individuals or families ("Low-Income Tenants") whose income is 60 X or less of the area median gross income (including adjustments for family size) as determined in accordance with Section 42 of the Internal Revenue Code (the "Code")· WHEREAS, the Authority has determined the Development would support a Credit allocation in the amount of $ 212,968 ; and WHEREAS, the Owner *EXI.(has not) represented to the Authority in owner' s application that it will elect to extend the low-income use and rental restrictions beyond the close of the initial fifteen (15) year compliance period, and PEEV(does not)agree to waive the right to early termination at the end of the initial fifteen (15) year compliance period; and WHEREAS, the Code has required as a condition precedent to the allocation of the Credit that. the Owner execute, deliver and record in the official land deed records of the city or county in which the Development is located this Agreement in order to create certain covenants running with the land for the purpose of enforcing the requirements of Section 42 of the Code and the MHDC Occupancy Restrictions found in Section 5 hereof by regulating and restricting the use and occupancy and transfer of the Development as set forth herein; and WHEREAS, the Owner, under this Agreement, intends, declares and covenants that the regulatory and restrictive covenants set forth herein governing the rents. use. occupancy F0fK 0301PA6E 3244 and transfer of the Development shall be and are covenants running with the land for the term stated herein and binding upon all subsequent owners of the Development for such term. and are not merely personal covenants of the Owner. NOW, THEREFORE, in consideration of the mutual premises and covenants hereinafter set forth, and of other valuable consideration. the Owner and the Commission agree as follows: SECTION 1 - DEFINITIONS. All words and phrases defined in Section 42 of the Code shall have the same meanings in this Land Use Restriction Agreement. SECTION 2 - RECORDING AND FILING; COVENANTS TO RUN WITH THE LAND. (a) Upon execution and delivery by the Owner, the Owner shall cause this Agreement and all amendments hereto to be recorded and filed in the official public land deed records of the city or county in which the Development is located, and shall pay all fees and charges incurred in connection therewith. (b) The Owner intends, declares and covenants, on behalf of itself and all future Owners and operators of the Development during the term of this Agreement, that this Agreement and the covenants and restrictions set forth in this Agreement regulating and restricting the rents. use, occupancy and transfer of the Development (1) shall be and are covenants running with the land and improvements. and encumbering the Development for the term of this Agreement, binding upon the Owner, their grantees. successors and assigns and the grantees and successors and assigns of them. or any of them, and, (ii) are not merely personal covenants of the Owner, and (ili) shall bind the Owner (and the benefits shall inure to the Authority and any past. present or prospective tenant of the Development) and its respective successors and assigns during the term of this Agreement. The Owner hereby agrees that any and all requirements of the laws of the State of Missouri to be satisfied in order for the ·provisions of this Agreement to constitute deed restrictions and covenants running with the land shall be deemed to be satisfied in full, and that any requirements or privileges of estate are intended to be satisfied, or in the alternative, that an equitable servitude has been created to insure that these restrictions run with the land. For the longer of the period this Credit is claimed or for the term of this Agreements each and every contract, deed or other instrument hereafter executed conveying the Development or any portion thereof shall expressly provide that such conveyance is subj ect to this Agreement, provided, however the covenants contained herein shall survive and be effective regardless of whether such contract, deed or other instrument hereafter executed conveying the Development or any portion thereof provides that such conveyance is subject to this Agreement. (c) The Owner covenants to obtain the consent of any recorded lienholder on the Development to this Agreement and such consent shall be a condition precedent to the issuance of Internal Revenue Service Form 8609 constituting final allocation of the Credit. SECTION 3 - REPRESENTATIONS, COVENANTS AND WARRANTIES OF TIE OWNER. The Owner hereby represents, warrants and covenants that: (a) The Owner (i) is a Limited Partnership duly organized under the laws of the State of Missouri. and is qualified to transact business under the laws of the State; 2 <. BnoK. 0301rA6[3245 (ii) has the power and authority to own its properties and assets and to carry on its business as now being conducted (and as now contemplated) by this Agreement and the Loan Documents, and (iii) has the full legal right, power and authority to execute and deliver this Agreement and to perform all the undertakings of the Owner hereunder. (b) The execution and performance of this Agreement and the Loan Documents by the Owner (i) w111 not violate or, as applicable, have not violated any provision of law. rule or regulation, or any order of any court or other agency or governmental body, state or Federal, and (li) will not violate or, as applicable, have not violated any provision of any indenture, agreement, mortgages mortgage note, or other instrument to which the Owner is a party or by which it or its property is bound, and (ili) will not result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature. (c) The Owner will, at the time of execution and delivery of this Agreement, have good and marketable title to the premises constituting the Development free and clear of any lien or encumbrance. except the encumbrances created pursuant to this Agreement. the Loan Documents or other permitted encumbrances. (d) There is no action, suit or proceeding at law or in equity or by or before any governmental instrumentality or other agency now pending, or, to the knowledge of the Owner, threatened against or affecting it, or any of its properties or rights, which, if adversely determined, would materially impair its right to carry on business substantially as now conducted (and as now contemplated by this Agreement or the Loan Documents) or would materially adversely affect its financial condition· Ce) The Development constitutes or will constitute a qualified low-income building or qualified low-income Development, as applicable, as defined in Section 42 of the Code and applicable regulations. (f) Each unit in the Development contains complete facilities for living, sleeping, . .eating, cooking and sanitation (unless the Development qualifies as a single-room oc©upancy Development or transitional housing for the homeless) which are to be used · on··other than a transient basis. (g) During the term of this Agreement, all units subject to the Credit shall be leased and rented or made available to members of the general public who qualify as Low-Income Tenants (or otherwise qualify for occupancy of the low-income units) linder the applicable election specified in Section 42(g) of the Code. (h) The owner agrees to comply fully with the requirements of the Fair Housing Act as it may from time to time be amended. (i) During the term of this Agreement, the Owner covenants, agrees and warrants·that each low-income unit is and will remain suitable for occupancy. (j) Subject to the requirements of Section 42 of the Code and this Agreement, the Owner may sell, transfer or exchange the entire Development at any time, but the Owner shall notify in writing and obtain the consent from any buyer or successor or other person acquiring the Development or any interest therein that such acquisition is subject to the requirements of this Agreement and to the requirements of Section 42 of the Code and applicable regulations. This provision shall not act to waive any other restriction on sale, transfer or exchange of the Development or any low-income portion of the Development. The Owner agrees that the Authority may vold any sale, transfer 3 .@ox 0301 PAGE 3246 or exchange of the Development if the buyer or successor or other person falls to assume in writing the requirements of this Agreement and the requirements of Section 42 of the Code. Ck) The Owner agrees to notify the Authority in writing of any sale, transfer or exchange of the entire Development or any low-income portion of the Development. (1) ThevOwner shall not demolish any part of the Development or substantially subtract from any real or personal property of the Development or permit the use of any residential rental unit for any purpose other than rental housing during the term of this Agreement unless tequired by law. (m) The Owner represents, whrrants and agrees that if the Development, or any part thereof, shall be damaged or destroyed or shall be condemned or acquired for public use, the Owner will use its best efforts to repair and restore the Development to substantially the same condition as existed prior to the event causing such damage or destruction, or to relieve the condemnation, and thereafter to operate the Development in accordance with the terms of the Loan Documents. (n) The Owner warr'ants that it has not and will not execute any other agreement with provisions contradictory to, or in opposition of, the provisions hereof, and that in any event, the requirements of this Agreement are paramount and controlling as to the rights and obligations herein set forth and supersede any other requirements in conflict herewith. (o) The Owner shall not sell, transfer to or exchange with any person any portion of the building to which this Agreement applies unless all of the building to which this Agreement applies is disposed of to such person. (p) During the term of this Agreement the Owner shall not evict or terminate the tenancy of an existing tenant of any low-income unit other than for good cause and shall not · increase the gross rent of any such unit above the maximum allowed under the Code or as may be approved by the Authority from time to time with respect to any such low-income unit. SECTION 4 - INCOME RESTRICTIONS; RENTAL RESTRICTIONS. The Owner represents, warrants and covenants throughout the term of this Agreement and in order to satisfy the requirements of Section 42 of the Code ("Section 42 Occupancy Restrictions") that: (a) (1) At least 20% or more of the residential units in the Development are both rent-restricted and occupied by individuals whose income is·50% or less of area median income; or (2) XX At least 40% or more of the residential units in the Development are both rent-restricted and occupied by individuals whose income is 60% or less of area median income. (Check applicable percentage election, above) (b) ,The income certification for each low-income tenant on the form shown as Exhibit C to the MHDC Low Income Housing Tax Credit Program Compliance Manual (the "Compliance 4 BMIK0301PAO[3247 Manual"), or on a form substantially similar to Exhibit c in the Compliance Manual as may be approved, from time to time, by MHDC. (c) The determination of whether a unit meets the low-income rental requirements shall be made by the Owner at least annually on the basis of the current rental information of The Owner shall prepare and keep on file with the Owner's records for later review by MHDC or the Internal Revenue Service ("IRS"), the income such low-income unit. certification for each low-income tenant on the form shown as -Exhibit_D to the Compliance Manual, or on a form substantially similar to Exhibit D as may be approved, from time to time, by MHDC. SECTION 5 - MHDC OCCUPANCY RESTRICTIONS. This Section is intended to make enforceable those extended use covenants, if any, and base rents which the Owner represented to the Authority during the application process. are the agreed upon provisions for the initial base rents and any Attached as Exhibit E extended use period for the Development. The Owner represents, warrants and covenants throughout the term of this Agreement that for up to one year following the date a qualified building in the Development is placed in service, the maximum initial base rent for the low-income units will be no higher than the base rent represented to Missouri Housing Development Commission in the Owner's application, all as shown in Exhibit E of this Agreement. ' The base rent is considered to be the total monthly amount paid by the Tenant to the Owner, or any amount paid to the owner on behalf of the Tenant in the form of a rental assistancg. The Owner further agrees to limit any increases to those approved by Missouri Housing Development Commission upon an annual written request. dle Owner (does not elect) to extend the low-income use and rental years beyond the close of the initial fifteen (15) year compliance period (which extended time period is hereinafter referred to as the "Extended restrictions for 0 Use Period•'), and W (does not waive) Owners right to early termination at the end of the initial fifteen (15) year compliance period. The MHDC Occupancy Restrictions as filed with the Secretary of State, State of Missouri, from time to time during the term of this Agreement and shall also commence with, and remain in place for, the term of this Agreement. SECTION 6 - TERM OF AGREEMENT. (a) Except as hereinafter provided, this Agreement. the Low-income use and rental restrictions and the MHDC Occupancy Restrictions specified herein shall commence with the first day of the initial fifteen (15) year compliance period in which any building which is part of the Development is placed in service and shall end on the.date which is 15 years after the close of the initial fifteen (15) year compliance period. (b) Notwithstanding subsection (a), above, this Agreement, wlth respect to any building which is part of this Development, shall terminate: (1) On the date the building is acquired by foreclosura or instrument in lieu of foreclosure unless the Secretary of the Department of Housing and Urban Development determines that such acquisition is part of an arrangement with the taxpayer, the purpose of which is to terminate such period; or 5 BOOK 0301 PAH 3248 (2) On the last day of the one year period beginning on the date: (i) after the 14th· year of the initial fifteen (15) year compliance period, if such initial compliance period is not extended in Section 5, above; or, (li) after the O year of the Extended Use Period, if the initial fifteen (15) year compliance period has been extended as set forth in Section 5, above; always provided, however, the owner has properly requested the Authority to assist Owner in procuring a "Qualified Contract" for the acquisition of the low-income portion of any building or buildings which are a part of the Development. and further provided the Authority is unable to present a Qualified Contract within said one year period described in Section 2 (a) or (b), above. Note: For the purpose of later determining the "adjusted investor equity" in the Development, Authority acknowledges receipt of Owner"s claim of investment of an initial cash equity in the sum of $ 1.218.179 at the time of this agreement. (c) Notwithstanding subsection (b) above, rthe Low-income use and rental restrictions and MHDC Occupancy Restrictions shall continue for a period of three years following .the termination of the Extended Use Period pursuant to the procedures specified in subsection (b) above. During such three year period, the owner shall not evict or terminate the tenancy of an existing tenant of any low.income unit other than for good cause and shall not increase the gross rent above the maximum allowed under the Code with respect to such low-income unit. (d) Owner will not refuse to rent a unit to a tenant because the tenant has a Section 8 certificate or voucher the tenant seeks to use to rent a unit in the property· SECTION 7 - ENFORCEMENT OF MHDC OCCUPANCY RESTRICTIONS. (a) .Tile Owner shall permit. during normal business hours and upon reasonable notice, any duly authorized representative of the Authority, or the IRS, to inspect any books and records of the Owner regarding the Development with respect to the incomes of Low-Income Tenants which pertain to compliance with the MHDC Occupancy Restrictions specified in this Agreement. (b) The Owner shall submit a copy of the Annual Development Certification of Continuing Compliance shown as Exhibit B in the Compliance Manual together with the Occupancy Report shown as Exhibit 82 in the Compliance Manual, at least annually, or as requested by the Authority in order to monitor compliance with the provisions specified in this Agreement and IRS Section 42 as amended. (c) The Owner shall submit any other information, documents or certifications requested by the Authority which the Authority shall deem reasonably necessary to substantiate the Owner's continuing compliance with the provisions of the MHDC Occupancy Restrictions specified in this Agreement. SECTION 8 - ENFORCEMENT OF SECTION 42 OCCUPANCY RESTRICTIONS. (a) Owner acknowledges receipt of and familiarity with Authority's new requirements and .procedures for monitoring compliance with low-income housing credits under Section 42 (m)(1)(B)(lii) of the Code and under new Section 1.42-5 of the IRS monitoring compliance Regulations promulgated thereunder, and Owner agrees to comply with the 6 BD0KO301PAFE3249 requirements of the Authority. as now or hereafter issued from time to time, for monitoring compliance of the Development with the requirements of Section 42 of the Code. (b) The Owner covenants that it will not knowingly take or permit any action that would result in a violation of the requirements of Section 42 of the Code and any applicable Moreover. Owner covenants to take any regulations thereunder or herein contained. lawful action (including amendment of this Agreement as may be necessary. in the opinion of the Authority) to comply fully with the Code and with all applicable rules, rulings, policies. procedures, regulations or other official statements promulgated or proposed by the Unites States Department of the Treasury, or the Internal Revenue Service, or the Department of Housing and Urban Development or the Authority from time to time pertaining to Owner's obligations under Section 42 of the Code and affecting the Development. (c) The Owner acknowledges that the primary purpose for requiring compliance by the Owner with the restrictions provided in this Agreement is to assure compliance of the Development and the Owner with Section 42 of the Code and the applicable regulations· AND BY REASON THEREOF, THE OWNER IN CONSIDERATION FOR RECEIVING LOW-INCOME HOUSING CREDITS FOR THIS Development HEREBY AGREES AND CONSENTS THAT THE AUTHORITY AND TO THE EXTENT PERMITTED IN SECTION 42(h)(6)(B)(ii) (1990) ANY INDIVIDUAL WHO MEETS THE INCOME UNDER SECTION 42 (WHETHER PROSPECTIVE, PRESENT OR FORMER OCCUPANT) SHALL BE ENTITLED, FOR ANY BREACH OF THE PROVISIONS HEREOF, AND IN ADDITION LIMITATION APPLICABLE TO·ALL OTHER REMEDIES PROVIDED BY LAW OR IN EQUITY, TO ENFORCE BY SPECIFIC PERFORMANCE ALL oF THE OWNER'S OBLIGATIONS UNDER THIS AGREEMENT IN A STATE COURT OF COMPETENT JURISDICTION· The Owner hereby further specifically acknowledges that the beneficiaries of the Owner's obligations hereunder cannot be adequately compensated by monetary damages in the event of any default hereunder. (d) .The owner hereby agrees that the representatlons and covenants set forth herein may be relied upon by the Authority and all persons interested in Development compliance under Section-42 of the Code and the applicable regulations. (e) The Owner agrees that if at any point following execution of this. Agreement, Section 42· of the Code or regulations implementing said Section requires the Authority to monitor the Section 42 Occupancy Restrictions, or', alternatively, the Authority chooses to monitor Section 42 Occupancy Restrictions or MHOG Occupancy Restrictions, the Owner will take ·any and all actions reasonably necessary and required by the Authority to substantiate the Owner's compliance with the Section 42 Occupancy Restrictions or MHDC Occupancy Restrictions and will pay a reasonable fee to the Authority for such monitoring activities performed by the Authority. SECTION 9 - MISCELLANEOUS. This Agreement and the covenants and conditions contained herein shall run with the land and shall bind, and the benefits shall inure to, respectively. (a) Successors Bound. the Owner and its successors and assigns and all subsequent owners of the Development or any interest therein, the Authority and its successors and assigns, for the period speci fled in Section 6 (a) hereo f unless terminated sooner pursuant to Section 6(b) hereof. 7 BnoK03Uli'A6£325U (1) Interpretation. Any terms not defined in this Agreement shall have the same meaning as terms defined in Section 42 of the Code and the Treasury Regulations promulgated thereunder. (c) Amendment. The Owner and MHDC agree that they will take all actions necessary to effect amendment of this Agreement as may be necessary to comply with the Code and any and all applicable rules, regulations, policies, procedures, rulings or other official statements pertaining to the Credit. (d) Severability. The invalidity of any clause, part or provision of this Agreement shall not affect the validity of the remaining portions thereof. (e) Notices. All notices to be given pursuant to this Agreement shall be in writing and shall be deemed given when mailed to the parties hereto at the addresses set forth below, or to such other place as a party may from time to time designate in writing. To the Authority: · Missouri Housing Development Commission 4625 Lindell, Suite 500 St. Louis, Missouri 63108 ·ATTENTION: Low-Income Housing Credit Program To the Owner: Branson Christian County, L.P. P.O. Box 7688 Columbia, MO 65205 The Commission, and the Owner. may, by notice gien hereunder, designate any further or di fferent addresses to which subsequent notices, certificates or other communications shall be sent. (f) Governing Law. This Agreement shall be governed by the laws of the State of Missouri and, where applicable, the laws of the United States of America. (g) Development Decertification. Notwithstanding anything in this entire agreement to the contrary, failure of the Owner to comply fully with the Code, the covenants and agreements contained herein or with all applicable rules, rulings, policies, procedures, regulations or other official statements promulgated or proposed by the States Department of the Treasury or the Internal Revenue Service or United Authority-- FROM TIME TO TIME PERTAINING TO THE OBLIGATIONS OF THE OWNER AS SET FORTH THEREIN OR HEREIN, AUTHORITY MAY, AND IN ADDITION TO ALL OF THE REMEDIES PROVIDED BY LAW OR IN EQUITY, REQUEST THE IRS TO DECERTIFY THE Development FOR LOW-INCOME HOUSING TAX CREDITS AND TO IMMEDIATELY COMMENCE RECAPTURE OF THE TAX CREDIT DOLLARS HERETOFORE ALLOCATED TO THE Development. Ch) Survival of Obligations. The obligations of the Owner as set forth herein and in the Application shall survive the allocation of Tax Credit Dollars and shall not be deemed to terminate or merge with the awarding of the allocation, or the execution. delivery, or recording of this Agreement. 8 /3220 BOOK'0301 PAFE.3253 .. (i) Subordinat*on of Agreement. This Agreement and the restrictions hereunder are subordinate to the loan and loan documents, if any, on the Development except insofar as Section 42 requires otherwise (relating to the three.year vacancy control during the extended use period). IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their respective duly authorized representatives, as of the day and year first written above. "OWNER" :'AUTHORITY" ISTIAN COUNTY, L.P. MISSPUR HOUSING DEVELOPMENT COMMISSION A l. / 9' 54?-,t k. .),14 , 7-lA Jane (0derson /- -- *Printed Na#le ACKNOWLEDGMENT STATE OF MISSOURI . )SS. COUNTY OF ) ON this ..2/2.- day of b o.arnbu. , 19 ff , before me personally appeared Jt P te.&9 1.IVEN under my hand and seal of office this /f- , day of,4,0t.a . A A 'A - U U.S. Law > Case Law > Missouri Case Law > Missouri Court of Appeals Decisions > 2002 ) Maryville Properties, LP v. Nelson Maryville Properties, LP v. Nelson Annotate this Case 83 S.W.3d 608 (2002) MARYVILLE PROPERTIES, L.P.. Appellant, v. Pat NELSON, Assessor, Nodaway County, MO, Respondent. No. WD 60335. Missouri Court of Appeals, Western District. June 25,2002. Rehearing Denied July 25,2002, · Application for Transfer Denied September 24, 2002. *610 Cathy Joy Pitman Dean, Kansas City, for appellant. Scott W. Ross, Maryville, for respondent. i RONALD R. HOLLIGER, Judge. Maryville Properties, L.P. (Maryville Properties) appeals from a decision ofthe State Tax ' Commission (Commission) including Low Income Housing Tax Credits (LIHTCs) received by Maryville Properties's limited partners in the valuation ofa rent restricted apartment complex for real property tax purposes. Maryville Properties contends that 1) the tax credits and accelerated depreciation passed through to limited partners are intangible proberty not properly considered by statute in valuations for real estate tax assessments; 2) the Commission's decision violated the Missouri Constitution by valuing the property based upon the interest of the individual limited partners ofMaryville Properties rather than the property's fair market value; and 3) the http://law.justia.com/cases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/2015 Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court of Appeals Decisions :: Miss... Page 2 of 13 i Commission rbi-ar;ly Ca"in.ted frm its own prior decision that such tax credits were not properly in lu let ir v: '.uii g ri 11 '1.- ierty. Jurisdiction . We must first address the issue of our jurisdiction because Article V, Section 3 of the Missouri Constitution grants exclusive appellate jurisdiction to the Missouri Supreme Court of all cases involving the constructions of revenue laws of the state. Alumax Foils, Inc. v. City of St. Louis, 939 S.WN 907,910 (Mo. banc 1997). The Supreme Court does not have exclusive jurisdiction unless each ofthe three separate elements is met: 1) construction; 2) of the revenue laws; 3) of this state. "Construction" differs from "application," and if the Supreme Court has already decided an : issue, the Court ofAppeals applies the Supreme Court precedent. Branson Scenic Ry. v. Dir. of i. Revenue, 3 S.W.3d 788,789 (Mo.App.1999). This case is one of first impression, and this court, 1 therefore, has no Supreme Court precedent to apply. Construction is required. The law in question, 1 however, is not a "revenue law of this state." We are required to interpret § 137.010, which i defines, inter alia, two constitutionally mandated classifications of taxable property: real property and tangible personal property. Nevertheless, § 137.010 does not constitute a revenue law: A "revenue law" directly creates or alters an income stream to the government that imposes a tax or fee on property owned or used or an activity undertaken in that government's area of authority. Thus, a revenue law either establishes or abolishes a tax or fee. changes the rate of an existing tax, broadens or narrows the base or activity against which a tax or fee is assessed, or excludes from or i creates exceptions to an existing tax or fee.... A revenue law "of the state" is a law adopted by the i general assembly to impose, amend or abplish a tax or fee on all similarly-situated persons, 1 properties, entities or activities in this state, the proceeds of which are deposited in the state ' treasury. Alumax Foils. 939 S.W.2d at 910. (Emphasis added). This court has previously held that cases involving property taxes imposed by a county and paid to the treasury of the county are not "revenue laws of this state." *611 Two Pershing Square, L.P. v. Boley, 981 S.W.2d 635,638 (Mo.App.1998). This case does involve construction of a law adopted by the general assembly. The proceeds of the acl valorem tax on real property are deposited in the treasury ofNodaway County, rather than in the state treasury. None of the other issues involved are reserved for the exclusive jurisdiction of the Supreme Court. Jurisdiction, therefore, properly lies with this court. Id. Background of Rent Restricted Federal Hpusing and Low Income Housing Tax Credits Since the 1930's, the federal government has utilized a number of approaches to provide higher quality and more affordable housing to loyer income individuals and families. These efforts have http://lawjustia.com/cases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/201-5 Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court of Appeals Decisions :: Miss... Page 3 of 13 ranged from rwegr°nt--"shict-d and operated projects to various incentives for private investors tr pi ,v; le qu h 1 )us nf . 7 ·e FmHA Section 515 Program is intended to provide more affordable housing in rural areas to low to moderate income families and senior citizens by providing favorable long term financing to private developers. In return for this financing, the , project owner restricts occupancy to qualified families and charges rent at rates set by FmHa. The LIHTC program is intended to motivate private investment by providing income tax credits which directly offset the federal income tax obligation of the individual investor. The individual investors in the Maryville property received such income tax credits through the Missouri Housing Development Commission (MHDC), a state agency established pursuant to RSMo. § 215.020. This program also supplied state income tax credjts to the investors. According to the testimony, the individual investor is motivated solely by the tax benefits. The tax * credits expire after ten years. The tax credits are "sold" to the individual investor on a discounted basis. Maryville Properties developed the rent-restricted apartment complex in 1992. For the tax years 1997 and 1998, the assessor valued this property at $758,300. Maryville Properties contested that the actual value was $350,000. The property is subject to FmHA Section 515, which means that the owner must restrict occupancy to Iow-income tenants and must comply with various regulations in return for a favorable interest rate. The limited partners of Maryville Properties also received federal income tax credits under the LIHTC Program as a result of their investment in the property. After development, Maryville Properties syndicated the project. The syndication process consisted i of Maryville Properties creating a limited partnership in which a company under its control was , the general partner. It then sold the ninety-nine percent limited partnership interest to a consortium of investors for between $138,000 and $169.000. The project cost was $748,647, but after syndication the value was $898,437. At the hearing, Maryville Properties' appraiser, Mr. Blaylock, testified that he could not explain the $149,790 increase in value except by way of the money paid during syndicatio'n. This appraiser testified that the income tax credits were not part of the real property. Another appraiser, Robert Cowan, testified for the assessor. His estimation ofthe value of the property included "the value a taxpayer in a 39% tax bracket would pay for the property," and assumed that person would sell the property as soon as the tax credit expired. The assessor also included in the value of the property accelerated depreciation that the federal program allows , to be passed through to each limited partner. *612 The hearing officer's decision included the value a person in a thirty-nine percent tax bracket would place on the tax credits and deductions. Maryville Properties appealed the hearing officer's http://lawjustia.com/cases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/2015 Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court of Appeals Decisions :: Miss... Page 4 of 13 decision, ard *he Co-mi-An den;'.d review, adopting the hearing officer's decision as its own. Maryville 1 ro ·er .ep a, pe; led :o ... Nodaway County Circuit Court, which affirmed the Commission's decision. This appeal follows. Other facts will be stated as the issues are considered. Analysis We generally review the Commission's decision to determine whether it was supported by competent and substantial evidence on the record as a whole, whether it was arbitrary, capricious f or unreasonable, or whether the Commission abused its discretion. Evangelical Ret. Homes of 1 i Greater St. Louis, Inc. v. State Tax Comm'n of Mo., 669 S.WN 548,552 (Mo. banc 1984). A + reviewing court is not to substitute its opinion as to the value of a property for that of the Commission. John Calvin Manor, Inc. v. Aylward, 517 S.W.2d 59,63 (Mo.1974). However, ifthe question involves the application of law to the fucts. the reviewing court must weigh the evidence for itself and determine the facts.accordingly. § 536.140(3). Maryville Properties argues that the Commission erroneously applied the law. The Commission stated under Finding ofFact 13: "Tax credits run with the land. They are part of the real property." However, whether LIHTCs constitute real property or intangible personal property, and whether a valuation of property that includes an assumption that the owner would be in a thirty-nine percent tax bracket values the property according to the owner's interest in it are questions of law. "It is well-settled that administrative agency decisions based on the agency's interpretation of law are matters for the independent judgment of the reviewing court." Morton v. Brenner, 842 S.W.2d 538,540 (Mo. banc 1992). (Internal citations omitted). Maryville Properties raises three points on appeal. In its first point it argues that the Commission erroneously applied the law because the income tax benefits to the individual limited partners are not real property for the purposes of valuation for real estate tax purposes. In its second point, Maryville Properties claims that the inclusion of the tax benefits to the individual limited partners amounted to a violation of Article X, Section *a) of the Missouri Constitution prohibiting the classification of real property based on the owner's interest in the property. In its third point, Maryville Properties argues that the Commission failed to follow its own precedent in the valuation of a similar low-income housing project. Constitutional and Statutory Scheme For ad valorem tax purposes there are three classes ofproperty: (1) real property, (2) tangible personal property and (3) intangible personal property. Mo. Const. Art. X, § 4(a). Each class of property is defined by statute: Class One (Real Property) http://lawjustia.comkases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/2015 Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court ofAppeals Decisions :: Miss... Page 5 of 13 "Real prorrt:'" ircl,+s 1-1 'tsel whether laid out in town lots or otherwise, and all growing crops, buil, in, c- tr„c, ire: in or .. nents and fixtures of whatever kind thereon ..." Class Two (Tangible Personal) ' "Tangible personal property" includes every tangible thing being the subject of ownership or part ownership whether animate or inahimate,,other than money, and not forming part or parcel ofreal properly as herein defined, but does not include household goods, furniture, wearing apparel and articles of personal *613 use and adornment, as defined by the state tax commission, owned and used by a person in his home or dwelling place. 1 Class Three (Intangible Personal) : "Intangible personal property," for the purpose of taxation, shall include all property other than ' real property and tangible personal property, as defined by this section;" § 137.010, RSMo.2000. The definitions and proper classification are important because the Missouri Constitution prohibits the inclusion of intangible personal property in real property values. Mo. Const. Art. 10, § 4(b). Are LIHTCs and Accelerated Depreciation Benefits received by the Owner Intangible Personal Property? Maryville Properties argues that Missouri law prohibits thetaxation of intangible personal property as real property. § 137.010, RSMo. The parties agree that the classification of the tax benefits including LIHTCs provided to investors in subsidized low income housing is at issue. The parties do not agree on the proper test for intangible personal property. Maryville Properties states the test for intangibility as "property which has no intrinsic and marketable value, but is merely representative or evidence of value." Norris v. Norris, 731 S.W.2d 844, 845 (Mo. banc 1987). Norris involved a probate court's determination that a testator's intent was clear when he used the term "tangible personal property." The court held that intangible personal property "is that which has no intrinsic-and marketable value, but is merely the representative or evidence of value, such as certificates of stock, bond, promissory notes, and franchises." Id. at 845. The Norris court was comparing intangible personal property to tangible personal property. Norris does not discuss the classifications of property for tax purposes. The assessor argues that the test for whether an item is tangible or intangible property is "whether the disputed value is appended to the property and, thus transferable with the property or is it independent of the property so that it either stays with the seller or dissipates upon sale." Main Plaza First Plat v. Boley. 1997 WL 49304, at *4 (Mo. State Tax Comm'n Feb. 6,1997). Maryville http:Maw.justia.com/cases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/2015 Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court of Appeals Decisions :: Miss... Page 6 of 13 Properties prries :h,+ 4424" Dinza First Plat concerned the abatement of a real property tax rather than an inr m · t: 5 rre :it 1 id 3, ' ..V. :fore, inapplicable. The assessor argues that because LIHTCs are transferable only with the land, they constitute "transmissible value." Transmissible value is a concept discussed in several Tax Commission decisions. Simon Property Group, L.P. v. Boley, 1996 WL 600855 (Mo. State Tax Comm'n Oct. 17; 1996); Main Plaza First Plat v. Boley, 1997 WL 49304 (Mo. State Tax Comm'n Feb. 6, 1997); John Hancock Mutual Life v. Stanton, 1996 WL 663128 (Mo. State Tax Comm'n Nov. 14, 1996). Commercial property is to be assessed at its "true value in money." § 137.115. In Missouri Baptist Children's Home v. State Tax Commission, 867 S.W.2d 510 (Mo. 1993), the court was presented with the question of whether a below market lease could be considered in determining the value in money ofthe property. The Tax Commission took the position that a long term below market lease should not be considered in determining the value of the property. The court said, "True value in money is the price which the property would bring from a willing buyer when offered for sale by a willing seller." Id. at 512. After considering positions taken by several states, the court concluded that *614 "[t]he more recent and better-reasoned approach is to authorize the assessing ! authority to utilize actual as well as potential income in determining true value." Id. The Commission, therefore, erred in refusing to consider the below market long term lease as reducing the value of the property because it did not comport with economic reality under the circumstances to use only potential rather than actual income in determining value. The court also observed that "[pllacing a value on real property is not an exact science. When relying on the income capitalization method to determine value, the factfinder necessarily has some discretion to decide what weight will be given to actual rent, as opposed to potential market rent, in reaching its , decision." Id. at 513. Despite the permissible discretion, the assessment should not "have the effect... of punishing the entrepreneur whose efforts created the environment for the market" and should not "ignore economic realities." Id. In Main Plaza First Plat, the Commission held that the tax abatements allowed under the statute could be considered in assessing the value in part because they directly contributed to increase net operating income of the property and. thus, its fair market value in an income capitalization method of appraisal. 1997 WL 49304, at *5. The Commission argues that the LIHTCs at issue here run with the land like the tax abatements considered in Main Plaza First Plat. Maryville Properties responds that the.LIHTCs do not affect the income ofthe property itself. Maryville Properties's argument, however, ignores the economic reality that the tax credits are in effect a substitute for the income the investors will not receive from their investment as a result of normal operations.[1.] Because of the low rate ofreturn from operations, other incentives to potential investors are deemed necessary. The tax credits provide one of those incentives. http://lawjustia.com/cases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/2015 Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court ofAppeals Decisions :: Miss... Page 7 of 13 In a related ar'·.un'ent ivl'.1"1 Ule Pmperties asserts that the fallacy of including tax credits in the determinqt )11 lf allie:s f rtli :r V.. onstrated by the need of the Commission to assume a thirty- nine percent tax bracket for the investor to determine the value. Maryville Properties is correct both that a potential investor may not be in that tax bracket and that, in addition, the upper bracket may change from time to time and correspondingly affect the economic value of the tax credit to the investor. However, we need not ignore economic reality and assume that a lower bracket investor would make this kind of investment.[2]Likewise, tax brackets may change but the L valuation here is for the true value oftlie property on tax day 1997 and not at some future date i when tax changes may affect the resale value of the credits and consequently that ofthe property. 1 Somewhat more troublesome is the fact that the tax credits will have been fully taken in ten years (the record reflects sometime in 2002). The assessor did consider only the remaining credits available after the tax year in question. Presumably the property will have less value after the credits are exhausted than it did when credits were available. But the same phenomenon would occur where tax abatements ended as in Main Plaza First Plat (although in the case of tax abatements, *615 net operating income would decrease when full tax payments were being made). We also observe that a potential buyer would arguably not pay a Maryville Properties limited partner dollar-for-dollar for the tax credits. Like the original investor, most of a new investor's return on his investment would be in the form and value of the remaining tax credits rather than ' potential income from the project.[3] We cannot determine if the assessor's appraiser considered 1 this factor, but, in any event, no argument is made in a point on appeal that the Commission erred f in determining the fair market value of the tax credits. All of the arguments made above are set forth by Maryville Properties in support of its contention that 1) it would be bad policy to include the tax credits, and 2) that the tax credits are simply not the kind of benefits particular to the land (as opposed to the owner) that can be considered part of the real estate under law. Other states have also considered the inclusion or exclusion of LIHTCs in determining real property values. Many of the arguments for and against consideration of the credits and the various views of other states are set forth in "Fairness in Valuation ofLow-Income Housing Tax Credit Properties: An Argument for Tax Exemption," Jonathan Pena, 1 I AFFORDABLE HOUSING & COMMUNITY DEVELOPMENT LAW 53 (Fall 2001).[4] A contrary view is taken in "Another Ad Valorem View of Low-Income Housing Tax Credit Properties," Michael W. Collins, 67 APPRAISAL J. 306 (1999). Review of other states' decisions for precedential value in this area is difficult because of varying constitutional and legislative differences. The Tax Commission relied upon and the assessor cites to a decision by the Washington Board of Tax Appeals, Cascade Court Limited Partnership v. Noble, BTA No. 49295 (Wash.1998). There, Washington State's equivalent of our Commission.held that LIHTCs were properly considered in http://lawjustia.com/cases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/2015 1. Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court of Appeals Decisions :: Miss... Page 8 of 13 valuing real e-tate. F-wr .,A„ the Viashington Court ofAppeals reversed the Board's decision, holding thy "Ll;i . cre, .ts re itr .o, ble personal property and thus are not subject to real property taxation." Cascade Court Ltd. P'ship v. Noble, 105 Wash.App. 563,20 P.3d 997,1002 (2001). The assessor and Commission also relied upon Deerfield 95 Investor Associates v. Town of East 1 Lyme, 1999 WL 391099 (Conn.Super.Ct. May 26, 1999), which also held that LIHTCs could be : considered in valuing the project. Maryville Properties points out, correctly, that the Connecticut court relied in part upon the subsequently reversed decision in Cascade, discussed above. More , importantly, however, for our purposes is the finding in Deerfield that "LIHTCs, although intangibles, do have an effect on the valuation ofreal estate for assessment purposes .... " Id. at *6. (emphasis added). LIHTCs are also described as intangible assets in Advisory Opinion 14 of the 2001 Uniform Standards Professional Appraisal Practice. Although the assessor argues that intangible factors affecting the value of real estate should be i included in the valuation, he apparently agrees that intangible personal property is not includible in the value of real estate. The assessor points to no foreign case holding that these types oftax credits are not intangibles. Rather, the assessor suggests that LIHTCs do not pass the test for intangibility set forth by the Commission in Simon Property Group. *616 He suggests that the test is (1) the intangible asset must be identifiable, i.e. legally recognized; (2) it must be capable of private ownership; (3) it must be marketable, i.e. capable of being financed and/or sold separate and apart from the tangible property; and (4) practically, it must possess value, i.e. have the potential to earn income, or its existence is ofno consequence. The assessor's argument about this test focuses entirely on the non-severability of the tax credit from the land under the reasoning for tax abatements used in One Main Plaza First Plat. The assessor's brief does not discuss the other elements of the test. First, we do not believe that transferability alone is a sufficient test, although it is certainly a significant factor. We believe that another important factor is the potential to add or detract from the value of the property, i.e. to affect the income ofthe property. Below market leases and tax abatements have direct effects on the income of a property. LIHTCs do not. And although they would appear to add value to a property, the literature dealing with these projects suggests that most prudent investors will stay in the project for fifteen years.[5] Secondly, because the original limited partner investor achieves much of his return through the tax credits, his rate ofreturn'is sharply reduced ifhe sells the ptoperty before receiving the full value of tax credits. This is particularly significant when considering that, while some tax credits remain, a potential purchaser of the investor's interest willlikewise be looking for a discount from face value of the unused tax credits. http://lawjustia.com/cases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/2015 Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court of Appeals Decisions :: Miss... Page 9 of 13 Finally, aft-r 'ile fift,·mt}' .,C, ar the investment may not be viable at all for the limited partner investor. T is 'ar ip n ng tiz, 1 1 , .,e owner's right to return the property to the government at his will and without recourse after ten years. All of these factors result in a situation where there is little incentive to sell until the tax credits are exhausted and not subject to recapture, and there is little incentive to buy the interest of the partner unless it can be done at a substantial discount. The value of the tax credits is to the owner ofthe property and not to the property itself. 1 It is difficult to construct a satisfactory definition of intangible property for real estate valuation purposes, but certain important distinctions can be made. The assessor argues that zoning and location are intangible and yet they are obviously proper factors for consideration. Zoning and location, however, are characteristics o f the property itself, not characteristics of the owners of the property. Likewise, just as with a below market lease or a tax abatement, zoning and location have d direct effect on the income or income producing potential of the property regardless of the identity or characteristics of the individual owner. LIHTCs are not characteristics ofthe property. Rather they are assets having direct monetary value. Their restricted transferability does not destroy their essential status as intangible property having value primarily to their owner. i Objective standards should be used for determining fair market value in the market place. The i particular circumstances of the owner are not a proper consideration. Even in Deerfield, which i approved the use of LIHTCs in valuation, tile court noted the difference in the concepts *617 of "investment value" and "market value. 1, 1, Investment value is the value of a property to a particular investor. whereas market value is not related to the needs of individual investors but 'is objective. impersonal, and detached; investment value is based on subjective, personal parameters.' " 1999 WL 391099, at *2 (quoting in part The Appraisal Institute, The Appraisal of Real Estate 413 (10th ed. 1992)). True value in money for ad valorem tax purposes in Missouri refers to the hypothetical price that could be agreed upon between a willing seller and buyer. Baptist Children's Home, 867 S.W.2d at £ 512. LIHTCs make no direct contribution to the market value of these housing projects. They are i intangible property. There is no statutory authority for the consideration ofthese tax credits in real estate tax appraisal in Missouri. The Commission en·oneously applied the law. The same reasoning compels that we reverse the Commission's inclusion of the capitalized value of the accelerated depreciation to the partners in the valuation. Again, this tax benefit is personal to the owner and not directly tied to the real estate. For the reasons stated, the decision of the Commission is reversed and remanded to the circuit court for entry of an order directing the Commission to redetermine its assessment of the Man'ville property in accordance with this opinion. http://law.justia.com/cases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/2015 9. Maryville Properties, LP.v. Nelson :: 2002 2: Missouri Court ofAppeals Decisions :: M... Page 10 of 13 r HAROLD r. T,OWFATSTUTN. Pre-;ding Judge, and THOMAS H. NEWTON, Judge, concur. NOTES [l] Investors are only allowed to receive eight percent of their initial investment per year. Often the return does not reach eight percent. [2] Even if such an investor were interested, he would prudently pay less for the tax credits because of the lesser benefit to him and would have to compete for the investment opportunity with a higher tax bracket investor to whom the credits were more valuable. [3] Although the tax credits are exhausted after ten years the rent limitations and other restrictions on the property last for a term of fifty years. [4] Cases holding for particular states should be verified because ofthe effect of subsequent judicial decisions in some states and legislation addressing the issue in others. [5] The tax credits are taken over a ten year period. However, if a subsequent purchase in year fourteen changed the use of the property, the tax credits would then be subject to recapture plus penalties even though the beneficiary ofthe credit no longer had any interest in the property. t JUSTIA t ANNOTATIONS 1*1/*44& 100-* 7..=s appraiser asserts that his 15% vacancy rate is an economic reality, but that is simply false. The actual vacancy rate was not 15%. Complainant=s appraiser does not attempt to characterize his 9% capitalization rate as economic reality but counsel asserts that it is the rate necessary to attract capital investment for this type of property. Again, this is not economic reality. For these reasons, Complainanes discounted cash flow is not persuasive. Comptainantps Income Approach Unreliable 10. Complainantfs appraiser also prepared a more traditional income approach to value. Because there are no market sales of similar properties, Complainant=s appraiser used a mortgage/equity formula for determining the capitalization rate. In this methodology, Complainant=s appraiser did not use the·actual interest paid on the subsidized loan but, instead, used a floating rate which he http:#stc.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 1. Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page 5 of 13 testified was necessary to account for the buildup of equity. And, suggesting that the subject property was a high-risk Investment, Complainant=s appraiser asserted that an equity yield rate of 20% would be required to attract investors. There Is no reliable data to support Complainantps assertion that the suwect property would be considered a high-risk investment or that the loan to value ratio would change. These condusions are purely speculative. Finally, there is no evidence that Complainant=s appraiser made any adjustment for the favorable interest rate running with the property or the non-recourse nature of the promissory note. Complainant=s Sales Comparison Unreliable 11. For whatever reason, subsidized properties do not sell in the open market. Consequently, there is no basis for a sales comparison approach to value. Complainant=s appraiser did attempt a sales comparison approach but utilized unsubsidized sales and attempted to adjust for external and functional obsolescence due solely to the special financing arrangements for the subject property. In Maryville Properties we spedfically found that Afinancing tools do not create external obsolescence@ (Finding of Fact #5). Similarly, financing tools do not create Afunctional obsolescence.@ Rent restridions and management fees do not limit the ability of the apartment complex to function as an apartment complex. There is no evidence which suggests that the subject property suffers from any functional or external obsolescence. Complainant=s sales comparison approach is wholly conjecture and is not a reliable Indicator of value for the subject property. Complainant=s Cost Approach Unreliable 12. Complainant=s appralser also attempted to prepare a cost approach to value. As in the sales approach, Complainant=s appraiser has attempted to use financing tools to justify a Afunctional obsolescence@ adjustment of $160,000 and an Aexternal obsolescence@ adjustment of $160,927. To the extent that Complainant=s appraiser has attempted to use said finandng tools as a justification for a reduction in value under his cost approach, his cost approach fails to state the true value of the subject property. Maryville Properties Methodology Applied 13. Prior to evidentiary hearing, Hearing Officer Luann Johnson supplied the parties with worksheets for calculating value using the Maryvilie Properties methodology. Said worksheets are identified as Complainant=s Exhibit M and Respondent=s Exhibit 26. 14. For tax years 1997 and 1998, the assessor valued the property at $858,684 (assessed value $163,150). Upon appeal, the Board of Equalization reduced value of $700,105 (assessed value $133,020). In his appraisal report, Complainant=s appraiser, Teddy Blaylock, asserts a value of $360,000 (assessed value $68,400). Under the Maryville Properties approach to value, the value for the property on January 1, 1997 was $813,167 (Respondent=s Ex. 26). Although not agreeing with the Maryville Properties methodology, Mr. Blaylock produced a modified version of the Maryville Properties methodology which resulted In a value for the subject property for tax year 1997 of $622,755 (Complainant Ex. AA). http:Ustc.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page 6 of 13 f 15. For tax years 1999 and 2000, the assessor valued the property at $700,100 (assessed value $133,020). Upon appeal, the Board of Equalization approved the assessop=s value. In his appraisal report, Blaylock assetts a value of $365,000 (assessed value $69,350). Under the Maryville Properties approach to value, the value of the property on January 1, 1999 was $577,218 (Respondent Ex. 26). Under the Blaylock modified version of the Maryville Properties methodology, the value of the subject property on January 1, 1999 was $491,700 (Complainant Ex. AA). 16. For tax years 2001 and 2002, the assessor valued the property at $754,900 (assessed value $143,430). Upon appeal, the Board of Equalization affirmed the assessor=s value. For tax year 2001, Mr. Blaylock asserts a value of $350,000 (assessed value $66,500). Under the Maryville Properties approach to value, the value or the property on January 1, 2001 was $602,772 (Respondent Ex. 26). Under the Blaylock modified version of the Mar'yville Properties methodology, the value of the subject property on January 1, 2001 was $375,000 (Complainant Ex. AA). 17. The values calculated by Complainant=s appraiser In his appraisal report and his modified Maryville Properties approach to value are not reliable indicators of market value for the subject property o¢ the various tax days inasmuch as Mr. Blaylock has failed to corredly apply the Maryville Properties methodology. 18. The Respondent=s calculations of value under the Maryville Properties methodology are correct and correcUy state the value for the subject property on the various tax days. The market value for the subject property on January 1, 1997 and January 1, 1998 was $813,170 (assessed value $154,500). The market value for the subject property on January 1, 1999 and Januar'y 1, 2000 was $577,220 (assessed value $109,670). The market value for the subject property on January 1, 2001 and January 1, 2002 was $602,770 (assessed value $114,530). 19. Correct calculations are set out in Respondent=s Exhibit 26 as follows: 1997 1999 2001 Income Rental Income $ 40,786 $ 45,558 $ 49,203 Rental Subsidy $ 43,612 $ 45,162 $ 44,421 Laundry/Vending $ 166 $ 347 $ 297 $ 84,564 $ 91,067 $ 93,921 Potential Gross Income Less: Actual Vacancy & Cotlection , $ 5,270 $ 6,198 $ 11,689 http:Uste.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page 7 of 13 $ 79,294 $ 84,869 $ 82,232 Effective Gross Income Expenses Maintenance & Repair $ 6,600 $ 8,529 $ 7,075 Utilities $ 14,281 $ 15,111 $ 13,796 Administrative $ 16,233 $ 21,580 $ 27,165 Insurance $ 2,399 $ 1,969 $ 2,646 Reserve for Replacement $ 8,113 $ 15,135 $ 7,720 $ 47,626 $ 62,324 $ 58,402 Total Expenses $ 31,668 $ 22,545 $ 23,830 Net Operating Income Capitalization Loan to Value x Actual Interest Rate .025402 .025402 .025402 Equity x Equity Dividend Rate .007500 .007500 .007500 Effective Tax Rate .006042 .006156 .006632 .038944 .039058 .039534 Overall Capitalization Rate Value $ 813,167 $ 577,218 $ 602,772 (say $ 813,170) (say $577,220) (say $602,770) Net Operating Income divided by Overatl Capitalization Rate CONCLUSIONS OF LAW + http:Ustc.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page 8 of 13 Jurisdiction The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capridous. Article X, Section 14, Mo. Const. of 1945, Sections 138.430, 138.431 RSMo. Board of Equalization Presumption There is a presumption of validity, good faith and correctness of assessment by the Board of Equalization. Hermel, Inc. v. STC, 564 S.W.ld 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.id 650,656 (Mo. 1968); May Department Stores Co. v. STC, 308 S.W.2d 748, 759 (Mo. 1958). Standard for Valuation Section 137.115, RSMo, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to selland bought by one who is willing or desirous to purchase but who is not compelled to do so. True value in money is defined in terms of value in exchange and not value in use. Mo. Const. Art. X, Section 4(b); St. Joe Minerals Corp v. State Tax Commission, 854 S.W.ld 526,529 (Mo. App. E.D. 1993); Missouri Baptist Children=s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993). It Is the fair market value of the subject property on the valuation date. Hermel, supra, at 897. Complainant»s Burden of Proof In order to prevail, Complainant must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of.the subject property on the tax day. Hermel, supra, at 897. Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact. The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief. Brooks v. General Motors Assembly Division, 527 S,W.2d 50,53 (Mo. App. 1975). t Duty to Investigate In order to investigate appeals filed with the Commission, the Hearing Officer has the duty to Inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, subclassification or assessment of the property. The Hearing Officer=s decision regarding the assessment or valuation of the property may be based solely upon her inquiry and any evidence presented by the parties, or based solely upon evidence presented by the parties. Section 138.430.2, RSMo. Weight to be Given Evidence The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but is free to consider all pertirient 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 http:Uste.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 1. Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page 9 of 13 a particular case is for the Hearing Officer to decide. St. Louis v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.Zd 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 all other circumstances. The Hearing Officer is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert=s testimony and accept it in part or reject it in part. St. Louis County v. Boatmen=s Trust Co., 857 S.W.2d 453,457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.ld 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981). Opinion Testimony by Expert:s If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto. The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing and must be of a type reasonably relied upon by experts in the field In forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data upon which the expert relies need not be admissible In evidence. Section 490.065, RSMo; Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-705; pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.Zd 133 (Mo. App. E.D. 1992). Commission Determines Methodology 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. Hermet, Inc. v. State Tax Commission, 564 S.W.2d 888,896; Chicago, Burlington & Quincy Railroad Co. v. State Tax Commission, 436 S.W.2d 650, 657 (Mo. 1968), cert den. 393 U.S. 1092 (1969); St Louis County v. Security Bonhomme, Inc., 558 S.W.id 655, 659 (Mo. banc 1997). It Is also within the State Tax Commission's authority to ascertain the correct or modem means of determining value according to a particular method or approach that it adopts to ascertain valuation, ancl it is within the Commission's discretion to determine what factors 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. Hermel, Inc. v. State Tax Commission, supra. The relative weight to be accorded any relevant factor in a particular tax assessment case is for the State Tax Commission to determine. St. Louis County v. State Tax Commission, 515 S.W. 446,450 (Mo. 1974). State Tax Commission decisions must declare the propriety of and the proper elements to consider in adopting a valuation approach, and must provide a definite indication as to the weight accorded each approach or method, i.e., how the final decision is weighed between the various approaches, methods, elements and factors. St. Louis County v. State Tax Commission, 515 S.W.2d 446, 451(Mo. 1974). The determination of"true value in money" of any property is a factual issue for the State Tax Commission, O'Flaherty v. State Tax Commission, 698 S,W.2d 2,3 (Mo. banc 1985). http://ste.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page 10 of 13 Courts Defer to State Tax Commission Dedsions. The Missouri Supreme Court, in Savage v. State Tax Commission of Missouri, 722 S.W.2d 72 (Mo. banc 1986), observed: Our review of the Commission's decision is ordinarily limited to whether that dedsion is "supported by competent and substantial evidence upon the whole record or whether it was arbitrary, capridous, unreasonable, unlawful or in excess of its jurisdiction." Evangelical Retirement Homes of Greater St. Louis, Inc. v. State Tax Com'n, 669 S.W.2d 548,552 (Mo. banc 1984); Section 536.140.01, RSMo. 1978. In matters of property 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 Cassilly v. Riney, 576 S.W.2d 325,328 (Mo. 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, CaD Investment Co. v. Bestor, 624 S.WN 835, 838 @la banc 1981) and that on review, "ft]he evidence must be considered in the Hght most favorable to the administrative body, together will all reasonable inferences which support it, and if the evidence would support either of two opposed findings, the reviewing court is bound by the administrative determination." Hermel Inc. v. State Tax Commission, 564 S.W.2d 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 of the Commission in matters of property tax assessment. Absent dear cause, we will "stay our hand[s]." Pierre Chouteau Condominiums v. State Tax Commission, 662 S.WN 513, 517 (Mo. banc 1984). Official Notice Agencies shall take official notice of all matters of which the courts take judicial note. 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, transferred 167 S.W.2d 205 (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 ret. St. Louis Public Service Company v. Public Service Commission, 291 S.W.2d 95, 97 (Mo. banc 1956). DISCUSSION Proper Methodology http://ste. mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page I 1 of 13 1 In this case, and all subsequent subsidized housing cases, the correct methodology for valuing subsidized housing projects is the methodology set out in Maryville Properties. That methodology is accurate because (1) rent restrictions are considered through the use of actual income rather than market income; (2) additional management requirements and expenses are accounted for through use of actual expenses which are in excess of market expenses; and (3) the actual loan-to-value ratio and the subsidized interest rate demonstrates and accounts for any and all risks involved In the property as well as the benefits flowing to the property. It is Aeconomic reality.@ It Is within the authority and expertise of the Tax Commission to determine which valuation methodology best represents value in a given situation or for a particular category of properties. Hermel, supra. After carefully considering the benefits and risks associated with subsidized housing, the State Tax Commission, in Maryville Properties, determined that calculating value based upon actual income, actual expenses, and actual interest and capitalization rates was the best way to recognize all benefits and risks associated with subsidized housing. Complainant Failed to Meet Burden of Proof Complainant asserts that the Commission must adopt its appraiser=s opinion of value because that is the only evidence presented in this case. However, it is the duty of the Commission to find value and there is more than enough evidence In this case for the Commission to make a determination of value using the Maryville Properties methodology. The Commission is not required to adopt the conclusions of the Complainanes appraiser when actual income, actual expenses, actual loan-to- value rates and interest rates are available. Complainant has failed to present substantial and persuasive evidence in support of its opinion of value. An opinion of value which is based upon improper elements or an improper foundation is without probative value. Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965). Complainant=s appraisal ignores economic realities and, thus, is based upon Improper elements and an Improper foundation. Failure to Consider Benefits Mr. Blaylock made no attempt to calculate the value of the substantial benefits flowing to this property by reason of the favorable financing documents in any of his approaches to value. It is possible to measure the difference in rent obtained from a rent restricted apartment and a non- restricted apartment but that only tells a portion of the story. The benefits of a low interest loan, guaranteed rental subsidizes and a non-recourse loan have yet to be measured by an appraiser based upon market-derived data because these properties are not selling. And, without accounting for the benefits associated with the favorable finandng and guaranteed income, Mr. Blaylock=s calculations under the cost approach, sales approach, and income approach necessarily understate the value of the subject property. Mr. Blaylock=s assertions that his adjustments refled market conditions and economic reality are not well taken. Discounted Cash Flow Highly Speculative The discounted cash flow methodology was specifically rejected in the Maryville Properties case and we reject it again in this case. To find that a discounted cash flow approach is reliable, the Commission would be required to find that an appraiser can predict a propertrs income, expense and capitalization rate at a point in the future-in this case, 2044. With substantial verified data it http:Ustc.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 1 Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page 12 of I 3 may be possible to trend or predict income, expenses and capitalization rates in the Immediate future. However, a discounted cash flow analysis is extremety speculative. In this case, there is little historical data in that the projed came on line in 1995. The tax years in question are 1997, 1999 and 2001. Based upon this very limited Information, we again find the discounted cash flow approach to be unreliable and unpersuasive. Complainant=s Maryville Properties Calculations Unreliable At the Hearing Officer=s request, both parties prepared income and expense calculations using the , it Maryville Properties methodology, although Complainant deviated from the methodology at several points. Complainant asserts that the Maryville Properties methodology is not the correct way to value property but, with some changes, would not be an unreasonable methodology. Complainant asserts that the vacancy rate should be averaged; that partnership management fees should be included in expenses as a third category of management fees; and that the loan to value ratio should be adjusted annually. Such deviations are Inappropriate and misreprent the value of the subject property. A calculation of actual income includes an adjustment for actual vacancy rate. Applying an artificial vacancy rate results in an understatement of value. Inasmuch as value is calculated every two years, changes in vacancy rates will automatically result in appropriate changes in value. It is not necessary to speculate about vacancy rates when actual rates are available for use in the Maryville formula. Partnership management fees are clearly not a management fee of the property. The fact that a partnership may only own one asset does not mean that that asset is responsible for paying the costs of maintaining the partnership. Finally, Complainant=s assertion that a new purchaser would not be able to get a 95% loan for the subject property and might only be able to acquire the properly through an assumption of the original loan, is unsubstantiated speculation, is contradicted by the evidence, and is entitled to no weight whatsoever. Mr. Blaylock testified that, for the Maryville Properties case in 2000, he had spoken with a Mr. Marks from Rural Development and was told that a refinance with a 95% loan would only be available if the property had been Acompletely rehabbed@., I.e. made new. (Tr. 15). Mr. Blaylock later testified that Mr. Marks= exact words were Athey would only make a 95% loan if the property was substantiatly rehabbed@. (Tr. 58). No evidence was presented which tended to show how Rural Development defined Arehabbed@ or which would tend to clarify when a rehab was required. But, for our purposes, the distinction is immaterial. The subject property was almost new on the original tax day and, at hearing in 2003, Mr. Blaylock testified that it suffered from very little physical deterioration (Tr. 38) and a reserve for replacement was maintained by the partners. In his appraisal report, Mr. Blaylock states that the purpose of the reserve for replacement was to Areplace roofs, carpets, cabinets, appliances, air conditioning, heating, water heater, tile floors, etc.@ (Complainant=s Ex. CC, p. 25). Even assuming that the government would require rehabilitation, it is obvious from the taxpayer==s testimony little rehabilitation is needed and that the funds have already been earmarked for that rehabilitation. http:Ustc.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 Missouri State Tax Commission » » Lake Ozark Village V. Whitworth (Camden) Page 13 of 13 Respondent=s Maryville Properties Calculations Reliable The decision of the Commission in this case is based upon the fomiula set forth in Maryville Properties. And, in particular, the calculations made by Respondent. (Respondent=s Ex. 26). Respondent=s calculations precisely follow the methodology set forth in Maryville Properties. The calculations, as presented by Respondent, are accurate and are adopted by the Commission. ORDER The assessed valuation for the subject property as determined by the Board of Equalization for the subject tax days is SET ASIDE. The market value for the subject property on January 1, 1997 and January 1, 1998 was $813,170 (assessed value $154,500). The market value for the subject property on January 1, 1999 and January 1, 2000 was $577,220 (assessed value $109,670). The market value for the subject properly on Janualy 1, 2001 and January 1,2002 was $602,770 (assessed value $114,530). A party may file with the Commission an application for review of this decision within thirty (3) days of the mailing of such decision. The application shall contain specific grounds upon which It is claimed the decision is erroneous. Failure to state specific facts or law upon which the appeal is based will result in summary denial. Section 138.432 RSMo. If an application for review of this decision fs made to the Commission, any protested taxes presently in an escrow account in accordance with these appeals 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 Camden County, as well as - the collectors of atl affeded political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment In these appeals. If any or all protested taxes have been disbursed pursuant to Section 139.031(8), RSMo., either patty 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 or Fact or Conclusion of Law shall be so deemed. SO ORDERED April 29,2004. STATE TAX COMMISSION OF MISSOURI Luann Johnson Hearing Officer http:Ustc.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 1. Missouri State Tax Commission » » Farmington Associates II et a! v. Dan Ward, Assesso... Page 1 of 15 . Thank you for printing our content at The Missouri State Tax Commission Office. Please check back soon C for new and updated information. (http://stc.mo.gov/) Farmington Associates 11 et al v. Dan Ward, Assessor St Francois County January 30th, 2015 State Tax Commission of Missouri FARMINGTON ASSOCIATES II ) Appeal No. 11-84005 FARMING ASSOCIATES ) Appeal No. 11-84006 ) Complainants ) -VS- ) DAN WARD, ASSESSOR, ) ST. FRANCOIS COUNTY, MISSOURI ) Respondent. ) http:#stc.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 r Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Assesso... Page 2 of 15 DECISION AND ORDER HOLDING Decisions of the St, Francois Count:y Board of Equalization are SET ASIDE. The Hearing Officer finds that the only valuation methodology fully presented is the Maryville Formula. Appeal No. Parcel No, True Value Assessed Vakwe 11-84005 09-70-35-00-000-0016.02 $1,934,000 $367,460 11-84006 09-70-35-00-000-0016.00 $651,660 $123,815 Complainants are represented by Counsel Richard Dvorak. Respondent is represented by counsel Patrick King. ISSUE The Commission takes this appeal to determine the true value in money for the subject properties on January 1, 2011. SUMMARY Subject Property The subject properties were appealed as Farmington Assodates and Farmjngton Associates II, They are also known as Orchard View and Orchard Vjew II. For purposes of the dedsion, the properties wjll be referred to in the order they were constructed as the "first property" (11-84006) and the "second property" (11-84005). http://stc.mo.gov/legal/farmington-associates-ii-el-al-v-dan-ward-assessor-st-francois-aoun... 2/20/2015 Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Assesso... Page 3 of 15 The first property was constructed in 2003. It is 3.49 acres improved with an apartment building consisting of 40 units totaling 40,400 square feet of rentable area. The improvements also include an office/clubhouse which includes a central laundry facility. The second property was constructed in 2009-2010. It is 3.86 acres improved with an apartment building consisting of 56 units totaling 57,008 square feet of rentable area. The residents of this building have access to all the amenities of the first property. As to both properties a "Low Income Housing Tax Credit Land Use Restriction Agreement" was recorded at the time of their construction. By the terms of the agreement, Missouri Housing Development Commission (MHDC) allocated low income housing tax credits to the project in exchange for the owner's agreement to be regulated by MHDC. The term of the agreement was for 15 years. The owner agreed the units are to be both rent restricted and occupied by individuals or families whose income is 60% or less of the area median gross income. The owner is allowed to charge up to $675 per month for 2 bedroom units and $780 per month for 3 bedroom units. The amount of the tax credits given is unknown. Exhibits Exhibit A - An appraisal report was submitted for each property. Both appraisals were marked as Exhibit A. The Exhibit was submitted pursuant to the exchange schedule and admitted into evidence prior to the hearing. Exhibit B - Written direct testimony of appraiser Kenneth Jaggers was submitted in each appeal, In both appeals, the exhibit was marked as Exhibit B. The Exhibit was submitted pursuant to the exchange schedule and admitted into evidence prior to the hearing. Exhibit C -An amendment to the appraisal report, Exhibit A, was offered immediately prior to going on the record the day of hearing. The amendment was marked Exhibit C. This is not the first time Appraiser Jaggers has appeared at a State Tax Commission hearing and presented an amendment at the last hour. Respondent graciously agreed to allow Mr. Jaggers to amend his report and Exhibit C was admitted into evidence. Exhibit 1- A page from the property record card of the first property submitted pursuant to the exchange schedule and admitted Into evidence prior to the hearing. http:Ustc.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 i , Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Assesso... Page 4 of 15 Exhibit 2- A page from the property record card of the second property submitted pursuant to the exchange schedule and admitted into evidence prior to the hearing. Exhibit 3 - Calculation of value using the income approach for both propeRies submitted pursuant to the exchange schedule and admitted into evidence prior to the hearing. Exhibit 4 - Written direct testimony of Dan Ward submitted pursuant to the exchange schedule and admitted into evidence prior to the hearing. Exhibit 5 - Order Approving the Stipulation of the Parties for the first property dated January 6, 2007 admitted into evidence without objection. Exhibit 6 - Submission to MHDC on the improvements of the subject property. Exhibit was not --- submitted for admission into evidence. Exhibit 7 - Application for Building Permit for the second property. Exhibit admittedinto evidence without objection. , Exhibit 8 - USPAP 2-2. Exhibit was not submitted for admission into evidence. Exhibit 9 - Full copy of the property record card of the first property. Exhibit admitted Into evidence without objection. Exhibit 10 - Full copy of the property record card of the second property. Exhibit admitted into evidence without objection. FINDINGS OF FACT 1. Jurisdiction over this appeal is proper. Complainants timely appealed to the State Tax Commission from the decisions of the St. Francois County Board of Equalization. 2. The property in appeal 11-84005, Farmington Associates II, is also known as Orchard View II and is Identified by locator number 09-70-35-00-000-0016.'The property in appeal 11- 84006, Farmington Associates, is also known as Orchard View, and is identified by locator number 09-07-35-00-000-0016-02. 3. The properties are multi-family residential properties. The first property, built in 2003, consists of 40 units, 40,400 square feet of net rentable area on 3.49 acres. Improvements include an office/clubhouse with laundry fadlities and parking. The property is in average condition with above average unit features. The second property, built in 2009, consists of 56 units, 57,008 feet square on 3.86 acres. Improvements also include parking and solar panels. The properties make use of the office and clubhouse located on the first property. The property is above average to market as to age, condition, size, layout, and unit features. http://stc.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 1 9 Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Assesso... Page 5 of 15 4. The subject properties are designated as low income, rent restricted units for tenants whose income is 60% or less of the "area median gross income", adjusted for family size. Occupancy is at 96%. This is believed to be a stabilized level. Rents have been approved for a maximum of $675 for 2 bed units and $788 for 3 bed units. 5. The market rents in the area are $595 for 2 bedroom units and $695 for 3 bedroom units. 6. Complainants' appraiser relied only the "Maryville formula" income approach, as a jurisdictional exception to the standard approaches to value. Complainants' appraiser's value determinations were based upon actual income (with market rates applied to the vacant units), projected expenses and a capitalization rate of 9.21% derived from the property funding and market. The appralser proposed values of $1,520,000 and $660,000. 7. The Maryville formula was the only approach fully presented and relied upon by the parties. Using the formula with tbe actual income, actual expenses and a capitalization rate derived from the information presented, the true value of the first property is $651,600 and the true value of the second property is $1,934,000. Appeal No. Parcel No. True Value Assessed Value 11-84005 09-70-35-00-000-0016.02 $1,934,000 $367,460 11-84006 09-70-35-00-000-0016.00 $651,660 $123,815 CONCLUSIONS OF LAW AND DECISION Jurisdiction The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious. 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. (Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431(4) RSMo.) Official and Judicial Notice r r· http://ste.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Assesso... Page 6 of 15 Agencies shall take official notice of all matters of which the courts take judicial notice. (Section 536.070 (6)) Courts will take judicial notice of their own records in the same cases. State ex rel. Horton v. Bourke, 129 S.W.ld 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.WN 889, 894 (1943); Bushman v. Barlow, 15 S.W.Zd 329, 332 (Mo. banc 1929) or when it is necessary for a full understanding of thejnstant 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.ld 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). Presumptions In Appeals There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. Hermel, Inc. v. STC, 564 S.W.ld 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v, STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STQ 308 S.W.2d 748, 759 (Mo. 1958). The presumption in favor of the Board Is not evidence. A presumption simply accepts something as true without any substantial proof to the contrary. In an evidentiary hearing before the Commission, the valuation determined by the Board, even if simply to sustain the value made by the Assessor, is accepted as true only until and so long as there is no substantial evidence to the contrary. The presumption of correct assessment is rebutted when the taxpayer, or respondent when advocating a value different than that determined by the Board, presents substantial and persuasive evidence to establish that the Board's valuation is erroneous and what the fair market value should have been plated on the property, Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Standard for Valuation Section 137.115, RSMo, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so. St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.ld 526,529 (Mo. App. E.D. 1993); Missouri Baptist Children's Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc http://stc.mo.gov/legal/farmington-associates-ii-cl-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Assesso... Page 7 of 15 1993). It is the fair market value of the subject property on the valuation date. (Hermel, supra) Market value is the most probable price in terms of money which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price is not affected by undue stimulus. Implicit in this definition are the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby: 1. Buyer and seller are typically motivated. 2. Both parties are well Informed and well advised, and both acting in what they consider their own best interests. 3. A reasonable time is allowed for exposure in the open market. 4. Payment is made In cash or its equivalent. 5. Finaocing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale. 6. The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction. Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; See also, Real Estate Valuation in Utigation, J. D. Eaton, M.A. I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80; uniform Standards of Professional Appraisal Practice, Glossary. http://ste.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 -- Missouri State Tax Commission » » Farmington Associates II et al v, Dan Ward, Assesso... Page 8 of 15 Weight to be Given Evidence The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled. The relative weight to be accorded any relevant factor in a particular case Is for the Hearing Officer to decide. St. Louis County v. Security Bonhomme, Inc., 558 S.W.ld 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968). Methods of Valuation Proper methods of valuation and assessment of property are delegated to the Commission. It is within the purview ofthe Hearing Officer to determine the method of valuation to be adopted in a given case. See, Nance v. STQ 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra; Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975). Missouri courts have approved the comparable sales or market approach, the cost approach and the income approach as recognized methods of arriving at fair market value. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STQ 789 S.W.Zd 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm'n v. Southern Dev. Co,, 509 S.WN 18, 27 (Mo. Div. 2 1974). Opinion Testimony by Experts If spedalized knowledge wHI assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto. The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearirig and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data need not be admissible in evidence. Section 490.065, RSMo; State Board of Registration for the Healing Arts v. McDonagh, 123 S.W.3d 146 (Mo. SC. 2004); Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.ld 133 (Mo. App. E,D. 1992). http:Uste.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 J. 1, Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Assesso... Page 9 of 15 Complainants' Burden of Proof There is no presumption that the taxpayer's opinion is correct. The taxpayer in a Commission appeal still.bears the burden of proof. The taxpayer is the moving party seeking affirmative relief. Therefore, the Complainant bears the burden of proving the vital elements of the case, i.e., the assessment was "unlawful unfair, improper, arbitrary or capricious," See, Westwood Partnership v. Gogarty„103 S.W.3d 152 (Mo. App. E.D. 2003); Daly v. P. D. George Co., 77 S.W.3d 645 (Mo. App. E.D. 2002); Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003). Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387,392 (Mo. App. 1991). Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept · as adequate to support a conclusion. See. Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959 Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact. The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in Inducing belief. Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975). Discussion Section 137.115, RSMo, requires that property be assessed based upon its true valueIn money which is defined as the price a property would bring when offered for sale by one willing or de*ous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so, (St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.ld 526,529 (Mo. App, E.D. 1993); Missouri Baptist Children's Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993). "Objective standards should be used in determining fair market value IA the market place. The particular circumstances of the owner are not a proper consideration... Investment value is the value of a property to a particular investor, whereas market value is not related to the needs of the individual investors but is objective, Impersonal, and detached; investment value is based on subjective, personal parameters . . ." (Maryville Properties v. Nelson, 83 SW3d 608, 616 WD 2002) In the past, when valuing subsidized housing, we have attempted to look at actual income, actual expenses, financing terms and market capitalization rates in order to try to account for risks and benefits associated with this unique type of real property, recognizing that subsidized propeRies do not tend to sell and costs tend to be inflated, making sales and cost approaches difficult, The State Tax Commission referred to this methodology as the Maryville Formula. After Lake Ozark Village v. Whitworth, STC Appeal Nos, 97-47000,99-47003 and 01-47002, parties to appeals involving subsidized housing properties utilized the Maryville Properties v. Nelson, STC Appeal No. http://ste.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun., 2/20/2015 Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Asses... Page 10 of 15 97-74500 methodology for determining value - as modified by the Western District Court of Appeals. At that time, subsidized housing typically included extremely low Interest, low equity loans which had subsidized income, subsidized mortgages, subsidized interest and non-recourse promissory notes. In attempting to follow the directive of Missouri Baptist Children's Home to consider all relevant economic facts, the Commission Instructed assessors to value subsidized housing based upon actual income, actual expenses and capitalization rates. In Park West v. Pruden, Bate County STC Appeal No. 11-43000 to 11-43036 and 13-43001 to 13-43002, decision dated 11/4/14, the Hearing Officer found with the facts presented In that appeal that the Maryville formula was not persuasive evidence for determining the true value of the property. The Hearing Officer found that the equity positions were no longer the 3% to 5% found In the Mar'yville Properties/Lake Ozark cases but had now skyrocketed to over 80%. The Maryville formula methodology contemplated a low equity position with a market return rate and a high fi nanced position with an extremely low interest rate, Under the Matyville formula, an increase in the equity position of the newer improvement resulted in it being valued substantially less than the older improvement. In Park West Estates I and II, the original construction cost of recently completed improvements was presented. The Hearing Officer compared the actual cost of the properties to the Indication of value as determined by the Maryville formula. The Hearing Officer asked "Would a typical Investor spend almost $3 million for a property that only had a market value of $490,000 before it is even completed?" The Hearing Officer concluded: "[e]ither the benefits and burdens under the Maryville formula are not being measured appropriately; or the income approach substantially distorts market value to a point of no longer being a good Indicator of value. Arguably, facts surrounding subsidized housing and Its financing have gone so far beyond typical market behavior that an income approach based upon subjective facts associated with these properties can never reasonably capture value." No information as to the actual cost to construct was presented in this appeal, The Hearing Officer was only provided with the income and expenses of the subject properties. Maryville formula uses actual rents, actual expenses, actual and market financings. The appraiser used actual rents and referred to market rents for the 1 two bed and 1 three bed vacant units to determine the potential gross income. The appralser did not use actual expenses but used projections. The appraiser did not provide support or reference for his projections and they are high in comparison to actual. For example In the second property, the actual expenses for repairs was $19,600 but the appraiser used a projected expense figure of $28,000. The appraiser http://stc,mo,gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun,.. 2/20/2015 4 f, Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Asses... Page 11 of 15 projected advertising cost to increase to $1400 from $154, which Is suspect given the apartment is near 100% occupied, The appralser projected administrative costs to Increase to $33,600 from $28,369; payroll to increase to $61,600 from $40,020. If we adjust his formula to reflect actual expenses, the resulting indications of values are: Farmington Associates Income $199,492 Vacancy & Collection 5% (9,975) Other Income $22,000 Effective Gross Income $211,518 Expenses Utilities $26,000 Insurance $11,000 Repairs $18,500 Advertising $55 Administration $34,025 Painting $3,250 Payroll $39,600 Management $9,070 Reserves $10,000 Total Expenses ($151,500) .$60,018 http:Ustc.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun,.. 2/20/2015 Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Asses... Page 12 of 15 Capitalization Rate 9.21% Indication of Value $651,660 Farmington Associates II Income $304,140 Vacancy & Collection 5% (15,552) Other Income $52,802 Effective Gross Income $341,390 Expenses Utilities $21,332 Insurance $15,516 Repairs $19,600 Advertising $154 Administration $28,369 Painting $4,129 Payroll $40,020 Management $20,160 Reserves $14,000 Total Expenses ($163,280) http:#stc.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 £, Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Asses... Page 13 of 15 $178,110 Capitalization Rate 9.21% Indication of Value $1,933,876 Conclusion Commission rejected Maryville Formula in Park West Estates (11-43000 to 11-430036). The properties in those appeals were new construction. The cost approach is an effective approach to develop market value in those circumstances. The reconciliation of cost approach and income approach lead the Hearing Officer to place more weight on the cost approach. In this appeal, the appraiser did not develop the cost approach even though the improvements of the second property were recent. The appraiser developed sales comparison approach but did not place reliance on the method or value developed. The income approach using the Maryville formula was developed. As that information was the only information presented to develop value and since the actual costs and the capitalization rate utilized were not contested; the indications of value using that approach is deemed substantial and persuasive evidence. ORDER The Board's market value for the subject properties is SET ASIDE. The following valuations are conduded: Appeal No. Parcel No. True Value Assessed Value 11-84005 09-70-35-00-000-0016.02 $1,934,000 $367,460 11-84006 09-70-35-00-000-0016.00 $651,660 $123,815 A party may file with the Commission an application for review of this decision within thirty (30) days of the mailing date shown in the Certificate of Service. The application shall contain specific grounds upon which it is claimed the decision is erroneous. Said application must be in writing http:Uste.mo.gov/legal/farmington-associates-ii-ct-al-v-dan-ward-assessor-st-francois-coun.., 2/20/2015 Missouri State Tax Commission » » Parmington Associates M et al v, Dan Ward, Asses... Page 14 of 15 addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, and a copy of said application must be sent to each person at the address listed below In the certificate of ser*ice. Failure to state specific facts or law upon which the appeal is based will result in summary denial. (Section 138.432 RSMO. 2000) The Collector of St. Francois County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending a filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of 139.031.8 RSMo. 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 this 30th day of January, 2015. STATE TAX COMMISSION OF MISSOURI Maureen Monaghan Hearing Officer Certificate of Service I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 30th day of January, 2015, to: Richard Dvorak, 7111 W. 98th Terr., #140, Overland Park, KS 66212, Attorney for Complainant; Patrick King, Assistant Prosecuting Attorney, 1 N. Washington, Suite 301, Farmington, MO 63640, Attorney for Respondent; Dan Ward, Assessor, County Courthouse Annex, 1 W. Liberty, Suite 200, Farmington, MO 63640; Mark Hedrick, Clerk, Courthouse Annex, 1 W. Liberty, Suite 300, Farmington, MO 63640; Pamela Williams, Collector, Courthouse Annex, 1 W. Liberty, Suite 201, Farmington, MO 63640. Jacklyn Wood http://stc.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun.„ 2/20/2015 Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Asses... Page 15 of 15 Legal Coordinator To Top http:#stc.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 Branson Christian County I, LP d/b/a Abbey Orchard I 10-0.6-14-003-001-001.001 EXHIBIT F HB No. 613 50708818.1 T Nixon signs HB 613, will lower housing costs - The Missouri Times Page 1 of 3 i Nixon signs HB 613, willlower housing costs Featured (http://themissouritimes. com/category/featured/) Governor (http://themissouritimes.com/category/executivebranch/governor-executivebranch/) TMT-Blog (http://themissouritimes.com/category/tmt-blog/) 20 hours ago --Il. I 7972€r, ·· - i , 45.9 '> £64$,/i 4.£>+7·3>9* 0 9 4/6 .-661.I- 1 1. ppf-**r '#4 +944* . r VF 411:4Jr £22fS&M32;*12rg:,f,yf*fitA ..4, 444 , 4 k'' . . 7 .1 % gif Me 4 7 - ./ . 1 ... r. .NA.·, 6 IL- I I . *// '. JEFFERSON CITY, Mo. - Gov. Jay Nixon signed HB 613 into law mak'ng changes and statutorily codifying existing practices regarding property tax collect'on. The bill will go into effect on August 28. Rep. Sandy Crawford, R-Buffalo, sponsored the bill in hopes to streamline and simplify property tax collection. http://themissouritimes.corn/19312/nixon-signs-hb-613-will-lower-housing-costs/ 7/8/2015 . Nixon Aigns HB 613, will lower housing costs - The Missouri Times Page 2 of 3 "These are some technical, but important, changes to our law based on the recommendations of a panel of county collectors who sought to make our statutes reflect recent court decisions and the reality of the way tax sales happen today," said Crawford, R-Buffalo. "I want to thank the governor for signing these changes into law, and thank my colleagues for providing strong bipartisan support to my legislation." The Governor could have let it become law without signing on July 14th, but chose to sign the bill signifying that he supports the legislation. The bill is seen as a victory for seniors living in housing developments constructed with tax credits. Currently, the practice was that county assessors would take into account limitations on rent and property use, but some assessors had begun disregarding existing precedence . and raising property taxes as they could on unrestricted properties. "HB 613 clarifies specific merchandise codes relating to electronics, appliance rentals, construction machinery, and more," said Warren County Assessor Wendy Nordwald. "This is a vital clarification needed as an assessor and I applaud the Governor's signature." Property tax increases were being passed onto residents on fixed incomes, and the new law codifies existing practices which many believe will stem the rising cost of housing due to exorbitant property tax increases. "The passage of HB 613 is an enormous win for Missouri's affordable housing industry," said Jason Maddox, president of MACO Companies, an affordable housing company. "The bill will prevent huge tax assessments on large, but inevitable, rent increases for Missouri's low income seniors and families." The bill had no opposition in committee and supporters said the bill further updates, tightens, and otherwise deans up the statute's chapter, and clarifies areas that frequently led to lawsuits by giving collectors discretion as to what constitutes "reasonable" costs of sale. The bill also repeals a section that operates as a disincentive for keeping properties maintained. "We applaud Governor Nixon and the state legislature for enacting HB 613," said Beyond Housing President/CEO Chris Krehmeyer. "This new law will prevent great financial damage to those who produce affordable housing across the state of Missouri. The bill is pragmatic and straight forward in assessing taxes to owners of affordable housing based upon the allowable rents and thereby income set forth by federal and state guidelines. We understand the importance of paying taxes to support schools, police and fire protection and other needed services but do not want our properties to fail with an unfair tax burden. In a time when bi- partisan agreements seem hard to come by we are thankful for the leadership in the governor's mansion and the state house to have HB 613 passed and signed into law." http:Uthemissouritimes.com/19312/nixon-signs-hb-613-will-lower-housing-costs/ 7/8/2015 Nixon signs HB 613, will lower housing costs - The Missouri Times Page 3 of 3 HB 613 also raises the amount that County Collectofs offices are required to collect to 2.5% on the first $350,000 to $3 million. It also streamlines public service fees for abolished townships, allows more counties to propose a special road rock property tax, and adjusts criteria for dealing with delinquent lands. http:Uthemissouritimes.com/19312/nixon-signs-hb-613-will-lower-housing-costs/ 7/8/2015 h] Missouri House of Representatives Page 1 of 1 4 House Home Page:: House Bill List :: HB613 HB 613 Changes the laws regarding the collection of property taxes Sponsor: Crawford, Sandy (129) Effective Date: Emergency Clause LR Number: 1344S.06T Governor Action: 07/06/2015 - Approved by Governor (G) Last Action: 07/06/2015 - Delivered to Secretary of State (G) Bill String: SCS HCS HB 613 Next Hearing: Hearing not scheduled Calendar: Bill currently not on a House calendar *7*=2®bslorst I aqi#yost I *earingsill .Eism-lityo.tes@ I B.ligu:allsj Bill Summaries ITruly Agreed (PDF) Perfected (PDF) Committee (PDF) Introduced (PDF) Bill Text Truly Agreed (PDF) Senate Comm Sub (PDF) Perfected (PDF) Committee (PDF) introduced (PDF) Amendments Status Amendment Sponsor Floor Number Roll Call G 1344S06.01F Crawford SENATE AMENDMENTS 1344H03.07H Hinson HCA 1 1 Distributed - Amendment has been distributed. Adopted - Amendment has been adopted. Defeated - Amendment has been defeated. A Returned - Amendment has been returned by motion and vote. Withdrawn - Amendment has been withdrawn by the amendment's sponsor. Offered - Amendment has been offered on the House floor. Pending - Amendment has been laid over to be taken up on the next legislative day. ' Substitute - Amendment has been substituted for a different amendment. Division - Amendment has been divided into parts to be voted on and debated , separately. 7/8/2015 11:32:06 AM http://www.house.mo.gov/BillSummaryPrn.aspx?bill=HB613&year=2015&code=Rkstyle=... 7/8/2015 t. FIRST REGULAR SESSION [TRULY AGREED TO AND FINALLY PASSED] SENATE COMMITTEE SUBSTITUTE FOR HOUSE COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 613 98TH GENERAL ASSEMBLY 1344S.06T 2015 AN ACT To repeal sections 52.260, 65.620, 137.076, 140.170, 140.310, 140.340, 140.350, 140.405, 140.410,140.420, and 231.444, RSMo, and to enact in lieu thereofthirteen new sections relating to the collection of property taxes. Be it enacted by the General Assembly of the state ofMissouri, as follows: Section A. Sections 52.260, 65.620, 137.076, 140.170, 140.310, 140.340, 140.350, 2 140.405,140.410,140.420, and 231.444, RSMo, are repealed and thirteen new sections enacted 3 in lieu thereof, to be known as sections 52.260,65.620,137.018,137.076,140.170,140.195, 4 140.310,140.340,140.350,140.405,140.410,140.420, and 231.444, to read as follows: 52.260. The collector in counties not having township organization shall collect on 2 behalfofthe county the following fees for collecting all state, county, bridge, road, school, back 3 and delinquent, and all other local taxes, including merchants', manufacturers' and liquor and 4 beer licenses, other than ditch and levee taxes, and the fees collected shall be deposited in the 5 county general fund: 6 (1) In all counties wherein the total amount levied foranyoneyear exceeds two hundred 7 and fifty thousand dollars and is less than three hundred and fifty thousand dollars, a fee of two 8 and one-half percent on the amount collected; 9 (2) In ali counties wherein the total amount levied for any one year exceeds three 10 hundred and fifty thousand dollars and is less than [two] three million dollars, a fee of two and EXPLANATION - Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and is intended to be omitted from the law. Matter in bold-face type in the above bill is proposed language. UN SCS HCS HB 613 2 11 one-halfpercent on the first three hundred and fifty thousand dollars collected and one percent 12 on whatever amount may be collected over three hundred and fifty thousand dollars; 13 (3) In all counties wherein the total amount levied for any one year exceeds [two] three 14 million dollars, a fee of one percent on tile amounts collected. 65.620. 1. Whenever any countyabolishes township organization the countytreasurer 2 and ex officio collector shall immediately settle his accounts as treasurer with the county 3 commission and shall thereafter perform all duties, exercise all powers, have all rights and be ' 4 subject to all liabilities imposed and conferred upon the county collector of revenue under 5 chapter 52 until the first Monday in March after the general election next following the 6 abolishment of township organization and until a collector of revenue for the county is elected 7 and qualified. The person elected collector at the general election as aforesaid, if that election 8 is not one for collector ofrevenue under chapter 52, shall serve until the first Monday in March 9 following the election and qualification of a collector of revenue under chapter 52. Upon 10 abolition of township organization a county treasurer shall be appointed to serve until the 11 expiration ofthe term of such officer pursuant to chapter 54. 12 2. Upon abolition of township organization, title to all property ofall kinds theretofore 13 owned by the several townships of the county shall vest in the county and the county shall be 14 liable for all outstanding obligations and liabilities ofthe several townships. 15 3. The terms of office ofall township officers shall expire on the abolition oftownship 16 organizationand the township trusteeofeachtownship shallimmediatelysettle his accounts with 17 the county clerk and all township officers shall promptly deliver to the appropriate county 18 officers, as directedbythecountycommission, allbooks, papers, records andpropertypertaining 19 to their offices. 20 4. For a period of one calendar year following the abolition of the townships or 21 until the voters of the county have approved a tax levy for road and bridge purposes, 22 whichever occurs first, the county collector shall continue to collect a property tax on a 23 county-wide basis in an amount equal to the tax Ievied by the township that had the lowest 24 total tax rate in the county immediately prior to the abolishment of the townships. The 25 continued collection of the tax shall be considered a continuation of an existing tax and 26 shall not be considered a new tax levy. 137.018. 1.*As used in this section, the term "merchandise" shalI include short term 2 rentals of equipment and other merchandise offered for short term rentals by rental 3 companies under 532412 or 532210 of the 2012 edition of the North American Industry 4 Classification System as prepared by the Executive Office of the President, Office of 5 Management and Budget, which will subsequently or ultimately sell such merchandise or 6 equipment. As used in this section, the term "short term rental" shall mean rentals for a SCS HCS HB 613 -- COLLECTION OF PROPERTY TAXES This bill changes the laws regarding the collection of property taxes. In its main provisions, the bill: (1) Changes the amount of fees a county collector must collect for collecting local taxes. In counties where the total amount levied in a year is between $350,000 and $2 million, the fee is 2.5% on the first $350,000 collected and 1% on any amount over that amount. In counties where the total amount levied exceeds $2 million, the fee is 1% on all amounts collected. The bill raises the outer threshold amount for a dounty to be eligible to collect the 2.5% on the first $350,000 to $3 million; (2) Allows counties in which townships have been abolished to continue to collect a property tax on a county-wide basis for road and bridge purposes for either one year following the abolishment of the townships or until the county voters have approved a property tax for such purposes, whichever occurs first. The property tax must be the same amount as the property tax being levied in the township with the lowest total tax rate immediately before the townships were abolished. The collection of the property tax is to be considered a continuation of a tax and not a new tax; (3) Specifies that certain merchandise whether or not subject to a short term rental and which will ultimately be sold must be considered inventory for property tax purposes and exempt from taxation. The bill is limited to general rental centers and construction, mining, and forestry equipment rental; (4) Requires a county assessor when establishing the value of real property to consider existing use of the property, restrictions, limitations, existing covenants or restrictions in the deed, and operational requirements or restrictions imposed on the property to be eligible for state and federal credits and subsidies as residential rental property; (5) Changes the laws regarding the advertisement of delinquent lands. Currently, a county collector may advertise delinquent lands with an assessed valuation of $1,000 or less without legal descriptions or the names of the record owners when publishing a delinquent land list for delinquent real property tax. The bill increases the assessed valuation to $1,500 or less; (6) Changes the laws regarding the advertisement of a delinquent lot. Currently, a county collector may advertise a delinquent lot if in a development of at least 20 or more lots with an assessed valuation of $1,000 or less without legal descriptions or the names .. of the record owners when publishing a delinquent land list for delinquent real property tax. The bill increases the assessed valuation to $1,500 or less; (7) Allows a collector, agent of a collector, tax sale purchaser, or an agent of a tax sale purchaper to enter land, without being guilty of trespass, to provide, 'serve, or post notice of a tax sale or tax sale redemption. Once the reasonable and customary costs of a sale are paid to the county collector, the purchaser, his or her heirs, successors, or assigns; the owner; lienholder; or occupant of any land or lot sold for taxes, or any other persons having an interest therein, must have the absolute right to redeem the land at any time during the following year and must continue to have a defeasible right to redeem th'e land until the tax sale purchaser acquires the deed. Once the tax sale purchaser acquires the deed, the right to redeem will expire, provided upon the expiration of the lien evidenced by a certificate of purchase under Section 140.410, RSMo, no redemption will be required; (8) Allows minors and incapacitated and disabled persons to redeem any lands belonging to them sold for taxes within five years of the date of the last payment of taxes encumbering the real estate by the minor, incapacitated or disabled person, the party's predecessors in interest, or any representative of the person in the sam@ manner as provided in Section 140.340 for redemption by other persons; (9) Specifies that "authorized to acquire the deed" means the date chosen by the tax sale purchaser that is more than the minimum redemption period in Section 140.340 if the tax sale purchaser has complied with the requirements entitling the purchaser to the issuance of a collector's deed including payment of the recording fee for the collector's deed, production of the original of the certificate of purchase as required under Section 140,.420 or production of an original affidavit of lost or destroyed certificate approved by the collector as to form and substance, and payment of all subsequent taxes required to be paid under Section 140.440. The bill specifies how any person except a minor or an incapacitated'or disabled person may receive notice under the provisions of the bill in a foreign country or outside the United States; (10) Changes the laws regarding the purchase of delinquent land. Currently, a purchaser of delinquent lands, or his or her heirs or assigns, must pay all subsequent taxes on the property purchased prior to the issuance of any collector's deed and have a deed to be executed and placed on record in the proper county within two years from the date of the sale. The bill shortens the time to 18 months. If no person redeems the lands sold for taxes prior to the expiration of the right to redeem, at the expiration thereof, and on productipn of the certificate of purchase and upon proof satisfactory to the collector that a purchaser or his or her heirs, successors, or assigns are authorized to acquire the deed, the collector of the county where the sale of the lands took place must execute to the purchaser, or his or her heirs dr assigns, in the name of the state, a conveyance of the real estate sold, which will vest in the grantee an absolute estate in fee simple, subject, however, to all claims thereon for unpaid taxes except the unpaid taxes existing at the time of the purchase of the lands and the lien for which taxes was inferior to the lien for taxes for which the tract or lot of land was sold; and (11) Authorizes all counties of the third and fourth classifications to impose, upon voter approval, a special road rock fund tax at a rate not to exceed $1 per acre for property classified as agricultural and horticultural. Currently, only certain counties of the third classification without a ,township form of government are authorized to impose the tax upon voter approval. SCS HCS HB 613 3 7 period of less than three hundred sixty-five consecutive days, for an undefined period, or 8 under an open-ended contract. 9 2. For the purposes of article X, section 6 of the Constitution of Missouri, all 10 merchandise held or owned by a merchant whether or not currently subjectto a shortterm 11 rental and which will subsequently or ultimately be sold shall be considered inventory and 12 exempt from ad valorem taxes. 137.076. 1. In establishing the value of a parcel of real property the county assessor 2 shall consider current market conditions. and previous decisions of the county board of 3 equaIization, the state tax commission or a court ofcompetentjurisdiction that affected the,value 4 of such parcel. For purposes of this section, the term "current market conditions':, shall include 5 the impact upon tile housing market of foreclosures and bank sales. 6 2. In establishing the value of a parcel of real property, the county assessor shall 7 use an income based approach for assessment of parcels of real property with federal or 8 state imposed restrictions in regard to rent limitations, operations requirements, or any 9 other restrictions imposed upon the property in connection with: 10 (1) The property being eligible for any income tax credits under section 42 of the 1 I Internal Revenue Code of 1986, as amended; 12 (2) Property constructed with the use of the United States Department ofHousing 13 and Urban Development HOME investment partnerships program; 14 (3) Property constructed with the use of incentives provided by the United States 15 Department of Agriculture Rural Development or 16 (4) Property receiving any other state or federal subsidies provided with respect 17 to use of the property for housing purposes. 18 19 For the purposes of this subsection, the term "income based approach" shall include the 20 use of direct capitalization methodology and computed by dividing the net operating 21 income of the parcel of property by an appropriate capitalization rate not to exceed the 22 average of the current market data available in the county of said parcel of 23 property. Federal and state tax credits or other subsidies shaII not be used when 24 calculating the capitalization rate. Upon expiration of a land use restriction agreement, 25 such parcel of property shall no longer be subject to this subsection. 140.170. 1. Except for lands described in subsection 7 of this section, the county 2 collector shall cause a copy of the list of delinquent lands and lots to be printed in some 3 newspaper of general circulation published in the county for three consecutive weeks, one 4 insertion weekly, before the sale, the last insertion to be at least fi fteen days prior to the fourth 5 Monday in August. SCS HCS HB 613 4 6 2. In addition to the names ofaIl record owners orthe names ofall owners appearing on 7 the land tax book it is only necessary in the printed and published list to state in the aggregate 8 the amount of taxes, penalty, interest and cost due thereon, each year separately stated. 9 3. To the list shall be attached and in like mannerprinted and published a notice ofsaid 10 lands and lots stating that said land and lots will be sold at public auction to discharge the taxes, ' 11 penalty, interest, and costs due thereon at the time ofsale in or adjacent to the courthouse ofsuch 12 countY, on the fourth Monday in August next thereafter, commencing at ten o'clock of said day 13 and continuing from day to day thereafter until alI are offered. 14 4. The county collector, on orbefore the day of sale, shall insert at the foot ofthe list on 15 his or her record a copy ofthe notice and certifyon his or her record immediately following the 16 notice the name ofthe newspaper ofthe county in which the notice was printed and published 17 and the dates of insertions thereofin the newspaper. 18 5. The expense of such printing shalI be paid out of the county treasury and shall not 19 exceed the rate provided for in chapter 493, relating to legaI publications, notices and 20 advertisements, and the cost ofprinting at the rate paid by the county shall be taxed as part ofthe 21 costs ofthe sale of any land or lot contained in the list. 22 6. The county colIector shall cause the affidavit of the printer, editor or publisher ofthe 23 newspaper in which the list of delinquent lands and notice ofsale was published, as provided by 24 section 493.060, with the list and notice attached, to be recorded in the office of the recorder of 25 deeds ofthe county, and the recorder shall not charge or receive any fees for recording the same. 26 7. The county collectormayhave a separate list ofsuch lands, without legal descriptions 27 or the names of the record owners, printed in a newspaper of general circulation published in 28 such county for three consecutive weeks before the sale of such lands for a parcel or Iot of land 29 that: 30 (1) Has an assessed value of one thousand five hundred dollars or less and has been 31 advertised previously; or 32 (2) Is a lot in a development of twenty or more lots and such lot has an assessed value 33 ofone thousand five hundred dollars or less. The notice shall state that legaI descriptions and 34 the names ofthe record owners ofsuch lands shall be posted at any countycourthouse within the 35 county and the office of the county collector. 36 8. If, in the opinion of the county collector, an adequate legal description of the 37 delinquent landand lots cannotbe obtainedthrough researchingthe documents availablethrough 38 the recorder of deeds, the collector may commission a professional land surveyor to prepare an 39 adequate legal description of the delinquent land and lots in question. The costs of any 40 commissioned land surveydeemed necessaryby the county collector shall be taxed as part ofthe 41 costs of the sale of any land or lots contained in the list prepared under this section. SCS HCS HB 613 5 140.195. Any colIector, agent of any collector, tax sale purchaser, or agent of any 2 tax sale purchaserperforming duties under this chapter shall have the lawful right to enter 3 upon the land of another without being guilty of trespass, if he or she is in the course of 4 providing or attempting to provide notice of a tax sale or tax sale redemption rights and 5 it is necessary to enter upon such land to provide, serve, or post such notice. 140.310. 1. The purchaser of any tract or lot of land at sale for delinquent taxes, 2 homesteads excepted, shall at any time after one year from the date of sale be entitled to the 3 immediate possession ofthe premises so purchased during the redemption period provided for 4 in this law, unless sooner redeemed; provided, however, any owner or occupant of any tract or 5 lot of landpurchasedmayretainpossession ofsaid premises bymaking a written assignment of, 6 or agreement to pay, rent certain or estimated to accrue during such redemption period or so 7 much thereof as shall be sufficient to discharge the bid of the purchaser with interest thereon as 8 provided in the certificate ofpurchase. 9 2. The purchaser, his or her heirs or assigns may enforce his or her rights under said I 0 written assignment or agreement in any manner now authorized or hereafter authorized by law 11 for the collection ofdelinquent and unpaid rent; provided further, nothing herein contained shall 12 operate to the prejudice of any owner not in default and whose interest in the tract or lot of land 13 is not·encumbered by the certificate ofpurchase, nor shall it prejudice the rights ofany occupant 14 of any tract or lot of land not liable to pay taxes thereon nor such occupant's interest in any 15 planted, growing or unharvested crop thereon. 16 3. Any additions or improvements made to any tract or lot of land by any occupant 17 thereof, as tenant or otherwise, and made prior to such tax sale, which such occupant would be 18 permitted to detach and remove from the land under his or her contract ofoccupancyshall also, 19 to the same extent, be removable against the purchaser, his or her heirs or assigns. 20 4. Any rent collected by the purchaser, his or her heirs or assigns shall operate as a 21 payment upon the amount due the holder of such certificate of purchase, and such amount or 22 amounts, together with the date paid and by whom shall be endorsed as a credit upon said 23 certificate, and which said sums shall be taken into consideration in the redemption ofsuch land, 24 as provided for in this chapter. 25 5. Anypurchaser, heirs or assigns inpossession within the period ofredemption against 26 whom rights ofredemption are exercised shall be protected in the value ofanyplanted, growing 27 and/or unharvested crop on the lands redeemed in the same manner as such purchaser, heirs or 28 assigns would be protected in valuable and lasting improvements made upon said lands after the 29 period of redemption and referred to in section 140.360. I. 1 SCS HCS HB 613 6 30 [6. The one-year redemption period shall not apply to third-year tax sales, but the 31 ninety-day redemption period as provided in section 140.405 shalI apply to such seles. There 32 shall be no redemption period for a post-third-year tax sale, or any offering thereafter.] 140.340. 1. Upon paying the reasonable and customary costs of sale to the county 2 collector for the use of the purchaser, his or her heirs, successors, or assigns; the owner; 3 lienholder; or occupant of any land or lot sold for taxes, or any other persons having an interest 4 therein, [may] shall have the absolute right to redeem the same at any time during the one year 5 next ensuing[, in the following manner] and shall continue to have a defensible right to 6 redeem the same until such time as the tax sale purchaser acquires the deed, at which time 7 the right to redeem shall expire, provided upon the expiration of the lien evidenced by a 8 certificate of purchase under section 140.410 no redemption shan be required. 9 2. The reasonable and customary costs of sale include all costs incurred in selling 10 and foreclosing taxliens underthis chapter, and such reasonable and customarycosts shall 11 include the following: [bypaying to the county collector, for the use of the purchaser, his heirs 12 or assigns,] the full sum of the purchase money named in [hisl the certificate ofpurchase and all 13 the [cost] costs ofthe sale, including the cost to record the certificate ofpurchase as required in 14 section 140.290, the fee necessary for the collector to record the release of such certificate of 15 purchase, and the reasonable and customary cost of the title search and [mailings] postage 16 costs ofnotification required in sections 140.150 to 140.405, together with interest at the rate 17 specified in such certificate, not ·to exceed ten percent annually, except on a sum paid by a 18 purchaser in excess ofthe delinquent taxes due plus costs ofthe sale incurred by the collector, 19 no interest shall be owing on the excess amount, with all subsequenttaxes which have been paid 20 thereon by the purchaser, his or her heirs or assigns with interest at the rate of eight percentper 21 annum on such taxes subsequently paid, and in addition thereto the person redeeming any land 22 shall pay the costs incident to entry of recital o f such redemption; provided, however, that no 23 costs incurred by tax sale purchasers in providing notice of tax sale redemption rights 24 required by law shall be reimbursable as a reasonable and customary cost of sale unless 25 such costs are incurred after March first following the date of purchase of the tax sale 26 certificate by said tax sale purchaser at a first or second offering delinquent tax sale. 27 [2.1 3. Upon deposit with the county collector of the amount necessary to redeem as 28 herein provided, it shall be the duty of the county collector to mail to the purchaser, his or her 29 heirs or assigns, at the last post office address if known, and ifnot known, then to the address 30 of the purchaser as shown in the record of the certificate ofpurchase, notice of such deposit for 31 redemption. 32 [3.1 4. Such notice, given as herein provided, shall stop payment to the purchaser, his 33 or her heirs or assigns of any further interest or penalty. SCS HCS HB 613 7 34 [4. In case the party purchasing said land, his heirs or assigns fails to take a tax deed for 35 the Iand so purchased within six months after the expiration of the one year next following the 36 date of sale, no interest shall be charged or collected from the redemptioner after that time.1 37 5. The reasonable and customary costs ofsaleneeded to redeem anyland orIotsold 38 for taxes under this section shall be determined by the collector. 140.350. [Infants] Minors and incapacitated and disabled persons as defined in chapter 2 475 mayredeem any lands belonging to them sold fortaxes, within Ione yearafterthe expiration 3 of such disability] five years of the date of the last payment of taxes encumbering the real 4 estate by the minor, incapacitated or disabled person, the party's predecessors in interest, 5 or any representative of such person, in the same manner as provided in section 140.340 for 6 redemption by other persons. 140.405. 1. Any person purchasing property at a delinquent land tax auction shall not 2 acquire the deed to the real estate, as provided for in section 140.250 or 140.420, until the person 3 meets the requirements of this section, except that such requirements shall not apply to 4 post-third-year sales, which shall be conducted under subsection 4 of section 140.250. The 5 purchaser shall obtain a title search report from a licensed attorney or licensed title company 6 detailing the ownership and encumbrances on the property. [Such title search report shall be 7 declared invalid if the effective date is more than one hundred twenty days from the date the 8 purchaser applies for a collector's deed under section 140.250 or 140.420.] 9 2. At least ninety days prior to the date when a purchaser is authorized to acquire the 10 deed, the purchaser shall notify the owner of record and any person who holds a publicly 11 recordedunreleaseddeed oftrust, mortgage, lease, lien,judgment, oranyotherpubliclyrecorded 12 claim upon that real estate of such person's right to redeem the property. Notice shall be sent by 13 both first class mail and certified mail return receipt requested to such person's Iast known 14 available address. Ifthe certifiedmail return receipt is returned signed, the first classmaiInotice 15 is not returned, the first class mail notice is refused where noted by the United States Postal 16 Service, or any combination thereof, notice shall be presumed received by the recipient. At the 17 conclusion of the applicable redemption period, the purchaser shall make an affidavit in 18 accordance with subsection [4] 5 of this section. 19 3. If the owner of record or the holder of any other publicly recorded claim on the 20 property intends to transfer ownership or execute any additional liens or encumbrances on the 21 property, such owner shall first redeem such property under section 140.340. The failure to 22 comply with redeeming the property first before executing any of such actions or agreements on 23 the property shall require the owner of record or any other publicly recorded claim on the 24 property to reimburse the purchaser for the total bid as recorded on the certificate ofpurchase 25 and ali the costs ofthe sale required in sections 140.150 to I40.405. SCS HCS HB 613 8 26 4. In the case that both the certified notice return receipt card is returned unsigned and 27 the first class mail is returned for any reason except refusal, where the notice is returned 28 undeliverable, then the purchaser shall attempt additional notice and certify in the purchaser's 29 affidavit to the collector that such additional notice was attempted and by what means. 30 5. The purchaser shall notify the county collector by affidavit of the date that every 31 required notice was sent to the owner of record and, if applicable, any other publicly recorded 32 claim on the property. To the affidavit, the purchaser shall attach a copy of a valid title search 33 report as described in subsection 1 ofthis section as well as completed copies ofthe following 34 for each recipient: 35 (1) Notices of right to redeem sent by first class maiI; 36 (2) Notices of right to redeem sent by certified mail; 37 (3) Addressed envelopes for all notices, as they appeared immediately before mailing; 38 (4) Certified mail receipt as it appeared upon its return; and 39 (5) Anyreturnedregularmailed envelopes. As provided inthis section, atsuchtimethe 40 purchaser notifies the collector by affidavit that all the ninety days' notice requirements of this 41 section have been met, the purchaser is authorized to acquire the deed, provided that a collector's 42 deed shall not be acquired before the expiration date of the redemption period as provided in 43 section 140.340. 44 6. If any real estate is purchased at a third-offering tax auction and has a publicly 45 recordedunreleaseddeed oftrust, mortgage, Iease, lien,judgment, oranyotherpubliclyrecorded 46 claimuponthereal estate underthis section, thepurchaserofsaidproperty shall within forty-five 47 days after the purchase at the sale notify such person of the person's right to redeem the property 48 within ninety days from the postmark date on the notice. Notice shall be sent byboth first class 49 mail and certified mail return receipt requested to such person's last known available 50 address. The purchaser shall notify the county collector by affidavit of the date the required 51 notice was sent to the owner of record and, if applicable, the holder of any other publicly 52 recorded claim on the property, that such person shall have ninety days to redeem said property 53 or be forever barred from redeeming said prope.rty. 54 7. If the county collector chooses to have the title search done then the county collector 55 may charge the purchaser the cost ofthe title search before giving the purchaser a deed pursuant 56 to section 140.420. 57 8. [If the property is redeemed, the person redeeming the property shall pay the costs 58 incurred by the purchaser in providing notice under this section. Recoverable costs on any 59 property soId at a tax sale shall include the title search, postage, and costs for the recording of 60 any certificate ofpurchase issued and for recording the release of such certificate ofpurchase and 61 ali the costs of the sale required in sections 140.150 to 140.405. 4. 1 SCS HCS HB 613 . 9 62 9.1 Failure ofthe purchaser to comply with this section shall result in such purchaser's 63 loss of all interest in the real estate except as otherwise provided in sections 140.550 and 64 140.570. 65 9. The phrase "authorized to acquire the deed" as used in this chapter shalI mean 66 the date chosen by the tax sale purchaser that is more than the minimum redemption 67 period set forth in section 140.340 if the tax sale purchaserhas complied with the following 68 requirements entitling the purchaser to the issuance of a collector's deed: 69 (1) Compliance with the requirements of this section to the satisfaction of the 70 collector; 71 (2) Payment of the recording fee for the collector's deed as required under section 72 140.410; 73 0) Production of the original of the certificate of purchase as required under 74 section 140.420, or production of an original affidavit of lost or destroyed certificate 75 approved by the collector as to form and substance; and 76 (4) Payment of all subsequent taxes required to be paid under section 140.440. 77 10. Notwithstanding any provision of law to the contrary, any person except a 78 minor or an incapacitated or disabled person may receive notice under this section in a 79 foreign country or outside the United States: 80 (1) By any internationally agreed upon means of service that is reasonably 81 calculated to give notice, such as the Hague Convention on the Service Abroad of Judicial 82 and Extrajudicial Documents; 83 (2) If there is no internationally agreed upon means of service, or if an 84 international agreement allows service but does not specify the means, by a method that 85 is reasonably calculated to give notice; 86 (3) As set forth for the foreign country's acceptable method of service in actions in 87 courts of general jurisdiction; 88 (4) As the foreign country directs in response to a letter of request; 89 . (5) Unless prohibited by a foreign country's Iaw, by delivering a copy of the notice 90 to the person personally or using a form of mail that requires a signed receipt; or 91 (6) By any other means not prohibited by international agreement as approved by 92 the colIector. 140.410. In all cases where lands have been or may hereafter be sold for delinquent 2 taxes, penalty, interest and costs due thereon, and a certificate of purchase has been or may 3 hereafter be issued, it is hereby made the duty of such purchaser, his or her heirs or assigns, to 4 cause all subsequent taxes to be paid on the property purchased prior to the issuance of any 5 collector's deed, and the purchaser shall further cause a deed to be executed and placed on record SCS HCS HB 613 10 6 intheproper county all within Itwo years] eighteen months from the date ofsaid sale; provided, 7 that on failure of said purchaser, his or her heirs or assigns so to do, then and in that case the 8 amount due such purchaser shall cease to be a lien on said lands so purchased as herein 9 provided. Upon the purchaser's forfeiture ofall rights o fthe property acquired by the certificate 10 ofpurchase issued, and including the nonpayment of all subsequent years' taxes as described in 11 this section, it shall be the responsibility of the collector to record the cancellation of the 12 certificate of purchase in the office of the recorder of deeds of the county. Certificates of 13 purchase cannot be assigned to nonresidents or delinquent taxpayers. However, any person 14 purchasing property at a delinquent land tax sale who meets the requirements of this section, 15 prior to receiving a collector's deed, shall pay to the collector'the fee necessary for the recording 16 of such colIector's deed to be issued. It shall be the responsibility of the collector to record the 17 deed before delivering such deed to the purchaser of the property. 140.420.. If no person shall redeem the lands sold for taxes [within the applicable 2 redemption period of one year from the date of the sale or within the ninety-day notice as 3 specified in section 140.405 for a third-year tax sale] prior to the expiration of the right to 4 redeem, at the expiration thereof, and on production of the certificate of purchase and upon 5 proof satisfactory to the collector that a purchaser or his or her heirs, successors, or assigns - 6 are authorized to acquire the deed, the collector of the county in which the sale of such lands 7 took place shall execute to the purchaser, his or her heirs or assigns, in the name ofthe state, a 8 conveyance of the real estate so sold, which shall vest in the grantee an- absolute estate in fee 9 simple, subject,however,toall claims thereon forunpaidtaxes exceptsuchunpaidtaxes existing 10 at time of the purchase o f said lands and the lien for which taxes was inferior to the lien for taxes 11 for which said tract or lot of land was sold. 231.444. 1. In addition to other levies authorized by Iaw, the governing body of any 2 county of the third or fourth classification Iwithout a township form of government having a 3 population of less than six thousand inhabitants according to the most recent decennial census] 4 may by ordinance levy and impose a tax pursuant to this section which shall not exceed the rate 5 of one dollar on each acre of real property in the county which is classified as agricultural and 6 horticultural property pursuant to section 137.016. 7 2. The proceeds o f the. tax authorized pursuant to this section shaII be collected by the 8 countycollectorand remitted to the countytreasurerwho shall deposit suchproceeds in a special 9 fund to be known as the "Special Road Rock Fund". AIl moneys in the special road rock fund 10 shall be appropriated by the county governing body forthe sole purpose ofpurchasingroad rock 11 to be placed on county roads within the boundaries of the county. 12 3. The ordinance levying and imposing atax pursuant to subsection 1 ofthis section shall 13 not be effective unless the county governing body submits to the qualified voters of the county t* SCS HCS HB 613 11 14 a proposal to authorize the county governing body to levy and impose the tax at an election 15 pennitted pursuant to section 115.123. The ballot of submission proposing the tax shall be in 16 substantially the following form: 17 Shall the county of .......... (county's name) be authorized to levy and impose a tax on all 18 real property in the county which is classified as agricultural or horticultural property at a rate 19 not to exceed .......... (rate of tax) cents per acre with ali the proceeds of the tax to be placed in 20 the "Special Road Rock Fund" and used solely for the purpose of purchasing road rock to be 21 placed on county roads within tile boundaries of the county? 22 0 YES ONO 23 4. If a majority of the qualified voters ofthe county voting on the proposal vote "YES", 24 then the governing body ofthe countymay by ordidance levy ind impose the tax authorized by 25 this section in an amount not to exceed the rate proposed in the ballot of submission. If a 26 majority of the qualified voters of the county voting on the proposal vote "NO", then the 27 governing body ofthe county shall not levy and impose such tax. Nothing in this section shall 28 prohibit a rejected proposal from being resubmitted to the qualified voters of the county at an 29 election permitted pursuant to section 1 15.123. --1 5 4 Branson Christian County I, LP - d/b/a Abbey Orchard I 10-0.6-14-003-001-001.001 EXHIBIT G Agent Authorization 7 -6 1 r - --- 50708818.1 JU l t• AUTHORIZATION FOR ANOTHER PARTY TO REPRESENT TAXPAYER AT THE CHRISTIAN COUNTY ASSESSOR MEETING & THE RELATED BOARD OF EQUALIZATION HEARING I (We), Jeffrey E. Smith Partnerships. LC, Authorize - Robert J Muchow & Brian T Howes To represent me (us) at the property tax appeal meeting with the Christian County Assessor & the related Board of Equalization Hearing regarding the properties listed below. Notices and Correspondence are to be sent to: (Check only one) Taxpayer X Authorized Representative/Agent Stinature 6f taxpayer) G hq lif (Date) , Regarding all appeals listed below: Branson Christian County, LP Branson Christian County II, LP X l V .... 1 Branson Christian County II, LP d/b/a Abbey Orchard II 10-0.6-14-003-001-001.002 Exhibit A Appeal Summary Sheet Exhibit B Income and Expense Worksheet Exhibit C 2011-2014 Income Statements Exhibit D Land Use Restriction Agreement Exhibit E Maryville Formula Case Law Exhibit F HB No. 613 Exhibit G Agent Authorization 50709075.1 t 0 24 1 Branson Christian County II, LP d/b/a Abbey Orchard II 10-0.6-14-003-001-001.002 EXHIBIT A Appeal Summary Sheet 50709075.1 f Ii Branson Christian County II, LP d/b/a Abbey Orchard II 168-396 Truman Street, Nixa 10-0.6-14-003-001-001.002 , 2015 Board of Equalization Appeal Property Description The subject property is a 56-unit apartment complex built in 1994 located on Truman Street in Nixa. It is subject to rent limitations, operations requirements and other restrictions in exchange for low-income housing tax credits. AnneaI Summarv The $2,151,400 market value assigned to this property in 2015 by Christian County is excessive. This valuation represents a 461% increase in the previous $466,100 value and is not warranted in the marketplace. Taxpayer asserts a value of $892,200 based on the attached income analysis. Taxpayer's proposed valuation is based on the methodology established in Maryville Properties v. Nelson, 83 S.W.Jd 608 (Mo. App. W.D. 2002) for determining market value of low income housing properties. The Maryville Formula was applied by the State Tax Commission in Lake Ozark Village v. Whitworth, STC Appeal Nos. 97-47000,99-47003 and 01-47002 and many subsequent decisions. Most recently, the Commission reaffirmed application of the Maryville Fonnula in Farmington Associates II v. Ward, STC Appeal Nos. 11-84005 and 11-84006. The Maryville Formula for valuation of low income housing has been codified by HB No. 613 passed by the General Assembly and signed by the Governor July 16, 2015. HB No. 613 amends 137.076 RSMo to require use of an income approach with direct capitalization of net operating income of low income housing properties at market capitalization rates without considering tax credits or other subsidies. 50708212.1 4 47 /1 Branson Christian County II, LP d/Wa Abbey Orchard II 10-0.6-14-003-001-001.002 EXHIBIT B Income and Expense Worksheet i 50709075.1 J € 1 0 44 gg!©loirla, f:cifito "- E·C; (dic Q ' gg WIE-121 1 1- 0 101 £4 CD . " 0 t Nis'R ; i 0 11110:4 1 1 1- 7 114 015 -2.2 SIE· · 1 0 | 15 %6·5 1 03, 1% c 1 .0 · >< E 10&0.2!0 05:01012 6 E'21!23·@i.*1115,0 10 :Cl'. 00:2 1% *Bkfifm 111 0 0|0 111 -3|Z<12111 f '01,1% 0,-El . 101-1.-'Plo .N, 1 M.32 4 0 | 10 CO *N AO N V | 0 Nirtloid,10 CO LD. V Id =F t.- co· '(C-Ir 1\ 1 \li 09 1 01 1. 1 2.. 01 :lili 51 1 1 M lEi '21 1 + . i .0: 0: 8,1 0 -MI 1-2,1 E[c E Cl Mi .al ,lili .1 4 i 10-4*imilil El 0 91 21 41% 8 1 [Evial" 0-ca St .2, g; U E Z!240' 2 1 1 1,81.0,> 0 3 0 91 21 W > UJ R# 5< EMEOI 22 zig·ju EMI a 8 1 2-121 2 .2 1 a i Ull 11:1 1 A Z: 01-81J Ullo > M Branson Christian County II, LP d/Wa Abbey Orchard II 10-0.6-14-003-001-001.002 EXHIBIT C 2011-2014 Income Statements 50709075.1 1 .1 Branson Christian County ll, LP 2013-2014 Income Statements Income Statement Income Statement Description 12/31/2013 12/31/2014 Rental Income 292,160.00 312,024.00 Vacancy Loss (2,135.66) (6,731.59) Rental Loss - HUD (1,140.00) Gain or Loss to Lease (4,546.00) (8,396.00) Other Tenant Charges 8,650.02 11,996.75 Laundry & Vending Income 123.96 154.11 Reimb. Application Screens 1,080.50 1,462.50 Gain/Loss On Sale Of Assets (5,339.15) Interest Income 114.63 58.53 Interest Income - Reserves 0.39 0.86 Other Income 25.00 1,160.94 Total Income 294,332.84 306,390.95 Advertising 1,765.56 2,023.18 Application Screens 1,012.64 1,395.21 Auditing Expense 3,078.00 1,377.00 Bad Debt - Damages 2,410.00 3,862.99 Bad Debt - Rent 599.04 2,419.31 Employee Benefits - 401K 729.00 1,027.53 Employee Benefits - Health 2,759.24 2,529.24 Employee Benefits - Health 921.02 2,662.85 Employee Benefits - Other 6.81 Fees - Asset Management 1,500.00 1,500.00 Fees - Management 26,880.00 30,240.00 Fees - Partnership Reporting 5,000.00 5,000.00 Grounds Lease 5,000.00 5,000.00 Legal Expense 20.25 225.00 Licenses, Fees, Permits 1,665.38 1,968.05 Office Equipment 1,040.00 1,323.94 Office Supplies 291.04 166.14 Other Administrative Expense 1,363.76 2,019.77 Other Administrative Expense 11.12 Payroll - Site Manager 23,225.13 21,948.02 Postage & Freight 104.37 156.60 Telephone Expense 1,833.32 1,797.86 Taxes - Payroll - FUTA 22.66 22.69 Taxes - Payroll - FOTA 53.17 48.51 Taxes - Payroll - FICA 1,676.04 1,601.06 Taxes - Payroll - FICA 1,525.19 1,772.34 Taxes - Payroll - SUTA 169.78 146.31 Taxes - Payroll - SUTA 294.63 319.77 Training, Education & Seminar 1,243.13 2,006.31 Total Administrative Expense 86,200.28 1 94,559.68 f. Branson Christian County 11, LP 2013-2014 Income Statements Income Statement Income Statement Description 12/31/2013 12/31/2014 Furn. & Fixture Replacement 791.86 5,160.00 Furn. & Fixture Rept - Appliancs 2,972.51 5,473.01 Grounds - Contract 4,687.54 5,248.91 Maint. & Repair - Contract 4,322.36 4,774.60 Maint. & Rpr - Cntrct Htng/Cing 517.78 546.44 Maint. & Rpr - Cntrct CIng/Jntr 2,495.61 4,752.30 Maint. & Repair - Supply 5,702.68 5,424.18 Painting & Decorating 779.70 1,550.64 Payroll - Maintenance 20,556.64 23,896.41 Services 1,032.00 957.00 Snow Removal 882.45 · 1,604.76 Total Repairs & Maintenance Expense 44,741.13 59,388.25 Insurance - Fidelity Bond 141.06 105.95 Insurance - Property & Liab. 7,971.01 8,614.08 Insurance - Umbrella 616.04 526.31 Insurance - Worker's Comp. . 803.25 1,252.58 Total Insurance Expense 9,531.36 10,498.92 Utilities - Electricity 137.64 Utilities - Electricity 4,759.31 4,670.48 Utilits - Electrcty - Vacnt Unts 524.03 982.08 Utilities - Garbage 72.43 76.26 Utilities -Sewer 5,801.94 6,367,83 Utilities - Water 4,550.76 7,394.38 Total Utility Expense 15,708.47 19,628.67 Depreciation 44,378.61 40,085.14 Interest 13,350.74 31,476.31 Taxes - Real Estate 5,198.29 5,190.76 Total Non Applicable Expenses 62,927.64 76,752.21 TOTAL EXPENSES 219,108.88 260,827.73 NET INCOME 75,223.96 45,563.22 Add Back Non Applicable Expenses 62,927.64 76,752.21 Deduct Transfers to Reserves (6,000.00) (6,000.00) NOI Per Formula 132,151.60 116,315.43 Branson Christian County n, LP INCOME STATEMENTS For the Years Ended December 31,2011 and 2012 y 12/31/11 12/31/12 RENT REVENUE 5120 Rent Revenue - Gross Potential $ 274,000 $ 279,400 5100T TOTAL RENT REVENUE 274,000 279,400 VACANCIES 5220 Apartments (8,042) (756) 5250 Rental Concessions (333) - 5290 Miscellaneous - (5) 5200T TOTAL VACANCIES (8,375) (761) 5152N NET RENTAL REVENUE 265,625 278,639 FINANCIAL REVENUE 5410 Financial Revenue - Project Operations 115 134 5440 Revenue from Investments - Replacement Reserve 2 5400T TOTAL FINANCIAL REVENUE 117 134 OTHER REVENUE 5910 Laundry and Vending Revenue 52 158 5920 Tenant Charges 11,304 9,141 5990 Miscellaneous Revenue 197 1,802 5900T TOTAL OTHER REVENUE 11,553 11,101 5000T TOTAL REVENUE $ 277,295 $ 289,874 ***The accompanying notes are an integral part of these financial statements.•** 4 t Bronson Christian County II, LP INCOME STATENLENTS For the Years Ended December 31, 2011 and 2012 12/31/11 1281/12 ADMINISTRATIVE EXPENSES 6203 Conventions, Meetings & Training $ 2,081 S 610 6210 Advertising and Marketing 1,935 1,879 6311 Omce Expenses 1,321 1,080 6320 Management Fee/Bookkeeping/Accounting Services 26,880 26,880 6330 Manager or Superintendent Salaries 19,906 23,323 6340 I=gal Expenses - Project 232 353 6350 Audit Expenses 3,795 2,977 6360 Telephone Expense 1,768 1.461 6370 Bad Debts 3,165 5,207 6390 Miscellaneous Administrative Expenses 2,211 1,783 6263T TOTAL ADMINISTRATIVE EXPENSES 63,294 65.553 R UTILITIES 6450 Electricity 5,749 , 4,708 6451 Water 4,495 5,219 6453 Sewer 5,788 6,989 6400T TOTAL UTILITIES 16,032 16,916 IA OPERATING & MAINTENANCE EXPENSES 6510 Payroll 18,391 I2,651 6515 Supplies 7,042 5,114 6520 Contracts 20,631 12,745 6525 Garbage and Trash Removal 92 70 6546 Heating/Cooling Repairs and Maintenance 205 - 6548 Snow Removal 1,217 184 6573 Exterminating 600 1,003 6580 Vacant Unit Preparation 4,549 4,220 6500T TOTAL OPERATING & MAINTENANCE EXPENSES 52,727 35,987 rA 6710 TAXES & INSURANCE ttlpe Real Estate Taxes 5,228 5,240 - 6711 Payroll Taxes (Project's Share) 3,329 3,223 k 6720 Property and Liability Insurance (Hazard) 7,010 7,205 6721 Fidelity Bond Insurance 165 153 / 6722 Workmen's Compensation 1,044 644 ( 6723 Health Insurance & Other Employee Benefits 2,787 3,928) 6790 Miscellaneous Taxes, Licenses, Permits & Insurance 1,354 1,660 6700T TOTAL TAXES & INSURANCE 20,917 22,053 FINANCIAL EXPENSES 6820 Interest on Mortgage Payable 10,837 12,979-| 6800T TOTAL FINANCIAL EXPENSES 10,837 12,979 6000T TOTAL COST OF OPERATIONS BEFORE DEPRECIATION 163,807 153,488 5060T PROFIT (LOSS) BEFORE DEPRECIATION $ 113.488 $ 136,386 *** Thc accompanying notes are an integral part ofthese financial statements. .*. 5 Branson Christian County II, LP INCOME STATEMENTS For the Years Ended December 31, 2011 and 2012 12/31/11 12/31/12 DEPRECATION & AMORTIZATION 6600 Depreciation $ 94,879 $ 97,391 TOTAL DEPRECIATION 94.879 97,391 OPERATING PROFIT ORLOSS 18,609 38,995 ENTITY EXPENSES 7115 Asset Management, Partnership and Incentive Fee (6,500) (6,500) & 7190 Other Expenses (5,000) (5,000) A TOTAL ENTITY EXPENSES (11,500) . (11,500) b 3250 NET INCOME (LOSS) $ 7,109 S /Ei© PART n 7001 Total mortgage principal payments required during the audit year (12 44,212 43,574 monthly payments). 7002 Total of 12 monthlydeposits in the audit year into the Replacement 6,000 6,000 Reserve account. 7003 Replacement Reserve or Residual Receipts releases which are included 9,469 2,268 as expense items on this Profit and Loss Statement 7145 Debt Service for other loans (surplus cash/non-mild£(paf61· loans) 18,265 69.919 6/ 27,499 /«D.4.10 4 S, 240 R WrL Blmy- -7,w 4 11 tem UPT,Aggl- + 97,79 f Tivekagies,A (0954) RepLAUM»/1- Refeaver \ 3-1 1/Of N (Yiz Afa N )A gf"jiet + '-81650-396 S. Truman Blvd. Buildine 8-3. Nixa. MO 45714 MQ=24=Qo-004 4 5 !'1 6 7 8 9 10 11 12 t0 ft B00K0300:'AD[7989 - 11> I'DVI EXHIBIT B Annual Development Certification of Continuing Compliance Project Name: LIHTC No. Federal B.I.N.(s) through ' 1 Certification Period: From through The Undersigned. . on behalf of (che "Owner"), hereby certified under penalty of perjury than the above referenced Project me t the following requirements as shown in the final monitoring regulations in the Federal Register/Val. 514 No. 171/Wednesday. September 2, 1992, Dept. of the Treasury, Internal. Revenue Service. 26 CFR Part 1 a nd 602: 1. The Project met the requirements of the 20-50 test under Section 42(g) £ 1) (Al. or the 40-60 test under Section 42(g){1)(B), or the 15-40 test under Sections 42(8){4) and t42(d)(41(Bl for "deep rent skewed• Projects, whichever minimum set-aside is applicable: (check one) 20-50 40-60 15-40 ..1- 2. The Owner has received an annual income certification and documentation to supporr the certification, and a unit certification from each low-income tenant: yes no 3. Each low-income unit in the Project was rent restricced under Section 42(g){2): yes no 4. All units in the Project were for use by the general public and were used on a nontransient basis: yes no 5. Each building in the Project was suitable for occupancy, taking into accounc local health. safety and building codes: yes no 6. There was no change in the eligible basis (as defined in Section 42(d) ) of any building in the Project: yes no' If "no-, state che nature of the change: 7. All tenant facilities included in the eligible basis under Section 42(d;) of any building in the Project. such as swimning pools. other recreational facilities and parking areas, were provided on a comparable basis without charge to all tenants in the building: yes no 8. If a low-income unit in the Project became vacant during the year. reasonable artempts were made to rent that unit to tenants having a qualifying income and while the unit was vacant no units of comparable or smaller size were rented ro tenants not having a qualifying inccme: yes no 9. If the income of tenants of a low-income unic in the Project increased above the limit allowed in Section 42(g)(2)(D)(ii), the next available unit of comparable or smaller size in the Project was rented to tenants having a qualifying income: yes no 11 f, BD0X0300PAC·279SO ' 0,//ON ... Exhibit B (continued) 10. The rent collected during the period of this certification for the low-income units was either approved by Missouri Housing Development Commission during the application period or as a result of an annual request from the Owner per the provisions of Section 3 of the declaracion of land use restriction covenants for low.income housing tax credits which was filed of record in the county recorder's office for the referenced Project: yes no If •no•,indicate the highest monthly per unit renc chan was collected for che various bedroom sizes of rhe low-income units during this period: 0-BR 1-BR 2-BR 3-BR 4-BR 5-BR 11. If this Project was exempt from compliance reviews because of: -Financing under FmHA 515 Program; 50Q or more of the aggregate basis being financed with proceeds of obligations, the interest on which is exempt from tax under Section 103 of the Code; The Owner certifies that the Project complied with the requirements for FmHA assistance or tax-exempt financing. as applicable. and thet the buildings in the Project also met the minimum seclaside, income, rent and suitability-for-occupancy requirements of Section 42· yes no If •no•, or if the Owner of an exempted Project could not certify affirmatively co one or more of certifications 1-10. please explain the reasonts) below: In witness whereof, the Owner has caused this cerrification to be duly executed in its name on this day of . 1993. Legal Name of Owner By: Nome Title: State of Missouri ) }SS. County of Jackson ) Signed and sworn to before me. the undersigned authority. on this day of . 1993. Notary Public My Commission Expires: 12 ff BOOK 0300 PA6£7991 .. lf- 1103/1 EXHIBIT 32 Occupancy Report Month/Year Project LIHTC / Federal B.I.N. Building Address Reporc prepared by: Phone number: Total number of residential units in the building Toral number of LIHTC unics in the building If the building contains any areas that are not residential (laundry, or other tenanc facilities) described the character of the area(s): Compliance monitoring regulations require that the owner keep the first year occupancy records (certifications, etc.) of this building for six years beyond the tax filing dare of the final yeac of the development•s compliance period. All other year occupancy records are co be retained for at least six years after the due date (wich extensions) for filing federal income tax for that year. 13 ** Start and End DateInclude all tenant activity by Unit since the previous report. BOOK 0300 PAH9992 /0 al 4/1031 C W •4 16 *Includes Rent From All Sources P C Q M ,- 0. 0 F V m u, AM CD 1- 2 0 0 - rt 0 0 r C Mr*= a.-1= 0 0. 4 00 MZO fD • U) Un 24: < r (D ,-1 In = .a on M S= 0 )-• r. MC 0 U ¢t rt.6 0 O P. E 9- C O P n) 0 e i 0 -0 a 11, C 0-4 0 10 C. rD I M W rt w 1 0 {D» 14 'BAD?:0300PA617993 "r #NOM LIHTC No. EXHIBIT C TENANT INCOME CERTIFICATION L Building Name 2 Initial Cercification Assigned Unit No. Bedroom Size Annual Recertificktion PART 1 - HOUSEHOLD COMPOSITION *•Race/National Full-Time Student. *Member Origin Relarionship Disabled, No. List Name First Name of Tenant to Head Age Occupation Handicappedl (encer code) Head 1 1 1 It 3 /1 PART 2 - PROJECTED HOUSEHOLD INCOME FOR NEXT TWELVE.MONTH PERIOD"* Gross Net Self- Rental Inc., ReciremenE. Unemployment Alimony •Member Salary Employment Interest, Pension. Social Disability Child No or Wages Income Stock Div. Annuities Security Compensation Welfare Supnort Other Head Z COMBINED TOTAL INCOME FOR ALL HOUSEHOLD MEMBERS: $ r Attach additional sheets if necessary to provide information on additional household members: ** /1/ White, non-Hispanic /2/ Black. non-Hispanic /3/ Asian. Pacific Island LEI American Indian - Alaskan Native LE Hispanic Give projections of fucure household earnings for the next twelve-month period based on current earnings or benefits. Income musc include at least char percentae of net family assets based on HUD-determined passbook savings rate. Include under "Ocher-: withdrawal of cash or assets exceeding amount invested. Do not include: (l) income from family members under age 18; (21 payments for care of foster children; (3) medical expense reimbursements: (4) amount of educational scholarships used for tuition or books; (5) income of live-in aide who provides essential care 00 4 family member; (61 lump sum inheritances, insurance, or worker•s compensation settlements or bodily injury or Properry damage; (7) HUD training program payments: or (81 gifts. PART 3 - TENANT"S CERTIFICATION I/We certify that all infonnation I/we have provided for the purpose of completing this form is true and complete to the best of my/our knowledge and belief. Head of Household Date Spouse/Co-Head Date 15 60!li Ujuu ;Al·L , 0091 Form Approved -- EXHIBIT C2 1.1- floslOMB No. 2502-0069 | PRIVACY ACT wbTICE: This ihfor,nation iS to bi ,;d by the agency collecting V . .RANS ADMINISTRATION. It In datormining whether you qualify as 8 prospactive mortgagor or borrower U.S.D.A., FARMERS HOME ADMINISTRATION, AND under Its program. It wm not be disclosed outside the agency without your con· U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT- sant except to your employer(0 for verification of employment and as required · (Community Planning and Development, and and permitted by law, You do not have to give us this information, bur if you do Housing · Federal Housing Commissioner) not your application for approval as a prospective mortgagor or borrower may be delayed or rejected. The Information requested In this form is authorized by Title REQUEST FOR VERIFICATION 38, U,S,C., Chapter 37 0/ VAk by 12 U.S.C., Section 1701 et seq. f,7 HUD/FHAk by 42 U,S.C., Section 1452b tif HUD/CPD); and Title 42, U.S,C., 1471 et seq.,or OFEMPLOYMENT 7 US.C., 1921 et seq. b7 US.D.A..FmHA}. INSTRUCTIONS LENDER OR LOCAL PROCESSING AG ENCY (LPA): Complete ltems 1 through 7. Have the applicant complete kem 8. Forward the com- pleted form directly to the employer named in Item 1. EMPLOYER: Complete either Parts It and IV or Parts Ill and IV. Return form directly to the Lender or Local Processing Agency named In kern 2 of Part L PART I -REQUEST 1. TO: {Name and Address of Employarj 2. FROM: {Nameand Addiessof Lender or Local Processing AgencyJ 4. TITLE OF LENDER, OFFICIALOF 6. DATE 3. 1 certify that thit verification has been sent directly to the employer and LPA. OR FmHA LOAN PACKAGER has not paxsed through the hands of the applicant or any other interested party. 6. HUD/FHA/CPD, VA, OR FmHA NO. (Signature of Lender. Official of LPA. or FmHA Loan Packager} 1 have applied for a mortgage loan or a rehabllitation loan and stated that I 7. NAME AND ADDRESS OF APPLICANT am/wa: employed by you. My signatum in the block below authorizes verlfi- catIon of my employment information. 8. EMPLOYEE'S IDENTIFICATION SIGNATURE OF APPLICANT PART It-VERIFICATION OF PRESENT EMPLOYMENT EMPLOYMENT DATA PAY DATA · · 9. APPLICANT'S DATE OF EMPLOYMENT 12A. BASE PAY (Currant) FOR MILITARY PERSONNELONLY $ O Annual $ O Hourly Type Monthly Amount 10. PRESENT POSITION $ E Monthly $ weeki BASE PAY S $ 0 Other (Specify) RATIONS S 124 EARNINGS FLIGHTOR 11. PROBABILITY OF.CONTINUED EMPLOYMENT Type Year to Date Past Year HAZARD BASE PAY $ $ CLOTHING $ 13. 17 OVERTIME OR BONUS IS APPLICABLE,IS ITS OVER·INME $ $ QUARTERS $ CONTINUANCE UKELY? COMMISSIONS $ $ PROPAY $ OVERTIME O Yes D No BONUS O Yes Il No BONUS $ $ OVERSEAS OR , - . COMBAT 14. REMARKS (lf paid houily. Please indicate sverage houn worked each week durtng current und past yeBri PART !11·VERIFICATION OF PREVIOUS EMPLOYMENT 15. DATES OF EMPLOYMENT 16. SALARY/WAGE ATTERMINATION PER YEAR MONTH WEEK BASE PAY OVERTIME COMMISSIONS BONUS $ $ S $ 17. REASONS FOR LEAVING 18. POSITION HELD PART IV · CENTIFICATION Federal :tatutoi providi saver, ponaltle• for any fraud, Intentional mt:represontation, or cilmlnat connivance or con:pIracy purpoled to Influence the i:suance of _any guaranty or Insurinco by th• VA Administrator, the U.S.DA., FmHA Administrator, the HUD/FHA Commlisioner, or tho HUD/CPD Assirtant Secretary. 20. TITLE OF EMPLOYER 21. DATE 19. SIGNATURE Pieviour Editions May be Used until 16 HUD·6233/92004-g; VA 26·8497: FmHA-410.5 {12·80 Supply ts Exhausted - RETURN DIRECTLY TO LENDER OR LOCAL PROCESSING AGENCY BOOK 0300.,66[7995 $ 1 let LIHTC No. EXHIBIT D UNIT CERTIFICATION The undersigned hereby (certify)(certifies) that: 1. This Unit Certification is being delivered in connection with the undersigned's application for occupancy of Apartment No. in the project: The address of the particular building where the unit is located is , in the City of . County of . State of Missouri and has been issued Building Identification Number of ' by Missouri Housing Development Commission. 2. The infonnation indicated below is an accurate description of the physical and financial conditions of the unit as of the date occupied by the household. (a) Term of Lease: (b) Number of Rooms Bedrooms Baths (c) Approximate square feet of rental area: Cd) Equipment (check if applic,ble): Stove Air Cond. Garage . Refrigerator Carpet Clubhouse Dishwasher Drapes/Blinds Pool Disposal Fireplace Washer/Dryer Other: Ce] Services included in rent: Cf) Utilities (indicate if paid by Owner]: Heating Hot Wacer Air Cond. Cold Water Cooking Sewer Lighting Trash (g) The following boxes should be checked if the parties agree thar the unic appears to sauisfy local healrh. safety and building codes: Owner Tenant 3. List the following financial information for the unit: (a) Actual rent charged for the unit (b) Actual rent paid by Tenanc (c) Amount of rental assistance. if any Cd) Type of rental issistance. if any Ce) Estimated utility allowance -OWNER -TEHANT. Date By: Date Date 17 S BOOKOJ0OP16[7996 #llAg ·EXHIBIT •E• EXTENDED USE AND INITIAL BASE KENT PROVISIONS The Owner ham irrevocably elecced co extend the low-income use and rencal restrictions for N/A years beyond the close of the initial fifteen (15) year compliance period. The following base rents for the low-income units which were represented to Missouri Housing Development Commission will remain in effecc for one year after. [he dave a qualified building in the project is placed in service. and may only be increased upon application to and receipt of written approval from Missouri Housing Development Commission. 1 Studio Size A Size B 1 Bedroom $320. 4 Bedroom Size A Size A Size B Size B 2 Bedroom $370. 5 Bedroom Size A Size A Size B Size 3 3 Bedroom 6 Bedroom Size A . Size A Size B Size 031693 3016M 18 Branson Christian County II, LP d/b/a Abbey Orchard II 10-0.6-14-003-001-001.002 EXHIBIT E Maryville Formula Case Law 50709075.1 1 Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court of Appeals Decisions :: Miks... Page 1 of 13 Justia > U.S. Law > Case Law > Missouri Case Law > Missouri Court of Appeals Decisions > 2002 > Maryville Properties, LP v. Nelson Maryville Properties, LP v. Nelson i ' Annotate this Case 83 S.W.3d 608 (2002) 0 MARYVILLE PROPERTIES, L.P., Appellant, v. Pat NELSON, Assessor, Nodaway County, MO, Respondent. ' No. WD 60335. Missouri Court of Appeals, Western District. June 25,2002. t Rehearing Denied July 25,2002. Application for Transfer Denied Septeinber 24., 2002. *610 Cathy Joy Pitman Dean, Kansas City, for appellant. Scott W. Ross, Maryville, for respondent. RONALD R. HOLLIGER, Judge. Maryville Properties, L.P. (Maryville Properties) appeals from a decision of the State Tax ' Commission (Commission) including Low Income Housing Tax Credits (LIHTCs) received by Maryville Properties's limited partners in the valuation of a rent restricted apartment complex for real property tax purposes. Maryville Properties contends that 1) the tax credits and accelerated depreciation passed through to limited partners are intangible proberty not properly considered by statute in valuations for real estate tax assessments; 2) the Commission's decision violated the Missouri Constitution by valuing the property based upon the interest of the individual limited partners ofMaryville Properties rather than the property's fair market value; and 3) the http://lawjustia.com/cases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/2015 Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court ofAppeals Decisions :: Miss... Page 2 of 13 t Commissien r:bi'"ar;i·, 0-·':°led frm its own prior decision that such tax credits were not properly in lu lei ir v; '41 g n al ..... lerty. Jurisdiction We must first address the issue of our jurisdiction because Article V, Section 3 of the Missouri Constitution grants exclusive appellate jurisdiction to the Missouri Supreme Court of all cases involving the constructions ofrevenue laws of the state. Alumax Foils, Inc. v. City of St. Louis, 939 S.WN 907, 910 (Mo. banc 1997). The Supreme Court does not have exclusive jurisdiction unless each ofthe three separate elements is met: 1) construction; 2) of the revenue laws; 3) of this state. "Construction" differs from "application," and if the Supreme Court has already decided an issue, the Court ofAppeals applies the Supreme Court precedent. Branson Scenic Ry. v. Dir. of . Revenue, 3 S.W.3d 788,789 (Mo.App.1999). This case is one of first impression, and this court, 1 therefore, has no Supreme Court precedent to apply. Construction is required. The law in question, i however, is not a "revenue law of this state." We are required to interpret § 137.010, which defines, inter alia, two constitutionally mandated classifications of taxable property: real property and tangible personal property. Nevertheless, § 137.010 does not constitute a revenue law: A "revenue law" directly creates or alters an income stream to the government that imposes a tax or fee on property owned or used or an activity undertaken in that government's area of authority. Thus, a revenue law either establishes or abolishes a tax or fee, changes the rate of an existing tax, broadens or narrows the base or activity against which a tax or fee is assessed, or excludes from or 1 creates exceptions to an existing tax or fee .... A revenue law "of the state" is a law adopted by the , general assembly to impose, amend or abolish a tax or fee on all similarly-situated persons, properties, entities or activities in this state, the proceeds of which are deposited in the state treasury. Alumax Foils, 939 S.W.2d at 910. (Emphasis added). This court has previously held that cases involving property taxes imposed by a county and paid to the treasury of the county are not "revenue laws of this state." *611 Two Pershing Square, L.P. v. Boley, 981 S.W.2d 635,638 (Mo.App.1998). This case does involve construction of a law adopted by the general assembly. The proceeds of the ad valorem tax on real property are deposited in the treasury ofNodaway County, rather than in the state treasury. None of the other issues involved are reserved for the exclusive jurisdiction of the Supreme Court. Jurisdiction, therefore, properly lies with this court. Id. Background of Rent Restricted Federal Housing and Low Income Housing Tax Credits Since the 1930's, the federal government has utilized a number of approaches to provide higher quality and more affordable housing to lower income individuals and families. These efforts have http://lawjustia.com/cases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/2015 Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court of Appeals Decisions :: Miss... Page 3 of 13 t ranged fror governrant -r...9s•-uct··d and operated projects to various incentives for private investors tr pl w; le qu h 1 )us nf . t 'e FmHA Section 515 Program is intended to provide more affordable housing in rural areas to low to moderate income families and senior citizens by providing favorable long term financing to private developers. In return for this financing, the project owner restricts occupancy to qualified families and charges rent at rates set by FmHa. The LIHTC program is intended to motivate private investment by providing income tax credits which directly offset the federal income tax obligation of the individual investor. The individual investors in the Maryville property received such income tax credits through the Missouri Housing Development Commission (MHDC), a state agency established pursuant to RSMo. § 215.020. This program also supplied state income tax credits to the investors. According to the testimony, the individual inv.estor is motivated solely by the tax benefits. The tax : credits expire after ten years. The tax credits are "sold" to the individual investor on a discounted basis. Maryville Properties developed the rent-restricted apartment complex in 1992. For the tax years 1997 and 1998, the assessor valued this property at $758,300. Maryville Properties contested that the actual value was $350,000. The property is subject to FmHA Section 515, which means that the owner must restrict occupancy to low-income tenants and must comply with various regulations in return for a favorable interest rate. The limited partners of Maryville Properties also received federal income tax credits under the LIHTC Program as a result of their investment in the property. After development, Maryville Properties syndicated the project. The syndication process consisted of Maryville Properties creating a limited partnership in which a company under its control was the general partner. It then sold the ninety-nine percent limited partnership interest to a consortium of investors for between $138,000 and $169.000. The project cost was $748,647, but after syndication the value was $898,437. At the hearing, Maryville Properties' appraiser, Mr. Blaylock, testified that he could not explain the $149,790 increase in value except by way of the money paid during syndication. This appraiser testified that the income tax credits were not part of the real property. Another appraiser, Robert Cowan, testified for the assessor. His estimation of the value of the property included "the value a taxpayer in a 39% tax bracket would pay forthe property," and assumed that person would sell the property as soon as the tax credit expired. The assessor also included in the value of the property accelerated depreciation that the federal program allows to be passed through to each limited partner. *612 The hearing officer's decision included the value a person in a thirty-nine percent tax bracket would place on the tax credits and deductions. Maryville Properties appealed the hearing officer's http://lawjustia.com/cases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/2015 Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court of Appeals Decisions :: Miss... Page 4 of 13 decision, ard *he Co•"mj'·r.4-n lien:nd review, adopting the hearing officer's decision as its own. Maryville 1 ro ·er .er a, pe: led .0 ..- Nodaway County Circuit Court, which affirmed the Commission's decision. This appeal follows. Other facts will be stated as the issues are considered. Analysis We generally review the Commission's decision to determine whether it was supported by competent and substantial evidence on the record as a whole, whether it was arbitrary, capricious 1 or unreasonable, or whether the Commission abused its discretion. EvangeIical Ret. Homes of : Greater St. Louis, Inc. v. State Tax Comm'n of Mo., 669 S.W.2d 548, 552 (Mo. banc 1984). A reviewing court is not to substitute its opinion as to the value of a property for that of the Commission. John Calvin Manor, Inc. v. Aylward, 517 S.W.2d 59,63 (Mo.1974). However, ifthe question involves the app#cation of law to the facts, the reviewing court must weigh the evidence for itself and determine the facts accordingly. § 536.140(3). Maryville Properties argues that the Commission erroneously applied the law. The Commission stated under Finding of Fact 13: "Tax credits run with the land. They are part of the real property." However, whether LIHTCs constitute real property or intangible personal property, and whether a valuation of property that includes an assumption that the owner would be in a thirty-nine percent tax bracket values the property according to the owner's interest in it are questions of law. "It is well-settled that administrative agency decisions based on the agency's interpretation of law are matters for the independent judgment of the reviewing court." Morton v. Brenner, 842 S.W.2d 538,540 (Mo. banc 1992). (Internal citations omitted). Maryville Properties raises three points on appeal. In its first point it argues that the Commission erroneously applied the law because the incom6 tax benefits to the individual limited partners are not real property for the purposes of valuation for real estate tax purposes. In its second point, Maryville Properties claims that the inclusion of the tax benefits to the individual limited partners amounted to a violation of Article X, Section 4(a) of the Missouri Constitution prohibiting the classification of real property 1based on the owner's interest in the property. In its third point, Maryville Properties argues that the Commission failed to follow its own precedent in the valuation ofa similar low-income housing project. Constitutional and Statutory Scheme For ad valorem tax purposes there are three classes ofproperty: (1) real property, (2) tangible personal property and (3) intangible personal property. Mo. Const. Art. X, § 4(a). Each class of property is defined by statute: Class One (Real Property) http://lawjustia.com/cases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/2015 Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court of Appeals Decisions :: Miss... Page 5 of 13 "Real propert:'" ircli'Aes 1 -4 :tsel·' whether laid out in town lots or otherwise, and all growing crops, buil, inL < tr„ct tre< in p .. vents and fixtures of whatever kind thereon ..." Class Two (Tangible Personal) "Tangible personal property" includes every tangible thing being the subject of ownership or part ownership whether animate or inanimate,.other than money, and not forming part or parcel of real property as herein defined, but does not include household goods, furniture, wearing apparel and articles ofpersonal *613 use and adornment, as defined by the state tax commission, owned and used by a person in his home or dwelling place. 1 Class Three (Intangible Personal) i "Intangible personal property," for the purpose oftaxation, shall include all property other than 1 real property and tangible personal property, as defined by this section;" § 137.010, RSMo.2000. The definitions and proper classification are important because the Missouri Constitution prohibits the inclusion of intangible personal property in real property values. Mo. Const. Art. 10,§ 4(b). Are LIHTCs and Accelerated Depreciation Benefits received by the Owner Intangible Personal Property? Maryville Properties argues that Missouri law prohibits the*taxation of intangible personal i property as real property. § 137.010, RSMo. The parties agree that the classification of the tax benefits including LIHTCs provided to investors in subsidized low income housing is at issue. , The parties do not agree on the proper test for intangible personal property. Maryville Properties states the test for intangibility as "property which has no intrinsic and marketable value, but is merely representative or evidence ofvalue." Norris v. Norris, 731 S.W.2d 844, 845 (Mo. banc 1987). Norris involved a probate court's determination that a testator's intent was clear when he used the term "tangible personal property." The court held that intangible personal property "is that which has no intrinsic and marketable value, but is merely the representative or evidence ofvalue, such as certificates of stock, bont promissory notes, and franchises." Id. at 845. The Norris court was comparing intangible personal property to tangible personal property. Norris does not discuss the ; classifications of property for tax purposes. The assessor argues that the test for whether an item is tangible or intangible property is "whether the disputed value is appended to the property and, thus transferable with the property or is it independent of the property so that it either stays with the seller or dissipates upon sale." Main Plaza First Plat v. Boley, 1997 WL 49304, at *4 (Mo. State Tax Comm'n Feb. 6.1997). Maryville http:Mawjustia.com/cases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/2015 Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court of Appeals Decisions ::,Miss... Page 6 of 13 Properties :·rg•ies thp+ Mre- DI··za First Plfit concerned the abatement of a real properly tax rather than an inc m ' t: c rre .it t id 3, ..... :fore, inapplicable. The assessor argues that because LIHTCs are transferable only with the land, they constitute "transmissible value." Transmissible value is a concept discussed in several Tax Commission decisions. Simon Property Group, L.P. v. Boley, 1996 WL 600855 (Mo. State Tax Comm'n Oct. 17; 1996); Main Plaza First Plat v. Boley, 1997 WL 49304 (Mo. State Tax Comm'n Feb. 6,1997); John Hancock Mutual Life v. Stanton, 1996 WL 663128 (Mo. State Tax Comm'n Nov. 14,1996). Commercial property is to be assessed at its "true value in money." § 137.115. In Missouri Baptist Children's Home v. State Tax Commission, 867 S.W.2d 510 (Mo. 1993), the court was presented with the question of whether a below market lease could be considered in determining the valUe in money ofthe property. The Tax Commission took the position that a long term below market lease should not be considered in determining the value ofthe property. The court said,."True · value in money is the price which the property would bring from a willing buyer when offered for sale by a willing seller." Id. at 512. After considering positions taken by several states, the court concluded that *614 8]he more recent and better-reasoned approach is to authorize the assessing authority to utilize actual as well as potential income in determining true value." Id. The Commission, therefore, erred in refusing to consider the below market long term lease as reducing the value of the property because it did not comport with economic reality under the circumstances to use only potential rather than actual income in determining value. The court also observed that "[p]Iacing a value on real property is not an exact science. When relying on the income capitalization method to determine value, the factfinder necessarily has some discretion to decide what weight will be given to actual rent, as opposed to potential market rent, in reaching its decision." Id. at 513. Despite the permissible discretion, the assessment should not "have the effect ... of punishing the entrepreneur whose efforts created the environment for the market" and should not "ignore economic realities." Id. In,Main Plaza First Plat. the Commission held that the tax abatements allowed under the statute could be considered in assessing the value in part because they directly contributed to increase net operating income of the property and. thus, its fair market value in an income capitalization method of appraisal. 1997 WL 49304, at *5. The Commission argues that the LIHTCs at issue here run with the land like the tax abatements considered in Main Plaza First Plat. Maryville Properties responds that the LIHTCs do not affect the income ofthe property itself. Maryville Properties's argument. however, ignores the economic reality that the tax credits are in effect a substitute for the income the investors will not receive from their investment as a result of normal operations.[1] Because of the low rate of return from operations, other incentives to potential investors are deemed necessary. The tax credits provide one of those incentives. http://law.justia.com/cases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/2015 , Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court ofAppeals Decisions :: Miss... Page 7 of 13 In a related ar'·,un'ent '\/1-'»-' "'i.lie Pmperties asserts that the fallacy of including tax credits in the determinit: )11 if ahie:s f rtli :r .... onstrated by the need ofthe Commission to assume a thirty- nine percent tax bracket for the investor to determine the value. Maryville Properties is correct both that a potential investor may not be in that tax bracket and that, in addition, the upper bracket may change from time to time and correspondingly affect the economic value of the tax credit to the investor. However, we need not ignore economic reality and assume that a lower bracket investor would make this kind of investment.[2] Likewise, tax brackets may change but the 1 valuation here is for the true value ofthe- property on tax day 1997 and not at some future date i when tax changes may affect the resale value ofthe credits and consequently that of the property. Somewhat more troublesome is the fact that the tax credits will have been fully taken in ten years (the record reflects sometime in 2002). The assessor did consider only the remaining credits available after the tax year in question. Presumably the property will have less value after the credits are exhausted than it·did when credits were available. But the same phenomenon would occur where tax abatements ended as in Main Plaza First Plat (although in the case of tax abatements, *615 net operating income would decrease when full tax payments were being made). We also observe that a potential buyer would arguably not pay a Maryville Properties limited partner dollar-for-dollar for the tax credits. Like the original investor, most of a new investor's , return on his investment would be in the form and value of the remaining tax credits rather than r potential income from the project.[3] We cannot detennine if the assessor's appraiser considered this factor, but, in any event, no argument is made iIi a point on appeal that the Commission erred in determining the fair market value ofthe tax credits. All of the arguments made above are set forth by Maryville Properties in support of its contention that 1)-it would be bad policy to include the tax credits, and 2) that the tax credits are simply not the kind of benefits particular to the land (as opposed to the owner) that can be considered part of the real estate under law. Other states have also considered the inclusion or exclusion ofLIHTCs in determining real property values. Many of the arguments for and against consideration of the credits and the various views of other states are set forth in "Fairness in Valuation ofLow-Income Housing Tax Credit Properties: An Argument for Tax Exemption," Jonathan Pena, 11 AFFORDABLE HOUSING & COMMUNITY DEVELOPMENT LAW 53 (Fall 2001).[4] A contrary view is taken in "Another Ad Valorem View of Low-Income Housing Tax Credit Properties," Michael W. Collins, 67 APPRAISAL J. 306 (1999). Review of other states' decisions for precedential value in this area is di fficult because of varying constitutional and legislative differences. The Tax Commission relied upon and the assessor cites to a decision by the Washington Board of Tax Appeals, Cascade Court Limited Partnership v. Noble, BTA No. 49295 (Wash.1998). There, Washington State's equivalent of our Commission.held that LIHTCs were properly considered in http://lawjustia.com/cases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/20 15 Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court of Appeals Decisions :: Miss... Page 8 of 13 t valuing real e tate. Fawe .'ll„ the Washington Court ofAppeals reversed the Board's decision, holding thF " L 11 4 cret Its re · itr .t· ble personal properly and thus are not subject to real property txation." Cascade Court Ltd. P'ship v. Noble, 105 Wash.App. 563,20 P.3d 997,1002 (2001). The assessor and Commission also relied upon Deerfield 95 Investor Associates v. Town of East Lyme, 1999 WL 391099 (Conn.Super.Ct. May 26, 1999), which also held that LIHTCs could be considered in valuing the project. Maryville Properties points out, correctly, that the Connecticut court relied in part upon the subsequently reversed decision in Cascade, discussed above. More importantly, however, for our purposes is the finding in Deerfield that "LIHTCs, although intangibles. do have an effect on the valuation of real estate for assessment purposes .... " Id. at *6. (emphasis added). LIHTCs are also described as intangible assets in Advisory Opinion 14 ofthe 2001 Uniform Standards Professional Appraisal Practice. Although the assessor argues that intangible factors affecting the value ofreal estate should be i included in the valuation, he apparently agrees that intangible personal property is not includible in the value of real estate. The assessor points to no foreign case holding that these types oftax credits are not intangibles. Rather, the assessor suggests that LIHTCs do not pass the test for intangibility set forth by the Commission in Simon Property Group. *616 He suggests that the test is (1) the intangible asset must be identifiable, i.e. legally recognized; (2) it must be capable of private ownership; (3) it must be marketable, i.e. capable of being financed and/or sold separate and apart from the tangible property; and (4) practically, it must possess value, i.e. have the potential to earn income, or its existence is ofno consequence. The assessor's argument about this test focuses entirely on the non-severability of the tax credit from the land under the reasoning for tax abatements used in One Main Plaza First Plat. The assessor's brief does not discuss the other elements of the test. First, we do not believe that transferability alone is a sufficient test, although it is certainly a significant factor. We believe that another important factor is the potential to add or detract from the value of the property. i.e. to affect the income of the property. Below market leases and tax abatements have direct effects on the income of a property. LIHTCs do not. And although they would appear to add value to a property, the literature dealing with these projects suggests that most prudent investors will stay in the project for fifteen years. [5] Secondly, because the original limited partner investor achieves much of his return through the tax credits, his rate ofreturn is sharply reduced if he sells the ptoperty before receiving the full value of tax credits. This is particularly significant when considering that, while some tax credits remain: a potential purchaser of the investor's interest will likewise be looking for a discount from face value of the unused tax credits. http://lawjustia.corn/cases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/2015 Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court of Appeals Decisions :: Miss... Page 9 of 13 Finally, afpr +he fiftpmt}· -ir the hivestment may not be viable at all for the limited partner investor. T is Flr ip re :og tize i 1, .,e owner's right to return the property to the government at his will and without recourse after ten years. All of these factors result in a situation where there is little incentive to sell until the tax credits are exhausted and not subject to recapture,and there is , I little incentive to buy the interest of the partner unless it can be done at a substantial discount. The ' value of the tax credits is to the owner ofthe property and not to the property itself. 1 It is difficult to construct a satisfactory definition of intangible property for real estate valuation purposes, but certain important distinctions can be made. The assessor argues that zoning and location are intangible and yet they are obviously proper factors for consideration. Zoning and location, however, are characteristics of the property itself, not characteristics of the owners of the property. Likewise, just as with a below market lease or a tax abatement, zoning and location have a direct effect on the income or income producing potential ofthe property regardless of the identity or characteristics of the individual owner. LIHTCs are not characteristics ofthe property. Rather they are assets having direct monetary value. Their restricted transferability does not i destroy their essential status as intangible property having value primarily to their owner. Objective standards should be used for determining fair market value in the market place. The I t particular circumstances of the owner are not a proper consideration. Even in Deerfield, which i approved the use of LIHTCs in valuation, the court noted the difference in the concepts *617 of "investment value" and "market value. 11 1,Investment value is the value of a property to a particular investor, whereas market value is not related to the needs ofindividual investors but is objective, impersonal, and detached; investment value is based on subjective, personal parameters.' " 1999 WL 391099, at *2 (quoting in part The Appraisal Institute, The Appraisal of Real Estate 413 (10th ed.1992)). True value in money for ad valorem tax purposes in Missouri refers to the hypothetical price that i could be agreed upon between a willing seller and buyer. Baptist Children's Home, 867 S.W.2d at ] 512. LIHTCs make no direct contribution to the market value ofthese housing projects. They are i intangible property. There is no statutory authority for the consideration oftheke tax credits in real estate tax appraisal in Missouri. The Commission erroneously applied the law. The same reasoning compels that we reverse the Commission's inclusion of the capitalized value of the accelerated depreciation to the partners in the valuation. Again, this tax benefit is personal to the owner and not directly tied to the real estate. For the reasons stated, the decision of the Commission is reversed and remanded to the circuit court for entry of an order directing the Commission to redetermine its assessment of the Maryville property in accordance with this opinion. http://lawjustia.com/cases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/2015 Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court of Appeals Decisions :: M... Page 10 of 13 HAROLD T.. T.OWFATS'rETN. Pre'·;ding Judge, and THOMAS H. NEWTON, Judge, concur. NOTES [l] Investors are only allowed to receive eight percent of their initial investment per year. Often the return does not reach eight percent. [2] Even if such an investor were interested, he would prudently pay less for the tax credits because of the lesser benefit to him and would have to compete for the investment opportunity with a higher tax bracket investor to whom the credits were more valuable. [3] Although the tax credits are exhausted after ten years the rent limitations and other restrictions on the property last for a term of fifty years. MI Cases holding for particular states should be verified because of the effect of subsequent judicial decisions in some states and legislation addressing the issue in others. [5] The tax credits are taken over a ten year period. However, if a subsequent purchase in year fourteen changed the use of the property, the tax credits would then be subject to recapture plus penalties even though the beneficiary of the credit no longer had any interest in the property. 44 JUSTIA ANNOTATIONS ., ad. .F€' 9.6'-# )2fl..41*,1.5 Add your insight @92}Eiktia**t,/aittWt**}52444· .¥.i •r!4492£ L 2 1.2/t.,i-%94**4. Search this Case Google Scholar Google Books , Legal Blogs Google Web Bing Web http://law.justia.com/cases/missouri/court-of-appeals/2002/.wd60335-2.html 7/8/2015 Maryville Properties, LP v. Nelson :: 2002 :: Missouri Court of Appeals Decisions :: M... Page 11 of 13 Google New• Googie New A chi ·e Yahoo! News Find a Lawyer Missouri Search !71.. 7 Tania Aidaddah f Criminal Law, DUI & DWI, Personal Injury, TrafficTickets, White Collar Crime ' Clayton, MO Nellie K. Herchenbach · Divorce, Family Law St.Charles, MO Ryan R. 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More... © 2015 Justia Company Terms of Service Privacy Policy Contact Us http:Mawjustia.com/cases/missouri/court-of-appeals/2002/wd60335-2.html 7/8/2015 Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page 1 of 13 Thank you for printing our content at The Missouri State Tax Commission Office. Please check back soon for new and updated inform (http://stc.mo.gov/) MO.gov (http:#mo.gov) Governor lay Nixon (http://gov.mo.gov) Find an Agency (http://www.mo. gov/search-results? mode=state_agencies) online Services (http:Uwww.mo.gov/search-results? mode=online_services) Horne About File An Appeal FAQ's Legal Dec (http·Her mn gn,in (ht.I': 1,/Qtr mn gn,Va (http·Uetc.mo.go'qf (http·flstr mn goi.,g (hup·lt' etr T hnilf/) 11.-An-'proal/) reqi'pr,rly=asked- egal-deciz Lake Ozark Village v. Whitworth (Camden) question:/) April 29th, 2004 LAKE OZARK VILLAGE, ) Complatnant, ) v. ) Appeals Number 97-47000,99-47003 ) and 01-47002 J EDDIE WHITWORTH, ASSESSOR, ) CAMDEN COUNTY, MISSOURI, ) Respondent) DECISION AND ORDER HOLDING The methodology set forth in Maryville Properties v. Nelson, State Tax Commission Appeal No. 97- 74500, as modified by the Western Distrid Court of Appeals, is the correct methodology to determine market value of subsidized properties. The values established for the subject property for tax years 1997 through 2002 are SET ASIDE. The market value for the subject property on January 1, 1997 and January 1, 1998 was $813,170 (assessed value $154,500). The market value for the subject property on January 1, 1999 and January 1, 2000 was $577,220 (assessed value $109,670). The market value for the subject property on January 1, 2001 and January 1, 2002 was $602,770 (assessed value $114,530). ISSUE The Commission takes this appeal to determine the true value in money for the suwect property on January 1, 1997, January 1, 1999, and January 1,2001. SUMMARY http://ste.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 f., Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page 2 of 13 On November 24,2003, the above-entitled matter came on regularly for hearing in front of Hearing Officer Luann Johnson in the Camden County Courthouse, Camdenton, Missouri. Complainant was represented by counsel, Cathy Dean. Respondent was represented by counsel, Witliam Icenogle. Both parties submitted post-hearing briefs on January 30,2004. The issue on·appeal was the true market value of a 24 unit subsidized housing complex for tax years 1997 and 1998; tax years 1999 and 2000; and tax years 2001 and 2002. All exhibits not spedfically objected to on the record were entered into evidence. At the close of the hearing, counsel for Complainant objected to the Introduction of a review appraisal prepared by Mr. Loren K. Woodard for use by Respondent as a rebuttal exhibit. Complainant=s objection to the introduction of the exhibit was taken under advisement. Said exhibit is not admissible into evidence inasmuch as it was not authenticated by Mr. Woodard at hearing and was not used to cross-examine Complainant=s expert. FINDINGS OF FACT Jurisdiction is Proper 1. Jurisdiction over these appeals is proper. The taxpayer timely appealed to the State Tax Commission from the dedsion of the Camden County Board of Equalization. Maryville Properties Methodology Applies 2. These appeals revisit the issue of the proper way to value subsidized housing developments. The subjed properly, parcel number 09-3.0-06,1-000.0-001-058-004, is a 24-unit apartment complex construded under the same subsidized housing sedion as Maryville Properties. Uke the Maryville Properties case, a portion of the units must be maintained for low-Income tenants; the owners are subject to program record keeping requirements; and are eligible to receive a 7% interest reduction on their loan. And, as in Maryville Properties, the promissory note between the partners and the government is a non-recourse loan providing: ANO PARTNER, EITHER GENERAL OR UMITED, WILL HAVE ANY PERSONAL LIABILITY FOR THE PAYMENT OF ALL OR ANY PART OF THE INDEBTEDNESS.@ (Respondent Ex. 6, p. 7). 3. On December 14, 1998, by order of the State Tax Commission, the proceedings concerning the subject property and a number of other similar properties were stayed pending the outcome of Maryville Properties v. Nelson, State Tax Commission appeal No. 97-74500. In order to preserve its appeal rights, in addition to its 1997 and 1998 appeal, the taxpayer timely filed an appeal for tax years 1999, 2000, 2001 and 2002. Those appeals were also stayed by order of the State Tax Commission. 4. A decision was issued by the Hearing Officer and affirmed by the State Tax Commission in the Maryville Properties case in 2000. http:Ate.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page 3 of 13 5. The decision of the State Tax Commission in the Maryville Properties case was appealed. The Western District Court of Appeals rejected the use of tax credits and accelerated depreciation in calculating market value of subsidized properties, but left the remainder of the State Tax Commission=s valuation methodology unaltered. The Missouri Supreme Court denied application for transfer. 6. Official notice is taken of the State Tax Commission decision, and the Court of Appeals decision, in the Maryville Properties case. Industry Standards Modified 7. Valuation of substdized housing falls outside the industry standards for determining market value. Generally accepted industry standards define market value as being a value where: AFInancing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale; and the price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs or credits Incurred'in the transaction.@ Under the factors commonly considered when determining real property value, we would be required to ignore the benefits, restrictions and unique financing experienced by the subject property. However, in Missouri Baptist Children=s Home v. State Tax Commission, 867 S.W.2d 510 (Mo. banc 19931 our Supreme Court effedively modified industry standards and guidelines when it determined that the impact of long-term leases must be considered when determining value. Likewise, in Maryville Properties v. Nelson, 83 S.W.3d 608 (W.D. 2002), our Court of Appeals Indicated that we must consider Aeconomic realities@ when valulng property. That court further held that factors which have a direct impact on the income of the property should be considered. The economic realities which have a direct impact on the Income producing capabilities of a subsidized property are: low equity requirements, subsidized income, subsidized interest, above market expenses and non-recourse promissory notes. Thus, we find that we must reject approaches to value that fail to adequately deal with the unique charaderistics of the subject property==s financing. Market rents, expenses, yield rates and capitalization rates are of no value when determining the income producing capability of subsidized properties. As long as a property remains subsidized, it can never be valued using traditional industry standards and definitions of fair market value which require that we ignore those financing realities. This will, undoubtedly, create problems for appraisers who are accustomed to valuing property based upon industry standards. However, we cannot ignore the dictates of Missouri Baptist Children=s Home and Maryville Properties which, in effect, create a definition of Atrue value@ or Amarket value@ that is outside typical appraisal methodology. MaryvIlle Properties Methodology 8. With Missouri Baptist Children=s Home in mind, the Tax Commission decision in Malyville Properties set forth the methodology for valuing subsidized properties which considers the economic realities of the financing arrangements and the impact of those financing arrangements on the income stream of subsidized housing. Utilization of data derived from something other than the subsidized property fails to consider Aeconomic reality@ and creates a presumption of mis- valuation. Maryville Properties defines the methodology to be employeel as follows: http:Ustc.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 1 f. Missouri State Tax Commission » >> Lake Ozark Village v. Whitworth (Camden) Page 4 of 13 AAn income approach for subsidized property should use adual income and expenses realized by the subsidized property; it should use the loan-to , -value ratio approved by the subsidizing agency based upon the subsidized mortgage rate; it should allow an appropriate equ* dividend rate; and the taxes should be included in the capita#zation ate. The advantages of using actual income, expenses and financing terms are clear. An investor will look at the benefits and restrictions the property actually carries when making a purchasing decision. Ukewise, by using actual expenses, induding the significantly higher management fees, and considering the contributions required for the reserve account, Complainantss concerns about the high costs of operating the projed are appropriately addressed@, (Finding of Fact #23). Complainant=s Discounted Cash Flow Unreliable 9. In the Maryville Properties case, the Income approach commonly referred to as the Adiscounted cash flow method@ of valuing subsidized housing was found to be unpersuasive. In the best of circumstances, in order to be valid, a discounted cash flow income approach must be based upon trending substantial historical market data from the subject property or substantially similar properties and must have a very short projection period. In this case, none of the criteria for a valid discounted cash flow have been met. Although the appraiser mentions income and expenses from 6,750 units (Ex. CC, p. 24), he only uses the actual income and expenses from the subject property and an Aaverage@ vacancy rate rather than actual vacancy rates. He then uses a 9% interest rate Instead of 1% actually paid - after interest subsidies (Ex. CC, p. 31-32). Finally, the appraiser attempts to trend income and expenses for 48 years through the year 2044. Complainant=s appraiser asserts that his 15% vacancy rate is an economic reality, but that is simply false. The actual vacancy rate was not 15°/0. Complainant=s appraiser does not attempt to characterize his 9% capitalization rate as economic reality but counsel asserts that it is the rate necessary to attract capital investment for this type of property. Again, this is not economic reality. For these reasons, Complainanes discounted cash flow is not persuasive. Complainant=s Income Approach Unreliable 10. Complainant=s appraiser also prepared a more traditional income approach to value. Because there are no market sales of similar properties, Complainant=s appraiser used a mortgage/equity formula for determining the capitalization rate. In this methodology, Complainant=:s appraiser did not use the·actual interest paid on the subsidized loan but, instead, used a floating rate which he http:Ustc.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 I 1 r. Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page 5 of 13 testified was necessary to account for the buildup of equity. And, suggesting that the subject property was a high-risk investment, Complainant-s appraiser asserted that an equity yield rate of 20% would be required to attract investors. There is no reliable data to support Complainanb=s assertion that the subject property would be considered a high-risk investment or that the loan to value ratio would change. These conclusions are purely speculative. Finally, there is no evidence that Complainanb=s appraiser made any adjustment for the favorable interest rate running with the property or the non-recourse nature of the promissory note. Complainant=s Sales Comparison Unreliable 11. For whatever reason, subsidized properties do not sell in the open market. Consequently, there Is no basis for a sales comparison approach to value. Complainant=s appraiser did attempt a sales comparison approach but utilized unsubsidized sales and attempted to adjust for external and functional obsolescence due solely to the special financing arrangements for the subject property. In Maryville Properties we spedfically found that Annancing tools do not create external obsolescence@ (Finding of Fact #5). Similarly, financing tools do not create Afunctional obsolescence.@ Rent restrictions and management fees do not limit the ability of the apartment complex to function as an apartment complex. There is no evidence which suggests that the subject property suffers from any functional or external obsolescence. Complainant=s sales comparison approach is wholly conjecture and is not a rellable indicator of value for the subject property. Complainant=s Cost Approach Unreliable 12. Complainant=s appraiser also attempted to prepare a cost approach to value. As in the sales approach, Complainant=s appraiser has attempted to use financing tools to justify a Afunctional obsolescence@ adjustment of $160,000 and an Aextemal obsolescence@ adjustment of $160,927. To the extent that Complainant=s appraiser has attempted to use said finandng tools as a justification for a reduction in value under his cost approach, his cost approach fails to state the true value of the subject property. Maryville Properties Methodology Applied 13. Prior to evidentiary hearing, Hearing Officer Luann Johnson supplied the parties with worksheets for calculating value using the Maryville Properties methodology. Said worksheets are identified as Complainant=s Exhibit M and Respondent=s Exhibit 26. 14. For tax years 1997 and 1998, the assessor valued the property at $858,684 (assessed value $163,150). Upon appeal, the Board of Equalization reduced value of $700,105 (assessed value $133,020). In his appraisal report, Complainant=s appraiser, Teddy Blaylock, asserts a value of $360,000 (assessed value $68,400). Under the Maryville Properties approach to value, the value for the property on January 1, 1997 was $813,167 (Respondent=s Ex. 26). Atthough not agreeing with the Mary'ville Properties methodology, Mr. Blaylock produced a modified version of the Maryville Properties methodology which resulted in a value for the subject property for tax year 1997 of $622,755 (Complainant Ex. AA). http:Ustc.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page 6 of 13 f 15. For tax years 1999 and 2000, the assessor valued the property at $700,100 (assessed value $133,020). Upon appeal, the Board of Equalization approved the assessor=s value. In his appraisal report, Blaylock asserts a value of $365,000 (assessed value $69,350). Under the Maryville Properties approach to value, the value of the property on January 1, 1999 was $577,218 (Respondent Ex. 26). Under the Blaylock modified version of the Maryville Properties methodology, the value of the subject property on January 1, 1999 was $491,700 (Complainant Ex. AA). 16. For tax years 2001 and 2002, the assessor valued the property at $754,900 assessed vallie : $143,430). Upon appeal, the Board of Equalization affirmed the assessor=s value. For tax year 2001, Mr. Blaylock asserts a value of $350,000 (assessed value $66,500). Under the Maryville Properties approach to value, the value of the property on January 1, 2001 was $602,772 (Respondent Ex. 26). Under the Blaylock modified version of the Maryville Properties methodology, the value of the subject property on January 1, 2001 was $375,000 (Complainant Ex. AA). 17. The values calculated by Complainant=s appraiser in his appraisal report and his modified Maryville Properties approach to value are not reliable indicators of market value for the subject property o¢ the various tax days inasmuch as Mr. Blaylock has failed to correctly apply the Maryville Properties methodology. 18. The Respondent=s calculations of value under the Maryville Properties methodology are correct and correctly state the value for the subject proper·ty on the various tax days. The market value for the subject property on January 1, 1997 and January 1, 1998 was $813,170 (assessed value $154,500). The market value for the subject property on January 1, 1999 and January 1, 2000 was $577,220 (assessed value $109,670). The market value for the subjed property on January 1, 2p01 and January 1, 2002 was $602,770 (assessed value $114,530). 19. Correct calculations are set out in Respondentps Exhibit 26 as follows: 1997 1999 2001 Income Rental Income $ 40,786 $ 45,558 $ 49,203 Rental Subsidy $ 43,612 $ 45,162 $ 44,421 Laundry/Vending $ 166 $ 347 $ 297 $ 84,564 $ 91,067 $ 93,921 Potential Gross Income Less: Actual Vacancy & Collection $ 5,270 $ 6,198 $ 11,689 http://stc.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 Missouri State Tax Coinmission » » Lake Ozark Village v. Whitworth (Camden) Page 7 of 13 l j $ 79,294 $ 84,869 $ 82,232 Effective Gross Income Expenses Maintenance & Repair $ 6,600 $ 8,529 $ 7,075 Utilities $ 14,281 $ 15,111 $ 13,796 Administrative $ 16,233 $ 21,580 $ 27,165 Insurance $ 2,399 $ 1,969 $ 2,646 Reserve for Replacement $ 8,113 $ 15,135 $ 7,720 r Total Expenses $ 47,626 $ 62,324 $ 58,402 Net Operating Income $ 31,668 $ 22,545 $ 23,830 Capitalization Loan to Value x Actual Interest Rate .025402 .025402 .025402 Equity x Equity Dividend Rate .007500 .007500 .007500 Effective Tax Rate .006042 .006156 .006632 .038944 .039058 .039534 Overall Capitalization Rate p Value $ 813,167 $ 577,218 $ 602,772 (say $ 813,170) (say$577,220) (say $602,770) Net Operating Income divided by Overall Capitalization Rate CONCLUSIONS OF LAW http:Uste.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page 8 of 13 t Jurisdiction The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capridous. Article X, Section 14, Mo. Const. of 1945, Sedions 138.430, 138.431 RSMo. Board of Equalizatlon Presumption There is a presumption of validity, good faith and correctness of assessment by the Board of Equalization. Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STC, 308 S.W.Zd 748, 759 (Mo. 1958). Standard for Valuation Section 137.115, RSMo, requires that property be assessed based upon its true value In money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so. True value in money is defined in terms of value in exchange and not value in use. Mo. Const. Art. X, Section 4(b); St. Joe Minerals Corp v. State Tax Commission, 854 S.W.2d 526,529 (Mo. App. E.D. 1993); Missouri Baptist Children=s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993). It is the fair market value of the subject property on the valuation date. Hermel, supra, at 897. Complainant=s Burden of Proof In order to prevail, Complainant must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on the tax day. Herme], supra, at 897. Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact. The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in Inducing belief. Brooks v. General Motors Assembly Division, 527 S.W.2d 50,53 (Mo. App. 1975). Duty to Investigate In order to investigate appeals filed with the Commission, the Hearing Officer has the duty to Inquire of the owner of the property or of any other party to the appeal regarding any matter or Issue relevant to the valuation, subclassification or assessment of the property. The Hearing Officers dedsion regarding the assessment or valuation of the property may be based solely upon her Inquiry and any evidence presented by the parties, or based solely upon evidence presented by the parties. Section 138.430.2, RSMo. Weight to be Given Evidence The Hearing Officer is not bound by any single formula, rute or method in determining true value in money, but is free to consider al! 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 http:Ustc.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page 9 of 13 a particular case is for the Hearing Officer to decide. St. Louis v. Security Bonhomme, Inc., 558 / S.W.ld 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968). · The Hearing Officer as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as she may deem it entitled to when viewed in connection with all other . circumstances. The Hearing Officer is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert=s testimony and accept it in part or reject it in part. St. Louis County v. Boatmen=s Trust Co., 857 S.W.2d 453,457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardstey v. Beardsley, 819 S.W.2d 400, 403 Cio. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981). Opinion Testimony by Experts If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in Issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto. The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data upon which the expert relies need not be admissible in evidence. Section 490.065, RSMo; Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-705; pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. ED. 1992). Commission Determines Methodology 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 Tax Commission, 564 S.W.2d 888,896; Chicago, Burlington & Quincy Railroad Co. v. State Tax Commission, 436 S.W.2d 650, 657 (Mo. 1968), cert den. 393 U.S. 1092 (1969); St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Nto. banc 1997). It is also within the State Tax Commission's authority to ascertain the correct or modern means of determining value according to a particular method or approach that it adopts to ascertain valuation, and it fs within the Commission's discretion to determine what factors should be considered lin fixing the "true value in money" for property under a valuation method or approach adopted for use in a particular case. Hermel, Inc. v. State Tax Commission, supra. The relative weight to be accorded any relevant factor in a particular tax assessment case is for the State Tax Commission to determine. St. Louis County v. State Tax Commission, 515 S.W. 446, 450 (Mo. 1974). State Tax Commission decisions must declare the propriety of and the proper elements to consider in adopting a valuation approach, and must provide a definite Indication as to the weight · accorded each approach or method, i.e., how the final decision is weighed between the various approaches, methods, elements and factors. St. Louis County v. State Tax Commission, 515 S.W.2d 446, 451(Mo. 1974). The determination of "true value in money" of any property is a factual issue for the State Tax Commission, O'Flaherty v. State Tax Commission, 698 S.W.2d 2,3 (Mo. banc 1985). http:Uste.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 f .- Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page 10 of 13 i Courts Defer to State Tax Commission Decisions. The Missouri Supreme Court, in Savage v. State Tax Commission of Missouri, 722 S.W.2d 72 (Mo. banc 1986), observed: Our review of the Commission's decision is ordinarily limited to whether that dedsion is "supported by competent and substantial evidence upon the whole record or whether it was arbitraty, capricious, unreasonable, unlawful or in excess of its jurisdiction." Evangerical Retirement Homes of Greater St. Louis, Inc. v. State Tax Comh, 669 S.W.2d 548,552 (Mo. banc 1984); Section 536.140.01, RSMo. 1978. In matters of property 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 Cassilly v. Riney, 576 S.W.Zd 325,328 (Mo. 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 in the hight most favorable to the administrative body, together willall reasonable inferences which support it, and if the evidence would support either of two opposed findings, the reviewing court is bound by the administrative determination." Hermel, Inc. v. State Tax Commission, 564 S.W.ld 888, 894 (Mo. banc 1978) (citation omitted). When read together, our cases demonstrate that this Court is /oathe to substitute its judgment for the expertise of the Commission in matters of property tax assessment Absent dear cause, we will "stay our hand[s]." Pierre Chouteau Condominiums v. State Tax Commission, 662 S.W.ld 513, 517 (Mo. banc 1984). Offidal Notice Agencies shall take official notice of all matters of which the courts take judicial note. Section 536.070(6), RSMo. Courts will take judicial notice of their own records in the same cases. State ex ret. 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.ld 844, 846 (Mo. 1952); Knorp v. Thompson, 175 S.W.2d ' 889, 894, transferred 167 S.W,ld 205 (1943); Bushman v. Barlow, 15 S.W.Zd 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). DISCUSSION Proper Methodology http://stc.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 €. Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page 11 of 13 i . In this case, and all subsequent subsidized housing cases, the correct methodology for valuing subsidized housing projects is the methodology set out in Maryville Properties. That methodology is accurate because (1) rent restrictions are considered through the use of actual income rather than market income; (2) additional management requirements and expenses are accounted for through use of actual expenses which are in excess of market expenses; and (3) the actual loan-to value ratio and the subsidized interest rate demonstrates and accounts for any and all risks involved in the property as well as the benefits flowing to the property. It is Aeconomic reality.@ It is within the authority and expertise of the Tax Commission to determine which valuation methodology best represents value in a given situation or for a particular category of properties. Hermel, supra. After carefully considering the benefits and risks assodated with subsidized housing, the State Tax Commission, in Maryvitle Properties, determined that calculating value based upon actual income, actual expenses, and actual interest and capitalization rates was the best way to recognize all benefits and risks associated with subsidized housing. Complainant Failed to Meet Burden of Proof Complainant asserts that the Commission must adopt its appraiser=s opinion of value because that Is the only evidence presented in this case. However, it is the duty of the Commission to find value and there is more than enough evidence in this case for the Commission to make a determination of value using the Maryville Properties methodology. The Commission Is not required to adopt the condusions of the Complainant's appraiser when actual income, actual expenses, actual loan-to- value rates and interest rates are available. Complainant has failed to present substantial and persuasive eviddnce In support of its opinion of value. An opinion of value which is based upon improper elements or an improper foundation Is without probative value. Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965). Complainant=s appraisal ignores economic realities and, thus, is based upon Improper elements and an improper foundation. Failure to Consider Benefits Mr. Blaylock made no attempt to calculate the value of the substantial benefits flowing to this property by reason of the favorable financing documents in any of his approaches to value. It Is possible to measure the difference in rent obtained from a rent restricted apartment and a non- restricted apartment but that only tells a portion of the story. The benefits of a low interest loan, guaranteed rental subsidizes and a non-recourse loan have yet to be measured by an appraiser based upon market-derived data because these properties are not selling. And, without accounting for the benefits associated with the favorable financing and guaranteed income, Mr. Blaylock=s calculations under the cost approach, sales approach, and income approach necessarily understate the value of the subject property. Mr. Blaylock=s assertions that his adjustments reflect market conditions and economic reality are not well taken. Discounted Cash Flow Highly Speculative The discounted cash flow methodology was specifically rejected in the Maryville Properties case and we reject it again in this case. To find that a discounted cash flow approach is retiable, the Commission would be required to find that an appraiser can predict a property=s income, expense and capitalization rate at a point in the future-in this case, 2044. With substantial verified data it http:Ustc.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page 12 of 13 may be possible to trend or predict income, expenses and capitalization rates in the immediate future. However, a discounted cash flow analysis is extremely speculative. In this case, there is little historical data in that the project came on line in 1995. The tax years in question are 1997, 1999 and 2001. Based upon this very limited information, we again find the discounted cash flow approach to be unreliable and unpersuasive. Complainantps Maryville Properties Calculations Unreliable At the Hearing Officer=s request, both parties prepared Income and expense calculations using the Maryville Properties methodology, although Complainant deviated from the methodology at several points. Complainant asserts that the Maryville Properties methodology is not the correct way to value property but, with some changes, would not be an unreasonable methodology. Complainant asserts that the vacancy rate should be averaged; that partnership management fees should be included in expenses as a third category of management fees; and that the loan to value ratio should be adjusted annually. Such deviations are inappropriate and misreprespnt the value of the subject property. A calculation of actual income includes an adjustment for actual vacancy rate. Applying an artificial vacancy rate results in an understatement of value. Inasmuch as value Is calculated every two years, changes in vacancy rates will automatically result in appropriate changes in value. It is not necessary to speculate about vacancy rates when actual rates are available for use in the Maryville formula. Partnership management fees are clearly not a management fee of the property. The fact that a partnership may only own one asset does not mean that that asset is responsible for paying the costs of maintaining the partnership. Finally, Complainant=s assertion that a new purchaser would not be able to get a 95% loan for the subject property and might only be able to acquire the property through an assumption of the original loan, is unsubstantiated speculation, is contradicted by the evidence, and is entitled to no weight whatsoever. Mr. Blaylock testified that, for the Maryville Properties case in 2000, he had spoken with a Mr. Marks from Rural Development and was told that a refinance with a 95% loan would only be available if the property had been Acompletely rehabbed@., 1.e. made new. (Tr. 15). Mr. Blaylock later testified that Mr. Marks= exact words were Athey would only make a 95% loan if the property was substantially rehabbed@. (Tr. 58). No evidence was presented which tended to show how Rural Development defined Arehabbed@ or which would tend to clarify when a rehab was required. But, for our purposes, the distinction is immaterial. The subject property was almost new on the original tax day and, at hearing in 2003, Mr. Blaylock testified that it suffered from very little physical deterioration (Tr. 38) and a reserve for replacement was maintained by the partners. In his appraisal report, Mr. Blaylock states that the purpose of the reserve for replacement was to Areplace roofs, carpets, cabinets, appliances, air conditioning, heating, water heater, tile floors, etc.@ (Complainant=s Ex. CC, p. 25). Even assuming that the government would require rehabilitation, It is obvious from the taxpayer=s testimony little rehabilitation is needed and'that the funds have already been earmarked for that rehabilitation. http://stc.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ 7/8/2015 Missouri State Tax Commission » » Lake Ozark Village v. Whitworth (Camden) Page 13 of 13 Respondentps Maryville Properties Calculations Reliable The decision of the Commission in this case is based upon the formula set forth In Maryville Properties. And, in particular, the calculations made by Respondent. (Respondent=s Ex. 26). Respondent=s calculations precisely follow the methodology set forth in Maryville Properties. The calculations, as presented by Respondent, are accurate and are adopted by the Commission. ORDER The assessed valuation for the subject property as determined by the Board of Equalization for the subject tax days is SET ASIDE. The market value for the subject property on January 1, 1997 and January 1, 1998 was $813,170 (assessed value $154,500). The market value for the subject property on January 1, 1999 and January 1, 2000 was $577,220 (assessed value $109,670). The market value for the subject property on January 1, 2001 and January 1, 2002 was $602,770 (assessed value $114,530). A party may file with the Commission an application for review of this decision within thirty (3) days of the mailing of such decisIon. The application shall contain specific grounds upon which it is claimed the decision is erroneous. Failure to state specific facts or law upon which the appeal is based will result in summary denial. Section 138.432 RSMo. If an application for review of this decision is made to the Commission, any protested taxes presently in'an escrow account in accordance with these appeals 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 dedsion and order is deemed final and the Collector of Camden 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 these appeals. If any or all protested taxes have been disbursed pursuant to Section 139.031(81 RSMo., either party may apply to the drcuit 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 or Fact or Conclusion of Law shall be so deemed. SO ORDERED April 29,2004. STATE TAX COMMISSION OF MISSOURI Luann Johnson Hearing Officer http:Ustc.mo.gov/legal/lake-ozark-village-v-whitworth-camden/ ' 7/8/2015 Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Assesso... Page 1 of 15 Thank you for printing our content at The Missouri State Tax Commission Office. Please check back soon for new and updated information. (http://stc.mo.gov/) Farmington Associates 11 et al v. Dan Ward, Assessor St Francois County January 30th, 2015 State Tax Commission of Missouri FARMINGTON ASSOCIATES II ) Appeal No. 11-84005 FARMING ASSOCIATES ) Appeal No. 11-84006 Complainants ) -VS- ) DAN WARD, ASSESSOR, ) ST. FRANCOIS COUNTY, MISSOURI ) Respondent. ) http:Uste.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 .. Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Assesso... Page 2 of 15 DECISION AND ORDER HOLDING Decisions of the St. Francois County Board of Equalization are SET ASIDE. The Hearing Offlcer finds that the only valuation methodology fully presented is the Maryville Formula. Appeal No. Parcel No. True Value Assessed Value 11-84005 09-70-35-00-000-0016,02 $1,934,000 $367,460 11-84006 09-70-35-00-000-0016.00 $651,660 $123,815 Complainants are represented by Counsel Richard Dvorak. Respondent Is represented by counsel Patrick King. ISSUE The Commission takes this appeal to determine the true value in money for the subject properties on January 1, 2011. SUMMARY Subject Property The subject properties were appealed as Farmington Asodates and Farmjngton Associates -II. They are also known as Orchard View and Orchard View II. For purposes of the decision, the properties will be referred to in the order they were constructed as the "first property" (11-84006) and the "second property" (11-84005). http:Uste.mo.gov/legal/farminglon-associates-ii-el-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Assesso... Page 3 of 15 The first property was constructed in 2003. It is 3.49 acres improved with in apartment building consisting of 40 units totaling 40,400 square feet of rentable area. The improvements also Include an office/dubhouse which includes a central laundry facility. The second property was constructed in 2009-2010. It is 3.86 acres improved with an apartment building consisting of 56 units totaling 57,008 square feet of rentable area. The residents of this building have access to all the amenities of the first property. As to both properties a "Low Income Housing Tax Credit Land Use Restriction Agreement" was recorded at the time of their construction. By the terms of the agreement, Missouri Housing Deveiopment Commission (MHDC) allocated low income housing tax credits to the project in exchange for the owner's agreement to be regulated by MHDC. The term of the agreement was for 15 years. The owner agreed the units are to be both rent restricted and occupied by individuals or families whose income is 60% or less of the area median gross income. The owner is allowed to charge up to $675 per month for 2 bedroom units and $780 per month for 3 bedroom units. - The amount of the tax credits given is unknown. Exhibits Exhibit A - An appraisal report was submitted for each property. Both appraisals were marked as Exhibit A. The Exhibit was submitted pursuant to the exchange schedule and admitted into evidence prior to the hearing. Exhibit B - Written direct testimony of appraiser Kenneth Jaggers was submitted in each appeal. In both appeals, the exhibit was marked as Exhibit B. The.Exhibit was submitted pursuant to the exchange schedule and admitted into evidence prior to the hearing. Exhibit C - An amendment to the appraisal report, Exhibit A, was offered immediately prior to going on the record the day of hearing. The amendment was marked Exhibit C. This is not the first time Appraiser Jaggers has appeared at a State Tax Commission hearing and presented an amendment at the last hour. Respondent graciously agreed to allow Mr. Jaggers to amend his report and Exhibit C was admitted into evidence, Exhibit 1- A page from the property record card of the first property submitted pursuant to the exchange schedule and admitted into evidence prior to the hearing. http://ste.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 , Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Assesso... Page 4 of 15 Exhibit 2 - A page from the property record card of the second property submitted pursuant to the exchange schedule and admitted into evidence prior to the hearing. Exhibit 3 - Calculation of value using the Income approach for both properties submitted pursuant to the exchange schedule and admitted into evidence prior to the hearing. Exhibit 4 - Wrjtten direct testimony of Dan Ward submitted pursuant to the exchange schedule and admitted Into evjdence prior to the hearing. Exhibit 5 - Order Approving the Stipulation of the Parties for the fjrst property dated January 6, 2007 admitted Into evidence without objection. Exhibit 6 - Submission to MHDC on the jmprovements of the subject property. Exhlblt was not submitted for admission into evidence. Exhibit 7 - Application for Building Permit for the second property. Exhibit admjtted'into evidence without objection. Exhibit 8 - USPAP 2-2. Exhibit was not submitted for admission into evidence. Exhibit 9 - Full copy of the property record card of the first property. Exhibit admitted Into evidence without objection. Exhibit 10 - Full copy of the property record card of the second property. Exhibit admitted Into evidence without objection. FINDINGS OF FACT 1. Jurisdiction over this appeal js proper. Complainants timely appealed to the State Tax Commission from the decisions of the St. Francois County Board of Equalization, 2. The property in appeal 11-84005, Farmington Associates II, is also known as Orchard View II and is Identified by locator number 09-70-35-00-000-0016. The property in appeal 11- 84006, Farmington Associates, is also known as Orchard View, and is identified by locator number 09-07-35-00-000-0016-02. 3. The properties are multj-famjly residential properties. The first property, built in 2003, consists of 40 units, 40,400 square feet of net rentable area on 3.49 acres. Improvements include an | office/clubhouse with laundry facilities and parking. The property is in average condition with above average unit features. The second property, built in 2009, consists of 56 units, 57,008 feet square on 3.86 acres. Improvements also Include parking and solar panefs. The properties make use of the office and clubhouse located on the first property. The property is above average to market as to age, condition, size, layout, and unit features. http:Uste.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Assesso... Page 5 of 15 4. The subject properties are designated as low income, rent restricted units for tenants whose j income is 60% or less of the "area median gross income", adjusted for family size. Occupancy is at 96%. This is believed to be a stabilized level. Rents have been approved for a maximum of $675 for 2 bed units and $788 for 3 bed units. 5. The market rents in the area are $595 for 2 bedroom units and $695 for 3 bedroom units. 6. Complainants' appraiser relied only the "Maryville formula" income approach, as a jurisdictional exception to the standard approaches to value. Complainants' appraiser's value determinations were based upon actual income (with market rates applied to the vacant units), projected expenses and a capitalization rate of 9.21% derived from the property funding and market. The appraiser proposed values of $1,520,000 and $660,000. 7. The Maryville formula was the only approach fully presented and relied upon by the parties. Using the formula with tbe actual income, actual expenses and a capitalization rate derived from the Information presented, the true value of the Arst property is $651,600 and the true value of the second property js $1,934,000. Appeal No. Parcel No. True Value Assessed Value 11-84005 09-70-35-00-000-0016.02 $1,934,000 $367,460 11-84006 09-70-35-00-000-0016.00 $651,660 $123,815 CONCLUSIONS OF LAW AND DECISION Jurisdiction The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious. The Hearing Officer shall issue a decision and order affirming, modifying or reversjng the determination of the board of equalization, and correcting any assessment which Is unlawful unfair, improper, arbitrary, or capricious. (Article X, Section 14, Mo. Const. of 1945; Sectjons 138.430, 138.431, 138.431(4) RSMo.) Official and Judicial Notice http://stc.mo.gov/legakfarmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Assesso... Page 6 of 15 Agencies shall take official notice of all matters of which the courts take judicial notice. (Section 536.070 (6)) 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.ld 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)nstant 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.ld 118, 122 (Mo. 1966). Presumptions In Appeals There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STQ 308 S.W.2d 748, 759 (Mo. 1958). The presumption in favor of the Board is not evidence. A presumption simply accepts something as true without any substantial proof to the contrary. In an evidentiary headng before the Commission, the valuation determined bythe Board, even if simply to sustain the value made by the Assessor, is accepted as true only until and so long as there is no substantial evidence to the contrary. The presumption of correct assessment is rebutted when the taxpayer, or respondent when advocating a value different than that determined by the Board, presents substantial and persuasive evidence to establish that the Board's valuation is erroneous and what the fair market value should have been plated on the property. Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Standard for Valuation Section 137.115, RSMo, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who Is not compelled to do so. St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526,529 (Mo. App, E.D. 1993); Missouri Baptist Children's Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc http://stc.mo.gov/legal/farmington-associates-ii-ct-al-v-dan-ward-assessor-st-francois-coun,.. 2/20/2015 f. Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Assesso... Page 7 of 15 1993). It is the fair market value of the subject property on the valuation date. (Hermel, supra) Market value is the most probable price in terms of money which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price Is not affected by undue stimulus. Implicit in this definition are the consummation of a sale as of a spedfic date and the passing of title from seller to buyer under conditions whereby: 1. Buyer and seller are typically motivated. 2. Both parties are well informed and well advised, and both acting in what they consider their own best interests. 3. A reasonable time is allowed for exposure in the open market. 4. Payment is made in cash or its equivalent. 5. Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale. 6. The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction. Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; See also, Real Estate Valuation in Litigation, J. D. Eaton, M.A.I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80; Uniform Standards of Professional Appraisal Practice, Glossary. http:Ustc.ino.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 Missouri State Tax Commission » >> Farmington Associates II et al v. Dan Ward, Assesso... Page 8 of 15 Weight to be Given Evidence The Hearing Officer is not bound by any single formula, rule or method in, determining true value in money, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled. The relative weight to be accorded any relevant factor In a particular case Is for the Hearing Officer to decide. St. Louis County v. Security Bonhomme, Inc., 558 S.W.ld 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.ld 446,450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968). Methods of Valuation Proper methods df valuation and assessment of property are delegated to the Commission. It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case. See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra; Xerox Corp. v, STC, 529 S.W.ld 413 (Mo. banc 1975). Missouri courts have approved the comparable sales or market approach, the cost approach and the Income approach as recognized methods of arriving at fair market value. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STQ 789 S.W.2d 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.ld 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm'n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. Div. 2 1974). Opinion Testimony by Experts If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto. The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearint and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data need not be admissible in evidence. Section 490.065, RSMo; State Board of Registration for the Healing Arts v, McDonagh, 123 S.W.3d 146 (Mo. SC. 2004); Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. E.D. 1992). http:Uste.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 Missouri State Tax Commission » » Farmington Associates H et al v. Dan Ward, Assesso... Rage 9 of 15 Complainants' Burden of Proof There is no presumption that the taxpayer's opinion is correct. The taxpayer in a Commission appeal still bears the burden of proof. The taxpayer is the moving party seeking affirmative relief. Therefore, the Complainant bears the burden of proving the vital elements of the case, i.e., the assessment was "unlawful, unfair, improper, arbitrary or capricious." See, Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App, E.D. 2003); Daly v, P. D. George Co., 77 S.W.3d 645 (Mo. App. E.D. 2002); Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003). Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387,392 (Mo. App. 1991). Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See. Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959 Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact. The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in indudng belief. Brooks v. General Motors Assembly Division, 527 S.W.ld 50, 53 (Mo. App. 1975). Discussion Section 137.115, RSMo, requires that property be assessed based upon its tfue value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so, (St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526,529 (Mo. App. E.D. 1993); Missouri Baptist Children's Home v. State Tax Commission, 867 S.W.ld 510, 512 (Mo. banc 1993). "Objective standards should be used in determining fair market value Iii the market place, The particular circumstances of the owner are not a proper consideration.., Investment value is the value of a property to a particular investor, whereas market value is not related to the needs of the individual investors but is objective, impersonal, and detached; investment value is based on subjective, personal parameters . . ." (Maryville Properties v. Nelson, 83 SW3d 608, 616 WD 2002) In the past, when valuing subsidized housing, we have attempted to look at actual income, actual expenses, financing terms and market capitalization rates in order to try to account for risks and benefits associated with this unique type of real property, recognizing that subsidized properties do not tend to sell and costs tend to be Inflated, making sales and cost approaches difficult. The State Tax Commission referred to this methodology as the Maryville Formula. After Lake Ozark Village v. Whitworth, STC Appeal Nos, 97-47000,99-47003 and 01-47002, parties to appeals involving subsidized housing properties utilized the Maryville Properties v. Nelson, STC Appeal No. http:Ustc.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun,„ 2/20/2015 Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Asses... Page 10 of 15 97-74500 methodology for determining value - as modified by the Western District Court of Appeals. At that time, subsidized housing typically included extremely low interest, low equit'y loans which had subsidized income, subsidized mortgages, subsidized interest and non-recourse promissory notes. In attempting to follow the directive of Missouri Baptist Children's Home to consider all refevant economic facts, the Commission instructed assessors to value subsidized housing based upon actual Income, actual expenses and capitalization rates. In Park West v. Pruden, Bate County STC Appeal No. 11-43000 to 11-43036 and 13-43001 to 13-43002, decision dated 11/4/14, the Hearing Officer found with the facts presented in that appeal that the Maryville formula was not persuasive evidence for determining the true value of the property. The Hearing Officer found that the equity positions were no longer the 3% to 5% found In the Maryville Properties/Lake Ozark cases but had now skyrocketed to over 80%. The Maryville formula methodology contemplated a low equity position with a market return rate and a high financed position with an extremely fow interest rate, Under the Maryville formula, an increase ih the equity position of the newer improvement resulted in it being valued substantially less than the older improvement. In Park West Estates I and II, the original constructlon cost of recently completed improvements was presented. The Hearing Officer compared the actual cost of the properties to the indication of value as determjned by the Mary01]e formula. The Hearing Officer asked "Would a typical Investor spend almost $3 m!11]on for a property that only had a market value of $490,000 before it is even completed?" The Hearing Officer concluded: "[elither the benefits and burdens under the Maryville formula are not being measured appropriately; or the income approach substantially dIstorts market value to a point of no longer being a good indicator of value. Arguably, facts surro'unding subsidized housing and Its financing have gone so far beyond typical market behavior that an income approach based upon subjective facts associated with these propertles can never reasonably capture value." No information as to the actual cost to construct was presented jn this appeal. The Hearlng Officer was on!y provided with the income aild expenses of the suwect properties. Maryvme formula uses actual rents, actual expenses, actual and market financings. The appraiser used actual rents and referred to market rents for the 1 two bed and 1 three bed vacant units to determine the potential gross income. The appraiser did not use actual expenses but used projections. The appraiser did not provide support or reference for his projections and they are high in comparison to actual For example In the second property, the actual expenses for repairs was $19,600 but the appraiser used a projected expense figure of $28,000. The appraiser httpAte.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 Missouri State Tax Commission » » Farmington Associates II et al v. Dan Ward, Asses... Page 11 of 15 projected advertising cost to increase to $1400 from $154, which Is suspect given the apartment is near 100% occupied. The appralser projected administrative costs to Increase to $33,600 from $28,369; payroll to increase to $61,600 from $40,020. If we adjust his formula to reflect actual expenses, the resulting Indications of values are: FarmIngton Associates , Income $199,492 Vacancy & Colledion 5% (9,975) Other Income $22,000 Effective Gross Income $211,518 1 Expenses Utilities $26,000 Insurance $11,000 Repairs $18,500 Advertising $55 Administration $34,025 -i---i Painting $3,250 Payroll $39,600 Management $9,070 Reserves $10,000 Total Expenses ($151,500) $60,018 http:Ustc.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun.., 2/20/2015 Missouri State Tax Commission >> » Farmington Associates II et at v. Dan Ward, Asses... Page 12 of 15 Capitalization Rate 9.21% Indication of Value $651,660 Farmington Associates II Income $304,140 Vacancy & Collection 5% (15,552) Other Income $52,802 Effective Gross Income $341,390 Expenses Utilities $21,332 Insurance $15,516 Repairs $19,600 Advertising $154 Administration $28,369 Painting $4,129 Payroll $40,020 Management $20,160 Reserves $14,000 Total Expenses ($163,280) http:Ustc.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 Missouri State Tax Commission >> » Farmington Associates II et al v. Dan Ward, Asses... Page 13 of 15 $178,110 Capitalization Rate 9.21% Indication of Value $1,933,876 r Conclusion Commission rejected MaryvIlle Formula in Park West Estates (11-43000 to 11-430036). The properties in those appeals were new construction. The cost approach is an effective approach to develop market value in those circumstances. The recondliation of cost approach and income approach lead the Hearing Officer to place more weight on the cost approach. In this appeal, the appraiser did not develop the cost approach even though the improvements of the second property were recent. The appraiser developed sales comparison approach but did not place reliance on the method or value developed. The Income approach using the Maryville formula was developed. As that information was the only information presented to develop value and since the actual costs and the capitalization rate utilized were not contested; the indications of value using that approach is deemed substantial and ersuasive evidence. ORDER The Board's market value for the subject properties is SET ASIDE. The following valuations are concluded: Appeal No. Parcel No. True Value Assessed Value 11-84005 09-70-35-00-000-0016.02 $1,934,000 $367,460 11-84006 09-70-35-00-000-0016.00 $651,660 $123,815 A party may file with the Commission an application for review of this decision within thirty (30) days of the mailing date shown in the Certificate of Service. The application shall contain specific grounds upon which it is claimed the decision is erroneous. Said application must be in writing http://ste.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun... 2/20/2015 Missouri State Tax Commission » » Farmington Associates H et al v. Dan Ward, Asses.,. Page 14 of 15 addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, and a copy of said application must be sent to each person at the address listed below In the certificate of ser*ice. Failure to state specific facts or law upon which the appeal is based will result in summary denial. (Section 138.432 RSMO. 2000) The Collector of St. Francois County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending a filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of 139.031.8 RSMo. Any Finding of Fact which is a Conclusion of Law or Dedsion shall be so deemed. Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed. SO ORDERED this 30th day of January, 2015. STATE TAX COMMISSION OF MISSOURI Maureen Monaghan Hearing Officer Certificate of Service I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 30th day of January, 2015, to: Richard Dvorak, 7111 W. 98th Terr., #140, Overland Park, KS 66212, Attorney for Complainant; Patrick King, Assistant Prosecuting Attorney, 1 N. Washington, Suite 301, Farmington, MO 63640, Attorney for Respondent; Dan Ward, Assessor, County Courthouse Annex, 1 W. Liberty, Suite 200, Farmington, MO 63640; Mark Hedrick, Clerk, Courthouse Annex, 1 W. Liberty, Suite 300, Farmington, MO 63640; Pamela Williams, Collector, Courthouse Annex, 1 W, Liberty, Suite 201, Farmington, MO 63640. Jacklyn Wood http:>/ste.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun,.. 2/20/2015 4 Missouri Srate Tax Commission » » Farmington Associates II et al v. Dan Ward, Asses... Page 15 of 15 Legal Coordinator To Top http://ste.mo.gov/legal/farmington-associates-ii-et-al-v-dan-ward-assessor-st-francois-coun.., 2/20/2015 \ Branson Christian County II, LP d/b/a Abbey Orchard II 10-0.6-14-003-001-001.002 EXHIBIT F HB No. 613 50709075.1 Nixon signs HB 613, will lower housing costs - The Missouri Times Page 1 of 3 i Nixon signs HB 613, willlower housing costs Featured (http://themissouritimes.com/category/featured/) Governor (http://themissouritimes.com/category/executivebranch/governor-executivebrancho TMT-Blog (http://themissouritimes.com/category/tmt-biog/) 20 hours ago f. ti I ' /1. fit.' -- 1.. 44 . I 4 -* ' .. r : tr I i -4 full .- 14, . , 41 - 4. t I t., , it. f> 5: / .iir. -: 4 . SE.194'}33%44 . tfaw,»2' 1.4 ....4.1* ..b 2@24* .if :»t j .22- i +2 N' 3· ·· ·,:sMER:k· i -iwfate,-fri*i€£10,,Amft €A. j . 89. - '-·:3·t*4 -avy/Ft#,9 0 4- Peid:)-4#:ed*Itt¥»Flf & . i«?f**»24 r, 1 0 * 0 4 f &74-/6 ... , 4. ./ I N .¥ 12 #p- 1 , c JEFFERSON CITY, Mo. - Gov. Jay Nixon sgned HB 613 into law making changes and statutorily codifying existing practices regard'ng property tax collection. The bill will go into effect on August 28. Rep. Sandy Crawford, R-Buffalo, sponsored the bill in hopes to streamline and simplify property tax collection. http:Uthemissouritimes.corn/19312/nixon-signs-hb-613-will-lower-housing-costs/ 7/8/2015 Nixon signs HB 613, will lower housing costs - The Missouri Times Page 2 of 3 "These are some technical, but important, changes to our law based on the recommendations of a panel of county collectors who sought to make our statutes reflect recent court decisions and the reality of the way tax sales happen today," said Crawford, R-Buffalo. "I want to thank the governor for signing these changes into law, and thank my colleagues for providing strong bipartisan support to my legislation." The Governor could have let it become law without signing on July 14th, but chose to sign the bill signifying that he supports the legislation. The bill is seen as a victory for seniors living in housing developments constructed with tax credits. Currently, the practice was that county assessors would take into account limitations on rent and property use, but some assessors had begun disregarding existing precedence and raising property taxes as they could on unrestricted properties. "HB 613 clarifies specific merchandise codes relating to electronics, appliance rentals, construction machinery, and more," said Warren County Assessor Wendy Nordwald. "This is a vital clarification needed as an assessor and I applaud the Governor's signature." Property tax increases were being passed onto residents on fixed incomes, and the new law codifies existing practices which many believe will stem the rising cost of housing due to exorbitant property tax increases. "The passage of HB 613 is an enormous win for Missouri's affordable housing industry," said Jason Maddox, president of MACO Companies, an affordable housing company. 9-he bill will prevent huge tax assessments on large, but inevitable, rent increases for Missouri's low income seniors and families." The bill had no opposition in committee and supporters said the bill further updates, tightens, and otherwise deans up the statute's chapter, and clarifies areas that frequently led to lawsuits by giving collectors discretion as to what constitutes "reasonable" costs of sale. The bill also repeals a section that operates as a disincentive for keeping properties maintained. "We applaud Governor Nixon and the state legislature for enacting HB 613," said Beyond Housing PresidenUCEO Chris Krehmeyer. "This new law will prevent great financial damage to those who produce affordable housing across the state of Missouri. The bill is pragmatic and straight forward in assessing taxes to owners of affordable housing based upon the allowable rents and thereby income set forth by federal and state guidelines. We understand the importance of paying taxes to support schools, police and fire protection and other needed services but do not want our properties to fail with an unfair tax burden. In a time when bi- partisan agreements seem hard to come by we are thankful for the leadership in the governor's mansion and the state house to have HB 613 passed and signed into law." http:Uthemissouritimes.com/19312/nixon-signs-hb-613-will-lower-housing-costs/ 7/8/2015 i Nixon signs HB 613, will lower housing costs - The Missouri Times Page 3 of j HB 613 also raises the amount that County Collector's offices are required to collect to 2.5% on the first $350,000 to $3 million. It also streamlines public service fees for abolished townships, allows more counties tb propose a special road rock property tax, and adjusts criteria for dealing with delinquent lands. http://themissouritimes.com/19312/nixon-signs-hb-613-will-lower-housing-costs/ 7/8/2015 «r- Nixon signs HB 613, willlower housing costs - The Missouri Times Page 1 of 3 4 Nixon signs HB 613, willlower housing costs Featured (http://themissouritimes. com/category/featured/) Governor (http://themissouritimes.com/category/executivebranch/governor-executivebranch/) TMT-Blog (http://themissouritimes.com/category/tmt-biog/) 20 hours ago d % 1 . - 4- 43-42 74» T .:/.1-46'F 015*/Criltilt:im#18.1" - - , 44 2 4 .-1-4-¢t , p . lA=A+45=430, 3,?- Aa:£69?, 4 %227#=r- 2 1 PU M.*49,%*. ..7- 9. t- -RP *422*34 4 ·!AiMip>,044/*·612·?2··e#A 440 '.. -· '* · 1 i - -1 1 lS e + . . - 1, , 5, ¥ .s JEFFERSON CITY, Mo. - Gov. Jay Nixon s*led HB 613 into law making changes and statutorily codifying existind practices regarding property tax collection. The bill will go into effect on August 28. Rep. Sandy Crawford, R-Buffalo, sponsored the bill in hopes to streamline and simplify property tax collection. http:Uthemissouritimes.com/19312/nixon-signs-hb-613-will-lower-housing-costs/ 7/8/2015 L 1 Nixon signs HB 613, willlower housing costs - The Missouri Times Page 2 of 3 "These are some technical, but important, changes to our law based on the recommendations of a panel of county collectors who sought to make our statutes reflect recent court decisions and the reality of the way tax sales happen today," said Crawford, R-Buffalo. "I want to thank the governor for signing these changes into law, and thank my colleagues for providing strong bipartisan support to my legislation." The Governor could have let it become law without signing on July 14th, but chose to sign the bill signifying that he supports the legislation. The bill is seen as a victory for seniors living in housing developments constructed with tax credits. Currently, the practice was that county assessors would take into account limitations on rent and property use, but some assessors had begun disregarding existing precedence and raising property taxes as they could on unrestricted properties. "HB 613 clarifies specific merchandise codes relating to electronics, appliance rentals, construction machinery, and more," said Warren County Assessor Wendy Nordwald. "This is a vital clarification needed as an assessor and I applaud the Govemofs signature." Property tax increases were being passed onto residents on fixed incomes, and the new law codifies existing practices which many believe will stem the rising cost of housing due to exorbitant property tax increases. ':The passage of HB 613 is an enormous win for Missouri's affordable housing industry," said Jason Maddox, president of MACO Companies, an affordable housing company. "The bill will prevent huge tax assessments on large, but inevitable, rent increases for Missouri's low income seniors and families." The bill had no opposition in committee and supporters said the bill further updates, tightens, and otherwise cleans up the statute's chapter, and clarifies areas that frequently led to lawsuits by giving collectors discretion as to what constitutes "reasonable" costs of sale. The bill also repeals a section that operates as a disincentive for keeping properties maintained. "We applaud Governor Nixon and the state legislature for enacting HB 613," said Beyond Housing President/CEO Chris Krehmeyer. "This new law will prevent great financial damage to those who produce affordable housing across the state of Missouri. The bill is pragmatic and straight forward in assessing taxes to owners of affordable housing based upon the allowable rents and thereby income set forth by federal and state guidelines. We understand the importance of paying taxes to support schools, police and fire protection and other needed services but do not want our properties to fail with an unfair tax burden. In a time when bi- partisan agreements seem hard to come by we are thankful for the leadership in the governor's mansion and the state house to have HB 613 passed and signed into law." http:Uthemissouritimes.com/19312/nixon-signs-hb-613-will-lower-housing-costs/ 7/8/2015 hh 144 Nixon signs HB 613, will lower housing costs - The Missouri Times. Page 3 of 3 HB 613 also raises the amount that County Collector's offices are required to collect to 2.5% on the first $350,000 to $3 million. It also streamlines public service fees for abolished townships, allows more counties to propose a special road rock property tax, and adjusts criteria for dealing with delinquent lands. h http://themissouritimes.com/19312/nixon-signs-hb-613-will-lower-housing-costs/ 7/8/2015 Missouri House of Representatives Page 1 of 1 House Home Page:: House Bill List:: HB613 HB 613 Changes the laws regarding the collection of property taxes Sponsor: Crawford, Sandy (129) Effective Date: Emergency Clause LR Number: 1344S.06T Governor Action: 07/06/2015 - Approved by Governor (G) Last Action: 07/06/2015 - Delivered to Secretary of State (G) Bill String: SCS HCS HB 613 Next Hearing: Hearing not scheduled Calendar: Bill currently not on a House calendar ? ¢*81?3®251 1 E¢#BINE 1 113@fdti€#311 *R@*1610.t€sl 1 49(611*11.*t Bill Summaries [Truly Agreed (PDF) Perfected (PDF) Committee (PDF) Introduced (PDF) Bill Text Truly Agreed (PDF) Senate Comm Sub (PDF) Perfected (PDF) Committee (PDF) Introduced (PDF) Amendments Status Amendment Sponsor Floor Number Roll Call 1344S06.01F Crawford SENATE AMENDMENTS 1344H03.0/H Hinson HCA 1 4 Distributed - Amendment has been distributed. Adopted - Amendment has been adopted. Defeated - Amendment has been defeated. A Returned - Amendment has been returned by motion and vote. Withdrawn - Amendment has been withdrawn by the amendment's sponsor. Offered - Amendment has been offered on the House floor. U;'pending - Amendment has been laid over to be taken up on the next legislative day. Substitute - Amendment has been substituted for a different amendment. Division - Amendment has been divided into parts to be voted on and debated separately. 7/8/2015 11:32:06 AM http:#www.house.mo.gov/BillSummaryPrn.aspx?bill=HB613&year=2015&code=Rkstyle=... 7/8/2015 FIRST REGULAR SESSION [TRULY AGREED TO AND FINALLY PASSED] SENATE COMMITTEE SUBSTITUTE FOR HOUSE COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 613 98TH GENERAL ASSEMBLY 1344S.06T 2015 AN ACT To repeal sections 52.260,65.620,137.076,140.170,140.310,140.340,140.350,140.405, 140.410,140.420, and 231.444, RSMo, and to enact in lieu thereofthirteennew sections relating to the colIection ofproperty taxes. Be it enacted by the General Assembly of the state of Missouri. as follows: Section A. Sections 52.260, 65.620, 137.076, 140.170, 140.310, 140.340, 140.350, 2 140.405,140.410,140.420, and 231.444, RSMo, are repealed and thirteen new sections enacted 3 in lieu thereof, to be known as sections 52.260,65.620,137.018,137.076,140.170,140.195, 4 140.310,140.340,140.350,140.405,140.410,140.420, and 231.444, to read as follows: 52.260. The collector in counties not having township organization shall collect on 2 behalf of the county the following fees for collecting all state, county, bridge, road, school, back 3 and delinquent, and all other local taxes, including merchants', manufacturers' and liquor and 4 beer licenses, other than ditch and levee taxes, and the fees collected shall be deposited in the 5 county general fund: 6 (1) In alI counties wherein the total amount levied for any one year exceeds two hundred 7 and fifty thousand dollars and is less than three hundred and fifty thousand dollars, a fee oftwo 8 and one-halfpercent on the amount collected; 9 (2) In all counties wherein the total amount levied for any one year exceeds three 10 hundred and fifty thousand dollars and is less than [two] three million dollars, a fee of two and EXPLANATION - Matter enclosed in bold-faced brackets Ithus] in the above billis not enacted and is intended to be omitted from the law. Matter in bold-face type in the above bill is proposed language. 4 SCS HCS HB 613 2 11 one-half percent on the first three hundred and fi fty thousand dollars collected and one percent 12 on whatever amount may be collected over three hundred and fifty thousand dollars; 13 (3) In all counties wherein the total amount levied for any one year exceeds [two] three 14 million dollars, a fee of one percent on the amounts collected. 65.620. 1. Whenever any county abolishes township organization the county treasurer 2 and ex officio collector shall immediately settle his accounts as treasurer with the county 3 commission and shall thereafter perform all duties, exercise all powers, have all rights and be 4 subject to all liabilities imposed and conferred upon the county collector of revenue under 5 chapter 52 until the first Monday in March after the general election next following the 6 abolishment of township organization and until a collector of revenue for the county is elected 7 and qualified. The person elected collector at the general election as aforesaid, if that election 8 is not one for collector ofrevenue under chapter 52, shall serve until the first Monday in March 9 following the election and qualification of a collector of revenue under chapter 52. Upon 10 abolition of township organization a county treasurer shall be appointed to serve until the 11 expiration ofthe term of such officer pursuant to chapter 54. 12 2. Upon abolition of township organization, title to all property of all kinds theretofore 13 owned by the several townships of the county shall vest in the county and the county shalI be 14 liable for all outstanding obligations and liabilities of the several townships. 15 3. The terms of office of all township officers shall expire on the abolition of township 16 organization and the township trustee ofeach township shall immediately settle his accounts with 17 the county clerk and all township officers shall promptly deliver to the appropriate county 18 officers, as directedbythe countycommission, allbooks, papers, records andpropertypertaining 19 to their offices. 20 4. For a period of one calendar year following the abolition of the townships or 21 until the voters of the county have approved a tax levy for road and bridge purposes, 22 whichever occurs first, the county collector shall continue to collect a property tax on a 23 county-wide basis in an amount equal to the tax levied by the township that had the lowest 24 total tax rate in the county immediately prior to the abolishment of the townships. The 25 continued collection of the tax shall be considered a continuation of an existing tax and 26 shall not be considered a new tax levy. 137.018. 1.Asused in this section, the term "merchandise" shall include shortterm 2 rentals of equipment and other merchandise offered for short term rentals by rental 3 companies under 532412 or 532210 of the 2012 edition of the North American Industry 4 CIassification System as prepared by the Executive Office of the President, Office of 5 Management and Budget, which will subsequently or ultimately sell such merchandise or 6 equipment. As used in this section, the term "short term rental" shall mean rentals for a r. SCS HCS HB 613 -- COLLECTION OF PROPERTY TAXES This bill changes the laws regarding the collection of property taxes. In its main provisions, the bill: (1) Changes the amount of fees a county collector must collect for collecting local taxes. In counties where the total amount levied in a year is between $350,000 and $2 million, the fee is 2.5% on the first $350,000 collected and 1% on any amount over that amount. In counties where the total amount levied exceeds $2 million, the fee is 1% on all amounts collected. The bill raises the outer threshold amount for a county to be eligible to collect the 2.5% on the first $350,000 to $3 million; (2) Allows counties in which townships have been abolished to continue to collect a property tax on a county-wide basis for road and bridge purposes for either one year following the abolishment of the townships or until the county voters have approved a property tax for such purposes, whichever occurs first. The property tax must be the same amount as the property tax being levied in the township with the lowest total tax rate immediately before the townships were abolished. The collection of the property tax is to be considered a continuation of a tax and not a new tax; (3) Specifies that certain merchandise whether or not subject to a short term rental and which will ultimately be sold must be considered inventory for property tax purposes and exempt from taxation. The bill is limited to general rental centers and construction, mining, and forestry equipment rental; (4) Requires a county assessor when establishing the value of real property to consider existing use of the property, restrictions, limitations, existing covenants or restrictions in the deed, and operational requirements or restrictions imposed on the property to be eligible for state and federal credits and subsidies as residential rental property; (5) Changes the laws regarding the advertisement of delinquent lands. Currently, a county collector may advertise delinquent lands with an assessed valuation of $1,000 or less without legal descriptions or the names of the record owners ,when publishing a delinquent land list for delinquent real property tax. The bill increases the assessed valuation to $1,500 or less; (6) Changes the laws regarding the advertisement of a delinquent lot. Currently, a county collector may advertise a delinquent lot if in a development of at least 20 or more lots with an assessed valuation of $1,000 or less without legal descriptions or the names of the record owners when publishing a delinquent land list for delinquent real property tax. The bill increases the assessed valuation to $1,500 or less; (7) Allows a collector, agent of a collector, tax sale purchaser, or an agent of a tax sale purchaser to enter land, without being guilty of trespass, to provide, serve, or post notice of a tax sale or tax sale redemption. Once the reasonable and customary costs of a sale are paid to the county collector, the purchaser, his or her heirs, successors, or assigns; the owner; lienholder; or occupant of any land or lot sold for taxes, or any other persons having an interest therein, must have the absolute right to redeem the land at any time during the following year and must continue to have a defeasible right to redeem th'e land until the tax sale purchaser acquires the deed. Once the tax sale purchaser acquires the deed, the right to redeem will expire, provided upon the expiration of the lien evidenced by a certificate of purchase under Section 140.410, RSMo, no redemption will be required; (8) Allows minors and incapacitated and disabled persons to redeem any lands belonging to them sold for taxes within five years of the date of the last payment of taxes encumbering the real estate by the minor, incapacitated or disabled person, the party's predecessors in interest, or any representative of the person in the same manner as provided in Section 140.340 for redemption by other persons; (9) Specifies that "authorized to acquire the deed" means the date chosen by the tax sale purchaser that is more than the minimum redemption period in Section 140.340 if the tax sale purchaser has complied with the requirements entitling the purchaser to the issuance of a collector's deed including payment of the recording fee for the collector's deed, production of the original of the certificate of purchase as required under Section 140.420 or production of an original affidavit of lost or destroyed certificate approved by the collector as to form and substance, and payment of all subsequent taxes required to be paid under Section 140.440. The bill specifies how any person except a minor or an incapacitated'or disabled person may receive notice under the provisions of the bill in a foreign country or outside the United States; (10) Changes the laws regarding the purchase of delinquent land. Currently, a purchaser of delinquent lands, or his or her heirs or assigns, must pay all subsequent taxes on the property purchased prior to the issuance of any collector's deed and have a deed to be executed and placed on record in the proper county within two years from the date of the sale. The bill shortens the time to 18 months. If no person redeems the lands sold for taxes prior to the expiration of the right to redeem, at the expiration thereof, and on production of the certificate of purchase and upon proof satisfactory to the collector that a purchaser or his or her heirs, successors, or assigns are authorized to acquire the deed, the collector of the county where the sale of the lands took place must execute to the purchaser, or his or her heirs or assigns, in the name of the state, a conveyance of the real estate sold, which will vest in the grantee an absolute estate in fee simple, subject, however, to all claims thereon for unpaid taxes except the unpaid taxes existing at the time of the purchase of the lands and the lien for which taxes was inferior to the lien for taxes for which the tract or lot of land was sold; and (11) Authorizes all counties of the third and fourth classifications to impose, upon voter approval, a special road rock fund tax at a rate not to exceed $1 per acre for property classified as agricultural and horticultural. Currently, only certain counties of the third classification without a township form of government are authorized to impose the tax upon voter approval. SCS HCS HB 613 3 7 period of less than three hundred sixty-five consecutive days, for an undefined period, or 8 under an open-ended contract. - 9 2. For the purposes of article X, section 6 of the Constitution of Missouri, all 10 merchandise held or owned by a merchant whether or not currently subjectto a short term 11 rental and which will subsequently or ultimately be sold shall be considered inventory and 12 exempt from ad valorem taxes. 137.076. 1. In establishing the value of a parcel of real property the county assessor 2 shall consider current market conditions. and previous decisions of the county board of 3 equalization, the state tax commission or a court of competent jurisdiction that affected the,value 4 of such parcel. Forpurposes of this section, the term "current market conditions", shall include 5 the impact upon the housing market of foreclosures and bank sales. 6 2. In establishing the value of a parcel of reaI property, the county assessor shall 7 use an income based approach for assessment of parcels of real property with federal or 8 state imposed restrictions in regard to rent limitations, operations requirements, or any 9 other restrictions imposed upon the property in connection with: 10 (1) The property being eligible for any income tax credits under section 42 of the 11 Internal Revenue Code of 1986, as amended; 12 (2) Property constructed with the use of the United States Department ofHousing 13 and Urban Development HOME investment partnerships program; 14 (3) Property constructed with the use of incentives provided by the United States 15 Department of Agriculture Rural Development; or 16 (4) Property receiving any other state or federal subsidies provided with respect 17 to use of the property for housing purposes. 18 19 For the purposes of this subsection, the term "income based approach" shalI include the 20 use of direct capitalization methodology and computed by dividing the net operating 21 income of the parcel of property by an appropriate capitalization rate not to exceed the 22 average of the current market data available in the county of said parcel of 23 property. Federal and state tax credits or other subsidies shall not be used when 24 calculating the capitalization rate. Upon expiration of a land use restriction agreement, 25 such parcel of property shall no longer be subject to this subsection. 140.170. 1. Except for lands described in subsection 7 of this section, the county 2 collector shall cause a copy of the list of delinquent lands and lots to be printed in some 3 newspaper of general circulation published in the county for three consecutive weeks, one 4 insertion weekly, before the sale, the last insertion to be at least fifteen days prior to the fourth 5 Monday in August. f .. SCS HCS HB 613 4 6 2. In addition to the names ofall record owners orthe names ofall owners appearing on 7 the land tax book it is only necessary in the printed and published list to state in the aggregate 8 the amount of taxes, penalty, interest and cost due thereon, each year separately stated. 9 3. To the list shalI be attached and in like mannerprinted andpublished a notice ofsaid 10 lands and lots stating that said land and lots will be sold at public auction to discharge the taxes, 11 penalty, interest, and costs due thereon at the time of sale in or adjacent to the courthouse of such 12 county, on the fourth Monday in August next thereafter, commencing at ten o'clock of said day 13 and continuing from day to day thereafter until all are offered. 14 4. The county collector, on or before the day ofsale, shall insert at the foot ofthe list on 15 his or her record a copy ofthe notice and certify on his or her record immediately following the 16 notice the name ofthe newspaper of the county in which the notice was printed and published 17 and the dates of insertions thereof in the newspaper. 18 5. The expense of such printing shall be paid out of the county treasury and shall not 19 exceed the rate provided for in chapter 493, relating to legal publications, notices and 20 advertisements, and the cost ofprinting at the rate paid by the county shall be taxed as part ofthe 21 costs of the sale of any land or lot contained in the list. 22 6. The county collector shall cause the affidavit of the printer, editor orpublisher ofthe 23 newspaper in which the list of delinquent lands and notice of sale was published, as provided by 24 section 493.060, with the list and notice attached, to be recorded in the office of the recorder of 25 deeds ofthe county, and the recordershall not charge or receive any fees for recording the same. 26 7. The county collectormayhave a separate list ofsuch lands, without legal descriptions 27 or the names of the record owners, printed in a newspaper of general circulation published in 28 such county for three consecutive weeks before the sale ofsuch lands for a parcel or lot of land 29 that: 30 (1) Has an assessed value of one thousand five hundred doIIars or less and has been 31 advertised previously; or 32 (2) Is a lot in a development of twenty or more lots and such lot has an assessed value 33 of one thousand five hundred dollars or less. The notice shall state that legal descriptions and 34 the names ofthe record owners ofsuch lands shall be posted at anycounty courthouse within the 35 county and the office of the county collector. 36 8. If, in the opinion of the county collector, an adequate legal description of the 37 delinquentland and lots cannotbe obtained throughresearchingthe documents availablethrough 38 the recorder of deeds, the collector may commission a professional land surveyor to prepare an 39 adequate legaI description of the delinquent land and lots in question. The costs of any 40 commissioned land surveydeemed necessaryby the county collector shall be taxed as part ofthe 41 costs o f the sale o f any land or lots contained in the list prepared under this section. SCS HCS HB 613 5 140.195. Any collector, agent of any collector, tax sale purchaser, or agent of any 2 tax sale purchaser performing duties under this chapter shall have the lawful right to enter 3 upon the land of another without being guilty of trespass, if he or she is in the course of 4 providing or attempting to provide notice of a tax sale or tax sale redemption rights and 5 it is necessary to enter upon such land to provide, serve, or post such notice. 140.310. 1. The purchaser of any tract or lot of land at sale for delinquent taxes, 2 homesteads excepted, shaII at any time after one year from the date of sale be entitled to the 3 immediate possession of the premises so purchased during the redemption period provided for 4 in this law, unless sooner redeemed; provided, however, any owner or occupant of any tract or 5 lot of land purchasedmay retainpossession ofsaidpremises bymaking a written assignment of, 6 or agreement to pay, rent certain or estimated to accrue during such redemption period or so 7 much thereof as shall be sufficient to discharge the bid ofthe purchaser with interest thereon as 8 provided in the certificate ofpurchase. 9 2. The purchaser, his or her heirs or assigns may enforce his or her rights under said 10 written assignment or agreement in any manner now authorized or hereafter authorized by law 11 for the collection ofdelinquent and unpaid rent; provided further, nothing herein contained shall 12 operate to the prejudice of any owner not in default and whose interest in the tract or lot of land 13 is not·encumbered by the certificate ofpurchase, nor shall it prejudice the rights ofany occupant 14 of any tract or lot of land not liable to pay taxes thereon nor such occupanfs interest in any 15 planted, growing or unharvested crop thereon. 16 3. Any additions or improvements made to any tract or lot of land by any occupant 17 thereof, as tenant or otherwise, and made prior to such tax sale, which such occupant would be 18 permitted to detach and remove from the land under his or her contract ofoccupancyshall also, 19 to the same extent, be removable against the purchaser, his or her heirs or assigns. 20 4. Any rent collected by the purchaser, his or her heirs or assigns shall operate as a 21 payment upon the amount due the holder of such certificate of purchase, and such amount or 22 amounts, together with the date paid and by whom shall be endorsed as a credit upon said 23 certificate, and which said sums shall be taken into consideration in the redemption ofsuch land, 24 as provided for in this chapter. 25 5. Anypurchaser, heirs or assigns in possession within theperiod ofredemption against 26 whom rights of redemption are exercised shall be protected in the value o f any planted, growing 27 and/or unharvested crop on the lands redeemed in the same manner as such purchaser, heirs or 28 assigns would be protected in valuable and lasting improvements made upon said lands after the 29 period of redemption and referred to in section 140.360. -1- SCS HCS HB 613 6 30 [6. The one-year redemption period shall not apply to third-year tax sales, but the 31 ninety-day redemption period as provided in section 140.405 shaII apply to such sales. There 32 shall be no redemption period for a post-third-year tax sale, or any offering thereafter.] 140.340. 1. Upon paying the reasonable and customary costs of sale to the county 2 collector for the use ofthe purchaser, his or her heirs, successors, or assigns; the owner; 3 lienholder; or occupant of any land or lot sold for taxes, or any other persons having an interest 4 therein, [may] shall have the absolute right to redeem the same at anytime during the one year 5 next ensuing[, in the following manner] and shall continue to have a defeasible right to 6 redeem the same until such time as the tax sale pbrchaser acquires the deed, at which time 7 the right 20 redeem shall expire, provided upon the expiration of the lien evidenced by a 8 certificate of purchase under section 140.410 no redemption shall be required. 9 2. The reasonable and customary costs of sale include all costs incurred in selling 10 and foreclosing tax liens under this chapter, and such reasonable and customary costs shall 11 include the following: [bypaying to the county collector, for the use of the purchaser, his heirs 12 or assigns,] the full sum ofthe purchase money named in [his] the certificate ofpurchase and all 13 the [cost] costs of the sale, including the cost to record the certificate ofpurchase as required in 14 section 140.290, the fee necessary for the collector to record the release of such certificate of 15 purchase, and the reasonable and customary cost of the title search and [mailings] postage 16 costs of notification required in sections 140.150 to 140.405, together with interest at the rate 17 specified in such certificate, not to exceed ten percent annually, except on a sum paid by a 18 purchaser in excess of the delinquent taxes·due plus costs ofthe sale incurred by the collector, 19 no interest shall be owing on the excess amount, with all subsequent taxes which have been paid 20 thereon by the purchaser, his or her heirs or assigns with interest at the rate of eight percent per 21 annum on such taxes subsequently paid, and in addition thereto the person redeeming any land 22 shall pay the costs incident to entry ofrecital of such redemption; provided, however, that no 23 costs incurred by tax sale purchasers in providing notice of tax sale redemption rights 24 required by law shall be reimbursable as a reasonable and customary cost of sale unless 25 such costs are incurred after March first following the date of purchase of the tax sale 26 certificate by said tax sale purchaser at a first or second offering delinquent tax sale. 27 [2.] 3. Upon deposit with the county collector of the amount necessary to redeem as 28 herein provided, it shall be the duty of the county collector to mail to the purchaser, his or her 29 heirs or assigns, at the last post o ffice address if known, and if not known, then to the address 30 of the purchaser as shown in the record ofthe certificate ofpurchase, notice of such deposit for 31 redemption. 32 [3.] 4. Such notice, given as herein provided, shall stop payment to the purchaser, his 33 or her heirs or assigns of any further interest or penalty. SCS HCS HB 613 7 t 34 · [4. In case the party purchasing said land, his heirs or assigns fails to take a tax deed for 35 the land so purchased within six months after the expiration of the one year next following the 36 'date of sale, no interest shall be charged or collected from the redemptioner after that time.] 37 5. The reasonable and customary costs ofsaleneeded to redeem anyland or lot sold 38 for taxes under this section shall be determined by the collector. 140.350. [Infants] Minors and incapacitated and disabled persons as defined in chapter 2 475 mayredeem anylands belonging to them sold fortaxes, within [one yearafterthe expiration 3 of soch disability] five years of the date of the last payment of taxes encumbering the real 4 estate by the minor, incapacitated or disabled person, the party's predecessors in interest, 5 or any representative of such person, in the same manner as provided in section 140.340 for 6 redemption by other persons. 140.405. 1. Any person purchasing property at a delinquent land tax auction shall not 2 acquire the deed to the real estate, as provided forin section 140.250 or 140.420, until the person 3 meets the requirements of this section, except that such requirements shall not apply to 4 post-third-year sales, which shall be conducted under subsection 4 of section 140.250. The 5 purchaser shall obtain a title search report from a licensed attorney or licensed title company 6 detailing the ownership and encumbrances on the property. [Such title search report shall be 7 declared invalid if the effective date is more than one hundred twenty days from the date the 8 purchaser applies for a collector's deed under section 140.250 or 140.420.] 9 2. At least ninety days prior to the date when a purchaser is authorized to acquire the 10 deed, the purchaser shall notify the owner of record and any person who holds a publicly 11 recordedunreleaseddeed oftrust, mortgage, lease, lien,judgment, oranyotherpubliclyrecorded 12 claim upon thatreal estate of such person's right to redeem the property. Notice shall be sent by 13 both first class mail and certified mail return receipt requested to such person's last known 14 available address. Ifthe certified maiI return receipt is returned signed, the first class mail notice 15 is not returned, the first class mail notice is refused where noted by the United States Postal 16 Service, or any combination thereof, notice shall be presumed received by the recipient. At the 17 conclusion of the applicable redemption period, the purchaser shall make an affidavit in 18 accordance with subsection [4] 5 ofthis section. 19 3. If the owner of record or the holder of any other publicly recorded claim on the 20 property intends to transfer ownership or execute any additional liens or encumbrances on the 21 property, such owner shall first redeem such property under section 140.340. The failure to 22 comply with redeeming the property first before executing any of such actions or agreements on 23 the property shall require the owner of record or any other publicly recorded claim on the 24 property to reimburse the purchaser for the total bid as recorded on the certificate o f purchase 25 and all the costs of the sale required in sections 140.150 to 140.405. SCS HCS HB 613 8 26 4. In the case that both the certified notice return receipt card is returned unsigned and 27 the first class mail is returned for any reason except refusal, where the notice is returned 28 undeliverable, then the purchaser shall attempt additional notice and certify in the purchaser's 29 affidavit to the collector that such additional notice was attempted and by what means. 30 5. The purchaser shall notify the county collector by affidavit of the date that every 31 required notice was sent to the owner of record and, if applicable, any other publicly recorded 32 claim on the property. To the affidavit, the purchaser shaII attach a copy of a valid title search 33 report as described in subsection 1 ofthis section as well as completed copies ofthe following 34 for each recipient: 35 (1) Notices of right to redeem sent by first class mail; 36 (2) Notices of right to redeem sent by certified mail; 37 (3) Addressed envelopes for all notices, as they appeared immediately before mailing; 38 (4) Certified mail receipt as it appeared upon its return; and 39 (5) Anyretumedregularmailed envelopes. Asprovided in this section, atsuchtimethe 40 purchaser notifies the collector by affidavit that all the ninety days' notice requirements o f this 41 section have been met, thepurchaseris authorized to acquire the deed, provided that a collector's 42 deed shall not be acquired before the expiration date of the redemption period as provided in 43 section 140.340. 44 6. If any real estate is purchased at a third-offering tax auction and has a publicly 45 recordedunreleaseddeedoftrust, mortgage, lease, lien,judgment, oranyotherpubliclyrecorded 46 claimupon thereal estateunderthis section, thepurchaserofsaidpropertyshall within forty-five 47 days after the purchase at the sale notify such person of the person's right to redeem the property 48 within ninety days from the postmark date on the notice. Notice shall be sent by both first class 49 mail and certified mail return receipt requested to such person's last known available 50 address. The purchaser shall notify the county collector by affidavit of the date the required 51 notice was sent to the owner of record and, if applicable, the holder of any other publicly 52 recorded claim on the property, that such person shall have ninety days to redeem said property 53 or be forever barred from redeeming said property. 54 7. If the county collector chooses to have the title search done then the county collector 55 may charge the purchaser the cost of the title search before giving the purchaser a deed pursuant 56 to section.140.420. 57 8. [Ifthe property is redeemed, the person redeeming the property shall pay the costs 58 incurred by the purchaser in providing notice under this section. Recoverable costs on any 59 property sold at a tax sale shall include the title search, postage, and costs for the recording of 60 anycertificate ofpurchaseissued and forrecordingthe release ofsuch certificateofpurchaseand 61 all the costs of the sale required in sections 140.150 to 140.405. q SCS HCS HB 613 9 62 9.1 Failure of the purchaser to comply with this section shall result in such purchaser's 63 loss of all interest in the real estate except as otherwise provided in sections 140.550 and 64 140.570. 65 9. The phrase "authorized to acquire the deed" as used in this chapter shall mean 66 the date chosen by the tax sale purchaser that is more than the minimum redemption 67 period set forth in section 140.340 ifthe tax sale purchaser has complied with the following 68 requirements entitling the purchaser to the issuance of a collector's deed: 69 (1) Compliance with the requirements of this section to the satisfaction of the 70 collector; 71 (2) Payment of the recording fee for the collector's deed as required under section 72 140.410; 73 (3) Production of the original of the certificate of purchase as required under 74 section 140.420, or production of an original affidavit of Iost or destroyed certificate 75 approved by the collector as to form and substance; and 76 (4) Payment of all subsequent taxes required to be paid under section 140.440. 77 10. Notwithstanding any provision of law to the contrary, any person except a 78 minor or an incapacitated or disabled person may receive notice under this section in a 79 foreign country or outside the United States: 80 (1) By any internationally agreed upon means of service that is reasonably 81 calculated to give notice, such as the Hague Convention on the Service Abroad of Judicial 82 and Extrajudicial Documents; 83 (2) If there is no internationally agreed upon means of service, or if an 84 international agreement allows service but does not specify the means, by a method that 85 is reasonably calculated to give notice; 86 (3) As set forth for the foreign country's acceptable method of service in actions in 87 courts of general jurisdiction; 88 0) As the foreign country directs in response to a letter of request; 89 (5) Unless prohibited by a foreign country's law, by delivering a copy of the notice 90 to the person personally or using a form of mail that requires a signed receipt; or 91 (6) By any other means notprohibited by international agreement as approved by 92 the collector. 140.410. In all cases where lands have been or may hereafter be sold for delinquent 2 taxes, penalty, interest and costs due thereon, and a certificate of purchase has been or may 3 hereafter be issued, it is hereby made the duty of such purchaser, his or her heirs or assigns, to 4 cause all subsequent taxes to be paid on the property purchased prior to the issuance of any 5 collector's deed, and the purchaser shall further cause a deed to be executed and placed on record 1 I. SCS HCS HB 613 10 6 in the proper county all within [two years] eighteen months from the date of said sale; provided, 7 that on failure of said pt*chaser, his or her heirs or assigns so to do, then and in that case the 8 amount due such purchpser shall cease to be a lien on said lands so purchased as herein 9 provided. Upon the purchaser's forfeiture ofall rights of the property acquired by the certificate 10 ofpurchase issued, and including the nonpayment of all subsequent years' taxes as described in I 1 this section, it shall be the responsibility of the collector to record the cancellation of the 12 certificate of purchase in the office of the recorder of deeds of the county. Certificates of 13 purchase cannot be assigned to nonresidents or delinquent taxpayers. However, any person 14 purchasing property at a' delinquent land tax sale who meets the requirements of this section, 15 prior to receiving a collector's deed, shall payto the collectorthe fee necessary forthe recording 16 of such collector's deed to be issued. It shall be the responsibility ofthe collector to record the 17 deed before delivering sdch deed to the purchaser of the property. 140.420. If no person shall redeem the lands sold for taxes [within the applicable 2 redemption period of one year from the date of the sale or within the ninety-day notice as 3 specified in section 140.405 for a third-year tax sale] prior to the expiration of the right to 4 redeem, at the expiration thereof, and on production of the certificate of purchase and upon 5 proof satisfactory to th¢ collector that a purchaser or his orherheirs, successors, or assigns 6 are authorized to acquire the deed, the collector of the county in which the sale of such lands 7 took place shall execute to the purchaser, his or her heirs or assigns, in the name of the state, a 8 conveyance of the real estate so sold, which shall vest in the grantee an absolute estate in fee 9 simple, subject,however, to all claims thereon forunpaid taxes except suchunpaid taxes existing 10 at time ofthe purchase of said lands and the lien for which taxes was inferior to the lien fortaxes 11 for which said tract or lot of land was sold. 231.444. 1. In addition to other levies authorized by law, the governing body of any 2 county of the third or fourth classification [without a township form of government having a 3 population of less than six thousand inhabitants according to the most recent decennial census] 4 may by ordinance levy and impose a tax pursuant to this section which shall not exceed the rate 5 0 f one dollar on each acre of real property in the county which is classified as agricultural and 6 horticultural property pursuant to section 137.016. 7 2. The proceeds of the tax authorized pursuant to this section shall be collected by the 8 countycollectorandrdnlitted tothe countytreasurerwho shall deposit such proceeds in a special 9 fund to be known as the "Special Road Rock Fund". All moneys in the special road rock fund 10 shall be appropriated bythe county governing body for the sole purpose ofpurchasing road rock 11 to be placed on county mads within the boundaries of the county. 12 3. The ordinance levying and imposing atax pursuant to subsection 1 ofthis sectionshaIl 13 not be effective unless the county governing body submits to the qualified voters of the county SCS HCS HB 613 11 14 a proposal to authorize the county governing body to levy and impose the tax at an election 15 pennitted pursuant to section 1 15.123. The ballot of submission proposing the tax shall be in 16 substantially the following form: 17 ShaII the county pf .......... (county's name) be authorized to levy and impose a tax on all 18 real property in the county which is classified as agricultural or horticultural property at a rate 19 not to exceed .......... (rate oftax) cents per acre with all the proceeds of the tax to be placed in 20 the "Special Road Rock Fund" and used solely for the purpose of purchasing road rock to be 21 placed on county roads within the boundaries of the county? 22 0 YES ONO 23 4. If a majority ofthe qualified voters ofthe county voting on the proposal vote"YES", 24 then the governing body of the county may by ordinance levy ind impose the tax authorized by 25 this section in an amount not to exceed the rate proposed in the ballot of submission. If a 26 majority of the qualified voters of the county voting on the proposal vote "NO", then the 27 governing body of the county shall not levy and impose such tax. Nothing in this section shall 28 prohibit a rejected proposal from being resubmitted to the qualified voters of the county at an 29 election permitted pursuant to section 1 15.123. 4 Branson Christian County II, LP d/b/a Abbey Orchard II 10-0.6-14-003-001-001.002 EXHIBIT G Agent Authorization 50709075.1 - h AUyHORIZATION FOR ANOTHER PARTY TO REPRESENT TAXPAYER AT THE CHRISTIAN COUNTY ASSESSOR MEETING & THE RELATED BOARD OF EQUALIZATION HEARING . I (We), Jeffrey E. Smith Paitnerships, LC, Authorize - Robert J Muchow & Brian T Howes To represent me (us) at the property tax appeal meeting with the Christian County Assessor & the related Board of Equalization Hearing regarding the properties listed below. Notices and Correspondence are to be sent to: (Check only one) Taxpayer X Authorized Representative/Agent 2 j \Al 4/' D (Sfinature 6f taxpayer) G (14 / 11 (Date) Regarding all appeals listed below: Branson Christian County, LP Branson Christian County II, LP