Pierre Chouteau Condominiums v. State Tax Commission

DONNELLY, Judge. This is an appeal from a judgment sustaining a decision of the State Tax Commission. The Pierre Chouteau is a high-rise building located at 4440 Lindell Boulevard in the Central West End area of the City of St. Louis. In 1979, it was converted from an apartment-rental unit building to a condominium-ownership unit building. See Chapter 448, RSMo 1978. The building was reassessed in 1980 pursuant to the provisions of § 448.100, Cum. Supp. RSMo 1982, which reads as follows: Real property taxes, special assessments, and any other special taxes or charges of the state of Missouri or of any political subdivision thereof, or other lawful taxing or assessing body, which are authorized by law to be assessed against and levied upon real property shall be assessed against and levied upon each unit and the owner’s corresponding percentage of ownership in the common elements as a tract, and not upon the property as a whole. Appellants are owners of 52 of the 61 condominium units. They allege discrimi [514] natory treatment. See Sioux City Bridge Co. v. Dakota County, Nebraska, 260 U.S. 441, 43 S.Ct. 190, 67 L.Ed. 340 (1923); Breekenridge Hotels Corp. v. Leachman, 571 S.W.2d 251 (Mo. banc 1978); and Hopkins v. Odom, 619 S.W.2d 857 (Mo.App.1981). At the hearing before the Hearing Officer of the State Tax Commission, counsel summarized their position as follows: The members of the Pierre Chouteau Condominiums, generally became owners in residence of the condominium units involved in 1979. With the tax year, January 1, 1980, they received an assessment that was roughly twice the assessment of the units at the time that they acquired that property. They have asked, or have initiated the process through the Missouri Tax Law, to appeal the level at which they are assessed. They have not raised the question of the appraised value of their apartments within the condominium building. They have taken the position that the Assessor has singled them out, relative to other high rise apartment buildings, on the basis of the fact that this is a condominium apartment building, as opposed to an apartment building held for investment and rental services. It is our purpose today to present evidence that would show that the comparable level of assessment of similar buildings within the City, and particularly within the neighborhood of the Pierre Chouteau, is assessed at a considerably lower assessment, an assessment that is comparable to the normal assessed value of the condominium units prior to the reassessment. The question is that, in the exercise of the power of equalization, that the Commission recognize that this building is being assessed at a level that is roughly twice the prevailing assessment level for similar properties in similar circumstances, and that, therefore, the assessment is discriminatory, excessive, arbitrary and capricious. The parties agree that the assessment for 1980 resulted from consideration of the Pierre Chouteau units as condominiums and not as rental apartments. The essential questions on appeal are whether this method of evaluation is permissible under the Equal Protection Clause of the United States Constitution (U.S. Const., amend. XIY, § 1) and the Uniformity Clause of the Constitution of Missouri (Mo. Const, art. X, § 3). The Fourteenth Amendment to the United States Constitution provides that no State shall “deny to any person within its jurisdiction the equal protection of the laws.” In Allied Stores of Ohio, Inc. v. Bowers, 358 U.S. 522, 526-27, 79 S.Ct. 437, 440, 3 L.Ed.2d 480 (1959), we find the following: The States have a very wide discretion in the laying of their taxes. When dealing with their proper domestic concerns, and not trenching upon the prerogatives of the National Government or violating the guaranties of the Federal Constitution, the States have the attribute of sovereign powers in devising their fiscal systems to ensure revenue and foster their local interests. Of course, the States, in the exercise of their taxing power, are subject to the requirements of the Equal Protection Clause of the Fourteenth Amendment. But that clause imposes no iron rule of equality, prohibiting the flexibility and variety that are appropriate to reasonable schemes of state taxation. * * But there is a point beyond which the State cannot go without violating the Equal Protection Clause. The State must proceed upon a rational basis and may not resort to a classification that is palpably arbitrary. The rule often has been stated to be that the classification “must rest upon some ground of difference having a fair and substantial relation to the object of the legislation.” [Citations omitted.] In 1980, Article X, § 3 of the Missouri Constitution provided that “[tjaxes * * * shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax.” As amended in 1982, Article X, § 3 provides that “[t]axes * * * shall be uniform upon the same class [515] or subclass of subjects within the territorial limits of the authority levying the tax.” In Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 700 (Mo.1959), the applicable Missouri law was stated as follows: At some expense in time and space, we reiterate here certain of the basic principles applicable to the review of assessments generally. There is no such thing in assessments as an absolute “true value,” and an assessment is, at best, a mere estimate; a presumption exists that the assessed value is correct, and the courts have no right to substitute their judgments, as such, for the values fixed by the assessor or by reviewing boards. [Citations omitted.] [A]nd a taxpayer has the burden of establishing a discrimination. [Citation omitted.] A mere overvaluation of a specific property does not establish a discrimination in the absence of a showing of an intentional plan of discrimination or a showing that there is an undervaluation in the average assessment, or that other property generally is undervalued. [Citations omitted.] It is sometimes stated that the assessment of petitioner’s property must, in the absence of an intentional plan or design of discrimination, be so grossly excessive “as to be entirely inconsistent with an honest exercise of judgment.” [Citations omitted.] The record in this case demonstrates that the assessments of the condominium units were based on their individual fair market value as established by the sales price. An equalization factor was then applied to bring the value down to the level of values in 1974 (when the area was last reassessed). In the view of the Commission, the assessments were not in any way discriminatory and “the reassessment of the subject building after the conversion to condominium was done in a proper and equitable manner.” We agree. In our view, the respective clauses of the constitutions, as interpreted in Allied Stores and Cupples Hesse, supra, were not violated. The judgment is affirmed. WELLIVER, HIGGINS and BILLINGS, JJ., concur. DONNELLY, J., concurs in separate opinion filed. BLACKMAR, J., concurs in result in separate opinion filed. RENDLEN, C.J., and GUNN, J., concur in result and concur in separate opinion of BLACKMAR, J.