In a recent commercial real estate tax appeal, a St. Louis County, Missouri (Clayton) hotel achieved an approximate $14,000,000 reduction in its appraised value in front of the Missouri State Tax Commission, representing a tax savings of over $1,500,000 over four years.
The tax appeal concerned tax years 2011-2014. The St. Louis County Assessor appraised the property in each of those tax years at $18,054,600 (assessed value of $5,777,480). The hotel paid taxes under protest for 2011-2014 in the amounts of $543,976, $550,245, $579,622 and $592,480, respectively.
On appeal, the hotel presented the testimony of a respected, local hotel and hospitality appraiser, who valued the hotel, using the State Tax Commission approved Rushmore Approach/Methodology to hotel income valuation, at $3,870,000 for tax years 2011-2012 and $4,600,000 for tax years 2013-2014. The County did not submit its own appraisal. The County is not obligated to present an appraisal or put on any evidence of its own, as the burden is upon the taxpayer to present substantial and persuasive evidence that the Assessor and, subsequently, Board of Equalization got the assessment wrong. Here, the State Tax Commission held that the hotel met its burden and set the value of the subject property at the values established by the taxpayer’s appraiser.
The opinion has a lengthy explanation of hotel valuation. Hotel tax appeals necessitate an experienced hotel appraiser (and an experienced commercial tax assessment appeal attorney), as there are numerous intricacies to hospitality valuations that do not exist with traditional commercial real estate appraisals.
Case Reference: W 2005 New Century Hotel Portfolio, LP v. Zimmerman (11-13900 and 13-13069)
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