Link to Mo. Sup. Ct. Opinion
Missouri imposes an ad valorem tax on electric utility facilities, requiring each company to “file a report with the county assessor describing its local property situated in the county and the ‘true value in money thereof.’”[2] Once the assessor receives that report, she certifies its accuracy, values the property, and sends her report to the state tax commission.[3] This case involved a dispute over the assessor’s valuation of Kansas City Power & Light Company’s two Platte County facilities.[4] A local school district and two of its school board members (collectively “West Platte”) brought suit against the Platte County assessor, arguing that she violated state law by undervaluing KCPL’s property, leading to a loss of revenue to the district.[5] After West Platte filed suit, KCPL intervened and filed motions to dismiss, which were denied by the Honorable Gerald McBeth of the Vernon County Circuit Court.[6] As a result, KCPL petitioned the Court of Appeals “to prohibit [Judge McBeth’s] purported exercise of jurisdiction over the lawsuit,” but the petition was denied.[7] The Supreme Court of Missouri reversed, instituting preliminary and permanent writs of prohibition and holding that “KCPL and the assessor’s motions to dismiss should have been granted” because West Platte lacked standing to challenge KCPL’s assessments and the assessor did not violate any statutory requirements.[8]
I. Facts and Holding
This case involves the valuation of two KCPL electricity generating plants located in Platte County, known as Iatan I and Iatan II.[9] In 2006, KCPL began modifying Iatan I to comply with environmental standards.[10] KCPL was required to cease Iatan I’s operation and take the facility offline from fall 2008 to spring 2009 after “a malfunction occurred when KCPL attempted to place the plant on line.”[11] Also in 2006, KCPL began construction on Iatan II, which was scheduled to begin service in fall 2010.[12]
During these projects, KCPL properly filed taxation reports with the county assessor, who “estimated the [facilities’] market value at approximately 50 percent of the sum total of the original construction costs reported by KCPL.”[13] In addition, the assessor classified Iatan I as distributable property under the law, statutorily defined as “‘personal property which is used directly in the generation and distribution of electric power.’”[14] This categorization was crucial to the valuation, because, had the plant been deemed local property, it would have been subject to the levy of the school district in which it was located and assessed by the county.[15] Instead, Iatan I was “assessed by the state tax commission and [was] taxed [by the local school district] according to the average rates of all the school districts within the county.”[16]
Seeking declaratory judgment and a writ of mandamus, West Platte brought suit against the Platte County assessor, alleging two main injustices.[17] West Platte argued that the assessor violated her ministerial duty by, first, “failing to assess KCPL’s reported construction costs as the [full] ‘true value in money’” and by, second, classifying the Iatan I property as distributable.[18] West Platte claimed that the school district was hurt by the lost tax revenue as a result of these indiscretions.[19] After KCPL intervened and brought motions to dismiss, the circuit court overruled the motions.[20] KCPL then sought the writ of prohibition at issue in the current case.[21]
KCPL put forth three arguments in support of their petitions for writ of prohibition.[22] The company argued that (1) West Platte lacked standing to challenge the assessment of KCPL’s property, (2) the Platte County assessor had no ministerial duty to value the construction costs according to their reported costs, and (3) the Platte County assessor had no ministerial duty to classify the Iatan I as “local property.”[23] The court addressed KCPL’s three arguments in kind, ultimately agreeing with the company.[24]
First, the court analyzed West Platte’s standing to bring claims for declaratory judgment and mandamus.[25] Because Missouri law clearly supported the rule that neither individual taxpayers, nor school districts could challenge a third party’s past tax assessment, the court rejected West Platte’s claim for declaratory judgment on KCPL’s assessments prior to 2009.[26] Other the other hand, the court held that, under Missouri law, West Platte did have standing to seek “a declaration of their rights and the assessor’s duties under the utility taxation statutes” because the parties had a protectable interest – school district revenue – that would be adversely affected if improper interpretation of the law persisted.[27]
Second, in analyzing West Platte’s standing to seek a writ of mandamus, the court similarly held that the district had standing, provided that the assessor “has a ministerial duty to value and assess the property in the manner . . . allege[d] [by West Platte].”[28] The court then reviewed KCPL’s argument that the Platte County assessor was under no duty to assess Iatan I by “true value in money” of the original cost.[29] Finding that the county assessor’s duty to value property is discretionary under Missouri statute, the court held that the Platte County assessor was not obligated by ministerial duty to follow West Platte’s interpretation of the law and, thus, that West Platte did not have standing in the mandamus action.[30]
Just as the county assessor did not have a ministerial responsibility to value KCPL’s property in a certain way, the court also held that she did not err in classifying Iatan I as distributable property under the law.[31] This last determination solidified the court’s conclusion that West Platte lacked standing to bring any suit against the Platte County assessor except for the declaratory judgment action.[32] Upon finding that the assessor “did not violate any definite, ministerial duty,” the court held that the only viable remedy for West Platte was to encourage the election of a new county assessor.[33]
II. Legal Background
Missouri court cases concerning assessment challenges have firmly established that third parties, including individuals, lack standing to challenge other taxpayers’ assessments.[34] As the Supreme Court of Missouri has noted in the past, “[t]he primary basis for taxpayer suits arises from the need to ensure that government officials conform to the law.”[35] In Kansas City Power & Light, the court held that the county assessor complied with the taxation statutes at issue, which meant that West Platte did not have standing to ensure public officials “conform to the law.”[36] Further, school districts in Missouri have long been unable to challenge valuations of property within their district because the law assumes that “public officials would adequately protect the interest of the state and its subdivisions.”[37] Relying on this precedent, the Supreme Court of Missouri concluded that West Platte lacked standing for declaratory judgment on the past valuations of KCPL property.[38]
The ability to bring a claim for declaratory judgment for the purpose of establishing rights, however, did exist for West Platte.[39] Missouri statutes explicitly address declaratory actions and allow individuals affected by a statute to bring a claim to “‘terminate the controversy or remove an uncertainty.’”[40] As this court reasoned, the individuals must also “have a legally protectable interest at stake in the outcome of the litigation,” which means that the individual must be “directly and adversely affected by the action in question.”[41] The Supreme Court of Missouri has already held that school districts in danger of losing funding have standing to clarify the statute at issue through an action for declaratory judgment.[42] This danger extends to individual taxpayers within the school district, as well.[43]
The standard for assessing West Platte’s standing for their mandamus action is much different than that of declaratory judgment under Missouri law.[44] Indeed, the court relied on its past precedent that, “where the duty sought to be enforced is a simple, definite, ministerial duty imposed by law,” a plaintiff generally will have standing to seek mandamus.[45] However, to establish whether a ministerial duty existed, the court was required to engage in statutory analysis, aided by case law.[46]
Public officials not only perform ministerial duties “‘in obedience to the mandate of legal authority, without regard to [their] own judgment’” but also discretionary duties that require officials to exercise their interpretation of law and reasoning.[47] In this case, the court looked to the job description of the county assessor, finding that she was required to assess KCPL’s property at a percentage of its “true value in money,” defined in case law as “an estimate of the fair market value on the valuation date.”[48]
After evaluating factually how the county assessor may conduct her assessment and determining that the job was clearly not ministerial, the court supported its finding by looking to surrounding statutes and regulations.[49] Missouri law requires county assessors to assess property at a value that they “believe[] to be the actual cash value” and that they derive the “true value in money”[50] to report to the tax commission.[51] Further, the state tax commission requires the assessor to estimate the value of a property by relying on his or her discretion, without providing specific guidance.[52]
The court also evaluated the county assessor’s “ministerial duty to assess a temporarily offline power plant as ‘local property.’”[53] Because Missouri law treats local and distributable property differently for taxation purposes, the court found it important to expound on the distinction, holding that the “dispositive factor for [classifying property as local or distributable] is the purpose for which the property at issue is held, not its operational status,” and thus that the Iatan I plant fit within the definition of local property.[54] Because of the assessor’s discretionary power, she was under no obligation to value the Iatan property in any specific manner, including by full acceptance of KCPL’s report or designation of local property.[55] As a result of the lack of ministerial duty, West Platte did not have standing to seek a mandamus action against the assessor.[56]
III. Comment
The notion that taxpayer standing does not exist in cases involving other taxpayer’s assessments appears settled in Missouri;[57] however, the doctrine of standing, in its simplest form, only “requires that a party seeking relief has some legally protectable interest in the litigation so as to be affected directly and adversely by its outcome, ‘even if that interest is attenuated, slight or remote.’”[58] In Kansas City Power & Light, West Platte school district and two individual taxpayers alleged that the county assessor had undervalued KCPL property located within the school district, seeking declaratory judgment of the assessor’s duty under the law and a writ of mandamus prohibiting her from discounting the value of KCPL property and defining temporarily dormant electricity plants as “distributable property.”[59]
While the court did determine that West Platte had standing for a declaratory judgment because the district and taxpayers had a legal and protectable interest in supporting school funding, it added a second requirement for mandamus – that the assessor perform ministerial duties – that West Platte did not meet because the court found the assessor’s duties to be discretionary.[60] Though the ministerial duty condition for standing is well-established in Missouri,[61] it is important for the court to consider the implications of denying standing in this case. Allowing West Platte to challenge the assessor’s valuation would potentially increase revenue to West Platte, a small rural district with just over 600 students.[62] In a district that relies primarily on local money to educate its students, the Platte County assessor’s fifty-percent reduction of KCPL’s property for taxation purposes has a major effect on funding.[63]
Despite the law’s firm commitment to the idea that school district interests would be duly represented by the state,[64] the court’s decision in Kansas City Power & Light demonstrates that its hands are tied in protecting school districts in the event that a discretionary action harms them.[65] The court advises the school district and its taxpayers to make an effort to oust the allegedly problematic county assessor at the next election.[66] Such counsel, though reflective of the state’s precedent rejecting standing in such matters, does little to help support schools in Missouri, which are institutions so important that they are codified in the state constitution.[67]
-Brianna L. Lennon
[1] No. SC90693, 2010 WL 4148944 (Mo. 2010) (en banc).
[2] Id. at *1 (citing Mo. Rev. Stat. § 151.110.1).
[3] Mo. Rev. Stat. § 151.110.2.
[4] Kansas City Power & Light, 2010 WL 4148944 at *1.
[5] Id. at *3-4; Brief of Relator Kansas City Power & Light at *2.
[6] Brief of Relator Kansas City Power & Light at *5.
[7] Id.
[8] Kansas City Power & Light, 2010 WL 4148944 at *6.
[9] Id. at *1.
[10] Id.
[11] Brief of Respondent at *9.
[12] Kansas City Power & Light, 2010 WL 4148944 at *1.
[13] Id.
[14] Id. at *5 (quoting Mo. Rev. Stat. § 153.034.1). By comparison, local property is defined as property “‘not used directly in the generation and distribution of power . . . .’” Id. (quoting Mo. Rev. Stat. § 153.034.2).
[15] Id. (citing Sw. Bell Tel. Co. v. Bond, 595 S.W.2d 365, 367 (Mo. App. W.D. 1980)).
[16] Id.
[17] Id. at *1.
[18] Id.
[19] Id.
[20] Id. at *2.
[21] Id.
[22] Id.
[23] Id.
[24] Id. at *2-6.
[25] Id. at *2-3.
[26] Id. at *3.
[27] Id. The court presumably refers to two Missouri statutes. First, Mo. Rev. Stat. § 137.115 requires the county assessor to assess property from the public utility’s report based on a percentage of the property’s “true value in money.” Id. at *4. Second, Mo. Rev. Stat. § 53.030 defines the general job description of the county assessor. Id. at *5.
[28] Id. at *4.
[29] Id.
[30] Id. at *5.
[31] Id. at *6.
[32] Id. To satisfy the declaratory judgment, the court declared that the “county assessor has discretion to exercise independent judgment when valuing and assessing property under” Missouri law. Id.
[33] Id.
[34] See Comm. for Educ. Equality v. State, 294 S.W.3d 477, 485-86 (Mo. 2009) (en banc) (holding that individual taxpayers are not personally injured by others’ assessments); W.R. Grace & Co. v. Hughlett, 729 S.W.2d 203, 206-7 (Mo. 1987) (en banc).
[35] E. Mo. Laborers Dist. Council v. St. Louis County, 781 S.W.2d 43, 46 (Mo. 1989) (en banc).
[36] Kansas City Power & Light, 2010 WL 4148944 at *6.
[37] State ex rel. St. Francois County Sch. Dist. R-III v. Lalumondier, 518 S.W.2d 638, 643 (1975); see also State ex rel. Brentwood Sch. Dist. v. State Tax Comm’n, 589 S.W.2d 613, 614 (Mo. 1979) (en banc).
[38] Kansas City Power & Light, 2010 WL 4148944 at *6.
[39] Id.
[40] Id. at *3 (quoting Mo. Rev. Stat. § 527.050); see also Mo. Rev. Stat. § 527.020 (describing who can bring a declaratory judgment claim); Mo. Rev. Stat. § 527.120 (stating that declaratory judgment statutes must “be liberally construed”).
[41] Kansas City Power & Light, 2010 WL 4148944 at *3 (citing Ste. Genevieve Sch. Dist. R-II v. Bd. of Aldermen, 66 S.W.3d 6, 10 (Mo. 2002) (en banc).
[42] State ex rel. Sch. Dist. of Independence v. Jones, 653 S.W.2d 178, 189 (Mo. 1983) (en banc). It is important to note, however, that school districts are precluded from challenging “alleged underassessments of private property” because the legislature only allowed appeals from the property owner himself. Id. at 188-89.
[43] Ste. Genevieve Sch. Dist. R-II, 66 S.W.3d at 10-11.
[44] Kansas City Power & Light, 2010 WL 4148944 at *4.
[45] Id. (citing State ex rel. City of Cabool v. Texas County Bd. of Equalization, 850 S.W.2d 102, 105 (Mo. 1993) (en banc)).
[46] Id. at *2-6.
[47] Id. at *4 (quoting Rustici v. Weidemeyer, 673 S.W.2d 762, 769 (Mo. 1984) (en banc)).
[48] Id. (citing Hermel, Inc. v. State Tax Comm’n, 564 S.W.2d 888, 897 (Mo. 1978) (en banc)); see also Mo. Rev. Stat. § 137.115 (Supp. 2009).
[49] Id. at *4-5.
[50] Id. at *5 (citing Hermel, Inc. v. State Tax Comm’n, 564 S.W.2d 888, 897 (Mo. 1978) (en banc) (“Although ‘true value in money’ is not defined by statute, Missouri case law defines ‘true value’ as an estimate of the fair market value on the valuation date.”)
[51] Id. (quoting Mo. Rev. Stat. §§ 53.030, 151.110.3).
[52] Id. (citing 12 CSR 30-2.011(1)).
[53] Id.
[54] Id. at *6.
[55] Id.
[56] Id.
[57] Comm. for Educ. Equality v. State, 294 S.W.3d 477, 485-86 (Mo. 2009) (en banc).
[58] Id. at 484 (citing Mo. State Med. Ass’n v State, 256 S.W.3d 85, 87 (Mo. 2008) (en banc)).
[59] Kansas City Power & Light, 2010 WL 4148944 at *1-2.
[60] Id. at *4-5.
[61] State ex rel. City of Cabool v. Texas County Bd. of Equalization, 850 S.W.2d 102, 106 (Mo. 1993) (en banc) (citing State ex rel. Twenty-Second Judicial Circuit v. Jones, 823 S.W.2d 471, 475 (Mo. 1992) (en banc)).
[62] West Platte Co. R-II Finance Report. Nov. 2, 2009. Missouri Department of Elementary and Secondary Education, available at http://dese.mo.gov/planning/profile/SF083002.html.
[63] Id. As compared to the state average of 58.4% of district operating funds coming from local revenue, 81.9% of West Platte’s budget was comprised of local money in 2009. Id.
[64] State ex rel. City of Cabool, 850 S.W.2d at 104 (citing Lalumondier, 518 S.W.2d at 643)).
[65] Kansas City Power & Light, 2010 WL 4148944 at *6.
[66] Id.
[67] See Mo. Const. Art. IX.
