State Tax Commission of Missouri
|FORREST AND SUSAN MASON||)|
|CATHY RINEHART, ASSESSOR||)|
|CLAY COUNTY, MISSOURI||)|
DECISION AND ORDER
The assessment made by the Board of Equalization of Clay County is AFFIRMED. Complainant failed to submit substantial and persuasive evidence to overcome the presumption of correct valuation by the Clay County Board of Equalization.
Assessed value in money for the subject property for tax year 2015 and 2016 is set at $27,379 ($144,100 True Market Value) residential.
Complainant appeared by counsel Bill Shull.
Respondent appeared by attorney Trish Hughes.
Case heard and decided by Senior Hearing Officer John Treu.
Complainant appeals on the ground of overvaluation the residential valuation of the subject property.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission.
- Evidentiary Hearing. The Evidentiary Hearing was held on April 6, 2016 at the Clay County Administrative Building, Liberty, Missouri.
- Identification of Subject Property. The subject property is identified by map parcel number or locator number 13-907-00-06-011.00. It is further identified as 6225 NE Normandy Drive, Gladstone, Clay County, Missouri (Complaint for Review).
- Description of Subject Property. The subject residential property consists of a tract of land of 9,954 square feet, improved by a single family raised ranch style home, with a gross living area of 1,758 square feet. Amenities include 3 bedrooms, 3 bathrooms, a 2 car garage, a fireplace and a shed. The property has casement type windows that are double pane. The property does in fact have some finish to it; however, the Appraisal report assumed no finished area in the basement given a lack of knowledge regarding the finish of the basement area (Exhibit 1 & Testimony).
- Assessment. The Assessor set a true market value on the subject property at $144,100, residential true market value. The Clay County Board of Equalization sustained such value (Complaint for Review).
- Complainant’s Evidence. Complainant offered Exhibits A through G which were received into evidence. Such consisted of:
|Exhibit B||Subject Property Information|
|Exhibit C||Assessor’s Appraisal|
|Exhibit D||County’s Comparison on Appraisal|
|Exhibit E||Mason’s Comparisons-Sales 2013-2014|
|Exhibit F||Mason’s Comparisons-Sales 2015|
|Exhibit G||Reference Material|
All objections to the offer of such exhibits were overruled and such were admitted into the evidentiary record to be given such weight, if any, as deemed appropriate (see section below discussing evidence regarding interior of subject property). Additionally, Complainant testified.
- Respondent’s Evidence. Respondent offered into evidence Exhibits 1 through 10 which were received into evidence. Such consisted of:
|Exhibit 1||Appraisal of Rick Knoch|
|Exhibit 2||Breakdown of Cost Approach|
|Exhibit 3||Appraisers Credentials|
|Exhibit 4||Sales Verifications|
|Exhibit 5||Property Valuation History|
|Exhibit 6||Countywide Median Sales Data|
|Exhibit 7||Standards on Verification of Adjustments of Sales|
|Exhibit 8||Information on Complainant’s Sales|
|Exhibit 9||Summary of Appraisers Comments|
|Exhibit 10||Plat of Subject Property Area|
All objections to the offer of such exhibits were overruled and such were admitted into the evidentiary record to be given such weight, if any, as deemed appropriate. Additionally, Rick Knoch testified.
- No Evidence of New Construction & Improvement and Ownership. There was no evidence of new construction and improvement from January 1, 2015 to January 1, 2016, therefore the assessed value for 2015 remains the assessed value for 2016. Section 137.115.1, RSMo
- Presumption of Correct Assessment Not Rebutted. Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment and establish the true value in money as of January 1, 2015. Consequently, the true market values set by the Clay County Board of Equalization is AFFIRMED.
CONCLUSIONS OF LAW AND DECISION
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.
Basis of Assessment
The Constitution mandates that real property and tangible personal property be assessed at its value or such percentage of its value as may be fixed by law for each class and for each subclass. Article X, Sections 4(a) and 4(b), Mo. Const. of 1945. The constitutional mandate is to find the true value in money for the property under appeal. By statute real and tangible personal property are assessed at set percentages of true value in money. Section 137.115.5, RSMo – residential property at 19% of true value in money.
Complainants’ 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 January 1, 2015. Hermel, supra. 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).
Evidence Regarding Interior of Subject Property
On February 16, 2016, the undersigned issue an Order which specifically warned Complainant about the potential consequences of not allowing an interior inspection of the subject property. Such Order stated in pertinent part:
First, Complainants cannot be compelled to allow an interior inspection of the subject properties. However, such right comes with certain consequences. Complainants shall not be allowed to present evidence regarding the interior condition of the subject properties unless access to the subject properties shall be afforded to Respondent’s by March 4, 2016. In the event that Complainants cannot be present to allow such to occur, Complainants shall arrange for another person to be present to allow such to occur. It is Complainants that brought this action and therefore, it is upon Complainants to bear the burden of making arrangements for the inspection of the interior of the subject properties if Complainants desire to present any evidence regarding the interior of the subject properties. However, it is once again noted that such allowance cannot be compelled.
Additionally, negative inferences may be imposed in favor of Respondent’s, including, but not limited to, an inference that the subject properties are of at least as good of quality and condition as any comparables in any appraisal by Respondent, thus negating any negative adjustment to such comparables for quality and/or condition.
At the Evidentiary Hearing on April 4, 2016, Complainant desired to present direct evidence regarding the interior of her property. However, Complainant acknowledged that she did not allow Respondent to view the interior of her property. Consequently, the Hearing Officer precluded Complainant from presenting any direct evidence regarding the interior of the subject property and admitted certain of Complainant’s exhibits with the understanding that any evidence within such regarding the interior of the property would not be considered. Additionally, Complainant was advised that a negative inference would be drawn regarding the interior of the subject property. Although it was acknowledged by the Hearing Officer that it was Complainants right to refuse an interior inspection of her property (which would have afforded Respondent to view all of the interior and not simply selected portions of such which Complainant desired to show via photographic evidence), the Hearing Officer noted that Complainant could not use such right as both a shield (to deny access) and as a sword (to present evidence regarding the interior with affording Respondent the same ability to know and view all which Complainant knew).
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value. Rigali v. Kensington Place Homeowners’ Ass’n, 103 S.W.3d 839, 846 (Mo. App. E.D. 2003); Boten v. Brecklein, 452 S.W.2d 86, 95 (Sup. 1970). The owner’s opinion is without probative value; however, where it is shown to have been based upon improper elements or an improper foundation. Cohen v. Bushmeyer, 251 S.W.3d 345, (Mo. App. E.D., March 25, 2008); Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992); State, ex rel. Missouri Hwy & Transp. Com’n v. Pracht, 801 S.W.2d 90, 94 (Mo. App. E.D. 1990); Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965). “Where the basis for a test as to the reliability of the testimony is not supported by a statement of facts on which it is based, or the basis of fact does not appear to be sufficient, the testimony should be rejected.” Carmel Energy at 783. A taxpayer does not meet his burden if evidence on any essential element of his case leaves the Commission “in the nebulous twilight of speculation, conjecture and surmise.” See, Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980). In the present appeal, Complainant’s evidence and her testimony left the Hearing Officer “in the nebulous twilight of speculation, conjecture and surmise.” Id.
Complainant Not Deemed an Expert
Complainant’s reliance upon State ex rel. Missouri Highways and Transportation Commission v. Boer, 2016 WL 320266 (Mo. App. S.D. Jan. 27, 2016) is misplaced in the present appeal. The Boer decision must be read narrowly, in that such decision was based heavily upon a determination of whether a trial court abused its discretion in allowing a particular person to testify as an expert. The Missouri Court of Appeals found no abuse of discretion. Nevertheless, inherent in such decision was the fact that determinations regarding who can testify as an expert are left to the discretion of the lower tribunal, in this appeal, the State Tax Commission.
In the present appeal, the Hearing Officer finds that Complainant does not qualify as an expert witness. The Hearing Officer is not persuaded that Complainant’s life experience, training, education and/or knowledge is superior to the general public to such an extent that such would allow Complainant to opine on property values. Secondly, the Missouri Court of Appeals noted that “[g]enerally, expert testimony is admissible as long as the expert’s competence on the subject matter is superior to that of the ordinary juror and the expert’s opinion aids the jury in deciding an issue in the case”.. Id. citing Freight House Lofts Condo Ass’n v. VSI Meter Services, Inc., 402 S.W.3d 586, 596 (Mo.App. W.D. 2013). In the present appeal, no evidence was adduced that Complainant competence on real estate appraisal or the valuation of real estate would be superior to the fact-finder in the present appeal, namely the State Tax Commission, which expertise and competence is addressed in Savage v. State Tax Commission of Missouri, 722 S.W.2d 72 (Mo. banc 1986) below. Any testimony above and beyond what a general property owner could testify to would merely confuse the issues in this appeal. As pointed out in the Boer decision, “[a]ll parties recognize and acknowledge that ‘[w]hile property owners may always testify as to their opinion concerning the value of their own property, they may not support that opinion by reference to comparable sales unless they qualify as an expert.’” Boer, citing State ex rel. Missouri Highway & Transp. Comm’n v. McDonald’s Corp., 872 S.W.2d 108, 113 (Mo. App. E.D. 1994).
The Missouri Supreme Court, in Savage v. State Tax Commission of Missouri, 722 S.W.2d 72 (Mo. banc 1986) observed:
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, 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 light most favorable to the administrative body, together with 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 clear cause, we will “stay our hand[s].” Pierre Chouteau Condominiums v. State Tax Commission, 662 S.W.2d 513, 517 (Mo. banc 1984).
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.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.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 he 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); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).
In the present appeal, even if Complainant were an appropriate expert, the Hearing Officer did not find her evidence or her testimony to warrant any substantial weight as to the actual value of the subject property. Complainant’s utilized figures by Respondent in the mass appraisal process as compared to values utilized by appraisers in making adjustments based upon market impact. Moreover, many of Complainant’s comparables were suspect as to whether they were true market sales reflecting true market value. 2 of such were short sales. 1 of such was an estate sale. 1 of such was essentially a flip as the buyer only owned the property for approximately 4 months. None of these are traditional comparables utilized by an appraiser, unless such type sales dominate the market. No evidence that such is the fact in the Clay County market was adduced.
As to Respondent, Respondent’s appraisal was weighed in light of the fact that Respondent’s appraiser is not a Missouri licensed appraiser and further in light of the fact that such appraiser qualifications reflect that he has not attended any educational seminars since 2009. Notwithstanding this fact, Respondent’s appraisal evidence was sufficient to support the Board of Equalization valuation.
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. Missouri Baptist Children’s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993). True value in money is defined in terms of value in exchange and not value in use. Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 S.W.2d 376, 380 (Mo. App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).
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:
- Buyer and seller are typically motivated.
- Both parties are well informed and well advised, and both acting in what they consider their own best interests.
- A reasonable time is allowed for exposure in the open market.
- Payment is made in cash or its equivalent.
- Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
- 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.
Respondent Provides Substantial and Persuasive Evidence
In Support Board of Equalization Value
Respondent presented substantial and persuasive evidence to establish a fair market value as of January 1, 2015, to be $144,000 for the subject property. This value does not rebut, but supports the Clay County Board of Equalization valuation of $144,100. Respondent’s appraiser developed an opinion of value relying upon an established and recognized approach for the valuation of real property, the sales comparison or market approach. The sales comparison approach is generally recognized to be the most reliable methodology to be utilized in the valuation of single-family residences. The adjustments made by the appraiser were, in general consistent with generally accepted guidelines for the appraisal of property of the subject’s type. The adjustments accounted for the various differences between the subject and each comparable, other than the appraisers failure to adjust for concessions in some manner. In the event that “[s]ales or financial consessions [sic] were all within the typical 3-5% range” and thus no adjustments were necessary, to the properties with concessions, Respondent’s appraiser failed to make an adjustment for those properties lacking any concessions.
Additionally, the Hearing Officer found Respondent’s comparable #6 to be the most pertinent comparable, in that it sold a mere 69 days after the pertinent date, such being January 1, 2015. Such property was also a raised ranch, residential property, which was within .09 miles of the subject property. Such property also had 3 bedrooms and a two car garage, like the subject. Such comparable was sold for $162,500. $16,000 worth of downward adjustments were made to such comparable (to the benefit of Complainant) due to better condition, a partially finished basement and due to a covered patio.
Positive adjustments were made for the subject having an additional bathroom and for the subject having additional gross living area. This resulted in an adjusted value of $152,516. Making an additional negative adjustment to Respondent’s appraisal of $3,500 for concessions, such would result in a value of $149,016. This figure is $4,916 more than the Clay County Board of Equalization value and thus supports such valuation.
The true market valuation for the subject property as determined by the Clay County Board of Equalization is AFFIRMED.
The assessed value for the subject property for tax years 2015 and 2016 is set at $27,379 residential.
Application for Review
A party may file with the Commission an application for review of this decision within thirty days of the mailing date set forth in the Certificate of Service for this Decision. The application shall contain specific facts or law as grounds upon which it is claimed the decision is erroneous. Said application must be in writing 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 service.
Failure to state specific facts or law upon which the application for review is based will result in summary denial. Section 138.432, RSMo
The Collector of Clay County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 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 May 3, 2016.
STATE TAX COMMISSION OF MISSOURI
Senior Hearing Officer
Delivery or Notice was made via mail, email, fax, or personally on May 3, 2016 to the following Individuals of this Decision/Order/Holding
Susan Arasmith-Mason, Complainant, email@example.com
Cathy Rinehart, Assessor, firstname.lastname@example.org
Patricia Hughes, Attorney For Respondent, email@example.com
Bill Shull, Attorney for Complainant, firstname.lastname@example.org
Lydia McEvoy, Collector, email@example.com
STATE TAX COMMISSION OF MISSOURI