STATE TAX COMMISSION OF MISSOURI
| JACKIE MARTIN, | ) | |
| ) | Appeal No. 21-20053 | |
| Complainant, | ) | Parcel No. 4946-9-280-000 |
| ) | ||
| v.
|
) | |
| MICHAEL DAUPHIN, ASSESSOR, | ) | |
| CITY OF ST. LOUIS, MISSOURI, | ) | |
| ) | ||
| Respondent. | ) |
DECISION AND ORDER
Jackie Martin (Complainant) appeals the City of St. Louis Board of Equalization’s (BOE) decision finding the assessed value of the subject residential property was $114,000 as of January, 1, 2021. The assessed value equates to a true value in money (TVM) of $600,000. Complainant alleges overvaluation and asserts the TVM of the subject property on January 1, 2021, was $525,000.[1] Complainant did not produce substantial and persuasive evidence of overvaluation. The BOE decision is affirmed. The TVM of the subject property on January 1, 2021, was $600,000, with an assessed value of $114,000.
The evidentiary hearing was held on April 28, 2022, at the City of St. Louis City Hall. Complainant appeared pro se. Respondent was represented by counsel William Willis.
FINDINGS OF FACT
1. The Subject Property. The subject residential real property is located at 3929 Flora Place in the City of St. Louis, Missouri. The subject property consists of an 8,688-square-foot lot improved with a 3,259-square-foot single family home. The home is constructed of brick and two stories with five bedrooms and three and one half baths. The home was built in 1910 and was 111 years old as of January 1, 2021. The surrounding homes are similar to the subject. The subject is within walking distance of Tower Grove Park. Complainant purchased the subject property in August 2019 for $625,000.
2. Assessment and Valuation. The BOE determined the assessed value of the subject property as of January 1, 2021, was $114,000, which equates to a TVM of $600,000.
3. Complainant’s Evidence. Complainant submitted a series of documents labelled as Exhibit A. Exhibit A was admitted into evidence.
Exhibit A includes photographs of the exterior of the subject property and of neighboring homes. The photographs show the home is located in a neighborhood with large and apparently well-maintained homes. Exhibit A also includes four photographs depicting small areas of discolored and bubbling paint on the home’s interior. Complainant testified the damage was caused by water leaks. There is no evidence quantifying the interior damage or showing its affect, if any, on the marketability of the subject property.
Exhibit A includes a September 16, 2019, proposal to complete roof repairs totaling $16,110. Complainant testified these repairs were completed as of January 1, 2021. Exhibit A also includes a September 25, 2020, proposal to repair five broken roof tiles for $700.
Exhibit A also includes a letter dated April 24, 2022, noting the BOE reduced the 2021 assessed value from $124,860 to $114,000. The letter also lists Respondent’s 2021 assessment of five nearby properties on Flora Place setting appraised market values ranging from $241,386 to $497,004. There is no evidence of sales.
Finally, Exhibit A includes an appraisal report prepared by Allen Edmonds, a licensed Missouri appraiser. The appraiser was not present to testify. Respondent objected to the appraisal report included in Exhibit A on grounds the appraisal lacked the requisite foundation for admissibility. Respondent’s objection was sustained. The appraisal report is not in evidence, but was preserved in the record pursuant to Section 536.070(7).
4. Respondent’s Evidence. Respondent introduced Exhibit 1. Complainant did not object. Exhibit 1 was admitted into evidence.
Exhibit 1 is an appraisal report prepared by Gerald Rowland, an appraiser in Respondent’s office. Rowland utilized the comparable sales approach to estimate the TVM of the subject property as of January 1, 2021, was $611,900. (Ex. 1 at 10) Rowland compared the subject property to three properties sold in July, August, and September of 2020. The properties are 0.1, 1.3, and 0.09 miles from the subject property. (Id. at 7) Like the subject, each property is improved with a two-story, brick home. The homes range from 91 to 113 years old and, like the subject, are in average condition. While the subject property has 3,259 square feet of living space, the comparable properties have between 3,010 and 4,442 square feet of living area. Notably, the comparable property with the largest home has only one and one half baths as compared to the subject’s three and one half baths. (Id. at 7) Rowland adjusted for all of these differences, along with others, to estimate the subject’s value as of January 1, 2021, was $187.76 per square foot, or $611,900. (Id. at 7-8)
5. Value. The TVM of the subject property as of January 1, 2021, was $600,000.
CONCLUSIONS OF LAW
1. Assessment and Valuation. Residential real property is assessed at 19% of its TVM as of January 1 of each odd-numbered year. Section 137.115.5(1)(a). The TVM is “the fair market value of the property on the valuation date[.]” Snider v. Casino Aztar/Aztar Mo. Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005) (internal quotation omitted). The fair market value is “the price which the property would bring from a willing buyer when offered for sale by a willing seller.” Mo. Baptist Children’s Home v. State Tax Comm’n, 867 S.W.2d 510, 512 (Mo. banc 1993). “True value in money is defined in terms of value in exchange not value in use.” Tibbs v. Poplar Bluff Assocs. I, L.P., 599 S.W.3d 1, 7 (Mo. App. S.D. 2020) (internal quotation omitted). “Determining the true value in money is an issue of fact for the STC.” Cohen v. Bushmeyer, 251 S.W.3d 345, 348 (Mo. App. E.D. 2008).
“For purposes of levying property taxes, the value of real property is typically determined using one or more of three generally accepted approaches.” Snider, 156 S.W.3d at 346. The three generally accepted approaches are the cost approach, the income approach, and the comparable sales approach. Id. at 346-48.
The comparable sales approach is typically used to value residential properties improved with a single-family home. “The comparable sales approach uses prices paid for similar properties in arms-length transactions and adjusts those prices to account for differences between the properties.” Snider, 156 S.W.3d at 347-48 (internal quotation omitted). The STC has wide discretion in selecting the appropriate valuation method but “cannot base its decision on opinion evidence that fails to consider information that should have been considered under a particular valuation approach.” Id., at 348. Therefore, when applying the comparable sales approach, it is necessary to compare the subject property to sales of comparable properties, with adjustments accounting for property differences.
2. Evidence. The hearing officer is the finder of fact and determines the credibility and weight of the evidence. Kelly v. Mo. Dep’t of Soc. Servs., Family Support Div., 456 S.W.3d 107, 111 (Mo. App. W.D. 2015). “Although technical rules of evidence are not controlling in administrative hearings, fundamental rules of evidence are applicable.” Mo. Church of Scientology v. State Tax Comm’n, 560 S.W.2d 837, 839 (Mo. banc 1977).
The hearsay rule is a fundamental rule of evidence applicable in administrative hearings. Speer v. City of Joplin, 839 S.W.2d 359, 360 (Mo. App. S.D. 1992). “Hearsay is an out-of-court statement offered for the truth of the matter asserted.” State v. McFadden, 391 S.W.3d 408, 431 (Mo. banc 2013). “Hearsay evidence is objectionable because the person who makes the statement offered is not under oath and is not subject to cross-examination.” Saint Louis Univ. v. Geary, 321 S.W.3d 282, 291 (Mo. banc 2009). Hearsay is inadmissible unless an exception applies. Id.
Complainant’s Exhibit A included an appraisal report regarding the subject property. Respondent objected, asserting the report was inadmissible because the appraiser was not present to testify and, therefore, was not available for cross-examination or to lay a foundation for the admissibility of the appraisal report. Respondent’s timely, specific objection properly raised an admissibility issue. Callahan v. Cardinal Glennon Hosp., 863 S.W.2d 852, 860 (Mo. banc 1993) (holding “[a]dmissibility only becomes an issue if there is a timely and specific objection”).
The January 20, 2022, scheduling order includes the following language on page 5: “If you are presenting an appraisal report from an appraiser as evidence, the appraiser MUST be present to testify and to be cross-examined. If the appraiser is not present at the Evidentiary Hearing, the appraisal report cannot be received into evidence.” This language is based on a fundamental rule of evidence holding that “[b]efore a document may be received in evidence, it must meet a number of foundational requirements including relevancy, authentication, the best evidence rule, and hearsay.” Revis v. Bassman, 604 S.W.3d 644, 657 (Mo. App. E.D. 2020) (internal quotation omitted).
While Respondent’s objection did not use the word “hearsay,” Respondent’s objection asserted in part the report was inadmissible because the appraiser was not present and available for cross-examination. Respondent’s objection invoked the hearsay rule by identifying the fundamental basis of the objection, namely, that “the person who [made] the statement offered is not under oath and is not subject to cross-examination.” Geary, 321 S.W.3d at 291.[2]
The appraisal report included in Complainant’s Exhibit A is hearsay because it was offered to prove the factual assertions contained therein and made by an individual not present at the evidentiary hearing and not subject to cross-examination. No recognized hearsay exception applies. The appraisal report is inadmissible.
Respondent’s appraisal report estimates a value higher than that determined by the BOE. Section 138.060.1 provides that in an STC hearing, Respondent “shall not advocate nor present evidence advocating a valuation higher than that value finally determined by the assessor or the value determined by the board of equalization, whichever is higher, for that assessment period.” Respondent did not advocate a value higher than that determined by the BOE. Respondent’s Exhibit 1 is admissible “for the purpose of sustaining the assessor’s or board’s valuation, and not for increasing the valuation of the property under appeal.” 12 CSR 30-3.075(1).
3. Complainant’s Burden of Proof. The taxpayer bears the burden of proof and must show by a preponderance of the evidence that the property was overvalued. Westwood P’ship v. Gogarty, 103 S.W.3d 152, 161 (Mo. App. E.D. 2003). The BOE’s valuation is presumptively correct. Tibbs, 599 S.W.3d at 7. The “taxpayer may rebut this presumption by presenting substantial and persuasive evidence that the valuation is erroneous.” Id. (internal quotation omitted). The taxpayer also must prove “the value that should have been placed on the property.” Id. “Substantial evidence is that evidence which, if true, has probative force upon the issues, and from which the trier of fact can reasonably decide the case on the fact issues.” Savage v. State Tax Comm’n, 722 S.W.2d 72, 77 (Mo. banc 1986) (internal quotation omitted). Evidence is persuasive when it has “sufficient weight and probative value to convince the trier of fact.” Daly v. P.D. George Co., 77 S.W.3d 645, 651 (Mo. App. E.D. 2002); see also White v. Dir. of Revenue, 321 S.W.3d 298, 305 (Mo. banc 2010) (noting the burden of persuasion is the “party’s duty to convince the fact-finder to view the facts in a way that favors that party”).
4. Complainant Did Not Produce Substantial and Persuasive Evidence of Overvaluation. The comparable sales approach is typically used to value residential properties improved with a single-family home. “The comparable sales approach uses prices paid for similar properties in arms-length transactions and adjusts those prices to account for differences between the properties.” Snider, 156 S.W.3d at 347-48 (internal quotation omitted).
Complainant relied on evidence of Respondent’s assessment of other properties rather than evidence of adjusted comparable sales. The comparable sales approach requires sales, not assessments. Complainant’s reliance on assessments of nearby properties does not include the necessary evidence of arm’s-length sales or of the adjustments necessary to compare one property to another. The STC “cannot base its decision on opinion evidence that fails to consider information that should have been considered under a particular valuation approach.” Snider, 156 S.W.3d at 348. Complainant’s evidence of Respondent’s assessment of other properties is not persuasive evidence of the TVM of the subject property as of January 1, 2021.
Complainant’s testimony that the subject’s value was reduced by water damage is also unpersuasive. Complainant produced no evidence providing a way to quantify the effect of the alleged water damage or showing the BOE value does not account for that damage.
“While a property owner is competent to testify as to the value of his land, when property owner’s opinion is based on improper elements or an improper foundation his opinion loses its probative value.” Cohen v. Bushmeyer, 251 S.W.3d 345, 349 (Mo. App. W.D. 2008). Complainant presented no substantial and persuasive evidence of comparable sales or other market data showing the TVM of the subject property. Complainant did not produce substantial and persuasive evidence showing a further reduction in value due to water damage. Complainant did not produce substantial and persuasive evidence of overvaluation.
CONCLUSION AND ORDER
The BOE’s decision finding the assessed value of the subject property on January 1, 2021, was $114,000 is affirmed. The TVM as of January 1, 2021, was $600,000.
Application for Review
A party may file an application for review of this decision within 30 days of the mailing date set forth in the certificate of service for this decision. The application “shall contain specific detailed grounds upon which it is claimed the decision is erroneous.” Section 138.432. The application must be in writing, and may be mailed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, or emailed to Legal@stc.mo.gov. A copy of the application must be sent to each person 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.
Disputed Taxes
The Collector of the City of St. Louis, and 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 the disputed taxes have been disbursed pursuant to a court order under the provisions of section 139.031.
SO ORDERED May 20, 2022.
Eric S. Peterson
Senior Hearing Officer
State Tax Commission
Certificate of Service
I hereby certify that a copy of the foregoing has been electronically mailed and/or sent by U.S. Mail on May 20, 2022, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.
Amy S. Westermann
Chief Counsel
[1] Complainant timely filed a complaint for review of assessment. The State Tax Commission (STC) has authority to hear and decide Complainant’s appeal. Mo. Const. art. X, sec. 14; Section 138.430.1, RSMo 2000. This authority includes the obligation to “correct any assessment or valuation which is shown to be unlawful, unfair, improper, arbitrary or capricious.” Id. All statutory citations are to RSMo 2000, as amended.
[2] A valid hearsay objection does not always require the formality of using the word “hearsay.” An objection sufficiently raises a hearsay issue by identifying a constituent element of the hearsay rule in a manner that reasonably apprises the tribunal of the legal basis for the objection as it relates to specific evidence. See eg., State v. Gaines, 316 S.W.3d 440, 448 (Mo. App. W.D. 2010) (holding an objection stating “we don’t believe there’s an indicia of reliability to this out-of-court statement” was sufficient to raise a hearsay issue); cf. State v. Amick, 462 S.W.3d 413, 415 (Mo. banc 2015) (holding an objection stating juror substitution would “create an enormous amount of error at this point” because “we can’t just throw somebody else into the ring” was sufficiently specific to invoke the Section 494.485 limitations on juror substitution even though the objection did not cite the statute).