STATE TAX COMMISSION OF MISSOURI
| MATTHEW ZEREGA | ) | |
| ) | ||
| Complainant, | ) | Appeal No. 19-20065 |
| ) | ||
| v. | ) | Parcel No. 2279-04-0015-0 |
| ) | ||
| ) | ||
| MICHAEL DAUPHIN, ASSESSOR, | ) | |
| CITY OF ST. LOUIS MISSOURI | ) | |
| Respondent. | ) |
DECISION AND ORDER
Matthew Zerega (Complainant) appeals the City of St. Louis Board of Equalization’s (BOE) decision finding the fair market value of the subject property on January 1, 2019 was $339,000, with an assessed value of $64,410. Complainant claims the property is overvalued, and proposes a value of $290,000.
The hearing officer conducted an evidentiary hearing.[1] Complainant did not present persuasive evidence establishing overvaluation. The BOE’s decision is AFFIRMED.
FINDINGS OF FACT
A. The Subject Property
1. The subject property is located at 1312 Mackay Place in the City of St. Louis, Missouri. The parcel/locator number is 2279-04-0015-0.
2. The subject property is in the Lafayette Square neighborhood. It consists of a two story brick town home with approximately 1,764 square feet of living area, and an 882 square foot finished basement. The subject property faces other similar residences, and is adjacent to a vacant building.
B. Respondent’s Valuation
3. Respondent determined the fair market value of the subject property on January 1, 2019 was $339,000. Respondent assessed the subject property at the 19% statutory residential rate, yielding an assessed value of $64,410.
C. BOE Decision
4. The BOE valued the subject property at $339,000, with an assessed value of $64,410.
D. Complainant’s Appeal
6. Complainant timely appealed the BOE decision to the State Tax Commission (Commission).
7. Complainant claims the subject property is overvalued. Complainant alleges the fair market value of the subject property on January 1, 2019 was $290,000. Complainant purchased the subject property in 2009 for $280,000.
E. Complainant’s Evidence
8. Complainant submitted Exhibits A-E. Exhibit A is a table composed by Complainant. The table compiles data regarding the subject property and eight similar properties sold between March 2016 and April 2019. Six of the similar properties are on the same street as the subject property. For each property, the table lists the square footage of the house, the appraised value from Respondent’s 2019 and 2017 assessments, the price per square foot based on Respondent’s assessments, the sale price and date, and the sale price per square foot. Exhibit A was admitted into the record subject to Respondent’s objection the exhibit lacked a factual foundation for the data.
9. Exhibit A indicates the subject property has 1,699 square feet and is valued at $339,000, which equates to $199.53 per square foot. Respondent’s records show the subject property has 1,764 square feet of living area, which equates to $192.18 per square foot. Complainant asserts exhibit A shows the subject property is overvalued because the average price per square foot of the eight similar properties listed in exhibit A is $151.34. Exhibit A does not document differences in condition or amenities between the similar properties and the subject property, and makes no market-based adjustments to account for any such differences. Exhibit A does not adjust the sale prices of the similar properties to account for possible market appreciation between the time of sale and the January 1, 2019 valuation date.
10. Exhibit B consists of two tables composed by Complainant. The tables compile data for the subject property and four comparable properties Complainant asserts were utilized by Respondent to value the subject property. Exhibit B was admitted into the record subject to Respondent’s objection the exhibit lacked a factual foundation for the data.
11. Exhibit C consists of color photographs of the exterior of the subject property, the similar properties listed in exhibit A, and properties at 1616, 1618, and 1620 Mississippi. Exhibit C also includes color photographs of the vacant building adjacent to the subject property, a street view near the subject property, and an aerial view of the subject property and surrounding neighborhood.
12. Exhibit D consists of a table showing data from five recent townhome sales in Lafayette Square. The properties sold between April 2017 and March 2019. Consistent with exhibit A, exhibit D indicates the subject property has 1,699 square feet and is valued at $199.53 per square foot. The average price per square foot of the recent sales in exhibit D is $137.79. Exhibit D does not document differences in condition or amenities between the recently sold properties and the subject property, and makes no market-based adjustments to account for any such differences. Exhibit D does not adjust the sale prices of the similar properties to account for possible market appreciation between the time of sale and the January 1, 2019 valuation date.
13. Exhibit E is a statement of Complainant’s closing argument summarizing the data in exhibits A-D and explaining Complainant’s overvaluation argument.
F. Respondent’s Evidence
14. Respondent submitted Exhibit 1. Exhibit 1 is an appraisal report prepared by Respondent’s staff appraiser estimating the fair market value of the subject property as of January 1, 2019 was $360,000.15.
15. Exhibit 1 utilizes 2219 Park Avenue, 1616 Mississippi, and 1620 Mississippi as comparable properties. Unlike the subject property, each of the three comparable properties utilized in exhibit 1 face Lafayette Square Park. The three comparable properties are larger than the subject property.
16. Unlike the subject property, the three comparable properties have unfinished basements. Respondent’s appraisal report made a positive adjustment of $15,000 to each of the three comparable properties to account for the increased value accruing to the subject property because it has a finished basement.
17. Each of the three comparable properties have more living area than the subject property. Respondent’s appraisal report made a negative adjustment to each of the three comparable properties reducing their value by $60 per square foot of additional living area. The negative adjustment accounted for the decreased value accruing to the subject property because it has less living area than the comparable properties. The appraisal report includes a general statement that “[q]uantitative or qualitative adjustments are made based on market reactions to significant variations between the subject and comparable sales.” Ex. 1 at 7. Aside from this general statement, the appraisal report provides no data or methodology justifying a negative adjustment of only $60 per square foot when the sale price per square foot of the comparable properties ranges from $181.80 to $231.18 per square foot.
18. Each of the three comparable properties in exhibit 1 has an attached, two car garage. The subject property has no garage. The appraisal report made a negative adjustment of $10,000 to each comparable property to account for this difference.
19. Respondent’s appraisal report concluded the adjusted sales price of the three comparable properties ranged from $361,880 to $429,240, which equates to $204.04 per square foot. By multiplying the $204.04 price per square foot by the 1,764 square feet of living area in the subject property, exhibit 1 concludes the comparative sales approaches indicates the fair market value of the subject property is $360,000. Respondent does not contend the subject property should be valued at $360,000.
G. Value
19. The TVM of the subject property is $339,000. The assessed value is $64,410.
CONCLUSIONS OF LAW
- Authority
The Commission has authority, “under such rules as may be prescribed by law, to hear appeals from local boards in individual cases and, upon such appeal, to correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious.” Mo. Const. art. X, § 14. Section 138.430.1 authorizes the Commission to hear appeals concerning assessment, valuation, the method or formula used in determining valuation, or assignment of a discriminatory assessment.[2] “To hear and decide appeals pursuant to section 138.430, the commission shall appoint one or more hearing officers.” Section 138.431.1. 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.” Section 138.431.5.
- Evidence
The hearing officer is the trier of fact and determines both the credibility and weight of the evidence. Citizens for Rural Pres., Inc. v. Robinett, 648 S.W.2d 117, 132 (Mo. App. 1982); see also Exch. Bank of Mo. v. Gerlt, 367 S.W.3d 132, 136 (Mo. App. 2012) (the trier of fact determines credibility and is free to disbelieve all or part of a party’s evidence). “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).
- True Value in Money
All real property and tangible personal property must be assessed at its value or a percentage of its value as fixed by law for each class and for each subclass. Mo. Const. art. X, §§ 4(a), 4(b). Section 137.115.1 provides residential property is assessed at 19% of its true value in money. The true value in money “is an estimate of the fair market value on the valuation date.” Hermel, Inc. v. State Tax Comm’n, 564 S.W.2d 888, 897 (Mo. banc 1978). 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). Determining the true value in money is a factual issue. Parker v. Doe Run Co., 553 S.W.3d 356, 360 (Mo. App. 2018). The hearing officer is not bound by any single formula, rule or method in determining true value in money, and “is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled to.” St. Louis Cty. v. State Tax Comm’n, 515 S.W.2d 446, 450 (Mo. 1974); see also Kelly v. Mo. Dep’t of Soc. Servs., Family Support Div., 456 S.W.3d 107, 111 (Mo. App. 2015) (the relative weight accorded to any relevant factor is for the administrative hearing officer to decide).
- Burden of Proof
The taxpayer bears the burden of proving overvaluation. Cupples Hesse Corp. v. State Tax Comm’n, 329 S.W.2d 696, 702 (Mo. 1959). The BOE’s valuation is presumed correct, but the taxpayer may rebut this presumption by producing “substantial controverting evidence.” Hermel, Inc. v. State Tax Comm’n, 564 S.W.2d 888, 895 (Mo. banc 1978) (internal quotation omitted).[3] Substantial evidence is 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.” Cupples Hesse, 329 S.W.2d at 702. If the taxpayer rebuts the BOE presumption with substantial evidence, “the burden of proof on the facts and inferences would still rest on petitioner, for it is the moving party seeking affirmative relief.” Id. To prevail, the taxpayer must produce “persuasive” evidence sufficient to convince the trier the disputed fact has been established. White v. Dir. of Revenue, 321 S.W.3d 298, 305 (Mo. banc 2010); see also Daly v. P.D. George Co., 77 S.W.3d 645, 651 (Mo. App. 2002) (evidence is persuasive when it has “sufficient weight and probative value to convince the trier of fact”).
- Complainant did not prove overvaluation.
Residential real property is typically valued with the comparable sales approach. “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 v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341, 347-48 (Mo. banc 2005) (internal quotation omitted). Respondent’s appraisal report utilized a market based comparable sales approach with value adjustments for differences between the subject property and the comparable properties. Even if Complainant established specific flaws in Respondent’s appraisal report, identifying any such flaws would not satisfy Complainant’s burden of proving the fair market value of the property on January 1, 2019.
Complainant relies primarily on exhibits A-D as proof of value. Exhibits A, B, and D consist of tables of unauthenticated data showing the assessment, recent sale prices, and square footage of a number of similar properties in the Lafayette Square neighborhood.[4] While Complainant’s approach is based on the legally recognized, market based comparable sales approach, it omits any adjustments accounting for differences between the subject property and the properties listed in Complainant’s exhibits. Because properties are rarely identical, adjustments are necessary to reconcile differences and enable a market based comparison of properties with varying characteristics. Thus, when a significant characteristic of the comparable property is inferior to the subject property, the comparable sales approach requires a positive adjustment increasing the value of the comparable property to account for the superior characteristic the subject property. Conversely, when a significant characteristic of the comparable property is superior to the subject property, the comparable sales approach requires a negative adjustment to account for the inferior characteristic of the subject property. Complainant’s exhibits make no market based adjustments. Without making the required adjustments based on demonstrated expertise in the local real estate market or market based data such as a paired sales analysis, Complainant’s comparable sales analysis does not persuasively establish the fair market value of the subject property is less than the $339,000 value assigned by the BOE. Complainant’s overvaluation claim is denied.
CONCLUSION AND ORDER
The BOE decision is affirmed. The fair market value of the subject property as of January 1, 2019 is $339,000. The assessed value is $64,410.
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 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.
Disputed Taxes
The Collector of the City of St. Louis, 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.
SO ORDERED February, 25th 2020.
Senior Hearing Officer
State Tax Commission
Certificate of Service
A copy of the foregoing was emailed on February 25th, 2020, to:
Complainant, Matthew Zerega, mattzerega@hotmail.com
Respondent, Michael Dauphin, City of St. Louis Assessor, slcasr-lgl@stlouis-mo.gov;
Counsel for Respondent, Chelsea Mannery, manneryc@stlouis-mo.gov
Collector, showerst@stlouiscity.com
Elaina McKee
Legal Coordinator
[1] Complainant appeared pro se. Respondent was represented by counsel Chelsea Mannery.
[2] All statutory citations are to RSMo 2000, as amended.
[3] In 1992, the General Assembly eliminated the statutory presumption in favor of the assessor’s valuation. Section 138.060.1 provides “[t]here shall be no presumption that the assessor’s valuation is correct.” The plain language of the statute negates the former presumption the assessor’s valuation is correct, but leaves intact the longstanding presumption the BOE’s valuation is correct. Cohen v. Bushmeyer, 251 S.W.3d 345, 348 n.2 (Mo. App. 2008); see also Parker, 553 S.W.3d at 360.
[4] Section 138.430.1 provides the Commission “shall investigate” all appeals. Section 138.430.2 authorizes the Commission to “inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation[.]” Section 138.431 provides Commission hearing officers can take all actions necessary “to hear and decide appeals pursuant to section 138.430.” The hearing officer’s independent review of the data in Complainant’s exhibits confirms it is substantially consistent with property data on Respondent’s official website.