STATE TAX COMMISSION OF MISSOURI
|JULIE REED||)||Appeal No. 19-30109|
|GAIL MCCANN BEATTY, ASSESSOR,||)|
|JACKSON COUNTY, MISSOURI,||)|
DECISION AND ORDER
The assessment made by the Jackson County Assessor is SET ASIDE. Complainant Julie Reed (Complainant) failed to present substantial and persuasive evidence to establish the true value in money (TVM) of the subject property as of January 1, 2019. However, Complainant also raised the issue and provided substantial and persuasive evidence of Respondent’s failure to fulfill the requirements of Section 137.115.10, in that Respondent increased the assessed value of the subject property by more than 15% without a physical inspection being conducted prior to the increase in assessed value by more than 15%. Respondent did not offer substantial and persuasive evidence a physical inspection was conducted of the subject property prior to the assessed value being increased by more than 15%.
Complainant was not represented.
Respondent, Gail McCann-Beatty, Assessor of Jackson County, Missouri (Respondent), was represented by Tamika Logan.
The case was submitted on the record by agreement of both parties and decided by Senior Hearing Officer John Treu (Hearing Officer).
Complainant appealed on the ground of overvaluation. Respondent initially set the assessed value of the subject property, as residential property, at $51,705 ($272,132). No Board of Equalization (BOE) appeal was taken as Complainant asserted she did not receive timely notice of the increase in the value of the subject property. The value as of January 1 of the odd numbered year remains the value as of January 1 of the following even numbered year unless there is new construction or improvement to the property. Section 137.115.1. The State Tax Commission (STC) takes this appeal to determine the TVM for the subject property as the property existed on January 1, 2019, under the economic conditions as they existed on January 1, 2019.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
- Authority. Authority over this appeal is proper. Complainant timely appealed to the State Tax Commission.
- Submission on Record. The parties waived an evidentiary hearing and agreed to submit the appeal on the record of exhibits and evidence.
- Identification of Subject Property. The subject property is identified by parcel/locator number 47-440-12-12-00-0-00-000. It is further identified as 7241 Madison Avenue, Kansas City, Jackson County, Missouri. (Exhibit A)
- Description of Subject Property. The subject property consists of a .16 acre lot, improved with a 1,515 square foot, two-story home, built in 1925. It has 3 bedrooms, one full bathroom and one half bathroom. It has a thirty-five square foot open porch, a two hundred thirty-four square foot enclosed porch and a three hundred sixty square foot deck. The subject property is of average quality and average condition. It has central air conditioning and forced air heating. (Written Direct Testimony of Darlene Lackey and Exhibits E & F).
- Assessment. Respondent initially valued the subject property at $272,132 TVM residential, as of January 1, 2019.
- Board of Equalization. No BOE appeal was taken as Complainant asserted she did not receive timely notice of the increase in the value of the subject property.
- Complainant’s Evidence. Complainant opined that the subject property’s TVM as of January 1, 2019, was $210,000. To support her opinion of value, Complainant offered the following exhibits, with a “Complainant’s Summary”:
|Exhibit A||Property Report and Mailing Address Change Form||Admitted|
|Exhibit B||Tax Bill and Complaint for Review of Assessment||Admitted|
|Exhibit C||Payment Under Protest Letter and Tax Statement||Admitted|
|Exhibit D||Property Report and Photographs||Admitted|
|Exhibit E||Information Printout Regarding Subject Property||Admitted|
|Exhibit F||Information Printout Regarding Subject Property||Admitted|
|Exhibit G||Ordinance No. 5267||Admitted|
|Exhibit H||Ordinance No. 5267 (cont.)||Admitted|
|Exhibit I||Ordinance No. 5267 (cont.)||Admitted|
|Exhibit J||Ordinance No. 5267 (cont.)||Admitted|
|Exhibit K||Comparison of Subject Property to Other Properties||Admitted|
|Exhibit L||Comparison of Subject Property to Other Properties (cont.)||Admitted|
|Exhibit M||Photographs of Other Properties||Admitted|
|Exhibit N||Photographs of Other Properties (cont.)||Admitted|
|Exhibit O||Photographs of Other Properties (cont.)||Admitted|
|Exhibit P||Photographs of Subject Property||Admitted|
|Exhibit Q||Photographs of Subject Property||Admitted|
|Exhibit R||Photographs of Subject Property||Admitted|
|Exhibit S||Photographs of Subject Property||Admitted|
Complainant’s summary indicates that a physical inspection was made by a drive-by inspection, but that no notices were sent regarding the physical inspection. Exhibit C shows that the assessed value of the subject property was $36,125 as of January 1, 2018 and $51,705 as of January 1, 2019. The homeowner did not receive timely notice of the increase. The summary and Exhibit D indicate the physical inspection occurred on September 21, 2019. Furthermore it indicates that Exhibits K, J, and L show the valuations of similar properties vary greatly. The summary indicates that the homes described in Exhibits M, N, O, P, Q, R, and S are in better condition than the subject property and are selling for higher fair market values than the subject’s supposed fair market value.
Exhibit C established that the assessed value of the subject property was $36,125 as of January 1, 2018 and $51,705 as of January 1, 2019.
- Respondent’s Evidence. Respondent offered the written direct testimony (WDT) of Darlene Lackey, the residential supervisor for the assessor of Jackson County, Missouri. In addition, Respondent offered Exhibit 1, consisting of property information sheets regarding 4 other properties. Only three of the properties are referenced in the WDT of Lackey. She stated that the 3 properties were utilized to determine the value of the subject property under the sales comparison approach. She stated that the comparables, like the subject property, all had the same number of bedrooms and bathrooms, and that they were all of similar age and square footage. She also stated that all of the comparables were within a couple blocks of the subject property. The WDT and Exhibit 1 were admitted into the evidentiary record.
The 3 properties referenced in the WDT of Lackey sold for $299,100, $302,500, and $223,000. The closing dates on each were January 20, 2018, February 5, 2018, and May 18, 2018.
- Complainant Presents Substantial and Persuasive Evidence of Limitation on Assessed Value Increase. Complainant’s evidence was substantial and persuasive to establish that the assessed value of the subject property increase by more than 15% without a physical inspection being conducted before such increase. Therefore the increase in assessed value is limited to 15%. The assessed value of the subject property is set at $41,544 as of January 1, 2019.
CONCLUSIONS OF LAW AND DECISION
The Commission has authority to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary, or capricious, including the application of any abatement. 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 property and tangible personal property are assessed at set percentages of true value in money: residential property at 19%; commercial property at 32%; and agricultural property at 12%. Section 137.115.5 RSMo (2000) as amended.
Investigation by Hearing Officer
In order to investigate appeals filed with the Commission, the Hearing Officer may inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, subclassification, or assessment of the property. Section 138.430.2 RSMo (2000) as amended. The Hearing Officer’s decision regarding the assessment or valuation of the property may be based solely upon his inquiry and any evidence presented by the parties or based solely upon evidence presented by the parties. Id.
Issuance of Decision Absent Evidentiary Hearing
The Hearing Officer, after affording the parties reasonable opportunity for fair hearing, shall issue a decision and order affirming, modifying or reversing the determination of the BOE, correcting any assessment which is unlawful, unfair, improper, arbitrary or capricious. Section 138.431.5. The parties waived an evidentiary hearing and agreed to submit the appeals on the record of exhibits and evidence. This establishes the basis upon which opportunity for an evidentiary hearing can be held. The Complainant has the burden to present substantial and persuasive evidence. The Hearing Officer considered all the evidence in determining judgment should be entered in Respondent’s favor.
Complainant’s Burden of Proof
To obtain a reduction in assessed valuation based upon an alleged overvaluation, the Complainant must prove the true value in money of the subject property on the subject tax day by substantial and persuasive evidence Hermel, Inc., v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978). True value in money is defined as the price that the subject property would bring when offered for sale by one willing but not obligated to sell it and bought by one willing or desirous to purchase but not compelled to do so. Rinehart v. Bateman, 363 S.W.3d 357, 365 (Mo. App. W.D. 2012); Cohen v. Bushmeyer, 251 S.W.3d 345, 348 (Mo. App. E.D. 2008); Greene County v. Hermel, Inc., 511 S.W. 2d 762, 771 (Mo. 1974). True value in money is defined in terms of value in exchange and not in terms of value in use. Stephen & Stephen Properties, Inc. v. State Tax Commission, 499 S.W. 2d 798, 901-803 (Mo. 1973). In sum, true value in money is the fair market value of the subject property on the valuation date. Hermel, Inc., 564 S.W.2d at 897.
Substantial evidence can be defined as such relevant evidence that a reasonable mind might accept as adequate to support a conclusion. Cupples Hesse Corp. v. State Tax Commission, 329 S.W. 2d 696, 702 (Mo. 1959). Persuasive evidence is evidence that has sufficient weight and probative value to convince the trier of fact. Cupples Hesse Corp., 329 S.W.2d at 702. The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief. Brooks v General Motors Assembly Division, 527 S.W. 2d 50, 53 (Mo. App. 1975).
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.” Westwood Partnership, 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); Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. W.D. 1991).
Generally, a property owner, while not an expert, is competent to testify to the reasonable market value of his own land. Cohen, 251 S.W.3d at 348-49; Carmel Energy, Inc v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992). “However, when an owner’s opinion is based on improper elements or foundation, his opinion loses its probative value.” Carmel Energy, Inc., 827 S.W.2d 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. E.D. 1980)
Respondent’s Burden of Proof
Respondent, when advocating a value different from that determined by the original valuation or a valuation made by the BOE, must meet the same burden of proof to present substantial and persuasive evidence of the value advocated as required of the Complainant under the principles established by case law. Hermel, Inc., 564 S.W.2d at 895; Cupples-Hesse, 329 S.W.2d at 702; Brooks, 527 S.W.2d at 53.
Weight to be Given Evidence
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. The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide. St. Louis Co. v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis Co. v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy RR. Co. 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 deemed necessary when viewed in connection with all other circumstances. Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. W.D. 1991). The Hearing Officer, as the trier of fact, is not bound by the opinions of experts but may believe all or none of the expert’s testimony or accept it in part or reject it in part. Exchange Bank of Missouri v. Gerlt, 367 S.W.3d 132, 135-36 (Mo. App. W.D. 2012).
Methods of Valuation
Proper methods of valuation and assessment of property are delegated to the Commission. It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case. See, Nance v. STC, 18 S.W.3d 611, 615 (Mo. App. W.D. 2000); Hermel, Inc., 564 S.W.2d at 897; Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975). Missouri courts have approved the comparable sales or market approach, the cost approach, and the income approach as recognized methods of arriving at fair market value. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STC, 789 S.W.2d 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm’n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. 1974).
“For purposes of levying property taxes, the value of real property is typically determined using one or more of three generally accepted approaches.” Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005). “Each method uses its own unique factors to calculate the property’s true value in money.” Id. “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. Id. at 348. “Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character.” Id. (quotation omitted). “This approach is most appropriate when there is an active market for the type of property at issue such that sufficient data [is] available to make a comparative analysis.” Id.
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.
Complainant’s Other Referenced Properties
The Hearing Officer understands Complainant’s claim to essentially be an assertion of inequity in assessments, based upon the valuations of the other properties in close proximity to the subject property. Complainant offered no evidence of the average assessment ratio of the same class of property as the subject, in Jackson County. The United States and Missouri constitutions prohibit discriminatory taxation of similarly situated taxpayers. See U.S. Const. amend. XIV; Mo Const. art. X, § 3. “A taxpayer has the right to have his assessment reduced to the percentage of that value at which others are taxed. . . .” Savage v. State Tax Comm’n of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986) (internal quotation omitted). Absent proof of intentional discrimination, the analysis of discrimination claims compares the assessment level of similarly situated properties to the actual assessment level for the subject property. Id. at 78.
There was no evidence of an intentional plan of discrimination. There was no evidence presented as to the average or median assessment level of similarly situated residential properties in Jackson County.
Complainant presented evidence establishing that the value of the subject property was increased by more than 15% and that she was not provided notice of the increase. Section 137.115.10 provides “[b]efore the assessor may increase the assessed valuation of any parcel of subclass (1) real property by more than fifteen percent since the last assessment, excluding increases due to new construction or improvements, the assessor shall conduct a physical inspection of such property.” There is no statutory definition of the phrase “physical inspection.” “Absent a statutory definition, the primary rule of statutory interpretation is to give effect to legislative intent as reflected in the plain language of the statute.” Fenix Constr. Co. of St. Louis v. Dir. of Revenue, 449 S.W.3d 778, 780 (Mo. banc 2014) (internal quotation omitted). The plain language meaning of otherwise undefined statutory terms or phrases “may be derived from a dictionary.” Campbell v. Cty. Comm’n of Franklin Cty., 453 S.W.3d 762, 768 (Mo. banc 2015). If the plain language is inconclusive, the correct interpretation may be confirmed by considering related statutes. Roesing v. Dir. of Revenue, 573 S.W.3d 634, 639 (Mo. banc 2019).
The word “physical” means “having material existence: perceptible esp. through the senses and subject to the laws of nature[.]” Webster’s Ninth New Collegiate Dictionary 887 (1989); see also Black’s Law Dictionary 1147 (6th ed.1990) (defining “physical” as “[m]aterial, substantive, having an objective existence, as distinguished from imaginary or fictitious[.]”) The word “inspect” means “to view closely in critical appraisal: look over[.]” Webster’s Ninth New Collegiate Dictionary 626 (1989); see also Black’s Law Dictionary 797 (6th ed.1990) (defining “inspection” as “[t]o examine; scrutinize; investigate; look closely into; check over; or view for the purpose of ascertaining the quality, authenticity, or conditions of an item . . . residence . . . etc.”) Therefore, it is reasonable to conclude that a “physical inspection” is a close, in-person, visual observation of the subject property.
This conclusion is consistent with Reeves v. Snider, 115 S.W.3d 375 (Mo. App. E.D. 2003), the only case interpreting the section 137.115.10 physical inspection requirement. In Reeves, taxpayers claimed “looking at the property from the street” did not constitute a “physical inspection” for purposes of section 137.115.10. Id. at 382. The assessor testified she visually inspected the exterior of the properties and would “go around and check around the property.” Id. An appraiser testified no interior inspection was conducted, but “we physically stop, inspect each individual piece of property.” Id. at 383. The court of appeals held this “testimony overwhelmingly indicates that the inspections … clearly meet the ‘physical inspection’ requirements, as that term is used in the statute.” Id. Reeves establishes that an on-site visual observation of the exterior of a residence satisfies the statutory requirement of a “physical inspection.”
Complainant showed by substantial and persuasive evidence that the drive-by physical inspection occurred on September 21, 2019, well after the assessed value was increased by more than 15%. Respondent offered no evidence that a physical inspection was conducted in accordance with Section 137.115.10 (burden of proof on Respondent). See Slusser v. Zimmerman, 2018 WL 3068768 (Mo.St.Tax.Com.), affirmed January 8, 2019, by Order of State Tax Commission from Application for Review.
Lack of Notice
Complainant asserts she was never given notice of the increase in the assessed value of the subject property. Presumably, Complainant is referencing Section 137.115.11. Sections 137.115.11 and 137.115.12 reference physical inspections but, pursuant to section 137.115.13, such sections “shall only apply in any county with a charter form of government with more than one million inhabitants[;]” i.e., St. Louis County. While sections 137.115.11 and 137.115.12 do not apply to Jackson County, they add context to the Jackson County Assessor’s obligation to conduct a physical inspection.
In pertinent part, section 137.115.11 provides, “If a physical inspection is required, the property owner may request that an interior inspection be performed during the physical inspection.” (Emphasis added). Section 137.115.12 provides:
A physical inspection, as required by subsection 10 of this section, shall include, but not be limited to, an on-site personal observation and review of all exterior portions of the land and any buildings and improvements to which the inspector has or may reasonably and lawfully gain external access, and shall include an observation and review of the interior of any buildings or improvements on the property upon the timely request of the owner pursuant to subsection 11 of this section. Mere observation of the property via a drive-by inspection or the like shall not be considered sufficient to constitute a physical inspection as required by this section.
“When the legislature amends a statute, that amendment is presumed to change the existing law.” Cox v. Dir. of Revenue, 98 S.W.3d 548, 550 (Mo. banc 2003). By adding section 137.115.11, allowing St. Louis County residential property owners to request an “interior inspection … during the physical inspection”, the legislature presumably recognized existing law permitted satisfaction of the physical inspection requirement with an exterior inspection alone. By adding section 137.115.12, providing physical inspections in St. Louis County must include “an on-site personal observation and review of all exterior portions” and may not rely on a “drive-by inspection or the like,” the legislature presumably changed existing law authorizing physical inspections via a “drive-by inspection or the like[.]” Because sections 137.115.11 and 137.115.12 do not apply to Jackson County, the Commission can reasonably infer existing law provides the Jackson County Assessor may satisfy the statutory obligation to conduct a “physical inspection” in a manner that allows the assessor’s office sufficient opportunity to conduct close, in-person, visual observation of the subject property.
Complainant offered substantial and persuasive evidence to establish the proper assessed value of the subject property was $41,544, as of January 1, 2019.
The assessed value for the subject property as determined is SET ASIDE. The assessed value for the subject property is $41,544 as of January 1, 2019.
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.
The Collector of Jackson 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 July 17th, 2020.
STATE TAX COMMISSION OF MISSOURI
John J. Treu
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 17h day of July, 2020, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.
Elaina McKee, Legal Coordinator
 Google maps or street view provides a mechanism for an “inspection,” but not a “physical inspection of such property.” A “physical inspection of such property” requires an inspection of the property itself, not an inspection of a software generated image of the property.
 Sections 137.115.11 and 137.115.12 were added in 2002.