State Tax Commission of Missouri
ADELAIDA GERHARDT,)
)
Complainant,)
)
v.) Appeal Number 09-32000
)
CATHY RINEHART,ASSESSOR,)
CLAY COUNTY, MISSOURI,)
)
Respondent.)
DECISION AND ORDER
HOLDING
Decision of the Clay County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE.Hearing Officer finds Complainant did not rebut the presumption of correct assessment by the Board, but Respondent did rebut that presumption. True value in money for the subject property for tax years 2009 and 2010 is set at $224,000, residential assessed value of $42,560.
Complainant appeared by counsel, Caroline L. Boyd.
Respondent appeared by Counsel, Patricia Hughes, Associate County Counselor.
Case heard and decided by Senior Hearing Officer Luann Johnson.
ISSUE
The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2009, and January 1, 2010.
SUMMARY
Complainant appeals, on the ground of overvaluation, the decision of the Clay County Board of Equalization, which sustained the valuation of the subject property.The Assessor determined an appraised value of $230,000 (assessed value of $43,790, as residential property).Complainant proposed a value of $192,000 (assessed value of $36,480).A hearing was conducted on November 17, 2009, at the Clay County Administration Building, Liberty, Missouri.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
Complainant’s Evidence
Complainant placed into evidence the testimony of Ms. Janet E. Pryor, a residential appraiser.Ms. Pryor testified as to her appraisal of the subject property.The Appraisal Report, Exhibit 1, was received into evidence.Ms. Pryor arrived at an opinion of value for the subject property of around $194,000.Ms. Pryor had failed to make her appraisal report effective as of January 1, 2009, and, thus, had to attempt some last minute adjustments during the hearing.Ms. Pryor’s opinion of value was based primarily upon the sales comparison approach to value.In performing her sales comparison approach, Ms. Pryor relied upon the sale of three properties which she deemed to be comparable to the subject property.
Complainant also entered the following Exhibits:
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Exhibit 2 |
An MLS sheet for MLS #1499815 |
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Exhibit 3 |
An MLS sheet for MLS #1518058 |
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Exhibit 4 |
An MLS sheet for MLS #1498161 |
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Exhibit 5 |
An MLS sheet for MLS #1414314 |
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Exhibit 6 |
An MLS sheet for MLS #1493052 |
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Exhibit 7 |
An MLS sheet for MLS #1392469 |
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Exhibit 11 |
Picture of a crack in the basement floor |
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Exhibit 12 |
Picture of a crack in the basement floor |
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Exhibit 13 |
Picture of a crack in the basement wall |
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Exhibit 16 |
Picture of loose boards on deck near fireplace |
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Exhibit 17 |
Picture of loose boards on deck showing where nails worked out |
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Exhibit 18 |
Picture of deck showing water damage |
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Exhibit 19 |
Picture of deck near fireplace |
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Exhibit 20 |
Picture of deck near French doors showing water damage |
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Exhibit 21 |
Estimate of Darryl Griffin to replace deck for $22,260 |
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Exhibit 22 |
May, 2007 Estimate by A-l Construction proposing $47,908 in repairs |
Respondent’s Evidence
Respondent placed into evidence the testimony of Ms. Sherri Deiss, appraiser for Clay County.The appraiser testified as to her appraisal of the subject property.The Appraisal Report, Exhibit A, was received into evidence.Ms. Deiss arrived at an opinion of value for the subject property of $224,000 based upon a sales comparison approach to value.In performing her sales comparison analysis, the appraiser relied upon the sales of four properties and the listing of one property deemed comparable to the subject property.
Respondent also entered the following Exhibits:
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Exhibit B |
The property record card for the subject property |
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Exhibit C |
A list of sales prices for lots in the neighboring subdivision showing sales prices between $42,450 and $50,450 |
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Exhibit D |
Insurance Declaration showing insured replacement cost of the home of $383,700 |
FINDINGS OF FACT
1.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the Clay County Board of Equalization.
2.The subject property is located at 4902 NE 60th Terrace, Kansas City, Missouri.The property is identified by parcel number 14-707-00-06-004.00.The property consists of a 14,744 square foot lot improved by a one-story brick faced, ranch, single-family structure of good quality construction.The house is 14 years old and appears to be in good condition.The residence has a total of 7 rooms, which includes 3 bedrooms,2.5 baths, and contains 2,368 square feet of living area.There is a full unfinished basement with an attached two-car garage, and a two-car basement garage. There was no listing or sale of the property noted within three years prior to the tax date of January 1, 2009.
3.There was evidence of property improvement between January 1, 2009, and January 1, 2010; the exact amount of which was not ascertainable.The improvements included interior and exterior painting and replacement and repair of the French door to the deck.The improvements are not significant enough to warrant a change in value for tax year 2010.
4.Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2009, to be $194,000, as proposed.Complainant’s appraiser failed to utilize the correct valuation date and had to make corrections to her appraisal report to account for the changes in market conditions, at the hearing.But, more significantly, Complainant’s appraiser utilized proposed comparable sales that did not represent the best comparable sales available in the market.Complainant’s comparable sales required gross adjustments of 37.2%, 33.7% and 39.2%.Complainant’s appraiser testified that these adjustments exceeded the normal adjustments preferred in the market.These excessive adjustments certainly suggest that the properties selected by Complainant’s appraiser were not truly “comparable” to the subject property.In contrast, Respondent’s appraiser presented comparable sales that required gross adjustments of 13.1%, 12.2%, 17.2% and 10.4%.Clearly, Respondent’s comparable sales were more similar to the subject property that the comparable sales proposed by Complainant.
5.The properties relied upon by Respondent’s appraiser in performing her appraisal were comparable to the subject property for the purpose of making a determination of value of the subject property.The four sale properties and one list property were located within 1.5 miles of the subject.Each sale property sold at a time relevant to the tax date of January 1, 2009.The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability.
6.The comparables were described as follows:
Comparable 1 (5205 NE 69th Terrace, Kansas City, Missouri) sold in October, 2008 for $210,080.The property is located 1.1 miles north of the subject property.This property consists of an 11,928 square foot lot improved by a one-story single-family structure of good quality construction.The house is 6 years old and appears to be in good condition.The residence has a total of 7 rooms, which includes 3 bedrooms, 2 baths, and contains 1,929 square feet of living area.There is a full unfinished basement.There is an attached two-car garage.
Comparable 2 (3213 NE 69th Street, Gladstone, Missouri) sold in May, 2007 for $224,900.The property is located 1.45 miles northwest of the subject property.This property consists of a 14,162 square foot lot improved by a one-story single-family structure of good quality construction.The house is 21 years old and appears to be in good condition.The residence has a total of6 rooms, which includes3 bedrooms, 2.5 baths, and contains 2,267 square feet of living area.There is a full unfinished basement and an attached two-car garage.
Comparable 3 (4009 NE 63rd Street, Gladstone, Missouri) sold in October, 2007 for $212,000.The property is 0.55 miles northwest of the subject property.This property consists of a 10,240 square foot lot improved by a one-story single-family structure of good quality construction.The house is 23 years old in and appears to be in good condition.The residence has a total of6 rooms, which includes 3 bedrooms, 2 baths, and contains 1,868 square feet of living area.There is a full unfinished basement and an attached two-car garage.
Comparable 4 (6112 N. Cypress Ave., Kansas City, Missouri) sold in April, 2009 for $230,000.The property is located 0.26 miles northwest of the subject property.This property consists of a 12,008 square foot lot improved by a one-story single-family structure of good quality construction.The house is 15 years old and appears to be in good condition.The residence has a total of 9 rooms, which includes 4 bedrooms, 2.5 baths, and contains 2,409 square feet of living area.There is a full unfinished basement and an attached two-car garage.
Comparable [Listing] 5 (4004 NE 61st Terrace, Gladstone, Missouri) is listed for $224,950.The property is 0.56 miles west of the subject property.This property consists of a 10,836 square foot lot improved by a one-story single-family structure of good quality construction.The house is 12 years old in and appears to be in good condition.The residence has a total of 7 rooms, which includes 3 bedrooms, 2 baths, and contains 1,911 square feet of living area.There is a full unfinished basement and an attached three-car garage.
7.The appraiser made various adjustments to the comparable properties for differences which existed between the subject and each comparable.Time adjustments were based upon a paired sales analysis.All adjustments appear to be appropriate to bring the comparables in line with the subject for purposes of the appraisal problem.
8.The net adjustments for Comparable 1 amounted to $15,475 or 7.4% of the sales price.The net adjustments for Comparable 2 amounted to -$2.475or 1.1% of the sales price.The net adjustments for Comparable 3 amounted to +$15,500 or 17.2% of the sales price.The net adjustments for Comparable 4 amounted to -$6,000 or 10.45.the net adjustments for Comparable [Listing] 5 amounted to +$15,925 or 7.1%.
9.The adjusted sales prices for the comparables calculated to $225,555, $222,425, $227,500, $224,000 and $240,875, respectively.The appraiser concluded on a $224,000 value which calculated to a value per square foot of $94.59 compared with the sales prices per square foot of living area for the comparables of $108.91, $99.21, $113.49, $95.48 and $117.71. The comparison of the value per square foot provides a validation check for the appraisal, to demonstrate that the indicated value is consistent with the market for properties such as the subject.
10.Respondent’s evidence met the standard of substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the value of the subject, as of January 1, 2009, and January 1, 2010, to be $224,000.
CONCLUSIONS OF LAW AND DECISION
Jurisdiction
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.[1]
Official and Judicial Notice
Agencies shall take official notice of all matters of which the courts take judicial notice.[2]
Courts will take judicial notice of their own records in the same cases.[3]In addition, courts may take judicial notice of records in earlier cases when justice requires[4] or when it is necessary for a full understanding of the instant appeal.[5] Courts may take judicial notice of their own records in prior proceedings involving the same parties and basically the same facts.[6]
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.[7]
The presumption in favor of the Board is not evidence.A presumption simply accepts something as true without any substantial proof to the contrary.In an evidentiary hearing before the Commission, the valuation determined by the Board, even if simply to sustain the value made by the Assessor, is accepted as true only until and so long as there is no substantial evidence to the contrary.
The presumption of correct assessment is rebutted when the taxpayer, or respondent when advocating a value different than that determined by the Board, presents substantial and persuasive evidence to establish that the Board’s valuation is erroneous and what the fair market value should have been placed on the property.[8]
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.[9]It is the fair market value of the subject property on the valuation date.[10]Market value is the most probable price in terms of money which a property should bring in 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:
1.Buyer and seller are typically motivated.
2.Both parties are well informed and well advised, and both acting in what they consider their own best interests.
3.A reasonable time is allowed for exposure in the open market.
4.Payment is made in cash or its equivalent.
5.Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
6.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.[11]
Duty to Investigate
In order to investigate appeals filed with the Commission, the Hearing Officer has the duty 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, subclassification or assessment of the property.The Hearing Officer’s decision regarding the assessment or valuation of the property may be based solely upon its inquiry and any evidence presented by the parties, or based solely upon evidence presented by the parties.[12]
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.[13]
Trier of Fact
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.[14]
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.[15]
Missouricourts have approved the comparable sales or market approach, the cost approach and the income approach as recognized methods of arriving at fair market value.[16]
Opinion Testimony by Experts
If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto.
The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data need not be admissible in evidence.[17]
Respondent’s Burden of Proof
Respondent, when advocating a value different from that determined by the original valuation or a valuation made by the Board of Equalization, 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.[18]
Complainant’s 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, 2009.[19]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.”[20]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[21]Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact.The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief.[22]
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.[23]The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[24]“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.”[25]
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.”[26]
Respondent Proves Value
Respondent presented substantial and persuasive evidence to establish a fair market value as of January 1, 2009, to be $224,000.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 the Ms. Deiss were consistent with generally accepted guidelines for the appraisal of property of the subject’s type.Ms. Deiss examined the interior and exterior of the subject property.The adjustments properly recognized the quality of construction and condition of the subject property and accounted for the various differences between the subject and each comparable.The net adjustments to the sale properties fell within a very narrow range from 1.1% to 7.4%.Even the gross adjustments were in a very acceptable range from 7.1% to 17.2%.
ORDER
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization forClay County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2009 and 2010 is set at $42,560.
A party may file with the Commission an application for review of this decision within thirty (30) days of the mailing date shown in the Certificate of Service.The application shall contain specific 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, MO65102-0146, 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 appeal is based will result in summary denial. [27]
The Collector of Clay County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending a filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of 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 December 22, 2009.
STATE TAX COMMISSION OFMISSOURI
_____________________________________
Luann Johnson
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 22nd day of December, 2009, to:Adelaida Gerhardt, 409 NE 60th Terrace, Kansas City, MO 64119, Complainant; Patricia Hughes, Associate County Counselor, 17 W. Kansas, Suite 3, Attorney for Respondent; Cathy Rinehart, Assessor, Tom Brandom, Clerk, Sandra Reeves, Collector, Administration Building, 1 Courthouse Square, Liberty, MO 64068.
___________________________
Barbara Heller
Legal Coordinator
[3] State ex rel. Horton v. Bourke, 129 S.W.2d 866, 869 (1939); Barth v. Kansas City Elevated Railway Company, 44 S.W. 788, 781 (1898).
[4] – Burton v. Moulder, 245 S.W.2d 844, 846 (Mo. 1952); Knorp v. Thompson, 175 S.W.2d 889, 894 (1943); Bushman v. Barlow, 15 S.W.2d 329, 332 (Mo. banc 1929)
[5] State ex rel St. Louis Public Service Company v. Public Service Commission, 291 S.W.2d 95, 97 (Mo. banc 1956).
[6] In re Murphy, 732 S.W.2d 895, 902 (Mo. banc 1987); State v. Gilmore, 681 S.W.2d 934, 940 (Mo. banc 1984); State v. Keeble, 399 S.W.2d 118, 122 (Mo. 1966).
[7] Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STC, 308 S.W.2d 748, 759 (Mo. 1958).
[8] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
[9] St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993); Missouri Baptist Children’s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993).
[11] 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.
[13] 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).
[14] 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).
[15] See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra;Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975).
[16] 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. Div. 2 1974).
[17] Section 490.065, RSMo; State Board of Registration for the Healing Arts v. McDonagh, 123 S.W.3d 146 (Mo. SC. 2004); Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. E.D. 1992).
[20] 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).Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991).
[23] 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).
[24] 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).