State Tax Commission of Missouri
|ALFRED & CYRILLA BERVING||)|
|v.||)||Appeal No. 13-10521|
|JAKE ZIMMERMAN, ASSESSOR||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
Decision of the County Board of Equalization for St. Louis County sustaining the assessment made by the Assessor is SET ASIDE. Both Complainant and Respondent submitted appraisal reports and evidence. Ultimately, both Complainant and Respondent submitted substantial and persuasive evidence to rebut the presumption of correct assessment and allow a determination of the true market value of the subject property.
True value in money for the subject property for tax years 2013 and 2014 is set at $578,110, residential assessed value of $109,840.
Complainant appeared by attorney Patrick Keefe.
Respondent appeared by attorney Kathryn Linnenbringer.
Case heard and decided by Senior Hearing Officer John Treu.
Complainant chose to only pursue this appeal on the ground of overvaluation, regarding the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property. The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2013. 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 and improvement to the property. Section 137.115.1 RSMo
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 from the decision of the St. Louis County Board of Equalization.
- Evidentiary Hearing. The Evidentiary Hearing was held on May 18, 2015 at St. Louis County Administration Building, Clayton, Missouri.
- Identification of Subject Property. The subject property is identified by map parcel number or locator number 20Q540311. It is further identified as 1001 Wellington Terrace, St. Louis County, Missouri. (Ex. A, B &1)
- Description of Subject Property. The subject property consists of a 36,000 square foot tract of land improved by a single family, residential two story style home, with 3,454 square feet of living area. Amenities include 4 bedrooms, 2 full bathrooms, 1 half bathroom, a 3 car attached garage, a patio/screened porch a fireplace and a tennis court. (Ex. 1)
- Assessment. The Assessor valued the property at $582,800, an assessed residential value of $110,730. The Board of Equalization sustained the assessor’s valuation of the property. (Complaint for Review of Assessment)
- Complainant’s Evidence. Complainant offered into evidence Exhibit A, B and D (No Exhibit C). Exhibit A consisted of an appraisal report by Ronald Keeven. Exhibit B consisted of the Written Direct Testimony of Mr. Keeven. Exhibit D consisted of a list of potential comparables. Exhibits A, B and D were received into evidence without objection.
- No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2013, to January 1, 2014, therefore the assessed value for 2013 remains the assessed value for 2014. Section 137.115.1, RSMo.
- Respondent’s Evidence. Respondent offered into evidence Exhibit 1, 2, 3 and 4. Exhibit 1 consisted of an appraisal report by Sharon Kuelker. Exhibit 2 consisted of a MARIS Matrix for 931 Lafite Court, Chesterfield, MO (Complainant’s comparable #1) showing such as a bank sale. Exhibit 3 consisted of a MARIS Matrix for 1047 Tidewater Place, Town and County, MO (Complainant’s comparable #3) showing such as a short sale. Exhibit 4 consisted of a list of sales comparable values for properties in Complainant’s Exhibit D. Exhibits 1 through 4 were received into evidence without objection.
- Presumption of Correct Assessment Rebutted. The evidence presented by Complainant and Respondent was substantial and persuasive to allow the establishment of the fair market value of the subject property to be $578,110, assessed residential value of $109,840. See, Complainant and Respondent Rebut Presumption, infra.
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 property is assessed at set percentages of true value in money. Section 137.115.5, RSMo – residential property at 19% of true value in money.
Presumption In Appeal
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. 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). This presumption is a rebuttable rather than a conclusive presumption. It places the burden of going forward with some substantial evidence on the taxpayer – Complainant.
Complainants’ Burden of Proof
In order to prevail, Complainants 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, 2013. 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. A valuation which does not reflect the fair market value (true value in money) of the property under appeal is an unlawful, unfair and improper assessment.
The Assessor’s original value in this appeal was determined by the Board to be correct. Accordingly, the taxpayer must rebut that presumption in order to prevail. The taxpayer must establish by substantial and persuasive evidence that the value concluded by the Board is in error and what the correct value should be.
The computer assisted presumption can only come into play in those instances where the Respondent is seeking to have the valuation of the subject property returned to the Assessor’s original valuation. If in a given appeal the Respondent is offering evidence that would establish a value less than the original valuation, then the computer-assisted presumption is not applicable to that appeal. Even if the Board has reduced the valuation and the Respondent’s evidence is offered to increase the value, but not to the level of the original valuation, the computer-assisted presumption does not come into play.
If the Board of Equalization sustained the valuation of the Assessor, such does not negate the fact that the Board presumption remains operative as to evidence which is presented by the taxpayer and Respondent. The computer-assisted presumption only comes into play if the Board of Equalization lowered the value of the Assessor and Respondent is seeking to sustain the original assessment and it has not been shown that the Assessor’s valuation was not the result of a computer assisted method. The Board valuation is assumed to be an independent valuation.
Respondent’s Burden of Proof
In charter counties or the City of St. Louis, the Respondent, when wishing to advocate for a valuation to return the valuation to the Assessor’s original valuation, which was higher than the value assigned by the Board of Equalization, has imposed upon him by the provisions of Section 137.115.1, RSMo, the burden of proof to present clear, convincing and cogent evidence to sustain a valuation on residential property which is made by a computer, computer-assisted method or a computer program.
If, as in this appeal, the Board of Equalization sustained the valuation of the Assessor, the computer assisted presumption does not come into play, as the Boards valuation, is an independent valuation. Thus, Respondent’s burden of proof in such appeals is the same as that imposed upon complainant. Respondent ultimately met the burden of proof imposed upon Respondent.
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. 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). 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.
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. 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. Section 138.430.2, RSMo. The Hearing Officer during the evidentiary hearing made inquiry of Complainant and Respondent’s appraiser.
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.
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, at 615 (Mo. App. W.D. 2000); Hermel, supra; 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. Div. 2 1974).
Opinion Testimony by Experts
An expert’s opinion must be founded upon substantial information, not mere conjecture or speculation, and there must be a rational basis for the opinion. Missouri Pipeline Co. v. Wilmes, 898 S.W. 2d 682, 687 (Mo. App. E.D. 1995). The State Tax Commission cannot ignore a lack of support in the evidence for adjustments made by the expert witnesses in the application of a particular valuation approach. Drey v. State Tax Commission, 345 S.W. 2d 228, 234-236 (Mo. 1961), Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W. 3d, 341, 348 (Mo. 2005). The testimony of an expert is to be considered like any other testimony, is to be tried by the same test, and receives just so much weight and credit as the trier of fact may deem it entitled to when viewed in connection with all other circumstances. The Hearing Officer, as the trier of fact, has the authority to weigh the evidence and 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 may accept it in part or reject it in part. Beardsley v. Beardsley, 819 S.W. 2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W. 2d 605, 607 (Mo. 1981); Scanlon v. Kansas City, 28 S.W. 2d 84, 95 (Mo. 1930).
Evidence of Increase in Value
In any case in charter counties or St. Louis City where the assessor presents evidence which indicates a valuation higher than the value finally determined by the assessor or the value determined by the board of equalization, whichever is higher, for that assessment period, such evidence will only be received for the purpose of sustaining the assessor’s or board’s valuation, and not for increasing the valuation of the property under appeal. Section 138.060, RSMo; 12 CSR 30-3.075.
Complainant and Respondent Rebut Presumption
Complainant and Respondent presented substantial and persuasive evidence to allow the determination of a fair market value for the subject property as of January 1, 2013, to be $578,110. Both Complainant’s and Respondent’s appraisers 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.
Both appraisers selected four comparable properties for their valuations. Complainant’s comparable #1 was a bank sale which was sold on the open market and handled by a realtor. Comparable #1 sold for $448,216 on the courthouse steps, was listed on MLS for $500,000 and sold for $522,000, after 24 days on the market. Complainant’s comparable #3 was a ultimately a short sale. Comparable #3 was listed for $526,000 as a short sale and sold for $543,500 on 2/11/2011, 22 ½ months prior to the relevant date herein. The property spent 466 cumulative days on the market (a portion of which time it was listed normally for $765,000 [$222,000 above its ultimate selling price]). As comparable #3 sold as a short sale, it sold with certain special conditions not typical in an open market sale, which may have depressed its ultimate sales price.
The Hearing Officer has reservations in general regarding the use of bank sales and short sales in ad valorem appraisals given the speculative nature of the adequacy of the sales price (how many offers considered by bank, how appropriate was the initial list price, how many days on the market, special terms and or conditions, etc.). 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). The Hearing Officer does not believe that Complainant presented substantial and persuasive evidence of all six elements set forth above in the “Standard for Valuation” section, regarding the bank sale or the short sale. Furthermore, given the date of sale of Complainant’s comparable #3, some additional pause is given such sale. Thus, such sales are disregarded.
Addressing Respondent’s four comparables, Complainant’s counsel and Complainant’s appraiser attempted to impeach and rebut the use of such due to their contention that the Respondent’s comparable had all been upgraded to some extent. However, Complainant did not put on any substantial and persuasive evidence that the subject property had also not been upgraded and/or that the subject property was different in condition than Respondent’s comparables. Of note is the fact that Complainant’s appraiser did not do an interior inspection of the subject property or even talk to the subject property’s owners. Given that Complainant, Complainant’s counsel and Complainant’s appraiser should all know the condition of the subject property, the lack of any evidence regarding the subject properties condition, not based upon an assumption, results in the Hearing Officer not being persuaded that a downward adjustment should be made to Respondent’s comparables.
The Hearing Officer finds Complainant’s comparables #2 and #4 and Respondent’s comparables #1 through #4 substantial and persuasive sales to allow the determination of an appropriate valuation. Both appraisers averaged their respective comparables adjusted sales prices. Appropriate adjustments appear to have been made to each comparable sale. The Hearing Office will do the same. This results in a true/fair market value of $578,110.
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Louis County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2013 and 2014 is set at $109,840.
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 St. Louis 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 this 26th day of May, 2015.
STATE TAX COMMISSION OF MISSOURI
Senior Hearing Officer
Delivery or Notice was made via mail, email, fax, or personally on May 26th, 2015, to the following Individuals of this Order
Patrick Keefe, Attorney for Complainants, firstname.lastname@example.org
Kathryn Linnenbringer, Assistant County Counsel, Attorney for Respondent, KLinnenbringer@stlouis.com
Jake Zimmerman, Assessor, email@example.com
Mark Devore, Collector, firstname.lastname@example.org
Contact Information for State Tax Commission:
Missouri State Tax Commission
301 W. High Street, Room 840
P.O. Box 146
Jefferson City, MO 65102-0146