STATE TAX COMMISSION OF MISSOURI
| ALFRED & SHEILA ROSENFELD, | ) | |
| ) | ||
| Complainants, | ) | |
| ) | ||
| v. | ) | Appeal No. 15-13665 |
| ) | ||
| JAKE ZIMMERMAN, ASSESSOR | ) | |
| ST. LOUIS COUNTY, MISSOURI, | ) | |
| ) | ||
| Respondent. | ) |
DECISION AND ORDER
HOLDING
The assessment made by the Board of Equalization of St. Louis County (BOE) is SET ASIDE. Respondent Jake Zimmerman, St. Louis County Assessor, (Respondent) presented substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE and to establish that the assessed value in money for the subject property for tax years 2015 and 2016 is set at $78,280 residential ($412,000 true market value or TMV).
Complainant Alfred Rosenfeld appeared pro se; Complainant Sheila Rosenfeld appeared not.
Respondent appeared by Steven Robson, Assistant County Counselor.
Case heard and decided by Senior Hearing Officer Amy S. Westermann.
ISSUE
Complainants appealed on the ground of overvaluation. Respondent initially set the TMV of the subject property, as residential property, at $490,700. The BOE lowered Respondent’s valuation to $446,000. The Commission takes this appeal to determine the TMV of the subject property on January 1, 2015.
The Senior 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.
- Evidentiary Hearing. The issue of overvaluation was presented at an evidentiary hearing on June 29, 2016, at the St. Louis County Government Administration Building, 41 South Central Avenue, Clayton, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 18N240202. It is further identified as 158 S. Graeser Rd., Creve Couer, Missouri. (Complaint; Exhibit 1)
- Description of Subject Property. The subject property consists of a 22,750 square foot residential lot improved by a 2,534 square foot, single-family, ranch-style home built in 1977 or 1978. (Exhibits G1; Exhibit 1) The subject property includes three bedrooms; two bathrooms; a full basement with 1,600 square feet of finished area; a two-car attached garage; one fireplace; and a patio. The exterior consists of brick construction. (Exhibit A; Exhibit 1)
- Assessment. Respondent placed a TMV of $490,700 on the subject property, as of January 1, 2015.
- Board of Equalization. The BOE lowered Respondent’s TMV of the subject property to $446,000.
- Complainant’s Evidence. Complainant Alfred Rosenfeld testified in his own behalf. Complainant testified that he had purchased the subject property in 1978 for $115,000. Complainant testified that the subject property was not encumbered by a mortgage, that it had not been listed for sale or appraised within the three years preceding the Evidentiary Hearing, and that he had not received any offers to purchase the subject property. Complainant testified that he had not made improvements to the subject property between January 2013 and January 2015.
Complainant testified that the subject property had never been updated and that the kitchen, bathrooms, carpeting, and HVAC system are all original. Complainant testified that the French doors, sliding glass doors, and garage doors need to be replaced. Complainant testified that some of the windows are “fogged” and need to be replaced. Complainant further testified that the foundation of the residence is cracked and needs “piering.” Complainant also testified that the noise emanating from a large A/C cooling tower associated with a school situated behind the subject property exceeded the noise level allowed by St. Louis County Ordinance. Complainant opined that the TMV of the subject property was $344,805 as of January 1, 2015.
Complainant offered as evidence a photograph of the street view of the subject property (Exhibit A); an aerial photograph of the subject property and the school with the A/C cooling tower situated behind the subject property (Exhibit B); a diagram of the subject property and the school with the A/C cooling tower situated behind the subject property (Exhibit C); a summary report issued by Engineering Dynamics International following a property line noise study (Exhibit D); a printed page entitled “Creve Coeur appreciation rates and housing market information” obtained from an Internet site (Exhibit E); a graph from the website Zillow purportedly showing the fluctuation in home values in Creve Coeur over a 10 year period (Exhibit F); a typed statement summarizing Complainants’ case and listing costs to repair the subject property and a 15% deduction to account for the noise from the A/C cooling tower (Exhibit G); packet containing data concerning five comparable properties (Exhibit H); a detailed bid from Lowes showing the cost of replacing the kitchen cabinets, countertops, and appliances (Exhibit H); a detailed bid from Home Depot showing the cost of replacing the French door (Exhibit J).
Respondent objected to Exhibits D, E, F, and G. The Senior Hearing Officer sustained the objections to Exhibits E and F because they constituted hearsay in that the source of the information contained in the exhibits could not be verified. The Senior Hearing Officer overruled the objections to Exhibits D and G, which were received into the record to be given the weight deemed appropriate in context with all of the other evidence received. Respondent did not object to Complainant’s other evidence, which was received into the record.
- Respondent’s Evidence. Respondent offered as evidence the testimony of Missouri State Certified Residential Real Estate Gerald D. Keeven, Jr., (Appraiser) along with the Appraiser’s report (Exhibit 1). The Appraiser opined that the TMV of the subject property as of January 1, 2015, was $412,000.[1] The Appraiser testified that he utilized the sales comparison approach to arrive at his opinion of value. The Appraiser testified that he had chosen four comparables and had given all equal weight in arriving at an opinion of TMV. The Appraiser testified that he had performed an exterior inspection of the subject property and heard the noise generated by the school’s A/C cooling tower. According to the Appraiser’s report, the subject property and Comparable No. 2 backed to the school’s property. The Appraiser testified that he had made a $10,000 adjustment to Comparable Nos. 1, 3, and 4 to account for the negative effect on the subject property due to the noise from the school’s A/C cooling tower. The Appraiser’s report also made adjustments to Comparables No. 2, 3, and 4 for their superior condition due to recent updates and/or remodeling. (Exhibit 1) In particular, Comparable Nos. 2 and 4 were remodeled “throughout including kitchen and bathrooms.” Comparable No. 3 had a remodeled kitchen but was not remodeled throughout and had its original bathrooms. (Exhibit 1) The Appraiser also made adjustments for the size of the lots of Comparable Nos. 1 and 3; for the quality of construction of Comparable Nos. 1 and 4; and the superior basement finish of Comparable Nos. 2 and 4. (Exhibit 1)
Complainant did not object to Respondent’s evidence, which was received into the record.
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, including the application of any abatement. The Senior 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.
During the hearing, the Senior Hearing Officer inquired of Complainant and of the Appraiser.
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. 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, 801-803 (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.
A presumption exists that the assessed value fixed by the BOE is correct. Rinehart, 363 S.W.3d at 367; Cohen, 251 S.W.3d at 348; Hermel, Inc., 564 S.W.2d at 895. “Substantial and persuasive controverting evidence is required to rebut the presumption, with the burden of proof resting on the taxpayer.” Cohen, 251 S.W.3d at 348. 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). See also, 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).
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).
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 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).
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).
Board Presumption and Computer-Assisted Presumption
There exists a presumption of correct assessment by the BOE – the BOE presumption. In charter counties or the City of St. Louis, there exists by statutory mandate a presumption that the Assessor’s original valuation was made by a computer, computer-assisted method or a computer program – the computer-assisted presumption. These two presumptions operate with regard to the parties in different ways.
The BOE presumption operates in every case to require the taxpayer to present evidence to rebut it. If Respondent is seeking to prove a value different than that set by the BOE, then it also would be applicable to the Respondent.
The computer-assisted presumption is applicable only if (1) the BOE lowered the value of the Assessor and Respondent is seeking to sustain the original assessment and (2) it has not been shown that the Assessor’s valuation was not the result of a computer assisted method. The BOE’s valuation is assumed to be an independent valuation.
In the present appeal, the BOE sustained the initial valuation of Respondent, and both Complainant and Respondent are seeking to lower the original assessment; therefore, only the BOE presumption applies while the computer-assisted presumption is not applicable.
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).
Discussion
Although Complainants presented substantial evidence to support their opinion of the subject property’s TMV, that evidence is not persuasive because, if relied upon, the fact finder would be required to resort to speculation to conclude the TMV of the subject property on January 1, 2015, should be $344,805.
Complainants presented substantial evidence. Substantial evidence is that which is relevant, adequate, and reasonably supports a conclusion. Cupples Hesse Corp., 329 S.W.2d at 702.
In particular, Complainants presented maps and an engineering report to support their argument that the subject property’s proximity to the school’s A/C cooling tower had a negative effect on the subject property’s TMV. (Exhibits B, C, D) Complainant Mr. Rosenfeld testified that the noise generated by the cooling tower caused the exterior backyard area of the subject property to be unusable. Exhibit D indicated that an engineer had made noise level measurements for approximately 30 minutes, had analyzed the acoustical data recorded from various sound sources in the area including the cooling tower, and had concluded that the sound levels produced by the cooling tower and heard at the property line ranged from 58 to 60 decibels. Exhibit D further indicated that the sound levels would be approximately 56 to 57 decibels in the center of the back yard. Exhibit D concluded that the “chiller noise impacting the nearest property line exceeds St. Louis County Health Department Noise Control Code for both daytime and nighttime hours in residential land use category.”
Complainants also presented detailed bids from Lowes and Home Depot totaling $42,422 and illustrating the cost to renovate and replace the subject property’s kitchen and French doors. (Exhibits I and J) Complainants further presented a list of comparable properties sold between January 28, 2013, and April 23, 2015. (Exhibit H) The comparable properties had either four to five bedrooms; had 2 and 1-1/2 bathrooms to five bathrooms; had square footage from 2,523 square feet to 3,315 square feet; and had sales prices ranging from $275,000 to $457,000. (Exhibit H)
However, Complainants’ evidence was not persuasive to support the conclusion that the subject property had a TMV of $344,805 as of January 1, 2015. Persuasive evidence is that which causes the trier of fact to believe, more likely than not, the conclusion advocated is the correct conclusion. Id.
First, with regard to the noise produced by the school’s A/C cooling tower, Complainants argued that the BOE’s determination of TMV of the subject property should be reduced by 15% due to this nuisance. The engineering report supporting this argument (dated August 8, 2005, approximately 10 years prior to the subject tax day) did not correlate a reduction in the TMV of the subject property to the noise from the school’s A/C cooling tower; rather, the engineering report indicated that the measured sound level exceeded the St. Louis County Health Department’s Noise Control Code in effect at the time of the noise study.
Second, with regard to the bids showing the cost of renovating and replacing the subject property’s kitchen and French doors, Complainants argued that the BOE’s determination of TMV of the subject property should be reduced by $42,422 due to these costs. Complainant Mr. Rosenfeld testified that renovating and replacing these components of the subject property would put the subject property on an equal basis with other similar homes. However, this is not an appropriate application of the cost approach to valuing a property as it does not take into account the estimated depreciation of the subject property in calculating TMV. Similarly, with regard to Complainants’ list of comparable properties, Complainants argued that averaging the sales prices and the square footage of the comparables resulted in a cost per square foot that could be applied to the subject property. However, Missouri courts have not approved this method of averaging sales prices and square footage as a method of valuing property.
On the contrary, Respondent presented substantial and persuasive evidence to rebut the presumption of correct valuation by the BOE. In arriving at an opinion of value, the Appraiser considered all three approaches to value the subject property: the cost approach, the income approach, and the sales comparison approach. The Appraiser ultimately utilized the sales comparison approach because the other two approaches were inapplicable. The Appraiser analyzed four comparable sales, all of which were located within half of a mile from the subject property. (Exhibit 1) The sale prices of Respondent’s comparables ranged from $379,000 to $620,000. Respondent’s comparables contained between 2,326 square feet and 2,696 square feet. The subject property contains 2,534 square feet. The Appraiser made market-based adjustments to the comparables for location, specifically allocating a $10,000 negative adjustment to Comparable Nos. 1, 3, and 4 due to the subject property backing to the school property and the noise from school’s A/C cooling tower. The Appraiser noted that Comparable No. 2, which is on the same street and near the subject property, also backed to the school property. The Appraiser made market-based negative adjustments to Comparables 2, 3, and 4 ranging from $40,000 to $120,000 due to the subject property’s lack of updating and need for renovations and/or repairs. The Appraiser noted that Comparable Nos. 2, 3, and 4 had received significant and recent updates. The Appraiser also made market-based adjustments to the comparables for differences in the size of the lots; differences in the quality of construction; number of bathrooms; gross living area square footage; basement square footage and finishes; and number of fireplaces. The adjusted sale prices of the comparables ranged from $365,400 to $484,000. Placing the most weight on Comparable Nos. 2 and 3, the Appraiser opined that the subject property had a TMV of $412,000.
From this substantial and persuasive evidence, it is reasonable to find and conclude that Respondent rebutted the presumption of correct valuation by the BOE and that the TMV of the subject property on January 1, 2015, was $412,000.
ORDER
The true market valuation for the subject property as determined by the BOE is SET ASIDE.
The assessed value for the subject property for tax years 2015 and 2016 is set at $78,280 residential ($412,000 TMV).
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
Disputed Taxes
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 August 23, 2016.
STATE TAX COMMISSION OF MISSOURI
Amy S. Westermann
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 23rd day of August, 2016, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.
Jacklyn Wood
Legal Coordinator
[1] Respondent’s proposed valuation following the Appraiser’s analysis was lower than the BOE’s assessment of the subject property’s value.