STATE TAX COMMISSION OF MISSOURI
|ANDREA LYNN WEISS||)|
|Complainant(s),||)||Appeal No. 21-10122|
|)||Parcel No. 14230234|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
Andrea Lynn Weiss (Complainant) appealed the St. Louis County Board of Equalization’s (BOE) decision finding the true value in money (TVM) of the subject property on January 1, 2021, was $159,600. Complainant alleges overvaluation and proposes that the TVM of the subject as of that date was $110,000. The BOE decision is set aside. The TVM of the subject property on January 1, 2021, was $130,000.
The evidentiary hearing was held on May 4, 2022, via Webex. Complainant appeared pro se and Respondent was represented by counsel Tim Bowe. The appeal was heard and decided by Senior Hearing Officer Benjamin Slawson.
FINDINGS OF FACT
1. The Subject Property. The subject residential real property is located at 2332 Seven Pines Dr., St. Louis, Missouri. The subject property consists of a townhouse condo with two bedrooms, three bathrooms, and 1,784 square feet. There are seven total townhome units within the subject property’s building. Complainant lives in the home and testified that she believes she purchased the property in 1986 or 1987. Complainant believes it was constructed in the early 1980s. Complainant has not had the property appraised within the last three years, nor has she listed the property for sale in the last three years. Other than updating a few appliances like the range and refrigerator, Complainant has not made any improvements to the property in the last three years.
2. Assessment and Valuation. The BOE determined the TVM of the subject property as of January 1, 2021, was $159,600. The BOE also determined the TVM of the subject property as of January 1, 2021, was $159,600.
3. Complainant’s Evidence. Complainant submitted the following Exhibits which were admitted without objection:
|A||23 photographs and one video of the subject property|
|B||Four additional photographs and one additional video of the subject property|
Complainant’s opinion of value for the subject property is $110,000, which is the amount Complainant testified was the last appraised value set by Respondent in 2019. Complainant’s primary argument is that the subject property is in a deteriorated condition, has several issues of deferred maintenance, and thus Respondent overvalued it when making his assessment. In support of Complainant’s argument regarding the condition of the property, Complainant listed in her testimony the many issues of the house which have not been updated or fixed:
a.) The property in general is dated and needs major renovations to make it marketable
b.) Paint scraped on the great room wall, flowers and plants painted on the great room wall by previous owner, paint color scheme outdated
c.) Wallpaper peeling in bathroom
d.) Cracks in great room ceiling
e.) Cabinet door under sink in kitchen does not close completely, peeling wallpaper in kitchen
f.) Cabinets in kitchen original. Some countertops and cabinets damaged in toaster fire
g.) Original carpet in the hallway that needs cleaning/repair
h.) Outdated, original fixtures in bathroom
i.) Original ceiling kitchen fluorescent lighting outdated and needs to be update
j.) Chipped wood damage to doors inside the home
k.) Water damage in ceiling in dining room
l.) Curtain rod anchors coming out of the drywall in the dining room, holes in the curtains
While Complainant has discussed some of these issues with the condo association, Complainant has not obtained any estimates to repair or update these issues in the home. Complainant does not believe she presented all these issues to the BOE at that hearing, but also stated that she could not recall with certainty. Complainant also testified that she is not a licensed appraiser in the state of Missouri.
4. Respondent’s Evidence. Respondent introduced three exhibits that were all admitted into evidence without objection. The exhibits are described as follows:
|1||The BOE decision letter dated October 29, 2021|
|2||Market Analysis by Adam Luesse|
|3||Pictures of the properties used in the market analysis|
Respondent introduced Respondent’s Exhibit 1, a copy of the BOE decision letter determining the subject appraised value as of January 1, 2021, was $159,600. Adam Luesse, an Appraiser with the St. Louis County’s Assessor’s Office since 2018, testified on behalf of Respondent. Mr. Luesse is a Certified Residential Trainee Appraiser in Missouri and also possesses a Missouri Real Estate Broker’s license. Mr. Luesse reviews properties for ad valorem purposes. Mr. Luesse’s job responsibilities also include reviewing tax appeals that have been appealed to the State Tax Commission on behalf of the County. For valuations of residential properties, Mr. Luesse stated that he reviews comparable properties and makes market-based adjustments to determine the TVM of the subject property.
Mr. Luesse testified that he reviewed Complainant’s Exhibit A prior to hearing. In his opinion, the photographs show that the townhouse condo subject property does have some interior deferred maintenance that would suggest it has a lower value than a typical townhome in that particular complex. Mr. Luesse prepared a Market Analysis for the subject property (Respondent’s Exhibit 2). Respondent’s Exhibit 3 was also offered which shows the pictures of the townhome properties that were sold recently and included in Mr. Luesse’s Market Analysis.
In performing his Market Analysis for the subject, Mr. Luesse searched all condo sales between January 1, 2019 and April 30, 2021 within a quarter mile of the subject. Mr. Luesse limited the search to 1,300 to 1,600 square foot properties but did not limit the search by age, ownership type, or sale validity. The result of this query therefore included properties that were sold both “as is” and “not as-is” type sales. Mr. Luesse testified that the Market Analysis gives an overview of the sales market for a particular type of property in a particular area over a specific amount of time. The range of value in the properties in the market analysis was $121,500 to $194,900. Determining the average sales prices of these properties, Mr. Luesse found an average TVM of townhome condos like the subject to be about $158,907, which is fairly close in value to the $159,600 determined by the BOE for the subject. However, based on his training and experience, Mr. Luesse stated that they would value the property around $130,000 for the subject considering its significant interior deferred maintenance and age. Mr. Luesse stated that he believes that every room in the subject property would have to be updated in some way. He noted issues such as the dated wallpaper, dated carpet, and damaged kitchen. Given all these issues, Mr. Luesse thus concluded that his opinion of value would be on the lower side of this range of values for similar townhome condos in the area. Mr. Luesse opined that an investor would probably purchase the property for a lower value like $130,000 and most likely purchase it in an “as-is” condition.
5. Value. The TVM of the subject property as of January 1, 2021, was $130,000.
CONCLUSIONS OF LAW
1. Assessment and Valuation. Residential real property is assessed at 19% of its TVM as of January 1 of each odd-numbered year. Section 137.115.5(1)(a). The TVM is “the fair market value of the property on the valuation date[.]” Snider v. Casino Aztar/Aztar Mo. Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005) (internal quotation omitted). The fair market value is “the price which the property would bring from a willing buyer when offered for sale by a willing seller.” Mo. Baptist Children’s Home v. State Tax Comm’n, 867 S.W.2d 510, 512 (Mo. banc 1993). “True value in money is defined in terms of value in exchange not value in use.” Tibbs v. Poplar Bluff Assocs. I, L.P., 599 S.W.3d 1, 7 (Mo. App. S.D. 2020) (internal quotation omitted). “Determining the true value in money is an issue of fact for the STC.” Cohen v. Bushmeyer, 251 S.W.3d 345, 348 (Mo. App. E.D. 2008).
“For purposes of levying property taxes, the value of real property is typically determined using one or more of three generally accepted approaches.” Snider, 156 S.W.3d at 346. The three generally accepted approaches are the cost approach, the income approach, and the comparable sales approach. Id. at 346-48. The STC has wide discretion in selecting the appropriate valuation method but “cannot base its decision on opinion evidence that fails to consider information that should have been considered under a particular valuation approach.” Id., at 348.
The comparable sales approach “is most appropriate when there is an active market for the type of property at issue such that sufficient data are available to make a comparative analysis.” Snider, 156 S.W.3d at 348. For this reason, the comparable sales approach is typically used to value residential property. “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 347-48 (internal quotation omitted). “Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character.” Id. at 348.
2. Evidence. “Although technical rules of evidence are not controlling in administrative hearings, fundamental rules of evidence are applicable.” Mo. Church of Scientology v. State Tax Comm’n, 560 S.W.2d 837, 839 (Mo. banc 1977). The hearing officer is the finder of fact and determines the credibility and weight of the evidence. Kelly v. Mo. Dep’t of Soc. Servs., Family Support Div., 456 S.W.3d 107, 111 (Mo. App. W.D. 2015). “It is within the purview of the hearing officer to determine the method of valuation to be adopted in a given case.” Tibbs v. Poplar Bluff Assocs. I, L.P., 599 S.W.3d 1, 9 (Mo. App. S.D. 2020). 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. 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.
3. Complainant’s Burden of Proof. The taxpayer bears the burden of proof and must show by a preponderance of the evidence that the property was overvalued. Westwood P’ship v. Gogarty, 103 S.W.3d 152, 161 (Mo. App. E.D. 2003). The BOE’s valuation is presumptively correct. Tibbs, 599 S.W.3d at 7. The “taxpayer may rebut this presumption by presenting substantial and persuasive evidence that the valuation is erroneous.” Id. (internal quotation omitted). The taxpayer also must prove “the value that should have been placed on the property.” Id. “Substantial evidence is that evidence which, if true, has probative force upon the issues, and from which the trier of fact can reasonably decide the case on the fact issues.” Savage v. State Tax Comm’n, 722 S.W.2d 72, 77 (Mo. banc 1986) (internal quotation omitted). Evidence is persuasive when it has “sufficient weight and probative value to convince the trier of fact.” Daly v. P.D. George Co., 77 S.W.3d 645, 651 (Mo. App. E.D. 2002); see also White v. Dir. of Revenue, 321 S.W.3d 298, 305 (Mo. banc 2010) (noting the burden of persuasion is the “party’s duty to convince the fact-finder to view the facts in a way that favors that party”).
4. Complainant Did Not Produce Substantial and Persuasive Evidence of Overvaluation.
Complainant did not produce substantial and persuasive evidence to support her $110,000 opinion of value and claim of overvaluation. Complainant’s opinion of value is based on what Respondent’s appraised value of the property in the previous assessment cycle. Complainant testified at length as to the various condition issues of the subject property, but did not provide evidence of the specific monetary impact that such conditions have on the TVM of the subject property.
The comparable sales approach is the usual method used to determine the TVM of residential real property. “The comparable sales approach uses prices paid for similar properties in arms-length transactions and adjusts those prices to account for differences between the properties.” Snider, 156 S.W.3d at 347-48 (internal quotation omitted). Complainant’s evidence does not make adjustments to comparable properties to find a proper appraisal comparison. Even if Complainant had rebutted the presumption of correct valuation by the BOE, Complainant has not proven that the TVM of the subject property is $110,000 as of January 1, 2021. While a property owner’s opinion of value is generally admissible, the opinion “is without probative value where it is shown to have been based upon improper elements or an improper foundation.” Shelby Cty. R-IV Sch. Dist. v. Herman, 392 S.W.2d 609, 613 (Mo. 1965); see also Cohen v. Bushmeyer, 251 S.W.3d 345, 349 (Mo. App. W.D. 2008) (noting a property owner’s opinion of value loses probative value when it rests on an improper foundation).
Complainant presented no appraisal of the subject property in order to determine a value of the subject property. See Cohen, 251 S.W.3d at 349 (holding a landowner’s opinion of value lacks probative value when there is “no other evidence as to what he based his opinion on or how he arrived at his opinion of [value]”). Complainant’s alleged valuation is based on improper elements and therefore is speculative. Overall, the condition issues submitted by Complainant are not persuasive evidence to demonstrate that the value of the subject property was $110,000 as of January 1, 2021.
Although not required given the burden of proof, Respondent presented testimony of Mr. Adam Luesse which persuasively supports a valuation of the subject property of $130,000. Mr. Luesse performed a market analysis examining recent sales of townhomes in the subject’s area. Identifying a range of values, Mr. Luesse, based on his training and experience, persuasively testified that in his professional opinion the BOE’s valuation of the subject is too high based on its characteristics versus the other comparable properties.
Mr. Luesse stated that he would value the property around $130,000 as of January 1, 2021, which was lower than the BOE’s valuation. Mr. Luesse determined this value considering its significant interior deferred maintenance and age and comparing it with similar townhomes that have sold recently in the subject’s area. Mr. Luesse stated that he believes that every room in the subject property would have to be updated in some way. Her noted issues such as the dated wallpaper, dated carpet, and damaged kitchen. Given all these issues, Mr. Luesse thus concluded that his opinion of value would be on the lower side of this range of values for similar townhome condos in the area. Mr. Luesse opined that an investor would probably purchase the property for a lower value like $130,000 and most likely purchase it in an “as-is” condition. Given Mr. Luesse’s experience as a broker and training in appraisal of real property, we find this opinion of value credible and persuasive.
CONCLUSION AND ORDER
The BOE decision is set aside. The TVM of the subject property as of January 1, 2021, was $130,000.
Application for Review
A copy of the application must be sent to each person 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.
A party may file an application for review of this decision within 30 days of the mailing date set forth in the certificate of service for this decision. The application “shall contain specific detailed grounds upon which it is claimed the decision is erroneous.” The application must be in writing, and may be mailed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, or emailed to Legal@stc.mo.gov. The Collector of St. Louis County, and 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 the disputed taxes have been disbursed pursuant to a court order under the provisions of section 139.031.
SO ORDERED September 23, 2022.
Benjamin C. Slawson
Senior Hearing Officer
State Tax Commission
Certificate of Service
I hereby certify that a copy of the foregoing has been electronically mailed and/or sent by U.S. Mail on September 23, 2022, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.