STATE TAX COMMISSION OF MISSOURI
| ANDREW M. CASSIDY, | )
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| Complainant, | ) | |
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| v. | ) | Appeal No. 17-20225 |
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Parcel/Locator No.
4142-00-0220-0 |
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| STEPHEN J. CONWAY, ASSESSOR, | ) | |
| CITY OF ST. LOUIS, MISSOURI,
Respondent. |
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DECISION AND ORDER
HOLDING
The decision of the City of St. Louis Board of Equalization (BOE) is AFFIRMED. Complainant Andrew M. Cassidy (Complainant) did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.
Complainant appeared pro se.
Respondent Stephen J. Conway, Assessor, City of St. Louis, Missouri, (Respondent) appeared by counsel Georganna Ekpo.
Case heard and decided by Senior Hearing Officer Amy S. Westermann (Hearing Officer).
ISSUE
Complainant appealed on the ground of overvaluation. Respondent initially set the true value in money (TVM) of the subject property at $94,600, as residential property, as of January 1, 2017. The BOE valued the subject property at $94,600, thereby sustaining Respondent’s valuation. The State Tax Commission (STC) takes this appeal to determine the TMV for the subject property as of January 1, 2017.
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.
- Evidentiary Hearing. The issue of overvaluation was presented at an evidentiary hearing on February 22, 2018, at the City of St. Louis City Hall, 1200 Market Street, St. Louis, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 4142-00-0220-0. It is further identified as 4117 Parker Avenue, St. Louis, Missouri. (Complaint; Exhibit 1)
- Description of Subject Property. The subject property consists of approximately 3,750 square feet improved by a 1,167 square foot, one-story, single family home built in approximately 1928. (Exhibit 1) The subject property includes two bedrooms; one full bathroom; a full unfinished basement; a two-car detached garage; a front porch; and a rear porch. (Exhibit 1) The exterior consists of brick frame construction. (Exhibit 1) The subject property had a quality of construction rating of average and a condition rating of average. (Exhibit 1)
- Assessment. Respondent set a TVM for the subject property of $94,600, residential, as of January 1, 2017.
- Board of Equalization. The BOE set a TVM of the subject property at $94,600, residential, as of January 1, 2017.
- Complainant’s Evidence. Complainant opined that the subject propety’s TVM as of January 1, 2017, was between $65,000 and $70,000. To support Complainant’s opinion of value, Complainant offered as evidence the following exhibits:
| Exhibit A | MARIS sales listings for 10 comparable properties |
| Exhibit B | Typed list showing real estate tax amounts of three properties and the subject property |
| Exhibit C | Daily Crimes and Happenings Report from the St. Louis Metropolitan Police Department highlighting criminal activity on properties within two to three miles of the subject property |
Respondent objected to all of Complainant’s exhibits on grounds of hearsay, lack of foundation, lack of authentication, relevance, and best evidence rule. After hearing argument of the parties regarding the objections, the Hearing Officer overruled the objections to Exhibits A and C and admitted the exhibits into the record to be given the weight deemed necessary. The Hearing Officer sustained the objection to Exhibit B as to relevance and excluded Exhibit B.
Complainant testified that he had purchased the subject property in the early 2000s for approximately $40,000. Complainant testified that the subject property had not been listed with a realtor or publicly advertised; he had purchased the subject property from a friend’s grandmother. Complainant testified that the subject property was not encumbered by a mortgage. Complainant testified that the subject property had not been listed for sale on January 1, 2017, but it was listed for $129,000 on the date of the Evidentiary Hearing. Complainant testified that no offers to purchase the property had been made and that he property was tenant occupied. Complainant testified that the subject property had not been appraised within the three years preceding the date of the Evidentiary Hearing. Complainant testified that the repaired the roof of the subject property between January 1, 2015, and January 1, 2017, but made no other improvements. Complainant testified that he believed the increase in the assessment of the subject property from 2015 to 2017 was extreme, especially given that schools are not accredited, residents are losing services, the city is declining, and crime is worsening. Complainant testified that the subject property needs a new roof. Complainant testified that the subject property was not a two-bedroom house and that the dining room is used as a bedroom.
On cross examination, Complainant testified that he is not a licensed real estate appraiser or realtor and has no education in real estate appraisal. Complainant admitted that the subject property was listed for $129,000 on the date of the Evidentiary Hearing and had originally been listed for $135,000. Complainant testified that the subject property had been on the market for most of 2017 and was listed with a professional realtor. Complainant testified that the realtor had set the list price.
- Respondent’s Evidence. Respondent offered as evidence the following exhibits:
| Exhibit 1 | Appraisal Report of Real Property Appraiser I Caressa Williams (the Appraiser) |
Complainant did not object to Respondent’s exhibits, which were admitted into the record.
In her report, the Appraiser analyzed three comparable sales, all of which were situated within less than .25 of one mile the subject property. (Exhibit 1) The sale prices of the comparables ranged from $119,000 to $149,900. (Exhibit 1) The comparables sold between April 2016 and March 2017. The Appraiser made market-based adjustments to each of the comparables to account for the differences between them and the subject property. The adjusted sale prices of the comparables ranged from $119,000 to $155,100. (Exhibit 1) In the report, the Appraiser noted that the comparables were the most similar sales found in the subject property’s neighborhood, were considered the most reliable indicators of value, and were located in the same marketing area. (Exhibit 1) The Appraiser placed the most weight on Comparable No. 2 because of its similarities to the subject property and because it required no net adjustments to its sale price. (Exhibit 1)
Respondent also presented the testimony of the Appraiser. The Appraiser opined that the TVM of the subject property was $119,000 as of January 1, 2017. The Appraiser testified that she was not licensed or state certified but that she had her realtor’s license. The Appraiser testified that she was not required to be licensed or certified as a real estate appraiser under Section 339.501.5(3). The Appraiser testified that she used the sales comparison approach to arrive at an opinion of TVM for the subject property. The Appraiser testified that if crime were an external factor affecting market value, it would have been revealed in the sale prices of the comparable properties.
On cross examination, the Appraiser testified that the sale listing for the subject property showed that the subject property had two bedrooms, not one bedroom as Complainant had testified. The Appraiser testified that realtors must list actual or factual information about properties. The Appraiser testified that she did not know of anyone who uses a dining room as a bedroom.
- Presumption of Correct Assessment Not Rebutted. Complainant did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE and to establish the TVM of the subject property as of January 1, 2017, to be between $65,000 and $70,000.
Respondent’s evidence was substantial and persuasive to establish the TVM of the subject property, as of January 1, 2017 to be $119,000. However, Respondent’s evidence was accepted only to sustain the BOE determination of the subject property’s TVM, and not for the purpose of raising the assessment above that value.
CONCLUSIONS OF LAW AND DECISION
Jurisdiction
The STC 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 Hearing Officer shall issue a decision and order affirming, modifying or reversing the determination of the BOE, 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 STC, 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.
Board Presumption and Computer-Assisted Presumption
There exists a presumption of correct assessment by the BOE – the BOE presumption. The BOE presumption requires the taxpayer to present substantial and persuasive evidence to rebut it. If Respondent is seeking to prove a value different than that set by the BOE, then Respondent is required to rebut the BOE presumption. The BOE’s valuation is assumed to be an independent valuation.
The computer-assisted presumption can only come into play in those instances where the BOE has lowered the assessor’s original valuation of the subject property and Respondent is seeking to have the valuation 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 BOE 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 BOE sustained the valuation of the assessor, the BOE presumption remains operative as to evidence which is presented by Complainant and Respondent. The computer-assisted presumption only comes into play if the BOE lowered the value of the assessor and Respondent is seeking to sustain the original assessment that was made as the result of a computer-assisted method.
In the present appeal, the BOE independently valued the subject property at the same amount as Respondent’s original assessment. Complainant is now seeking to lower the BOE’s valuation; therefore, the BOE presumption applies to Complainant. Respondent is not seeking to establish a different value than that set by the BOE but advocated that the BOE’s valuation should be sustained. The computer-assisted presumption does not apply under the circumstances.
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.
“’True value’ is never an absolute figure, but is merely an estimate of the fair market value on the valuation date.” Drury Chesterfield, Inc., v. Muehlheausler, 347 S.W.3d 107, 112 (Mo. App. E.D. 2011), citing St. Joe Minerals Corp. v. State Tax Comm’n of Mo., 854 S.W.2d 526, 529 (Mo. App. E.D. 1993). “Fair market value typically is defined as the price which the property would bring when offered for sale by a willing seller who is not obligated to sell, and purchased by a willing buyer who is not compelled to buy.” Drury Chesterfield, Inc., 347 S.W.3d at 112 (quotation omitted).
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 STC 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 STC “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).
In this case, Complainant opined that the TVM of the subject property was between $65,000 and $70,000 as of January 1, 2017.
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. Hermel, Cupples-Hesse, Brooks, supra
Here, although not required, Respondent presented substantial and persuasive evidence to rebut the presumption correct assessment by the BOE. However, Respondent advocated that the evidence should be used only to sustain the BOE’s determination of the subject property’s TVM as of January 1, 2017.
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).
Complainant testified on his own behalf. Respondent presented the expert testimony and report of the Appraiser.
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), citing St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977). “Each valuation approach is applied with reference to a specific use of the property—its highest and best use.” Snider, 156 S.W.3d at 346-47, citing Aspenhof Corp., 789 S.W.2d at 869. “The method used depends on several variables inherent in the highest and best use of the property in question.” Snider, 156 S.W.3d at 347.
“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.
Discussion
In this case, Complainants’ evidence was not substantial and persuasive to rebut the presumption of correct assessment by the BOE. 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. Specifically, Complainant did not present evidence utilizing any of the three court-approved methods for valuing residential property. Exhibit A contained 10 listings for purportedly comparable properties. However, Exhibit A included some listings for properties that were still active on the market. Exhibit A did not make any market-based dollar adjustments to the sale prices of Complainant’s comparables based on the differences between the comparables and the subject property. Unlike the subject property, the comparables in Exhibit A all were one-bedroom homes. The fact finder would be forced to speculate in order to conclude that Complainant’s evidence rebutted the presumption of correctness of the BOE’s valuation and supported Complainant’s opinion of value.[1]
Respondent, though not required, presented substantial and persuasive evidence supporting the BOE’s valuation of the subject property. The Appraiser used the comparable sales method for arriving at an opinion of TVM for the subject property, which is one of the three court-approved methods for determining value for tax assessment purposes. The Appraiser’s report made market-based dollar adjustments to account for the similarities and differences between the comparables analyzed in the report and the subject property.
Exhibit 1 contained a total of three comparabe properties that were similar to the subject property. The Appraiser accounted for the few differences by making market-based dollar adjustments to the sale prices of all of the comparables. The Appraiser placed the most weight on Comparable No. 2 in arriving at an opinion of the subject property TVM. Comparable No. 2 had sold for $119,000 in June 2016. After making negative market-based dollar adjustments of $2,200 for central cooling and $1,500 for additional front feet and a positive market-based dollar adjustment of $3,700 for a one-car detached garage, the only differences between Comparable No. 2 and the subject property, the adjusted sale price remained the same as its sale price – $119,000. Combined with the evidence that the subject property was listed for $129,900 at the time of the evidentiary hearing, approximately one year after the relevant tax date, it is reasonable to conclude that the sale price of Comparable No. 2 reflected the market value of the subject property on January 1, 2017. Respondent did not advocate raising the BOE’s determination of the subject property’s TVM, which was approximetly 20.5% lower than the Appraiser’s opinion of the subject property’s TVM.
ORDER
The TVM for the subject property as determined by the BOE is AFFIRMED. The assessed value for the subject property for tax year 2017 is set at $17,974 residential ($94,600 TVM).
Application for Review
A party may file with the STC 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 June 14, 2018.
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 14th day of June, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.
Jacklyn Wood
Legal Coordinator
[1] Furthermore, Complainant’s opined values were $59,000 to $64,000 less than his own list price for the subject property as of the date of the Evidentiary Hearing. Although list prices may not necessarily represent TVM, the Hearing Officer is not persuaded that the TVM would have been approximately 50% to 55% of the list price.