State Tax Commission of Missouri
v.) Appeal Number 08-10625
PHILIP MUEHLHEAUSLER, ASSESSOR,)
ST. LOUIS COUNTY,MISSOURI,)
DECISION AND ORDER
Decision of the St. Louis County Board of Equalization reducing the assessment made by the Assessor is SET ASIDE.True value in money for the subject property for tax year 2008 is set at $305,000, residential assessed value of $57,950.Complainant appeared pro se. Respondent appeared by Associate County Counselor Paula J. Lemerman.Case heard and decided by Senior Hearing Officer W. B. Tichenor.
The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2007.
Complainant appeals, on the ground of overvaluation and discrimination, the decision of the St. Louis County Board of Equalization, which reduced the valuation of the subject property.The Assessor determined an appraised value of $366,000, assessed value of $69,540, as residential property.The Board reduced the value to $310,400, assessed value of $58,980.Evidentiary Hearing was held on June 18, 2009, at the St. Louis County Government Center, Clayton, Missouri.The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
1.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.
2.Complainant’s Evidence.Complainant offered into evidence Exhibit A – a list of repairs needed with approximate cost and a group of interior and exterior photographs of the subject home showing items of deferred maintenance.Exhibit A was received into evidence. Mr. Uddin stated his opinion of the fair market value as of January 1, 2007, to be $249,000 based upon offers received when the property was for sale by owner during the first four months of 2007.
3.Respondent’s Evidence.Respondent presented the appraisal report and testimony of Arthur Froeckmann, Missouri State Certified Residential Real Estate Appraiser.Me. Froeckmann gave his opinion of the fair market value of Complainant’s property as of January 1, 2007, to be $305,000 based upon a sales comparison analysis.
4.Subject Property.The subject property is located at 758 Grand View Ridge Court, Eureka, Missouri.The property is identified by parcel number 30W330119.The property consists of .26 of an acre lot improved by a two-story vinyl and brick single-family structure of average quality construction.The house was built in 1998 and appears to be in fair condition.The residence has a total of nine rooms, which includes four bedrooms, two and a half baths, and contains 2,847 square feet of living area.There is a full basement with partial finish and an attached three-car garage.
5.Deferred Maintenance.The home suffers from a number of items of deferred maintenance including: missing roof shingles in spotted locations, aged and missing caulking around windows resulting in air and water infiltration, exterior paint and caulking is weathered or missing, interior paint shows age, bathroom water leak caused damage to living room ceiling, two front windows have loosened seals between panes, one front window glass is cracked, spill damaged basement carpet, weathered exterior wood steps, perimeter soil grading is toward the foundation, water seeps through wall into basement, interior shows lack of routine household cleaning and maintenance.
6.Sale History.The subject property was purchased by Complainant for $317,000 on 6/20/06.Mr. Uddin listed the property for sale by owner from January to April of 2007.He received offers of $249,000 and less, but none of the offers were accepted.
7.New Construction and Improvement.There was no evidence of new construction and improvement from January 1, 2007, to January 1, 2008.
8.Complainant’s Evidence Did Not Establish Value.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, 2007, to be $249,000.
9.Appraiser’s Sales Comparison Properties.The properties relied upon by Respondent’s appraiser in performing his appraisal were comparable to the subject property for the purpose of making a determination of value of the subject property. The three properties were located within less than a half mile of the subject.Each sale property sold at a time relevant to the tax date of January 1, 2007.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.
10.Appraiser’s Adjustments and Conclusions of Value.The appraiser’s adjustments to the comparable properties for differences which existed between the subject and each comparable were appropriate for the appraisal problem.The net adjustments ranged from -10.5% to 2.4%.The adjusted sales prices calculated to $301,500, $301,500 and $310,400.The appraiser concluded on a $305,000 value which calculated to a value per square foot of $107.13 compared with the sales prices per square foot of living area for the comparables of $105.03, $115.16 and $115.56. 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.
11.Adjustment for Deferred Maintenance.The appraiser made a negative adjustment of $20,000 to each comparable to account for the superior condition of the sale properties in comparison to the Uddin property.The adjustment did not attempt to account for a dollar for dollar cost of repair on the subject home, but adjusted for the lack of contributory value for the subject property due to its deferred maintenance issues.This was an appropriate method to address the matter of the items of deferred maintenance.
12.Respondent’s Evidence Established Value.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, 2007, to be $305,000.
13.Discrimination Claim Dismissed.Complainant presented no testimony or evidence to establish an intentional plan by the Assessor or the Board of Equalization to assess the property at a value greater than its fair market or true value in money.No evidence was presented to establish that the residential assessment ratio of 19% was not in fact the average assessment ratio for residential property in St. Louis County for the 2007-08 assessment cycle.Therefore, Complainant’s claim of discrimination having been raised in the Complaint, but not proven by evidence offered at the evidentiary hearing is dismissed.
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.
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization. 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 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.Complainant’s testimony and exhibit established the subject property suffers from various items of deferred maintenance, however, the evidence was insufficient to rebut the presumption of correct assessment by the Board and prove that the true value in money of the property as of January 1, 2007, would have been $249,000.Mr. Froeckmann’s appraisal and testimony constituted substantial and persuasive evidence to both rebut the presumption of correct assessment and establish the fair market value of the Uddin property to be $305,000 as of January 1, 2007.
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.True value in money is defined in terms of value in exchange and not value in use.It is the fair market value of the subject property on the valuation date.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.
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.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. Complainant did not present an opinion of value based on any recognized methodology for valuation of property for ad valorem tax purposes.Respondent’s appraiser concluded an opinion of value relying on the sales or market approach to value.This approach generally provides the most credible basis for appraisal of owner occupied property.
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, 2007.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.”
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.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.
The owner of property is generally held competent to testify to its reasonable market value.The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.Mr. Uddin’s opinion of value is based upon offers he received in early 2007, after the valuation date.
There are a few problems with an opinion of value based on such evidence.First, offers do not establish value since there was no sale transaction.Without a sale, there is not an agreement as to price between the seller and buyer.When only offers are made, it is obvious the seller is unwilling for whatever reason to sell at the offers made.Therefore, offers do not establish a market value.
An Owner’s individual offering of a property for sale does not establish prima facie a reasonable exposure to the market.Therefore, any offers made cannot be considered to adequately represent the market of buyers for a given property.Without supporting evidence to establish that a “For Sale by Owner” property received market exposure similar to properties being commercially marketed through ordinary real estate agencies, any offerings made on such a property cannot be presumed to have been representative of the complete market.
Finally, the Commission has recently determined that a hearing officer’s basing a decision on the fair market value of properties relying on sales after the valuation date is not appropriate.It is reversible error for a decision to rest upon after valuation date sales. In like manner no probative weight can be given by the Hearing Officer in this instance to offers made after the date of January 1, 2007.
Complainant’s opinion of value was not based upon proper elements or a proper foundation.Therefore, it does not meet the standard of substantial and persuasive evidence.Complainant failed to meet his burden of proof.
Respondent Proves Value
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.Respondent presented substantial and persuasive evidence to establish a fair market value of $305,000, as of January 1, 2007 for Complainant’s property.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 critical issue of accounting for the deferred maintenance of the subject property was properly addressed by Mr. Froeckmann.Mr. Uddin in his Exhibit A presented a total cost of repairs of $82,000.However, this amount was not supported by bids from repair companies.Complainant’s testimony was that the figures were general amounts provided to him by oral communication. There was no written documentation on the repair items.
The Hearing Officer places little, if any, weight on such testimony to establish costs of repair.There is no question that there are various maintenance and repair items connected to the property under appeal.However, when a taxpayer wishes to establish costs for repairs, it is necessary to present bids for such work on letterhead stationary or forms of the firms making the bids.This basic foundation must be established for any probative merit to be given to the costs for repair.
More importantly, even when a detailed and total cost for repairs due to deferred maintenance is presented, this does not establish that the market would recognize a dollar for dollar adjustment to comparable sale properties.The adjustment for items of deferred maintenance is best expressed as an amount that represents only a percentage of total actual costs.It is seldom, if ever, that a cost for repair made will be completely recovered in a sale price on a home.Mr. Froeckmann’s condition allowance appears appropriate as it represents a factor of approximately 25% of the total, unsubstantiated, costs presented by Mr. Uddin.
Summary & Conclusion
Complainant failed to meet the required burden of proof to prove fair market value.Respondent’s appraiser presented substantial and persuasive evidence to establish value.
The assessed valuation for the subject property as determined 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 year 2008 is set at $57,950.
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.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, MO65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.
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 29, 2009.
STATE TAX COMMISSION OFMISSOURI
W. B. Tichenor
Senior Hearing Officer
 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).
 Daly v. P. D. George Company, et al, 77 SW3d 645, 649 (Mo.App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 SW2d 376, 380 (Mo.App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).
 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.
 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).
 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).
 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).