State Tax Commission of Missouri
v.) Appeal Number 07-10142
PHILLIP MUELHEAUSLER, 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.Hearing Officer finds presumptions of correct assessment rebutted. True value in money for the subject property for tax year 2007 and 2008 is set at $740,000, assessed value of $140,600.
Complainant Anthony Mikulec appeared pro se.
Respondent appeared by Assistant County Counselor, Paula Lemerman.
Case heard and decided by Hearing Officer Maureen Monaghan.
The Commission takes this appeal to determine the true value in money for the subject properties on January 1, 2007.
Complainants appeal, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which reduced the valuations of the subject properties.The Assessor determined an appraised value of $826,100, assessed value of $156,960, as residential property. The Board of Equalization reduced the valuation to $825,500, assessed value $156,850.Complainants proposed a value of $601,000, assessed value of $114,190, in their Complaint for Review of Assessment.A hearing was conducted on May 22, 2008, at theSt. LouisCountyGovernmentCenter,Clayton,Missouri.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
Mr. Mikulec testified on behalf of Complainants.Mr. Mikulec testified that he purchased the residence in 2004 for $811,500.The Complainants were represented by a buyer’s agent at the time of the sale; the residence was listed and a seller’s agent was involved in the transaction.Complainant believes that he may have paid too much for the property.
Mr. Mikulec stated his opinion of value of the property is $601,000 as of January 1, 2007. The Assessor’s valuation for his property in the 2005-2006 cycle was $601,800.The Complainant stated that his property might be valued as high as $657,000.The Complainant testified that a valuation of $657,000 “represents an annualized 3% gain for inflation from 2004 to 2007” .
Complainant submitted Exhibit A.The Respondent objected to the Exhibit based upon the Complainant not mailing it to the Assessor’s attorney on or before May 15, 2008, pursuant to the order issued by the State Tax Commission.The objection was overruled as the Complainant had provided the Exhibit to the Assessor’s Office at the prehearing conference and because the Assessor failed to comply with the exchange order.
Exhibit A consists of thirteen pages.Exhibit A1 is an appeal form to the Board of Equalization.Exhibit A1 was admitted into evidence.Exhibit A2is a letter to the Board of Equalization summarizing the Complainant’s argument.The exhibit was accepted by the Hearing Officer as a summary of the Complainant’s argument.
Exhibit A3 is a newspaper ad for a house for sale in June 2007.The Respondent objected for lack of foundation and relevance because the house is for sale and has not sold.Objections were sustained.
Exhibits A4 – 9 are photographs of the subject property.Exhibits were admitted in to evidence.
Exhibit A10 is a valuation of the property by “Zillow.com” valuing the property at $749,640.The Exhibit was admitted without objection.
Exhibits A11&12 are repair bills to the HVAC for $7650.Exhibits A11&12 were admitted into evidence.
Exhibit A13 is a listing for a property near the subject property.The exhibit was not admitted into evidence as it is evidence of a listing and not a sale of property.
Respondent placed into evidence the testimony of Mr. Robert Koch, Missouri State Certified Residential Appraiser.The appraiser testified as to his appraisal of the subject properties.The Appraisal Report, Exhibit 1, of Mr. Koch was offered by the Respondent.Complainant objected to the report as the Respondent failed to comply with the Exchange Order.On January 18, 2008, Senior Hearing Officer Tichenor ordered the parties to exchange any documents which they intended to introduce at the hearing by May 15, 2008.The Hearing Officer told the Complainant that she would either continue the case to a date convenient for the Complainant or allow the Complainant as much time as the Complainant needed to review the documents.Complainant stated that he would take time to review the document.Hearing Officer also provided time for the Complainant and the Respondent to discuss the case prior to the hearing.After Complainant reviewed the document and announced he was ready to proceed, the Hearing Officer went on the record.The appraisal report of Mr. Koch was received into evidence.Mr. Koch arrived at an opinion of value for the subject property of $740,000 based upon a sales comparison approach to value.
In performing his sales comparison analysis, the appraiser relied upon the sales of five properties which he deemed to be comparable to the subject property. The adjusted sales prices of the comparables fell in a range from $708,000 to $766,600.The gross adjustments ranged from 8.6% to 15.7%.
Respondent’s Exhibit 2A is the Certificate of Value for the subject property showing the sales price of $811,500 in July 2004.
Respondent’s Exhibit 2B is the Deed of Trust for the Property dated July 21, 2004.
Respondent’s Exhibit 2C is the Deed of Trust for the Property dated October 27, 2004.
Respondent’s Exhibit 2D is the Deed of Trust for the Property dated March 14, 2005.
FINDINGS OF FACT
1.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.The subject property is located at19 Brookside Lane,Ladue,Missouri. It is identified by parcel number 18L340014.
3.The property is a .75 acre lot with a single-family, two-story brick and frame house with a full basement.There is a two-car detached garage and a patio. The residence was built in 1940 and appears to be in good condition.The residence has 3,218 square feet with a total of nine rooms which includes four bedrooms and three full baths and a half bath.
4.There was no evidence of new construction and improvement from January 1, 2007, to January 1, 2008.
5.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 $601,000, as proposed in the Complaint for Review of Assessment or the $657,000 as testified to at the evidentiary hearing.
6.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.
7.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 $740,000.
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.Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, RSMo.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.Section 138.431.4, RSMo.
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof 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).
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, even if simply to sustain the value made by the Assessor, is accepted as true only until and so long as there is no substantial evidence to the contrary.
Notwithstanding the provision of Section 138.431.3, RSMo – “There shall be no presumption that the assessor’s valuation is correct,” – the Supreme Court of Missouri has held, “A tax assessor’s valuation is presumed correct.”Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341 (Mo. 2005).Citing to Hermel, supra; and Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
The presumption of correct assessment is rebutted when the taxpayer 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.Snider, Hermel & Cupples Hesse, supra.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).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 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.
6.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, Exhibit 1, p. 4.
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).
Missouricourts 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).
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, 2007.Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, at 897. 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); 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).
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.See, Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).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.Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.Rigali v. Kensington Place Homeowners’ Ass’n, 103 S.W.3d 839, 846 (Mo. App. E.D. 2003); Boten v. Brecklein, 452 S.W.2d 86, 95 (Sup. 1970).The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.Cohen v. Bushmeyer, — S.W.3d —-, 2008 WL 820938 (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).
Mr. Mikulec testified that he purchased the residence in 2004 for $811,500.He was represented by a buyer’s agent at the time of the sale; the residence was listed and a seller’s agent was involved in the transaction.Complainant believes that he may have paid too much for the property.
Mr. Mikulec’s opinion of value of the property is $601,000 as of January 1, 2007.The property was valued by the assessor’s office at $601,800 in the 2005-6 cycle.Complainant testified that a valuation of $657,000 “which represents an annualized 3% gain for inflation from 2004 to 2007” would be appropriate.This is not a recognized approach for determining value.
Mr. Mikulec also argued that the Hearing Officer should work from the “known to the unknown.”Mr. Mikulec argued the “known” is the valuation by the Assessor in the 2005-2006 cycle.However, a sale of a property that is recent in time, involving a willing seller and buyer in an open transaction is more persuasive evidence as to the market value of a property.The recent sale should be the “known” or the starting point for valuing the property.
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.The Koch appraisal meets the required evidentiary standard in this appeal to establish fair market value for the subject at $740,000.
Mr. Koch located five comparable sales within .4 miles of the subject property.The sales occurred between February 2005 and October 2007.The properties were similar in location, view, age, and room count.The properties were within 500 square feet of the subject.The comparable properties sold for $189.28 to $238.32 per square foot or an average of $217.17 per square foot.The adjusted sales prices ranged from $708,600 to $766,600.The appraiser reconciled the values and concluded a value of $740,000.
Complainant’s Exhibit A10 is a valuation by Zillow.com.The subject property was valued at $749,000.
The assessed valuation for the subject property as determined by the Assessor and reduced by the Board of Equalization forSt. LouisCountyfor the subject tax day are SET ASIDE.
The assessed value for the subject property for tax years 2007 and 2008 is set at $140,600.
A party may file with the Commission an application for review of this decision within thirty (30) days of the mailing of such decision.The application shall contain specific 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.
Failure to state specific facts or law upon which the appeal is based will result in summary denial.Section 138.432, RSMo 2000.
If an application for review of this decision is made to the Commission, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the Commission and an order to the Collector to release and disburse the impounded taxes, unless said taxes have been disbursed pursuant an order of the circuit court under the provisions of Section 139.031.8, RSMo.§139.031.3, RSMo.If no application for review is received by the Commission within thirty (30) days, this decision and order is deemed final and the Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal.
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 2, 2008.
STATE TAX COMMISSION OFMISSOURI
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 2ndday of June, 2008, to:Anthony Mikulec, 19 Brookside Lane, St. Louis, MO 63124, Complainant; Paula Lemerman, Associate County Counselor, County Government Center, 41 South Central Avenue, Clayton, MO 63105, Attorney for Respondent; Philip A. Muehlheausler, Assessor, County Government Center, 41 South Central Avenue, Clayton, MO 63105; John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.