State Tax Commission of Missouri
BILL MAY, TRUSTEE,)
v.)Appeal Nos.08-20005, 08-20006,
)08-20007 & 08-20008
ED BUSHMEYER, ASSESSOR,)
ST. LOUIS CITY, MISSOURI,)
OVERTURNING HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
On December 23, 2008, Senior Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) in each separate Appeal setting aside the assessments by the St. Louis City Board of Equalization and setting the assessed values for each property.
Respondent filed a consolidated Application for Review of the Decisions.Complainant timely filed Response.
FINDINGS OF FACT
1.Appeal 08-20005 – The subject property is located at 3646 Alberta St., St. Louis, Missouri.The property is identified by parcel number 2588-90.The property was purchased by the Alberta Trust pursuant to a contract, dated 8/27/07.Sale was closed on 9/13/07.Bill May is the Grantor, Trustee, and Beneficiary of the Alberta Trust.The purchase was from Wells Fargo Bank, after the property had been foreclosed.
2.Appeal 08-20006 – The subject property is located at 4636 Compton Ave, St. Louis, Missouri.The property is identified by parcel number 2745-60.The property was purchased by the South Compton Trust pursuant to a contract, dated 2/5/08.Sale was closed on 2/20/08.Bill May is the Grantor, Trustee, and Beneficiary of the South Compton Trust.The purchase was from HSBC Bank USA.
3.Appeal 08-20007 – The subject property is located at 4359 Wilcox Ave, St. Louis, Missouri.The property is identified by parcel number 5583-39.The property was purchased by the Wilcox Trust pursuant to a contract, dated 8/9/07.Sale was closed on 8/21/07.Bill May is the Grantor, Trustee, and Beneficiary of the Wilcox Trust.
4.Appeal 08-20008 – The subject property is located at 4643 Morganford Road, St. Louis, Missouri.The property is identified by parcel number 5542-24.The property was purchased by the Morganford Trust pursuant to a contract, dated 1/8/08.Sale was closed on 2/22/08.Bill May is the Grantor, Trustee, and Beneficiary of the Morganford Trust.The purchase was from Deutsche Bank Trust Company, after the property had been foreclosed.
CONCLUSIONS OF LAW & DECISION
Respondent’s Allegations of Error
Respondent alleges the following errors on behalf of the Hearing Officer in his Decisions.
1.General Allegation:Decision is erroneous, unreasonable, arbitrary and capricious and an abuse of discretion.
2.Complainant’s Burden of Proof:Complainants did not meet the requisite Burden of Proof.
3.Complainant’s Exhibits:Hearing Officer erred in receiving the closing statement in each of the appeals.
4.Sale Dates:Hearing Officer erred in accepting prices on sale dates after
January 1, 2007, as the basis for the 2007 assessment, thereby using an improper date for valuation.
5.Rebutting of Presumption:Hearing Officer erred in providing no fact or law to establish that the Complainant’s evidence was substantial and persuasive to rebut a presumption of correctness.
6.Properties had been previously Foreclosed:Hearing Officer erred in finding the foreclosed property becomes part of the market without providing any evidence to support that assertion.
7.IAAO Standard on Ratio Studies.Hearing Officer erred in not following the standards, directives and policies of the IAAO on Ratio Studies.
Respondent’s general allegation that the Decision is erroneous, unreasonable, arbitrary and capricious and an abuse of discretion is well taken.A review of the record in the present appeals provides support for the Respondent’s allegation that various determinations made by the Hearing Officer were in error thereby rendering the Decision erroneous, unreasonable, arbitrary and capricious and an abuse of discretion.The Commission finds sufficient basis to support the conclusion that the Hearing Officer erred as the trier of fact and concluder of law in these appeals.
Complainant’s Burden of Proof
Respondent asserts Complainant did not meet the requisite burden of proof.The Hearing Officer in each appeal correctly set forth the Standard for Valuation and Complainant’s Burden of Proof.However, the Hearing Officer erred in his conclusions.The Complainant failed to meet his burden of proof based upon purchase of the subject properties after the valuation date of January 1, 2007.Respondent’s point is well taken.The Hearing Officer erred in basing the conclusion of value upon the sale prices that occurred eight to thirteenth months after the valuation date of January 1, 2007.
Respondent argues the Hearing Officer erred in receiving into evidence the closing statement in each of the appeals.The allegation of error is that the closing statements did not qualify as business records and were irrelevant.At the evidentiary hearing, Counsel for Respondent objected to receiving the closing statement and sales contract on the basis of no proper foundation.Counsel further explained his objection as being on the grounds of hearsay, evidence of a sale price after January 1, 2007, and not an arm’s-length transaction.Both Complainant’s and Respondent’s exhibits in the other appeals were received into evidence based upon the testimony and rulings in the first appeal.
The Hearing Officer did not err in receiving into evidence the closing statements and contracts showing the purchase by Complainant of the properties under appeal on the ground that they were business records.The controlling statutory provision on this point is §536.070(10).The subsection reads as follows:
Any writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of an act, transaction, occurrence or event, shall be admissible as evidence of the act, transaction, occurrence or event, if it shall appear that it was made in the regular course of any business, and that it was the regular course of such business to make such memorandum or record at the time of such act, transaction, occurrence, or event or within a reasonable time thereafter. All other circumstances of the making of such writing or record, including lack of personal knowledge by the entrant or maker, may be shown to affect the weight of such evidence, but such showing shall not affect its admissibility. The term “business” shall include business, profession, occupation and calling of every kind.
The closing statements and sale contracts identified by Complainant in these appeals come within this statutory provision.A closing statement and sale contract are evidence of the sale transaction for each of the purchases made by Complainant in these cases.It is part of the regular course of business when purchasing real estate to have a closing statement and contract.Complainant buys and sells real estate.It is his “business.”
Notwithstanding that the closing statements came within the business record exception to the hearsay rule, because the underlying sales occurred after the statutory valuation date of January 1, 2007, the closing statements cannot be used to establish fair market value.The Hearing Officer erred in receiving the exhibits into evidence, given that the sales occurring after the valuation date are irrelevant for purposes of a determination of fair market value.
Respondent’s next allegation of error is that the Hearing Officer erred in accepting purchase prices on sale dates after January 1, 2007, as the basis for the 2007 assessment, thereby using an improper date for valuation.The point is well taken.The valuation date for the properties under appeal was January 1, 2007.The use of sales dates ranging from eight to thirteen months after the valuation date was reversible error in the Hearing Officer’s Decisions.
Rebutting of Presumption
Respondent next alleges the Hearing Officer erred in providing no fact or law to establish that the Complainant’s evidence was substantial and persuasive to rebut a presumption of correctness.Given that the Hearing Officer erred in basing his Decisions on sales dates occurring after the valuation date, he erred in his conclusion that the presumption of correct assessment had been rebutted.Respondent’s point is well taken.
Properties Had Been Previously Foreclosed
Respondent’s next ground to support his Application for Review relates to the fact that Complainant had purchased each of the properties under appeal after they had gone through foreclosure.Respondent asserts the Hearing Officer erred in finding a prior foreclosed property becomes part of the market without providing any evidence to support that assertion.This argument is rendered moot based upon the foregoing determination that it was error for the Hearing Officer to rely upon sales of the subject properties that occurred eight to thirteenth months after the valuation date.
IAAO Standard on Ratio Studies
Respondent’s final argument is that the Hearing Officer erred in not following the standards, directives and policies of the IAAO on Ratio Studies.The argument on this point is moot based upon the foregoing determination that it was error for the Hearing Officer to rely upon sales of the subject properties that occurred eight to thirteenth months after the valuation date.
The Commission upon review of the record and Decisions in these appeals, finds the Hearing Officer erred in his determination that the presumption of correct assessment had been rebutted and erred in his conclusions of true value in money based upon sales of the properties under appeal occurring after the valuation date.According the Decisions are overturned.
The assessed valuations for the subject properties as determined by the Board of Equalization for the City of St. Louis for the subject tax day are AFFIRMED.
The assessed value for the subject property in Appeal 08-20005 for tax year 2008 is set at $13,170.
The assessed value for the subject property in Appeal 08-20006 for tax year 2008 is set at $6,460.
The assessed value for the subject property in Appeal 08-20007 for tax year 2008 is set at $12,670.
The assessed value for the subject property in Appeal 08-20008 for tax year 2008 is set at $20,050.
Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of the mailing date set forth in the Certificate of Service for this Order.
If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts unless disbursed pursuant to Section 139.031.8, RSMo.
If no judicial review is made within thirty days, this decision and order is deemed final and the Collector of St. Louis City, 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.
SO ORDERED April 7, 2009.
STATE TAX COMMISSION OF MISSOURI
Bruce E. Davis, Chairman
Jennifer Tidwell, Commissioner
Charles Nordwald, Commissioner
State Tax Commission of Missouri
BILL MAY, TRUSTEE,)
v.) Appeal No.08-20008
ED BUSHMEYER, ASSESSOR,)
ST. LOUIS CITY, MISSOURI,)
DECISION AND ORDER
Decision of the St. Louis City Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE.True value in money for the subject property for tax year 2008 is set at $65,500, residential assessed value of $12,450.Complainant appeared in person and by Counsel, Steven May, St. Louis, Missouri.Respondent appeared by Associate City Counselor, Carl W. Yates, III.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, the decision of the St. Louis City Board of Equalization, which sustained the valuation of the subject property.The Assessor determined an appraised value of $105,525, assessed value of $20,050, as residential property.Complainant proposed a value of $65,500, assessed value of $12,450.A hearing was conducted on November 18, 2008, at the City Hall, St. Louis, Missouri.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
Complainant testified in his own behalf.Mr. May’s opinion of value of $65,500 was based on the purchase of the property in February 2008.Complainant offered into evidence Exhibit A.Exhibit A consisted of the following documents (1) Special Sale Contract, dated 1/8/08, with a purchase price of $65,500; (2) Counterproposal; (3) Invoice for Electrical work dated 3/4/08; (3) Invoice for roofing and tuck-pointing, dated 3/19/08; and (2) Settlement Statement, dated 2/22/08, with a purchase price of $65,500.
Counsel for Respondent objected to the Exhibit on the grounds of hearsay and relevancy of the sale date.Objection was overruled and Exhibit A was received into evidence.Mr. May was a party to both the sale contract and the settlement statement.These are business records.Complainant is a qualified witness to testify as to the identity of the documents.The documents on their face establish they were made in the regular course of business and at the time of the act given in each document.Mr. May’s testimony identifying the documents laid the proper foundation and overcame any claim of hearsay in the documents.
Respondent placed into evidence the testimony of Mr. John Norton, real estate appraiser for St. Louis City.The appraiser testified as to his appraisal of the subject property.The Appraisal Report, Exhibit 1, of Mr. Norton was received into evidence.Mr. Norton arrived at an opinion of value for the subject property of $108,300 based upon a sales comparison approach to value.In performing his sales comparison analysis, the appraiser relied upon the sales of three properties deemed comparable to the subject property.
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 City Board of Equalization.
2.The subject property is located at 4643 Morganford Road, St. Louis, Missouri.The property is identified by parcel number 5542-24.The property consists of 30 front feet lot improved by a two-story brick, single-family structure of average quality construction.The house was built in 1914 and appears to be in fair condition.The residence contains 1,900 square feet of living area.
3.There was no evidence of new construction and improvement from January 1, 2007, to January 1, 2008.
4.The property under appeal was purchased by the Morganford Trust pursuant to a contract, dated 1/8/08.Sale was closed on 2/22/08.Bill May is the Grantor, Trustee, and Beneficiary of the Morganford Trust.The purchase was from Deutsche Bank Trust Company, after the property had been foreclosed.The property was listed with a real estate agent (One West Associates) and marketed to the public.
5.Complainant’s evidence was 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 $65,500, as proposed.
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, 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.
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.Complainant’s evidence of the purchase of the property in an open-market transaction was sufficient to rebut the presumption of correct assessment and to establish the fair market value of the subject property.
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.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.
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.
It is important to acknowledge at this point that a price agreed to between a willing buyer and seller creates a presumption the transaction was a market transaction.The presumption exists, with regard to the February 2008 purchase, that it was a market transaction.Therefore, each of the six conditions identifying a fair market transaction are presumed to have been satisfied.In order to reject the actual sale of the subject, substantial and persuasive evidence is required to rebut the presumption.The burden to establish that the 2008 sale was not a market transaction rests with the party opposing the sale – the Respondent.
Respondent’s appraiser rejected the February 2008 purchase price essentially on the basis that Mr. May had purchased it from Deutsche Bank after the bank had foreclosed on the property.It is readily recognized that a purchase of a property in foreclosure is not deemed a market sale.However, once the property has been foreclosed and is then exposed to the market in a manner consistent with sales of other properties that have not been foreclosed, the property becomes part of the market.
Respondent presented no evidence to support a conclusion that the Bank and Mr. May were not typically motivated in the sale and purchase of the subject.There is nothing from which the Hearing Office can determine that both the seller and buyer were not well informed and acting in their own best economic interests.Mr. May specializes in purchasing properties like the subject.He is quite knowledgeable concerning properties like the subject.There is no reason to assume that Deutsche Bank is not likewise well informed relative to the sale of the property under appeal and what is in its own best interests.
No evidence was put forth by Respondent to establish that the exposure time for the property was not reasonable.Likewise, there is no evidentiary basis for a conclusion that financing was on any basis not generally available to the public.The Settlement Statement establishes that the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits.
The presumption that the February 2008 transaction met the generally accepted requirements of a market sale was not rebutted by Respondent’s appraisal. Therefore the 2008 sale can be given probative weight in the appeal.
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 burden of proof imposed on Complainant as the moving party was met in this instance.An opinion of fair market value was tendered, and supported by substantial and persuasive evidence of that value. The owner of property is generally held competent to testify to its reasonable market value.The opinion of value testified to by Mr. May was based upon the actual purchase price of the property.This is generally an appropriate basis for the formation of an owner’s conclusion of value.
Evidence of the actual sales price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time.The actual sale price is a method that may be considered for estimating true value.The actual sales price, between a willing seller who is not obligated to sell and a willing buyer who is not compelled to buy, establishes an outer limit on the value of real property.
The sale of the subject thirteen months after the valuation date is not too remote in time to lack relevance.Mr. Norton utilized sales that ranged from 4 to 24 prior to the 1/1/07 valuation date.The February 2008 purchase set the outer limit on the subject value for a valuation date of 1/1/07.Claims or assertions that the overall housing market in February 2008 was lower than the market at a time closer to January 2007 are nothing but conjecture in this appeal.No market study was presented to establish a difference in the overall market for properties like the subject that would require an upward adjustment to the purchase price of $65,500.Exhibit 1 does not constitute such a study.
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for the City of St. Louis for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax year 2008 is set at $12,450.
Respondent 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 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. 
The Collector of St. Louis City, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending a 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 December 23, 2008.
STATE TAX COMMISSION OFMISSOURI
W. B. Tichenor
Senior Hearing Officer
 References hereafter in footnote to DECISION refers to the Decision and Order rendered in each appeal, unless otherwise specified.
 Allegations of errors have been characterized and restated from Respondent’s Application by the Commission for purposes of discussing the points raised and rendering its decision.
 Hermel, Inc. v. STC, 564 S.W.2d 888 (Mo. 1978); Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Holt v. Clarke, 965 S.W.2d 241 (Mo. App. W.D. 1998); Smith v. Morton, 890 S.W.2d 403 (Mo. App. E.D. 1995); Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).
 In each case, a copy of the closing statement and a sales contract on the sale/purchase of each property were received into evidence as Complainant’s Exhibit A.
 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).
 Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
 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).
 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. 3.
 Testimony of Complainant.Official Notice is taken of prior STC cases involving Mr. May before the Hearing Officer and his testimony relative to his real estate business. Section 536.070(6), RSMo.; State ex rel. Horton v. Bourke, 129 S.W.2d 866, 869 (1939); Barth v. Kansas City Elevated Railway Company, 44 S.W. 788, 781 (1898;Burton v. Moulder, 245 S.W.2d 844, 846 (Mo. 1952); Knorp v. Thompson, 175 S.W.2d 889, 894 (1943); Bushman v. Barlow, 15 S.W.2d 329, 332 (Mo. banc 1929); State ex rel St. Louis Public Service Company v. Public Service Commission, 291 S.W.2d 95, 97 (Mo. banc 1956); In re Murphy, 732 S.W.2d 895, 902 (Mo. banc 1987); State v. Gilmore, 681 S.W.2d 934, 940 (Mo. banc 1984); State v. Keeble, 399 S.W.2d 118, 122 (Mo. 1966).
 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).
 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).