STATE TAX COMMISSION OF MISSOURI
| BLUE JAY HOMES, LLC, | ) | |
| ) | ||
| Complainant, | ) | |
| ) | ||
| v. | ) | Appeal No. 17-10377 |
| ) | Parcel/locator No. 22L140473 | |
| JAKE ZIMMERMAN, ASSESSOR | ) | |
| ST. LOUIS COUNTY, MISSOURI, | ) | |
| ) | ||
| Respondent. | ) |
DECISION AND ORDER
The assessment made by the Board of Equalization of St. Louis County (BOE) is AFFIRMED. Complainant Blue Jay Homes, LLC, (Complainant) did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE and to establish the true value in money (TVM) of the subject property as of January 1, 2017.
Complainant appeared by counsel Haskell Allen.
Respondent Jake Zimmerman, Assessor, St. Louis County, Missouri, (Respondent) appeared by Counsel Steven Robson.
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 TVM of the subject property, as residential property, at $390,300. The BOE set the TVM at $390,300, thereby sustaining Respondent’s valuation. The value as of January 1 of the odd numbered year remains the value as of January 1 of the following even numbered year unless there is new construction or improvement to the property. Section 137.115.1 RSMo The State Tax Commission (STC) takes this appeal to determine the true value in money for the subject property as the property existed on January 1, 2017, under the economic conditions as they existed on 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 October 4, 2018, at the St. Louis County Government Administration Building, 41 South Central Avenue, Clayton, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 22L140473. It is further identified as 50 Wingfield Road, St. Louis County, Missouri. (Complaint for Review)
- Description of Subject Property. The subject property consists of a .186 acre (approximately 8,100 square feet) residential lot improved by a 2,277 square foot, single-family, 1.5-story home built in 1961. (Exhibit B; Exhibit 1) The home includes three bedrooms; two full bathrooms; a full basement; a two-car attached garage; a patio; and one fireplace. The exterior consists of vinyl and brick finish. (Exhibit A; Exhibit 1) The subject property has a quality of construction rating of Q5 C+ and a condition rating of C3. (Exhibit 1) The subject property is located in Central St. Louis County in the municipality of Glendale. (Exhibit B; Exhibit 1)
- Assessment. Respondent initially valued the subject property at $390,300 residential, as of January 1, 2017.
- Board of Equalization. The BOE valued the subject property at $390,300.
- Complainant’s Evidence. Complainant opined that the subject property’s TVM as of January 1, 2017, was $275,000. To support its opinion of value, Complainant offered the following evidence:
| Exhibit | Description | Ruling |
| Exhibit A | Complainant’s comparable sales and map | Admitted |
| Exhibit B | St. Louis County Sales Analysis Report | Admitted |
| Exhibit C | Additional comparable sales and map | Admitted |
Exhibit A was comprised of the sales listings obtained from the multi-list service for five comparable properties and a map of the comparable properties in relation to the subject property. (Exhibit A) The properties in Exhibit A were located 1.24 miles or less from the subject property; had sold between September 2015 and December 2016; and had sale prices ranging from $277,000 to $331,000. (Exhibit A) Exhibit C was comprised of the sales listings obtained from the multi-list service for six comparable properties and a map of the comparable properties in relation to the subject property. (Exhibit C) The properties in Exhibit C were located .95 miles or less from the subject property; had sold between March 2016 and November 2017; and had sale prices ranging from $226,500 to $282,000. (Exhibit C)
- Respondent’s Evidence. Respondent opined that the TVM of the subject property as of January 1, 2017, was $400,000, which supported the presumption that the BOE’s valuation of $390,300 was correct. Respondent offered the following evidence:
| Exhibit | Description | Ruling |
| Exhibit 1 | The appraisal report of Nancy McGrath | Admitted |
| WDT | Written Direct Testimony of Nancy McGrath | Admitted |
| WRT | Written Rebuttal Testimony of Nancy McGrath | Admitted |
| Exhibit 2 | Aerial photograph of subject property prior to second-story addition | Excluded |
| Exhibit 3 | Aerial photograph of subject property after second-story addition | Excluded |
Respondent also presented the testimony of certified real estate appraiser Nancy McGrath (the Appraiser). The Appraiser testified that her research revealed Complainant had purchased the subject property in 2012 for $275,000 through an estate sale from a personal representative.
On cross examination, the Appraiser testified that she had reviewed Complainant’s comparable properties but determined that her own comparable properties were better for analyzing the subject property. The Appraiser testified that sometimes one has to consider square footage and condition over comparing a two-story home to a 1.5-story home. The Appraiser testified that there had been no reason to go outside the subject property’s neighborhood to find comparables.
Exhibit 1, the appraisal report, analyzed five comparable properties, all of which were either 1.5 or two-story, three-bedroom or four-bedroom homes. The comparable properties were located .92 miles or less from the subject property and in the same municipality as the subject property. The comparable properties sold between January 2015 and October 2016. The sale prices of the comparables ranged from $385,000 to $479,000. After making market-based adjustments for lot size, square feet, condition, garage or carport, deck or screened porch, and fireplace, the adjusted sale prices of the comparables ranged from $387,450 to $451,700. (Exhibit 1) The Appraiser placed the most weight on Comparable Nos. 1, 2, and 3 because they required the lowest gross adjustments. (Exhibit 1) The adjusted sale prices of Comparable Nos. 1, 2, and 3 were $397,000, $387,450, and $411,800, respectively. (Exhibit 1)
- Presumption of Correct Assessment Rebutted – Value Established. Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the BOE. In this case, Respondent presented substantial and persuasive evidence establishing that the TVM of the subject property was $400,000 as of January 1, 2017. However, Respondent presented his evidence to support the BOE’s valuation and advocated that the BOE’s valuation of $390,300 should be affirmed.
CONCLUSIONS OF LAW AND DECISION
Jurisdiction
The Commission 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 Board of Equalization, 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 Commission, 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.
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.
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 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.” 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 Commission “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, the owner of the subject property did not testify; rather, counsel for Complainant presented Complainant’s exhibits.
Respondent’s Burden of Proof
Respondent, when advocating a value different from that determined by the original valuation or a valuation made by the BOE, 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, Inc., 564 S.W.2d at 895; Cupples-Hesse, 329 S.W.2d at 702; Brooks, 527 S.W.2d at 53.
In this case, Respondent presented substantial and persuasive evidence, the Appraiser’s report and the testimony of the Appraiser, establishing that the TVM of the subject property was $400,000 as of January 1, 2017.
Evidence of Increase in Value
In any case in charter counties or St. Louis City where Respondent presents evidence that indicates a valuation higher than the value finally determined by the assessor or the value determined by the BOE, whichever is higher, for that assessment period, such evidence will only be received for the purpose of sustaining the assessor’s or board’s valuation, and not for increasing the valuation of the property under appeal. Section 138.060; 12 CSR 30-3.075.
The evidence presented by Respondent was substantial and persuasive to rebut the presumption of correct assessment by the Board and to establish the TVM of the property under appeal, as of January 1, 2017, to be $400,000. However, Respondent presented his evidence to support the BOE’s valuation and advocated that the BOE’s valuation of $390,300 should be affirmed. The TVM cannot be increased above $390,300 in this particular appeal. State ex rel. Ashby Road Partners, LLC et al v. STC and Muehlheausler, 297 S.W.3d 80, 87-88 (Mo. banc 2009).
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).
Board Presumption and Computer-Assisted Presumption
There exists a presumption of correct assessment by the BOE – the BOE presumption. In charter counties or the City of St. Louis, there exists by statutory mandate a presumption that the Assessor’s original valuation was made by a computer, computer-assisted method or a computer program – the computer-assisted presumption. These two presumptions operate with regard to the parties in different ways.
The BOE presumption operates in every case to require the taxpayer to present evidence to rebut it. If Respondent is seeking to prove a value different than that set by the BOE, then it also would be applicable to the Respondent.
The computer-assisted presumption is applicable only if (1) the BOE lowered the value of the Assessor and Respondent is seeking to sustain the original assessment and (2) it has not been shown that the Assessor’s valuation was not the result of a computer assisted method. The BOE’s valuation is assumed to be an independent valuation.
In the present appeal, the BOE sustained the initial valuation of Respondent. Complainant is now seeking to reduce the BOE’s valuation. Although Respondent presented evidence of a new, higher valuation, Respondent is not advocating for a different valuation from the BOE’s determination but arguing that the higher valuation supports the BOE’s valuation. Therefore, the BOE presumption applies to Complainant.
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
Complainant’s evidence was neither substantial nor persuasive to support an opinion as to the true market value of the subject property as of January 1, 2017. Substantial evidence is that which is relevant, adequate, and reasonably supports a conclusion. Cupples Hesse Corp., 329 S.W.2d at 702. Persuasive evidence is that which causes the trier of fact to believe, more likely than not, the conclusion advocated is the correct conclusion. Id.
Complainant’s Exhibits A and C resembled the sales comparison method of valuation in that they presented a range of sale prices of comparable properties, $226,500 to $331,000, but the exhibits were not an appraisal report conforming to USPAP[1] and did not make any market-based adjustments to account for similarities and differences between the comparable properties and the subject property.
Exhibit A’s comparable properties had sale dates from September 2015 to December 2016, indicative of the market leading up to the relevant tax date. In that grouping of properties, the list price of Comparable No. 5 was $329,900 when it entered the market on September 29, 2016. (Exhibit C) However, the sale price of Comparable No. 5 was $331,000 on December 15, 2016. While Comparable No. 5 was generally similar to the subject property, it was roughly 20 years older and approximately 400 square feet smaller than the subject property, factors which likely influenced its sale price. (Id.) It also was located farther away from the subject property than all of Complainant’s other comparables. All but one of the sale dates of the comparable properties contained in Exhibit C occurred after the relevant tax date, between March 2017 and November 2017, making them somewhat less influential in the determination of TVM as of January 1, 2017. Furthermore, the comparability of some of the properties contained in Exhibit C is questionable. For example, the exhibit included three one-story properties, two “as-is” properties, one 131-year-old property, and one property being sold by the owner’s daughter. From this evidence, one would be forced to speculate to conclude that the subject property’s TVM was $275,000, as of January 1, 2017.
Importantly, the 2012 sale price of the subject property carries little weight in determining the subject property’s TVM on January 1, 2017. First, although the tax records for the subject property, obtained from the St. Louis County Real Estate Information Database, show that the subject property was assessed at $275,000 for the 2013-2014 and 2015-2016 tax cycles, the real estate market had not yet recovered from the decline of market values due to the Great Recession. The subject property, like properties across St. Louis County, underwent reassessment for the 2017-2018 tax cycle when the market had begun to recover. Second, assuming, arguendo, that the 2013-2014 and 2015-2016 assessed values were influenced by the 2012 sale price of the subject property, the evidence in the record as a whole implies that the sale was not an open market sale. The Appraiser testified that her research had revealed Complainant purchased the subject property through an estate from the personal representative. This evidence leads to the reasonable conclusion that the purchase did not represent a transaction between a typical buyer and seller and that reasonable time was not allowed for exposure in the open market. The 2017 reassessment of the subject property brought the assessed value of the subject property to market value through the comparison of open market sales of similar properties closer in time to January 1, 2017.
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 and the subject property. The Appraiser’s report established that the adjusted sale prices of five comparable properties in the same municipality as the subject property ranged from $387,450 to $451,700. The appraised value of the subject property, $400,000, fell within the low end of this range. (Exhibit 1) Respondent advocated upholding the BOE’s valuation, $390,300, which was 2.4% lower than the appraised value.
ORDER
The TVM for the subject property as determined by the BOE is AFFIRMED. The assessed value for the subject property is $74,157 residential ($390,300 TVM), as of January 1, 2017, and January 1, 2018.
Application for Review
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 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 December 4, 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 4th day of December, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.
Jacklyn Wood
Legal Coordinator
[1] Uniform Standards of Professional Appraisal Practice.