STATE TAX COMMISSION OF MISSOURI
|CAMERON WALKER,||)||Appeal No. 21-30073|
|Complainant(s),||)||Parcel/locator No(s): 47-230-29-02-00-0-00-000|
|GAIL MCCANN BEATTY, ASSESSOR,||)|
|JACKSON COUNTY, MISSOURI,||)|
DECISION AND ORDER
Cameron Walker (Complainant) appeals the Jackson County Board of Equalization’s (BOE) decision finding the true value in money (TVM) of the subject property on January 1, 2021, was $385,000. Complainant claims the property is overvalued, subject to discrimination, and proposes a value of $306,000. Complainant did not produce substantial and persuasive evidence establishing overvaluation or discrimination. Nonetheless, the substantial and persuasive evidence in the record shows Respondent increased the assessment by more than 15 percent since the last assessment without providing the notice and inspection required by Sections 137.115.10 through 137.115.12. The BOE’s decision is set aside. Complainant was represented by counsel, Robert Murphy, and Respondent was represented by counsel, Jennifer Ware. The evidentiary hearing was conducted via Webex on August 30, 2022.
FINDINGS OF FACT
- Subject Property. The subject property is located at 111 W 67th St, Jackson County, Missouri. The parcel/locator number is 47-230-29-02-00-0-00-000.
The subject property consists of a 1,948 square foot, two story single family home. The subject property features three bedrooms, two bathrooms, one car garage and a basement. Complainant purchased the property in April 2019, for $385,000.
- Respondent and BOE. Respondent classified the subject property as residential and determined the TVM on January 1, 2021, was $385,000. The BOE classified the subject property as residential and independently determined the TVM on January 1, 2021, was $385,000.
- Complainant’s Evidence. Complainant testified the TVM of the subject property on January 1, 2021, was $306,000. Complainant testified his assessment increased by more than 15 percent, triggering the Section 137.115.10 inspection requirement. Complainant testified no notice was received by him regarding inspection completed. Complainant testified no inspection was performed and that no new construction or improvements had been conducted on the property either prior to purchase in 2019 or after his purchase. Complainant testified that reliance on an MLS listing from the seller and photos from the sale rendered it impossible to determine the property condition without an inspection. Complainant testified the home was not in the condition that the seller’s stated in their listing or disclosures, including drainage issues, tree removal, and leaks in the ceiling. The various repairs cost Complainant more than $28,000. Complainant testified the kitchen was not recently updated, having been redone in the 1990s. Complainant testified had he known the house’s condition, he would not have purchased the home. Complainant testified that had there been an inspection, the County would have clearly seen there had been no new construction or improvements. There was no evidence presented that Complainant is a licensed appraiser or a person possessing appraisal training. Complainant submitted no appraisal of the subject property.
- Respondent’s Evidence. Respondent submitted Exhibit 1, Summary Report, which is admitted into evidence and testimony of David Davis. Mr. Davis testified he has six years of experience as a Residential Real Estate Appraiser for Jackson County. In Exhibit 1, Mr. Davis utilized the sales comparison approach to estimate the January 1, 2021, market value of the subject property. Mr. Davis concluded the market value was $385,000 and utilizes the Exhibit 1, Summary Report, to support this conclusion.
Exhibit 1 states the subject was visited on April 24, 2021. (Exhibit 1 at 7). Exhibit 1 utilizes the sales comparison approach to estimate the market value of the subject property from recent sales of four comparable properties. The comparable properties are located within one-fifth of a mile of the subject property. The comparable properties are similar to the subject property with respect to location, age, and size. The comparable properties differ from the subject property with respect to features. Mr. Davis testified the Jackson county records showed new construction or improvements for the property, which, in combination with the sales comparison approach, was the foundation for the TVM of $385,000. Mr. Davis testified there were no permits applied for or granted for construction on the subject property in 2019 or 2020. Exhibit 1 alleges an inspection “was not required because the increase was due to ‘new construction or improvements’ as described in subsection 10”. (Exhibit 1 at 7). Mr. Davis testified he was aware that notices of inspection were mailed in Jackson County for the 2021 assessment, but did not specify as to any details regarding the notice for the subject property.
- Value. The TVM of the subject property on January 1, 2021, was $306,510.
CONCLUSIONS OF LAW
- Assessment and Valuation
Pursuant to Article X, Sections 4(a) and 4(b), Mo. Const. of 1945 real property and tangible personal property is 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. Residential real property is assessed at 19% of its TVM as of January 1 of each odd-numbered year. Section 137.115.5(1)(a). “True value in money is the fair market value of the property on the valuation date, and is a function of its highest and best use, which is the use of the property which will produce the greatest return in the reasonably near future.” Snider v. Casino Aztar/Aztar Mo. Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005) (internal quotation omitted). The fair market value is “the price which the property would bring from a willing buyer when offered for sale by a willing seller.” Mo. Baptist Children’s Home v. State Tax Comm’n, 867 S.W.2d 510, 512 (Mo. banc 1993). Determining the TVM is a factual issue for the STC. Cohen v. Bushmeyer, 251 S.W.3d 345, 348 (Mo. App. E.D. 2008). The “proper methods of valuation and assessment of property are delegated to the Commission.” Savage v. State Tax Comm’n, 722 S.W.2d 72, 75 (Mo. banc 1986).
“For purposes of levying property taxes, the value of real property is typically determined using one or more of three generally accepted approaches.” Snider, 156 S.W.3d at 346. The three generally accepted approaches are the cost approach, the income approach, and the comparable sales approach. Id. at 346-48; see also St. Louis Cty. v. Sec. Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977).
The comparable sales approach “is most appropriate when there is an active market for the type of property at issue such that sufficient data are available to make a comparative analysis.” Snider, 156 S.W.3d at 348. For this reason, the comparable sales approach is typically used to value residential property. “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 347-48 (internal quotation omitted). “Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character.” Id. at 348.
The hearing officer is the finder of fact and determines the credibility and weight of the evidence. Kelly v. Mo. Dep’t of Soc. Servs., Family Support Div., 456 S.W.3d 107, 111 (Mo. App. W.D. 2015). The finder of fact in an administrative hearing determines the credibility and weight of expert testimony. Hornbeck v. Spectra Painting, Inc., 370 S.W.3d 624, 632 (Mo. banc 2012). “It is within the purview of the hearing officer to determine the method of valuation to be adopted in a given case.” Tibbs v. Poplar Bluff Assocs. I, L.P., 599 S.W.3d 1, 9 (Mo. App. S.D. 2020). 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. 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
The BOE’s valuation is presumptively correct. Rinehart v. Laclede Gas Co., 607 S.W.3d 220, 227 (Mo. App. W.D. 2020). To prove overvaluation, a taxpayer must rebut the BOE’s presumptively correct valuation and prove the “value that should have been placed on the property.” Snider, 156 S.W.3d at 346. The taxpayer’s evidence must be both “substantial and persuasive.” Id. “Substantial evidence is that evidence which, if true, has probative force upon the issues, and from which the trier of fact can reasonably decide the case on the fact issues.” Savage, 722 S.W.2d at 77 (internal quotation omitted). Evidence is persuasive when it has “sufficient weight and probative value to convince the trier of fact.” Daly v. P.D. George Co., 77 S.W.3d 645, 651 (Mo. App. E.D. 2002); see also White v. Dir. of Revenue, 321 S.W.3d 298, 305 (Mo. banc 2010) (noting the burden of persuasion is the “party’s duty to convince the fact-finder to view the facts in a way that favors that party”). 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. 1980).
- Complainant Did Not Prove Overvaluation.
Complainant’s evidence alleges the subject property’s value is $306,000. Complainant’s argument in support of this value is no new construction or improvements, combined with various repair issues affecting the overall condition of the subject property do not support an increase in TVM and, although the value should not increase from the prior assessment, the 15 percent increase should limit the value of the subject property to $306,000. Complainant’s evidence of the condition of the property was taken into account in the property comparison analysis done by the Respondent in Exhibit 1. The resulting value in Exhibit 1 is specific to the property, as the Respondent classified the property as being in “average condition”.
Complainant’s testimony of condition is not a method used to find a TVM for a property. The comparable sales approach is the method used to determine the TVM of the subject property. “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.” Snider, 156 S.W.3d at 347-48 (internal quotation omitted). Complainant offered no evidence of comparable properties to the subject property. While a property owner’s opinion of value is generally admissible, the opinion “is without probative value where it is shown to have been based upon improper elements or an improper foundation.” Shelby Cty. R-IV Sch. Dist. v. Herman, 392 S.W.2d 609, 613 (Mo. 1965); see also Cohen v. Bushmeyer, 251 S.W.3d 345, 349 (Mo. App. W.D. 2008) (noting a property owner’s opinion of value loses probative value when it rests on an improper foundation). Complainant presented no appraisal of the subject property in order to determine a value of the subject property. See Cohen, 251 S.W.3d at 349 (holding a landowner’s opinion of value lacks probative value when there is “no other evidence as to what he based his opinion on or how he arrived at his opinion of [value]”). Complainant’s alleged valuation is based on improper elements and therefore is speculative. Overall, the condition issues submitted by Complainant are not persuasive evidence to demonstrate the TVM of the subject property.
- Complainant Did Not Prove Discrimination.
Both the United States and Missouri constitutions prohibit discriminatory taxation of similarly situated taxpayers. Savage v. State Tax Comm’n of Missouri, 722 S.W.2d 72, 78 (Mo. banc 1986). To prove discrimination, a property owner must first prove the fair market value of the subject property on the valuation date. Id. After proving fair market value, the property owner can prove discrimination by showing an “intentional systematic undervaluation . . . of other taxable property in the same class.” State ex rel. Ashby Rd. Partners, LLC, v. State Tax Comm’n, 297 S.W.3d 80, 85 (Mo. banc 2009) (internal quotation omitted). In the absence of intentional discrimination, a discrimination claim requires proof that the level of assessment is “so grossly excessive as to be inconsistent with an honest exercise of judgment.” Savage, 722 S.W.2d at 78.
The only evidence of discrimination is Complainant’s conclusory testimony asserting the assessment was discriminatory. To the extent this conclusory testimony is relevant to an allegation of intentional discrimination, it is neither credible nor corroborated by other evidence in the record. Likewise, there is no evidence as to whether a statistically significant number of other residential properties within Jackson County were assessed in 2021 at a lower ratio of market value than the subject property. Complainant did not produce substantial and persuasive evidence of discrimination.
- Section 137.115. Although Complainant did not produce substantial and persuasive evidence of overvaluation, Complainant established Respondent raised the subject property’s assessed value by more than 15 percent without performing the inspection required by Section 137.115.10.
In pertinent part, Section 137.115.10 provides “[b]efore the assessor may increase the assessed valuation … by more than fifteen percent … the assessor shall conduct a physical inspection of such property.” (Emphasis added). In other words, the statute expressly conditions a valuation increase of more than 15 percent (“[b]efore the assessor may increase the assessed valuation … by more than 15 percent”) on a mandatory physical inspection (“shall conduct a physical inspection”). Because a physical inspection is a condition precedent to a valuation increase in excess of 15 percent, an assessor is precluded from increasing an assessment by more than 15 percent without conducting the statutorily required physical inspection. It follows that the failure to conduct a sufficient physical inspection negates any increased valuation to the extent it exceeds 15 percent.
The necessary elements of a Section 137.115.10 physical inspection are set forth in Section 137.115.11 and Section 137.115.12. In pertinent part, Section 137.115.11 requires the assessor to provide the property owner with “clear written notice” of the right to an inspection. The inspection “shall include, but not be limited to, an on-site personal observation and review of all exterior portions of the land.” Section 137.115.12. “Mere observation of the property via a drive-by inspection or the like shall not be considered sufficient to constitute a physical inspection as required by this section.” Id. Respondent argues it is exempt from any inspection due to its evidence of new construction. Respondent did not submit any evidence of new construction other than to say their records stated it had occurred and an MLS listing from April 2019. The MLS listing does not point to any construction per se, but rather lists the features of the home. Respondent also testified there was no evidence of permits taken for construction for the time period. Complainant argues that by its nature an MLS listing is an advertisement and in this case is wholly unreliable as it was inaccurate considering the repair issues on the property. There is no evidence within the whole of the record of any actual new construction or improvements to the property within the 2019 or 2020 tax years and thus the inspection exception in subsection 10 does not apply.
The 2021 assessment of the subject property increased by approximately 46%, from $266,534 to $385,000. There is no evidence Respondent provided “clear written notice” to Complainant regarding his right to an inspection as required by Section 137.115.11. Complainant testified Respondent did not perform a physical inspection. Respondent did not testify or introduce exhibits contradicting Complainant’s testimony regarding a notice other than to testify that the notices were mailed. There is no evidence Respondent or Respondent’s staff performed the “on-site personal observation and review of all exterior portions of the land” required by Section 137.115.12. While the Exhibit 1 for the subject property includes photographs taken in approximately April 2019 and April 2021, the photographs do not show any inspection “before” the assessment was increased by more than 15% as of January 1, 2021. On this record, there is no reason to conclude Complainant is mistaken and that Respondent did in fact provide notice and perform the required inspection.
The substantial and persuasive evidence in the record shows the assessment of the subject property increased by more than 15 percent without the required notice and physical inspection. Consequently, the assessment is unlawful to the extent it exceeds a 15 percent increase from the prior assessment. Section 137.115.10. Because Complainant did not otherwise satisfy his burden of proving overvaluation, the TVM is set at 15 percent above the prior assessment of $266,534. The TVM as of January 1, 2021, was $306,510 ($266,534 x 1.15 = $306,514).
CONCLUSION AND ORDER
The BOE decision is set aside. The TVM of the subject property as of January 1, 2021, was $306,510.
Application for Review
A party may file with the Commission an application for review of this decision within 30 days of the mailing date set forth in the certificate of service for this decision. The application “shall contain specific detailed grounds upon which it is claimed the decision is erroneous.” Section 138.432. The application must be in writing, and may be mailed to the State Tax Commission, P.O. Box 146, Jefferson City, MO 65102-0146, or emailed to Legal@stc.mo.gov. A copy of the application must be sent to each person 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.
The Collector of Jackson 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.
SO ORDERED October 7, 2022.
STATE TAX COMMISSION OF MISSOURI
Erica M. Gage
Senior Hearing Officer
State Tax Commission
Certificate of Service
I hereby certify that a copy of the foregoing has been electronically mailed and/or sent by U.S. Mail on October 7, 2022, to:
Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.
 Complainant timely filed a complaint for review of assessment. The State Tax Commission (STC) has authority to hear and decide Complainant’s appeal. Mo. Const. art. X, Section 14; section 138.430.1, RSMo 2000. All statutory citations are to RSMo 2000, as amended.
 This conclusion is confirmed by considering the converse: if the failure to conduct a physical inspection does not negate a valuation increase in excess of fifteen percent, then the condition precedent to increasing the assessment by more than 15 percent – “[b]efore the assessor may increase the assessed valuation” – is rendered superfluous. See Bateman v. Rinehart, 391 S.W.3d 441, 446 (Mo. banc 2013) (courts “must presume every word, sentence or clause in a statute has effect, and the legislature did not insert superfluous language.”)