State Tax Commission of Missouri
CARL & CAROL HILL,)
)
Complainants,)
)
v.) Appeal Number 09-10184
)
MICHAEL BROOKS,)
ACTING ASSESSOR,)
ST. LOUIS COUNTY,MISSOURI,)
)
Respondent.)
DECISION AND ORDER
HOLDING
Decision of the St. Louis County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE.True value in money for the subject property for tax years 2009 and 2010 is set at $382,000, residential assessed value of $72,580.Complainant Carl Hill appeared in person.Respondent appeared by Associate County Counselor Paula Lemerman.
Case heard and decided by Hearing Officer Maureen Monaghan.
ISSUE
Complainant appeals, on the grounds of overvaluation, the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property.The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2009.The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
1.Jurisdiction.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.A hearing was conducted on August 11, 2010, at the St. LouisCountyGovernmentCenter,Clayton,Missouri.
2.Assessment.The Assessor appraised the property at $387,100, a residential assessed value of $73,540.The Board sustained the valuation.
3.Subject Property.The subject property is located at 631 Southern Hills Dive, Eureka, Missouri.The property is identified by locator number 30W530070.The property consists of 21,941 square foot lot.The lot is improved with a 1.5 story, single-family residence built in 1997.The gross living area is 3,487 square feet and has a full, unfinished basement.The exterior is vinyl and brick veneer.The residence has 10 rooms, 4 bedrooms, and 4 full baths and 1 half bath.There is an attached three-car garage.Behind the subject property is common area for the subdivision.The common area is a sloping, forested area which is not suitable for building.The water run-off from other property in the subdivision, including the common area, has created some erosion on the subject property.The property owner has been addressing it with landscaping.
4.Complainant’s Evidence.Complainant testified in his own behalf.He stated his opinion of the fair market value of the property under appeal as of January 1, 2009, to be $345,000.This opinion of value was arrived at by averaging the price per square foot of sales in the Legends Community in Eureka, Missouri.
The following exhibits were tendered by Complainant:
|
EXHIBIT |
DESCRIPTION |
|
A |
Summation of Argument |
|
B |
Chart of Sales in Legends |
|
C |
Photographs of Subject |
Exhibit A was admitted not as to proof of value, but as a written summary of Complainant’s theory of valuation.Respondent objected to statements from others within the Exhibit as hearsay.The objection to the statements contained in the document is sustained.
Exhibit B is two charts of sales.One chart, 3 pages, is of sales of properties in the Legends from August 2008 to July 2010.It lists the address, age, date of sale, sale price, Assessor’s values in 2007 and 2009, number of beds and baths, square footage, garage size, and price per square foot. The second chart lists sales from July 2007 to December 2008.It lists the address, date of sale, sale price, square footage, Assessor’s value, and price per square foot. The chart highlights properties in the subject’s subdivision.
The Respondent objected to the documents as to relevance and lack of foundation.The objection was sustained.
There was no evidence of new construction and improvement from January 1, 2009, to January 1, 2010, therefore the assessed value for 2009 remains the assessed value for 2010.[1]
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, 2009, to be $345,000, as proposed.
5.Respondent’s Evidence.Respondent presented the testimony of Art Froeckmann, a State Certified Residential Real Estate Appraiser, and Mr. Froeckmann’s Appraisal Report.(Exhibit 1)The properties relied upon by Respondent’s appraiser were comparable to the subject property for the purpose of making a determination of value of the subject property.The properties were located within .16 to .32 of a mile of the subject.Each sale property sold at a time relevant to the tax date of January 1, 2009. (July 2007 to March 2008)The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability.The appraiser made various adjustments to the comparable properties for differences which existed between the subject and each comparable.The appraiser adjusted the comparable properties for date of sale, age, and garage size.All adjustments were appropriate to bring the comparables in line with the subject for purposes of the appraisal problem, and fell within the generally acceptable range for both net and gross adjustments.
Respondent’s evidence met the standard of substantial and persuasive to establish the value of the subject, as of January 1, 2009, to be $382,000.
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.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.[2]
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[3]This presumption is a rebuttable rather than a conclusive presumption.It places the burden of going forward with some substantial evidence on the taxpayer – Complainant.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.[4]Complainant’s evidence failed to meet the standard of substantial and persuasive.Therefore, the presumption of correct assessment by the Board was not rebutted by Complainant.
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.[5]True value in money is defined in terms of value in exchange and not value in use.[6]It is the fair market value of the subject property on the valuation date.[7]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.[8]
Respondent’s appraiser arrived at his opinion of value under the Standard for Valuation.
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.[9]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.[10]Complainant’s opinion of the fair market value of the property under appeal was not derived from any of the accepted methodologies for appraising property in an appeal before the Commission.Complainant based his opinion on market sales but his approach did not comply with the sales comparison approach.Respondent’s appraiser concluded his opinion of value based upon the proper development of the sales comparison approach to value.
Complainant Fails To Prove Value
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, 2009.[11]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.”[12]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[13]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.[14]
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.[15]The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[16]The exhibits presented by Mr. Hill failed to establish or support a fair market value for the subject as of January 1, 2009, of $345,000.Exhibit B, which was excluded, provides sales data on properties with prices ranging from of $205,000 to $590,000 and square footage ranging from 1,621 to 6,060.The Complainant then determined an average price per square foot.This is not an appropriate methodology for the sales comparison approach.
The sales comparison approach begins by finding sales; however, it does not stop after finding sales of properties and it does not determine value by averaging price per square footage of the sale properties. Under the sales comparison approach, the appraiser reviews all of the sale properties and selects properties that are most similar to the subject. The appraiser then makes adjustments to the sale prices of the comparables for their differences from the subject.The adjustments are based upon market evidence.The adjustments made are not based upon cost but upon the contributory value to the property.After making individual adjustments for each difference, the appraiser reviews the adjusted sales prices to conclude a value for the subject property.The conclusion is not an average of the adjusted sales prices, but a valuation determined after review of the adjusted sales price and the gross and net adjustments on each comparable sale.
The Complainant must present substantial and persuasive evidence to prove the value they are asserting.Complainant failed to meet that burden of proof.Applying an average price per square foot is not a recognized methodology for valuation. It is not substantial and persuasive evidence.
Respondent’s Burden of Proof
The evidence presented by the Respondent was substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the fair market value of the property under appeal, as of January 1, 2009, to be $382,000.
The finding of value presented by Mr. Froeckmann on behalf of Respondent was based upon an appraisal of the subject property relying on the generally accepted appraisal methodology of the sales comparison approach to value. The methodology was executed properly. Exhibit 1 established by substantial and persuasive evidence a value of $382,000.
Complainant argued that the appraiser should have selected other sale properties.The appraiser testified that he selected the properties that were most like the subject property using criteria such as location, square footage, finish, time of sale, and amenities. The Complainant did not agree with the time adjustments made by the appraiser. The appraiser testified that he reviewed sales in the market to adjust for time of sale.In particular, the appraiser noted that there was a decline in sale prices for the area from 2007 to 2008, but there was not a decline in prices in 2008.The Complainant also took issue with the appraiser not using a foreclosure sale or a relocation sale.Complainant argued that those sales are part of the market and should be considered.Foreclosure sales and relocation sales, like all other sales, should be reviewed by the appraiser for selection of sales of properties most like the subject.However, exclusion of two properties does not invalidate the appraisal conducted by Mr. Froeckmann.
Taxpayers often feel that simply by raising questions and assertions against the comparables used that they can prevail in the evidentiary hearing before the Commission.Raising questions and making assertions does not establish the true value in money for the property being appealed.The burden of proof on the taxpayer is not to attempt to show problems or shortcomings. The Complainant must present substantial and persuasive evidence to prove the value they are asserting.
Respondent’s Exhibit 1 is substantial and persuasive evidence to reduce the valuation.
ORDER
The assessed valuation for the subject property as determined by the Board of Equalization for St. Louis County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2009 and 2010 is set at $72,580.
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, 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. [17]
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 August 19, 2010.
STATE TAX COMMISSION OFMISSOURI
_____________________________________
Maureen Monaghan
Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 19thday of August, 2010, to:Carl Hill, P.O. Box 171, Eureka, MO 63025, Complainant; Paula Lemerman, Associate County Counselor, County Government Center, 41 South Central Avenue, Clayton, MO 63105, Attorney for Respondent; Michael Brooks, ActingAssessor, County Government Center, 41 South Central Avenue, Clayton, MO 63105; John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.
___________________________
Barbara Heller
Legal Coordinator
Contact Information for State Tax Commission:
Missouri State Tax Commission
301 W. High Street, Room 840
P.O. Box 146
Jefferson City, MO 65102-0146
573-751-2414
573-751-1341 Fax
[3] 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)
[4] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
[5] 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).
[6] Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 S.W.2d 376, 380 (Mo. App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).
[8] 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.
[9] 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).
[10] 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).
[12] 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).
[13] See, Cupples-Hesse, supra.
[14] Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).
[15] 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).
[16]Cohen v. Bushmeyer, 251 S.W.3d 345, (Mo. App. E.D., March 25, 2008); Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992); State, ex rel. Missouri Hwy & Transp. Com’n v. Pracht, 801 S.W.2d 90, 94 (Mo. App. E.D. 1990); Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965).
[17] Section 138.432, RSMo.