State Tax Commission of Missouri
CLINT SKIBINSKI, )
)
Complainant, )
)
v. ) Appeal No. 12-32512
)
SCOTT SHIPMAN, ASSESSOR, )
ST. CHARLES COUNTY, MISSOURI, )
)
Respondent. )
DECISION AND ORDER
HOLDING
Decision of the County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE. Complainant failed to present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization. Respondent presented substantial and persuasive evidence to rebut the presumption of correct assessment and establish true value in money.
True value in money for the subject property for tax year 2012 is set at $320,320, residential assessed value of $60,860.
Complainant appeared pro se.
Respondent appeared by Associate County Counselor, Amanda Jennings.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
ISSUE
Complainant appeals, on the ground of overvaluation, the decision of the St. Charles 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, 2011.[1] 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. Charles County Board of Equalization.
2. Evidentiary Hearing. The Evidentiary Hearing was held on March 5, 2012, at the St. Charles County Administration Building, St. Charles, Missouri.
3. Identification of Subject Property. The subject property is identified by map parcel number 3-0072-5235-00-0005,.2 and Assessor’s Account Number 616500A017. It is further identified as 410 Callaway Ridge Dr., Defiance, Missouri.[2]
4. Description of Subject Property. The subject property consists of a 5.07 acres tract of land improved by single family, residential ranch style home of good quality, with 2,468 square feet of living area. Amenities include four bedrooms, two bathrooms, a full poured concrete walkout basement, a fireplace, two covered porches, and a three car side entry garage.[3]
5. Sales of Subject. The subject property sold on 3/30/10 for $325,000.[4] Complainant purchased the property 6/8/12 for $230,000.[5]
6. Assessment. The Assessor appraised the property at $325,684, an assessed residential value of $61,880. The Board of Equalization sustained the assessment.[6]
7. Complainant’s Evidence. Complainant offered into evidence Exhibit A. The exhibit consisted of a spreadsheet for the subject and 11 other properties, with Multi-List Service Detail Sheets and Assessor’s Database Search documents for each of the properties. Exhibit A was objected to, objection was sustained and the exhibit was excluded from the evidentiary record.[7] See, Exclusion of Exhibit A, infra. Mr. Skibinski testified at hearing that his opinion of value for the subject property was $226,000.
8. No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2011, to January 1, 2012, therefore the assessed value for 2011 remains the assessed value for 2012.[8]
9. Presumption of Correct Assessment Not Rebutted. Complainant’s unsubstantiated opinion of value was not substantial and persuasive evidence to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2011, to be $226,000, as proposed. See, Presumption In Appeal and Complainant Fails To Prove Value, infra.
10. Respondent’s Evidence. Respondent offered into evidence Exhibit 1 – Appraisal Report dated 1/1/11 – Lynne M. Mesey, Mo. State Certified Residential Real Estate Appraiser. The Exhibit was received into evidence without objection.
11. Presumption of Correct Assessment Rebutted – Value Established. The evidence presented by Respondent was substantial and persuasive to both rebut the presumption of correct assessment by the Board and to establish the fair market value of the subject property to be $320,320, assessed residential value of $60,860. See, Respondent Proves Value, infra.
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.[9]
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.[10] The constitutional mandate is to find the true value in money for the property under appeal. By statute real and tangible personal property is assessed at set percentages of true value in money.[11]
Presumption In Appeal
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[12] 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 is not evidence of value.
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.[13] Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[14] 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.[15]
The Assessor’s original value in this appeal was determined by the Board to be correct. Accordingly, the taxpayer must rebut that presumption in order to prevail. The taxpayer must establish by substantial and persuasive evidence that the value concluded by the Board is in error and what the correct value should be. Complainant failed to present evidence under a recognized methodology for the valuation of the subject property that established that the value concluded by the Board was in error. Therefore, the Board presumption remained in effect as it related to the Complainant’s case in chief.
Respondent’s evidence was substantial and persuasive to establish both that the Board’s valuation was in error and the true value in money as of 1/1/11 for the subject to be $320,320.
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.[16] True value in money is defined in terms of value in exchange and not value in use.[17] It is the fair market value of the subject property on the valuation date.[18] 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.[19]
Respondent’s appraiser concluded the fair market value of the property under appeal relying on the Standard for Valuation.[20]
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. 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.[21] The Hearing Officer during the evidentiary hearing made inquiry of Complainant and Respondent’s appraiser.
Weight to be Given Evidence
The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but 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.[22]
The Hearing Officer as the trier of fact may consider the testimony of an expert or lay witness and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances. The Hearing Officer is not bound by the opinions of experts who testify on the issue of reasonable value, or the opinion of value of an owner, but may believe all or none of the expert’s or owner’s testimony and accept it in part or reject it in part.[23]
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.[24] 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.[25] The Supreme Court of Missouri has also held that 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.[26]
Appraiser Mesey presented the County Mass Appraisal Cost Approach for the subject, but did not rely on this approach. Respondent’s appraiser developed and concluded value under the sales comparison approach, using the March, 2010 purchase of the subject as Comparable Sale No. 1.[27]
Opinion Testimony by Experts
If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto. Respondent’s appraiser was qualified by knowledge, skill, experience, training and education to testify in this appeal as an expert on the valuation of the subject property.[28]
The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data need not be admissible in evidence.[29] The data utilized to develop the Mesey appraisal were of a type reasonably relied upon by residential real estate appraiser in forming their opinions of value, and such data was otherwise reliable.[30]
Complainant Fails To Prove Value
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, 2011.[31] There is no presumption that the taxpayer’s opinion is correct. The taxpayer 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.”[32] A valuation which does not reflect the fair market value (true value in money) of the property under appeal is an unlawful, unfair and improper assessment.
The owner of property is generally held competent to testify to its reasonable market value.[33] The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[34] Mr. Skibinski testified at hearing that his opinion of the value of the subject as of 1/1/11 was $226,000. This was based upon his June, 2012 purchase of the subject. He asserted that since the Seller paid $4,000 of the closing costs the net proceeds to the seller were $226,000. Mr. Skibinski did not establish he had only paid $226,000, instead of $230,000. His testimony only established the seller apparently only received $226,000. This is not a recognized methodology for the valuation of real property. The basis for the opinion did not rest upon proper elements or a proper foundation. The March 2010 sale being closer in time to the 1/1/11 valuation date than the Skibinski purchase, provides the superior indicator of fair market value. The opinion of fair market value presented by the owner being based upon improper elements and an improper foundation can be accorded no probative value.
Exclusion of Exhibit A
Exhibit A was objected to on the grounds of relevance, hearsay and lack of foundation. Counsel for Respondent objected to the exhibit since no adjustments had been made for differences between any of the eleven properties and the subject. Objection was further made that the sale properties were not established to be comparable properties for purpose of this appraisal and that the information presented consisted of hearsay documents.
The objections were sustained. Mr. Skibinski was not established to be an expert in the field of residential real estate appraisal who could rely upon hearsay information to develop an appraisal. No foundation was laid to establish that the spreadsheet prepared by Complainant represented any accepted appraisal methodology (it does not). Ultimately, the owner did not rely upon the document to establish his opinion of value accordingly, it was irrelevant to the issue of the fair market value as asserted by Mr. Skibinski.
Respondent Proves Value
An assessor may always elect to simply rely upon the presumption of correct assessment that rests with the Board’s conclusion of value. In other words, the assessor was under no burden of proof and accordingly was not required to present evidence as to the fair market value of the property under appeal. However, when advocating a value different from that determined by the original valuation or a valuation made by the Board of Equalization, the Respondent 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.[35]
Respondent presented substantial and persuasive evidence to establish a fair market value as of January 1, 2011, to be $320,320 relying upon the sales comparison approach and specifically, on the time of sale adjusted March, 2010 purchase of the subject. The sales comparison approach is generally recognized to be the most reliable methodology to be utilized in the valuation of single-family residences. The other three comparables gave support and validation to the conclusion of value based upon the time adjusted March, 2010 sale.[36] Placing most reliance on the actual sale of the subject less than 10 months prior to the valuation date of 1/1/11 was most appropriate in this appraisal problem.
ORDER
The assessed valuation for the subject property as determined by the Assessor and sustained 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 year 2012 is set at $60,860.
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. [37]
Disputed Taxes
The Collector of St. Charles 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 April 30, 2013.
STATE TAX COMMISSION OF MISSOURI
_____________________________________
W. B. Tichenor
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 30th day of April, 2013, to: Clint Skibinski, 410 Callaway Ridge Dr., Defiance, MO 63341, Complainant; Amanda Jennings, Associate County Counselor, 100 North Third Street, Room 216, St. Charles, MO 63301, Attorney for Respondent; Scott Shipman, Assessor, 201 North Second, Room 247, St. Charles, MO 63301-2870; Ruth Miller, Registrar, 201 North Second Street, Room 529, St. Charles, MO 63301; Michelle McBride, Collector, 201 North Second Street, Room 134, St. Charles, MO 63301.
___________________________
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
[1] The value as of 1/1/11 remains the value as of 1/1/12 unless there is new construction and improvement to the property. Section 137.115.1, RSMo.
[6] Exhibit 1 – Summary of Salient Facts, p. 2; BOE Decision, dated 7/31/12 – Attached to Complaint for Review of Assessment.
[7] Exhibit A is maintained in the Appeal file as an offer of proof. It is not held as part of the evidentiary record upon which the decision must be rendered.
[11] Section 137.115.5, RSMo – residential property at 19% of true value in money; commercial property at 32% of true value in money and agricultural property at 12% of true value in money.
[12] 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)
[13] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
[14] See, Cupples-Hesse, supra.
Substantial and persuasive evidence is not an extremely high standard of evidentiary proof. It is the lowest of the three standards for evidence (substantial & persuasive, clear and convincing, and beyond a reasonable doubt). It requires a small amount of evidence to cross the threshold to rebut the presumption of correct assessment by the Board. The definitions, relevant to substantial evidence, do not support a position that substantial and persuasive evidence is an extremely or very high standard.
“Substantial evidence: Evidence that a reasonable mind would accept as adequate to support a conclusion; evidence beyond a scintilla.” Black’s Law Dictionary, Seventh Edition, p. 580.
The word scintilla is defined as “1. a spark, 2. a particle; the least trace.” Webster’s New World Dictionary, Second College Edition. Black’s definition at 1347 is “A spark or trace <the standard is that there must be more than a scintilla of evidence>.” There must be more than a spark or trace for evidence to have attained the standard of substantial. Once there is something more than a spark or trace the evidence has reached the level of substantial. Substantial evidence and the term preponderance of the evidence are essentially the same. “Preponderance of the evidence. The greater weight of the evidence; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.” Black’s at 1201. Substantial evidence is that a reasonable mind would accept as adequate to support the conclusion. Preponderance is sufficient to incline a fair and impartial mind to one side of the issue rather than the other, i.e. support the proposed conclusion.
[16] 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).
[17] 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).
[19] 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.
[22] 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).
[23] St. Louis County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).
[24] 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).
[25] 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).
[27] Exhibit 1 – Mass Appraisal Cost Approach of the Property, pp. 16 – 20; Sales Comparison Approach, pp. 21 – 33.
[29] Section 490.065, RSMo; State Board of Registration for the Healing Arts v. McDonagh, 123 S.W.3d 146 (Mo. SC. 2004); Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. E.D. 1992).
[32] 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).
[33] 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).
[34] 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).