Congyi Zhou v. Tracy Baldwin, Assessor, Clay County

STATE TAX COMMISSION OF MISSOURI

CONGYI ZHOU,	)	Appeal No. 21-32029
	)	Parcel/locator No. 15119001302000
Complainant(s),	)
	)
v.	)
	)
TRACY BALDWIN, ASSESSOR,	)
CLAY COUNTY, MISSOURI,	)
Respondent.	)

 

DECISION AND ORDER

          Congyi Zhou (Complainant) appeals the Clay County Board of Equalization’s (BOE) decision finding the true value in money (TVM) of the subject property on January 1, 2021, was $205,100, with an assessed value of $38,970. Complainant claims the property is overvalued and proposes a value of $192,700.  Complainant did not produce substantial and persuasive evidence establishing overvaluation.  The BOE’s decision is affirmed.[1] The parties waived their opportunity for an evidentiary hearing and agreed to submit the appeals on the record.[2] Complainant, pro se, and Respondent, represented by counsel, Lucas Wallingford, each submitted their respective evidence for appeal on the record.

FINDINGS OF FACT

1. Subject Property. The subject property is located at 460 Spring Ave, Liberty, Clay County, Missouri. The parcel/locator number is 15119001302000.

The subject property consists of a 2,392 square foot, two story, two unit duplex with wood siding. Each unit features three bedrooms, one and a half bathrooms, and a one car garage. Each unit has 1,196 square foot of living space.

The subject property was purchased by Complainant in December 2019, for $225,000.

2. Respondent and BOE. Respondent classified the subject property as residential and determined the TVM on January 1, 2021, was $205,100. The BOE classified the subject property as residential and independently determined the TVM on January 1, 2021, was $205,100.
3. Complainant’s Evidence. Complainant testified the TVM of the subject property on January 1, 2021, was $192,700. Complainant’s submitted multiple documents which are marked as Exhibit A and admitted into evidence. Complainant’s evidence includes comparable assessments, pictures of the condition of his individual home’s features and repair estimates/bids. Complainant submitted 10 recent comparable assessments from his neighborhood, with 2021 assessment values for the neighbors’ houses ranging between $157,600 and $196,800, and the assessed values ranging between $29,940 and $37,410. (See Exhibit A) Exhibit A contains two recent bids from separate companies, the first bid totaling $13,592, to replace the shared driveway, and the second bid totaling $2,000, to replace the HVAC coil. Exhibit A contains 18 pictures of the condition of the wood siding and the driveway. 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.
4. Respondent’s Evidence. Respondent submitted Exhibit 1, the Property Record Card, Exhibit 2, the Subject Property Valuation Report, and the Written Direct Testimony (WDT) of Bobby Reed; all of which are admitted into evidence.  Exhibit 2 is the appraisal report concluding the TVM of the subject property on January 1, 2021, was $205,100. Mr. Reed has approximately three years of experience as a Residential Real Estate Data Collector for Clay County. In Exhibit 2, Mr. Reed utilized the cost and sales comparison approaches to estimate the January 1, 2021, market value of the subject property. Mr. Reed’s WDT concluded the market value was $205,100.

Exhibit 2 utilizes the cost approach to find an estimate of the cost of constructing a building with the same utility as the subject property, but with modern materials and according to current standards, design and layout to find the replacement cost. (See Exhibit 2 at 5) The WDT of Mr. Reed concludes the value based on this approach to be $205,100.

Exhibit 2 utilizes the sales comparison approach to estimate the market value of the subject property from recent sales of three comparable properties. The three comparable properties are located within one mile of the subject property, within the same subdivision. Mr. Reed adjusted the sale prices of the comparable properties to account for differences with the subject property. Exhibit 2 specifies the properties chosen are the “most similar to the subject duplex in age and design and layout.” (Ex. 2 at 6)

The key property data in Exhibit 2 are as follows:

	Subject Property	508 Spring Ave	512 Spring Ave	529 Spring Ave
Year built	1995	1995	1995	1996
Square feet	2,392	2,616	2,616	2,684
Class	Fair	Fair	Fair	Fair
Type	Two story Duplex	Two story Duplex	Two story Duplex	Two story Duplex

The comparable properties are similar to the subject property with respect to location, age, class, and size. The comparable properties differ from the subject property with respect to age and features.

Exhibit 2 also utilizes sales comparison for three properties submitted by Complainant, one of which was chosen for comparison by Mr. Reed, 512 Spring Ave. Mr. Reed’s grid and analysis of the homes submitted by Complainant concludes the comparables at 1807 Andrea Dr. and 409 Maple St. had many differences in age, location, class, and size. Mr. Reed concluded in the analysis “with adjustments made to the sales that Mr. Zhou submitted it shows that our value is still within market value.” (Ex. 2 at 7)

Exhibit 2 also notes Complainant “submitted an estimate in the amount of $2,000 for replacing the furnace,” but then cites that Mr. Zhou testified at the BOE hearing that both sides have been repaired and are currently tenant occupied. (See Exhibit 2 at 8-11)

5. Value. The TVM of the subject property on January 1, 2021, was $205,100, with an assessed value of $38,970.

CONCLUSIONS OF LAW

1. 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).  While reproduction cost is the best indicator of value for newer properties where the actual costs of construction are available, replacement cost may be more appropriate for older properties.  Snider, 156 S.W. 3d. at 341, 347.

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.

2. Evidence

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.

3. 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).

4. Complainant Did Not Prove Overvaluation.

Complainant’s evidence alleges the subject property’s value should have been $192,700. Complainant’s alleged value is based on comparable assessments of neighboring properties and various repair issues affecting the overall condition of the property. Complainant’s evidence of the poor condition of the property was taken into account in the replacement cost analysis done by the Respondent. Further, the evidence showed that some repairs had been present prior to Complainant purchasing the property in 2019 and Complainant was aware of the need for those repairs at the time of purchase. Overall, the condition issues submitted by Complainant are not persuasive of the valuation alleged as they were either pre-existing to the purchase of the subject property or had been cured prior to the BOE’s hearing and subsequent decision.

Complainant’s submission of comparable assessments of properties in his neighborhood 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). Exhibit A’s calculation does not account for differences between the comparable properties and 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’s alleged valuation is based on improper elements and therefore is speculative.

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]”). The data submitted by Complainant for his calculation was not authenticated and the sales prices of the comparables were not adjusted with the subject property to find a proper appraisal comparison. Therefore, all of the comparable home data and analysis submitted in Complainant’s Exhibit is both speculative and incomplete (see Exhibit A)

Respondent, although not required to, presented persuasive evidence in support of his valuation. Exhibit 2 and Mr. Reed’s testimony outlines the replacement cost estimate for the subject property and three comparable properties that he had adjusted their sales prices based on similarities and differences to the subject property. Respondent’s evidence persuasively supports the TVM of $205,100.

CONCLUSION AND ORDER

The BOE decision is affirmed.  The TVM of the subject property as of January 1, 2021, was $205,100, with an assessed value of $38,970.

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.

Disputed Taxes

            The Collector of Clay 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 February 11, 2022.

STATE TAX COMMISSION OF MISSOURI

 

Erica M. Gage

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 February 11^th, 2022, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.

 

Elaina Mejia

Legal Coordinator

 

 

 

[1] 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.

 

[2] Section 138.431.5 provides the “hearing officer, after affording the parties reasonable opportunity for fair hearing, shall issue a decision and order affirming, modifying, or reversing the determination of the BOE, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious.”