STATE TAX COMMISSION OF MISSOURI
|DARREL D. LEWIS,||)|
|v.||)||Appeal No. 15-81004|
|THOMAS E. RUHL, ASSESSOR||)|
|RALLS COUNTY, MISSOURI,
DECISION AND ORDER
The valuation and assessment made by Respondent Thomas E. Ruhl, Ralls County Assessor, (Respondent) is AFFRIMED. Complainant Darrel D. Lewis (Complainant) did not present substantial and persuasive evidence to establish an opinion as to the true market value of the subject property as of January 1, 2015.
Complainant appeared pro se.
Respondent appeared pro se.
Case heard and decided by Senior Hearing Officer Amy S. Westermann.
Complainant appealed on the ground of overvaluation. Respondent initially set the true market value (TMV) of the subject property at $106,640 ($89,670, as residential property, $16,970, as agricultural property). Respondent later lowered the valuation to $94,640 ($77, 670, as residential property, $16,970, as agricultural property). The Commission takes this appeal to determine the TMV of the subject property on January 1, 2015.
The Senior 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. See Board of Equalization, infra.
- Evidentiary Hearing. The issue of overvaluation was presented at an evidentiary hearing on August 9, 2016, at the Ralls County Courthouse, New London, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 02-0.5-22-000-00-06.01000. It is further identified as 13659 Route T, New London, Ralls County, Missouri. (Complaint; Respondent’s Exhibit 1B)
- Description of Subject Property. The subject property consists of 48.7 acres classified as agricultural and residential. A 1,512 square-foot, ranch-style, single-family residence built in 1960 is situated upon the subject property. The residence includes two bedrooms; one bathroom; a 1,120 square-foot basement; and a two-car attached garage. The exterior consists of vinyl and frame construction. (Complainant’s Exhibits D and F; Respondent’s Exhibit 1B)
- Assessment. Respondent initially set a TMV for the subject property of $106,640 ($89,670, as residential property, and $16,970, as agricultural property) as of January 1, 2015. (Complainant’s Exhibit A3) Respondent later lowered the assessment to $94,640 ($77,670, as residential property, and $16,970 as agricultural property) as of January 1, 2015. (Respondent’s Exhibit 1A)
- Board of Equalization. Complainant did not appeal to the Ralls County Board of Equalization (BOE) but appealed to the Commission. (See Complainant’s Exhibit B) Respondent did not object and did not raise this issue at any time prior to the introduction of evidence at the evidentiary hearing, thereby waiving this affirmative defense to the direct filing of the appeal. See McCracken v. Wal-Mart Stores East, L.P., 298 S.W.3d 473, 475 (Mo. banc 2009).
- Complainant’s Evidence. Complainant testified in his own behalf. Complainant testified that he had purchased a single parcel consisting of approximately 142 acres in 2011 or 2012 at a public auction for approximately $1,950 per acre. Complainant testified that the parcel included the subject property at issue in this appeal, i.e., 48.7 acres plus the residence. Complainant testified that he was appealing only the valuation placed on the residence.
Complainant testified that the subject property had been publicly advertised for sale. Complainant testified that the subject property was not encumbered by a mortgage and had not been listed for sale or appraised within the three years preceding the Evidentiary Hearing. Complainant testified that he had not received any offers to purchase the subject property. Complainant testified that he would place an asking price of $284,000 on the entire 142 acre parcel but an asking price of $70,000 on the residence alone. Complainant testified that he had not made improvements to the subject property between January 1, 2013, and January 1, 2015. Complainant opined that the residence had a TMV as of January 1, 2015, of $70,000. Complainant testified that his complaint regarding overvaluation related to his belief that Respondent had overvalued the residence, not the agricultural land.
Complainant offered as evidence the following:
|Exhibit A1; A2; A3||Complainant’s note to Respondent objecting to the assessment of the residence; Complainant’s Complaint for Review of Assessment; Notice of Change in Assessed Value of Real Property issued by Respondent|
|Exhibit B||Complainant’s letter to Respondent dated November 25, 2015|
|Exhibit C||Respondent’s letter to Complainant dated December 10, 2015|
|Exhibit D||Photographs of the residence|
|Exhibit E||Aerial map of the subject property|
|Exhibit F||Copy of notice of public auction advertising the subject property|
|Exhibit G||Respondent’s letter to Complainant dated June 10, 2016|
|Exhibit H||Respondent’s Notice to Complainant concerning reassessment of real estate for the 2014-2015 tax cycle|
Respondent did not object to Complainant’s evidence, which was received into the record.
- No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2015, to January 1, 2016; therefore, the assessed value for 2016 remains the assessed value for 2015. Section 137.115.1, RSMo.
- Respondent’s Evidence. Respondent appeared on his own behalf. Respondent testified that the Commission had ordered the Ralls County Assessor’s Office to increase residential values by an average of 15 percent and to adjust agricultural values by an average of 5 percent. Respondent testified that the corresponding increase in the valuation of Complainant’s property had been close to those percentages.
Respondent offered as evidence the following:
|Exhibit 1A; 1B||Respondent’s letter to Complainant dated June 10, 2016, along with photographs of comparable properties and copies of Complainant’s exhibits; sketch of the residence along with a photograph of the front of the residence|
|Exhibit 2||Comparable Property No. 1 Property Record Card|
|Exhibit 3||Comparable Property No. 2 Property Record Card|
|Exhibit 4||Comparable Property No. 3 Property Record Card|
Respondent advocated that the true market value of the residence as of January 1, 2015, was $77,670.
Complainant objected to Respondent’s Exhibits 1A and 1B as irrelevant. The Senior Hearing Officer noted the objections for the record but overruled the objections and received the exhibits into the record to be given the weight deemed necessary when considered with all of the other evidence. Complainant objected to Respondent’s Exhibits 2, 3, and 4 on the ground that the comparables were not exactly the same as the subject property. Hearing no legal objection, the Senior Hearing Officer overruled the objection, and Exhibits 2, 3, and 4 were received into the record.
- Substantial and Persuasive Evidence – True Market Value Established. Complainant’s evidence was not substantial and persuasive to establish the true market value of the subject property in money as of January 1, 2015, to be $86,970 ($70,000 residential, $16,970 agricultural). However, Respondent’s evidence was substantial and persuasive to support his valuation of the subject property in money as of January 1, 2015, to be $94,640 ($77,670 residential, $16,970 agricultural).
CONCLUSIONS OF LAW AND DECISION
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 Senior 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.
During the hearing, the Senior Hearing Officer inquired of Complainant and Respondent.
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.
“’True value’ is never an absolute figure, but is merely an estimate of the fair market value on the valuation date.” Drury Chesterfield, Inc., v. Muehlheausler, 347 S.W.3d 107, 112 (Mo. App. E.D. 2011), citing St. Joe Minerals Corp. v. State Tax Comm’n of Mo., 854 S.W.2d 526, 529 (Mo. App. E.D. 1993). “Fair market value typically is defined as the price which the property would bring when offered for sale by a willing seller who is not obligated to sell, and purchased by a willing buyer who is not compelled to buy.” Drury Chesterfield, Inc., 347 S.W.3d at 112 (quotation omitted).
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).
Weight to be Given Evidence
The Senior 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 Senior 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 Senior 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 Senior 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).
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.
Complainants’ evidence was neither substantial nor persuasive to support an opinion that the fair market value of the residence situated on the subject property as of January 1, 2015, was $70,000. 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.
Here, Complainant argued and presented evidence establishing that he had purchased the subject property as part of a much larger parcel containing agricultural land and the residence. Complainant argued and presented evidence establishing that he had purchased the subject property at a publicly advertised auction three or four years before the tax date at issue. Complainant claimed that, given the fact he had purchased the subject property at an auction where open bidding had occurred on a date not too remote in time from the subject tax day, the price he had paid for the parcel was relevant for establishing fair market value of the residence. This logic is flawed for several reasons.
First, Complainant’s approach to valuing the residence is not based upon one of the court approved approaches to valuing property, i.e., the comparable sales or market approach, the cost approach, and the income approach. Complainant did not present an appraisal report combined with the testimony of an appraiser or any evidence showing a formal comparison between the residence and similar residences. Second, a public auction does not necessarily indicate that a willing seller was involved in the transaction; rather, a public auction often indicates that the seller is under duress and the potential buyers are attempting to take advantage of the situation to obtain a property for less than its full fair market value.
Respondent presented substantial and persuasive evidence to support his conclusion that the fair market value of the residence as of January 1, 2015, was $77,670. Respondent developed an opinion of value relying upon an established and recognized approach for the valuation of real property, the sales comparison or market approach. The sales comparison approach is generally recognized to be the most reliable methodology to be utilized in the valuation of single-family residences. Respondent presented evidence concerning three comparable properties located within the same geographic area as the subject property. In his testimony concerning his analysis of the comparable properties, Respondent noted similarities and differences between Complainant’s residence and the comparables. Respondent’s valuation of the comparables ranged from $71,950 to $85,230. Comparable No. 1 was most like Complainant’s residence: 1,584 square foot, ranch-style, single-family home built in 1960; 1,188 square foot basement; two bedrooms and one bathroom; a detached two-car garage; vinyl and fame exterior construction. Comparable No. 1 was valued at $82,780. Comparable No. 2, which was valued at $71,950, was approximately 500 square feet smaller than Complainant’s residence and had been built in 1965. Comparable No. 2 had a full basement, had three bedrooms and one and one-half bathrooms, and had a detached two-car garage. Comparable No. 3, which was valued at $85,230, was only a few square feet smaller than Complainant’s residence and had been built in 1962. Comparable No. 3 had a full basement, had three bedrooms and one and one-half bathrooms, and had an attached two-car garage plus a detached metal carport. Given these comparables, it is reasonable to conclude that the fair market value, i.e., true market value, of Complainant’s residence as of January 1, 2015, was $77,670.
The true market value for the subject property as of January 1, 2015, has been established by substantial and persuasive evidence. The valuation and assessment made by Respondent is AFFIRMED. The assessed value for the subject property for tax years 2015 and 2016 is set at $17,981 residential ($94,640 TMV).
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
The Collector of Ralls 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 28, 2016.
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 28th day of December, 2016, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.
 The record is unclear as to whether Complainant received a notice of increase in assessment from Respondent prior to 30 days before the deadline for filing an appeal with the Ralls County BOE. See Section 137.275.1; 12 CSR 30-3.010(1)(B)1. However, the record contains Complainant’s letter sent to Respondent dated November 25, 2015, stating that the parties had discussed Complainant’s case in July 2015 and that Respondent had informed Complainant that he “could have until the end of the year to plead [his] case against the tax increase.” (Complainant’s Exhibit B)
 Initially, Respondent had placed a TMV of $89,670 on the residence. However, according to Respondent’s own evidence, Respondent lowered the initial assessment in June 2016 to reflect the results of the Ralls County Assessor’s analysis of the market data.