STATE TAX COMMISSION OF MISSOURI
|DAVID A. DESANTIS,||)|
|v.||)||Appeal No. 15-16104|
|JAKE ZIMMERMAN, ASSESSOR||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
The assessment made by the Board of Equalization of St. Louis County (BOE) is AFFIRMED. Complainant David A. DeSantis (Complainant) did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.
Complainant appeared pro se.
Respondent Jake Zimmerman, St. Louis County Assessor, (Respondent) appeared by Steven Robson, Assistant County Counselor.
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, as residential property, at $173,700. The BOE sustained Respondent’s valuation. 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. Complainant timely appealed to the State Tax Commission.
- Evidentiary Hearing. The issue of overvaluation was presented at an evidentiary hearing on July 28, 2016, at the St. Louis County Government Administration Building, 41 South Central Avenue, Clayton, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 12O120657. It is further identified as 12108 Glenpark Drive, St. Louis County, Missouri. (Complaint; Exhibit 1)
- Description of Subject Property. The subject property consists of an 8,712 square foot (.20 acre) residential lot improved by a 1,580 square foot, two-story, single-family home built in 1997. (St. Louis County Real Estate Information Database) The subject property includes three bedrooms; two full bathrooms and one half bathroom; a full basement; a two-car attached garage; an open frame porch, a patio, and a deck. (St. Louis County Real Estate Information Database) The exterior consists of aluminum and vinyl. (St. Louis County Real Estate Information Database)
- Assessment. Respondent set a TMV for the subject property of $173,700 residential, as of January 1, 2015.
- Board of Equalization. The BOE sustained Respondent’s TMV of the subject property.
- Complainant’s Evidence. Complainant testified in his own behalf. Complainant testified that he had purchased the subject property in 1998 for $135,500. Complainant testified that the subject property had been listed with a realtor. 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 but, if he listed it for sale, he would list it for $150,000. Complainant testified that he had not made improvements to the subject property between January 1, 2013, and January 1, 2015. Complainant opined that the subject property’s TMV as of January 1, 2015, was $150,000.
Primarily, Complainant argued that the consistent problems of water flooding the backyard of the subject property and the presence of the protected wetlands adjacent to the property adversely affected the true market value of the property. Complainant testified that to his knowledge the problem could not be remediated based on the fact that a neighbor had “filled” his backyard to stop the flooding but was fined because the area is designated as protected wetlands. Complainant testified that at one time he had obtained flood insurance from the Federal Emergency Management Agency, but now the subject property was exempt. Complainant testified that the presence and threat of the water prevented the placement of a pool or other items in the backyard. Complainant testified that, when flooding occurred, the water would rise and fall within a day but was so deep that logs would float into the yard. Complainant testified that the flooding would come within a few feet of the residence. Complainant testified that the source of the water was three natural underground springs. Complainant testified that the wetlands was ugly, had a bad odor, and was infested with mosquitoes. On cross examination, Complainant testified that the water problem affected neighboring properties but that it was worse on the subject property. In response to questioning from the Senior Hearing Officer, Complainant testified that he had not pursued a remedy for the flooding from the City of Maryland Heights but that he had spoken to neighbors about the problem.
Complainant offered as evidence to support his opinion of value (1) photographs depicting the flooding in the backyard of the subject property and showing the wetlands on one side of a wood privacy fence and a grassy area on the other side of the fence (Exhibits A and B); (2) photographs depicting various areas of the residence of the subject property showing items in deteriorated condition or in need of upgrading, replacement, or repair (Exhibits C through L); and (3) a photograph depicting the exterior of a neighbor’s residence showing a radon remediation device attached to the side of the residence (Exhibit M).
Respondent did not object to Complainant’s exhibits, which were received into the record.
- Respondent’s Evidence. Respondent offered as evidence a copy of the Notice of Decision issued by the BOE sustaining Respondent’s initial assessment of the subject property. (Exhibit 1) Respondent stipulated that the subject property was partially situated in a flood plain and that the residence was exempted from the flood plain. Respondent argued that the BOE’s valuation of the subject property as of January 1, 2015, $173,700 should be sustained.
Complainant generally objected to Respondent’s Exhibit 1. Hearing no legal objection, the Senior Hearing Officer overruled the objection, and Exhibit 1 was received into the record.
- Presumption of Correct Assessment Rebutted. Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the BOE.
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.
Board Presumption and Computer-Assisted Presumption
There exists a presumption of correct assessment by the BOE – the BOE presumption. In charter counties or the City of St. Louis, there exists by statutory mandate a presumption that the Assessor’s original valuation was made by a computer, computer-assisted method or a computer program – the computer-assisted presumption. These two presumptions operate with regard to the parties in different ways.
The BOE presumption operates in every case to require the taxpayer to present evidence to rebut it. If Respondent is seeking to prove a value different than that set by the BOE, then it also would be applicable to the Respondent.
The computer-assisted presumption is applicable only if (1) the BOE lowered the value of the Assessor and Respondent is seeking to sustain the original assessment and (2) it has not been shown that the Assessor’s valuation was not the result of a computer assisted method. The BOE’s valuation is assumed to be an independent valuation.
In the present appeal, the BOE sustained the initial valuation of Respondent, and Complainant is seeking to change the BOE’s assessment; therefore, only the BOE presumption applies.
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.
In this case, Complainant’s evidence was neither substantial nor persuasive to rebut the presumption of correct assessment by the BOE. 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. In particular, Complainant, who is not a certified residential real estate appraiser, did not use any of the court approved methods of valuation to arrive at an opinion of TMV for the subject property. Although Complainant’s testimony and photographic evidence specifically depicted the flooding in the backyard and the condition of the protected wetlands adjacent to the subject property, none of Complainant’s evidence provided any market data assigning a particular value to the problems created by the flooding and wetlands and did not provide bids or estimates for mitigating or remediating the water problem. Notably, Complainant testified that he had not pursued a remedy for the problems created by the flooding and wetlands from any agency or governing body even though he asserted that the wetlands were protected. Additionally, Complainant’s evidence of the deteriorated condition of the subject property resembled an attempt to utilize the replacement-cost-less-depreciation method for determining TMV, but Complainant failed to establish the current depreciated value of the subject property to be subtracted from the value of the subject property if the repairs and replacements were completed. Consequently, based on the evidence presented, one would be forced to speculate in order to conclude that the flooding, the wetlands, and the need for some repairs and replacements were not considered by the BOE when it valued the subject property or to conclude that Complainant’s opinion of value was correct.
The true market valuation for the subject property as determined by the BOE is AFFIRMED. The assessed value for the subject property for tax years 2015 and 2016 is set at $33,000 residential ($173,700 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 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 November 8, 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 8th day of November, 2016, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.