State Tax Commission of Missouri
| DAVID MOSER, | ) | |
| ) | ||
| Complainant, | ) | |
| ) | ||
| v. | ) | Appeal No. 15-13475 |
| ) | ||
| JAKE ZIMMERMAN, ASSESSOR | ) | |
| ST. LOUIS COUNTY, MISSOURI, | ) | |
| ) | ||
| Respondent. | ) |
DECISION AND ORDER
HOLDING
The assessment made by the Board of Equalization of St. Louis County (BOE) is SET ASIDE. Complainant David Moser (Complainant) did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE. However, Respondent Jake Zimmerman, St. Louis County Assessor, (Respondent) presented substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE. Assessed value in money for the subject property for tax years 2015 and 2016 is set at $43,035 residential ($226,500 true market value or TMV).
Complainant appeared pro se.
Respondent appeared by attorney Steven Robson, Assistant County Counselor.
Case heard and decided by Senior Hearing Officer Amy S. Westermann.
ISSUE
Complainant appealed on the ground of overvaluation. Respondent initially set the true market value (TMV) of the subject property, as residential property, at $277,500. The BOE lowered the valuation to $230,000. 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, which was held on May 18, 2016, at the St. Louis Government Administration Building, 41 South Central Avenue, Clayton, Missouri, 63105.
- Identification of Subject Property. The subject property is identified by parcel/locator number 17L130254. It is further identified as 4 Homestead Acres Street, Olivette, St. Louis County, Missouri. (Complaint; Exhibit 1)
- Description of Subject Property. The subject property consists of a 28,880 square foot lot improved by a single family, 1,245 square-foot, ranch-style residence built in 1952 with a full unfinished basement, two bedrooms, and one bath. The subject property has a two-car attached garage, one fireplace, an enclosed frame porch, an open frame porch, and a stoop. The exterior consists of brick and frame. (Exhibits A and B; Exhibit 1) The subject property is located in a fully-developed, residential neighborhood of single family homes that are primarily owner occupied. (Exhibit 1)
- Assessment. Respondent placed a true market value (TMV) on the subject property of $277,500 residential, as of January 1, 2015.
- Board of Equalization. The BOE lowered Respondent’s TMV of the subject property to $230,000.
- Complainant’s Evidence. Complainant offered as evidence his own testimony; a typed summary of his argument, which contained an index of his other exhibits (Exhibit A); a printed copy of the Real Estate Information for the subject property, which had been obtained from St. Louis County’s Department of Revenue website, http://revenue.stlouisco.com (Exhibit B); a copy of the general warranty deed for the purchase and transfer of ownership of one of Complainant’s comparables, 6 Homestead Acres Street, which had been recorded with the St. Louis County Recorder of Deeds (Exhibit C); a printed copy of the Real Estate Information from tax year 2013 for three comparable properties, which had been obtained from St. Louis County’s Department of Revenue website, http://revenue.stlouisco.com (Exhibit D, Exhibit E, Exhibit F); and four color photographs depicting the subject property and the three comparable properties, all of which were printed on a single page (Exhibit G).
Complainant testified that he had purchased the subject property in 1991 for approximately $102,500. Complainant testified that the subject property had been listed with a realtor, had been publicly advertised, and that no mortgage encumbered the subject property. Complainant testified that the subject property had not been listed for sale within the past three years and that he did not know the asking price he would place on the subject property if it were listed for sale. Complainant further testified that the BOE’s valuation had been based on only one comparable property owned by a neighbor who had performed a tear down of the existing home and then rebuilt a new home. Complainant testified that the comparable had not been torn down and rebuilt by a builder who would have sold the property for a profit. Complainant argued that the three comparables he had presented in Exhibits D, E, and F should be used to value the subject property.
Complainant testified that he had recently received some unsolicited inquiries from realtors who expressed interest in purchasing the subject property. The inquiries were in the form of a letter and a telephone call. Complainant testified that he planned to continue residing on the subject property and had no plan to sell it as a tear down and rebuild. Complainant testified that he had performed only maintenance in the form of painting in the last three years. Complainant opined that the subject property should be valued at $206,670 as of January 1, 2015, which was a higher value that Complainant had proposed when he filed his appeal with the Commission. Complainant testified that he had concluded the revised proposed value was appropriate after reviewing a relevant comparable when preparing his evidence for the evidentiary hearing. Complainant testified that he had averaged the values of the three comparable properties he had presented to arrive at his revised proposed value. (Complaint; Exhibit A)
Respondent objected to Complainant’s Exhibit C to the extent that Complainant had offered it to establish that one of the comparables had not been sold to a builder but to individuals who had purchased that property as a tear down and rebuild. The Senior Hearing Officer overruled the objection and received Exhibit C into the record to be given the weight deemed necessary in light of the other evidence in the case. Respondent did not object to the remainder of Complainant’s exhibits, which were received into the record.
During cross-examination, Complainant testified that he came to his revised opinion of value for the subject property by looking at the characteristics of the comparable properties, such as square footage, and equally weighting the properties. Complainant testified that he had acknowledged positive and negative variations between the subject property and the comparable properties and, in his view, believed those variations would average out. Complainant testified that he was not a certified appraiser and did not have appraisal training.
- Respondent’s Evidence. Respondent offered as evidence the testimony of State Certified Residential Real Estate Appraiser Gerald Keeven, Jr., (the Appraiser). Respondent also offered Exhibit 1, which contained the professional qualifications of the Appraiser and the Appraisal Report for the subject property. (Exhibit 1)
The Appraiser testified that he had used the sales comparison approach to arrive at his opinion of value. The Appraiser testified that he had performed an exterior inspection of the subject property and had concluded it was a prospective tear down due to its location and condition. The Appraiser chose three comparable properties close in proximity to the subject property that had sold within the last three years. After each of the comparable properties was sold, the houses were torn down and larger, more expensive houses were built on the lots. The Appraiser testified that he had limited market adjustments to Comparable 2 and Comparable 3 on the basis of the lot sizes. The Appraiser testified that, based upon his review of the market, he believed a larger lot was worth more. The Appraiser gave Comparable 1 the most weight because it was most similar to the subject property and required no adjustments. The Appraiser opined that the value of the subject property as of January 1, 2015, was $226,500. (Exhibit 1)
On cross-examination, the Appraiser testified that, given the recent history of the surrounding neighborhood, he believed the next buyer of the subject property would tear down the house and rebuild a bigger, more expensive house. The Appraiser testified that he believed the existing house did not add any value to the lot. The Appraiser testified that he was treating the comparables used in his Appraisal Report as vacant lots very similar to the subject property. The Appraiser testified that he had made a positive adjustment of $10,000 to two of the comparables for lot size because they were smaller (approximately 8,500 to 8,700 square feet) than the subject property. The Appraiser testified that he did not make a negative adjustment to Comparable 1 for lot size because it was only slightly larger (435 square feet) than the subject property. The Appraiser testified that he had made the adjustments based on his 18 years of training and experience, his familiarity with the area, and market conditions. (Exhibit 1)
Exhibit 1 described the subject property as one of 10 properties in the subdivision. Four of those 10 properties were sold between January 1, 2013, and January 1, 2015. The three comparables the Appraiser used to value the subject property had been ranch-style, two bedroom homes that were torn down subsequent to the sales. Comparable 1 and Comparable 3 had also been used as comparables by Complainant. (Exhibit 1) The Appraiser found Comparable 1, which was the property next door to the subject property, to be most similar to the subject property. Comparable 1 had sold for $230,000. (Exhibit 1)
Complainant did not object to Respondent’s evidence, which was received into the record.
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, 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.
Complainants’ 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 is 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.
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. “[W]here the basis for a test as to the reliability of the testimony is not supported by a statement of facts on which it is based, or the basis of fact does not appear to be sufficient, the testimony should be rejected.” Id. 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).
Board Presumption and Computer-Assisted Presumption
There exists a presumption of correct assessment by the BOE. 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 only comes into play if the BOE lowered the value of the Assessor and Respondent is seeking to sustain the original assessment and 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, both parties challenged the presumption that the BOE’s valuation was correct and advocated a lower valuation of the subject property. Accordingly, in order to rebut the presumption, both parties were required to present substantial and persuasive evidence.
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, supra; 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. Div. 2 1974).
Weight to be Given Evidence
The relative weight to be accorded any relevant factor in a particular case is for the 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 Hearing Officer is not bound by any specific method.
Opinion Testimony by Experts
An expert’s opinion must be founded upon substantial information, not mere conjecture or speculation, and there must be a rational basis for the opinion. Missouri Pipeline Co. v. Wilmes, 898 S.W.2d 682, 687 (Mo. App. E.D. 1995). The State Tax Commission cannot ignore a lack of support in the evidence for adjustments made by the expert witnesses in the application of a particular valuation approach. Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d, 341, 348 (Mo. 2005); Drey v. State Tax Commission, 345 S.W.2d 228, 234-236 (Mo. 1961).
The testimony of an expert is to be considered like any other testimony, is to be tried by the same test, and receives just so much weight and credit as the trier of fact may deem it entitled to when viewed in connection with all other circumstances. The Senior Hearing Officer, as the trier of fact, has the authority to weigh the evidence, is not bound by the opinions of experts who testify on the issue of reasonable value, and may believe all or none of the expert’s testimony, accepting it in part or rejecting it in part. Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W. 2d 605, 607 (Mo. 1981); Scanlon v. Kansas City, 28 S.W.2d 84, 95 (Mo. 1930).
Discussion
In the present appeal based upon overvaluation, both Complainant and Respondent presented substantial evidence to support their respective opinions of the value of the subject property. However, under the circumstances of this case, only Respondent presented substantial and persuasive evidence to rebut the TMV set by the BOE and to support the conclusion that the TMV of the subject property was $226,500 on January 1, 2015.
In arriving at his opinion of value, Complainant testified that he had weighted equally all three of the comparable properties he had reviewed. Although Complainant testified that he looked at the characteristics of each comparable and recognized that adjustments to sale prices would need to be made on the basis that some of the comparables had advantages and disadvantages in comparison with the subject property, Complainant did not utilize any of the recognized approaches to value. Complainant testified and presented evidence indicating that he averaged the sale prices of the comparable properties and concluded that the subject property should be valued at that averaged amount.
In arriving at an opinion of value, the Appraiser considered all three approaches to value the subject property: the cost approach, the income approach, and the sales comparison approach. The Appraiser ultimately utilized the sales comparison approach because the cost approach and the income approach were not applicable to valuing the subject property.
The Appraiser viewed the appraisal of the subject property as a “tear down prospect” given the recent history of the subject property’s neighborhood. The appraiser selected three comparable sales located in the same or similar marketing areas and made adjustments to two of the comparables. Significantly, two of the Appraiser’s comparables were also utilized by Complainant. Specifically, the Appraiser made positive adjustments to the price of Comparable 2 and Comparable 3 to account for their smaller lot size in comparison to the subject property. The dates of sale of the comparable properties ranged from February 2013 to June 2014. The sale prices of the comparable properties used by Respondent ranged from $190,000 to $230,000. The Appraiser gave more weight to Comparable 1 because it was most similar to the subject property in that it was only slightly larger in lot size and, therefore, required no adjustments. The sale date of Comparable 1 was June 2014, which was closer in time to the valuation date than any of the other comparables. The sale price of Comparable 1 was $230,000.
Given Respondent’s substantial and persuasive evidence, it is reasonable to find and conclude that the TMV of the subject property on January 1, 2015, was $226,500.
ORDER
The assessment made by the BOE is SET ASIDE. The assessed value for the subject property for tax years 2015 and 2016 is set at $43,035 residential ($226,500 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
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 June 13, 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 electronically mailed or sent by U.S. Mail on this 13 day of June, 2016 to:
David C. Moser, Complainant, 6 Homestead Acres Street, Olivette, MO 63132
Steven Robson, St. Louis County Associate County Counselor, SRobson@stlouisco.com
Jake Zimmerman, St. Louis County Assessor, syoutzy@stlouisco.com, rkoch@stlouisco.com
Jacklyn Wood
Legal Coordinator