STATE TAX COMMISSION OF MISSOURI
|CATHY RINEHART, ASSESSOR||)|
|CLAY COUNTY, MISSOURI,||)|
DECISION AND ORDER
The decision of the Clay County Board of Equalization (BOE) is AFFIRMED. Complainant Deborah Jones (Complainant) did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.
Complainant appeared by pro se.
Respondent Cathy Rinehart, Assessor, Clay County, Missouri, (Respondent) appeared by lead counsel Lucas Wallingford and counsel Patricia Hughes.
Case heard and decided by Senior Hearing Officer John Treu (Hearing Officer).
Complainant appealed on the ground of overvaluation. Respondent initially set the true market value (TMV) of the subject property at $127,600, as residential property, as of January 1, 2017. The BOE set a TVM of the subject property at $127,600. The State Tax Commission (STC) takes this appeal to determine the TMV for the subject property as of January 1, 2017.
The 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 STC.
- Evidentiary Hearing. The issue of overvaluation was presented at an evidentiary hearing on December 12, 2017, at the Clay County Courthouse, Liberty, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 14-717-00-05-017.00. It is further identified as 4928 NE Gladstone Ave., Kansas City, Clay County, Missouri. (Exhibit B; Exhibit 1; Exhibit 2)
- Description of Subject Property. The subject property consists of an 11,750 square foot residential lot, which is improved by a 1,428 square-foot ranch-style single-family home constructed in 1959. The subject property includes three bedrooms; two full bathrooms; a two-car attached garage; a screened patio; one fireplace; and central air conditioning. The exterior consists of brick and wood. (Exhibit 2)
- Assessment. Respondent initially set a TMV for the subject property of $127,600, residential, as of January 1, 2017.
- Board of Equalization. The BOE set a TMV of the subject property at $127,600, residential, as of January 1, 2017.
- Complainant’s Evidence. Complainant testified on her own behalf. Complainant testified that she had closed on the subject property on September 20, 2014. Complainant testified that the subject property has foundation issues which result in water leaking into the basement of the subject property. Complainant testified that the property is located near multiple empty businesses. Complainant testified that she refused an interior inspection by Respondent of the subject property. Complainant opined that the subject property’s TMV as of January 1, 2017, was $124,000. To support Complainant’s opinion of value, Complainant offered as evidence the following exhibits:
|Written Outline||Summary Testimony of Complainant|
|Exhibit A||Respondent’s Interrogatories to Complainant|
|Exhibit B||Valuation Notice|
|Exhibit C||Appraisal Report With Effective Date of 8/8/2014|
|Exhibit D||Letter Regarding Tax Increment Financing|
|Exhibit E||Map of Area Near Subject Property|
|Exhibit F||Information and Pictures of Subject Property Given to Complainant at BOE|
|Exhibit G||Pictures of Comparables Utilized in Appraisal Report (Exhibit C)|
|Exhibit H||Information and Pictures of Comparables Given to Complainant at BOE|
|Exhibit I||Information Given to Complainant at BOE|
|Exhibit J||Estimate Regarding Foundation of Subject Property|
|Exhibit K||Multi-List Regarding Neighboring Home|
Respondent objected to the Written Outline and to Exhibits A through K. Respondent’s served interrogatories on Complainant which were not responded to, other than Exhibit J being given to a representative for Respondent prior to the Evidentiary Hearing. Complainant also failed to produce the appraiser who had conducted the appraisal (Exhibit C) and who had chosen the comparables for the appraisal (Exhibit G). The Hearing Officer sustained the objections to paragraphs C and G contained within the Written Outline, to Exhibit C, Exhibit E (to buildings being empty), Exhibit G, and Exhibit K. The Hearing Officer overruled the objections to the remainder of the Written Outline and exhibits, and such were received into the record to be given the weight, if any, deemed appropriate by the Hearing Officer.
- Respondent’s Evidence. Respondent offered as evidence the testimony of Larissa Pasek, an employee of the office of the Clay County Assessor (the Appraiser). The Appraiser opined that the subject property’s TMV as of January 1, 2017, was $136,000, which was higher than the BOE’s valuation. The Appraiser’s report assumed the subject property’s basement to be unfinished. (Exhibit 2) In support of the Appraiser’s opinion of value, Respondent offered as evidence the following exhibits:
|Exhibit 1||Property Record Card of Subject Property|
|Exhibit 2||Appraisal Report of Larissa Pasek|
Complainant did not object to Respondent’s exhibits, which were received into the record.
The Appraiser developed the cost approach and the sales comparison approach. The Appraiser relied on the sales comparison approach to develop an opinion of TVM of the subject property because that approach was considered the most reliable indicator of value.
The Appraiser’s report analyzed five comparable sales, which sold between November 6, 2015 and July 17, 2017. (Exhibit 2) The sale prices of the comparables ranged from $127,000 to $158,000. (Exhibit 2) The proximity of the comparables to the subject property ranged from .10 miles to .61 miles (.10, .10, .18, .61, and .31 respectively). The Appraiser made market-based adjustments to the comparables for date of sale (time of sale adjustment), gross living area, basement finish, porch/patio/deck, and sales or financing concessions. The adjusted sale prices of the comparables ranged from $135,800 to $143,200. (Exhibit 2) The appraiser testified that the sales prices of properties in the subject property’s area rose between 2015 and January 1, 2017 and continue to rise. This resulted in the appraiser making positive time adjustments for sales occurring prior to January 1, 2017 and negative time adjustments for sales occurring after January 1, 2017.
- Presumption of Correct Assessment Not Rebutted. Complainant did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE, which determined the TMV of the subject property as of January 1, 2017, to be $127,600.
CONCLUSIONS OF LAW AND DECISION
The STC 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 Hearing Officer 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. 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 TVM for the property under appeal. By statute, real property and tangible personal property are assessed at set percentages of TVM: 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 STC, 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.
In the present appeal, the Hearing Officer inquired of Complainant and of the Appraiser.
Complainant’s Burden of Proof
To obtain a reduction in assessed valuation based upon an alleged overvaluation, the Complainant must prove the TVM of the subject property on the subject tax day. Hermel, Inc., v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978). TVM 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). TVM 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, TVM 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 STC 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 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. E.D. 1980).
Respondent presented the Appraiser’s report as evidence indicating that the subject property had a higher TMV than the value finally determined by the BOE. However, Respondent specifically stated that the Appraiser’s report was offered only in support of the TVM determined by the BOE of the subject property, as of January 1, 2017.
Weight to be Given Evidence
The 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 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, 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 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 [TVM].” 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.
Complainant stated in her testimony that homes in the subject property’s area are selling for high amounts which Complainant did not think were appropriate. Complainant did not offer any evidence that any such sales did not meet the test under the six point test set forth above. Complainant’s opined TVM for the subject property, as of January 1, 2017, was based upon the Exhibit C, which was excluded due to the failure to have the appraiser who authored such appraisal present for cross-examination. Additionally, the effective date of the excluded appraisal was August 8, 2014, and not January 1, 2017, the pertinent valuation date.
Although Respondent did not have the burden of proof in this appeal, Respondent presented substantial and persuasive evidence to support the BOE’s valuation of the subject property. The Appraiser, relied upon one of the three court-approved approaches for valuing residential property to arrive at an opinion of TMV for the subject property, the sales comparison approach.
The Appraiser’s report analyzed sales data from five comparable properties, four of which were located less than one half mile from the subject property, with the other located .61 miles for the subject property. The Appraiser made market based adjustments, including time adjustments.
The Appraiser’s opined a TMV of the subject property, as of January 1, 2017, of $136,000. The Appraiser’s opinion of TVM was presented in support of the TVM set by the BOE.
The TMV for the subject property as determined by the BOE is AFFIRMED.
Application for Review
A party may file with the STC 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 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 139.031.8, 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 26th, 2017.
STATE TAX COMMISSION OF MISSOURI
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 26th day of December, 2017, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.
 Respondent specifically argued that the BOE’s valuation of $127,600 should be affirmed and did not advocate for an increase in the valuation of the subject property.