State Tax Commission of Missouri
DEBRA A. MARX, TRUSTEE,)
v.) Appeal No.07-12488
PHILIP MUEHLHEAUSLER, ASSESSOR,)
ST. LOUIS COUNTY,MISSOURI,)
DECISION AND ORDER
Decision of the St. Louis County Board of Equalization reducing the assessment made by the Assessor is SET ASIDE.Hearing Officer finds presumption of correct assessment rebutted by Respondent. True value in money for the subject property for tax years 2007 and 2008 is set at $830,000, residential assessed value of $157,700.
Complainant appeared by Counsel, Paul J. Harris,Maryland Heights,Missouri.
Respondent appeared by Counsel, Paula J. Lemerman, Associate County Counselor.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2007.
Complainant appeals, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which reduced the valuation of the subject property.The Assessor determined an appraised value of $840,000, assessed value of $159,600, as residential property.The Board reduced the value to $826,400, assessed value of $157,020.Complainant proposed a value of $767,000, assessed value of $145,730 in her Complaint for Review of assessment.A hearing was conducted on July 9, 2008, at theSt. LouisCountyGovernmentCenter,Clayton,Missouri.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
Counsel for Complainant called Greg Marx, husband of Complainant to testify as to the owner’s opinion of value.Mr. Marx stated an opinion of value of $725,000.This opinion of value was based on the per square foot sales prices indicated for a list of properties Mr. Marx deemed comparable to the subject.
Complainant offered into evidence Exhibit A – a CMA listing sales of 16 properties in 2005 (2), 2006 (11) and 2007 (3).Counsel for Respondent objected to Exhibit A on the grounds of lack of foundation and hearsay.Objection was sustained.The exhibit is maintained in the file for this appeal, but was not received as part of the evidentiary record in the case.
Respondent placed into evidence the testimony of Mr. Arthur Froeckmann, Missouri State Certified Residential Real Estate Appraiser for St. LouisCounty.The appraiser testified as to his appraisal of the subject property.The Appraisal Report (Exhibit 1) of Mr. Froeckmann was received into evidence.Mr. Frockmann arrived at an opinion of value for the subject property of $830,000 based upon a sales comparison approach to value.In performing his sales comparison analysis, the appraiser relied upon the sales of three properties deemed comparable to the subject property.
FINDINGS OF FACT
1.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.
2.The subject property is located at 16305 Wilson Creek Court, Clarkson Valley, Missouri.The property is identified by parcel number 20T530342.The property consists of a 62,933 square foot (1.44 acres)lot improved by a one and a half-story frame and stone, single-family structure of good quality construction.The house was built in 1986 and appears to be in average condition.The residence has a total of ten rooms, which includes four bedrooms, three full and two half baths, and contains 4,827 square feet of living area.There is a full basement, with 400 square feet of finished area and a full bath.The home has an attached three-car garage.The property was purchased in March 2004 for $800,000.A room addition on slab at a cost of $40,000 was made after the March 2004 purchase.There have been the following updates after the purchase:New Siding ($12,000 – $14,000); Remodeling of Master Bath ($5,000); Remodeling of Kitchen, with new tile floor ($15,000); and sealing of pool and concrete deck ($350).Exhibit 1; Testimony of Mr. Marx.
3.There was no evidence of new construction and improvement from January 1, 2007, to January 1, 2008.
4.The living area of the subject home is 4,827 square feet as shown by Exhibit 1 (Floor Plan).The claim by Mr. Marx of a living area of only 4,271 square feet is not supported by any documentary evidence on the record.
5.Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2007, to be $767,000, as proposed in the Complaint for Review of Assessment, or $725,000 as testified to by Mr. Marx at the hearing.
6.Greg Marx was permitted to testify as an owner (husband of Debra A. Marx), but was not recognized as an expert in appraisal of real property for ad valorem tax purposes.
7.The properties relied upon by Respondent’s appraiser were comparable to the subject property for the purpose of making a determination of value of the subject property. Two of the properties were located within less than .30 of a mile of the subject.The third property was located 2.42 miles away.Given the area in which the subject is located, use of sale this distance from the subject was not unreasonable.Each sale property sold at a time relevant to the tax date of January 1, 2007 (7/05, 8/06 and 1/06).The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability. Exhibit 1.
8.The appraiser made various adjustments to the comparable properties for differences which existed between the subject and each comparable.All adjustments were appropriate to bring the comparables in line with the subject for purposes of the appraisal problem. The net adjustments ranged from -1.4% to 7.1% of the sales prices. Exhibit 1.
9.The adjusted sales prices for the comparables calculated to $814,300, $833,200 and $838,500, respectively.The appraiser concluded on an $830,000 value which calculated to a value per square foot of $171.95 compared with the sales prices per square foot of living area for the comparables of $175.84, $175.07 and $186.08. Exhibit 1.
10.Respondent’s evidence met the standard of substantial and persuasive to rebut the presumption of correct assessment and establish the value of the subject, as of January 1, 2007, to be $830,000.
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.Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, RSMo.The 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.Section 138.431.4, RSMo.
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STC, 308 S.W.2d 748, 759 (Mo. 1958).The presumption of correct assessment is rebutted when the taxpayer, or respondent when advocating a value different than that determined by the Board, presents substantial and persuasive evidence to establish that the Board’s valuation is erroneous and what the fair market value should have been placed on the property.Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).Complainant failed to present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board.Respondent’s appraiser presented substantial and persuasive evidence to establish that the Board’s valuation was in error and therefore, rebutted the presumption in the Board’s favor.
Standard for Valuation
Section 137.115, RSMo, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so.St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993); Missouri Baptist Children’s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993).It is the fair market value of the subject property on the valuation date.Hermel, supra.
Market value is the most probable price in terms of money which a property should bring in competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price is not affected by undue stimulus.
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:
1.Buyer and seller are typically motivated.
2.Both parties are well informed and well advised, and both acting in what they consider their own best interests.
3.A reasonable time is allowed for exposure in the open market.
4.Payment is made in cash or its equivalent.
5.Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
6.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; Exhibit 1.
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, at 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). The opinion of value offered by Mr. Marx was not arrived at by the use of any recognized appraisal methodology.Presenting of a list of sale properties in the form of a CMA report does not constituted a sales comparison approach to value.It is not an appraisal of real property.The opinion of value set forth in the Complaint for Review of Assessment was likewise, not supported or established by data developed in any accepted appraisal approach.
Respondent’s appraiser 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.The use of this method of valuation is consistent with the precedents for valuation of real property set by both the Commission and the Courts of Missouri.
Complainant Failed To Meet Burden of Proof
In order to prevail, Complainant must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2007.Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, at 897. 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.” See, 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).Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991).
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.See, Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact.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).
The owner of property is generally held competent to testify to its reasonable market value.Rigali v. Kensington Place Homeowners’ Ass’n, 103 S.W.3d 839, 846 (Mo. App. E.D. 2003); Boten v. Brecklein, 452 S.W.2d 86, 95 (Sup. 1970).The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.Cohen v. Bushmeyer, 251 S.W.3d 345, (Mo.App. E.D., March 25, 2008); Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992); State, ex rel. Missouri Hwy & Transp. Com’n v. Pracht, 801 S.W.2d 90, 94 (Mo. App. E.D. 1990); Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965).
Complainant relied upon the opinion of value tendered by Mr. Marx.Although that opinion apparently had some basis in excluded Exhibit A, it was never developed at hearing exactly how Mr. Marx arrived at his value of $725,000.It was based upon comparables and a per square foot price, according to his testimony.However, which alleged comparables and what per square foot price was never developed.If one divides the square foot of living area of the subject – 4,827 – by the value proposed of $725,000, the indicated per square foot value is $150.20.
However, a review of the proffered exhibit reveals per square foot average of the 16 sale properties was $160.85, not $150.20.Furthermore, the average square footage of living area for the list of properties was only 3,640 or nearly 1,200 square feet smaller than the subject on average.This significant difference in living area would disqualify the vast majority of the sales as not comparable to the subject.At the very least a very substantial upward adjustment would have to be made to most of the sale properties to account for this difference.
A review of the land area of the properties likewise establishes the non-comparability of the majority of the properties.The list establishes that only one property was larger than one acre in lot size.The average lot size was only .721 of an acre compared with the subject’s 1.44 acres.Here again, this factor raises serious question as to the use of nearly all of these properties for appraisal of the subject.This factor would also demand a significant upward adjustment to the sales price to account for the subject’s larger lot size.
The opinion of value given by Mr. Marx was not shown to have been based upon proper elements or a proper foundation.Therefore, it can be given no probative weight in this appeal. “Where 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.” Carmel Energy at 783.The testimony of Mr. Marx as to the fair market value of the subject property on January 1, 2007 is not founded upon facts relevant to the issue of value, therefore it is rejected.
Respondent Proves Value
Respondent, when advocating a value different from that determined by the original valuation or a valuation made by the Board of Equalization, must meet the same burden of proof to present substantial and persuasive evidence of the value advocated as required of the Complainant under the principles established by case law.Hermel, Cupples-Hesse, Brooks, supra.The Froeckmann appraisal constituted substantial and persuasive evidence to establish a fair market value as of January 1, 2007, to be $830,000 for the residential portion of the subject.
The adjustments made the Mr. Froeckmann were consistent with generally accepted guidelines for the appraisal of property of the subject’s type.The adjustments properly accounted for the various differences between the subject and each comparable.The net adjustments to the sale properties fell within a very narrow range.The concluded value was consisted with the unadjusted per square foot values in the market for comparable properties
The assessed valuation for the subject property as determined by the Board of Equalization forSt. LouisCountyfor the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2007 and 2008 is set at $157,700.
Complainant may file with the Commission an application for review of this decision within thirty (30) days of the mailing of such decision.The application shall contain specific 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, MO65102-0146, 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 appeal is based will result in summary denial.Section 138.432, RSMo 2000.
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 a filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of 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 August 4, 2008.
STATE TAX COMMISSION OFMISSOURI
W. B. Tichenor, Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 4th day of August, 2008, to:Paul Harris, 2458 Old Dorsett Rd., Suite 230, Maryland Heights, MO 63043, Attorney for Complainant; Paula Lemerman, Associate County Counselor, Attorney for Respondent; Philip A. Muehlheausler, Assessor; John Friganza, Collector,CountyGovernmentCenter,41 South Central Avenue,Clayton,MO63105.
W. B. Tichenor
Senior Hearing Officer