Denis & Mary St. John v. Copeland (Franklin)

 

DENIS & MARY ST. JOHN, )

)

Complainants, )

)

v. ) Appeal No. 09-57026

)

TOM COPELAND, ASSESSOR, )

FRANKLIN COUNTY, MISSOURI, )

)

Respondent. )

 

DECISION AND ORDER

 

HOLDING

 

Decision of the Franklin County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE. True value in money for the subject property for tax years 2009 and 2010 is set at $675,000, residential assessed value of $128,250. Complainant Denis St. John appeared pro se. Respondent appeared by County Counselor, Mark Vincent.

Case heard and decided by Senior Hearing Officer W. B. Tichenor.

ISSUE

Complainant appeals, on the ground of overvaluation, the decision of the Franklin County Board of Equalization, which sustained the valuation of the subject property. The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2009. The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

FINDINGS OF FACT

1. Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Franklin County Board of Equalization. A hearing was conducted on May 12, 2010, at the Franklin County Government Building, Union, Missouri.

2. Assessment. The Assessor appraised the property under appeal at $794,850, an assessed residential value of $151,022. The Board of Equalization sustained that assessment.

3. Subject Property. The subject property is located at 231 St. Andrews Drive, St. Albans, Missouri. The property is identified by map parcel number 57-8-1-2-3-35. The property consists of 1.25 acre lot improved by a one-story brick single-family structure of good to excellent quality construction. The house was built in 1994 and appears to be in good or normal condition for its age. The residence contains 3,320 square feet of living area. There is a full basement with partial finish and an attached three-car garage.[1]

4. Marketing and Sale of Subject. The subject property had been marketed at various times from 2008 through 2010. It was listed for sale in 2008 at $749,775. The listing price was dropped to $729,000. In 2010 the property was listed for $687,500. During the 3 year period from 2008 into 2010, the house had only shown 6 times and no offers had been made.[2] The property was sold under a Residential Sale Contract dated March 1, 2010 for $660,000. Closing on this sale is set for on or before July 1, 2011 due to the Buyer being in the process of obtaining a divorce.[3]

5. Complainants’ Evidence. Complainants offered into evidence the testimony of Mr. St. John and Marjorie Sebelius. The following exhibits were received into evidence:

 

 

There were no objections to Exhibits A and E. Objection was made to Exhibit B on the ground of lack of foundation and relevancy. Objections were overruled. Objection was made to Exhibits C & D on the ground of lack of foundation. Objection was overruled. See, Ruling on Objections, infra.

There was no evidence of new construction and improvement from January 1, 2009, to January 1, 2010, therefore the assessed value for 2009 remains the assessed value for 2010.[4]

Evidence presented by Complainant was substantial and persuasive to rebut the presumption of correct assessment and establish true value in money. See, Hearing Officer Finds Value, infra.

6. Respondent’s Evidence. Respondent offered into evidence the Appraisal Report[5] of Lori Ruby, State Certified Appraiser, and her testimony. Exhibit 1 was received into evidence, without objection.

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. 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.[6]

Presumptions In Appeals

There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[7] The presumption in favor of the Board is not evidence. A presumption simply accepts something as true without any substantial proof to the contrary. In an evidentiary hearing before the Commission, the valuation determined by the Board, even if simply to sustain the value made by the Assessor, is accepted as true only until and so long as there is no substantial evidence to the contrary.

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.[8] The evidence presented by Complainant standing, on its own, was sufficient to rebut the presumption of correct assessment and establish the fair market value of the property. The evidence presented by Respondent, standing on its own, was sufficient to rebut the presumption of correct assessment and establish the fair market value of the property.

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.[9] True value in money is defined in terms of value in exchange and not value in use.[10] It is the fair market value of the subject property on the valuation date.[11] 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.[12]

 

Both appraisers concluded value under this Standard for Valuation.[13]

Ruling on Objections

Objection to Exhibit B

Counsel for Respondent objected to Exhibit B on the grounds of lack of foundation and relevancy. He also raised the matter that the exhibit was incomplete since a copy of the House Lease referenced in the Contract was not attached as noted in paragraph 23 of the Contract.

As one of the parties to the contract, Mr. St. John’s testimony was sufficient to lay the necessary foundation for admissibility of Exhibit B. The sale of the subject fourteen months after the valuation date is a transaction at a time relevant for the purpose of determining the true value in money of the property under appeal.[14] The absence of the House Lease as an attachment is not a fatal defect to receiving the contract into the record as an exhibit. The matter of the lease was a proper subject of cross-examination, which Mr. Vincent addressed in his examination of Mr. St. John. Nothing raised during cross-examination brought into question the simple fact that the subject property had been sold for $660,000 in an arm’s-length transaction at a time relevant to the valuation date. The fact that the sale occurred after the valuation date is a factor to be considered, however, it did not rendered the sale inadmissible.

Objections to Exhibits C & D

Mr. Vincent objected to both Exhibit C and D on the ground of a lack of foundation. Specifically, the objection was that the photographs of the comparables utilized by Ms. Sebelius and the comparables utilized by Ms. Ruby had not been taken by Ms. Sebelius. The photographs were obtained from MultiList Services (MLS) internet websites which had the properties in question presented for sale.

Appraisers generally utilize information and data from MLS listings. Although ordinarily, photographs of the exterior of the subject and comparables will be taken by the appraiser, it is not always possible to obtain interior photographs of a subject or comparable property except through a source such as the internet MLS data. Furthermore, similar hearsay evidence is utilized and relied upon by appraisers. Such items as room count, square footage, age, and acreage generally may come from some document or source other than the personal observation of the appraiser. The locator maps ordinarily included in appraisals have never appeared to have been drawn by the appraiser and it is unnecessary to attempt to have someone appear to give testimony of verification of a locator map. The burden of having the person or persons who took the photographs that are posted as MLS data to appear and testify to say the photographs represents what the photograph shows is unreasonable in most instances. Such was the case in this instance.

To the Hearing Officer the photographs simply provide verification that the interiors of both the Sebelius and Ruby comparables appear quite similar to the subject. The point is of de minimus importance, since the other information in each appraisal report establishes sufficient comparability of the sale properties to the property being appraised.

Hearing Officer Finds Value

Counsel for Respondent in his closing argument put forth the proposition that the task of the Hearing Officer was to decide which was more important in this case, location or time of sale. Counsel may have correctly analyzed the solution to the appraisal problem. However, the Hearing Officer is not so persuaded. It is the perception of the Hearing Officer that there are other critical factors beyond the Sebelius and Ruby appraisal reports that must be taken into account.

Trier of Fact

The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but 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.[15] 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 he may deem it entitled to when viewed in connection with all other circumstances. The Hearing Officer is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert’s testimony and accept it in part or reject it in part.[16]

If all that was before the Hearing Officer was the two appraisal reports, one option would be to elect which is most persuasive. Of course, another option to address the apparent conflict between location and time of sale would be to simply settle on the middle ground. However, neither of these options accounts for the fact that the subject had been actively marketed for approximately a year prior to and a year after the valuation date and a sale of the subject property occurred at a time relevant to January 1, 2009. The Hearing Officer must take account of those critical facts.[17]

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.[18] Missouri courts have approved the comparable sales or market approach, the cost approach, the income approach and actual sales price as recognized methods of arriving at fair market value.[19] Complainant’s appraiser arrived at a conclusion of value having appraised the property under appeal utilizing both the cost and sales comparison approaches. Respondent’s appraiser concluded value based upon the development of the sales comparison approach.

Ordinarily, the reliance by both appraisers on the sales comparison approach would provide ample basis for the Hearing Officer to conclude a value weighing each appraisal in light of the other. However, another recognized methodology for determining value comes into play in this instance. That is the actual sales price methodology. Neither appraiser could have been aware at the time of the development of their appraisal of the March, 2010 sale of the subject. Ms. Sebelius did note: “According to MLS the subject is listed for $687,500 and has been on the market since September 5, 2009.”[20]

The Hearing Officer is aware that in general appraisers rely upon the “no sale in prior three years” rule in appraising property. This leaves open the entire area of recent or current listings. It is the opinion of the Hearing Officer that a stronger appraisal can be presented by not only addressing the matter of recent sales of the property being appraised, but research and reporting in the appraisal report as to listings within the 3 year period prior to the valuation date, as well as listings between the valuation date and the date of the appraisal report would be beneficial.

Complainants’ Burden of Proof

In order to prevail, Complainants 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, 2009.[21] 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.”[22]

Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[23] 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.[24]

Owner’s Opinion of Value

The owner of property is generally held competent to testify to its reasonable market value.[25] The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[26] In this case Mr. St. John’s opinion of value – $675,000 – was based upon the Sebelius appraisal report. Exhibit A provides

a proper foundation for the owner’s opinion of value, irrespective of the other evidence the Hearing Officer must consider.

Sale and Listing of Subject

March 2010 Sale

Evidence of the actual sales price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time. The actual sale price is a method that may be considered for estimating true value.[27]

The March 2010 sale of the subject meets the criteria establish by the St. Joe Mineral holding. That sale was clearly admissible since it took place within a time frame relevant to January 1, 2009. The time range of comparable sales ran from 20 months prior to less than 3 months prior to valuation day. The sale of the subject 14 months after the valuation date comes within the time frame established by the Sebelius and Ruby sales. Neither appraiser had a basis upon which they could make an adjustment for time of sale. Accordingly, the Hearing Officer has no evidentiary record upon which a time of sale adjustment can be made to the March, 2010 transaction.

Prior Listings

The property under appeal had been listed since September 2009. That listing was for $687,500. In 2008 the property was placed on the market at an asking price of $749,775. It was dropped some time later to $729,000. During the period from 2008 until the March 2010 sale, the property was placed on the market from time to time. It was showed six times during 2008, 2009 and 2010. No offers were received at the listings of $749,775, $729,000 or $687,500. The only offer was the $660,000 at which the property sold.

Conclusion of Value

From the foregoing, the Hearing Officer must conclude that the listing history on the subject property and its March 2010 sale rebuts the conclusion of value of $800,000 proffered in the Ruby appraisal. Likewise, the presumption of correct assessment by the Board at a value of $794,850 is rebutted. The subject having been offered for sale in the time period from 12 months prior to 14 months after the valuation date for $687,500 to $749,775, without any offers in that range, establishes that the amounts of $800,000 and $794,850 overstate the value of Complainants’ property.

The Sebelius and owner’s conclusion of value of $675,000 is supported by the sale price of $660,000 to the extent that the property might have commanded a slightly higher price in January 2009. The substantial and persuasive evidence establishes a value of $675,000.

ORDER

The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Franklin County for the subject tax day is SET ASIDE.

The assessed value for the subject property for tax years 2009 and 2010 is set at $128,250.

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. 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 appeal is based will result in summary denial. [28]

Disputed Taxes

The Collector of Franklin 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 4, 2010.

STATE TAX COMMISSION OF MISSOURI

 

 

_____________________________________

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 4^th day of June, 2010, to: Denis St. John, 231 St. Andrew Drive, P.O. Box 79, St. Albans, MO 63073, Complainant; Mark Vincent, Franklin County Counselor, P.O. Box 439, Union, MO 63084, Attorney for Respondent; Tom Copeland, Assessor, 400 E. Locust, Suite 105A, Union, MO 63084; Debbie Door, Clerk, Franklin County Courthouse, 400 E. Locust, Suite 201, Union, MO 63084; Linda Emmons, Collector; Franklin County Courthouse, 400 E. Locust, Suite 103, Union, MO 63084.

 

 

___________________________

Barbara Heller

Legal Coordinator

 

 

Contact Information for State Tax Commission:

Missouri State Tax Commission

301 W. High Street, Room 840

P.O. Box 146

Jefferson City, MO 65102-0146

573-751-2414

573-751-1341 Fax