STATE TAX COMMISSION OF MISSOURI
|v.||)||Appeal No. 17-10204|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS COUNTY, MISSOURI,
DECISION AND ORDER
The decision of the St. Louis County Board of Equalization (BOE) is AFFIRMED. Complainant Diane Kilgore (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, Assessor, St. Louis County, Missouri, (Respondent) appeared by counsel Steve Robson.
Case heard and decided by Senior Hearing Officer Amy S. Westermann (Hearing Officer).
Complainant appealed on the ground of overvaluation. Respondent initially set the true value in money (TVM) of the subject property at $143,000, as residential property, as of January 1, 2017. The BOE valued the subject property at $143,000, thereby sustaining Respondent’s valuation. The State Tax Commission (STC) takes this appeal to determine the TVM 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 State Tax Commission.
- Evidentiary Hearing. The issue of overvaluation was presented at an evidentiary hearing on March 21, 2018, at the St. Louis County Government Building, 41 South Central Avenue, Clayton, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 11M110527. It is further identified as 11735 Laux Dr., Bridgeton, St. Louis County, Missouri. (Complaint; Exhibit 1)
- Description of Subject Property. The subject property consists of .296 acres (12,894 square feet) of land improved by a 1,344 square-foot single-family, ranch-style home built in 1972. (Exhibit 3) The home includes three bedrooms; two bathrooms; a full, partially-finished basement; a covered porch; a screened porch; an oversized attached garage; and a predominately brick exterior with some vinyl siding. (Exhibit 3)
- Assessment. Respondent set a TVM for the subject property of $143,000, residential, as of January 1, 2017.
- Board of Equalization. The BOE set a TVM of the subject property at $143,000, residential, as of January 1, 2017.
- Complainant’s Evidence. Complainant opined that the TVM of the subject property was $135,000 as of January 1, 2017. To support her opinion of value, Complainant offered the following exhibits:
|Exhibit A||Photographs depicting a glass sliding door and a sandbag placed in front of the door|
|Exhibit B||Photographs depicting a parquet wood floor with water damage|
|Exhibit C||Photographs depicting the electrical service panel and the exterior electric meter for the improvement to the subject property along with a narrative evaluation from an unknown source regarding the improvement’s electrical system and a handwritten notation “Estimate: 2500-3500 =/-“|
|Exhibit D||Photographs depicting segments of roof with descrptions of “sagging/curling/crackling” and handwritten notation “Roof – Replacement $7-10,000”|
|Exhibit E||Photograph depicting portion of exterior wall and window with narrative evaluation from an unknown source describing cracking near basement windows and a wall leaning or moving and suggestions for caulking and monitoring|
|Exhibit F||Photograph of interior attic space and gable vent with narrative suggestion from an unknown source “Suggest repair damaged/missing vent screens”|
|Exhibit G||Addresses and brief descriptions of four comparable properties|
Respondent did not object to Complainant’s exhibits, all of which were admitted into the record.
Complainant testified that she had purchased the property in 2016 for $155,500. Complainant testified that the subject property had listed with a realtor and had been publicly advertised. Complainant testified that the subject property was encumbered by a mortgage in the amount of approximately $111,000. Complaintant testified that, if she were to list the subject property for sale, she did not know what would be the asking price. Complainant testified that no offers had been made to purchase the property. Complainant testified that the property had not been appraised in the three years preceding the evidentiary hearing but then later testified that the property had been appraised at the time she purchased it and that she did not remember the amount of the appraised value.
Complainant testified that she was aware of some issues with the condition of specific components of the subject property when she purchased it. Complainant testified that she had obtained an inspection prior to purchasing the property and admitted that she did have knowledge of the property’s condition issues. Complainant testified that water had come into the basement under and/or around a sliding glass door, causing damage to the floor. Complainant testified that the electrical panel was outdated and did not pass code, but it was currently operable. Complainant testified that grading needed to be done around the foundation and that the attic vent screen was missing. Complainant further testified that she did not know the extent of the problems and the cost to repair them when she purchased the subject property. Complainant testified that she had been represented by a licensed real estate agent when she purchased the subject property.
- Respondent’s Evidence. Respondent advocated affirming the BOE’s determination of TVM, $143,000. To support his opinion of value, Respondent offered the following exhibits:
|Exhibit 1||BOE Notice of Decision valuing the subject property at $143,000, residential, as of January 1, 2017|
|Exhibit 2||Real Property Certificate of Value dated September 16, 2016, and recorded with the St. Louis County Recorder’s Officer establishing Complainat’s purchase price for the subject property of $155,500|
|Exhibit 3||Multi-listing service data sheet for the subject property establishing the original list price of the subject property of $170,000 on July 27, 2016, the sale price of $155,500 on September 16, 2016, and an appraised value of $170,000|
Complainant did not object to Respondent’s exhibits, all of which were admitted into the record.
- Presumption of Correct Assessment Not Rebutted – True Value in Money Not Established. Complainant did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE and to establish the TVM of the subject property to be $135,000, as of January 1, 2017. However, even though not required to present any evidence, Respondent presented substantial and persuasive evidence supporting the assessment made by the BOE of $143,000, as of January 1, 2017.
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 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 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.
During the Evidentiary Hearing, the Hearing Officer inquired of Complainant.
Board Presumption and Computer-Assisted Presumption
There exists a presumption of correct assessment by the BOE – the BOE presumption. The BOE presumption requires the taxpayer to substantial and persuasive present evidence to rebut it. If Respondent is seeking to prove a value different than that set by the BOE, then Respondent is required to rebut the BOE presumption. 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 now seeking to lower the BOE’s assessment; therefore, the BOE presumption applies to Complainant.
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 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’s Burden of Proof
Respondent, when advocating a value different from that determined by the original valuation or a valuation made by the BOE, 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, Inc., 564 S.W.2d at 895; Cupples-Hesse, 329 S.W.2d at 702; Brooks, 527 S.W.2d at 53.
In this case, Respondent did not advocate a value different from his initial valuation or the valuation made by the BOE. Respondent argued that the BOE’s determination of value was correct and should be affirmed. Even though not required, Respondent presented substantial and persuasive evidence supporting the BOE’s valuation.
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).
Neither Complainant nor Respondent presented any expert testimony.
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 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.
Complainant did not present any evidence utilizing one or more of three generally accepted approaches to valuing real property for ad valorem tax purposes. Exhibit G was a list of four comparable properties. The only information provided in the list consisted of the addresses, the number of bedrooms and bathrooms, the square footage, and the sale dates and sale prices of the comparables. (Exhibit G) Exhibit G did not provide any information concerning the conditions of the sales, e.g., whether they were foreclosures or bank-owned sales, or the conditions of the comparable properties. Exhibit G did not provide any market-based adjustments to the sale prices of the comparables to account for individual differences between them and the subject property.
Other evidence established that, on September 16, 2016, less than four months before the relevant tax date, Complainant purchased the subject property for $155,500, approximately 8% more than the assessed value as determined by the BOE. Complainant testified and presented evidence of isolated issues related to the condition of the improvement to the subject property. Some of the evidence, particularly the narrative descriptions and suggestions for repairs to the attic vent and to the electrical panel, appeared to have originated from an inspection report. Complainant did not present any bids for repairing the condition issues. The handwritten notations regarding estimated costs to cure the problems that were contained on some of Complainant’s exhibits were not provided by specific vendors.
Complainant testified that she had obtained an inspection prior to purchasing the property and admitted that she did have knowledge of the property’s condition issues. Complainant testified that she did not know the extent of the problems and the cost to repair them. However, Complainant also testified that she had been represented by a licensed real estate agent and that an appraisal had been performed at the time of the purchase. Complainant testified that she initially told the agent not to show her properties in the local area where the subject property is located but that, when Complainant saw the subject property, she changed her mind about moving to the local area.
Exhibit 3, the MLS/Maris listing, described the subject property as having been appraised at $170,000. Consequently, in conjunction with the evidence of the $14,500 difference between the list price and price Complainant actually paid for the property, the evidence implies that Complainant negotiated a sale price that was reflective of the subject property’s condition issues and the need for some potentially costly repairs. There was no evidence that Complainant’s purchase was anything other than a transaction between a typically motivated buyer and seller. Consequently, it is reasonable to conclude that the sale price in October 2016, $155,500, was the market value of the subject property, which supports the BOE’s determination of the TVM of $143,000, as of January 1, 2017.
Even though not required to present evidence, Respondent presented substantial and persuasive evidence establishing that Complainant purchased the subject property for $155,500 close in time to the relevant tax date, which supported the BOE’s determination of the value.
The TVM for the subject property as determined by the BOE is AFFIRMED. The assessed value for the subject property for tax year 2017 is set at $27,170 residential ($143,000 TVM).
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 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 May 11, 2018.
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 11th day of May, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.