Donald Hensley v. Tracy Baldwin, Assessor, Clay County

STATE TAX COMMISSION OF MISSOURI

DONALD HENSLEY,	)	Appeal No. 21-32000
	)	Parcel/locator No. 14405000601100
Complainant(s),	)
	)
v.	)
	)
TRACY BALDWIN, ASSESSOR,	)
CLAY COUNTY, MISSOURI,	)
Respondent.	)

 

ORDER AFFIRMING HEARING OFFICER DECISION UPON APPLICATION FOR REVIEW

HOLDING

On December 31, 2021, State Tax Commission (STC) Senior Hearing Officer Erica Gage (Hearing Officer) entered a Decision and Order (Decision) affirming the decision of the Clay County Board of Equalization (BOE)[1].  Donald Hensley (Complainant) timely filed an Application for Review of the Decision and Order of the Hearing Officer.  Tracy Baldwin, Assessor, Clay County, Missouri, (Respondent) timely filed a Response.

We AFFIRM the Decision of the Hearing Officer. Segments of the Hearing Officer’s Decision may have been incorporated into our Order without further reference.

FINDINGS OF FACT AND PROCEDURAL HISTORY

The subject property is identified by Parcel Locator No. 14405000601100. The subject property is further identified as being located at 7828 N Chestnut Ave, Gladstone, Clay County, Missouri. The subject property consists of a parcel of residential real property improved by a 2,098 square-foot-main-floor single family home.  The home is a reverse one-and-a-half story ranch with a stucco and wood siding exterior, a three-car attached garage, a wood deck, and a patio.  The home features two bedrooms, two full bathrooms, and a partially-finished basement with additional square footage and a full bathroom.

Respondent assessed the subject property as residential with a value of $305,200. Complainant appealed to the BOE, which affirmed Respondent’s valuation. Complainant timely appealed to the STC alleging that the subject property was overvalued. The parties waived their opportunity for an evidentiary hearing and submitted their evidence and exhibits on the written record. The Hearing Officer subsequently issued the Decision and Order affirming the BOE’s decision. 

Complainant timely filed an application for review.  The STC thereafter issued its Order allowing the application for review and granting Respondent time to file a response.  Respondent timely filed his response.

CONCLUSIONS OF LAW

Complainant’s Point on Review

Complainant alleges the Hearing Officer erred by finding that Complainant did not produce substantial and persuasive evidence to establish Respondent overvalued the subject property.  Specifically, Complainant argues that his evidence showed other homes in the area in 2020 were sold at $81.55 per square foot, equating to a value of $234,130 for the subject property.

Standard of Review

A party subject to a Decision and Order of a hearing officer of the STC may file an application requesting the case be reviewed by the STC.  Section 138.432[2].  The STC may then summarily allow or deny the request.  Section 138.432.  The STC may affirm, modify, reverse, set aside, deny, or remand to the Hearing Officer the Decision and Order of the Hearing Officer on the basis of the evidence previously submitted or based on additional evidence taken before the STC.  Section 138.432.    

Commission’s Ruling

          For the reasons that follow, the Commission finds Complainant’s argument to be unpersuasive.  The Commission, having thoroughly reviewed the whole record and having considered the Hearing Officer’s Decision, the Application for Review of Complainant, and the Response of Respondent, affirms the Hearing Officer’s decision.

There is a presumption of validity, good faith and correctness of assessment by the BOE.  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).  This presumption is a rebuttable rather than a conclusive presumption.  The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the BOE’s valuation is erroneous and what fair market value should have been placed on the property.  Id.

The taxpayer in a STC appeal bears the burden of proof. The taxpayer is the moving party seeking affirmative relief.  Therefore, Complainant bears the burden of proving by substantial and persuasive evidence 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. W.D. 1991).  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).

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 record reveals that Complainant advocated the TVM of the subject property on January 1, 2021, was $234,130. Complainant presented evidence intended to show that Respondent’s mass appraisal methods did not take the subject property’s features into account and that Respondent’s determination of value was not supported by the condition of the property. Complainant submitted six recent comparable home sales, from which he calculated the total square footage and found a median price per square foot. This price was then used to calculate his opinion of the subject property’s value, $234,130 ($81.55 per square foot x 2,871 square feet).  The Hearing Officer correctly reasoned that “Although this method of finding value does produce a method of comparison between the properties, it is not the method used to find TVM for a property.  The comparable sales approach is the method used to determine the TVM of the subject property.” The Hearing Officer further reasoned that Complainant’s evidence was not substantial and persuasive of his opinion of value because the data submitted by Complainant for his calculation was not authenticated, and the sales prices of Complainant’s comparables had not been adjusted for similarities and differences with the subject property.  The record contains no evidence establishing that Complainant is a licensed appraiser or has had education and training as an appraiser.  The Hearing Officer found that Complainant’s calculation was based on improper elements and, therefore, speculative and did not constitute substantial and persuasive evidence to rebut the BOE’s valuation and to establish that Complainant’s opinion of the value of the subject property was correct. The record supports the Hearing Officer’s findings.  

The record also reveals that Respondent presented evidence supporting the BOE’s valuation of the subject property, specifically, an appraisal report concluding the TVM of the subject property on January 1, 2021, was $305,200.  The appraisal report utilized recent sales of four comparable properties located within 1.5 miles of the subject property, two of which were the same as two comparables presented by Complainant.  The appraisal report correctly utilized the sales comparison approach to valuing property by adjusting the sale prices of the comparable properties to account for similarities and differences with the subject property.  The Hearing Officer found that, although Respondent did not have the burden of proof, Respondent’s evidence persuasively supported the BOE’s valuation of the subject property.

The taxpayer in a STC appeal bears the burden of proof. The taxpayer is the moving party seeking affirmative relief.  Therefore, in this appeal, the Complainant had the burden of proving that the BOE’s valuation was erroneous and of establishing what should be the value of the subject property.  Given the evidence presented, the Hearing Officer did not err in affirming the BOE decision.

ORDER

          The Decision of the Hearing Officer is AFFIRMED.  Segments of the Decision and Order of the Hearing Officer, including the findings of fact and conclusions of law therein, may have been incorporated by reference, as if set out in full, in this final decision of the Commission.

Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140 RSMo within 30 days of the mailing date set forth in the Certificate of Service for this Order.

If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts unless disbursed pursuant to Section 139.031.8 RSMo.

If no judicial review is made within 30 days, this decision and order is deemed final and the Collector of Clay County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal.

SO ORDERED April 22, 2022.

STATE TAX COMMISSION OF MISSOURI

 

_____________________________________

Gary Romine, Chairman

 

_____________________________________

Victor Callahan, Commissioner

 

_____________________________________

Will Kraus, Commissioner

 

Certificate of Service

I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid April 22, 2022, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.

 

Elaina Mejia

Legal Coordinator

 

 

STATE TAX COMMISSION OF MISSOURI

DONALD HENSLEY,	)	Appeal No. 21-32000
	)	Parcel/locator No. 14405000601100
Complainant(s),	)
	)
v.	)
	)
TRACY BALDWIN, ASSESSOR,	)
CLAY COUNTY, MISSOURI,	)
Respondent.	)

 

DECISION AND ORDER 

         Donald Hensley (Complainant) appeals the Clay County Board of Equalization’s (BOE) decision finding the true value in money (TVM) of the subject property on January 1, 2021, was $305,200, with an assessed value of $57,990.  Complainant claims the property is overvalued and proposes a value of $234,130.  Complainant did not produce substantial and persuasive evidence establishing overvaluation.  The BOE’s decision is affirmed.[3] The parties waived their opportunity for an evidentiary hearing and agreed to submit the appeals on the record.[4] Complainant, pro se, and Respondent, represented by counsel, Lucas Wallingford, each submitted their respective evidence for appeal on the record.

FINDINGS OF FACT

1. Subject Property. The subject property is located at 7828 N Chestnut Ave, Gladstone, Clay County, Missouri. The parcel/locator number is 14405000601100.

The subject property consists of a 2,098 square foot single family home.  It is a reverse one and a half story ranch with a stucco front and wood siding. There is a three car attached garage to the front and a wood deck and patio to the rear. The main level features two bedrooms, two full bathrooms, and a living area, totaling 2,098 square feet of living space. The basement level is 2,072 square feet with approximately 1,422 square feet finished, which includes additional rooms and one full bath.

2. Respondent and BOE. Respondent classified the subject property as residential and determined the TVM on January 1, 2021, was $305,200. The BOE classified the subject property as residential and independently determined the TVM on January 1, 2021, was $305,200.
3. Complainant’s Evidence. Complainant testified the TVM of the subject property on January 1, 2021, was $234,130. Based on Complainant’s evidence, Complainant’s argument is Respondent’s mass appraisal methods did not take his individual home’s features into account and the increase in value was not supported by the condition of the property. Complainant submitted six recent comparable home sales, from which he calculated the total square footage and found a median price per square foot. This price was then used to calculate his home’s value, $234,130 ($81.55 average price per sq. foot x 2,871 sq. feet of the subject property). There was no evidence presented that Complainant is a licensed appraiser or a person possessing appraisal training.

Complainant submitted the following exhibits:

Exhibit	Description	Ruling
A	Letters	Admitted
B	Sequence of Events Written testimony	Admitted
C	Comparables	Admitted
D	Emails	Admitted

Complainant’s Exhibit C presents six comparable properties of recent or pending sales. The properties are all similar in location, class, and age. The properties are different in size. Complainant’s comparables are not adjusted for differences but compared by total square foot and sales price. All comparables were recently sold in 2020 or 2021.

4. Respondent’s Evidence. Respondent submitted Exhibit 1, the Property Record Card, Exhibit 2, the Subject Property Valuation Report, and the Written Direct Testimony (WDT) of Bobby Reed; all of which are admitted into evidence.  Exhibit 2 is the appraisal report concluding the TVM of the subject property on January 1, 2021, was $305,200.  Mr. Reed has approximately three years of experience as a Residential Real Estate Data Collector for Clay County.  In Exhibit 2, Mr. Reed utilized the sales comparison approach to estimate the January 1, 2021, market value of the subject property.  Mr. Reed’s WDT concluded the market value was $305,200.

Exhibit 2 utilizes the sales comparison approach to estimate the market value of the subject property from recent sales of four comparable properties. The four comparable properties are located within one and a half miles of the subject property.  Mr. Reed adjusted the sale prices of the comparable properties to account for differences with the subject property.  Exhibit 2 specifies the “comparables were chosen because they had the fewest net adjustments, and were the most similar in Gross Living Area.  Comp #1 is an investor owned home that was sold in “as is” condition and was located in the subject’s immediate subdivision.  Sales #2, #3, and #4 are located in nearby competing additions with similar quality homes and amenities.” (Ex. 2 at 6).

The key property data in Exhibit 2 are as follows:

	Subject Property	2710 NE 76th Terr	1818 NE 80th St	1803 NE 80th Pl	2512 NW 78th St
Year built	1996	1996	2003	2003	1992
Square feet	2,098	2,735	1,539	2,059	2,372
Class	Good	Good	Good	Good	Average

The comparable properties are similar to the subject property with respect to location, class, overall usage (single family residential), and size. The comparable properties differ from the subject property with respect to age and features.

Exhibit 2 also utilizes sales comparison for six properties submitted by Complainant, two of which are the same properties chosen for comparison by Mr. Reed. Mr. Reed’s grid and analysis of the homes submitted by Complainant concludes “many of these sales were deemed to be too different to use as true comparable properties to the subject in our own Sales Comparison Grid as supported by the large difference in Net Adjustments needed to equal them to the subject property.”  (Ex. 2 at 10 – 12).

5. Value. The TVM of the subject property on January 1, 2021 was $305,200, with an assessed value of $57,990.

CONCLUSIONS OF LAW

1. Assessment and Valuation

          Pursuant to Article X, Sections 4(a) and 4(b), Mo. Const. of 1945 real property and tangible personal property is 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.  Residential real property is assessed at 19% of its TVM as of January 1 of each odd-numbered year.  Section 137.115.5(1)(a). “True value in money is the fair market value of the property on the valuation date, and is a function of its highest and best use, which is the use of the property which will produce the greatest return in the reasonably near future.”  Snider v. Casino Aztar/Aztar Mo. Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005) (internal quotation omitted).  The fair market value is “the price which the property would bring from a willing buyer when offered for sale by a willing seller.”  Mo. Baptist Children’s Home v. State Tax Comm’n, 867 S.W.2d 510, 512 (Mo. banc 1993).   Determining the TVM is a factual issue for the STC.  Cohen v. Bushmeyer, 251 S.W.3d 345, 348 (Mo. App. E.D. 2008). The “proper methods of valuation and assessment of property are delegated to the Commission.”  Savage v. State Tax Comm’n, 722 S.W.2d 72, 75 (Mo. banc 1986).

          “For purposes of levying property taxes, the value of real property is typically determined using one or more of three generally accepted approaches.”  Snider, 156 S.W.3d at 346.  The three generally accepted approaches are the cost approach, the income approach, and the comparable sales approach.  Id. at 346-48; see also St. Louis Cty. v. Sec. Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977).

The comparable sales approach “is most appropriate when there is an active market for the type of property at issue such that sufficient data are available to make a comparative analysis.”  Snider, 156 S.W.3d at 348.  For this reason, the comparable sales approach is typically used to value residential property.  “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 347-48 (internal quotation omitted).  “Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character.”  Id. at 348.

2. Evidence

The hearing officer is the finder of fact and determines the credibility and weight of the evidence.   Kelly v. Mo. Dep’t of Soc. Servs., Family Support Div., 456 S.W.3d 107, 111 (Mo. App. W.D. 2015).  The finder of fact in an administrative hearing determines the credibility and weight of expert testimony.  Hornbeck v. Spectra Painting, Inc., 370 S.W.3d 624, 632 (Mo. banc 2012).  “It is within the purview of the hearing officer to determine the method of valuation to be adopted in a given case.” Tibbs v. Poplar Bluff Assocs. I, L.P., 599 S.W.3d 1, 9 (Mo. App. S.D. 2020).   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. 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.

3. Complainant’s Burden of Proof

         The BOE’s valuation is presumptively correct.  Rinehart v. Laclede Gas Co., 607 S.W.3d 220, 227 (Mo. App. W.D. 2020).  To prove overvaluation, a taxpayer must rebut the BOE’s presumptively correct valuation and prove the “value that should have been placed on the property.”  Snider, 156 S.W.3d at 346.  The taxpayer’s evidence must be both “substantial and persuasive.”  Id.  “Substantial evidence is that evidence which, if true, has probative force upon the issues, and from which the trier of fact can reasonably decide the case on the fact issues.”  Savage, 722 S.W.2d at 77 (internal quotation omitted).  Evidence is persuasive when it has “sufficient weight and probative value to convince the trier of fact.”  Daly v. P.D. George Co., 77 S.W.3d 645, 651 (Mo. App. E.D. 2002); see also White v. Dir. of Revenue, 321 S.W.3d 298, 305 (Mo. banc 2010) (noting the burden of persuasion is the “party’s duty to convince the fact-finder to view the facts in a way that favors that party”). 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. 1980).

4. Complainant Did Not Prove Overvaluation.

Complainant’s evidence alleges the subject property’s value should have been $234,130.  Complainant’s Exhibits B and C includes the explanation of Complainant’s alleged value calculated as $234,130 (the comparables sales price(s) divided by square foot, then average of the price per square foot multiplied by the subject property’s square footage).  Complainant’s Exhibit C includes a grid with comparable home sale prices and square footages and the calculation to find the price per square foot.  Although this method of finding value does produce a method of comparison between the properties, it is not the method used to find TVM for a property.  The comparable sales approach is the method used to determine the TVM of the subject property.  “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.”  Snider, 156 S.W.3d at 347-48 (internal quotation omitted).  Exhibits B and C’s calculation does not account for differences between the comparable sales and the subject property.  While a property owner’s opinion of value is generally admissible, the opinion “is without probative value where it is shown to have been based upon improper elements or an improper foundation.”  Shelby Cty. R-IV Sch. Dist. v. Herman, 392 S.W.2d 609, 613 (Mo. 1965); see also Cohen v. Bushmeyer, 251 S.W.3d 345, 349 (Mo. App. W.D. 2008) (noting a property owner’s opinion of value loses probative value when it rests on an improper foundation).  Complainant’s calculation is based on improper elements and therefore is speculative.

Further, Complainant presented no appraisal of the subject property in order to determine a value of the subject property.  See Cohen, 251 S.W.3d at 349 (holding a landowner’s opinion of value lacks probative value when there is “no other evidence as to what he based his opinion on or how he arrived at his opinion of [value]”).  The data submitted by Complainant for his calculation was not authenticated, and the sales prices of the comparables were not adjusted with the subject property to find a proper appraisal comparison.  Therefore, all of the comparable home data and analysis submitted in Complainant’s Exhibits is both speculative and incomplete (see Exhibit C).

The assertions within Exhibit A, B, and D, which discuss Respondent’s methodology, are not substantial and persuasive evidence that the BOE’s valuation of the subject property is erroneous. General assertions about the short-comings of the methodology of Respondent and how such methodology causes increases due to mass appraisal do not speak specifically as to the TVM of the subject property.  Further, the fact that the appraised value of the subject property increased approximately 14% is not substantial and persuasive evidence that the BOE value is incorrect.

Respondent, although not required to, presented persuasive evidence in support of his valuation.  Exhibit 2 and Mr. Reed’s testimony that he selected four comparable properties and adjusted their sales prices based on similarities and differences to the subject property persuasively support the TVM of $305,200 determined by Respondent.

CONCLUSION AND ORDER

The BOE decision is affirmed.  The TVM of the subject property as of January 1, 2021, was $305,200 with an assessed value of $57,990.

Application for Review

            A party may file with the Commission an application for review of this decision within 30 days of the mailing date set forth in the certificate of service for this decision. The application “shall contain specific detailed grounds upon which it is claimed the decision is erroneous.”  Section 138.432.  The application must be in writing, and may be mailed to the State Tax Commission, P.O. Box 146, Jefferson City, MO 65102-0146, or emailed to Legal@stc.mo.gov.  A copy of the application must be sent to each person 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.

Disputed Taxes

            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.

SO ORDERED December 31, 2021.

STATE TAX COMMISSION OF MISSOURI

 

Erica M. Gage

State Tax Commission

 

Certificate of Service

I hereby certify that a copy of the foregoing has been electronically mailed and/or sent by U.S. Mail on December 31, 2021, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.

 

Elaina Mejia

Legal Coordinator

 

 

 

[1] Missouri operates on a two-year reassessment cycle for valuing real property. See Section 137.115.1. Absent new construction or improvements to a parcel of real property, the assessed value as of January 1 of the odd year remains the assessed value as of January 1 of the following even year. Id.

[2] All statutory citations are to RSMo. 2000, as amended, unless indicated otherwise.

[3] Complainant timely filed a complaint for review of assessment.  The State Tax Commission (STC) has authority to hear and decide Complainant’s appeal.   Mo. Const. art. X, Section 14; section 138.430.1, RSMo 2000.  All statutory citations are to RSMo 2000, as amended.

 

[4] Section 138.431.5 provides the “hearing officer, after affording the parties reasonable opportunity for fair hearing, 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.”