STATE TAX COMMISSION OF MISSOURI
|DONALD AND TRACY BOEHLEIN,||)
|v.||)||Appeal No. 17-10042|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS COUNTY, MISSOURI,
DECISION AND ORDER
The decision of the St. Louis County Board of Equalization (BOE) is AFFIRMED. Complainants Donald Boehlein and Tracy Boehlein did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.
Tracy Boehlein (Complainant) appeared pro se; Donald Boehlein appeared not.
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).
Complainants appealed on the ground of overvaluation. Respondent initially set the true value in money (TVM) of the subject property at $554,000, as residential property, as of January 1, 2017. The BOE valued the subject property at $554,000, 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 January 24, 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 19V320202. It is further identified as 1500 Highland Valley Circle, Wildwood, St. Louis County, Missouri. (Complaint; Exhibit 1)
- Description of Subject Property. The subject property consists of slightly more than a ½ acre (25,268 square feet) improved by a 3,213 square foot, atrium ranch-style, single family home built in approximately 1995. (Exhibit 1) The subject property includes four bedrooms; two full bathrooms; one half bathroom; a 3,189 square foot basement with 1,400 square feet of finished area; one bedroom, one full bathroom, and one half bathroom in the basement; a three-car garage; a porch, a screened porch, a deck, and a patio; and two fireplaces. (Exhibit 1) The exterior consists of masonry and frame construction. (Exhibit 1)
- Assessment. Respondent set a TVM for the subject property of $554,000, residential, as of January 1, 2017.
- Board of Equalization. The BOE set a TVM of the subject property at $554,000, residential, as of January 1, 2017.
- Complainant’s Evidence. Complainant opined that the subject propety’s TVM as of January 1, 2017, was $450,000. To support Complainant’s opinion of value, Complainant offered as evidence the following exhibits:
|Exhibit A||Appraisal Report prepared by Missouri State Certified Residential Real Estate Appraiser Scott C. Tillotson|
|Exhibit B||Comparable 1524 Highland Valley Circle|
|Exhibit C||Comparable 1539 Wildhorse Parkway|
|Exhibit D||Comparable 1306 Katsura Court|
|Exhibit E||Comparable 1622 Highland Valley Circle|
|Exhibit F||Comparable 17704 Hornbean|
|Exhibit G||Comparable 1647 Wildhorse Parkway|
|Exhibit H||Comparable 1502 Wildhorse Parkway|
|Exhibit I||Data for comparable property’s used in Respondent’s initial assessment of the subject property
Respondent objected to Exhibit A as hearsay because the appraiser who had prepared the report was not present to testify as to the contents of the report. The Hearing Officer sustained the objection and excluded Exhibt A but allowed Complainant to testify regarding her personal knowledge of the comparable properties contained within the Exhibit A. Respondent did not object to the remainder of Complainant’s exhibits, which were admitted into the record.
Complainant testified that she had purchased the subject property in October 2015 for $522,500. Complainant testified that the subject property had been listed with a realtor and publicly advertised on the multi-listing service (MLS). Complainant testified that a mortgage encumbered the subject property, but that she was unsure of the balance, which possibly was $200,000. Complainant testified that she had not listed the subject property for sale within the three years preceding the date of the Evidentiary Hearing and that no offers to purchase the subject property had been made. Complainant testified that if she were to list it for sale, she would consult with an agent to price it. Complainant testified that she had the subject property appraised for purposes of the current appeal. Complainant testified that she had received the appraisal report on January 23, 2018, and the appraisal amount was $480,000. Complainant testified that, to her knowledge, the appraiser had looked at the exterior of her home and reviewed multi-listing service photographs of the interior. Complainant testified that she had purchased the subject property with the furniture included in the home. Complainant testified that the only improvement made to the subject property between January 1, 2015, and January 1, 2017, was the addition of an alarm system.
With regard to Exhibits B through H, the sale prices of Complainant’s comparables ranged from $425,000 to $488,000. (Exhibits B through H) None of the exhibits included the actual sale date of the comparables. The only dates appearing on the exhibits were the dates that the comparables were emailed by John T. Burghoff Realty to Complainant, September 27, 2017, and the date the exhibits were printed, September 29, 2017. The square footage of the comparables ranged from 2,732 square feet to 3,734 square feet. (Exhibits B through H) Complainant testified as to the similarities and differences between the comparable properties and the subject property, but Complainant did not make any market-based dollar adjustments to the comparables for the similarities and differences. Complainant testified that the comparable contained in Exhibit D was similar to the subject property except for its location; the comparable backed to trees/woods and was on a cul-de-sac. (Exhibit D) Complainant testified that the subject property was surrounded by streets on three sides.
On cross examination, Complainant testified that she is not a certified real estate appraiser but that she had researched some of the comparable sales and had conducted further research after receiving some assistance from a real estate agent. Complainant testified that she knew she could not compare properties that were foreclosures or in as-is condition. Complainant testified that she did not know the sale dates of the comparables but that they were within a two-year period of the tax date. Complainant testified that she did not have any specific training or experience in order to make market-based adjustments to the comparables but that she used common sense to compare updates and upgrades of the comparables to the original condition of the subject property.
- Respondent’s Evidence. Respondent offered as evidence the following exhibits:
|Exhibit 1||Appraisal report of Missouri State Certified Residential Real Estate Appraiser Barry A. Hough|
Complainant did not object to Respondent’s exhibit, which was admitted into the record.
Respondent also presented the testimony of Missouri State Certified Residential Real Estate Appraiser Barry A. Hough (the Appraiser). The Appraiser opined that the TVM of the subject property was $580,000 as of January 1, 2017. The Appraiser testified that he used the sales comparison approach to arrive at an opinion of TVM for the subject property.
In his report, the Appraiser analyzed seven comparable sales situated within less than one mile the subject property. (Exhibit 1) The sale prices of the comparables ranged from $522,675 to $605,000. (Exhibit 1) The comparables sold between June 2015 and October 2016. In the report, the Appraiser noted that Comparable No. 6, only 118 square feet larger than the subject property, was again on the market, “listed for $615,000.” (Exhibit 1)
Comparable Nos. 1, 2, 3, 4, and 5 were either ranch-style or atrium ranch-style single family homes. Comparable Nos. 6 and 7 were two-story single family homes. (Exhibit 1) All of the comparables were built between approximately 1993 and 1998, within the same age range as the subject property. (Exhibit 1) The Appraiser made positive and negative market-based dollar adjustments to the prices of the comparables for specific items that were either superior or inferior in relation to the subject property, such as bedroom and bathroom count; gross living area; basement size and finished area; and bathrooms in basement. (Exhibit 1) The adjusted sale prices of the comparables ranged from $532,175 to $627,000. (Exhibit 1) The Appraiser placed the most weight on Comparable Nos. 1 and 2 “because of their immediate proximity to the subject property.” (Exhibit 1) The adjusted sale price of Comparable No. 1 was $550,500. The adjusted sale price of Comparable No. 2 was $625,500. (Exhibit 1)
In the report, the Appraiser addressed the quality and condition of the subject property. The subject property and all of the comparables had a condition rating of C3 and a quality of construction rating of Q4. The Appraiser reported that he had observed the exterior condition of the subject property from the street. The Appraiser reported that he had observed the interior condition of the subject property through “extensive photographic evidence from the 2015 MLS listing corresponding with prior sale.” (Exhibit 1) The report stated, “Condition ratings for the subject and each comparable property have been determined using the Uniform Appraisal Dataset (UAD). Adjustments have been made based on the differences per these definitions.” The report contained the definitions for C3 and Q4:
C3 The improvements are well maintained and feature limited physical depreciation due to normal wear and tear. Some components, but not every major building component, may be updated or recently rehabilitated. The structure has been very well maintained.
Q4 Dwellings with this quality rating meet or exceed the requirements of applicable building codes. Standard or modified standard building plans are utilized and the design includes adequate fenestration and some exterior ornamentation and interior refinements. Materials, workmanship, finish, and equipment are of stock or builder grade and may feature some updates.
On cross examination, the Appraiser testified that a cul-de-sac or private lot would not add value to the subject property under the circumstances because the site was “typical” for the neighborhood. The Appraiser testified that, generally, whether certain upgrades or updates increased the value of specific properties depended upon whether the market was showing that prices for properties with those upgrades or updates were higher than those properties without such upgrades or updates. The Appraiser testified that he did not necessarily need to view the interior of the subject property to form an opinion of its value because he used standard appraisal practice and viewed the mult-listing service photographs. The Appraiser further testified that detailed ameneties, such as pools, firepits, sprinkler systems, alarm systems, and media rooms were not represented as adjustments in the report. The Appraiser testified that such detailed ameneties do not necessarily add value to a property.
- Presumption of Correct Assessment Not Rebutted – True Market Value 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 as of January 1, 2017, to be $450,000.
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.
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).
In this case, Complainant testified that the TVM of the subject property was $450,000 as of January 1, 2017.
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 advocated that the BOE’s valuation of the subject property be affirmed and presented evidence, the Appraiser’s report and the testimony of the Appraiser, to support 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).
Complainant testified on her own behalf. Respondent presented the expert testimony and report of the Appraiser.
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 not substantial and 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.
Although Complainant presented Exhibits B through H, which contained detailed information regarding seven comparable properties, the information resembled a comparative market analysis. None of Exhibits B through H showed the sale date for the comparables. Exhibits B through H listed numerous details about the comparables, but the exhibits did not utilize market-based dollar adjustments to account for the similarities and differences between comparable properties and the subject property to persuade the factfinder that the subject property should have been valued at $450,000. Although Complainant testified that she had purchased the subject property along with its furniture in 2015 for $522,500, Complainant presented no evidence establishing the TVM of the furniture that might be deducted from the TVM of the subject property.
Respondent, though not required, presented substantial and persuasive evidence supporting the BOE’s valuation of the subject property. The Appraiser used the comparable sales method for arriving at an opinion of TVM for the subject property, which is one of the three court-approved methods for determining value for tax assessment purposes. The Appraiser’s report made market-based dollar adjustments to account for the similarities and differences between the comparables analyzed in the report and the subject property.
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 $105,260 residential ($554,000 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 March 13 , 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 13th day of March, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.