STATE TAX COMMISSION OF MISSOURI
|Complainant,||)||Appeal No. 19-20138|
|)||Parcel No. 5410-00-0130-0|
|MICHAEL DAUPHIN, ASSESSOR,||)|
|CITY OF ST. LOUIS MISSOURI ,||)|
DECISION AND ORDER
Drew Carter (Complainant) appeals the City of St. Louis Board of Equalization’s (“BOE”) decision finding the fair market value of the subject property on January 1, 2019, was $1,090,900, with an assessed value of $207,270. Complainant claims the property is overvalued and asserts the true value in money (TVM) on January 1, 2019, was $679,145. Complainant did not produce substantial and persuasive evidence rebutting the BOE’s presumptively correct assessment and establishing the TVM of the subject property as of January 1, 2019. The BOE’s decision is AFFIRMED.
The evidentiary hearing was conducted on February 14, 2020, at Respondent’s office in the City of St. Louis. Complainant appeared pro se. Respondent appeared personally and was represented by attorney Chelsea Mannery. The appeal was heard and decided by Senior Hearing Officer Eric Peterson (Hearing Officer).
FINDINGS OF FACT
- Authority. Complainant timely filed a complaint for review of assessment.
- The Subject Property. The subject property is located at 6251 McPherson Avenue in the City of St. Louis, Missouri. The parcel/locator number is 5410-00-0130-0. The subject property consists of a lot and a three-story, single-family brick home with approximately 9,018 square feet of living area; four bedrooms; four and one-half bathrooms; a detached garage; and a full, unfinished basement. The lot is 0.85 acres. Complainant purchased the subject property in 2012 for $700,000.
- Assessment. Respondent determined the fair market value of the subject property on January 1, 2019, was $1,090,900. Respondent assessed the subject property at the 19% statutory rate for residential property, yielding an assessed value of $207,270.
- Board of Equalization. The BOE determined the fair market value of the subject property on January 1, 2019, was $1,090,900, with an assessed value of $207,270.
- Complainant’s Evidence. Complainant submitted Exhibit A. Exhibit A summarizes the multiple linear regression analysis Complainant used to value the subject property. Exhibit A was admitted into evidence subject to Respondent’s objection it lacked a factual foundation because much of the underlying data was drawn from the Zillow.com website.
A multiple linear regression analysis determines the degree of correlation between two or more independent variables and a dependent variable. Complainant’s multiple linear regression analysis evaluated “numerous home attributes … to determine the impact of each on the value of a home.” Exhibit A. In Complainant’s multiple linear regression analysis, the independent variables are property attributes such as the size of home, the lot size, the number of bathrooms, or the presence of a swimming pool. The dependent variable is the market value of the subject property.
Complainant sampled 19 home sales to determine the correlation between various property attributes and market value. Complainant testified the data were drawn from the Zillow.com website, but presented no facts establishing the accuracy or reliability of the data. Complainant did not verify whether the 19 sales were valid sales resulting from arm’s-length transactions. Exhibit A does not include property data for 12 of the 19 sales Complainant used as the initial sample for his analysis.
Complainant narrowed the initial sample of 19 sales to seven recent sales “determined by statistical analysis to be informative in valuing 6251 McPherson.” Exhibit A. Complainant concluded square footage, garage size, and the presence of fireplaces are not strongly correlated with value. Complainant concluded the property attributes which best predict value are the number of bathrooms, lot size, and the presence of a swimming pool. Complainant developed a final algorithm utilizing the value of these components to calculate a market value $679,145.
Complainant testified he confirmed the predictive capacity of his linear regression analysis by testing it on actual sales. Complainant conceded he did not include this testing data in Exhibit A.
- Respondent’s Evidence. Respondent submitted Exhibits 1 and 2. Respondent asserts the fair market value of the property is $1,090,000 as assigned by the BOE.
Exhibit 1 is an appraisal report for the subject property. Exhibit 1 utilized three comparable sales to estimate the value of the subject property. The comparable sales involved properties at least 1.69 miles away from the subject property. Like the subject property, all the comparable properties are brick homes in good condition.
Exhibit 1 makes market based adjustments to the subject property to account for the differences between the comparable properties and the subject property. Specifically, Exhibit 1 adjusts for differences in living area, garage size, fireplaces, the presence or absence of a pool, and the front footage of the lots. Exhibit 1 estimates the value of the subject property on January 1, 2019, was $1,302,800.
Exhibit 2 is a “Summary of Salient Facts” for the subject property summarizing the 2019 assessment of the subject property. The factual assertions in Exhibit 2 are repetitive of the information included in Exhibit 1.
- Value. The true value in money of the subject property on January 1, 2019, was $1,090,900, with an assessed value of $207,270.
CONCLUSIONS OF LAW
The Commission has authority 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 Board of Equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious. Mo. Const. art. X, sec. 14; section 138.430, RSMo 2000; section 138.431.
Residential real property is assessed at 19% of its “true value in money” as of January first of each odd-numbered year. Sections 137.115.1, 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 Missouri 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).
- Complainant’s Burden of Proof
The taxpayer bears the burden of proof and must show by a preponderance of the evidence that the property was overvalued. Westwood P’ship v. Gogarty, 103 S.W.3d 152, 161 (Mo. App. 2003). 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 v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005). To rebut the BOE presumption and prevail, 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 v. State Tax Comm’n, 722 S.W.2d 72, 77 (Mo. banc 1986) (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. 2002); see also White v. Dir. of Revenue, 321 S.W.3d 298, 305 (Mo. banc 2010) (noting the burden of persuasion is a “party’s duty to convince the fact-finder to view the facts in a way that favors that party”).
- Computer-Assisted Valuation
In pertinent part, section 137.115.1 provides:
In the event a valuation of subclass (1) real property within any county with a charter form of government, or within a city not within a county, is made by a computer, computer-assisted method or a computer program, the burden of proof, supported by clear, convincing and cogent evidence to sustain such valuation, shall be on the assessor at any hearing or appeal.
Section 137.115.1 does not relieve the taxpayer of his or her independent burden of rebutting the BOE presumption and proving the fair market value of the subject property. Nor does section 137.115.1 generally place the burden of proof on the assessor. Section 137.115.1 shifts the burden of proof to the assessor only if: (1) the valuation of residential property was “made by” a computer-assisted method; and (2) the assessor seeks to “sustain such valuation.” Even if Respondent’s valuation was computer-assisted, Respondent is not seeking to “sustain such valuation” because Respondent is seeking to affirm the BOE’s independent valuation. The burden shifting provision in section 137.115.1 does not apply.
“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 (Mo. banc 2005). 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.
The hearing officer is the finder of fact, and determines both the credibility and weight of the evidence. Kelly v. Missouri Dep’t of Soc. Servs., Family Support Div., 456 S.W.3d 107, 111 (Mo. App. 2015); Stone v. Missouri Dep’t of Health & Senior Servs., 350 S.W.3d 14, 20 (Mo. banc 2011) (noting that in a contested case, courts defer to administrative agency findings of fact); see also section 536.090 (requiring all decisions and orders in contested cases to include “findings of fact”). 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 is not bound by any single formula, rule or method in determining the 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 to.” St. Louis Cty. v. State Tax Comm’n, 515 S.W.2d 446, 450 (Mo. 1974). “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. 2020).
Respondent’s Exhibit 1 concludes the market value of the subject property is higher than the value determined by Respondent and the BOE. Respondent, however, does not advocate a value higher than that determined by the BOE. Therefore, Exhibit 1 is admissible as evidence for sustaining the value assigned by the BOE. 12 CSR 30-3.075(1).
7. Complainant Did Not Prove Overvaluation
Complainant asserts the linear regression valuation analysis in Exhibit A shows the fair market value of the subject property as of January 1, 2019, was $679,145, not $1,090,900 as set by the BOE. Complainant’s argument is unpersuasive.
Exhibit A reflects Complainant’s opinion of value and was admitted into the record subject to Respondent’s objection for a lack of foundation. 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); Cohen v. Bushmeyer, 251 S.W.3d 345, 349 (Mo. App. 2008) (property owner’s opinion of value loses probative value when it rests on an improper foundation).
Complainant testified the data underlying his analysis was sourced from the Zillow.com website. Complainant did not present facts establishing the accuracy or reliability of the data obtained from the Zillow website. Complainant’s opinion of value in Exhibit A rests on an insufficient foundation of unreliable and unverified facts. Therefore, Exhibit A lacks probative value and does not constitute substantial and persuasive evidence of value. Shelby Cty., 392 S.W.2d at 613 (Mo. 1965); cf. City of Maryland Heights v. Heitz, 358 S.W.3d 98, 111 (Mo. App. 2011) (sales data lacks a sufficient foundation when an appraiser simply relies “on facts from some unknown person in his office”).
The persuasiveness of Complainant’s analysis is further undermined by the lack of evidence confirming the predictive capacity of Complainant’s valuation model. Complainant testified he confirmed the model’s accuracy by comparing his value estimates to actual sales. Complainant, however, conceded Exhibit A does not include the data underlying this comparison. The lack of verified data and documented testing undermines the persuasiveness of Exhibit A. Although Exhibit A was admitted into record, Complainant’s regression analysis, premised as it is on unreliable and unverified data, is not substantial and persuasive evidence rebutting the BOE’s presumptively correct decision valuing the subject property at $1,090,900.
Conclusion and Order
The BOE decision is affirmed. The fair market value of the subject property as of January 1, 2019 is $1,090,900. The assessed value is $207,270.
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 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 of Missouri, 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.
The Collector of the City of St. Louis, 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 July 17th, 2020.
STATE TAX COMMISSION OF MISSOURI
Eric S. Peterson
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 17th day of July, 2020, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.
 All statutory citations are to RSMo 2000, as amended.
 The St. Louis City BOE is a statutorily created entity independent of the assessor. See Section 138.140, et seq; see also Stocke v. Edwards, 244 S.W. 802, 805 (Mo. 1922) (noting the board of equalization is a “distinct and separate entity in the field of taxation”). The BOE is obligated to “adjust, correct, and equalize the valuations and assessments” within the City and “adjust and correct the assessment plat books or records accordingly.” Section 138.150.1. The BOE’s independent valuation supplants the assessor’s valuation.
 Complainant also asserts Respondent’s appraisal report is flawed and unpersuasive. Complainant bears the burden of proof, not the Respondent. Thus, even if Respondent’s appraisal report is unpersuasive, that conclusion would not negate Complainant’s burden of producing substantial and persuasive evidence showing the BOE overvalued the subject property. Because Complainant did not meet his burden of proof, it is unnecessary to address his critique of Respondent’s appraisal report.