STATE TAX COMMISSION OF MISSOURI
|DRF HOLDINGS, LLC,||)|
|Complainant,||)||Appeal Nos. 19-20026 and 19-20029|
|)||Parcel Nos. 0482-03-0151-0 and 0482-03-0149-0|
|MICHAEL DAUPHIN, ASSESSOR,||)|
|ST. LOUIS CITY, MISSOURI,||)|
DECISION AND ORDER
DRF Holdings, LLC (Complainant) appeals the City of St. Louis Board of Equalization’s (BOE) decision finding the true value in money (TVM) of the subject properties on January 1, 2019, was $98,000 each. Complainant claims the properties are overvalued and proposes a value of $75,000 each. Complainant did not produce substantial and persuasive evidence establishing overvaluation. The BOE’s decisions are affirmed.
The evidentiary hearing was conducted on October 6, 2020, at St. Louis City Hall, St. Louis, Missouri. Complainant was represented by counsel Daniel Friedman. Respondent appeared in person and was represented by counsel Chelsea Mannery.
FINDINGS OF FACT
- Subject Properties. The subject properties are located in the Eden Lofts condominium complex at 1720 Chouteau Avenue, #404 (subject property 404) and #405 (subject property 405) in St. Louis, Missouri. The parcel/locator numbers for subject property 404 and subject property 405 are 0482-03-0149-0 and 0482-03-0151-0, respectively.
The subject properties are two condominium units that each have two bedrooms and two full bathrooms. Subject property 404 is an approximately 1,089 square foot unit, and subject property 405 is an approximately 1,036 square foot unit. Complainant purchased the subject properties for $75,000 each on December 12, 2016.
- Respondent and BOE. Respondent classified the subject properties as residential and determined the TVM on January 1, 2019, was $98,000 each. The BOE classified the subject properties as residential and independently determined the TVM on January 1, 2019, was $98,000 each.
- Complainant’s Evidence. Complainant asserted the TVM of the subject properties on January 1, 2019, was $75,000 each, based on the purchase price of the subject properties and the evidence submitted. Complainant submitted the following exhibits:
|A||Listing, property detail report, two sale contract counteroffers, addendum to counteroffer 1, and May 14, 2017, residential sale contract for 1720 Chouteau, 107, St. Louis, MO 63103.||Admitted|
|B||Sale contract counteroffer, October 13, 2016, special sale contract, special sale inspection rider, disclosure of information and acknowledgement regarding lead based paint and/or lead based paint hazards, listing, and property detail report for subject property 404.||Admitted|
|C||Sale contract counteroffer, October 13, 2016, special sale contract, special sale inspection rider, disclosure of information and acknowledgement regarding lead based paint and/or lead based paint hazards, listing, and property detail report for subject property 405.||Admitted|
|D||Sixteen photographs of subject property 404 as of July 20, 2019.||Admitted|
|E||Thirteen photographs of subject property 405 as of July 20, 2019, including building exterior.||Admitted|
|F||Printout of Saint Louis home prices and values and Saint Louis market overview with highlighting indicating “Data through Aug 31, 2020,” from www.zillow.com.||Admitted|
|G||Listings as of July 30, 2019, of the subject properties and other properties located at 1720 Chouteau with calculations of proposed values for the subject properties found by multiplying the price per square foot for each non-subject property by the square footage of the subject properties.||Admitted|
|H||Printout from www.realtor.com of property details for 1523 Locust Street, Unit 46, indicating that the deeded garage space is listed for $18,000.||Admitted|
|I||June 11, 2019, email from Mr. Friedman to Tim Keller with attachments and other emails about crime around the subject properties’ building and in the parking lot.||Admitted|
|J||June 13, 2019, email from Mr. Friedman to Tim Keller about the assessment of the subject properties and #107.||Admitted|
|K||June 28, 2019, letter from Respondent reflecting an adjustment to the 2019 assessment for 1720 Chouteau Avenue, #107.||Admitted|
|L||February 14, 2020, email from Mr. Friedman to the previous STC chief counsel with the written direct testimony of Mr. Friedman and a document titled as the written direct testimony of Tim Keller indicating Mr. Friedman’s difficulty in obtaining contact information for Mr. Keller and asserting that the City of St. Louis should be responsible for producing and providing contact information for Mr. Keller.||Admitted|
|M||January 9, 2020, email from Mr. Friedman to Ms. Mannery about offers received from Respondent and related earlier emails.||Admitted|
|N||February 28, 2020, email from Mr. Friedman to the previous STC chief counsel and Complainant’s objections and rebuttal.||Admitted|
Respondent objected on the basis of hearsay to Exhibits I and M, and Exhibits A through N were received into evidence for whatever weight deemed appropriate.
Mr. Friedman testified that Complainant purchased three condominiums in Eden Lofts, unit 107, subject property 404, and subject property 405. He indicated that subject property 404 was on the market for 3,307 days, and subject property 405 was on the market 2,819 days. Mr. Friedman further testified that as of December 31, 2018, the appraised value for the subject properties increased 30.66 percent from two years earlier, and in the St. Louis area, property values “don’t raise 30 percent plus in a two-year period.” Mr. Friedman stated that Exhibit F shows that the average condo value in the St. Louis City area as of December of 2016 was $182,000, and as of December of 2018 was $192,000. He indicated “that increase is 5.49 percent, for an average condo value between 2016 and 2018, which is quite different than the 30.66 percent increase that was reflected in the assessor’s determination.” As to Exhibit G, page 3, unit 107, Mr. Friedman testified that he determined a value for subject property 404, as indicated on Exhibit G, by multiplying the price per square foot, $67.67, by the square footage of subject property 404, 1,089, resulting in $73,692.63. Similarly, he determined a value for subject property 405 by multiplying the price per square foot, $67.67, by the square footage of subject property 405, 1036, resulting in $70,106.12. As to Exhibit G, page 8, Mr. Friedman testified that unit 104 was different from the subject properties in that unit 104 had a new renovated kitchen, which is, on ‘the low end,” $20,000, and an indoor garage spot, which was found listed for $18,000 as seen in Exhibit H. Mr. Friedman testified that multiplying the price per square foot ($93.55) by the square footage of each of the subject properties (for subject property 404, $93.55 multiplied by 1,089 equals $101,875; for subject property 405, $93.55 multiplied by 1,036 equals $96,917) and then subtracting amounts for the renovated kitchen as well as the indoor garage parking spot would result in values of $63,875 ($101,875-$38,000) for subject property 404 and $58,917 ( $96,917- $38,000) for subject property 405.
- Respondent’s Evidence. Respondent submitted Exhibit 1, an appraisal report for subject property 405, and Exhibit 2, an appraisal report for subject property 404, both prepared by Tiffany Brown, a real property appraiser I with Respondent, and determining the TVM of each subject property on January 1, 2019, was $100,000. Complainant did not object to either exhibit, and Exhibits 1 and 2 were received into evidence.
Ms. Brown testified that her opinion of value for each of the subject properties was $100,000, “values have steadily increased,” and in the Lafayette Square area, “in the 2017 reassessment, there was about an eight percent increase, and in the 2019 reassessment, there was about a 21 percent increase.” In Exhibits 1 and 2, Ms. Brown utilized the sales comparison approach to estimate the market values of the subject properties from recent sales of five comparable properties. The key property data in Exhibits 1 and 2 are as follows:
|Address||Subject Property 404||Subject Property 405||Comp. 1
|Comp. 2 #104||Comp. 3 #207||Comp. 4 #107||Comp. 5 #302|
|Sty/Ext. wall||3 story brick||3 story brick||3 story brick||3 story brick||3 story brick||3 story brick||3 story brick|
|Adjusted sales price||$108,000||$111,680||$120,520||$78,880||$98,920|
The comparable properties are similar to the subject properties with respect to location, number of stories and type of exterior wall, quality of construction, age, and condition. Comparables 2, 3, 4, and 5 differ from the subject properties with respect to the size of the living area. Exhibits 1 and 2 indicate that these differences have been adjusted for when determining an opinion of value. The grids indicate that comparable 5 differs from the subject properties with respect to the number of bathrooms, and a negative adjustment of $2,000 was made to the adjusted sales price of such property to adjust for this perceived difference. However, because the subject properties also have two bathrooms, this adjustment was not necessary.
The subject properties are located in the Lafayette Square neighborhood, as stated on page 6 of Exhibits 1 and 2 and the listings located in Exhibits B and C.
- Value. The TVM of each of the subject properties on January 1, 2019, was $98,000, with an assessed value of $18,620.
CONCLUSIONS OF LAW
- Assessment and Valuation. 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. “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.
- 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.
- 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 or misclassified. Westwood P’ship v. Gogarty, 103 S.W.3d 152, 161 (Mo. App. E.D. 2003). The BOE’s valuation is presumptively correct. Tibbs v. Poplar Bluff Assocs. I, L.P., 599 S.W.3d 1, 7 (Mo. App. S.D. 2020). The “taxpayer may rebut this presumption by presenting substantial and persuasive evidence that the valuation is erroneous” and must prove “the value that should have been placed on the property.” 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”).
- Complainant Did Not Prove Overvaluation. Complainant did not produce substantial and persuasive evidence establishing that the BOE’s valuation was erroneous and that Complainant’s opinion of value, $75,000, was the TVM of each of the subject properties as of January 1, 2019. Although Complainant purchased each of the subject properties for $75,000, these sales closed in 2016, and are not persuasive evidence of the TVM of the subject properties as of January 1, 2019.
Complainant’s argument that the increase in each of the subject property’s appraised values from $75,000 in 2017 to $98,000 in 2019 far exceeded the 5.49 percent increase in property values for the City of St. Louis does not support Complainant’s contention that the appraised values for 2017 and 2019 should have remained the same, $75,000. If the value for the subject properties increased 5.49 percent from the 2017 values, the value for each subject property would be $79,117.50 as of January 1, 2019, rather than Complainant’s proposed $75,000 value. Additionally, Complainant indicated that its percentage, which was determined from Exhibit F, is based on the area of the City of St. Louis rather than a more narrowed geographical area, such as the Lafayette Square area.
Further, Complainant did not utilize a generally accepted approach to value property in its analysis. For example, using the information for comparable 2, unit 104, Complainant presented Mr. Friedman’s testimony and Exhibit G in calculating the value of subject property 404 and subject property 405 as $63,875 and $58,917, respectively. In deriving these numbers, Complainant multiplied the price per square foot for unit 104 by the square footage of each of the subject properties and then subtracted $38,000, which included $20,000 for the purported cost of a new renovated kitchen, and $18,000 for the listed price for a garage space as indicated in Exhibit H. This methodology does not comply with the comparable sales approach. “The value added or lost by the presence or absence of an item in a comparable property may not equal the cost of installing or removing the item” as “[t]he market dictates the value contribution of individual components to the value of the whole.” Appraisal Inst., The Appraisal of Real Estate 420 (14th ed. 2013). Additionally, Complainant’s adjustments were made to the subject properties rather than the comparable properties. However, “[t]he comparable sales approach applies prices paid for similar properties in arms-length transactions and adjusts those prices to account for differences between the properties.” Tibbs, 599 S.W.3d at 8 (internal quotation omitted).
Respondent, although not required to, presented persuasive evidence in support of the BOE’s valuation. Although Complainant pointed to discrepancies between Complainant’s data and the data included in Respondent’s sales comparison grids, the discrepancies had minimal impact, if any. For example, Complainant indicated that the subject properties and almost all of the comparable properties have two full bathrooms. The sales comparison grids in Exhibits 1 and 2 indicate that the subject properties and all of the comparable properties except for comparable 5 have one and one-half bathrooms. If the subject properties and the comparable properties have the same number of bathrooms, no adjustment would be necessary for number of bathrooms, regardless of whether the properties have one and one-half bathrooms or two full bathrooms. For comparable 5, a negative $2,000 adjustment was made to account for the subject properties having one-half less bathrooms. However, if this adjustment was not made because the subject properties and comparable 5 all have two bathrooms, the adjusted sales price would be more, $100,920 rather than $98,920, and would not support Complainant’s argument that the TVM of each of the subject properties should be $75,000. Further, although Complainant contended that comparable 2 has a garage space that was not correctly listed on the sales comparison grids, Complainant did not persuasively show the amount comparable 2 should be adjusted to take this difference into account. Likewise, although Complainant discussed other differences between the comparable properties and the subject properties, such as in Exhibit L, paragraph 20(4), Complainant indicated that comparable 1 has “clear views of downtown and clear views of the arch[,]” Complainant did not persuasively show that such difference required an adjustment, and if an adjustment was required, the correct amount of such adjustment. Rather, Ms. Brown’s testimony and Exhibits 1 and 2 illustrate that the adjusted sales prices of the comparable properties range from approximately $78,880 to $120,520. These prices support the $98,000 BOE value and Ms. Brown’s $100,000 opinion of value for each of the subject properties. Additionally, the $98,000 BOE values are generally supported by Ms. Brown’s testimony that “in the 2019 reassessment, there was about a 21% increase” for the Lafayette Square area. A 21% increase from the 2017 value of $75,000 would be $90,750, which is over $15,000 more than the $75,000 value proposed by Complainant for each of the subject properties.
CONCLUSION AND ORDER
The BOE decision is affirmed. The TVM of each of the subject properties in Appeal Nos. 19-20026 and 19-20029 as of January 1, 2019, was $98,000, each with an assessed value of $18,620.
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.
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 August 13, 2021.
Laura A. Storck-Elam
Senior Hearing Officer
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 August 13, 2021, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.
 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.
 Mr. Friedman testified that he is also the owner of Complainant.
 The sales comparison grids on page 8 of Exhibits 1 and 2 indicate that each of the subject properties has one and one-half bathrooms. However, page 10 of Exhibit B and page 1 of Exhibit G indicate that subject property 404 has two full bathrooms, and page 10 of Exhibit C and page 2 of Exhibit G indicate that subject property 405 has two full bathrooms.
 The sales comparison grid on page 8 of Exhibit 1 indicates the living area is 1,089 square feet. However, the listing on page 2 of Exhibit G and the listing on page 10 of Exhibit C indicate that the approximate square footage is 1,036, which is also the number used in Complainant’s calculations.
 The bottom of page 10 of Exhibit B states “CDOM: 3,307,” indicating 3,307 cumulative days on the market. This page also states a listing price of $102,900.
 The bottom of page 10 of Exhibit C indicates “CDOM: 2,819,” indicating 2,819 cumulative days on the market. This page also states a listing price of $103,600.
 On cross-examination, Ms. Brown testified that the “2017 Assessed Value” on page 2 of Exhibits 1 and 2 should have said 2019 rather than 2017. Ms. Brown agreed that for 2017, the assessed value was $14,250, and appraised value was $75,000. Additionally, Respondent’s counsel questioned Mr. Friedman briefly about Exhibit 3, a listing from Zillow.com for subject property 404, but Exhibit 3 was not offered and received into evidence.
 All of the addresses are for units located at 1720 Chouteau Ave.
 On cross-examination, Ms. Brown indicated that the sales numbers indicate that the building is a three-story building but she is aware that this is a five-story building.
 As previously referenced, subject property 404 has two full bathrooms.
 As previously referenced, subject property 405 has two bull bathrooms.
 Mr. Friedman indicated that comparable 1 has two full bathrooms rather than one and one-half bathroom.
 In paragraph 3.B of Exhibit N, Objections and Rebuttal, Mr. Friedman stated that this comparable has two full bathrooms.
 Mr. Friedman indicated that comparable 4 has two full bathrooms rather than one and one-half bathrooms.
 On cross-examination, when told that MLS indicates that the living area is 1,330 square feet, Ms. Brown testified that she does not know which number is accurate.
 In paragraph 3.A of Exhibit N, Objections and Rebuttal, Complainant stated that this unit “comes with a garage space.”
 Respondent’s evidence was considered to support the BOE’s value rather than to raise such value pursuant to 12 CSR 30-3.075.