State Tax Commission of Missouri
DWAYNE & CHERYL TIESZEN )
v. ) Appeal(s) Number 10-48500
GEORGE MEYERS, ASSESSOR, )
CARTER COUNTY, MISSOURI, )
DECISION AND ORDER
Decision of the Carter County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE. True value in money for the subject property for tax year 2010 is set at $37,000, residential assessed value of $7,030. Complainants appeared in person and by counsel Samuel Spain. Respondent appeared in person and by Prosecuting Attorney Rocky Kingree.
Case heard and decided by Hearing Officer Maureen Monaghan.
The Commission takes this appeal to determine (1) the true value in money for the subject property; (2) whether the property was occupied pursuant to Section 137.082, RSMo; and (3) whether there was an intentional plan by assessing officials to assess the property under appeal at a ratio greater than 19% of true value in money, or at a ratio greater than the average 2009 residential assessment ratio for Carter County.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
1. Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Carter County Board of Equalization. A hearing was conducted on March 7, 2011, at the Carter County Courthouse, Van Buren, Missouri.
2. Assessment. The Assessor appraised the property at $564,100 ($533,300 improvements, $30,800 land) residential assessed value of $107,180. The Board sustained the assessment.
3. Occupancy. The parties agree that Carter County is an “occupancy” county, meaning that the county adopted the provisions in Section 137.082, RSMo which allows a county to assess newly constructed and occupied residential property and tax on such assessed valuation as of the first day of the month following the date of occupancy for the proportionate part of the remaining year.
4. Subject Property. The subject property is located at HC 2 Box 2218, Van Buren, Missouri. The property is identified by locator number 05-6-23-0-0-14. The property consists of a 4.77 acre lot improved by a two-story, 4,554 square foot residential structure. The house has a full basement with a three-car garage, elevator and river view. The improvement is under construction and has been under construction for the last five years. The exterior has been completed, including all windows, except for walkways, driveway and exterior front door. Some landscaping has been completed and includes mosaic and stone walks, waterways, and plantings. The property has utilities. Heating and air conditioning have been installed. The interior has limited finished areas. A temporary toilet has been installed in the basement but there are no other plumbing features. Two of the bedrooms have unfinished wood floors and drywall. Two rooms have finished ceilings. The remaining areas have exposed studs. There is no kitchen nor any kitchen appliances.
5. Complainant’s Evidence. The following exhibits were introduced and admitted into evidence:
Carter County Assessment Form
Minutes from Board of Equalization
Disk for Occupancy Photographs
Occupancy Affidavits. Complainant objected as to hearsay.
Objection overruled as Complainant submitted the affidavits pursuant to
Section 536.070, RSMo
Neighboring Property Assessments
Surrounding County Property Assessments
Hunnicutt Manual (Not offered or admitted into evidence)
Carter County Hunnicutt Valuation
Construction Units for Carter County Hunnicutt Valuation
Adjusted area of property
Assessor Errors in Adjusted Area Calculations
Complainant’s Hunnicutt Valuation
Complainant presented two appraisals, Exhibits 5 and 6. One completed by Donal Sue Ferguson (Ex. 5) and the other by John Karnes (Ex. 6), both Missouri Certified General Real Estate Appraisers. Both appraisers used the cost and sales comparison approach. Both appraisers appraised the subject property as if construction had been completed.
Donal Sue Ferguson testified that the effective date of her appraisal was August 16, 2010. She had no opinion as to the value of the property in its uncompleted state on January 1, 2010, or under market conditions of January 1, 2009. She concluded that the subject property, had construction been completed by August 16, 2010, would have a market value of $475,000. In the sales comparison approach, Appraiser Ferguson used four sales. The comparable properties were located from 0 to 66.46 miles from the subject property. The sales occurred from December 2009 to June 2010; the prices ranged from $320,000 to $409,000. Adjustments were made for age, inferior interiors, and less square footage. The gross adjustments ranged from 37.8% to 61.6%. The appraiser concluded a value of $475,000 by sales approach. The appraiser, at the request of the client, completed a cost approach and determined a value of $588,000. Included with her cost approach was a determination of land value using sales comparison. She determined the value of the property to be $40,545. She placed most weight on the sales comparison approach.
John Karnes testified that the effective date of his appraisal was June 2, 2010. He had no opinion as to the value of the property in its uncompleted state on January 1, 2010. He concluded that the subject property would have a market value of $515,000 if the construction was complete. In the sales comparison approach, Appraiser Karnes used six sales. The comparable properties were located from 0 to 84.18 miles from the subject property. The sales occurred from June 2004 to December 2009; the prices ranged from $3150,000 to $860,000. The adjustments were made for time, site, design, quality, age, size, and basement finish. The net adjustments ranged from -18.02% to 145.9%. The appraiser concluded a value of $700,000 by sales approach. The appraiser then applied an economic obsolescence of 35% to the subject property for a final estimate of value of $515,000.
The appraiser completed a cost approach and determined a value of $595,000. Included with his cost approach was a determination of land value using sales comparison. He determined
the value of the property to be $37,000. He placed most weight on the sales comparison approach.
6. Respondent’s Evidence. Although Complainant’s attorney called Assessor George Meyers and the Assessor’s employee Randy Brooks as witnesses on direct, their opinion of value was presented at hearing and will be presented in paragraph 6 of the Findings of Fact.
Assessor George Meyers and employee Randy Brooks testified that the county uses the Hunnicutt Manual for determination of true value of the properties. The property record for the subject property, which includes the Hunnicutt calculations, was admitted into evidence
(Exhibit 1). The Assessor’s Office determined the property to be “S” class with 320 construction units. The 320 construction units include 100 units for special use and 100 units for shape/design. The adjusted rate per unit was determined to be 74.59 and an index of 1.70 was applied for a total square foot cost of $126.80. The Assessor’s Office applied the square foot cost to an adjusted area of 8037 for a total base cost of $1,019,092 with additional features valued at $69,175 resulting in a replacement cost of $1,088,267. The office then adjusted the property by 50% as the construction was not completed.
CONCLUSIONS OF LAW AND DECISION
The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious. 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.
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. This presumption is a rebuttable rather than a conclusive presumption. It places the burden of going forward with some substantial evidence on the taxpayer – Complainant. The presumption of correct assessment is rebutted when the taxpayer or the Respondent, when advocating a value different than the Board’s value presents, substantial and persuasive evidence to establish that the Board’s valuation is erroneous and what the fair market value should have been placed on the property. Complainant’s evidence was substantial and persuasive to rebut the presumption of correct assessment by the Board.
Grounds for Appeal
The Complainant alleged three grounds in this appeal:
(1) Overvaluation – the true value in money for the subject property;
(2) Whether the property was occupied for assessment purposes; and
(3) Whether there was an intentional plan by assessing officials to assess the property under appeal at a ratio greater than 19% of true value in money, or at a ratio greater than the average 2009 residential assessment ratio for Carter County.
Complainants Fail To Prove Overvaluation
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. The constitutional mandate is to find the true value in money for the property under appeal. By statute, real and tangible personal property is assessed at set percentages of true value
in money. In an overvaluation appeal, true value in money for the property being appealed must be determined based upon the evidence on the record. Under the controlling statute, the subject property must be valued under the economic conditions that existed on January 1, 2009.
Standard for Valuation
Section 137.115, RSMo, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so. True value in money is defined in terms of value in exchange and not value in use. It is the fair market value of the subject property on the valuation date. Market value is the most probable price in terms of money which a property should bring in competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price is not affected by undue stimulus.
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:
1. Buyer and seller are typically motivated.
2. Both parties are well informed and well advised, and both acting in what they consider their own best interests.
3. A reasonable time is allowed for exposure in the open market.
4. Payment is made in cash or its equivalent.
5. Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
6. 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.
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. 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.
Complainant Failed to Prove Value
In order to prevail, Complainant must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property as of the effective tax date. The taxpayer in a Commission appeal 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.”
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact. The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief.
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value. The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation. In this case, the owner testified that it was her opinion the fair market value of the property in its unfinished state was $200,000. This opinion of value is not based upon either proper elements or a proper foundation. There was no recognized method for valuation and the owner is not a qualified appraiser with the training and experience to value a unique property such as the subject property.
Appraisers’ Opinions of Value
The sales comparison approach is usually the most effective and persuasive approach for valuing residential property. The subject property is difficult to value due to its unique characteristics. The general certified appraisers that testified at the hearing were experienced and qualified appraisers. However, there were problems with each report making the valuations unpersuasive. One problem was an adjustment made by Appraiser Karnes to the subject property after he completed his sales comparison analysis. The appraiser made adjustments for items such as size, location, quality of construction. He determined the net adjustment for each comparable property and concluded on a value. After he concluded a value, the appraiser made an adjustment to the concluded value for external obsolescence due to the subject’s high quality construction with super adequacies including an elevator and its size. The appraiser states in his report that a case-study in included in the Addenda of his report. “ECONOMIC OBSOLESCENCE STUDY” in his addenda includes one sale; one sale is unpersuasive to establish an adjustment. Further, any adjustments should be made, as necessary, on comparable properties and not on the subject property.
Another problem, which is found in both appraisals, is that the appraisers determined the property’s value as if the property was completed and as of dates other than the effective date for ad valorem property tax purposes. Neither appraiser had an opinion as to the value of the property in its incomplete state on January 1st.
Since the appraisers could not provide a value for the improvements as they appeared on January 1st, the evidence is not persuasive or substantial.
Complainants Prove No Occupancy of New Residential Construction
The Assessor testified that Carter County became an “occupancy” county in 1997.
Section 137.082, RSMo provides that any newly constructed and occupied residential improvement “shall be assessed and taxed on such assessed valuation as of the first day of the month following the date of occupancy for the proportionate part of the remaining year at the tax rates established for that year, in all taxing jurisdictions located in the county adopting this section.” “Newly constructed residential property which has never been occupied shall not be assessed as improved real property until such occupancy or the first day of January of the second year following the year in which construction of the improvements was completed.”
Although the legislature probably did not contemplate or foresee a structure classified as residential being under construction for over five years, the plain language of the statute directs the action of the Hearing Officer. The courts must give effect to the plain meaning of the statute and the words used.
Determination of Occupancy
Complainants testified that they do go into the house during the day. They are in the house to review progress of construction, determine design choices, purchase construction materials, and use their lap tops. They testified that they do not eat or prepare meals in the structure, stay overnight, or live in the structure. The Assessor argues by engaging in such daytime activities, Complainants are “occupying” the structure.
Section 137.082 RSMo, provides guidelines for the assessor to determine if the property may be considered “occupied”; none of the conditions or guidelines have been met.
(1) An occupancy permit has been issued for the property;
The assessor testified that the county does not issue occupancy permits. Occupancy permits, when issued by local governments, are issued after an inspection conducted to insure the health, safety and general welfare of the future occupants. Typically, items such as walls and doors are required and exposed wiring is not allowed.
(2) A deed transferring ownership from one party to another has been filed with the recorder of deeds’ office subsequent to the date of the first permanent utility service;
The property transferred ownership to the Complainants prior to them beginning construction. The subject property has utilities service for construction purposes.
(3) A utility company providing service in the county has verified a transfer of service for property from one party to another;
The utilities are in the names of the Complainants.
(4) The person or persons occupying the newly constructed property has registered a change of address with any local, state or federal governmental office or agency.”
The Complainants are residents of the State of Texas. Complainants resided in Texas prior to obtaining the property and continue to maintain their residence in Texas. Complainant Cheryl Tieszen testified that she divides her time between Texas and Missouri since construction has started. Complainant Dwayne Tieszen testified that he divides his time between his residence in Texas, business in Indiana and construction of the subject property in Missouri. The Complainants’ testified that they use the Texas address as their permanent address for all purposes including to file their federal income tax. The Complainants established a post office box and later a mail box on the property for any local mailing. They notified the Assessor of the change from the post office box to a mailing address, however, this change of address alone does not establish occupancy of the property.
Complainants, by being in the home during the day, are not occupying the property. Since the newly constructed residential property which has never been occupied shall not be assessed as improved real property until such occupancy or the first day of January of the second year following the year in which construction of the improvements was completed, the property should be assessed on the land only. There were three opinions of land valuation presented. Reviewing the appraisals, the valuation for the site is determined to be $37,000.
Complainants Fail To Prove Discrimination
In order to obtain a reduction in assessed value based upon discrimination, the Complainants must (1) prove the true value in money of their property on January 1; and (2) show an intentional plan of discrimination by the assessing officials resulting in an assessment of that property at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction. Evidence of value and assessments of a few properties do not prove discrimination. Substantial evidence must show that all other property in the same class, generally, is actually undervalued. The difference in the assessment ratio of the subject property the average assessment ratio in the subject county must be shown to be grossly excessive. No other methodology is sufficient to establish discrimination.
Where there is a claim of discrimination based upon a lack of valuation consistency, Complainants have the burden to prove the level of assessment for the subject property. This is done by independently determining the market value of the subject property and dividing the market value into the assessed value of the property as determined by the assessor’s office.
Complainants must then prove the average level of assessment for residential property in Carter County. This is done by (a) independently determining the market value of a representative sample of residential properties; (b) determining the assessed value placed on the property by the assessor’s office for the relevant year; (c) dividing the assessed value by the market value to determine the level of assessment for each property in the sample; and (d) determining the mean and median of the results.
The difference between the actual assessment level of the subject property and the average level of assessment for all residential property, taken from a sufficient representative sample in Carter County must demonstrate a disparity that is grossly excessive.
Complainants’ discrimination claim fails because they failed to establish the market value of their property. Without establishing their market value, they cannot establish their assessment ratio. Without establishing their ratio, they cannot establish that they are being assessed at a higher percentage of market value that any other property.
However, even if Complainants had established their market value, their discrimination claim would still fail because they have not demonstrated that a statistically significant number of other residential properties within Carter County are being assessed at a lower ratio of market value than their property. In point of fact, Complainants presented no evidence to demonstrate that any property is being assessed at a lower ratio of market value than the subject property.
Because Complainants failed to establish the market value of their property and failed to establish that they are being assessed at a higher percentage of market value than a statistically significant number of other properties in Carter County, they have failed to establish discrimination.
At the conclusion of the hearing, the Complainants’ moved the Hearing Officer to (1) determine the property is not occupied for purposes under Section 137.082, or in the alternative determine that for 2010 the Assessor overvalued the property; (2) order the County “correct” the 2009 assessment so that it is in agreement with the Hearing Officers findings for 2010; and (3)
establish a value for the property for 2011. The Hearing Officer only has the authority to review the 2010 assessment.
As to the 2010 assessment, the Complainant failed to produce substantial and persuasive evidence as to discrimination and overvaluation. Complainant met their burden of proof as to the property being unoccupied and therefore the property is valued without the new improvements.
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Carter County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax year 2010 is set at $7,030.
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 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. 
The Collector of Carter 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 15, 2011.
STATE TAX COMMISSION OF MISSOURI
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 15th day of March, 2011, to: Samuel Spain, P.O. Box 1248, Poplar Bluff, MO 63902-1248, Attorney for Complainant; Rocky Kingree, Prosecuting Attorney, P.O. Box 540, Van Buren, MO 63965, Attorney for Respondent; George Meyers, Assessor, P.O. Box 429, Van Buren, MO 63965; Rebecca Gibbs, Clerk, P.O. Box 517, Van Buren, MO 63965; Jennifer Clark-Williams, Collector, P.O. Box 445, Van Buren, MO 63965.
Contact Information for State Tax Commission:
Missouri State Tax Commission
301 W. High Street, Room 840
P.O. Box 146
Jefferson City, MO 65102-0146
 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)
 Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
 St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993); Missouri Baptist Children’s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993).
 Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 S.W.2d 376, 380 (Mo. App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).
 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.
 See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra; Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975).
 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. Div. 2 1974).
 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. 1991).
 Rigali v. Kensington Place Homeowners’ Ass’n, 103 S.W.3d 839, 846 (Mo. App. E.D. 2003); Boten v. Brecklein, 452 S.W.2d 86, 95 (Sup. 1970).
 Cohen v. Bushmeyer, 251 S.W.3d 345, (Mo. App. E.D., March 25, 2008); Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992); State, ex rel. Missouri Hwy & Transp. Com’n v. Pracht, 801 S.W.2d 90, 94 (Mo. App. E.D. 1990); Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965).