STATE TAX COMMISSION OF MISSOURI
|EDWARD C. & ELLEN B. LAWRENCE,||)|
|v.||)||Appeal No. 15-10067|
|JAKE ZIMMERMAN, ASSESSOR||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
The assessment made by the Board of Equalization of St. Louis County (BOE) is SET ASIDE. Complainants Edward C. and Ellen B. Lawrence (Complainants) did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE. Respondent Jake Zimmerman, St. Louis County Assessor, (Respondent) presented substantial and persuasive evidence to establish that the assessed value in money for the subject property for tax years 2015 and 2016 is set at $182,780 residential ($962,000 true market value or TMV).
Complainant Edward C. Lawrence appeared pro se; Complainant Ellen B. Lawrence appeared not.
Respondent Jake Zimmerman, St. Louis County Assessor, (Respondent) appeared by Steven Robson, Assistant County Counselor.
Case heard and decided by Senior Hearing Officer Amy S. Westermann.
Complainants appealed on the ground of overvaluation. Respondent initially set the TMV of the subject property, as residential property, at $982,900. The BOE sustained Respondent’s valuation. The Commission takes this appeal to determine the TMV of the subject property on January 1, 2015.
The Senior 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 June 29, 2016, at the St. Louis County Government Administration Building, 41 South Central Avenue, Clayton, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 17N210035. It is further identified as 501 N. Mosley Road, Creve Couer, Missouri. (Complaint; Exhibit 1)
- Description of Subject Property. The subject property consists of a 45,568 square foot residential lot improved by a 5,295 square foot, single-family, two-story home built in 2005. (Exhibits A and D; Exhibit 1) The subject property includes four bedrooms; three full bathrooms; one half bathroom; a 3,117 square foot basement with 1,200 square feet of finished area; a three-car attached garage; two fireplaces; and a patio. The exterior consists of brick construction. (Exhibits A and D; Exhibit 1)
- Assessment. Respondent set a true market value (TMV) on the subject property at $982,900 residential, as of January 1, 2015.
- Board of Equalization. The BOE sustained Respondent’s TMV of the subject property of $982,900.
- Complainant’s Evidence. Complainant Edward C. Lawrence testified in his own behalf. Complainant testified that he had purchased the subject property in 2004 for $280,000 and had the then-existing residence torn down. Complainant testified that a new residence was built in 2005 and completed in 2006. Complainant testified that the subject property was not encumbered by a mortgage, that it had not been listed for sale or appraised within the three years preceding the Evidentiary Hearing, and that he had not received any offers to purchase the subject property. Complainant testified that he had not made improvements to the subject property between January 2013 and January 2015. Complainant testified that the comparables used by Respondent were more luxurious than Complainant’s comparables. Complainant opined that the TMV of the subject property was $800,000 or “a little more” as of January 1, 2015.
Complainant offered as evidence a statement of complaint along with a copy of the Change of Assessment Notice that Respondent sent to Complainant (Exhibit A); a narrative list describing the comparables used by Respondent’s appraiser used to show the amenities and finishes in the comparable properties were superior to the subject property (Exhibit B); a printed copy of the data related to the five Comparable Sales that were listed on the Change of Assessment Notice (Exhibit C); a table showing data from the sale of five comparable properties Complainant had researched (Exhibit D) and a list of properties and their sale prices and 2015 sale prices to support an argument concerning Respondent’s alleged improper method determining the fair market value of real property (Exhibit E).
Respondent objected to Exhibit E on the ground that it was not relevant to establishing the subject property’s value. Complainant counter argued that the exhibits were relevant to show that Respondent’s method of valuing the subject property was flawed because Respondent’s assessed values of the comparables were lower than the sale prices of those comparables. The Senior Hearing Officer sustained Respondent’s objection and excluded Exhibit E. The Senior Hearing Officer also noted that Complainant’s argument seemed to assert a possible discrimination claim, which was not included with the initial complaint; therefore, Complainant would not be allowed to raise or argue a discrimination claim at the evidentiary hearing stage of the appeal. Respondent did not object to Complainant’s other evidence, which was received into the record.
- Respondent’s Evidence. Respondent offered as evidence the testimony of Residential Appraiser Senior Sharon Kuelker (Appraiser) along with the Appraiser’s report (Exhibit 1). The Appraiser opined that the TMV of the subject property as of January 1, 2015, was $962,000.  The Appraiser testified that she utilized the sales comparison approach to arrive at her opinion of value. The Appraiser testified that she had chosen five comparables but had used Comparable Nos. 4 and 5 only to provide support for the information provided by the other comparables because the sales dates for Comparable Nos. 4 and 5 were too far in time from the subject tax day. The Appraiser testified that she had placed the most weight on Comparable Nos. 2 and 3 in arriving at her opinion of value. The Appraiser testified that Comparable Nos. 1, 2, and 3 were all in the same school district as the subject property. The Appraiser testified that it had been difficult to locate comparables due the square footage of the subject property and the fact that it had been built relatively recently. Complainant did not object to Respondent’s evidence, which was received into the record.
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, including the application of any abatement. The Senior 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. 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 Commission, 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.
During the hearing, the Senior Hearing Officer inquired of 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.
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 Commission 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 Commission “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).
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).
Board Presumption and Computer-Assisted Presumption
There exists a presumption of correct assessment by the BOE – the BOE presumption. In charter counties or the City of St. Louis, there exists by statutory mandate a presumption that the Assessor’s original valuation was made by a computer, computer-assisted method or a computer program – the computer-assisted presumption. These two presumptions operate with regard to the parties in different ways.
The BOE presumption operates in every case to require the taxpayer to present evidence to rebut it. If Respondent is seeking to prove a value different than that set by the BOE, then it also would be applicable to the Respondent.
The computer-assisted presumption is applicable only if (1) the BOE lowered the value of the Assessor and Respondent is seeking to sustain the original assessment and (2) it has not been shown that the Assessor’s valuation was not the result of a computer assisted method. The BOE’s valuation is assumed to be an independent valuation.
In the present appeal, the BOE sustained the initial valuation of Respondent, and both Complainant and Respondent are seeking to lower the original assessment; therefore, only the BOE presumption applies while the computer-assisted presumption is not applicable.
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).
Although Complainants presented substantial evidence, that evidence is not persuasive because, if relied upon, the fact finder would be required to resort to speculation to conclude the TMV of the subject property on January 1, 2015, should be $800,000.
Complainants presented substantial evidence. Substantial evidence is that which is relevant, adequate, and reasonably supports a conclusion. Cupples Hesse Corp., 329 S.W.2d at 702. Complainants presented data comparing several similar properties to the subject property.
However, Complainants’ evidence was not persuasive to support their opinion as to value. Persuasive evidence is that which causes the trier of fact to believe, more likely than not, the conclusion advocated is the correct conclusion. Id. Complainants argued that the valuation of the subject property should be reduced from the BOE’s determination of value because, in part, it was difficult to find comparables for the subject property and because the comparables Complainants had found indicated lower sale prices. Complainants’ Exhibits C and D indicated that their comparables were located three or more miles from the subject property; contained between 4,300 square feet and 7,387 square feet; had sale prices ranging from $815,000 to $925,000; and had sale dates occurring between July 2012 and August 2014. This evidence did not include any market based adjustments for specific similarities and differences between the comparables and the subject property to persuade the trier of fact that the subject property should be valued at $800,000. Complainants’ opinion that the subject property had a value of $800,000 was not supported by any of the three recognized approaches to value. Complainants’ evidence also did not account for whether the final sale prices of the comparables were due, in part, to specific location, to number of days on the market, or to the type of sale, e.g., market sale, foreclosure, or bankruptcy.
Notably, Complainants’ Exhibit B reiterated the data from the Appraiser’s comparison grid in a narrative form and highlighted some of the miscellaneous interior finishes of the comparables, such as brands of kitchen appliances, cathedral ceilings, and special millwork. Complainants argued that these interior finishes added value to the comparables. But because this information was merely descriptive and did not include any market-based adjustments tying the specific finishes to the true market value of the comparables, the trier of fact would be forced to speculate as to whether and in what amount the subject property’s TMV should be reduced for either similar or different miscellaneous interior finishes.
On the contrary, Respondent presented substantial and persuasive evidence to rebut the presumption of correct valuation by the BOE. In arriving at an opinion of value, the Appraiser considered all three approaches to value the subject property: the cost approach, the income approach, and the sales comparison approach. The Appraiser ultimately utilized the sales comparison approach because the other two approaches were inapplicable. The Appraiser analyzed five comparable sales, all of which were 2.38 miles or less from the subject property. (Exhibit 1) The sale prices of Respondent’s comparables ranged from $875,000 to $1,100,000. Respondent’s comparables contained between 4,697 square feet and 5,312 square feet. The subject property contains 5,295 square feet. The Appraiser made market-based adjustments to the comparables for location (the subject property is located on a busy street); differences in age; differences in square footage; number of bedrooms and bathrooms; basement square footage and finishes; patios and decks; number of fireplaces; exterior construction; and swimming pools (the subject property does not have a swimming pool). (Exhibit 1) The Appraiser’s Report noted that all comparables required a slight adjustment for quality of construction, but no adjustments were made for condition because the Appraiser believed the adjustment for age represented the wear and tear to the improvements. The adjusted sale prices of the comparables ranged from $885,700 to $1,102,400. Placing the most weight on Comparable Nos. 2 and 3, the Appraiser opined that the subject property had a TMV of $962,000.
From this substantial and persuasive evidence, it is reasonable to find and conclude that Respondent rebutted the presumption of correct valuation by the BOE and that the TMV of the subject property on January 1, 2015, was $962,000.
The true market valuation for the subject property as determined by the BOE is SET ASIDE.
The assessed value for the subject property for tax years 2015 and 2016 is set at $182,780 residential ($962,000 TMV).
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. 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 August 16, 2016.
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 16th day of August, 2016, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.
 Respondent’s proposed valuation following the Appraiser’s analysis was lower than the BOE’s assessment of the subject property’s value.