State Tax Commission of Missouri
FRANK & MARY GALATI,)
)
Complainants,)
)
v.) Appeal Number 10-57005
)
TOM COPELAND, ASSESSOR,)
FRANKLIN COUNTY, MISSOURI,)
)
Respondent.)
DECISION AND ORDER
HOLDING
Decision of the Franklin County Board of Equalization sustaining the assessment made by the Assessor is SUSTAINED.True value in money for the subject property for tax year 2010 is set at $484,260, residential assessed value of $92,009.Complainants appeared pro se. Respondent appeared in person and by County Counselor, Mark S. Vincent.
Case heard and decided by Hearing Officer Maureen Monaghan.
ISSUE
The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2009.
SUMMARY
Complainants appeal, on the ground of overvaluation and misclassification, the decision of the Franklin County Board of Equalization, which sustained the valuation of the subject property.The Assessor determined an appraised value of $484,260, assessed value of $92,009, as residential property.Complainants proposed a value of $400,000, assessed as residential and agricultural.A hearing was conducted on December 14, 2010, at the Franklin County Government Building, Union, Missouri.
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 Franklin County Board of Equalization.
2.Subject Property.The subject property is located at 2830 Highway N, Pacific, Missouri.The property is identified by map parcel number 19-8-27-0-7-020.100.The property consists of a 12.41 acre site.The lot is improved by a one and a half story, single-family structure of good quality construction.The house was built in 2009.The residence has a total of 8 rooms, which includes 3 bedrooms, three and one half baths, and contains 3,184 square feet of living area.There is a partially finished basement and a two-car garage.
3.Complainants’ Evidence.Complainants testified as to their opinion of value.They testified they obtained a $350,000 loan to construct the residence.They said that they use approximately 9 acres of the property to cut hay.
4.Evidence Not Substantial and Persuasive.Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board as to the value or classification of the property.
5.Respondent’s Evidence.Respondent presented the Appraisal Report – Exhibit 1 – and testimony of Angela Johnson, a State Certified General Appraiser.The appraisal determined a value of $523,000 as residential property.
CONCLUSIONS OF LAW AND DECISION
Jurisdiction
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.[1]
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.[2]The presumption of correct assessment is rebutted when the taxpayer, or respondent, when advocating a value different than that determined by the Board, 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.[3]Complainants failed to present substantial and persuasive evidence to rebut the presumption of correct assessment.
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.[4]True value in money is defined in terms of value in exchange and not value in use.[5]It is the fair market value of the subject property on the valuation date.[6]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.[7]
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.[8]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.[9] Complainants did not present an opinion of fair market value derived from a recognized appraisal methodology.The conclusion of value presented by Ms. Johnson was based upon the sales comparison approach to value.This approach is recognized as most appropriate for the valuation of owner occupied residential properties.
Complainants’ Burden of Proof– Valuation
In order to prevail, Complainants 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 on January 1, 2009.[10]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.”[11]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[12]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.[13]
The owner of property is generally held competent to testify to its reasonable market value.[14]The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[15]Complainants failed to present evidence to establish that their opinion of value was based upon proper elements and a proper foundation.
The Complainants brought listings sheets which were objected to on the grounds of lack of foundation and hearsay.The objection was sustained.The realtor who prepared the document was not present to testify and be cross-examined.The documents do not provide an opinion of the fair market value of the property under appeal as of January 1, 2009.Furthermore, such evidence does not constitute an appraisal of the subject property under any recognized appraisal methodology. Accordingly, the relevancy of the documents were not established to support a value of $400,000 for the Complainants’ property.
Complainants also presented an appraisal, but the appraiser was not present, and therefore was excluded on the grounds of lack of foundation and hearsay.
Classification
Complainants seek a determination that 9 acres of their site be classified as agricultural.The controlling statute relative to a determination of an agricultural use of real property is Section 137.016.1(1), RSMo.It states in relevant part for the present appeals:
“Agricultural and horticultural property”, all real property used for agricultural purposes and devoted primarily to the raising and harvesting of crops; …”
Complainant claims that for tax year 2010 the property under appeal met this statutory definition.In order for Complainant’s properties to be classified as agricultural Complainant must have established by substantial and persuasive evidence that the properties were “used for agricultural purposes and devoted primarily to the raising and harvesting of crops.”The asserted use for agricultural purposes consists solely of their testimony that they cut hay in 2010.The Complainants did not provide photographs or any other evidence of agricultural activity. Complainant’s evidence falls short of establishing that the land was devoted primarily to the raising and harvesting of crops.
The Respondent’s appraiser testified that she sent documents requesting information regarding any agricultural activity and none of the documents were returned.She also inspected the property in September 2010 and saw no signs of agricultural activity.
Respondent’s Appraisal
Angela Johnson, a State Certified General Appraiser, testified on behalf of the Assessor.She appraised the property using the cost and the sales comparison approach, relying primarily on the sales comparison approach.She determined the value of the property to be $523,000.The Assessor had set the value at $484,260.
Conclusion
The Complainants’ contend the property should be valued at $400,000 based upon the market value of the improvement and an agricultural valuation for the 9 acres.The certified appraiser valued the property at $523,000.Sales Comparable 4 is within 3.64 miles of the subject property.Comparable 4 is on a 5.6 acres tract.The appraiser made an adjustment of $25,000 to Comparable 4 to account for less land.In reviewing the adjustments made for the additional land and with the appraisal on the improvements to the property, it appears that even if the 9 acres were classified as residential, the assessed valuation of the subject property would exceed the valuation originally determined by the assessor.The Assessor testified that they were not asking the Hearing Officer for a higher valuation.
ORDER
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Franklin County for the subject tax day is AFFIRMED.
The assessed value for the subject property for tax year 2010 is set at $92,009, as residential property.
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.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, MO65102-0146, 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 appeal is based will result in summary denial. [16]
The Collector of Franklin 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.If no Application for Review is filed, the Collector, as well as the collectors of all affected political subdivisions, shall disburse the taxes in accord with the decision on the underlying assessment in this appeal.
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 December 21, 2010.
STATE TAX COMMISSION OFMISSOURI
_____________________________________
Maureen Monaghan
Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 21stday of December, 2010, to:Frank Galati, 2832 Hwy. N, Pacific, MO 63069, Complainant; Mark Vincent, Franklin County Counselor, P.O. Box 439, Union, MO 63084, Attorney for Respondent; Tom Copeland, Assessor, 400 E. Locust, Suite 105A, Union, MO 63084; Debbie Door, Clerk, Franklin County Courthouse, 400 E. Locust, Suite 201, Union, MO 63084; Linda Emmons, Collector; Franklin County Courthouse, 400 E. Locust, Suite 103, Union, MO 63084.
___________________________
Barbara Heller
Legal Coordinator
[2] 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).
[3] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
[4] 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).
[5] Daly v. P. D. George Company, et al, 77 SW3d 645, 649 (Mo.App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 SW2d 376, 380 (Mo.App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).
[7] 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.
[8] 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).
[9] 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).
[11] 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).
[14] 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).
[15] 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).