STATE TAX COMMISSION OF MISSOURI
|v.||)||Appeal No. 17-57026|
|)||Parcel/Loc. No. 17-9-32.0-0-002-016.300|
|TOM COPELAND, ASSESSOR,||)|
|FRANKLIN COUNTY, MISSOURI,||)|
DECISION AND ORDER
The assessment made by the Board of Equalization of Franklin County (BOE) is AFFIRMED. Complainant Gary Borgers (Complainant) did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.
Complainant Gary Borgers appeared pro se.
Tom Copeland, Assessor of Franklin County (Respondent) appeared pro se.
Case heard and decided by Senior Hearing Officer John Treu (Hearing Officer).
Complainant appealed on the ground of overvaluation. The BOE determined a true value in money (TVM) of $305,000. The State Tax Commission (STC) takes this appeal to determine the TVM of the subject property on January 1, 2017.
Both Complainant and Respondent presented appraisals by State Certified Real Estate Appraisers. Both utilized the comparable sales approach to determine the TVM of the subject property.
Complainant’s appraiser, Randy Watson (Watson), a State Certified Residential Real Estate Appraiser, utilized four comparable properties, with adjusted sales prices ranging from $258,380 to $302,460. Some discussion occurred regarding Complainant’s comparable four involving the size of the garage. It was agreed that if Watson was mistaken regarding comparable four having a three car attached garage, but instead having basically a two and one-half attached garage, that he would have added $7,500 to the adjusted sales price of comparable four. This would result in the adjusted sales prices ranging from $258,380 to $303,090. Watson opined a TVM of $275,000.
Complainant’s appraisal also included the fact that Complainant purchased the subject property on March 25, 2015, for $230,000. However, Complainant testified the property was originally listed for $300,000, that the list price at the time of purchase was $267,000 and that the seller was no longer living in the subject property, but was living in a nursing home.
Respondent’s appraiser, Donald Dodd (Dodd), a State Certified General Real Estate Appraiser, utilized three comparable properties, with adjusted sales prices ranging from $292,045 to $311,049. Dodd did not have access to MLS data. Dodd opined a TVM of $304,000.
Dodd’s comparable one was the same as Watson’s comparable four. The Hearing Officer found this comparable to be appropriate to determine the TVM of the subject property. Dodd’s adjusted sales price for such property was $308,641, while Watson’s adjusted sales price was $295,590, without the previously mentioned garage adjustment or $303,090, with the garage adjustment. Therefore such comparables adjusted sales price ranged from $303,090 to $308,641.
The 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 STC.
- Evidentiary Hearing. The issue of overvaluation was presented at an evidentiary hearing on November 3, 2017, at the Franklin County Administrative Building, Union, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 17-9-32.0-0-002-016.300. It is further identified as 1654 Oak Parc, Union, Franklin County, Missouri. (Complaint for Review of Assessment)
- Description of Subject Property. The subject property consists of a 5.53 acre residential lot improved by a 1,923 square-foot, ranch style single-family home built in 1997. (Exhibit C) The subject property has two bedrooms; two full bathrooms; a three-car attached garage and two fireplaces. (Exhibit B & C)
- Sale of Subject. The subject property was purchased by Complainant on March 25, 2015 for $230,000. When purchased the subject property had been on the market, with its second realtor, for 290 days. The subject property was originally listed for $300,000. At the time of Complainant’s purchase, the subject property was listed for $267,000. The seller was no longer living in the subject property, but instead was living in a nursing home. See, Methods of Valuation, infra. (Exhibit C and Testimony of Complainant)
- Assessment. Respondent set the TVM for the subject property of $309,800, as of January 1, 2017.
- Board of Equalization. The BOE lowered the TVM and set the TVM of the subject property at $305,000.
- Complainant’s Evidence. Complainant offered Exhibits A, B and C and the testimony of Randy Watson. Exhibits A and B were objected to, as the appraiser was not present for cross-examination. The objection was sustained. Exhibits A and B were excluded from the evidentiary record. Exhibit C was received without objection:
|C||Appraisal as of January 1, 2017 by Randy Watson|
- Respondent’s Evidence. Respondent offered Exhibit 1 and the testimony of Donald Dodd, which were received without objection:
|1||Appraisal as of January 1, 2017 by Donald Dodd|
- Presumption of Correct Assessment Not Rebutted. Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the BOE and to establish a TVM of the subject property as of January 1, 2017.
CONCLUSIONS OF LAW AND DECISION
The STC 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 Hearing Officer shall issue a decision and order affirming, modifying or reversing the determination of the BOE, 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 TVM 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.
Board Presumption and Complainant’s Burden of Proof
To obtain a reduction in assessed valuation based upon an alleged overvaluation, the Complainant must prove the TVM of the subject property on the subject tax day. Hermel, Inc., v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978). TVM 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). TVM 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, TVM is the fair market value of the subject property on the valuation date. Hermel, Inc., 564 S.W.2d at 897.
“’True value’ is never an absolute figure, but is merely an estimate of the fair market value on the valuation date.” Drury Chesterfield, Inc., v. Muehlheausler, 347 S.W.3d 107, 112 (Mo. App. E.D. 2011), citing St. Joe Minerals Corp. v. State Tax Comm’n of Mo., 854 S.W.2d 526, 529 (Mo. App. E.D. 1993). “Fair market value typically is defined as the price which the property would bring when offered for sale by a willing seller who is not obligated to sell, and purchased by a willing buyer who is not compelled to buy.” Drury Chesterfield, Inc., 347 S.W.3d at 112 (quotation omitted).
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 STC 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). 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. 1980).
Weight to be Given Evidence
The Hearing Officer is not bound by any single formula, rule, or method in determining TVM 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).
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).
“For purposes of levying property taxes, the value of real property is typically determined using one or more of three generally accepted approaches.” Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005), citing St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977). “Each valuation approach is applied with reference to a specific use of the property—its highest and best use.” Snider, 156 S.W.3d at 346-47, citing Aspenhof Corp., 789 S.W.2d at 869. “The method used depends on several variables inherent in the highest and best use of the property in question.” Snider, 156 S.W.3d at 347.
“Each method uses its own unique factors to calculate the property’s [TVM].” Id. “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 348. “Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character.” Id. (quotation omitted). “This approach is most appropriate when there is an active market for the type of property at issue such that sufficient data [is] available to make a comparative analysis.” Id.
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:
- Buyer and seller are typically motivated.
- Both parties are well informed and well advised, and both acting in what they consider their own best interests.
- A reasonable time is allowed for exposure in the open market.
- Payment is made in cash or its equivalent.
- Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
- 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.
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.
In this case, Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the BOE. Substantial evidence is that which is relevant, adequate, and reasonably supports a conclusion. Cupples Hesse Corp., 329 S.W.2d at 702. Persuasive evidence is that which causes the trier of fact to believe, more likely than not, the conclusion advocated is the correct conclusion. Id.
The Hearing Officer is not persuaded that Complainant’s purchase of the subject property was an arms-length sale, given the $37,000 concession from the list price ($70,000 concession from the original list price), accompanied by the circumstances of the seller. Given such, the Hearing Officer is not persuaded the seller was “typically motivated.”
Viewing the evidence as a whole, the Hearing Officer is persuaded that the BOE TVM should be affirmed. The purchase price of the subject property on March 25, 2015 for $230,000 was not persuasive to the Hearing Officer, as the Hearing Officer is not persuaded that the seller was “typically motivated.” The common comparable is the most persuasive to the Hearing Officer. Dodd’s comparable one was the same as Watson’s comparable four. The Hearing Officer found this comparable to be appropriate to determine the TVM of the subject property as both appraisers utilized it. Dodd’s adjusted sales price for such property was $308,641, while Watson’s adjusted sales price was $295,590, without the previously mentioned garage adjustment or $303,090, with the garage adjustment. Therefore such comparables adjusted sales price ranged from $303,090 to $308,641. This range supports the BOE TVM.
|BOE TVM (Presumed Correct)||$305,000|
|Common Comparable (With Garage Adjustment) (Complainant)||$303,090|
|Common Comparable (Respondent)||$308,641|
The TVM for the subject property as determined by the BOE is AFFIRMED.
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 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, 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 November 21, 2017.
STATE TAX COMMISSION OF MISSOURI
Senior Hearing Officer
Certificate of Service
Delivery or Notice of the information contained in this Order was made via email on November 21, 2017, to the following: