State Tax Commission of Missouri
GARY MITCHELL,)
)
Complainant,)
)
v.) Appeal Number 09-10644
)
MICHAEL BROOKS,)
ACTING ASSESSOR,)
ST. LOUIS COUNTY,MISSOURI,)
)
Respondent.)
DECISION AND ORDER
HOLDING
Decision of the St. Louis County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE.True value in money for the subject property for tax years 2009 and 2010 is set at $835,000, residential assessed value of $158,650.Complainant appeared pro se.Respondent appeared by Associate County Counselor Paula Lemerman.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
ISSUE
Complainant appeals, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property.The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2009.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 St. Louis County Board of Equalization.A hearing was conducted on July 7, 2010, at theSt. LouisCountyGovernmentCenter,Clayton,Missouri.
2.Assessment.The Assessor appraised the property under appeal at $877,700, a residential assessed value of $166,760.The Board sustained the assessment.
3.Subject Property.The subject property is located at 1206 Lewis Spring Dr. Wildwood, Missouri.The property is identified by locator number 19U120081.The property consists of a 3 acre lot improved by a one and a half-story fiberboard and brick-sided frame house with full basement, three-car attached masonry garage, covered front porch, 2 patios, paved walkway, and a paved driveway leading to the side entry garage.The improvements are considered to be good quality construction.The home was built in 1995 and the improvements are in overall good physical condition. The residence has a total of 10 rooms above grade with 4 bedrooms, 3 full baths, 2 half baths, and contains 5,110 square feet of living area.The basement is approximately 3,384 square feet and has 1,430 square feet of finished area with 1 full bath.The site has a steeply upward sloping hillside lot with a steep driveway and a small useable rear yard area.The view from the site is of other similar quality house having naturally wooded lots.The property is on a street cul-de-sac having low vehicular traffic levels.There was no listing or sale of the property noted within three years prior to the tax date of January 1, 2009.[1]
4.Complainant’s Evidence.Complainant testified in his own behalf.He gave his opinion of the fair market value of the property to be $775,000 based upon the sale in May, 2009 of the property at 16949 Lewis Spring Farm Road.Mr. Mitchell offered into evidence Exhibits A and B.Exhibit A was the taxpayer’s presentation document, consisting of 16 pages.[2]Exhibit B was a copy of a Comparable Sales Analysis Report for Tax year 2009 on the subject property dated July 20, 2009.This was a document provided to Complainant at the Board of Equalization hearing by Florita Harrison.
Counsel for Respondent objected to pages 8, 13, 14 and 16, on the grounds of hearsay, lack of foundation and relevancy.The objections were sustained and pages 8, 13, 14 and 16 were excluded from evidence.The pages are maintained in the Commission file and deemed an offer of proof along with the testimony of Mr. Mitchell relating to these pages, but they are not part of the evidentiary record for making a determination of value for the subject property.The remainder of Exhibit A, i.e. pages 1 – 7, 9 – 12, and 15 were received into evidence.
Counsel for Respondent objected to Exhibit B on the grounds of hearsay, lack of foundation and relevancy.Objection sustained.The exhibit is maintained in the Commission file and deemed an offer of proof along with the testimony of Mr. Mitchell relating to the exhibit, but it is not part of the evidentiary record for making a determination of value for the subject property.
There was no evidence of new construction and improvement from January 1, 2009, to January 1, 2010; therefore the assessed value for 2009 remains the assessed value for 2010.[3]
Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2009, to be $775,000, as testified to at hearing, or $767,800 as stated on the Complaint for Review of Assessment.
5.Respondent’s Evidence.Respondent presented the appraisal report and testimony of Arthur Froeckmann, Missouri State Certified Residential Real Estate Appraiser.The appraiser developed the sales comparison approach, relying on sales of three comparable properties. The properties relied upon by Respondent’s appraiser were comparable to the subject property for the purpose of making a determination of value. The properties were located within 6/10s to 2.07 miles of the subject.[4]Each sale property sold at a time relevant to the tax date of January 1, 2009.The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability.
The appraiser made various adjustments to the comparable properties for differences which existed between the subject and each comparable.All adjustments appear to be appropriate to bring the comparables in line with the subject for purposes of the appraisal problem.In particular, Mr. Froeckmann adjusted each comparable downward by $10,000 to account for decrease in functional utility of the site being on a steep lot, with a steep driveway.
Along with Exhibit 1, Exhibit 2 – aerial photographs of the comparable sales used by Mr. Froeckmann – was received into evidence.
Respondent’s evidence met the standard of substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the value of the subject, as of January 1, 2009, to be $835,000.
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.[5]
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[6]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 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.[7]When some substantial evidence is produced by the Complainant, “however slight,” the presumption disappears and the Hearing Officer, as trier of facts, receives the issue free of the presumption.[8]Complainant’s evidence did not meet the substantial and persuasive standard to rebut the presumption of correct assessment by the Board.The opinion of value derived by the appraisal presented on behalf of Respondent rebutted the presumption of correct assessment and established the fair market value of the property under appeal as of 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.[9]True value in money is defined in terms of value in exchange and not value in use.[10]It is the fair market value of the subject property on the valuation date.[11]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.[12]
The conclusion of value presented by Respondent’s appraiser was based upon the Standard for Valuation.[13]
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.[14]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.[15]Complainant did not present an opinion of value derived from any of these recognized methodologies.Presentation of a single sale of a property asserted to be similar by the owner is not a methodology that can be relied upon for the appraisal of real property before the Commission.Respondent’s appraiser on the other hand concluded his opinion of value based upon the sales comparison approach to value.
Complainant Fails 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 on January 1, 2009.[16]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.”[17]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[18]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.[19]
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.[20]The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[21]Mr. Mitchell’s opinion of value presented at the evidentiary hearing of $775,000 was based upon the sale of the property at16949 Lewis Spring Farm Road, Wildwood on May 15, 2009.Selecting a single sale of a similar property to establish value is not a methodology that is recognized by the courts or the Commission.This sale in the hands of an appraiser might have been accepted as a comparable sale and after adjustment could have provided an indicated value.However, it would have been used with two or more other comparable properties to conclude an estimate of value for the subject.The taxpayer’s opinion of value of $775,000, testified to at hearing was not based on proper elements or a proper foundation for the valuation of property for an ad valorem tax appeal.Therefore, it has no probative weight.
Mr. Mitchell gave his opinion of value in the Complaint for Review of Assessment to be $767,800, based upon a value derived from Exhibit B which was excluded from evidence.However, since the opinion of value testified to at hearing was $775,000; the Hearing Officer deems that the Complainant had abandoned the opinion of $767,800.In any case, given that the supporting documentation for this opinion of value was excluded upon the sustaining of objection by Counsel for Respondent.There is no foundation to support the opinion of $767,800.
Complainant failed to present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board and to establish the fair market value of the subject property.
Respondent Proves Value
Respondent, when advocating a value different from that determined by the original valuation or a valuation made by the Board of Equalization, must meet the same burden of proof to present substantial and persuasive evidence of the value advocated as required of the Complainant under the principles established by case law.[22]Respondent’s evidence was tendered to propose a reduction in the value of the subject property from that sustained by the Board.
Respondent presented substantial and persuasive evidence to establish a fair market value as of January 1, 2009, to be $835,000 for the subject.Respondent’s appraiser developed an opinion of value relying upon an established and recognized approach for the valuation of real property, the sales comparison or market approach.The sales comparison approach is generally recognized to be the most reliable methodology to be utilized in the valuation of single-family residences.The adjustments made the Mr. Froeckmann were consistent with generally accepted guidelines for the appraisal of property of the subject’s type.The adjustments properly accounted for the various differences between the subject and each comparable.
ORDER
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization forSt. LouisCountyfor the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2009 and 2010 is set at $158,650.
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, 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. [23]
Disputed Taxes
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 17, 2010.
STATE TAX COMMISSION OFMISSOURI
_____________________________________
W. B. Tichenor
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 17thday of August, 2010, to:Gary Mitchell, 1206 Lewis Spring Drive, Chesterfield, MO 63005, Complainant; Paula Lemerman, Associate County Counselor, County Government Center, 41 South Central Avenue, Clayton, MO 63105, Attorney for Respondent; Michael Brooks, ActingAssessor, County Government Center, 41 South Central Avenue, Clayton, MO 63105; John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.
___________________________
Barbara Heller
Legal Coordinator
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
573-751-2414
573-751-1341 Fax
[2] Subsequent to the Hearing, the Hearing Officer numbered the pages for further identification with numbers 1 through 16.
[4] Two sales were located beyond the preferred one mile standard due to the lack of similar sales in the immediate neighborhood.Exhibit 1, Page 2 of 3.
[6] 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)
[7] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
[8] United Missouri Bank of Kansas City v. March, 650 S.W.2d 678, 680-81 (Mo. App. 1983), citing to State ex rel. Christian v. Lawry, 405 S.W.2d 729, 730 (Mo. App. 1966) and cases therein cited.
[9] 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).
[10] 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).
[12] 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.
[14] 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).
[15] 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).
[17] 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).
[20] 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).
[21] 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).