State Tax Commission of Missouri
GARY MITCHELL, )
)
Complainant, )
)
v.) Appeal No.11-10424
)
JAKE ZIMMERMAN, 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.Complainant failed to present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization.Respondent presented substantial and persuasive evidence to rebut the presumption of correct assessment and establish the true value in money for the subject property as January 1, 2011.
True value in money for the subject property for tax years 2011 and 2012 is set at $788,000, residential assessed value of $149,720.
Complainant appeared Pro Se.
Respondent appeared by Associate County Counselor, Paula J. 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, 2011.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.
2.Evidentiary Hearing.The Evidentiary Hearing was held on November 1, 2012, at the St. Louis County Government Center, 41 South Central Avenue, Clayton, Missouri.
3.Subject Property.The subject property is identified by locator number 19U10081.The property is located at 1206 Lewis Spring Dr., Chesterfield, Missouri.A complete description of the property is provided in Exhibit.
4.Assessment.The Assessor appraised the property at $823,000, a residential assessed value of $156,370.The Board sustained the valuation.[1]
5.Complainant’s Evidence.Complainant offered into evidence the following exhibits:
|
EXHIBIT |
DESCRIPTION |
|
A |
Letter dated 3/23/12 – Failure to Attend Prehearing |
|
B |
Change of Assessment Notice – dated 5/13/11 |
|
C |
BOE Appeal, CP’s Letter, BOE Decision |
|
D |
Complaint for Review of Assessment |
|
E |
Comparable Sales Analysis Report – 2009 |
|
F |
Realtor Photos – 16949 Lewis Sp. Farms Rd. |
|
G |
Realtor Photos – 16925 Lewis Sp. Farm Rd. |
|
H |
Statement of Value & Basis |
There were no objections to Exhibits A, B, C, D, F, G and H.They were received into the record.Counsel for Respondent objected to Exhibit E on the ground of lack of foundation and relevance.The objection was sustained and Exhibit E was not received into evidence.[2]Mr. Mitchell testified that his opinion of value for his property as of 1/1/11 was $763,000.
There was no evidence of new construction and improvement from January 1, 2011, to January 1, 2012, therefore the assessed value for 2011 remains the assessed value for 2012.[3]
Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board.
6.Respondent’s Evidence.Respondent offered into evidence the appraisal report (Exhibit1) of Burchell McGhee.Mr. McGhee concluded a value as of January 1, 2011, of $788,000.Complainant objected to Exhibit 1 on the ground it was offered by an employee of the Assessor.The objection was overruled and Exhibit 1 was received into evidence.The fact that Mr. McGhee is an employee of the Assessor is not a legal basis for the exclusion of the appraisal report.Respondent’s evidence met the standard of substantial and persuasive evidence to both rebut the presumption of correct assessment by the Board and to establish the true value in money as of January 1, 2011, to be $788,000.
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.[4]
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.[5]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.[6]
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[7]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.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]The presumption is not evidence of value.
The presumption of correct assessment is rebutted when the taxpayer, or Respondent when advocating a value different than the value 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.[9]
Complainant failed to present any evidence upon which it could be concluded that the valuation determined by the Board was in error.Accordingly, as to Complainant’s claim of overvaluation, the presumption of correct assessment by the Board was not rebutted.
Upon presentation of the Respondent’s evidence[10] the presumption of correct assessment by the Board was rebutted.The submission of the appraisal report established prima facie that the Board’s value was in error.The appraisal further established the fair market value that should have been placed on the property.
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.[11]True value in money is defined in terms of value in exchange and not value in use.[12]It is the fair market value of the subject property on the valuation date.[13]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.[14]
Mr. McGhee concluded his value for Complainant’s property under this Standard.[15]
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.[16]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.[17]Complainant failed to present an opinion of value that was derived from and based upon any recognized appraisal methodology.Respondent presented evidence of a valuation that was derived from and based upon the comparable sales approach.Accordingly, Complainant did not present a value under an accepted method of valuation, while Respondent did.
Opinion Testimony by Experts
If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto.
The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data need not be admissible in evidence.[18]
Respondent’s appraiser was qualified to testify as an expert on the valuation of the subject property.[19]The data upon which Mr. McGhee based his conclusion of value were of a type reasonably relied upon appraisers in the field of residential real estate appraisal in St. Louis County and such data were deemed to be otherwise reliable for purposes of ascertaining the true value in money of the property under appeal as of 1/1/11.
Complainant Failed To Meet Burden of Proof
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, 2011.[20]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.”[21]A valuation which does not reflect the fair market value (true value in money) of the property under appeal is an unlawful, unfair and improper assessment.
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[22]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.[23]As will be now addressed, the evidence presented by Mr. Mitchell failed to meet the standard of substantial and persuasive to establish first rebut the presumption of correct assessment by the Board and to second establish that his proposed value of $763,000 did in fact represent the fair market value of the property as of 1/1/11.
Complainant’s Exhibits
Exhibit A:This exhibit consists of a letter by Mr. Mitchell explaining his failure to attend the prehearing in this appeal.This exhibit has no probative merit in a determination of value for the subject property.No adverse inference was drawn by the Hearing Officer against Complainant due to in ability to attend the prehearing conference.The exhibit has no relevance to what a willing buyer and seller would have paid for the subject property on 1/1/11.
Exhibit B:This is the Change of Assessment Notice, dated 5/13/11.The change notice only established that the value on the Mitchell property had been reduced from the 2009 valuation of $835,000 to $823,000.The document is irrelevant to a determination of fair market value as of 1/1/11, other than to support the value concluded by the Board.
Exhibit C:This exhibit consists of a copy of the Appeal Form to the BOE, Complainant’s letter to the Board, and the BOE Decision Letter.The Appeal Form simply stated the owner’s opinion to be $763,000.Complainant’s letter complained of the Assessor not providing substantiation or description of methodology for the valuation of $823,000.The letter also referenced a Comparative Sales Analysis Report for 2009 giving a value of Complainant’s property at $767,800 and a sale in the first quarter of 2009 of a property for $775,000.Based upon these items, Mr. Mitchell concluded in his letter that his property should be valued between $750,000 and $760,000.
The foregoing does not constitute a valid methodology for appraisal of real estate.The reference to the 2009 report is information that is not relevant to the valuation date of 1/1/11.The reference to a single sale in early 2009 does not establish the market for a home such as the subject in January, 2011.Accordingly, the conclusion of an opinion of value before the BOE of $750,000 to $760,000 lacks a property foundation and is therefore irrelevant.
Exhibit D:The Complaint for Review of Assessment is a part of the Commission’s filed in every appeal.It is, in fact, the petition or pleading of the taxpayer.It sets forth the owner’s claim, in this instances overvaluation of the property, and a proposed value of $763,000.However, absent substantial and persuasive evidence to prove the claim asserted the Complaint has no probative value.
Exhibit F:This document is a group of photographs and other information on the property at 16949 Lewis Spring Farms Road, Chesterfield, Missouri.It shows this property sold on 5/18/09 for $775,000.This property was Sales Comparable 1 in the McGhee appraisal.Mr. McGhee made appropriate adjustments to this sale to conclude an Adjusted Sale Price for this property of $794,600.The Exhibit failed to provide any evidence that established the subject property should be valued at only $763,000 as proposed by Mr. Mitchell.
Exhibit G:This exhibit provides realtor’s data on the property at 16925 Lewis Spring Farms Road, Chesterfield, Missouri.The document shows a sale price of $800,000.This was Mr. McGhee’s Comparable 2, which sold on 9/17/10 according to Exhibit 1 for the price as shown in Exhibit G.As with Exhibit F, Respondent’s Appraiser properly adjusted this property to provide an indicated value for the Mitchell property of $780,200.The Exhibit provided no evidence upon which the Hearing Officer can conclude a value of only $763,000.
Exhibit H:This is Complainant’s Statement of Value and Basis (Statement).[24]Mr. Mitchell asserts in his Statement that Exhibits B through G validates the true market value of the property is no more than $763,000.He further argues that there was no substantiating date presented before the Board from the Assessor’s office to support the value of $823,000.The Hearing Officer does not review what the Board did or did not do relative to its summary conclusion of value.As addressed in reference to Complainant’s Exhibits, none of them establish the value of $763,000 to be the fair market value of the property as of 1/1/11.Complainant’s entire line of argument is against the original assessment and the Board Decision, however, the determination of value in this appeal is based on the valuation evidence presented in this record.The Assessor abandoned the value set by the Board and instead presented evidence in the form of the McGhee appraisal to advocate a value less than $823,000.Therefore, all arguments and assertions against that value are for naught.
Exclusion of Exhibit E
Exhibit E consists of the Comparable Sales Analysis Report for Tax Year 2009 on the subject property.It was offered into evidence in the hearing in Appeal 09-10644 (Mitchell v. Brooks) on Mr. Mitchell’s property.Objection was made on the grounds of hearsay, lack of foundation and relevancy.The objection was sustained and the exhibit excluded.[25]Counsel for Respondent objected to Exhibit E on the grounds of lack of foundation and relevance.The objection was sustained and Exhibit E was excluded.No foundation was established that the Exhibit established value as of 1/1/11.No foundation was laid that the indicated values reported were relied upon by either the Assessor or the Board in valuing the property for either 2009 or 2011.It was not relevant since it concluded a value for the 2009 assessment year.Nothing contained in the document supported a value of $763,000 as proposed by Mr. Mitchell
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.[26]The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[27]“Where the basis for a test as to the reliability of the testimony is not supported by a statement of facts on which it is based, or the basis of fact does not appear to be sufficient, the testimony should be rejected.”[28]
At hearing, Mr. Mitchell gave his opinion of value to be $763,000 without any support from any accepted appraisal methodology.As has previously been addressed the Exhibits tendered in no way establish or even support such a value.Accordingly, the reliability of the owner’s testimony on the matter of fair market value as of 1/1/11 is not supported by a sufficient statement of facts.
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.”[29]The Hearing Officer is unable to ascertain how the opinion of value proffered by the taxpayer can be supported by the two sales presented, when those sales properly adjusted established indicated values for the subject of $794,600 and $780,200 respectively.[30]The Hearing Officer is left with only the unsupported owner’s opinion, which is nothing more than speculation, conjecture and surmise.A decision in the taxpayer’s favor cannot be based upon such elements.The owner’s opinion did not rest upon proper elements or a proper foundation, and therefore can be given no probative weight.
Summary and Conclusion
Mr. Mitchell failed to present evidence that established the Board failed to correctly value the property.Therefore, the Board presumption was not rebutted.
Respondent Proves Value of $788,000
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.[31]Respondent met that burden in this instance by the submission of Exhibit 1 and the testimony at hearing of appraiser McGhee.
Mr. McGhee’s appraisal considered and adjusted three comparable sales to conclude his value of $788,000.This constituted substantial and persuasive evidence to both rebut the Board presumption and to establish the value advocated.Therefore, the valuation of $823,000 must be set aside and the true value in money of $788,000 be utilized to reached the assessed value of $149,720 for this residential property.
ORDER
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Louis County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2011 and 2012 is set at $149,720.
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 application for review is based will result in summary denial. [32]
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 January 10, 2013.
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 10th day of January, 2013, to:Gary Mitchell, 1206 Lewis Spring Drive, Chesterfield, MO 63005,Complainant; Paula Lemerman, Associate County Counselor, Attorney for Respondent, County Government Center, 41 South Central Avenue, Clayton, MO 63105; Jake Zimmerman, Assessor, County Government Center, 41 South Central Avenue, Clayton, MO 63105; Eugene Leung, Director of Revenue, 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
[1] BOE Decision Letter, Exhibit 1- Assessment Information and Tax Data, Addendum Page 1 of 4; Residential property is assessed at 19% of its appraised value (true value in money, fair market value) – Section 137.115.1, RSMo.
[2] The Exhibit is maintained in the Commission file, but it is not part of evidence in the record upon which a finding of value can be made.
[7] 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)
[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] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
[11] 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).
[12] 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).
[14] 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.
[15] Exhibit 1 – Definition of Value & Definition of “True Value In Money” as set forth by the state of Missouri, Page 4 of 4
[16] 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).
[17] 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).
[18] Section 490.065, RSMo; State Board of Registration for the Healing Arts v. McDonagh, 123 S.W.3d 146 (Mo. SC. 2004); Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. E.D. 1992).
[21] 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).
[22] See, Cupples-Hesse, supra.
Substantial and persuasive evidence is not an extremely high standard of evidentiary proof.It is the lowest of the three standards for evidence (substantial & persuasive, clear and convincing, and beyond a reasonable doubt).It requires a small amount of evidence to cross the threshold to rebut the presumption of correct assessment by the Board.The definitions, relevant to substantial evidence, do not support a position that substantial and persuasive evidence is an extremely or very high standard.
“Substantial evidence: Evidence that a reasonable mind would accept as adequate to support a conclusion; evidence beyond a scintilla.”Black’s Law Dictionary, Seventh Edition, p. 580.
The word scintilla is defined as “1. a spark,2. a particle; the least trace.” Webster’s New World Dictionary, Second College Edition.Black’s definition at 1347 is “A spark or trace <the standard is that there must be more than a scintilla of evidence>.”There must be more than a spark or trace for evidence to have attained the standard of substantial.Once there is something more than a spark or trace the evidence has reached the level of substantial.Substantial evidence and the term preponderance of the evidence are essentially the same.“Preponderance of the evidence.The greater weight of the evidence; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”Black’s at 1201.Substantial evidence is that a reasonable mind would accept as adequate to support the conclusion.Preponderance is sufficient to incline a fair and impartial mind to one side of the issue rather than the other, i.e. support the proposed conclusion.
[24] Pursuant to Order dtd3/29/12, Complainant was to file with the Commission and Counsel for Respondent a Statement of Value and Basis (Statement).Complainant’s original Exhibit H contained certain information that explained his other exhibits.Accordingly, those items were not received as part of Exhibit H and only the Statement constitutes Exhibit H.
[26] 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).
[27] 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).