State Tax Commission of Missouri
GLORIA A. STRAUSS,)
v.) Appeal Number 07-10398
PHILIP MUEHLHEAUSLER, ASSESSOR,)
ST. LOUIS COUNTY,MISSOURI,)
DECISION AND ORDER
Decision of the St. Louis County Board of Equalization reducing the assessment made by the Assessor is AFFIRMED.Hearing Officer finds presumptions of correct assessment not rebutted. True value in money for the subject property for tax year 2007 and 2008 is set at $1,200,000 assessed value of $228,000.
Complainant Gerhard Strauss appeared pro se.
Respondent appeared by Associate County Counselor, Paula Lemerman.
Case heard and decided by Hearing Officer Maureen Monaghan.
The Commission takes this appeal to determine the true value in money for the subject properties on January 1, 2007.
Complainants appeal, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which reduced the valuations of the subject property.The Assessor determined an appraised value of $1,228,100, assessed value of $233,340, as residential property.The Board of Equalization reduced the valuation to $1,200,000, assessed value $228,000.Complainants proposed a value of $977,700, assessed value of $185,765, in their Complaint for Review of Assessment.A hearing was conducted on May 29, 2008, at theSt. LouisCountyGovernmentCenter,Clayton,Missouri.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
Mr. Strauss testified on behalf of Complainants.He stated his opinion of value for the property to be $977,700 as of January 1, 2007.Mr. Strauss testified that the residence was built in 1981.In 1991, they added a two-story addition of a bedroom, family room and spa.They have updated their kitchen including adding Corian countertops.
Ernest A. Demba, State Certified General Real Estate Appraiser, testified on behalf of the Complainant.Mr. Demba originally testified the value of the property was $977,700.The appraiser testified as to his appraisal of the subject property.The Appraisal Report, Exhibit A, of Mr. Demba was received into evidence.
In performing his sales comparison analysis, the appraiser relied upon the sales of four properties which he deemed to be comparable to the subject property. The adjusted sales prices of the comparables fell in a range from $878,419 to $1,114,838.
After cross-examination, Mr. Demba amended his opinion of value to $997,700
Respondent placed into evidence the testimony of Mr. Robert Koch, Missouri State Certified Residential Appraiser.The appraiser testified as to his appraisal of the subject property.The Appraisal Report, Exhibit 1, of Mr. Koch was received into evidence.Mr. Koch arrived at an opinion of value for the subject property of $1,683,000 based upon a sales comparison approach to value.
In performing his sales comparison analysis, the appraiser relied upon the sales of five properties which he deemed to be comparable to the subject property. The adjusted sales prices of the comparables fell in a range from $1,474,100 to $1,799,400.The gross adjustments ranged from 10.7% to 19.5%.
FINDINGS OF FACT
1.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.The subject property is located at12 Warridge Drive,Ladue,Missouri. It is identified by parcel number 20M540041.
3.The property is a 3.12 acre lot with a single-family, two-story brick house with abasement.There is a three-car attached garage, two patios, a deck and a gazebo. The residence was built in 1981 of very good construction and appears to be in good condition.The residence has 6,387 square feet of finished space with a total of eleven rooms which includes five bedrooms and five and one half baths.
4.There was no evidence of new construction and improvement from January 1, 2007, to January 1, 2008.
5.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, 2007, to be $977,700, as proposed in the Complaint for Review.
6.The properties relied upon by Complainant’s appraiser in performing his appraisal were comparable to the subject property for the purpose of making a determination of value of the subject property.However, errors in property measurements, existence of updates, and adjustments, make the evidence unpersuasive and not substantial.
7.The properties relied upon by Respondent’s appraiser in performing his appraisal were comparable to the subject property for the purpose of making a determination of value of the subject property.
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.Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, RSMo.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.Section 138.431.4, RSMo.
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.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).
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.Snider, Hermel & Cupples Hesse, supra.As is discussed below, Complainants failed to meet the required standard 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.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).It is the fair market value of the subject property on the valuation date.Hermel, supra.
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.
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; Exhibit 1.
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, at 615 (Mo. App. W.D. 2000); Hermel, supra;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. Div. 2 1974).
Evidence of Increase in Value
In any case in St. Louis County where the assessor presents evidence which indicates a valuation higher than the value finally determined by the assessor or the value determined by the board of equalization, whichever is higher, for that assessment period, such evidence will only be received for the purpose of sustaining the assessor’s or board’s valuation, and not for increasing the valuation of the property under appeal.Section 138.060, RSMo; 12 CSR 30-3.075.Therefore, Exhibit 1 was received only to support the value of $1,200,000 per parcel and not to increase the value to $1,630,000.
Complainants’ Burden of Proof
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, 2007.Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, at 897.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.” 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).
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.See, Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).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.Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).
Mr. Ernest Demba testified on behalf of the Complainant and presented an appraisal report.(Exhibit A).The appraiser developed a sales comparison approach to value.The appraiser found four sales.The appraiser provided a map with the subject property and the comparable properties tagged.There is no scale and the exact distance between the subject property and the comparables is unknown.Also, the appraiser believed the subject property was 5,623 square feet and used comparables between 4,000 to 4,500 square feet.The subject property is actually 6,387 square feet.
The first comparable sale is located on a lot 1/3 the size of the subject property and is 712 square feet smaller than the subject property.The appraiser made several adjustments including a positive $136,560 adjustment for lot size, positive $24,920 adjustment for square footage differences, and a negative $103,500 adjustment for a floor plan deemed superior to the subject floor plan by the appraiser.
The second comparable sale is also on a smaller lot.The appraiser stated the lot size was 1.04 acres but the MLS document relied on by the appraiser listed the lot size at 1.54 acres.The appraiser made a $200,000 adjustment for the updated kitchen in the comparable, information the appraiser believes he received from the realtor.The appraiser has no recollection of the conversation and the MLS makes no mention of the kitchen being updated.The appraiser also believed that the subject property’s kitchen was outdated and had laminate countertops.The comparable was built in 1964, the subject in 1981, and the appraiser made a $5,000 adjustment.The appraiser made the negative adjustment for the floor plan of $134,400.
The appraiser also made an adjustment to the third comparable sale for an updated kitchen.There is nothing in the MLS listing for updated kitchen or baths that the appraiser made a $75,000 adjustment.Again the appraiser made an adjustment for floor plan of $110,000.
Comparable 4 is on the same street as the subject property.The appraiser made a negative adjustment for less rooms, bedrooms and bathrooms of $43,500; however, the comparable property is inferior and the adjustment should have been a positive adjustment.Once again, the appraiser made an adjustment for an updated kitchen which is not documented on the MLS listing.
The comparable properties had effective price per square foot range of $193.44 – $283.00.Based upon the appraiser’s adjustments, an adjusted dollar per square foot has a range of $163.73 to $198.26.If the negative adjustment on comparable 4 is changed to a positive adjustment, the range of adjusted dollar per square foot is $163.73 to $234.79.If the values are weighted equally, the resulting value estimate is $1,088,200.
An expert’s opinion must be founded upon substantial information, not mere conjecture or speculation, and there must be a rational basis for the opinion.Missouri Pipeline Co. v. Wilmes, 898 S.W. 2d 682, 687 (Mo. App. E.D. 1995). The facts upon which an expert’s opinion is based, like the facts sufficient to support a verdict, must measure up to the legal requirements of substantiality and probative force; the question of whether such opinion is based on and supported by sufficient facts or evidence to sustain the same is a question of law for the court.Robinson v. Empiregas Inc. of Hartville, 906 S.W.2d 829 (S.D. 1995).
The Hearing Officer cannot ignore a lack of support in the evidence for calculations and adjustments made by the expert witnesses in the application of a particular valuation approach.Drey v. State Tax Commission, 345 S.W.2d 228, 234-236 (Mo. 1961); Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d, 341, 348 (Mo. 2005).A taxpayer does not meet their burden if evidence on any essential element of his case leaves the Hearing Officer “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).
Given the incorrect information in the appraisal report, the lack of support for adjustments, and the corrections changing the resulting valuation from $977,700 to $1,088,200, the evidence presented by the Complainant is not substantial nor persuasive.
Mr. Koch, a certified residential appraiser for the county, testified and presented his report.(Exhibit 1)The appraiser developed a sales comparison approach using five sales within 1.82 miles of the subject property.The square footage of three of the properties were within 500 square feet of the subject property. The properties sold between January 2005 and July 2006.The appraiser made net adjustments ranging from 5.1% to 17.9%.The resulting values ranged from $1,474,100 to $1,799,400.The appraiser concluded on a value of $1,630,000.The valuation is used to support the value set by the Board of Equalization and not to raise the valuation.
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 AFFIRMED.
The assessed value for the subject property for tax years 2007 and 2008 is set at $228,000.
Complainants may file with the Commission an application for review of this decision within thirty (30) days of the mailing of such decision.The application shall contain specific grounds upon which it is claimed the decision is erroneous.Failure to state specific facts or law upon which the appeal is based will result in summary denial.Section 138.432, RSMo 2000. An Application for Review 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 response must be sent to the Attorney for Respondent, Assessor and Collector at the addresses listed below in the certificate of service.
If an application for review of this decision is made to the Commission, the protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the Commission and an order to the Collector to release and disburse the impounded taxes.§139.031.3, RSMo.If no application for review is received by the Commission within thirty (30) days, this decision and order is deemed final and the Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes to the appropriate taxing jurisdictions, unless previously done under court order pursuant to Section 139.031, 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 June 5, 2008.
STATE TAX COMMISSION OFMISSOURI
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 5thday of June, 2008, to:Gloria Strauss, 12 Warridge, St. Louis, MO 63124, Complainant; Paula Lemerman, Associate County Counselor, County Government Center, 41 South Central Avenue, Clayton, MO 63105, Attorney for Respondent; Philip A. Muehlheausler, Assessor, County Government Center, 41 South Central Avenue, Clayton, MO 63105; John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.