State Tax Commission of Missouri
HENRY & ILENE ORDOWER,)
v.) Appeal Number 07-11568
PHILIP MUEHLEAUSLER, ASSESSOR,)
ST. LOUIS COUNTY,MISSOURI,)
DECISION AND ORDER
Decision of the St. Louis County Board of Equalization sustaining 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 years 2007 and 2008 is set at $570,200, residential assessed value of $108,340.
Complainant appeared in person.
Respondent appeared by Assistant County Counselor, Paula Lemmerman.
Case heard and decided by Hearing Officer Maureen Monaghan
The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2007, and whether there was an intentional plan by the assessing officials to assess the property under appeal at a ratio greater than 19% of true value in money, or at a ratio greater than the average 2007 – 2008 residential assessment ratio for St. Louis County.
Complainant appeals, on the ground of overvaluation and discrimination, the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property.The Assessor determined an appraised value of $570,200, assessed value of $108,340, as residential property.Complainant proposed a value of $403,000, assessed value of $76,570. A hearing was conducted on May 15, 2008, at theSt. LouisCountyAdministrationBuilding,St. Louis,Missouri.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
Complainant testified in his own behalf.Mr. Ordower stated his opinion of value for the subject property as of January 1, 2007, was $403,000.His determination of value was based upon a dollar per square foot amount based upon the Assessor’s valuations of other properties. The taxpayer offered into evidence the Assessor’s appraisal report (Joint Exhibit 1) and his appeal to the Board of Equalization (Complainant’s Exhibit 2).
Respondent placed into evidence the testimony of Mr. Robert S. Koch, Missouri State Certified Appraiser forSt. LouisCounty.The appraiser testified as to his appraisal of the subject property.The Appraisal Report, Joint Exhibit 1, of Mr. Koch was received into evidence.Mr. Koch arrived at an opinion of value for the subject property of $575,000 based upon a sales comparison approach to value.
In performing his sales comparison analysis, the appraiser relied upon the sales of four properties and the listing of one property which he deemed to be comparable to the subject property.The adjusted sales prices of the comparables fell in a range from $560,300 to $611,700. The percentage of sale price adjustments ranged from 9.3% to 18.3%.
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 at2 Pine Manor Drive,Creve Coeur,Missouri.The property is identified by parcel number 18N540454.The property consists of a lot of 20,000 square feet improved by a two-story brick and frame, single-family structure of average quality construction.The house was built in 1976 and appears to be in average condition.The residence has a total of eight rooms, which includes four bedrooms, two full baths and one half baths, and contains 2,730 square feet of gross living area.There is a basement with 899 square feet of finish, an attached two-car garage, a fireplace, screened porch and patio.
3.There was no evidence of new construction and improvement from January 1, 2007, to January 1, 2008.
4.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 $403,000.
5.The properties relied upon by Respondent’s appraiser were comparable to the subject property for the purpose of making a determination of value of the subject property. The properties were located in the same subdivision or within one mile of the subject.Each sale property sold at a time relevant to the tax date of January 1, 2007 (in a range from June 2004 to March, 2007).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.
6.The appraiser made various adjustments to the comparable properties for differences which existed between the subject and each comparable.All adjustments were appropriate to bring the comparables in line with the subject for purposes of the appraisal problem.
7.The appraiser placed the most weight on Comparable 3 due to its similarity to the subject and minimal adjustments.Comparable 3 is within .83 miles of the subject property.The property sold in March 2007 for $629,900.The lot size is 9000 square feet larger than the subject lot size.The comparable is in slightly better condition and has a swimming pool.The comparable has less finished space in the basement and does not have a screened porch.The gross adjustments totaled 9.3% with a final adjusted sales price of $576,400.
8.Comparable 5 is an active listing and was used to support the final estimate and no weight was placed on the comparable when arriving at the final estimate of value.
9.Respondent’s evidence met the standard of standard of clear, convincing and cogent evidence in this appeal, under the provisions of Section 137.115, RSMo, to establish the value of the subject, as of January 1, 2007, to be $575,000.Respondent’s appraisal was accepted only to sustain the original assessment made by the Assessor and not for the purpose of raising the assessment above that value.
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).
Notwithstanding the provision of Section 138.431.3, RSMo – “There shall be no presumption that the assessor’s valuation is correct,” – the Supreme Court of Missouri has held, “A tax assessor’s valuation is presumed correct.”Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341 (Mo. 2005).Citing to Hermel, supra; and Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
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.Complainant failed to present any evidence that would support his opinion of fair market value for the subject property on January 1, 2007, to be $403,000.
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, p. 4.
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).
Missouricourts 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). Complainant failed to present any evidence under any accepted method of valuation.
Respondent’s Burden of Proof
The Respondent has imposed upon him by the provisions of Section 137.115.1, RSMo, the burden of proof to present clear, convincing and cogent evidence to sustain a valuation on residential property which is made by a computer, computer-assisted method or a computer program.There is a presumption in this appeal that the original valuation, which was sustained by the Board of Equalization, was made by a computer, computer-assisted method or a computer program.There was no evidence to rebut the presumption, therefore, in order to sustain the valuation of the subject property at $570,200, appraised value, Respondent’s evidence must come within the guidelines established by the legislature and must clearly and convincingly persuade the Hearing Officer as to the value sought to be sustained.
The statutory guidelines for evidence to meet the standard of clear, convincing and cogent include the following:
(1)The findings of the assessor based on an appraisal of the property by generally accepted appraisal techniques; and
(2) The purchase prices from sales of at least three comparable properties and the address or location thereof.As used in this paragraph, the word comparable means that:
(a)Such sale was closed at a date relevant to the property valuation; and
(b)Such properties are not more than one mile from the site of the disputed property, except where no similar properties exist within one mile of the disputed property, the nearest comparable property shall be used.Such property shall be within five hundred square feet in size of the disputed property, and resemble the disputed property in age, floor plan, number of rooms, and other relevant characteristics.
Section 137.115.1(1) & (2).
Complainant testified that the appraiser’s comparables were not within one mile. The Complainant testified that the comparables may be within one mile “as the crow flies” but were not within one mile if using a vehicle to drive to each location.Section 137.115, RSMo does not specify how distances are to be calculated.Distance should be calculated using straight line method of measuring from property line to property line “as the crow flies” rather than as distance via available roadways to and from properties; straight line method renders the statute effective and workable and avoids the unreasonable and bizarre results that might occur from use of a roadway method.
Complainant also testified that the appraiser’s report is flawed because one of the comparable properties is not within the 500 square foot allowance as provided in Section 137.115, RSMo.Comparable property 2 is 557 square feet larger than the subject property.The appraiser for the Assessor placed the most weight on Comparable 3 which is only 30 square feet larger than the subject property.One property that is not within the square foot requirements will not disqualify an appraisal report that contains at least three comparable properties where the sales were closed at a date relevant to the property valuation and the properties are not more than one mile from the site of the disputed property, within five hundred square feet in size of the disputed property, and resemble the disputed property in age, floor plan, number of rooms, and other relevant characteristics.
Clear, cogent and convincing evidence is that evidence which clearly convinces the trier of fact of the affirmative proposition to be proved.It does not mean that there may not be contrary evidence.Grissum v. Reesman, 505 S.W.2d 81, 85, 86 (Mo. Div. 2, 1974).The quality of proof, to be clear and convincing must be more than a mere preponderance but does not require beyond a reasonable doubt.30 AmJur2d. 345-346, Evidence section 1167.“For evidence to be clear and convincing, it must instantly tilt the scales in the affirmative when weighed against the evidence in opposition and the fact finder’s mind is left with an abiding conviction that the evidence is true.”Matter of O’Brien, 600 S.W.2d 695, 697 (Mo. App. 1980).The appraisal report presented by Respondent met the required standard to affirm the value originally set by the Assessor and sustained by the Board.
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, Joint Exhibit 1 and the testimony of Mr. Koch in support thereof was only received as evidence to sustain the value determined by the Board.It was not received to increase the value above that found by the Assessor and sustained by the Board.
Complainant’s 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, 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).
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.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).The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.Cohen v. Bushmeyer, — S.W.3d —-, 2008 WL 820938 (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).
In this case, Mr. Ordower stated his opinion of value as of January 1, 2007, to be $403,000.However, the documents he tendered and his testimony relating to those documents fail to provide any market data upon which his opinion of value can be supported.Mr. Ordower testified that the owner of property located at 10 Pine Manor appealed his valuation to the Board of Equalization and the Board determined a value of his property of $460,000.Mr. Ordower also reviewed the properties used as comparables by the Assessor’s appraiser.He sought a valuation for his property based upon a price per square foot amount.However, in a sales comparable approach the sale price of the comparables are adjusted for differences in the property from the subject property.The adjustments are made to the sale price of the comparable for an indication of value of the subject property not a price per square foot for properties.
There are no market facts to establish $403,000 as the fair market value of the property under appeal.There is no sales, income or cost information which supports the owner’s opinion of value. “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.”Carmel Energy at 783.Given that Mr. Ordower’s opinion of value was not based upon facts derived from the market or a methodology recognized by the State Tax Commission, it is not probative on the issue of value.Since the owner’s opinion of value was not founded upon a proper basis and foundation it can be given no weight on the issue of fair market value.
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).In this case, to conclude a fair market value as proposed by the Complainant would be nothing but an exercise in speculation, conjecture and surmise.That is not the means recognized by our Courts upon which a conclusion of value may be reached in appeals before the Commission.
Complainant Fails To Prove Discrimination
In order to obtain a reduction in assessed value based upon discrimination, the Complainant must prove the assessment of the property under appeal at a greater percentage of value than other residential property, generally, within the taxing jurisdiction (county).Koplar v. State Tax Commission, 321 S.W.2d 686, 690 (Mo. 1959).Substantial evidence must show that all other property in the same class, generally, is actually undervalued.State ex rel. Plantz v. State Tax Commission, 384 S.W.2d 565, 568 (Mo. 1964).The difference in the assessment ratio of the subject property and the average assessment ratio in the subject county must be shown to be grossly excessive.Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986).No other methodology is sufficient to establish discrimination.Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696 (Mo. 1958).
To establish his claim of discrimination, Complainant had to prove the average level of assessment for residential property in St. LouisCountyfor 2007.This would be done by (a) independently determining the market value of a representative sample of residential properties in St. Louis County; (b) determining the assessed value placed on each of the sample properties by the assessor’s office for the relevant year; (c) dividing the assessed value by the market value to determine the level of assessment for each property in the sample; and (d) determining the mean and median of the results.The difference between the actual assessment level of the subject property and the average level of assessment for all residential property, taken from a sufficient representative sample in St. LouisCountymust demonstrate a disparity that is grossly excessive.Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986).
Complainant’s discrimination claim fails because he failed to establish that the average assessment ratio for residential property inSt. LouisCountyfor the 2007 assessment.The subject property was assessed at 19%, as mandated by law, based on the value set by the Assessor and sustained by the Board.Complainant’s assertions does not constitute discrimination.
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 $108,340.
A party 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.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.Section 138.432, RSMo 2000.
If an application for review of this decision is made to the Commission, any 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, unless said taxes have been disbursed pursuant an order of the circuit court under the provisions of Section 139.031.8, RSMo.§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 presently in an escrow account 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 June 2, 2008.
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 2ndday of June, 2008, to:Henry Ordower, 2 Pine Manor Drive, St. Louis, MO 63141, 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.