State Tax Commission of Missouri
HILLCREST LANES, INC., )
)
Complainant, )
)
v. ) Appeal No. 12-42500
)
IVAN FRIEDEN, ASSESSOR, )
BARTON COUNTY, MISSOURI, )
)
Respondent. )
DECISION AND ORDER
HOLDING
Decision of the Barton County Board of Equalization sustaining the residential assessment made by the Assessor is AFFIRMED. Decision of the Barton County Board of Equalization reducing the commercial assessment made by the Assessor is SET ASIDE.
Complainant presented substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization as to the commercial portion of Complainant’s property, and to establish the true value in money of the subject property as of January 1, 2011.
True value in money for Complainant’s property for tax year 2012 is set at $152,470, commercial assessed value of $48,790; $62,180, residential assessed value of $11,810; total assessed value of $60,600.
Complainant appeared by Counsel, George D. Nichols, Lamar, Missouri.
Respondent appeared in person and by Prosecuting Attorney Steven H. Kaderly.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
ISSUE
Complainant appeals, on the ground of overvaluation, the decision of the Barton County Board of Equalization, which reduced 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.[1] 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 Barton County Board of Equalization.
2. Evidentiary Hearing. The Evidentiary Hearing was held on April 30, 2013, at the Barton County Courthouse, Lamar, Missouri. Parties waived briefing the appeal. Hearing was recorded, but no transcript was ordered.
3. Identification of Complainant’s Property.[2] The subject property is identified by map parcel number 8-3-23-4-2-4. It is further identified as 9 NE 1st Lane, Lamar, Missouri. The property is otherwise known as the Hillcrest Lanes Bowling Alley.
4. Description of Complainant’s Property.[3] Complainant’s’ property consists of a 6.40 acres tract of land. The land is improved with a mobile home and car ports which are located on 2.6 acres of the property – residential portion. The remaining 3.8 acres are improved by a bowling alley structure (13,096 square feet), pavement, two sheds, a yard sign, billboard and office – commercial portion.
5. Deferred Maintenance.[4] The original bowling alley structure was built in 1960; in 1967 a brick game room was added and in 1971 a brick and frame lounge/restaurant was added. The bowling alley structure suffers from critical and severe deferred maintenance issues. The costs for the deferred maintenance items are the required repairs for the bowling alley to be operational.
6. Subject Property. The subject property consists of the commercial portion of Complainant’s property. The residential portion is not under appeal.[5]
7. Overall Assessment.[6] The Assessor appraised Complainant’s property at $62,180 – residential (assessed value – $11,810) and $576,500 – commercial (assessed value – $164,580). The Board of Equalization sustained the residential assessment and reduced the commercial value to $286,520, assessed value – $91,690.
8. Detailed Assessment.[7] The appraisal of the commercial portion of Complainant’s property by the Board’s decision valued the property as follows: 3.8 acres – $9,910; Bowling Alley – $250,290; Pavement – $3,400; Shed – $1,780; Shed – $13,680; Yard Sign – $ 620; Billboard – $980; Office – $5,860
9. Complainant’s Evidence. The following exhibits were received into evidence on behalf of Complainant:
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EXHIBIT |
DESCRIPTION |
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A |
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B |
Written Direct Testimony – Galen G. Carter |
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C |
Mr. Carter and Mr. Curless testified at the hearing.
10. Carter Appraisal.[10] The appraisal by Mr. Carter valued 2.5 acres of the commercial portion, the bowling alley structure, 65,000 square feet of pavement and an older barn. The value for the 2.5 acres was concluded to be $19,250. The depreciated value of the bowling alley structure, pavement and older barn was concluded to be $123,979, for a total indicated value for the subject of $143,229, rounded to $143,200.
11. No Evidence of New Construction & Improvement. 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.[11]
12. Presumption of Correct Assessment Rebutted. Complainant’s evidence was substantial and persuasive to prima facie rebut the presumption of correct assessment by the Board. See, Presumption In Appeal, infra.
13. Respondent’s Evidence. Respondent did not prefile any exhibits or written direct testimony. At the conclusion of the evidentiary hearing, the Hearing Officer instructed Respondent to file with the Commission a copy of the property record card for Complainant’s property, with the Assessor’s summary on the assessment of the property. Said document was so filed and it has been marked for purpose of identification as Exhibit1. It is received into the record.
14. Reconciliation of Valuation Differences. Complainant’s appraiser undervalued the commercial portion by 1.3 acres.[12] Mr. Carter’s valuation accounted for the bowling alley structure, pavement, and barn/shed (1,680 square feet). It omitted valuation of a 168 square feet shed, a 714 square feet office, a yard sign and a billboard. The omitted acreage and omitted improvements, valued by the Assessor/Board, added to the Carter conclusion of value establish the indicated value under the cost approach. See, FINDINGS OF FACT 8 & 10, supra.
15. Concluded Value. The evidence on the entire record was substantial and persuasive to establish the true value in money as of January 1, 2011, to be $152,470, for the commercial portion of Complainant’s property. See, Hearing Officer Finds Value, infra.
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.[13]
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.[14] 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.[15]
Presumption In Appeal
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[16] 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.[17] The presumption is not evidence of value.
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.[18]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[19] 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.[20]
Upon presentation of the Complainants’ evidence[21] the presumption in this appeal disappeared. The submission of the appraisal report, performed by a state certified real estate appraiser, established prima facie that the Board’s value was in error and what the fair market value that should have been placed on the property, subject to evidence as to the valuation of a certain improvements on the commercial portion of Complainant’s property included in the Assessor/Board’s description, but omitted from Complainant’s appraisal.
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.[22] True value in money is defined in terms of value in exchange and not value in use.[23] It is the fair market value of the subject property on the valuation date.[24] 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.[25]
The Carter appraisal was performed under this Standard.[26]
Investigation by Hearing Officer
In order to investigate appeals filed with the Commission, the Hearing Officer may inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, subclassification or assessment of the property. The Hearing Officer’s decision regarding the assessment or valuation of the property may be based solely upon his inquiry and any evidence presented by the parties, or based solely upon evidence presented by the parties.[27] The Hearing Officer during the evidentiary hearing made inquiry of Complainant’s witnesses and of Respondent, and instructed Respondent to provide a copy of the property record card and a summary of same to the Commission following the hearing.[28]
Weight to be Given Evidence
The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but 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.[29]
The Hearing Officer as the trier of fact may consider the testimony of an expert or lay witness and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances. The Hearing Officer is not bound by the opinions of witnesses who testify on the issue of reasonable value, but may believe all or none of the testimony and accept it in part or reject it in part.[30]
The Hearing Officer concludes that probative weight must be accorded to the valuation concluded by Complainant’s appraiser and that same constitutes substantial and persuasive evidence upon which a conclusion of value may be established.
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.[31] 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.[32] The Carter appraisal considered each of the three established appraisal methodologies. The appraiser developed both the cost and sales comparison approaches to value and concluded value under the cost approach.[33]
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.[34]
The facts or data upon which Mr. Carter based his opinion were of a type reasonably relied upon by experts in the field of commercial real estate appraisal. The facts or data are deemed to be otherwise reliable.
Hearing Officer Finds Value
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, 2011.[35] 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.”[36] 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. Standing alone, the appraisal presented on behalf of Complainant satisfied the burden of proof, since Respondent elected to not file any exhibits, written direct testimony or rebuttal exhibits. However, during the course of cross-examination of Complainant’s appraiser it was demonstrated that certain improvements existed on the commercial portion of Complainant’s property which apparently had not been included in the Carter appraisal.
Considering all of the evidence on the record, leads the Hearing Officer to conclude that the valuation presented under the Carter appraisal must be adjusted by the inclusion of additional site value for 1.3 acres, as well as a shed, office, yard sign and billboard. The value for the additional 1.3 acres is taken from the Carter conclusion of land value. The values for the shed, office, yard sign and billboard are taken from the Exhibit 1.
The 1.3 acres valued at $7,700 per acre provides a value of $10,010. This added to the $19,250 already accounted for on the 2.5 acres in the Carter appraisal, equates to a total site value of $$29,260. To the Carter value of $123,979 for the depreciate value of improvements is added values for the shed ($1,780), yard sign ($620), bill board ($980) and office ($5,860), for a total additional improvements value of $9,240. The concluded value for the commercial portion of Complainant’s property is $152,470.[37]
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.[38] The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[39] Mr. Curless, as President and Director of Complainant, was qualified due to his personal knowledge of the property under appeal to tender his opinion of value on behalf of Complainant. His opinion of value was “Not more than $100,000.”[40] In the absence of any documentary evidence to support the owner’s opinion, it is deemed to have been based upon improper elements and an improper foundation. Accordingly, in arriving at a conclusion of value no probative weight was given to the opinion of value proffered by Mr. Curless.
ORDER
The assessed valuation for the commercial portion of Complainant’s property as determined by the Board of Equalization for Barton County for the subject tax day is SET ASIDE.
The assessed valuation for the residential portion of Complainant’s property as determined by the Assessor and sustained by the Board of Equalization for Barton County for the subject tax day is AFFIRMED.
The assessed value for the subject property for tax year 2012 is set at $11,810 – residential and $48,790 – commercial; total assessed value of $60,600.
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. [41]
Disputed Taxes
The Collector of Barton 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 June 25, 2013.
STATE TAX COMMISSION OF MISSOURI
_____________________________________
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 25th day of June, 2013, to: George Nichols, 206 West 10th Street, Lamar, MO 64759, Attorney for Complainant; Steven Kaderly, Prosecuting Attorney, 114 W. 10th, Lamar, MO 64759, Attorney for Respondent; Ivan Frieden, Assessor, 1004 Gulf, Room 109, Lamar, MO 64759; Kristina Crockett, Clerk, 1004 Gulf, Room 103, Lamar, MO 64759; Frances Cato, Collector, 1004 Gulf, Room 101, Lamar, MO 64759.
___________________________
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] The value as of 1/1/11 remains the value as of 1/1/12 unless there is new construction and improvement to the property. Section 137.115.1, RSMo.
[2] Exhibit Complaint for Review of Assessment; BOE Decision Letter & Exhibit A – Identification of Subject Property, p. 17
[12] 3.8 acres (Respondent’s/Board’s commercial site area) minus 2.5 acres (Carter site area) = 1.3 acres.
[15] Section 137.115.5, RSMo – residential property at 19% of true value in money; commercial property at 32% of true value in money and agricultural property at 12% of true value in money.
[16] 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)
[17] 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.
[18] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
[19] 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.
[22] 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).
[23] 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).
[25] 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.
[28] Counsel for Complainant was present during the post-hearing conversation and was aware that the Hearing Officer was going to receive into evidence the property record card.
[29] 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).
[30] St. Louis County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).
[31] 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).
[32] 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).
[34] 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).
[36] 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).
[38] 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).
[39] 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).