Jack Tejcek & Jacalyn Schwarz v. Jake Zimmerman, Assessor St. Louis County

June 14th, 2018

STATE TAX COMMISSION OF MISSOURI

JACK E. TEJCEK & JACALYN SCHWARZ,	) )
	)
Complainants,	)
	)
v.	)	Appeal No. 17-10271
	) )
JAKE ZIMMERMAN, ASSESSOR,	)
ST. LOUIS COUNTY, MISSOURI,	)
	)
Respondent…	)

ORDER

AFFIRMING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

HOLDING

On June 14, 2018, Senior Hearing Officer Amy Westermann (Hearing Officer) entered her Decision and Order (Decision) affirming the decision of the Board of Equalization of St. Louis County (BOE). Jack Tejcek and Jacalyn Schwarz (Complainants) subsequently filed their Application for Review of Hearing Officer’s Decision and Order. Jake Zimmerman, Assessor of St. Louis County (Respondent), thereafter filed an Opposition to Complainant’s Application for Review.

We AFFIRM the Decision and Order of the Hearing Officer. Segments of the Hearing Officer’s Decision may have been incorporated into our Decision without further reference.

FACTS AND PROCEDURAL HISTORY

The subject property is identified by parcel/locator number 20O230027. It is further identified as 2306 Mueller Lane, Town & Country, St. Louis County, Missouri. The subject property consists of .9240 acres (approximately 40,249 square feet) of land improved by a 1,453 square-foot single-family, ranch-style home built in 1947. The home includes two bedrooms; one full bathroom; one half bathroom; a full unfinished basement; two fireplaces; an attached garage; a concrete or masonry patio; and a frame exterior.

The issue of overvaluation was presented at an evidentiary hearing on March 22, 2018, at the St. Louis County Government Building, 41 South Central Avenue, Clayton, Missouri.

Exhibits

Complainants discussed, provided and offered the following exhibits.

Exhibit A	St. Louis County Record of Deeds Certified copy of sale transfer of comparable property located at 2322 Mueller Lane through a trustee/foreclosure sale date of December 21, 2017, and a foreclosure sale price of $226,500
Exhibit B	Property record card for comparable property located at 2322 Mueller Lane showing an appraised value of $339,000 for tax year 2017
Exhibit C	Property record card for comparable property located at 2238 Mueller Lane showing an appraised value of $399,300 for tax year 2017 and a satellite image map of the comparable
Exhibit D	List of comparable sales; letter from Complainants to BOE dated July 28, 2017, explaining Complainants’ opinion of value and evidence; letter from Complainants to STC dated October 6, 2017, explaining Complainants’ opinion of value and reasoning

Complainants’ exhibits were received into the record without objection.

Complainants testified that they had purchased the subject property in 1979 for approximately $70,000, but that they could not remember whether the subject property had been listed with a realtor. Complaints testified that if they were to list the subject property for sale, they would list it for $159,000. Complainants testified that they had not made any improvements to the subject property between January 1, 2015, and January 1, 2017.

Respondent advocated affirming the BOE’s determination of TVM, $303,000. To support his opinion of value, Respondent offered the following exhibits:

Exhibit 1	Appraisal Report of Residential Appraiser Senior Sharon Kuelker valuing the subject property at $359,000, as residential, as of January 1, 2017
Exhibit 2	Satellite image map of subject property in relation to neighboring properties and proximity to arterial roads and interstates
Exhibit 3	Quit claim deed dated May 21, 1979, conveying the subject property to Jack E. Tejcek and providing the legal description of the subject property plus a segment of the subject property comprising a right-of-way for the State of Missouri
Exhibit 5[1]	St. Louis County Recorder of Deeds Certified copy of Quit claim deed dated July 11, 2002, conveying the subject property from Jack E. Tejcek to Complainants as husband and wife and providing a legal description of the subject property

In the addendum to the appraisal report, the Appraiser Sharon Kuelker (Kuelker) commented:

The subject property is located in [a] subdivision in the City of Town and Country. Town and Country is made up of primarily detached single family residences that are owner occupied. Area is fully developed with ranch, 1.5 and 2 story dwellings. There are a number of homes in the neighborhood that are purchased in order to tear down and build larger more expensive homes.

. . .

A review of statistics in the subject neighborhood indicates that values of single family residences were increasing during the period from 1/01/15 to 01/01/17. The average marketing times for residential properties during this period was 78 days.

. . .

A land appraisal was performed after an interior/exterior inspection of the subject property. The highest and best use of this property was determined to be a “tear down” property due to the age, quality, condition and size.

. . .

The subject and comparable 4, back to heavily a (sic) travelled Interstate Highway; Comparables 1, 2 and 3 were adjusted for not having the same influence; however, Comparable 3 sides a moderately travelled road, and is located close to a busy intersection.

Demolition Costs:

Comp 2, was adjusted for not having demolition costs, as this sale occurred after the improvements were removed from the site. Comps 1, 3 and 4 had existing ranch homes at the time of sale, the same as the subject and were considered equal.

The subject lot and all 4 comparable lots consist of 1 buildable lot only.

All sales are from the same neighborhood . . . .

Kuelker testified that she had used the comparative sales approach to arrive at an opinion that the subject property’s TVM was $359,000 as of January 1, 2017. Kuelker testified that her research had determined that the highest and best use of the subject property, like the comparable properties, was as a potential tear-down property due to the condition, size, and utility or function of the subject property. Kuelker testified that she had looked at comparable properties with tear-down homes, but the homes situated on Comparable Nos. 1, 3, and 4 had not been torn down as of the date of the evidentiary hearing. With regard to Comparable No. 4, which had a sale date of February 14, 2018, Kuelker testified that she had not used the comparable to value the subject property but to support the final value estimate. Kuelker testified that she had used Comparable No. 4 in this manner because of the similar size of the lot and the influence its proximity to traffic and highways had on the sale, which was equal to the subject property. Kuelker testified that Comparable No. 4 sold through foreclosure to a construction company for $325,000. Kuelker testified that her research had shown back-to-back transactions involving Comparable No. 4 in which an investor sold the property to a builder in order to build a new house on the lot.

On cross examination, Kuelker testified that she compared the land value of Comparable Nos. 1, 2, and 3 to the land value of the subject property and made a market-based adjustment for location in the comparison grid in the appraisal report.

CONCLUSIONS OF LAW

Complainant’s Points on Review

Complainant alleged that the Hearing Officer’s Decision is erroneous in that:

The Hearing Officer should not have overruled Complainants’ objection to Exhibit 1;
The Hearing Officer erred by allowing supportive transactions dated after January 1, 2017 in Exhibit 1 and the testimony of Sharon Kuelker;

The Hearing Officer erred in stating Complainants did not submit substantial and persuasive evidence;

The Hearing Officer should not have considered the comparable sales method as applicable as no comparable sales or market activity existed as of January 1, 2017;

The Hearing Officer erred in considering highest and best use; and

The Hearing Officer erred by stating that Exhibit B was submitted.

STC’s Ruling

For the reasons that follow, the STC does not find Complainants’ arguments to be persuasive. The STC, having thoroughly reviewed the whole record and having considered the Hearing Officer’s Decision, the Application for Review of Complainant, and Respondent’s response opposing the Application for Review, affirms the Hearing Officer’s decision.

Standard of Review

A party subject to a Decision and Order of a Hearing Officer with the State Tax Commission (STC) may file an application requesting the case be reviewed by the STC. Section 138.432 RSMo Cum. Supp. 2015. The STC may then summarily allow or deny the request. Section 138.432. The STC may affirm, modify, reverse, set aside, deny, or remand to the Hearing Officer the Decision and Order of the Hearing Officer on the basis of the evidence previously submitted or based on additional evidence taken before the STC. Section 138.432.

Presumption In Appeal

There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978). This presumption is a rebuttable rather than a conclusive presumption. 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. Id.; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).

Complainant’s Burden of Proof

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). Such must be proved by substantial and persuasive evidence. 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).

Weight to be Given Evidence

The Hearing Officer is not bound by any single formula, rule, or method in determining true value in money and 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. 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).

The Hearing Officer, as the trier of fact, may consider the testimony of an expert witness and give it as much weight and credit as deemed necessary when viewed in connection with all other circumstances. Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. W.D. 1991). The Hearing Officer, as the trier of fact, is not bound by the opinions of experts but may believe all or none of the expert’s testimony or accept it in part or reject it in part. Exchange Bank of Missouri v. Gerlt, 367 S.W.3d 132, 135-36 (Mo. App. W.D. 2012).

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).

“Each method uses its own unique factors to calculate the property’s true value in money.” Id. “The ‘comparable sales approach’ uses prices paid for similar properties in arms-length transactions and adjusts those prices to account for differences between the properties. Id. at 348. “Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character.” Id. (quotation omitted).

Highest and Best Use

TVM is the fair market value of the property on the valuation date, and is a function of its highest and best use, which is the use of the property which will produce the greatest return in the reasonably near future. Aspenhof Corp. v. State Tax Commission, 789 S.W. 2d 867, 869 (Mo. App. 1990). It is true that property can only be valued according to a use to which the property is readily available. But this does not mean that, in order for a specific use to be the highest and best use for calculating the property’s TVM such particular use must be available to anyone deciding to purchase the property. A determination of the TVM cannot reject the property’s highest and best use and value the property at a lesser economic use of the property. Snider, 156 S.W. 3d at 348-349.

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, 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).

“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. A taxpayer does not meet his burden if evidence on any essential element of his case would require the Commission to speculate or participate in conjecture and/or surmise. See, Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980).

Respondent’s Burden of Proof

Respondent, when advocating a value different from that determined by the original valuation or a valuation made by the BOE, 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. Hermel, Inc., 564 S.W.2d at 895; Cupples-Hesse, 329 S.W.2d at 702; Brooks, 527 S.W.2d at 53.

In this case, Respondent did not advocate a value different from his initial valuation or the valuation made by the BOE. Respondent argued that the BOE’s determination of value of $303,000 was correct and should be affirmed, supported by an appraisal report opining a TVM of $359,000 ($56,000 higher than the BOE).

Discussion of Complainant’s Points on Review

Exhibit 1

Complainant contends the Hearing Officer erred in overruling his objection to Exhibit 1. Exhibit 1 was the Appraisal Report. Complainant objected to the use of a sale in the report which sale occurred 13 months after the valuation date.

The Hearing Officer did not err in admitting the exhibit into evidence. Evidence deemed to be relevant is admissible into evidence. The report as a whole supported the BOE’s determination of TVM of $303,000 as the appraiser opined a TVM of $359,000. Further the appraiser utilized the sale to review her determination of value as the property was very comparable to the subject since it was .12 miles from the subject parcel.

Complainant’s Evidence

Complainant contends the Hearing Officer erred in not finding his evidence to be substantial and persuasive.

Complainant must prove the TVM of the subject property by 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. The owner of property is generally held competent to testify to its reasonable market value. The owner’s opinion is without probative value, however, where it is shown to have been based upon improper elements or an improper foundation.

In this appeal, the Complainant presented a chart of the Respondent’s land values for seven parcels, property record cards for two parcels, and a deed. The evidence was not deemed to be persuasive. The method of valuing the property was not based upon proper elements or recognized valuation method.

Highest and Best Use

Regarding Complainants’ assertion that the Hearing Officer should not have considered highest and best use, such is contrary to established law. A determination of the TVM cannot reject the property’s highest and best use and value the property at a lesser economic use of the property. Snider, 156 S.W. 3d at 348-349.

Exhibit B

Complainants contend that it was error for the Hearing Officer to state that Exhibit B was submitted by Complainants. A review of the audio transcript verifies that Exhibit B was discussed, provided and offered by Complainants and admitted into the evidentiary record without objection. Therefore, the Hearing Officer committed no error.

Summary & Conclusion

The Hearing Officer found that the Complainant failed to present substantial and persuasive evidence to rebut the BOE presumption. STC finds that a reasonable mind could have conscientiously reached the same result as the Hearing Officer based on a review of the entire record. Hermel, Inc. v. STC, 564 S.W.2d 888 (Mo. 1978); Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Holt v. Clarke, 965 S.W.2d 241 (Mo. App. W.D. 1998); Smith v. Morton, 890 S.W.2d 403 (Mo. App. E.D. 1995); Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).

ORDER

The Decision of the Hearing Officer is AFFIRMED. The Decision and Order of the Hearing Officer, including the findings of fact and conclusions of law therein, is incorporated by reference, as if set out in full, in this final decision of the STC.

Segments of the Decision and Order of the Hearing Officer, including the findings of fact and conclusions of law therein, have been incorporated without reference, as if set out in full, in this final decision of the STC.

Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of the mailing date set forth in the Certificate of Service for this Order.

If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts unless disbursed pursuant to Section 139.031.8, RSMo.

If no judicial review is made within thirty 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.

SO ORDERED September 11, 2018.

STATE TAX COMMISSION OF MISSOURI

Bruce E. Davis, Chairman

Victor Callahan, Commissioner

Certificate of Service

I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 11th day of September, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.

Jacklyn Wood

Legal Coordinator

[1] Respondent did not introduce an exhibit labeled Exhibit 4.

STATE TAX COMMISSION OF MISSOURI

JACK E. TEJCEK & JACALYN SCHWARZ,	) )
	)
Complainants,	)
	)
v.	)	Appeal No. 17-10271
	) )	Parcel/Locator No. 20O230027
JAKE ZIMMERMAN, ASSESSOR,	)
ST. LOUIS COUNTY, MISSOURI, Respondent	) )

DECISION AND ORDER

HOLDING

The decision of the St. Louis County Board of Equalization (BOE) is AFFIRMED. Complainants Jack E. Tejcek and Jacalyn Schwarz (Complainants) did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.

Complainants appeared pro se.

Respondent Jake Zimmerman, Assessor, St. Louis County, Missouri, (Respondent) appeared by counsel Steve Robson.

Case heard and decided by Senior Hearing Officer Amy S. Westermann (Hearing Officer).

ISSUE

Complainant appealed on the ground of overvaluation. Respondent initially set the true value in money (TVM) of the subject property at $303,000, as residential property, as of January 1, 2017. The BOE valued the subject property at $303,000, thereby sustaining Respondent’s valuation. The State Tax Commission (STC) takes this appeal to determine the TMV for the subject property as of January 1, 2017.

The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

FINDINGS OF FACT

Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission.
Evidentiary Hearing. The issue of overvaluation was presented at an evidentiary hearing on March 22, 2018, at the St. Louis County Government Building, 41 South Central Avenue, Clayton, Missouri.
Identification of Subject Property. The subject property is identified by parcel/locator number 20O230027. It is further identified as 2306 Mueller Lane, Town & Country, St. Louis County, Missouri. (Complaint; Exhibit 1)
Description of Subject Property. The subject property consists of .9240 acres (approximately 40,249 square feet) of land improved by a 1,453 square-foot single-family, ranch-style home built in 1947. (Exhibit 1) The home includes two bedrooms; one full bathroom; one half bathroom; a full unfinished basement; two fireplaces; an attached garage; a concrete or masonry patio; and a frame exterior. The home has a grade factor of C- and a condition/desireability/utility (CDU) rating of fair. (St. Louis County Property Records Database)
Assessment. Respondent set a TVM for the subject property of $303,000, residential, as of January 1, 2017.
Board of Equalization. The BOE set a TVM of the subject property at $303,000, residential, as of January 1, 2017.
Complainants’ Evidence. Complainants opined that the TVM of the subject property was $159,000 as of January 1, 2017. To support their opinion of value, Complainants offered the following exhibits:

Exhibit A	St. Louis County Record of Deeds Certified copy of sale transfer of comparable property located at 2322 Mueller Lane through a trustee/foreclosure sale date of December 21, 2017, and a foreclosure sale price of $226,500
Exhibit B	Property record card for comparable property located at 2322 Mueller Lane showing an appraised value of $339,000 for tax year 2017
Exhibit C	Property record card for comparable property located at 2238 Mueller Lane showing an appraised value of $399,300 for tax year 2017 and a satellite image map of the comparable
Exhibit D	List of comparable sales; letter from Complainants to BOE dated July 28, 2017, explaining Complainants’ opinion of value and evidence; letter from Complainants to STC dated October 6, 2017, explaining Complainants’ opinion of value and reasoning

Respondent did not object to Complainants’ exhibits, all of which were admitted into the record.

Complainants testified that they had purchased the subject property in 1979 for approximately $70,000. Complainants testified that they could not remember whether the subject property had been listed with a realtor but that they found the sale listing in a St. Louis Post Dispatch advertisement. Complainants testified that the subject property was not encumbered by a mortgage. Complaints testified that they had not listed it for sale within the three years preceding the evidentiary hearing and, if they were to list the subject property for sale, they would list it for $159,000. Complainants testified that no offers had been made to purchase the property. Complainants testified that the property had not been appraised in the three years preceding the evidentiary hearing. Complainants testified that they had not made any improvements to the subject property between January 1, 2015, and January 1, 2017.

Respondent’s Evidence. Respondent advocated affirming the BOE’s determination of TVM, $303,000. To support his opinion of value, Respondent offered the following exhibits:

Exhibit 1	Appraisal Report of Residential Appraiser Senior Sharon Kuelker valuing the subject property at $359,000, as residential, as of January 1, 2017
Exhibit 2	Satellite image map of subject property in relation to neighboring properties and proximity to arterial roads and interstates
Exhibit 3	Quit claim deed dated May 21, 1979, conveying the subject property to Jack E. Tejcek and providing the legal description of the subject property plus a segment of the subject property comprising a right-of-way for the State of Missouri
Exhibit 5^[1]	St. Louis County Recorder of Deeds Certified copy of Quit claim deed dated July 11, 2002, conveying the subject property from Jack E. Tejcek to Complainants as husband and wife and providing a legal description of the subject property

Complainants objected to Comparable No. 4 contained in Respondent’s Exhibit 1 on the ground that it represented a sale occurring in February 2018, more than a year after the relevant tax date. The Hearing Officer overruled the objection and informed Complainants that they would have the opportunity to ask questions about Comparable No. 4 during cross-examination. Complainants did not object to Respondent’s remaining exhibits, all of which were admitted into the record.

In the addendum to the appraisal report, the Appraiser commented:

. . .

Demolition Costs:

The subject lot and all 4 comparable lots consist of 1 buildable lot only.

All sales are from the same neighborhood . . . .

(Exhibit 1)

Respondent also presented the testimony of Residential Appraiser Senior Sharon Kuelker (the Apparaiser). The Appraiser testified that she had used the the comparative sales approach to arrive at an opinion that the subject property’s TVM was $359,000 as of January 1, 2017. The Appraiser testified that her research had determined that the highest and best use of the subject property, like the comparable properties, was as a potential tear-down property due to the condition, size, and utility or function of the subject property. The Appraiser testified that she had looked at comparable properties with tear-down homes, but the homes situated on Comparable Nos. 1, 3, and 4 had not been torn down as of the date of the evidentiary hearing. With regard to Comparable No. 4, which had a sale date of February 14, 2018, the Appraiser testified that she had not used the comparable to value the subject property but to support the final value estimate. The Appraiser testified that she had used Comparable No. 4 in this manner because of the similar size of the lot and the influence its proximity to traffic and highways had on the sale, which was equal to the subject property. The Appraiser testified that Comparable No. 4 sold through foreclosure to a construction company for $325,000. The Appraiser testified that her research had shown back-to-back transactions involving Comparable No. 4 in which an investor sold the property to a builder in order to build a new house on the lot.

On cross examination, the Appraiser testified that she compared the land value of Comparable Nos. 1, 2, and 3 to the land value of the subject property and made a market-based adjustment for location in the comparison grid in the appraisal report, Exhibit 1. In the comparison grid, the Appraiser made a market-based negative adjustment of $125,000 to Comparable Nos. 1 and 2 and a market-based negative adjustment of $100,000 to Comparable No. 3 because none of those comparables backed to highways. In response to questioning from Complainants, the Appraiser agreed with Complainants’ assertion that a property on the interior of a subdivision probably would sell at a higher value than the subject property. In response to questioning from Complainants regarding Comparable No. 4, the Appraiser testified that her research had revealed that Comparable No. 4 was sold through foreclosure then resold two months later for a higher price. The Appraiser testified that the second buyer would pay more due to the highest and best use of the lot or site, i.e., purchase the property as a “tear down” so that a new home could be built and sold.

Presumption of Correct Assessment Not Rebutted – TVM Not Established. Complainants did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE. However, even though not required to present any evidence, Respondent presented substantial and persuasive evidence supporting the determination of TVM made by the BOE of $303,000, as of January 1, 2017.

CONCLUSIONS OF LAW AND DECISION

Jurisdiction

The STC has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious, including the application of any abatement. The Hearing Officer shall issue a decision and order affirming, modifying or reversing the determination of the BOE, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious. Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.

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. Article X, Sections 4(a) and 4(b), Mo. Const. of 1945. The constitutional mandate is to find the true value in money for the property under appeal. By statute, real property and tangible personal property are assessed at set percentages of true value in money: residential property at 19%; commercial property at 32%; and agricultural property at 12%. Section 137.115.5 RSMo (2000) as amended.

Investigation by Hearing Officer

In order to investigate appeals filed with the STC, 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. Section 138.430.2 RSMo (2000) as amended. 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. Id.

Board Presumption and Computer-Assisted Presumption

There exists a presumption of correct assessment by the BOE – the BOE presumption. There also exists by statutory mandate a presumption that the assessor’s original valuation was made by a computer, computer-assisted method or a computer program – the computer-assisted presumption. These two presumptions operate with regard to the parties in different ways.

The BOE presumption operates in every case to require the taxpayer to present substantial and persuasive evidence to rebut it. If Respondent is seeking to prove a value different than that set by the BOE, then Respondent is required to rebut the BOE presumption.

The computer-assisted presumption only comes into play if the BOE lowered the value of the assessor and Respondent is seeking to sustain the original assessment and it has not been shown that the assessor’s valuation was not the result of a computer-assisted method. The BOE valuation is assumed to be an independent valuation.

In the present appeal, the BOE determined the TVM of the subject property to be $303,000, thereby sustaining the initial valuation of Respondent, which was a result of a computer-assisted method of valuation. Complainant is now seeking to lower the BOE’s valuation while Respondent is seeking to sustain the BOE’s valuation; therefore, the BOE presumption applies only to Complainants. The computer-assisted presumption is not applicable in this case.

Complainant’s Burden of Proof

To obtain a reduction in assessed valuation based upon an alleged overvaluation, the Complainant must prove the true value in money of the subject property on the subject tax day. Hermel, Inc., v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978). True value in money is defined as the price that the subject property would bring when offered for sale by one willing but not obligated to sell it and bought by one willing or desirous to purchase but not compelled to do so. Rinehart v. Bateman, 363 S.W.3d 357, 365 (Mo. App. W.D. 2012); Cohen v. Bushmeyer, 251 S.W.3d 345, 348 (Mo. App. E.D. 2008); Greene County v. Hermel, Inc., 511 S.W.2d 762, 771 (Mo. 1974). True value in money is defined in terms of value in exchange and not in terms of value in use. Stephen & Stephen Properties, Inc. v. State Tax Commission, 499 S.W.2d 798, 801-803 (Mo. 1973). In sum, true value in money is the fair market value of the subject property on the valuation date. Hermel, Inc., 564 S.W.2d at 897.

“’True value’ is never an absolute figure, but is merely an estimate of the fair market value on the valuation date.” Drury Chesterfield, Inc., v. Muehlheausler, 347 S.W.3d 107, 112 (Mo. App. E.D. 2011), citing St. Joe Minerals Corp. v. State Tax Comm’n of Mo., 854 S.W.2d 526, 529 (Mo. App. E.D. 1993). “Fair market value typically is defined as the price which the property would bring when offered for sale by a willing seller who is not obligated to sell, and purchased by a willing buyer who is not compelled to buy.” Drury Chesterfield, Inc., 347 S.W.3d at 112 (quotation omitted).

A presumption exists that the assessed value fixed by the BOE is correct. Rinehart, 363 S.W.3d at 367; Cohen, 251 S.W.3d at 348; Hermel, Inc., 564 S.W.2d at 895. “Substantial and persuasive controverting evidence is required to rebut the presumption, with the burden of proof resting on the taxpayer.” Cohen, 251 S.W.3d at 348. Substantial evidence can be defined as such relevant evidence that a reasonable mind might accept as adequate to support a conclusion. Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is evidence that has sufficient weight and probative value to convince the trier of fact. Cupples Hesse Corp., 329 S.W.2d at 702. 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). See also, 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).

There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a STC 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.” Westwood Partnership, 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. W.D. 1991).

Generally, a property owner, while not an expert, is competent to testify to the reasonable market value of his own land. Cohen, 251 S.W.3d at 348-49; Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992). “However, when an owner’s opinion is based on improper elements or foundation, his opinion loses its probative value.” Carmel Energy, Inc., 827 S.W.2d at 783. A taxpayer does not meet his burden if evidence on any essential element of his case leaves the STC “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. E.D. 1980).

Respondent’s Burden of Proof

In this case, Respondent presented the Appraiser’s appraisal report, Exhibit 1, concluding a value of $359,000, only to support Respondent’s argument that the BOE’s determination of value was correct and should be affirmed.

Weight to be Given Evidence

Respondent presented the expert testimony of the Apparaiser and the Appraiser’s report.

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, 615 (Mo. App. W.D. 2000); Hermel, Inc., 564 S.W.2d at 897; 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. 1974).

“For purposes of levying property taxes, the value of real property is typically determined using one or more of three generally accepted approaches.” Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005), citing St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977). “Each valuation approach is applied with reference to a specific use of the property—its highest and best use.” Snider, 156 S.W.3d at 346-47, citing Aspenhof Corp., 789 S.W.2d at 869. “The method used depends on several variables inherent in the highest and best use of the property in question.” Snider, 156 S.W.3d at 347.

“Each method uses its own unique factors to calculate the property’s true value in money.” Id. “The ‘comparable sales approach’ uses prices paid for similar properties in arms-length transactions and adjusts those prices to account for differences between the properties. Id. at 348. “Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character.” Id. (quotation omitted). “This approach is most appropriate when there is an active market for the type of property at issue such that sufficient data [is] available to make a comparative analysis.” Id.

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:

Buyer and seller are typically motivated.

Both parties are well informed and well advised, and both acting in what they consider their own best interests.

A reasonable time is allowed for exposure in the open market.

Payment is made in cash or its equivalent.

Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.

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.

Highest and Best Use

TVM is the fair market value of the property on the valuation date, and is a function of its highest and best use, which is the use of the property which will produce the greatest return in the reasonably near future. Aspenhof Corp. v. State Tax Commission, 789 S.W. 2d 867, 869 (Mo. App. 1990). It is true that property can only be valued according to a use to which the property is readily available. But this does not mean that, in order for a specific use to be the highest and best use for calculating the property’s TVM, that particular use must be available to anyone deciding to purchase the property. A determination of the TVM cannot reject the property’s highest and best use and value the property at a lesser economic use of the property. Snider, 156 S.W. 3d at 348-349.

Discussion

In this case, Complainants’ evidence was neither substantial nor persuasive to rebut the presumption of correct assessment by the BOE. Substantial evidence can be defined as such relevant evidence that a reasonable mind might accept as adequate to support a conclusion. Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is evidence that has sufficient weight and probative value to convince the trier of fact. Cupples Hesse Corp., 329 S.W.2d at 702.

Complainants did not present any evidence utilizing one or more of three generally accepted approaches to valuing real property for ad valorem tax purposes. Rather, Complainants’ Exhibit D proposed two alternative methods for valuing the subject property.

Complainants’ Exhibit D acknowledged that the properties similar to the subject property and in the same area as the subject property were “sold as tear-downs.” Exhibit D argued that the improvements upon the subject property should have been valued at “$0, minus $25,000, estimated cost of demolition.” Exhibit D then asserted, in contradiction, that there was an “absence of comparable sales” and based its calculations on the assessed values of “similar lots in proximity to the subject property.” Using “Method One,” Exhibit D asserted that the average price per acre of similar properties was $197,492; that, after subtracting $25,000 for demolition, the average price per acre was $172,492; and that the average price per acre must be further reduced because the subject property “is .9 acre, resulting in decreased Value of $152,742.80.” Using “Method Two,” Exhibit D asserted that the average lot value of properties with similar proximity to multiple lanes of highway, causing devaluation and decreased desirability, was “$175,975, minus $25,000 teardown costs = $150,975.” Neither Exhibit D, nor any of Complainants’ other exhibits, provided any market-based sales data to support these methodologies. Complainants’ proposed methods of valuing the subject property have not been approved by Missouri courts as accepted approaches to valuing real property and will not be followed here.

Although not required to present any evidence to support the BOE’s determination of value, Respondent presented substantial and persuasive evidence establishing that the TVM of the subject property was $359,000, approximately 16% higher than the BOE’s determination of value. Key to the Appraiser’s opinion of the subject property’s TVM were the recent sales of similar properties^[2] that, like the subject property, were considered “tear downs.” (Exhibit 1) The Appraiser specifically noted that Comparable Nos. 1, 2, and 3 were given consideration in forming a final opinion of value, but Comparable No. 4 was furnished “in further support of the final value estimate.”

The sale prices of Comparable Nos. 1, 2, and 3 ranged from $500,000 to $562,000. (Exhibit 1) The sale dates of Comparable Nos. 1, 2, and 3 ranged from January 2016 to December 2016. (Exhibit 1) The size of the lots of Comparable Nos. 1, 2, and 3 ranged from 43,560 square feet to 50,094 square feet. (Exhibit 1) The Appraiser made a market-based negative adjustment to Comparable Nos. 1, 2, and 3 to account for the fact that they were located in established subdivisions while the subject property was not located within a subdivision. The amount of the negative adjustment was $50,000. The Appraiser also made a market-based negative adjustment to Comparable Nos. 1, 2, and 3 to account for the fact that they did not back to highways or heavy traffic while the subject property backed to arterial roads and an interstate highway. The amount of the negative adjustment ranged from $100,000 to $125,000. (Exhibit 1) The Appraiser made a market-based negative adjustment of $25,000 to Comparable No. 2 to account for the cost of demolition; the improvements associated with Comparable No. 2 had been demolished prior to its sale in December 2016. (Exhibit 1) The adjusted sale prices of Comparable Nos. 1, 2, and 3 ranged from $340,000 to $387,000. The Appraiser’s opinion of the TVM of the subject property, used only to support the BOE’s determination of value, was $359,000, which fell squarely within the adjusted sale prices of the comparables. Based on this evidence, it is reasonable to conclude that the BOE’s determination of value, $303,000, was correct.

ORDER

The TVM for the subject property as determined by the BOE is AFFIRMED. The assessed value for the subject property for tax year 2017 is set at $57,570 residential ($303,000 TVM).

Application for Review

A party may file with the STC 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. Section 138.432, RSMo

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 June 14, 2018.

STATE TAX COMMISSION OF MISSOURI

Amy S. Westermann

Senior Hearing Officer

Certificate of Service

I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 14 day of June, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.

Jacklyn Wood

Legal Coordinator

^[1] Respondent did not introduce an exhibit labeled Exhibit 4.

^[2] In Exhibit 1, the Appraiser acknowledge that, due to a lack of similar sales close in proximity to the subject property, Comparable Nos. 1, 2, and 3 exceeded the preferred one-mile distance guildline but were situated within the subject property’s general market area. The Appraiser made a location adjustment to those comparables but found that no adjustment to Comparable No. 4 was necessary.

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Jack Tejcek & Jacalyn Schwarz v. Jake Zimmerman, Assessor St. Louis County

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