State Tax Commission of Missouri
v.) Appeal Number 09-33007
RICK KESSINGER, ASSESSOR,)
GREENE COUNTY, MISSOURI,)
DECISION AND ORDER
Decision of the Greene County Board of Equalization sustaining the assessment made by the Assessor AFFIRMED for 2009 and in part for 2010.True value in money for the subject property for tax year 2009 and is set at $485,000 ($484,000 – residential and $1,000 – agricultural), residential assessed value of $91,970 and agricultural assessed value of $120.Agricultural assessed value for 2010 to be determined by Assessor due to new agricultural construction and improvement.Complainant appeared pro se. Respondent appeared by County Counselor, Theodore L. Johnson, III, Springfield.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2009.
Complainant appeals, on the ground of overvaluation, the decision of the Greene County Board of Equalization, which sustained the valuation of the subject property.The Assessor determined an appraised value of $484,000 – residential and $1,000 – agricultural, assessed value of $92,090, as residential and agricultural property.Complainant proposed a value of $289,000 for the residential portion only, assessed value of $54,910.A hearing was conducted on January 14, 2010, at the Historic Greene County Courthouse, Springfield, Missouri.
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 Greene County Board of Equalization.
2.Complainant’s Evidence.Complainant testified in his own behalf and gave his opinion of value for the residential portion of the property under as of January 1, 2009, to be $289,000.This value was based upon what Mr. Belcher believed real estate has done over the past year.The following exhibits were offered into evidence.
Assessor’s Website Assessment Record on Subject
Assessor’s Website Assessment Record on four properties
Obj. Sustained Excluded
Cost Spreadsheet on subject property
Exhibit B was offered by Complainant to show a lack of equality in valuation compared to the subject property.Counsel for Respondent objected to the exhibit and testimony relating to Exhibit B, as it raised the issue of discrimination, which was not set forth as a ground for appeal on the Complaint for Review of Assessment.Objection sustained Exhibit B was excluded.Complainant’s tender of the exhibit and testimony explaining the purpose of the exhibit were taken as an offer of proof only.Exhibit B is maintained in the Commission file, but is not part of the record for purposes of determining true value in money for the subject property.
3.Respondent’s Evidence.Respondent presented the testimony of John A. Stiber, residential appraiser for the Greene County Assessor.Mr. Stiber testified as to his appraisal of Complainant’s property.He concluded a value of $485,000 for the five acre homesite.Mr. Stiber’s appraisal (Exhibit 1) was received into evidence.Exhibit 2 – the property record card on the subject property was also received into evidence.
4.Property Under Appeal.The subject property is located at 10390 West Jay Bee Lane, Republic, Missouri.The property is identified by map parcel number 88-15-36-200-012.The property consists of a 10 acre tract.The site is divided into a 5 acre portion that has been given an agricultural land productivity grade of 5 and assessed accordingly.The agricultural land value was not appealed by Complainant.
The remaining 5 acres is improved by a one-story brick, ranch, single-family structure.The house was built in 2007.The residence has a total of 7 rooms, which includes 4 bedrooms,3 baths, and contains 2,717 square feet of living area.There is a full finished basement and an attached three-car garage. It is this portion of the property for which Complainant appealed the valuation.
5.New Construction and Improvement.Complainant testified that he had constructed a pole barn during 2009 at an approximate cost of $12,000.There was no evidence of new construction and improvement from January 1, 2009, to January 1, 2010, on the residential portion of the property.The contributory value of the agricultural improvement will have to be added to the valuation and assessment of the agricultural portion of the property for tax year 2010.There is insufficient evidence for the Hearing Officer to make the valuation for the agricultural improvement for 2010.
6.Complainant Failed To Meet Burden of Proof.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 for the residential portion of the property as of January 1, 2009, to be $289,000, as proposed.Therefore, the true value in money and assessed value for 2009 must remain as determined by the Board of Equalization.
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.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.
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.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.The evidence presented by Complainant failed to reach the level of substantial and persuasive to rebut the presumption of correct assessment by the Board, or to establish the fair market value as of January 1, 2009.
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.True value in money is defined in terms of value in exchange and not value in use.It is the fair market value of the subject property on the valuation date.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.
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.
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 experts or the owner who testify on the issue of value, but may believe all or none of the expert’s or owner’s testimony and accept it in part or reject it in part.The testimony and exhibits of Mr. Belcher cannot be given probative weight on the issue of what a willing buyer and seller would have paid for his property on January 1, 2009.His conclusion of value based on what he believed the real estate market had done in the years 2008 or 2009 simply provides no proof based in fact from market data as to fair market value on the applicable valuation date.The conclusion of value tendered constitutes nothing more than speculation on the part of the owner.
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.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. The information received into the record on behalf of Complainant did not constitute a recognized appraisal methodology.The submission of a list of costs for construction of a home in 2007 does not establish the fair market value of the real property as of January 1, 2009.
Complainant Failed to Meet Burden of Proof
In order to prevail, Complainant must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2009.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.”
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.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.
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 the present case, Mr. Belcher offered a cost spreadsheet on elements of the cost to construct the subject home.Such information does no present a recognized methodology for appraising the property under appeal.Cost data does not establish a cost approach to value.The fatal deficiencies in the cost information are essentially four.
First, Mr. Belcher presented no market data to establish the market value as of January 1, 2009 for the five acre homesite.Second, the cost information presents only out of pocket expenses for a construction for which Mr. Belcher acted as his own general contractor.Exhibit C did not represent a turn-key cost to construct.This significantly understates the value of the residential property at 10390 West Jay Bee Lane even at the time of its completion.Had this home been constructed by a general contractor the cost to construction in 2007 would have more appropriately represented what a willing buyer and seller would have agreed to as a purchase price at that time.
Third, the 2007 cost information was not established to represent the cost to construct as of January 1, 2009.Therefore, the information lacks reliability for the issue of valuation presented in the appeal, i.e. true value in money as of January 1, 2009.“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.”There is no means by which the cost data for 2007 can be adjusted, based upon the record, to account for Mr. Belcher acting as his own general contractor and to establish what the actual cost to construct for 2009 would have been.
Finally, even if there was evidence in the record upon which the Hearing Officer could adjust the 2007 data to reflect the reproduction cost for 2009, there is no market data to establish the physical deprecation factor for a two year old structure and no data to conclude what if any economic obsolescence factor should be applied to arrive at a final value relying on reproduction cost new less depreciation.
A proper cost approach would have established from comparable unimproved land sales or extraction from improved residential sales a land value for the five residential acres.Once that was established, cost data as of January 1, 2009, to reproduce the subject residence new would have been calculated.This would have established a reproduction cost new for the home.Then it would be necessary to apply a physical depreciation factor to account for the two year age of the subject.A calculation of economic obsolescence from reliable and appropriate market data would have to also be conducted.Only through this means could the reproduction cost new less depreciation be established to be added to the land value to arrive at an indicated value recognized by the Commission and the courts of Missouri.
To the extent Mr. Belcher relied upon the 2007 raw cost information for his opinion of value, it was not grounded in proper elements and a proper foundation.Accordingly, the Hearing Officer can give no probative value to the opinion of $289,000 as the fair market value of the homesite on January 1, 2009.
Recent Real Estate Activity
Mr. Belcher’s opinion of value was additionally based upon his perception of what real estate had been doing in the last year.The glaring omission is that no tender of evidence was presented for a sound market study and analysis of home values in Greene County or more particularly in the subject’s neighborhood or adjoining comparable neighborhoods.In other words, the effect, if any, of economic conditions in 2008 on the subject’s market has no basis in fact in this record.The conclusion of value absent sound, verifiable and relevant market data presents nothing more or less than speculation on the part of the owner.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.”The assertion that the value of the Complainant’s homesite as of January 1, 2009, should be $289,000 based on what real estate has done in the last year clearly leaves the Hearing Officerwith nothing but speculation, conjecture and surmise to support Mr. Belcher’s claim.Such a foundation will not support a judgment that the presumption of correct assessment by the Board has been rebutted let alone establish that the tender opinion constitutes the fair market value of Complainant’s property.
General assertions on the current state of the real estate market simply are not relevant evidence when the issue is the value of a specific piece of property.They provide no basis in fact upon which a decision can be made.They fall completely short of being substantial and persuasive evidence.
Complainant failed to meet his burden of proof.Having failed in his case in chief to rebut the presumption of correct assessment and establish value, it is unnecessary to consider evidence presented on behalf of Respondent on the valuation of the subject property.
Discrimination/Inequality in Assessment
In order to obtain a reduction in assessed value based upon discrimination or a claim that a property is the subject of an unequal assessment it is necessary to establish that the property under appeal has been valued at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction.Evidence of value and assessments of a few properties does not prove discrimination.Substantial evidence must show that all other property in the same class, generally, is actually undervalued.The difference in the assessment ratio of the Complainant’s property and the average assessment ratio for residential property in Greene County must be shown to be grossly excessive.No other methodology is sufficient to establish discrimination.
Complainant failed to mark as a ground for his appeal discrimination or inequality in assessment.Therefore, the objection by Counsel for Respondent was sustained.The Hearing Officer permitted Mr. Belcher to make an offer of proof on discrimination.The offer of proof consisted of the information in Exhibit B on four other properties in the subject’s neighborhood that Mr. Belcher contended were nicer homes than his, but valued at lower values.Exhibit B
fails to meet the case law standard to establish a discriminatory assessment of the property under appeal.
Complainant Fails To Prove Discrimination/Lack of Equality
Complainant failed to establish the market value of his property as of January 1, 2009 based upon relevant and reliable market data.It is necessary to establish market value of the property under appeal in order to establish the assessment ratio for the property under the Board’s valuation.The market value divided into the assessed value yields the assessment ratio for the property.
In addition to failing to establish the assessment ratio for the subject property was something other than 19% as set by statute, Complainant failed to establish average level of assessment for residential property in Greene County for 2009.This would have been done by (a) independently determining the market value of a representative sample of residential properties in Greene County; (b) determining the assessed value placed on the property 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 Greene County must demonstrate a disparity that is grossly excessive.
Complainant’s discrimination claim even had it been properly and timely asserted on the Complaint for Review of Assessment or established by a timely Motion to Amend the Complaint fails because of the failure to establish the market value of the property under appeal.Without establishing the market value for the subject property, Mr. Belcher could establish the
assessment ratio.Without establishing the ratio, it cannot be establish that the Complainant’s property was being assessed at a higher percentage of market value that any other property.
However, even if Complainant had established market value for his property, the discrimination claim would still fail.Mr. Belcher would not have demonstrated, based on Exhibit B, that a statistically significant number of other residential properties within Greene County are being assessed at a lower ratio of market value than property.Complainant’s claim of inequality of assessment is based upon four properties in the Republic area.The information failed to establish if the assessed values represented the fair market values of any of the properties and therefore failed to establish the assessment ratios for the four properties. This does not constitute a statistically valid sample for purposes of establishing the mean and median residential assessment ratio for 2009 for Greene County.
Because Complainant failed to establish the market value of their property and failed to establish, by his offer of proof, that the subject property was being assessed at a higher percentage of market value than a statistically significant number of other properties in Greene County, he have failed to establish an inequality in assessment.
Complainant did not present substantial and persuasive evidence to rebut the presumption of correct assessment and establish the fair market value of the property under appeal as of January 1, 2009, nor did he present substantial and persuasive evidence under the offer of proof to establish a claim of discrimination.
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Greene County for the subject tax day is AFFIRMED.
The assessed value for the subject property for tax year 2009 is set at $92,090.
The assessed value for the residential portion of the subject property for tax year 2010 is set at $91,970.
The assessed value for the agricultural land value for 2010 is set at $120.
Assessment of 2009 Agricultural Improvement
The Assessor shall determine the contributory value of the new agricultural construction and improvement under the economic conditions as of January 1, 2009, as if the pole barn construction in 2009 had been in place on January 1, 2009, to arrive at the value to be added to the agricultural assessment for 2010.Complainant shall be duly notified of the increase in assessment in order that he may exercise his right of appeal to the Greene County Board of Equalization.The right of appeal relates only to the portion of increase attributable to the agricultural assessment for new construction and improvement.Complainant has no right of appeal to the Board of Equalization in 2010 relative to the residential portion of the subject property or the agricultural land value.
Application for Review
A party may file with the Commission an application for review of this decision within thirty days of the mailing date set forth in the Certificate of Service for this Decision.The application shall contain specific facts or law as grounds upon which it is claimed the decision is erroneous.Said application must be in writing addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.
The Collector of Greene County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 139.031.8, RSMo.
Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed.Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.
SO ORDERED January 29, 2010.
STATE TAX COMMISSION OFMISSOURI
W. B. Tichenor
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 29thday of January, 2010, to:James Belcher, 10390 W. Jay Bee Lane, Republic, MO 65738, Complainant; Theodore Johnson, Greene County Counselor, 901 St. Louis Street, 20th Floor, Springfield, MO 65806, Attorney for Respondent; Rick Kessinger, Assessor; Richard Struckhoff, Clerk; Scott Payne, Collector, Greene County Courthouse, 940 Boonville, Springfield, MO 65806.
 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).
 Daly v. P. D. George Company, et al, 77 SW3d 645, 649 (Mo.App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 SW2d 376, 380 (Mo.App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).
 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.
 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).
 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).
 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).
 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).
 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).