STATE TAX COMMISSION OF MISSOURI
|JAN M. ADAMS,||)|
|v.||)||Appeal No. 15-13353|
|JAKE ZIMMERMAN, ASSESSOR||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
The assessment made by the Board of Equalization of St. Louis County (BOE) is SET ASIDE. Respondent Jake Zimmerman, St. Louis County Assessor, (Respondent) presented substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE and to establish that the assessed value in money for the subject property for tax years 2015 and 2016 is set at $51,300 residential ($270,000 true market value or TMV).
Complainant Jan M. Adams appeared pro se.
Respondent appeared by Steven Robson, Assistant County Counselor.
Case heard and decided by Senior Hearing Officer Amy S. Westermann.
Complainants appealed on the ground of overvaluation. Respondent initially set the TMV of the subject property, as residential property, at $300,700. The BOE lowered Respondent’s valuation to $275,000. The Commission takes this appeal to determine the TMV of the subject property on January 1, 2015.
The Senior 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 June 2, 2016, at the St. Louis County Government Administration Building, 41 South Central Avenue, Clayton, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 18J521121. It is further identified as 7150 Cambridge Ave., University City, Missouri. (Exhibit A; Exhibit 1)
- Description of Subject Property. The subject property consists of a 6,300 square foot residential lot improved by a 2,129 square foot, single-family, two-story home built in 1926. (Exhibit 1) The subject property includes three bedrooms; one full bathroom and one half bathroom; a 1,048 square foot unfinished basement; a two-car detached garage; one fireplace; and a patio. The exterior consists of brick construction. (Exhibit 1)
- Assessment. Respondent placed a TMV of $300,700 on the subject property, as of January 1, 2015.
- Board of Equalization. The BOE lowered Respondent’s TMV of the subject property to $275,000.
- Complainant’s Evidence. Complainant testified in her own behalf. Complainant testified that she had purchased the subject property in 1994 for approximately $200,000. Complainant testified that the subject property was encumbered by a reverse mortgage, that it had not been listed for sale or appraised within the three years preceding the Evidentiary Hearing, and that she had not received any offers to purchase the subject property. Complainant testified that the only improvements she had made between January 2013 and January 2015 was to replace some of the brick on the house.
Complainant testified that the subject property’s TMV should be reduced due to the latent defect of significant ground water coming into the basement through the joint between the basement floor and wall. Complainant testified that several attempted repairs had failed. Complainant also testified that Respondent’s analysis of the subject property’s TMV using the comparable sales method was flawed because Respondent should have compared the subject property to properties with three bedrooms, one full bathroom, and one half bathroom rather than to properties with four bedrooms and two bathrooms. Complainant opined that the TMV of the subject property was $200,000 as of January 1, 2015.
Complainant offered as evidence a written summary of the case with an index of the photographs contained in other exhibits as well as a list of comparable sales ranging in price from $106,700 to $195,000 (Exhibit A); a written warranty dated March 8, 2011, from a construction company that had repaired the waterproofing and water drainage system in the basement (Exhibit B); an invoice in the amount of $2,700.00 dated December 6, 2011, for the installation of a sump pump pit, sump pump, and drainage tile in the basement (Exhibit C); photographs taken in June 2015 of wet carpeting, “buckling” drywall, and a dehumidifier in the basement (Exhibit D); and a photograph taken in April 2016 showing the carpeting, base molding, and damaged drywall removed from the basement and wet areas on the concrete floor (Exhibit E). Respondent did not object to Complainant’s evidence, which was received into the record.
On cross-examination, Complainant testified that she was not a certified real estate appraiser. Complainant testified that she had obtained the information in Exhibit A concerning comparable sales from the St. Louis County real estate records available on the County’s website. Complainant testified that she did not know anything about the conditions of the sales but had compared similar properties with three bedrooms, one full bathroom, and one half bathroom.
- Respondent’s Evidence. Respondent offered as evidence the testimony of Missouri State Certified Residential Real Estate Appraiser Nancy McGrath (Appraiser) along with the Appraiser’s report. (Exhibit 1) The Appraiser opined that the TMV of the subject property as of January 1, 2015, was $270,000. The Appraiser testified that the BOE had corrected the property record card for the subject property to reflect that it contained three bedrooms, one full bathroom, and one half bathroom. The Appraiser testified that she utilized the sales comparison approach to arrive at an opinion of value. (Exhibit 1) The Appraiser testified that she had chosen four comparables and had given all equal weight. The sale prices of the comparables ranged between $275,000 and $305,000 and were located within a third of a mile or less of the subject property. (Exhibit 1) The comparables were similar to the subject property in that they all were two-story, single family homes. Comparable Nos. 1, 3, and 4 had three bedrooms, one full bathroom, and one half bathroom. Comparable No. 2 had three bedrooms and two full bathrooms, so the Appraiser made a negative adjustment of $3,000 for the second full bathroom. All of the comparables and the subject property had the same quality of construction, Q4, Comparable Nos. 1 and 3, however, were in superior condition to the subject property, requiring a $20,000 negative adjustment. (Exhibit 1) The Appraiser made adjustments for the smaller size of all of the comparables and made adjustments for the basement size and finish in Comparable Nos. 1, 3, and 4. (Exhibit 1) The Appraiser made a positive adjustment to Comparable Nos. 2 and 4 for the type of garage; a negative adjustment to Comparable Nos. 1, 2, and 4 for the type and size of porch/patio/deck; and a negative adjustment to Comparable Nos. 1 and 3 for a second fireplace. (Exhibit 1) The adjusted sale prices of the comparables ranged between $267,525 and $273,480. The Appraiser testified that she had performed a limited interior and exterior inspection of the subject property and saw evidence of water in the basement. The Appraiser testified that she had made a separate $10,000 cost-to-cure downward adjustment to each of the comparables to account for the water problem in the basement of the subject property. The Appraiser testified that, although the comparable properties used for the appraisal report were similar to the subject property, none of the comparables had a water problem in the basement. On cross-examination, the Appraiser agreed with Complainant that the sump pump in the basement of the subject property does not remedy the water problem but that the problem was isolated to the basement. The Appraiser further testified that she had made the adjustment in the amount of $10,000 by using an online cost estimate analysis because Complainant had not provided the Appraiser with a bid to correct the problem. The Appraiser acknowledged that the water problem was “pretty significant” and more than just “seepage.”
Complainant did not object to Respondent’s evidence, which was received into the record.
- Presumption of Correct Assessment Rebutted – Value Established. The evidence presented by Respondent was substantial and persuasive to both rebut the presumption of correct assessment by the BOE and to establish the TMV of the subject property to be $270,000, assessed (residential) value of $51,300.
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, including the application of any abatement. The Senior 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. 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 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. 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.
During the hearing, the Senior Hearing Officer inquired of Complainant.
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.
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 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.” 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 Commission “in the nebulous twilight of speculation, conjecture and surmise.” See Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. E.D. 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 Board of Equalization, 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, Cupples-Hesse, Brooks, supra.
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).
Board Presumption and Computer-Assisted Presumption
There exists a presumption of correct assessment by the BOE – the BOE presumption. In charter counties or the City of St. Louis, there 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 evidence to rebut it. If Respondent is seeking to prove a value different than that set by the BOE, then it also would be applicable to the Respondent.
The computer-assisted presumption is applicable only if (1) the BOE lowered the value of the Assessor and Respondent is seeking to sustain the original assessment and (2) it has not been shown that the Assessor’s valuation was not the result of a computer assisted method. The BOE’s valuation is assumed to be an independent valuation.
In the present appeal, the BOE lowered the initial valuation of Respondent, and both Complainant and Respondent are now seeking to lower the original assessment; therefore, only the BOE presumption applies while the computer-assisted presumption is not applicable.
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).
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:
- 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.
Although Complainant presented some evidence in an effort to support an opinion of the subject property’s value, this evidence was neither substantial nor persuasive to support an opinion as to the true market value of the subject property as of January 1, 2015. Substantial evidence is that which is relevant, adequate, and reasonably supports a conclusion. Cupples Hesse Corp., 329 S.W.2d at 702. Persuasive evidence is that which causes the trier of fact to believe, more likely than not, the conclusion advocated is the correct conclusion. Id.
Complainant presented photographs and documentary evidence establishing that the subject property has a problem with water entering the basement and that Complainant has attempted to correct the problem without success. (Exhibits B, C, D, and E) Complainant presented an invoice, dated December 6, 2011, in the amount of $2,700.00 for the installation of a sump pump pit, sump pump, and drainage tile in the basement. (Exhibit C) Complainant presented photos from June 2015 and April 2016 showing damage to the carpet and walls of the basement due to water entering at the joint between the wall and the floor. (Exhibits D and E) However, Complainant did not provide a bid for the cost of repairing the walls and replacing carpeting or for any additional waterproofing to be performed. Moreover, according to the evidence, the damage to the carpet and walls of the basement occurred after January 1, 2015, the relevant tax date in this appeal. Consequently, the damage did not have an effect on the TMV of the subject property on January 1, 2015.
Complainant also presented evidence of sales of comparable properties with prices ranging from $106,000 to $195,000. (Exhibit A) However, Complainant’s evidence regarding these comparable properties was flawed. The property record cards contained in the St. Louis County Real Estate Records Database show that one of the sales presented by Complainant was a foreclosure and that one sale needed to be reviewed for validity. The data related to only one of Complainant’s comparables indicated a valid sale had occurred. The property record cards also show that Complainant’s comparables had sold for higher amounts than she had reported, i.e., between $170,000 and $367,000. Complainant did not provide any analysis of market data comparing similarities and differences of the subject property and the comparable properties from which one could conclude that the sale prices of any of these comparables could be used to determine the TMV of the subject property on January 1, 2015.
On the contrary, Respondent presented substantial and persuasive evidence to rebut the presumption of correct valuation by the BOE. In arriving at an opinion of value, the Appraiser utilized the sales comparison approach and analyzed four comparable sales, all of which were located within a third of a mile from the subject property. (Exhibit 1) The sale prices of Respondent’s comparables ranged from $275,000 to $305,000. Respondent’s comparables contained between 1,850 square feet and 2,014 square feet. The subject property contains 2,129 square feet, so the Appraiser made a market-based positive adjustment to the comparables at $35.00 per square foot. The Appraiser made market-based adjustments to the comparables for condition, specifically allocating a $20,000 negative adjustment to Comparable Nos. 1 and 3 due to their superior newer, modern kitchens. The Appraiser also made market-based adjustments to the comparables for differences in the number of full bathrooms; basement square footage, finishes, and bathrooms below grade; decks, enclosed porches, and patios; location of garages and number of garage stalls; and number of fireplaces. Significantly, the Appraiser made a market-based negative adjustment of $10,000 to all of the comparables to account for the water problem in the basement of the subject property. On cross examination, the Appraiser convincingly explained that Complainant had not provided a bid from a contractor who would perform water damage remediation and/or repair to the basement; thus, the Appraiser had used online sources for determining an estimated average cost in the subject property’s zip code for water damage remediation and/or repair to the basement. The adjusted sale prices of the comparables ranged from $267,525 to $273,480. Because the adjusted sale prices of the comparables represented a “fairly narrow range of indicated value,” the Appraiser weighed the comparables equally in arriving at her opinion that the subject property had a TMV of $270,000. From this substantial and persuasive evidence, it is reasonable to find and conclude that Respondent rebutted the presumption of correct valuation by the BOE and that the TMV of the subject property on January 1, 2015, was $270,000.
The true market valuation for the subject property as determined by the BOE is SET ASIDE.
The assessed value for the subject property for tax years 2015 and 2016 is set at $51,300 residential ($270,000 TMV).
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. Section 138.432, RSMo
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 September 2, 2016.
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 2nd day of September, 2016, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.
 Respondent’s proposed valuation following the Appraiser’s analysis was lower than the BOE’s assessment of the subject property’s value.
 Q4 Dwellings with this quality rating meet or exceed the requirements of applicable building codes. Standard or modified standard building plans are utilized & the design includes adequate fenestration & some exterior ornamentation & interior refinements. Materials, workmanship, finish, & equipment are of stock or builder grade & may feature some upgrades.