Jane Allen v. Muehlheausler (SLCO)

June 24th, 2008

State Tax Commission of Missouri

 

JANE ALLEN,)

)

Complainant,)

)

v.) Appeal(s) Number 07-10469

)

PHILIP MUEHLHEAUSLER, ASSESSOR,)

ST. LOUIS COUNTY,MISSOURI,)

)

Respondent.)

 

 

DECISION AND ORDER

 

HOLDING

 

Decision of the St. Louis County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE.Hearing Officer finds presumptions of correct assessment rebutted. True value in money for each of the subject properties for tax year 2007 and 2008 is set at $455,000, assessed value of $86,450.

Complainant appeared by counsel Haskell Allen.

Respondent appeared by Associate County Counselor, Paula Lemerman.

Case heard and decided by Hearing Officer Maureen Monaghan.

ISSUE

The Commission takes this appeal to determine the true value in money for the subject properties on January 1, 2007.

SUMMARY

Complainant appeals, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property.The Assessor determined an appraised value of $484,500, assessed value of $92,060, as residential property.Complainant proposed a value of $350,000, assessed value of $66,500 in the Complaint for Review of Assessment.A hearing was conducted on June 11, 2008, at theSt. LouisCountyGovernmentCenter,Clayton,Missouri.

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

Complainant’s Evidence

Mr. Allen, Missouri State Certified General Appraiser and counsel for the Complainant, testified on behalf of Complainant.He stated his opinion of value for the property to be $375,000 as of January 1, 2007, based on income and sales comparison approaches to value.Exhibit A, Mr. Allen’s appraisal, and Exhibit B, Mr. Allen’s curriculum vitae, were received into evidence on behalf of Complainant.

Respondent’s Evidence

Respondent placed into evidence the testimony of Mr. Robert Koch, Missouri State Certified Residential Appraiser.The appraiser testified as to his appraisal of the subject property.The Appraisal Report, Exhibit 1, of Mr. Koch was received into evidence. Exhibit 2 Gross Rent Multiplier analysis was received into evidence.Exhibit 3, MLS listing on property at6525 Clayton Ave, was received into evidence.Mr. Koch arrived at an opinion of value for the subject property of $505,000 based upon income and sales comparison approaches to value.

FINDINGS OF FACT

1.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.

2.The subject property is located at7258 Forsyth Blvd.,University City,Missouri.The property is identified by Parcel Number 19J530713.

3.The property is a two story, four family, brick improvement built in 1929 on a .241 acre site.The gross living area of the subject property is 5,370 square feet.It has a full basement and a five-car garage.Each unit has a total six rooms, three bedrooms and one bath.The basement has bracing under the bathroom areas to support the flooring and deter settlement.

4.There was no evidence of new construction and improvement from January 1, 2007, to January 1, 2008.

5.The Complainant’s appraiser developed income and a sales comparison approaches to value.

6.The appraiser used actual rents and expenses in 2007 on his income approach.The appraiser determined effective gross income to be $39,865.The appraiser included the property taxes in his expenses.After removing the taxes from the expenses, the resulting total is $15,592.00.The net income is $24,273.The appraiser testified that the appropriate capitalization rate is 6%.The effective tax rate is .0138.The resulting value is $328,902.

7.The Complainant’s appraiser also developed a sales comparable approach.The appraiser relied on six properties he deemed comparable to the subject property for the purpose of making a determination of value. The six properties were located within 1.68 miles.Each sale property sold at a time relevant to the tax date of January 1, 2007, ranging from January, 2004 to March 2007.The sale properties were similar to the subject in age, number of units, room count, and other amenities of comparability.

8.The Respondent’s appraiser developed income and sales comparison approaches to value.

9.The Respondent’s appraiser was given incorrect data from the Complainant.The Respondent determined a gross rent multiplier of $145.00.The resulting value was $547,375.The appraiser adjusted the value due to the age of the building; the resulting value is $507,375.

10.The Respondent’s appraiser also developed a sales comparable approach.The appraiser relied on three properties he deemed comparable to the subject property for the purpose of making a determination of value. The three properties were located within 1.5 miles of the subject property.Each sale property sold at a time relevant to the tax date of January 1, 2007, ranging from May, 2004 to March, 2005.The sale properties were similar to the subject in age, number of units, room count, and other amenities of comparability.

11.The true value in money of each property as of January 1, 2007, is set at $455,000, assessed value of $86,450.See, Hearing Officer Finds Value, infra.

CONCLUSIONS OF LAW AND DECISION

Jurisdiction

The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious.Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, RSMo.The hearing officer shall issue a decision and order affirming, modifying or reversing the determination of the board of equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious.Section 138.431.4, RSMo.

Presumptions In Appeals

There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STC, 308 S.W.2d 748, 759 (Mo. 1958).

The presumption in favor of the Board is not evidence.A presumption simply accepts something as true without any substantial proof to the contrary.In an evidentiary hearing before the Commission, the valuation determined by the Board, even if simply to sustain the value made by the Assessor, is accepted as true only until and so long as there is no substantial evidence to the contrary.

Notwithstanding the provision of Section 138.431.3, RSMo – “There shall be no presumption that the assessor’s valuation is correct,” – the Supreme Court of Missouri has held, “A tax assessor’s valuation is presumed correct.”Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341 (Mo. 2005).Citing to Hermel, supra; and Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).

The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the Board’s valuation is erroneous and what the fair market value should have been placed on the property.Snider, Hermel & Cupples Hesse, supra.

Standard for Valuation

Section 137.115, RSMo, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so.St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993); Missouri Baptist Children’s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993).It is the fair market value of the subject property on the valuation date.Hermel, supra.

Market value is the most probable price in terms of money which a property should bring in competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price is not affected by undue stimulus.

Implicit in this definition are the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby:

1.Buyer and seller are typically motivated.

 

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

 

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

 

4.Payment is made in cash or its equivalent.

 

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

 

6.The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction.

 

Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; See also, Real Estate Valuation in Litigation, J. D. Eaton, M.A.I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80; Uniform Standards of Professional Appraisal Practice, Glossary, Exhibit 1, p. 4.

Methods of Valuation

Proper methods of valuation and assessment of property are delegated to the Commission.It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case.See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra;Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975).

Missouricourts have approved the comparable sales or market approach, the cost approach and the income approach as recognized methods of arriving at fair market value. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STC, 789 S.W.2d 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm’n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. Div. 2 1974).

In the present appeals, the Hearing Officer is presented with two recognized approaches to value, the income and sales comparison approaches.

Respondent’s Burden of Proof

The Respondent has imposed upon him by the provisions of Section 137.115.1, RSMo, the burden of proof to present clear, convincing and cogent evidence to sustain a valuation on residential property which is made by a computer, computer-assisted method or a computer program.There is a presumption in this appeal that the original valuation, which was sustained by the Board of Equalization, was made by a computer, computer-assisted method or a computer program.There was no evidence to rebut the presumption, therefore, in order to sustain the valuation of the subject property at $484,500, appraised value, Respondent’s evidence must come within the guidelines established by the legislature and must clearly and convincingly persuade the Hearing Officer as to the value sought to be sustained.

The statutory guidelines for evidence to meet the standard of clear, convincing and cogent include the following:

(1)The findings of the assessor based on an appraisal of the property by generally accepted appraisal techniques; and

 

(2) The purchase prices from sales of at least three comparable properties and the address or location thereof.As used in this paragraph, the word comparable means that:

 


(a)Such sale was closed at a date relevant to the property valuation; and

 

(b)Such properties are not more than one mile from the site of the disputed property, except where no similar properties exist within one mile of the disputed property, the nearest comparable property shall be used.Such property shall be within five hundred square feet in size of the disputed property, and resemble the disputed property in age, floor plan, number of rooms, and other relevant characteristics.

 

Section 137.115.1(1) & (2).

Clear, cogent and convincing evidence is that evidence which clearly convinces the trier of fact of the affirmative proposition to be proved.It does not mean that there may not be contrary evidence.Grissum v. Reesman, 505 S.W.2d 81, 85, 86 (Mo. Div. 2, 1974).The quality of proof, to be clear and convincing must be more than a mere preponderance but does not require beyond a reasonable doubt.30 AmJur2d. 345-346, Evidence section 1167.“For evidence to be clear and convincing, it must instantly tilt the scales in the affirmative when weighed against the evidence in opposition and the fact finder’s mind is left with an abiding conviction that the evidence is true.”Matter of O’Brien, 600 S.W.2d 695, 697 (Mo. App. 1980).

Evidence of Increase in Value

In any case in St. Louis County where the assessor presents evidence which indicates a valuation higher than the value finally determined by the assessor or the value determined by the board of equalization, whichever is higher, for that assessment period, such evidence will only be received for the purpose of sustaining the assessor’s or board’s valuation, and not for increasing the valuation of the property under appeal.Section 138.060, RSMo; 12 CSR 30-3.075.Therefore, Exhibit 1, was received only for the purpose of sustaining that value and not for increase in the value to $505,000.

Complainant’s Burden of Proof


In order to prevail, Complainant must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2007.Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, at 897. There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a Commission appeal still bears the burden of proof.The taxpayer is the moving party seeking affirmative relief.Therefore, the Complainant bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.” See, Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003); Daly v. P. D. George Co., 77 S.W.3d 645 (Mo. App. E.D. 2002); Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003).Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991).

Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.See, Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact.The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief.Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).

Hearing Officer Finds Value

The present case provides a record in which two state certified appraisers have developed appraisal reports utilizing the two recognized approaches to value.When two appraisals are presented, both must be considered and varying degrees of weight will be accorded to different aspects of each appraisal.

Both appraisers developed an income and a sales comparison approach.As to the income approach, each used a different methodology.The Complainant’s appraiser developed an income approach using the property’s actual income and expenses.The appraiser listed the actual income of the property and its actual expenses.The appraiser determined effective gross income to be $39,865.The appraiser included the property taxes as an expense.It is recognized the inclusion of the real estate taxes as an expense in the income approach, rather than developing an effective tax rate to be included in the capitalization rate, is not the method generally utilized in appeals before the Commission.However, this variance is not fatal to the income approach as presented.After removing the taxes from the expenses, the resulting total is $15,592.00.The net income is $24,273.The appraiser testified that the appropriate capitalization rate is 6%.The effective tax rate is .0138.The resulting value is $328,902.The Complainant’s appraiser concluded a value of $375,000.

The Respondent’s appraiser also developed an income approach.The Respondent’s appraiser was given incorrect data on the property from the Complainant.The Respondent looked at the subject property and the market and determined a gross rent multiplier of $145.00.The resulting value was $547,375.The appraiser adjusted the value due to the age of the building; the resulting value is $507,375.

Both appraisers stated that there were few sales of multi family properties to use in the valuation however, bothdeveloped a sales comparison approach to value and used properties located at 8042 Delmar and 7235 Dartmouth.The following adjustments were made to the sale prices:

8042 Delmar

 

Complainant

Respondent

Date ofSale

 

+$10,000

Condition

-$85,000

-$60,000

Age

-$10,000

 

GBA

+$13,720

+$20,600

Windows

 

-$15,000

Garage

 

+$7,000

Patio

 

-$1,000

Fire escape

 

-$20,000

Bathroom sup

 

-$20,000

New GFA/C

-$20,000

 

Adjusted SP

$483,720

$506,600

 

The Complainant made 22% gross adjustments to the sales price.The Respondent made 26.3% adjustments.Both appraisers made negative adjustment of $115,000 for the condition of the property. (Age, heating and air, windows, fire escape and bathroom support).Both appraisers also made an adjustment for size or gross building area.The average of the adjustments is $17,160.The Respondent made an appropriate adjustment of $10,000 for the date of sale which occurred in 2005.The adjusted sales price is $497,160.

7235 Dartmouth

 

Complainant

Respondent

Date ofSale

 

+$9,500

Location

 

+$30,000

Condition

-$20,000

 

Age

-$10,000

 

GBA

+$17,080

+$25,600

Garage

+$12,000

+$35,000

Patio

 

-$1,000

Fire escape

 

-$20,000

Bathroom sup

 

-$20,000

New GFA/C

-$20,000

 

Adjusted SP

$379,080

$459,100

 

The Complainant made 19.8% gross adjustments to the sales price.The Respondent made 35.3% adjustments.Both appraisers made negative adjustments for condition (age,heating and air, fire escape and bathroom support).The average of the adjustments is $45,000.Both appraisers also made an adjustment for size or gross building area.The average of the adjustments is $21,340.Both appraisers adjusted for parking arrangements.The average of the adjustments is $23,500.The Respondent made an appropriate adjustment of $9,500 for the date of sale which occurred in 2004.The adjusted sales price is $409,340.

If equal weight is given to the sales, a resulting valuation is $453,250.

After review of both appraisal reports and all approaches to value, the Hearing Officer has determined that $455,000 is the appropriate valuation for the property as of January 1, 2007.

ORDER

The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization forSt. LouisCountyfor the subject tax day is SET ASIDE.

The assessed value for the subject property for tax years 2007 and 2008 is set at $86,450.

A party may file with the Commission an application for review of this decision within thirty (30) days of the mailing of such decision.The application shall contain specific grounds upon which it is claimed the decision is erroneous.Said application must be in writing addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.

Failure to state specific facts or law upon which the appeal is based will result in summary denial.Section 138.432, RSMo 2000.

If an application for review of this decision is made to the Commission, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the Commission and an order to the Collector to release and disburse the impounded taxes, unless said taxes have been disbursed pursuant an order of the circuit court under the provisions of Section 139.031.8, RSMo.§139.031.3, RSMo.If no application for review is received by the Commission within thirty (30) days, this decision and order is deemed final and the Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal.

Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed.Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.

SO ORDERED June 24, 2008.

STATE TAX COMMISSION OFMISSOURI

 

 

_____________________________________

Maureen Monaghan

Hearing Officer

 

 

Certificate of Service

 

I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 24thday of June, 2008, to:Haskell Allen, 1602 S. Big Bend Blvd., St. Louis, MO 63117, Attorney for Complainant; Paula Lemerman, Associate County Counselor, County Government Center, 41 South Central Avenue, Clayton, MO 63105, Attorney for Respondent; Philip A. Muehlheausler, Assessor, County Government Center, 41 South Central Avenue, Clayton, MO 63105; John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.

 

 

___________________________

Barbara Heller

Legal Coordinator