Jansen Properties III, LLC vs David Cox, Assessor, Platte County

July 8th, 2019

STATE TAX COMMISSION OF MISSOURI

JANSEN PROPERTIES III, LLC )
)
Complainant, )
) Appeal No. 18-79010 & 18-79011
v. )
)
DAVID COX, ASSESSOR, )
PLATTE COUNTY, MISSOURI, )
)
Respondent. )

 

   ORDER AFFIRMING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

David Cox, Assessor, filed an application for review of the hearing officer’s decision and order setting aside the Platte County Board of Equalization’s (BOE) decision.  The hearing officer determined the true value in money of the residential properties as $115,000 for each parcel.[1]  Jansen Properties III, LLC, Complainant, presented substantial and persuasive evidence of overvaluation. The hearing officer’s decision and order is AFFIRMED.[2]

BACKGROUND

The subject properties are vacant lots located in The National, Parkville, Platte County Missouri. The National is a residential development that includes amenities such as golf courses, tennis courts and related facilities.  The parcel subject to appeal number 18-79010 is a 1.17 acre lot. It is adjacent to a lot improved with a single-family dwelling owned by Complainant.   The parcel subject to appeal 18-79011 is a 1.10 acre lot.  The parcel is adjacent to the parcel subject to appeal 18-79010 and backs to the first green.

The Platte County Assessor (Assessor) classified the subject properties as residential, and valued the lots at $225,000 per parcel as of January 1, 2018.  The BOE reduced the valuations to $165,000 per parcel. Complainant timely appealed the BOE decision, claiming overvaluation.  Complainant asserted the true value in money for the subject parcels were between $100,000 and $115,000.  Complainant’s overvaluation claims were heard in a consolidated evidentiary hearing.

To support the overvaluation claim, Complainant introduced exhibits including an appraisal report, photographs, and marketing materials.  Complainant presented the testimony of Mark Jansen (Jansen) and Russ Wolfe (Wolfe). Jansen is a member of Complainant.  The parcel subject to appeal 18-79010 was purchased to allow ingress and egress while he was constructing a residence on the adjacent lot.  He has had the parcel listed since 1999.  The parcel subject to appeal 18-79011 was purchased in October 2017 for $115,000.  Jansen described the lots as extremely sloped and is rock shelved.  The parcels are fully wooded blocking the views to the golf course.

Wolfe is a real estate broker and sales person.  He is familiar with The Nationals because he sold 267 home sites in the development and is a resident of the development.  He continues to sell homes and lots in The Nationals.  Wolfe testified that the subject parcels had been listed from 1999 until they were purchased by Complainant.  He opined that the expense of developing those lots inhibited their sale.  He estimated the site development would be at least $200,000.  The development offered the lots to builders at no cost if the builder would construct “spec homes” on the parcels.  No builder accepted the offer.  Wolfe testified that he sold lots in The Nationals for $82,000 to $115,000 and those lots did not suffer from the conditions as the subject parcels.

The Assessor presented the testimony and appraisal report of Jack Baines (Baines).    Baines is employed as the Chief Analyst and Real Estate Specialist for the Platte County Assessor’s Office.  Baines testified that he developed a “mass appraisal, using the allocation method” for Subject Property 1 and Subject Property 2.  Baines testified that he reviewed and verified “all the arm’s length sales in the county” as well as “the improved sales for market time trends,” allocating total land value of the property based on the sale price.  Baines selected improved sales within the subject properties’ subdivision, adjusting them for time and financing and applied the allocation percentage as a land-to-value ratio.  “After abstracting the land value from the improved sales, [Baines] developed an allocated price per square foot of land and a size adjustment, based upon the typical lot size in the subdivision.”  Baines adjusted the sales for differences in location with regard to the view and whether the site was a superior or inferior lot when compared to the typical lot in the subdivision.  Baines calculated a price per square foot of land value, when was then tested against the total sales price by adding the depreciated cost of the improvement to the modeled land value, thereby eliciting a sales ratio indicator.

Baines testified that, in the market area of the subject properties, 18% of the sales price is typically the value of the land to the overall sale price.  Baines testified that he calculated the typical dollar per square foot value from the allocated land value and then analyzed how the size of a parcel affects its allocated land value.  Baines determined that the average base lot size was 24,560 square feet with a value of $7.30 per square foot, which indicated a base lot value of $179,288.  Baines applied a size adjustment of $1.50 per square foot to the subject properties due to their size being larger than typical lots.

OVERVALUATION

To obtain an assessment reduction based on overvaluation, the property owner must prove the true value in money of the subject property on the valuation date.  Hermel, Inc., v. State Tax Comm’n, 564 S.W.2d 888, 897 (Mo. banc 1978).  The “true value in money” is the same as fair market value, and refers to “the price which the property would bring from a willing buyer when offered for sale by a willing seller.”  Mo. Baptist Children’s Home v. State Tax Comm’n, 867 S.W.2d 510, 512 (Mo. banc 1993).  Determining the true value in money is a factual issue.  Parker v. Doe Run Co., 553 S.W.3d 356, 360 (Mo. App. 2018).  The hearing officer, as the trier of fact, determines both the credibility and weight of the evidence.   Exchange Bank of Missouri v. Gerlt, 367 S.W.3d 132, 135-36 (Mo. App. 2012).

Complainant presented evidence of the actual price paid for the subject properties:  $225,000 for Subject Property 1 in 2008 and $115,000 for Subject Property 2 in October 2017.  The purchase of Subject Property 1 was approximately 10 years prior to the tax date at issue while the purchase of Subject Property 2 was only two or three months prior to the tax date at issue.  Complainant’s purchase of Subject Property 2 was through an arm’s-length transaction, which was a competitive bid process.  The subject properties are similar in size, topography, and are adjacent to one another.  Consequently, the actual price paid for Subject Property 2 in October 2017 is logically and legally relevant, i.e., admissible evidence, that can be utilized to establish value of both subject properties at the time of assessment as of January 1, 2018.

Complainants’ evidence was substantial and persuasive to rebut the presumption of correct assessment by the BOE and to establish the TVM of the subject properties was $115,000 and $115,000, respectively, as of January 1, 2018.  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.

Specifically, Jansen’s and Wolfe’s testimony and the related evidence was based upon their personal knowledge of the extreme topography and other factors adversely impacting the values of the subject properties.

Respondent’s appraiser used a mass appraisal methodology, which is the systematic appraisal of groups of properties using standardized procedures and statistical testing.  Mass appraisal differs from single property or “fee” appraisal.  “Fee” appraisal is the valuation of a particular property as of a given date.  Mass appraisal requires appraisal judgments related to groups of properties rather than to single properties.  Fee appraisals analyze market information and develop valuation methodologies to estimate the value of the subject parcel only.  Property Assessment Valuation, Second Edition, IAAO. 

            Respondent’s methodology requires the use of sales of improved properties to estimate a valuation of a vacant lot.  The method requires the application of cost and depreciation factors to improvements to estimate the contribution of the land value to the total valuation of the improved properties.  The method is useful if there is a lack of sales of vacant lots.  The disadvantage of the method is that it requires complex and more subjective determinations.

The Supreme Court of Missouri has held that evidence of the actual sale price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time.  The actual sale price is a method that may be considered for estimating true value.  St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993)

            It is within the purview of the hearing officer to determine the method of valuation to be adopted in a given case.  Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992) citing Nance v. STC, 18 S.W.3d 611, 615 (Mo. App. W.D. 2000). The approached used to determine value is applied with reference to a specific property.  The method selected depends on variables specific to the property and its highest and best use.  Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341 (Mo. banc. 2005)

Given the record of the recent sale of one lot for $115,000, the listing history of the property, and the challenges to develop the lots, the hearing officer correctly concluded the testimony and exhibits presented by Complainant were substantial and persuasive evidence to establish the true value in money of the subject parcels.

ORDER

The true value in money of the subject properties as determined by the hearing officer is AFFIRMED.

Section 138.432 and sections 536.100 to 536.140 govern judicial review of the Commission’s decision and order.  If Respondent seeks timely seeks judicial review within thirty days, any protested taxes presently in escrow as a result of this appeal shall be held pending a final decision of the courts, unless disbursed pursuant to section 139.031.8.

If judicial review is not sought within thirty days, this decision and order is deemed final and the Platte County Collector, and the collectors of all affected political subdivisions, shall disburse the protested taxes presently held in escrow in accordance with the decision on the assessment underlying this appeal.

SO ORDERED October 29, 2019.

STATE TAX COMMISSION OF MISSOURI

 

 

_____________________________________                                                                        

Bruce E. Davis, Chairman

 

 

 

_____________________________________

Victor Callahan, Commissioner

 

 

 

_____________________________________

Will Kraus, Commissioner

 

 

[1] The hearing officer’s decision and order is incorporated as if fully set forth herein.

[2] The Commission has authority to decide this appeal. Complainant timely appealed the BOE decisions, and Respondent timely filed an application for review of the hearing officer’s decision and order.  Section 138.432 authorizes the Commission to “affirm, modify, reverse, or set aside the decision and order of the hearing officer[.]” All statutory citations are to RSMo 2000, as amended.

 

STATE TAX COMMISSION OF MISSOURI

JANSEN PROPERTIES III, LLC, )

)
) Appeal No. 18-79010
              Complainant, ) Parcel/Locator No. 20-5.0-22-300-003-049.00
) Appeal No. 18-79011
v. ) Parcel/Locator No. 20-5.0-22-300-003-048.00
)
DAVID COX,  ASSESSOR, )
PLATTE COUNTY, MISSOURI,

Respondent.

 )

)

DECISION AND ORDER 

HOLDING

The decision of the Platte County Board of Equalization (BOE) is SET ASIDE.  Complainant Jansen Properties III, LLC, (Complainant) presented substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.

Complainant is represented by counsel Jeffrey M. Hensley.

Respondent David Cox, Assessor, Platte County, Missouri, (Respondent) is represented by counsel Stephen E. Magers.

Case decided by Senior Hearing Officer John J. Treu (Hearing Officer).  The parties’ filed written motions requesting to submit the case on the record, and such requests were granted.

ISSUE

Complainant appealed with regard to both parcels on the ground of overvaluation.  Respondent initially set the true value in money (TVM) of the subject property in Appeal No. 18-79010 at $225,000, as residential property, as of January 1, 2018.  Respondent initially set the TVM of the subject property in Appeal No. 18-79011 at $225,000, as residential property, as of January 1, 2018.  The BOE valued the subject properties at $165,000 and $165,000, respectively.

The value as of January 1 of the odd numbered year remains the value as of January 1 of the following even numbered year unless there is new construction or improvement to the property.  Section 137.115.1 RSMo   The State Tax Commission (STC) takes this appeal to determine the TVM for the subject properties on January 1, 2018, under the economic conditions as they existed on 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

  1. Jurisdiction. Jurisdiction over this appeal is proper.  Complainant timely appealed to the STC.
  2. Evidentiary Hearing. The parties waived an evidentiary hearing and agreed to submit the appeals on the record of exhibits and evidence.  In addition to the exhibits and evidence, the parties submitted written direct testimony of their witnesses.
  3. Identification of Subject Property. The subject property in Appeal No. 18-79010 (Subject Property 1) is identified by parcel/locator number 20-5.0-22-300-003-049.00.  Subject Property 1 is further identified as Lot 74, The National, Parkville, Platte County, Missouri.  The subject property in Appeal No. 18-79011 (Subject Property 2) is identified by parcel/locator number 20-5.0-22-300-003-048.00.  Subject Property 2 is further identified as Lot 73, The National, Parkville, Platte County, Missouri.  (Complaints; Exhibit 1)
  4. Description of Subject Properties. The subject properties are situated on The National, “a luxury, resort-style development with world-class amenities.”  (Exhibit J)  The National includes two 18-hole golf courses, clubhouses, pro shops, dining facilities, swimming pool, tennis courts, and homes.  (WDT Jansen)  Subject Property 1 consists of approximately 51,121 square feet (1.17 acres) of vacant land.  (Exhibit 2)  Subject Property 2 consists of approximately 48,226 square feet (1.10 acres) of vacant land.  (Exhibit 2)  Subject Property 1 directly abuts Lot 75, which is a residential lot improved by a single-family dwelling owned by Complainant.  Subject Property 2 directly abuts Subject Property 1.  The lots are oriented, north to south, Lot 75, Subject Property 1, and Subject Property 2. (WDT Jansen; Exhibit J)  Subject Property 2 backs to the first green on a golf course.  (Exhibit J)
  5. Assessment. Respondent set a TVM for Subject Property 1 at $225,000, residential, as of January 1, 2018.  Respondent set a TVM for Subject Property 2 at $225,000, residential, as of January 1, 2018.
  6. Board of Equalization. The BOE set a TVM for Subject Property 1 at $165,000, residential, as of January 1, 2018.  The BOE set a TVM for Subject Property 2 at $165,000, residential, as of January 1, 2018.
  7. Complainant’s Evidence.[1] Complainant opined that the TVM of Subject Property 1 was $100,000, as of January 1, 2018.  Complainant opined that the TVM of Subject Property 2 was $100,000 to $115,000, as of January 1, 2018.  To support the opinions of value, Complainant offered as evidence the following exhibits:
Exhibit Description Ruling
WDT Jansen Written Direct Testimony of Mark S. Jansen (Jansen) Admitted
WDT Wolfe Written Direct Testimony of Russ Wolfe (Wolfe) Admitted
Exhibits A – H and L Photographs of Subject Properties and Lot 75 Admitted
Exhibit I Summary of Complainant’s costs to develop Lot 75 for construction of home Admitted
Exhibit J Marketing flyer for seven properties in same subdivision as Subject Properties offered for sale through auction in August 2017; highest bid received for Subject Property 2 was $50,000, which did not meet the auction reserve price; Lots 76 and 77, located directly to the north of Complainant’s Lot 75, received no bids; Lot 9, .62 acres backing to a fairway and adjacent to greenspace, sold for $86,000; Lot 16, .55 acres in an “exclusive” cul-de-sac, received a bid of $20,000, which did not meet the auction reserve price Admitted
Exhibit K Marketing flyer for 6524 Ridge Road on Lot 72, which directly abuts Subject Property 2 to the south; .59 acres improved by 11,298 square-foot custom built home with seven bedrooms, six full bathrooms, three half bathrooms, two-story media room, full indoor basketball court; development costs of $4,000,000 and sold through competitive bid/no reserve auction for $1,000,000 in September 2018 Admitted
Exhibit M Tax assessment data and receipts for Lots, 72, 73, 74, and 75 showing some declines and some increases in assessed values of the lots by Respondent Admitted
Exhibit N Expert opinion of Wolfe regarding value of subject properties and Respondent’s analysis of listings and land sales in same subdivision as subject properties Admitted
Exhibit O Buyer’s Closing Statement documenting Complainant’s purchase of Subject Property 2 dated October 27, 2017, for a sale price of $115,000 Admitted
Exhibit P Written Rebuttal Testimony (WRT) of Jansen Admitted
Exhibit Q WRT of Wolfe Admitted
Exhibit R History of Sales and Listings of Land in same subdivision as subject properties created by/for Platte County Assessor’s Office depicting listings of heavily timbered lots on market for approximately 19 years and sales of lots “superior” to the subject properties and with no site development issues Admitted

    Jansen’s Testimony

Jansen is the managing member of Complainant, an entity he set up for tax and estate planning purposes.  (WDT Jansen)  Jansen resides in the home on Lot 75.  Jansen testified that the subject properties’ subdivision is known as the residential development of the National Golf Club of Kansas City, which is a private golf course.  (Id.)  Jansen testified that he purchased Lot 75 in 2000 and built a home on the lot.  (Id.)  Jansen testified that he experienced “extraordinary issues when constructing” the home due to the topography, timber, soil, and limestone rock on the lot.  (Id.)  Jansen testified that surveys, engineering, excavation, and piering, all of which occurred prior to the beginning of construction, cost approximately $500,000.  (Id.; Exhibits A through I)

Jansen testified that Lot 75 has “limited level area,” so he purchased Subject Property 1 to allow for ingress and egress and space to store construction materials.  (WDT Jansen)  Jansen testified that he purchased Subject Property 1 from “close friends” for a list price of $225,000 even though he “knew [Subject Property 1] was not worth nearly that much, especially considering [his] recent experience in the cost to develop Lot 75.”  (Id.)  Jansen testified that Complainant initially planned to sell Subject Property 1 “for whatever we could get” but later decided to keep the property because it had been listed for sale since 1999 with no prospective purchasers.  (Id.)  Jansen testified that Complainant purchased Subject Property 2 in October 2017 for $115,000 through a competitive bid process.  Jansen testified that the next highest bid was $110,000.  (Id.)  Jansen testified that Subject Property 2 had been listed in a previous land auction but did not sell; the highest bid in that auction had been only $50,000.  (Id.)  Jansen testified that the subject properties are comparable in slope and topography to Lot 75 and that all three lots are heavily timbered.  (Id.)  Jansen opined that the “maximum value” of the subject properties would be $115,000.  (Id.)  Jansen testified that issues adversely affecting the values of and ability to sell the subject properties include their high costs of development due to:  extremely steep elevations/slopes; limestone rock shelves beneath the soil; fully wooded terrain that blocks views of the golf course; “vigorous” zoning requirements of the subdivision’ covenants and restrictions and homeowners’ association rules and dues; and neighborhood improvement district costs.  (Id.)  Jansen testified that Complainant has not attempted to develop Subject Property 1 or Subject Property 2 because the cost to develop them would not be economically feasible.  (Id.)

In his rebuttal testimony, Jansen testified that he disagreed with Respondent’s valuation of the subject properties, which had been based upon mass appraisal using the allocation method.  (WRT Jansen)  Jansen testified that Respondent’s valuation failed to consider “crucial factors” affecting the value of the subject properties, such as desirability, surroundings, restrictions, physical factors, economic factors, governmental factors, and depth influence.”  (Id.)  Jansen testified that the value of the subject properties is impacted because they are platted for single-family homes only, the covenants and restrictions impose substantial restrictions on the use of the subject properties, the cost to prepare the properties for homes is cost prohibitive, and the physical nature of the land leaves much of the properties unusable for any purpose.  (Id.)  Jansen further testified that he believed the sale price of Subject Property 2, $115,000, should be used value the subject properties given that the sale occurred close in time to the relevant tax date, that Subject Property 2 had been listed for sale for approximately 18 years, and that the sale was the result of a competitive bidding process.  (WRT Jansen)

Wolfe’s Testimony

Wolfe is a real estate broker and salesperson who has been in the real estate industry for 21 years.  (WDT Wolfe)  Between 1999 and 2006, Wolfe and another real estate broker sold 267 home sites/lots in the subject properties’ subdivision.  (Id.)  Wolfe has resided in the subdivision since 2003.  (Id.)  As of January 2019, Wolfe continues to sell homes and lots in the subdivision.  (Id.)

Wolfe testified that the subject properties had been listed for sale since May 1999 until they were purchased by Complainant.  (WDT Wolfe)  Wolfe testified that no prospective buyers other than Complainant were interested in the subject properties “once they learned the additional expenses associated with site development,” estimates of which “ranged from a minimum of $200,000 and up, depending on the final approved site plan.”  (Id.)  To provide an example of the difficulty and expense involved in the site development of the subject properties and neighboring lots, Wolfe testified that three neighboring lots “were once offered to a respected builder in the area at no cost if he would agree to construct spec homes on those [lots].”  (Id.)  Wolfe testified that the builder declined the offer given the excessive cost of site development.  (Id.)  Wolfe testified that he had sold three lots comparable to the subject properties between October 2017 and November 2018.  The sale prices ranged from $82,500 to $115,000, and the comparable properties will not require additional site development that the subject properties would require.  (Id.)

Wolfe reviewed Exhibit R, which had been generated from Respondent’s office.  (WDT Wolfe)  Wolfe testified that the listings and land sales contained in the document were comparable to the subject properties.  (Id.)

In his rebuttal testimony, Wolfe testified that he had reviewed the appraisal report of Respondent’s appraiser (see Respondent’s Evidence, below).  (WRT Wolfe)  Wolfe testified that he disagreed with the appraiser’s method of valuing the subject properties through mass appraisal using the allocation method because the approach “simply doesn’t work for Lots in the National Development.”  Wolfe testified that the mass appraisal/allocation method uses a formula based upon the entire square footage of the parcel to determine value, considers improved parcels, and assumes no recent comparable sales of vacant lots.  (Id.)  Wolfe testified that the extreme topography of the subject properties makes much of the square footage unusable for any purpose, so a valuation based upon square footage does not provide an accurate value or TVM.  (Id.)  Wolfe testified that, given the recent sale of vacant land, Subject Property 2, a valuation based upon mass appraisal/allocation method is unreliable.  (Id.)

  1. Respondent’s Evidence.[2] Respondent opined that the TVM of Subject Property 1 was $219,129 and the TVM of Subject Property 2 was $214,787.  To support Respondent’s opinion of value, Respondent offered as evidence the following exhibits:
Exhibit 1 Written Direct Testimony of Jack L. Baines (Baines) Admitted
Exhibit 2 Appraisal Report of Baines Admitted
Rebuttal Exhibit 1 Sale listing for neighboring vacant lots, Lot 76, Lot 77, and Lot 78 Admitted

 Baines is employed as the Chief Analyst and Real Estate Specialist for the Platte County Assessor’s Office.  (Exhibit 1)  Baines has been in the assessment industry for over 30 years; has served as a county appraiser in two counties in Kansas; has served as a deputy appraiser in a Kansas county and a Nebraska county; and is currently designated by the International Association of Assessing Officers (IAAO) as an Assessment Administration Specialist (AAS).  (Exhibit 1)  Baines has previously testified as an expert witness in ad valorem tax appeals at the local and state level.  (Id.)

Baines testified that he developed a “mass appraisal, using the allocation method” for Subject Property 1 and Subject Property 2.  (Exhibit 1)  Baines testified that a “mass appraisal methodology relies upon modeling data, based upon the relevant value-contributing characteristics, specific to that set of properties. The model is then applied to that set, based on a specific market area.”  (Id.)  Baines testified that he inspected Subject Property 1 and 2 and that his scope of work was to develop a mass appraisal for properties located within Platte County.  (Id.)  Baines testified that Exhibit 2 contained his scope of work and that the effective date of his appraisal was January 1, 2017.  (Id.)

Specifically with regarding to valuing Subject Property 1 and Subject Property 2, Baines testified that he reviewed and verified “all the arm’s length sales in the county” as well as “the improved sales for market time trends,” allocating total land value of the property based on the sale price.  (Exhibit 1)  Baines selected improved sales within the subject properties’ subdivision, adjusting them for time and financing and applied the allocation percentage as a land-to-value ratio.  (Id.)  “After abstracting the land value from the improved sales, [Baines] developed an allocated price per square foot of land and a size adjustment, based upon the typical lot size in the subdivision.”  (Id.)  Baines adjusted the sales for differences in location with regard to the view and whether the site was a superior or inferior lot when compared to the typical lot in the subdivision.  (Id.)  Baines calculated a price per square foot of land value, when was then tested against the total sales price by adding the depreciated cost of the improvement to the modeled land value, thereby eliciting a sales ratio indicator.  (Id.)

Baines testified that, in the market area of the subject properties, 18% of the sales price is typically the value of the land to the overall sale price.  (Exhibit 1)  Baines testified that he calculated the typical dollar per square foot value from the allocated land value and then analyzed how the size of a parcel affects its allocated land value.  (Id.)  Baines determined that the average base lot size was 24,560 square feet with a value of $7.30 per square foot, which indicated a base lot value of $179,288.  (Id.)  Baines applied a size adjustment of $1.50 per square foot to the subject properties due to their size being larger than typical lots.  (Id.)  Baines opined that the highest and best uses of the subject properties were as single-family residential home sites.  (Id.; Exhibit 2)

Exhibit 2 analyzed five comparable properties, which were improved with single family residences.  The comparable properties sold between February 2016 to August 2016, and the sale prices ranged from $629,000 to $1,450,000.  (Exhibit 2)  According to Exhibit 2, the unadjusted land values of the comparable properties ranged from $114,726 to $263,162.  The adjusted land values of the comparable properties ranged from $144,805 to $229,449.  (Exhibit 2)

Exhibit 2 also contained aerial photographs of three comparable vacant lot sales within the subject properties’ subdivision.  Baines had made notes below each photograph, which provided additional information concerning the sale of the vacant lot referenced in the corresponding photo.  For the first vacant lot, .6949 acres, Baines noted, “Vacant lot sold 4/22/2016 $150,000 or $4.95 sq. ft. shape restriction.”  For the second vacant lot, .5549 acres, Baines noted, “Vacant lot sold 10/31/2017 for $115,000 or $4.75 sq. ft. no view of golf course.”  For the third vacant lot, .6649 acres, Baines noted, “Vacant lot sold 4/2016 for $320,000 or $11.05 sq. ft. flat lot-cleared.”  (Exhibit 2)

Rebuttal Exhibit 1 was a sale listing for neighboring vacant lots, Lot 76, Lot 77, and Lot 78.  Rebuttal Exhibit 1 described the lots as follows:

Lot 76 List price $197,500 Listing date April 20, 2018; sloped topography; partially wooded; located on a cul-de-sac with view of golf club; premier building site for large estate home.
Lot 77 List price $197,500 Listing date December 17, 2018; .70 acres; sloped topography; partially wooded; located on a cul-de-sac with view of golf club; walk-out basement estate lot.
Lot 78 List price $225,000 Listing date April 20, 2018; .60 acres; sloped topography; partially wooded; located on a cul-de-sac with view of golf club; “unique 1-1/2 lots for the custom home which needs width and depth.”

Rebuttal Exhibit 1 showed that Lot 76 and Lot 78 had been on the market for nearly one year and were not sold at the time the exhibit was introduced into evidence in these appeals.  Rebuttal Exhibit 1 showed that Lot 77 had been on the market for approximately four months and was not sold at the time the exhibit was introduced into evidence in these appeals.

  1. Presumption of Correct Assessment Rebutted – TVM Established. Complainant presented substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.  The substantial and persuasive evidence established the TVM of the subject properties as of January 1, 2018, were $115,000 and $115,000, respectively.

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.

Issuance of Decision Absent Evidentiary Hearing

The Hearing Officer, after affording the parties reasonable opportunity for fair hearing, shall issue a decision and order affirming, modifying or reversing the determination of the BOE, correcting any assessment which is unlawful, unfair, improper, arbitrary or capricious.  Section 138.431.5.  The parties waived an evidentiary hearing and agreed to submit the appeals on the record of exhibits and evidence.  In addition to the exhibits and evidence, the parties submitted written direct testimony of their witnesses.   Such establishes the basis upon which opportunity for an evidentiary hearing can be held.  The Complainant has the burden to present substantial and persuasive evidence.  The Hearing Officer considered all the facts in determining that judgment should be entered in Complainant’s favor.

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); 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).   This presumption is a rebuttable rather than a conclusive presumption.  It places the burden of going forward with some substantial evidence on the taxpayer – the complainant.  When some substantial evidence is produced by the complainant, “however slight”, the presumption disappears and the Hearing Officer, as trier of facts, receives the issue free of the presumption. United Missouri Bank of Kansas City v. March, 650 S.W.2d 678, 680-81 (Mo. App. 1983), citing to State ex rel. Christian v. Lawry, 405 S.W.2d 729, 730 (Mo. App. 1966) and cases therein cited.  The presumption is not evidence of value.  The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the Board’s valuation is erroneous and what the fair market value should have been placed on the property. Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).

The Complainant’s Burden of Proof

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.  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).

To obtain a reduction in assessed value 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).

In order to prevail, the 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 the relevant tax date.  Hermel, supra.  There is no presumption that the complainant’s opinion is correct.  The taxpayer in an STC appeal still bears the burden of proof because 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).  A valuation which does not reflect the true market value of the property under appeal is an unlawful, unfair, and improper assessment.

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.

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).

Opinion Testimony by Experts

            An expert’s opinion must be founded upon substantial information, not mere conjecture or speculation, and there must be a rational basis for the opinion. Missouri Pipeline Co. v. Wilmes, 898 S.W. 2d 682, 687 (Mo. App. E.D. 1995).  The STC cannot ignore a lack of support in the evidence for adjustments made by the expert witnesses in the application of a particular valuation approach. Drey v. State Tax Commission, 345 S.W. 2d 228, 234-236 (Mo. 1961), Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W. 3d, 341, 348 (Mo. 2005).

            The testimony of an expert is to be considered like any other testimony, is to be tried by the same test, and receives just so much weight and credit as the trier of fact may deem it entitled to when viewed in connection with all other circumstances.  The Hearing Officer, as the trier of fact, has the authority to weigh the evidence and is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert’s testimony and may accept it in part or reject it in part.  Beardsley v. Beardsley, 819 S.W. 2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W. 2d 605, 607 (Mo. 1981); Scanlon v. Kansas City, 28 S.W. 2d 84, 95 (Mo. 1930).

If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto.

The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data need not be admissible in evidence.

Section 490.065, RSMo; State Board of Registration for the Healing Arts v. McDonagh, 123 S.W.3d 146 (Mo. banc 2004); Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. E.D. 1992).

Methods of Valuation

Proper methods of valuation and assessment of property are delegated to the STC.  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:

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.

Missouri courts have held that evidence of the actual sale price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time.  The actual sale price is a method that may be considered for estimating true value.  St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993).

Complainant presented evidence of the actual price paid for the subject properties:  $225,000 for Subject Property 1 in 2008; $115,000 for Subject Property 2 in October 2017.  The purchase of Subject Property 1 was approximately 10 years prior to the tax date at issue while the purchase of Subject Property 2 was only two or three months prior to the tax date at issue.  Complainant’s purchase of Subject Property 1 was from sellers whom Jansen characterized as “close friends.”  (WDT Jansen)  Complainant’s purchase of Subject Property 2 was through an arm’s-length transaction, which was a competitive bid process.  (WRT Jansen)  The subject properties are similar in size, topography, and are adjacent to one another.  Consequently, the actual price paid for Subject Property 2 in October 2017 is logically and legally relevant, i.e., admissible evidence, that can be utilized to establish value of both subject properties at the time of assessment as of January 1, 2018.

Discussion

            In this case, Complainants’ evidence was substantial and persuasive to rebut the presumption of correct assessment by the BOE and to establish the TVM of the subject properties was $115,000 and $115,000, respectively, as of January 1, 2018.  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.

Specifically, Jansen’s and Wolfe’s testimony and the related evidence was based upon their personal knowledge of the extreme topography and other factors adversely impacting the values of the subject properties.  The subject properties, like other vacant lots for sale within the same subdivision, would require an additional substantial financial investment to physically prepare them for building improvements.  The evidence established that Complainant’s Lot 75, which is similar in size and topography to the subject properties and directly abuts Subject Property 1, required an investment of approximately $1,000,000 in addition to the cost to acquire Lot 75 to develop the site and the foundation of the building improvements.  The evidence as a whole established that similar lots within the subject properties’ subdivision did not sell quickly or for their list prices due to the high cost to further develop the lots to prepare them for building improvements.  Subject Property 2 had been listed for sale since 1999 and had no prospective buyers.  Subject Property 2 had received a bid of $50,000 during a land auction in August 2017 but did not sell because the bid did not meet the auction reserve price.  (Exhibit J)  A short time later, in October 2017, Complainant paid $115,000 for Subject Property 2 through a privately-negotiated competitive bid process against another bidder.  Subject Property 2 is similar to Subject Property 1 and is situated directly adjacent to Subject Property 2.  Consequently, this specific evidence along with Complainant’s other evidence is particularly persuasive when weighed against Respondent’s evidence, which was based upon a generalized mass appraisal analysis using the allocation method, which is not one of the three Court-approved methods for determining TVM in appeals before the STC.

ORDER

The TMV for the subject property as determined by the BOE is SET ASIDE.  The assessed values for the subject properties as of January 1, 2018, were $21,850 and $21,850, respectively.

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 Platte 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 July 1, 2019.

STATE TAX COMMISSION OF MISSOURI

John J. Treu

Senior Hearing Officer

Certificate of Service

I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 1st day of July, 2019, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.

 

Elaina McKee

Legal Coordinator

 

[1] Respondent’s objections to Complainant’s evidence are hereby overruled.  The exhibits and evidence will be given the weight deemed appropriate by the Hearing Officer.

[2] Complainant’s objections to Respondent’s evidence are hereby overruled.  The exhibits and evidence will be given the weight deemed appropriate by the Hearing Officer