Jason Spann v. Jake Zimmerman, Assessor St. Louis County

STATE TAX COMMISSION OF MISSOURI

 

JASON SPANN,	)
	)
Complainant,	)
	)
v.	)	Appeal No. 17-10076
	) )	Parcel/Locator No. 22J141562
JAKE ZIMMERMAN,  ASSESSOR,	)
ST. LOUIS COUNTY, MISSOURI, Respondent	) )

 

DECISION AND ORDER

 

HOLDING

 

The decision of the St. Louis County Board of Equalization (BOE) is AFFIRMED.  Complainant Jason Spann (Complainant) did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.

Complainant appeared pro se.

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

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

ISSUE

Complainant appealed on the ground of overvaluation.  Respondent initially set the true value in money (TVM) of the subject property at $274,700, as residential property, as of January 1, 2017.  The BOE valued the subject property at $274,700, thereby sustaining Respondent’s valuation.

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 property as the property existed on January 1, 2017, 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 State Tax Commission.
2. Evidentiary Hearing. The issue of overvaluation was presented at an evidentiary hearing on January 31, 2018, at the St. Louis County Government Building, 41 South Central Avenue, Clayton, Missouri.
3. Identification of Subject Property. The subject property is identified by parcel/locator number 22J141562.  It is further identified as 7602 Suffolk Avenue, St. Louis County, Missouri.  (Complaint; Exhibit B; Exhibit 1)
4. Description of Subject Property. The subject property consists of .1722 acres (approximately 7,501 square feet), improved by a 1,920 square-foot, two-story single-family home constructed in 1986.  (Exhibit 3)  The subject property includes four bedrooms; two full bathrooms; one half bathroom; a full basement; a two-car detached garage; one open porch; one deck/stoop; and one patio area.  (Exhibit J)  The exterior consists of masonry and frame construction.  (Exhibit J)
5. Assessment. Respondent set a TVM for the subject property of $274,700, residential, as of January 1, 2017.
6. Board of Equalization. The BOE set a TVM of the subject property at $274,700, residential, as of January 1, 2017.
7. Complainant’s Evidence. Complainant opined that the TVM of the subject property as of January 1, 2017, was $243,700.  To support his opinion of value, Complainant offered as evidence the following exhibits:

Exhibit A	Notice of 15% increase in assessment and exterior property inspection conducted by Respondent’s employee Janet B., I.D. #764, dated April 5, 2017, 9:50 a.m.; Section 137.115.11 RSMo (2000 as amended); SLCO Ordinance 501.250
Exhibit B	Change of Assessment Notice dated May 8, 2017
Exhibit C	Summary of change in grade factor of subject property and neighboring property and showing upgrade of subject property between 2015 and 2017 despite no improvements to justify change
Exhibit D	Letter/revised Change of Assessment Notice from Respondent dated June 19, 2017, memorializing that an informal conference occurred, that a member of the appraisal staff reviewed the subject property’s 2017 market value, and determining the final appraised value for tax year 2017 to be $274,000
Exhibit E	BOE’s Findings and Notice of Decision
Exhibits F, G, H	Email correspondence between Complainant and Counsel for Respondent regarding the change in the grade factor of the subject property and discovery requests and responses in prepration for the Evidentiary Hearing
Exhibit I	Sections 137.115, 138.060 RSMo (2000 as amended); SLCO Ordinance 501.250
Exhibit J	St. Louis County Comparable Sales Analysis Report for Tax Year 2018 for subject property, dated January 9, 2018
Exhibit K	Property Record Card for 7606 Suffolk Avenue, located two doors from the subject property
Exhibit L	Respondent’s comparable sales grid for 7606 Suffolk Avenue using the June 2015 sale price of the subject property as a comparable sale
Exhibit M	Respondent’s comparable sales grid for the subject property using the June 2015 sale price of the subject property as a comparable sale (self-comparable) and four additional comparables
Exhibit N	Photographs of front elevation of subject property and 7606 Suffolk Avenue
Exhibits O, P	Photographs of the four additional comparables used in Exhibit M
Exhibit Q	Definition of the term CDU and the related codes used by Respondent to rate the overall condition, desirability, and usefulness of a dwelling to assist in valuing the dwelling
Exhibit R	Guidelines used by Respondent to ensure consistent application of grade factors to residential properties in St. Louis County
Exhibit S	Compilation of appraised values of comparables in the subject property’s neighborhood showing CDU for each comparable and noting that five of the properties and the subject property were recent sales and had been “self comparable,” i.e., the recent sales had been used to compare those properties against themselves
Exhibits T, U	Detailed residential review document and property sketch of subject property from Respondent’s mass apparaisal computer program

 

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

Complainant testified on his own behalf.  Complainant testified that he had purchased the subject property in June 2015 for $301,000.  Complainant testified that the subject property had been listed with a realtor and had been publicly advertised.  Complainant testified that the subject property is encumbered by a mortgage but that he was unsure of the balance.  Complainant testified that that the subject property had not been listed for sale since he purchased it and that no offers to purchase the property had been made.  Complainant testified that he did not know what asking price he would place on the subject property if he were to list it for sale.  Complainant testified that the subject property had been appraised within the three years preceding the Evidentiary Hearing but that he did not know the appraisal amount.  Complainant testified that no improvements had been made to the subject property between January 1, 2015, and January 1, 2017.  Complainant opined that the TVM of the subject property as of January 1, 2017, was $243,700.

Complainant testified that he believed that the increase in the subject property’s valuation from the 2015 tax cycle to the 2017 tax cycle was due to Respondent targeting new sales.  Complainant argued that Respondent had engaged in a pattern of manipulation of the comparables in the mass appraisal system to inflate the appraised value of the subject property.  Complainant further argued that there was unequal treatment in assessing properties that had been recently sold versus properties with no recent sales.  Complainant argued that the June 2015 sale of the subject property for $301,000 had been used as a “self-comparable” when Respondent valued the subject property for the 2017 tax cycle.  Complainant alleged that such use of the subject property to value itself was improper.

On cross examination, Complainant testified that he had not requested an appraiser from Respondent’s office to conduct an interior inspection.  In rebuttal, Complainant testified that the ad valorem tax appeal process was new to him and that he did not understand the importance of having an interior inspection to helping him prove his opinion of the TVM of the subject property.

8. Respondent’s Evidence. Respondent advocated that the BOE’s valuation of $274,700 should be affirmed.  To support Respondent’s position, Respondent offered as evidence the following exhibits:

Exhibit 1	BOE Findings and Notice of Decision
Exhibit 2	Certificate of Value related to Complainant’s purchase of the subject property in June 2015 showing a sale price of $301,000
Exhibit 3	MLS/Maris listing for the subject property related to Complainants purchase of the subject property in June 2015 showing a list price of $299,000 and a sale price of $301,000

 

Complainant did not object to Respondent’s exhibits, which were admitted into the record.

9. Presumption of Correct Assessment Not Rebutted. Complainant did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE and to establish the TVM of the subject property as of January 1, 2017, to be $243,700.

CONCLUSIONS OF LAW AND DECISION

Jurisdiction

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

Basis of Assessment

The Constitution mandates that real property and tangible personal property be assessed at its value or such percentage of its value as may be fixed by law for each class and for each subclass.  Article X, Sections 4(a) and 4(b), Mo. Const. of 1945.  The constitutional mandate is to find the true value in money for the property under appeal.  By statute, real property and tangible personal property are assessed at set percentages of true value in money:  residential property at 19%; commercial property at 32%; and agricultural property at 12%.  Section 137.115.5 RSMo (2000) as amended.

Investigation by Hearing Officer

In order to investigate appeals filed with the STC, the Hearing Officer may inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, subclassification, or assessment of the property.  Section 138.430.2 RSMo (2000) as amended.  The Hearing Officer’s decision regarding the assessment or valuation of the property may be based solely upon his inquiry and any evidence presented by the parties or based solely upon evidence presented by the parties.  Id.

Board Presumption and Computer-Assisted Presumption

There exists a presumption of correct assessment by the BOE – the BOE presumption.  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/Respondent 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.

According to Section 137.115, the computer-assisted presumption operates as follows:

In the event a valuation of residential real property within any county with a charter form of government, or within a city not within a county, is made by a computer, computer-assisted method, or a computer program, the burden of proof, supported by clear, convincing, and cogent evidence to sustain such valuation, shall be on the assessor at any hearing or appeal.  In such county, unless the assessor proves otherwise, there shall be a presumption that the assessment was made by a computer, computer-assisted method, or a computer program.  Such evidence shall include, but shall not be limited to an appraisal and the sales prices of at least three comparable properties.

 

In the present appeal, Respondent’s evidence before the STC established that the final valuation of the subject property from which Complainant now appeals was not made by a computer, computer-assisted method, or a computer program; rather, the BOE “reviewed and considered all of the evidence submitted regarding [the] appeal” and determined the TVM of the subject property to be $274,700.  (Exhibit 1)  Complainant now seeks to lower the BOE’s valuation while Respondent seeks to uphold the BOE’s valuation; therefore, the BOE presumption applies to Complainant.  The computer-assisted presumption does not apply in this case.

The Complainant’s Burden of Proof

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 January 1, 2017.  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.

Here, Respondent advocated that the BOE’s valuation should be affirmed.

Presumption in Appeal

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).

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).

Neither Complainant nor Respondent presented expert testimony or evidence.

 

Methods of Valuation

Proper methods of valuation and assessment of property are delegated to the Commission.  It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case.   See, Nance v. STC, 18 S.W.3d 611, 615 (Mo. App. W.D. 2000); Hermel, Inc., 564 S.W.2d at 897; Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975).  Missouri courts have approved the comparable sales or market approach, the cost approach, and the income approach as recognized methods of arriving at fair market value.   St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STC, 789 S.W.2d 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm’n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. 1974).

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

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

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

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.

Discussion

            In this case, while Complainants’ evidence was substantial, it was not persuasive to rebut the presumption of correct assessment by the BOE.  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.

Notably, Complainant did not present evidence using one or more of the three court-approved approaches to valuing property to support his opinion that the TVM of the subject property was $243,700 as of January 1, 2017.  Instead, Complainant argued that his 2015 purchase of the subject property should not be used as a “self-comparable,” which improperly inflated the 2017 appraised value of the subject property by improperly affecting its market value estimate.  In a related argument, Complainant contended that there had been improper changes in the CDU code (from “good” to “very good”) and in the grade factor (from “C” to “B-“) in 2017, which improperly increased the appraised value of the subject property.  Complainant further argued that the 2017 appraised value of the subject property was 27% higher than the 2015 appraised value, triggering the application of Section 137.115.10-.13, Section 138.060, and St. Louis County Ordinance (SLCO) 501.250.  Complainant argued that Respondent did not fulfill the requirements of Section 137.115 in that there were no results from an inspection performed by an employee named “Janet B.,” so Complainant did not know if a prohibited “driveby” inspection or a physical inspection occurred.  Complainant argued that Respondent did not fulfill the requirements of SLCO 501.250 in that he never received any notes from Janet B. concerning the changes in the CDU code and in the grade factor.

The Market Value Estimate of the Subject Property and the Use of a Self-Comparble

First, the evidence established that Respondent’s market value estimate of the subject property was higher than the final appraised value of the subject property.  Using the formula described in Exhibit C, one can calculate the market value estimate of the subject property pursuant to the instructions appearing on Respondent’s website by using the data shown on Exhibit M:

Gather the following data:
Statisical Model Estimate of subject property Weighted Estimate of subject property 7602 Suffolk (self-comparable) 7618 Arlington 7420 Devonshire 5113 Shrewsbury 5014 Lenox	$324,500 $280,300 $286,000 $265,000 $255,600 $304,100 $306,000
Eliminate the two highest and the two lowest estimates:
Statisical Model Estimate of subject property Weighted Estimate of subject property 7602 Suffolk (self-comparable) 7618 Arlington 7420 Devonshire 5113 Shrewsbury 5014 Lenox	$324,500 $280,300 $286,000 $265,000 $255,600 $304,100 $306,000
Average the remaining estimates:
Weighted Estimate of subject property 7602 Suffolk (self-comparable) 5113 Shrewsbury	$280,300 + $286,000 + $304,100 $870,400	$870,400/3 = $290,133
Market Value Estimate	$290,133

 

However, according to Respondent’s website, the market value estimate can be overridden in a final review.  Based on the evidence presented, it is reasonable to infer that an override of the market value estimate occurred to result in a final appraised value of $274,400.  It is also reasonable to infer that an override of the market value estimate was due to the change of the grade factor of the subject property from “B-“ back to “C.”  (See below.)

Second, Exhibit M established that the subject property was used as a “self-comparable” to determine the subject property’s TVM as of January 1, 2017, due to its sale in 2015.  The evidence also established that the data related to the “self-comparable” was flawed because it initially reported the subject property’s grade factor as “Grade B-.”  The subject property’s grade factor is “Grade C.”  (Exhibits M)  However, even if the subject property as a “self-comparable” is eliminated from the market value estimate calculation, above, the recalculated market value estimate is still higher than the final appraised value:  $292,200 versus $274,400.

Third, although Complainant argued that the subject property should have been compared to 7606 Suffolk Avenue, such a comparison would have been improper.  (Exhibit L)  Even though the subject property could be used as a comparable for 7606 Suffolk Avenue because of the similarity of the two properties and because of the recent sale of the subject property, the reverse comparison could not be made because there had been no recent sale of 7606 Suffolk Avenue around the relevant tax date.^[1]  (Exhibit L)  However, the remaining comparables shown on Exhibit M can be compared to the subject property.  Those comparables, 7618 Arlington, 7420 Devonshire, 5113 Shrewsbury, and 5014 Lenox, sold between July 2014 and May 2016.  The sale prices of the comparables ranged from $225,000 to $244,000.  (Exhibit M)  The adjusted sale prices of the comparbles ranged from $255,600 to $306,000.  (Exhibit M)  The BOE’s determination of the TVM of the subject property of $274,700 fell squarely withing the range of the adjusted sale prices of the comparables.  Notably, Complainant paid $301,000 for the subject property in an open-market sale in June 2015, which was 9% more than the 2017 appraised value.^[2]  (Exhibit 2)

Changes to the Grade Factor and to the CDU Code

Complainant testified that the grade factor and the CDU code of the subject property were changed in 2017 without justification and improperly increased the appraised value of the subject property.  Complainant testified that, for the 2017 tax cycle, the grade factor had been changed to a “B-.”  Complainant testified that he did not know the reason the subject property had a CDU code of “very good.”

The definition of “B Grade” is, in pertinent part, “buildings exhibit materials and fixtures of good quality and workmanship. . . . exceeding current code and standards . . . plumbing and heating is of better quality . . . [u]nless of older construction, this grade of home will have been built with at least two attached or basement garage spaces.”  (Exhibits C, R)  The definition of the CDU code “very good” is “to indicate slight evidence of deterioration; still attractive and quite desirable.”  (Exhibits C, Q)    

The record reveals that the subject property was built in 1986 and does not have an attached garage or a basement garage but has a detatched garage.  (Exhibits J, L, N, T)  Complainant testified and Exhibit G showed that the grade factor was changed to “C Grade” in April 2017 after, Janet B., an employee of Respondent’s office, visited the subject property.  Consequently, it is reasonable to infer that the grade factor was changed to “C” following Janet B.’s visit because it was apparent that the subject property had only a detatched garage.  According to Exhibit G, following the change in grade factor, the “computer model was run again and the market value did yield 274,700.”

Complainant testified that he believed the application of the grade factor of “B-“ had contributed to a 27% increase in the appraised value of the subject property from $215,700 in 2015 to $274,700 in 2017.  However, the evidence clearly established that the grade factor of “C” assigned to the subject property was already in place when the 2017 Change of Assessment Notice was sent to Complainant on May 8, 2017; when the summary of the Informal Conference between Complainant and Respondent’s office was sent to Complainant on June 19, 2017; and, later, when the BOE reviewed the evidence and determined the TVM as of January 1, 2017, to be $274,700.  (Exhibits B, D, E)

With regard to the CDU rating of “very good,”  the evidence established that Janet B. conducted an exterior inspection to actually view the subject property.  The evidence also included photographs of the exterior of the subject property as well as the 2015 sale listing description.  (Exhibit 3)  In particular, the sale listing noted the “[f]reshly painted exterior, newer furnace, hot water heater, and newer roof . . . granite countertops and stainless steel appliances.”  Today’s common knowledge of the housing market indicates that buyers find these attributes attractive and quite desirable;  thus, the CDU rating of “very good” was supported by the evidence.

Physical Inspection of Subject Property

Complainant testified that he never received any notes or information explaining the change in the grade factor or the CDU rating based upon Janet B.’s visit to the property.  Complainant argued that he was therefore unsure whether Janet B. had conducted a driveby inspection or a physical inspection.  Complainant argued that, because of these unknowns, he is entitled to judgment as a matter of law pursuant to Section 138.060.1, which provides, in relevant part:

The county board of equalization shall, in a summary way, determine all appeals from the valuation of property made by the assessor, and shall correct and adjust the assessment accordingly.  There shall be no presumption that the assessor’s valuation is correct.  In any county with a charter form of government with a population greater than two hundred eighty thousand inhabitants but less than two hundred eighty-five thousand inhabitants, and in any county with a charter form of government with greater than one million inhabitants, and in any city not within a county, the assessor shall have the burden to prove that the assessor’s valuation does not exceed the true market value of the subject property.  In such county or city, in the event a physical inspection of the subject property is required by subsection 10 of section 137.115, the assessor shall have the burden to establish the manner in which the physical inspection was performed and shall have the burden to prove that the physical inspection was performed in accordance with section 137.115.  In such county or city, in the event the assessor fails to provide sufficient evidence to establish that the physical inspection was performed in accordance with section 137.115, the property owner shall prevail on the appeal as a matter of law.

(Emphasis added.)

 

Section 137.115 provides, in relevant part:

 

10. Before the assessor may increase the assessed valuation of any parcel of subclass (1) real property by more than fifteen percent since the last assessment, excluding increases due to new construction or improvements, the assessor shall conduct a physical inspection of such property.

11.  If a physical inspection is required, pursuant to subsection 10 of this section, the assessor shall notify the property owner of that fact in writing and shall provide the owner clear written notice of the owner’s rights relating to the physical inspection.  If a physical inspection is required, the property owner may request that an interior inspection be performed during the physical inspection.  The owner shall have no less than thirty days to notify the assessor of a request for an interior physical inspection.

12.  A physical inspection, as required by subsection 10 of this section, shall include, but not be limited to, an on-site personal observation and review of all exterior portions of the land and any buildings and improvements to which the inspector has or may reasonably and lawfully gain external access, and shall include an observation and review of the interior of any buildings or improvements on the property upon the timely request of the owner pursuant to subsection 11 of this section.  Mere observation of the property via a drive-by inspection or the like shall not be considered sufficient to constitute a physical inspection as required by this section.

13.  The provisions of subsections 11 and 12 of this section shall only apply in any county with a charter form of government with more than one million inhabitants.

 

SLCO 501.250 provides:

(A) ”Drive-by” inspections shall not constitute physical inspections for purposes of determining the appraised valuation of any parcel of residential real property located within St. Louis County.

 

(B) Whenever the assessor or any person acting on the assessor’s behalf shall perform an inspection of any parcel of residential real property for the purpose of determining the appraised valuation of such parcel pursuant to the six-year review set forth in the County’s assessment plan or pursuant to state law due to an increase of more than seventeen (17) percent in the property’s appraised valuation, the assessor or such person acting on the assessor’s behalf shall:

 

1. Attempt to visually inspect all sides of the exterior of any structure on the property. Unless authorized by the property owner or occupant, the assessor or his representative shall perform the inspection from the property line and the sidewalk, driveway or other walkway leading to the front entrance of the property. The assessor or his representative shall request permission from the owner or occupant of any residence to enter onto the property for purposes of making an exterior inspection. If permission is granted, the assessor or his representative shall conduct such inspection as is authorized by the property owner or occupant. If permission is refused, or if the owner or occupant is not available, the assessor or his representative shall visually inspect any structure on the property from the property line and from the sidewalk, driveway or other walkway leading to the front entrance of the property. The assessor or his representative shall perform the inspection of the property to the fullest extent possible without crossing through or over any natural or artificial barriers such as landscaping, gates or fencing, and without entering the rear or side yard of such property, if any. If at any time during the performance of the exterior inspection the assessor or his representative is requested to leave the property by the owner or occupant of said property, the assessor or his representative shall promptly leave the property and complete the exterior inspection from the property line; and

 

2. Notify the owner of the property, both by leaving a notice on the premises at the time of the inspection and by mailing a notice to such owner, that the owner is entitled to an inspection of the interior of the property if the owner wishes to have such an inspection, and further notifying such owner of the process required to arrange for such an interior inspection. Said notice shall include the name and identification number of the inspector, the date, time and extent of the exterior inspection and the telephone number of the Assessor’s Office.

 

3. Shall have a copy of the property record card or other record from the Assessor’s Office which lists the physical attributes of the property being inspected; and shall make and keep notes of the condition of the property and the structures located thereon, and record any variation from the information contained in the property record card for said parcel.

 

(C) In the event the assessor or any person acting on the assessor’s behalf to perform inspections is unable or otherwise prevented from visually inspecting any side of the exterior of the premises, or in the event that the owner or occupant has refused the assessor or his representative permission to enter onto the property for purposes of conducting the exterior inspection, or has requested the assessor or his representative to leave the property prior to the completion of the exterior inspection, said owner shall be notified by the Assessor in writing by mail that the exterior inspection was performed from the property line and the sidewalk, driveway or other walkway leading to the front entrance of the property, and that a complete exterior inspection may be requested by the property owner. The written notification shall inform the owner of the process required to arrange for an exterior inspection, and of the time period within which an exterior physical inspection may be performed before the close of the next reassessment cycle. Said notice shall also include the name and identification number of the inspector, the date, time the inspector attempted to perform the exterior inspection and the telephone number of the Assessor’s Office.

 

(D) Any notice of assessment sent by St. Louis County to any property owner shall include a separate notice which allows the property owner to indicate by a check-off and signature whether said property owner grants or refuses authorization for an inspector to enter upon the property for the purpose of performing a physical inspection of all sides of the exterior of any structure located on such property. The property owner shall be informed of his or her right to have such authorization or refusal to be kept in the property file maintained by the Assessor’s Office. The Assessor shall be obligated to maintain any written authorization or refusal returned to the Assessor by the property owner in the property file maintained by the Assessor’s Office, and shall comply with such authorization or refusal unless otherwise instructed by the property owner. No authorization to perform an exterior inspection shall extend to any future purchaser of said property.

 

(E) In the event that the assessor or any person acting on the assessor’s behalf has reasonable belief, based upon observations made while conducting an exterior inspection of a parcel of property, that improvements have been made to the property which are not reflected on the property record card or other records of the Assessor, and full access to the exterior of the property has not been authorized by the property owner or is otherwise not possible, then the appraised value of the property may include a good faith reasonable estimation of the value added by said improvements, which shall be recorded on the property record card or other records maintained by the Assessor. The property owner shall be notified in writing that the Assessor is relying upon an estimated valuation of added value of the improvements, the reason why the Assessor is relying upon an estimated valuation, and that the property owner may request a full exterior and/or interior inspection by the Assessor.

 

In this case, Complainant is not entitled to judgment as a matter of law.  The evidence established that Janet B. left a notice of inspection at the subject property on April 5, 2017, at 9:50 a.m.  (Exhibit A)  On the notice, a mark was placed next to the reason for the inspection:  increase of more than 15% in a property’s appraised value, excluding increases due to new construction or improvements.  The notice explained that Janet B. had performed an exterior inspection from the property line and walkway leading to the front door.  (Exhibit A)  On cross-examination, Complainant testified that he did not request an interior inspection even though the notice informed Complainant that he was entitled to a more complete exterior inspection and an interior inspection by calling Respondent’s office within 30 days of the date on the notice.  (Exhibit A)  This evidence established that the requirements of Sections 137.115 and 138.060.1 were satisfied.

Moreover, although it is not within the purview of the STC to interpret local county ordinances, the evidence in this case established that Respondent complied with SLCO 501.250.  Specifically, Complainant’s Exhibits T and U were copies of the property record card for the subject property obtained from Respondent’s office.  The property record card listed the physical attributes of the subject property, including a grade factor of “C” and a CDU rating of “very good.”

ORDER

The TMV for the subject property as determined by the BOE is AFFIRMED.  The assessed value for the subject property for tax year 2017 is set at $52,136 residential ($274,400 TVM).

Application for Review

A party may file with the STC an application for review of this decision within thirty days of the mailing date set forth in the Certificate of Service for this Decision.  The application shall contain specific facts or law as grounds upon which it is claimed the decision is erroneous.  Said application must be in writing addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.

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

Disputed Taxes

The Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 139.031.8, RSMo.

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

 

SO ORDERED April 17, 2018.

STATE TAX COMMISSION OF MISSOURI

Amy S. Westermann

Senior Hearing Officer

 

Certificate of Service

I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 17th day of April, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.

 

Jacklyn Wood

Legal Coordinator

 

^[1] According to the St. Louis County Real Estate Database, the most recent sale of 7606 Suffolk Avenue occurred in 2006.  The sale was deemed a valid sale.  The sale price was $270,500.

^[2] The Supreme Court of Missouri has held that evidence of the actual sales 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).