State Tax Commission of Missouri
JAY STUART & LINDA B. GOLDMAN,)
v.) Appeal Number 07-11479
PHILIP MUEHLHEAUSLER, ASSESSOR,)
ST. LOUIS COUNTY,MISSOURI,)
DECISION AND ORDER
Decision of the St. Louis County Board of Equalization reducing the assessment made by the Assessor is SET ASIDE.Hearing Officer finds presumptions of correct assessment rebutted. True value in money for the subject property for tax years 2007 and 2008 is set at $715,390, residential assessed value of $135,930.
Complainants appeared pro se.
Respondent appeared by Counsel, Paula J. Lemerman, Associate County Counselor.
Case heard and decided by Hearing Officer Maureen Monaghan.
The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2007.
Complainants appeal, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which reduced the valuation of the subject property.The Assessor determined an appraised value of $936,200, assessed value of $177,880, as residential property.The Board of Equalization reduced the value to $800,000, assessed value of $152,000 assessed value.Complainants proposed a value of $600,000, assessed value of $114,000.A hearing was conducted on June 25, 2008, at theSt. LouisCountyGovernmentCenter,Clayton,Missouri.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
The Complainants appeared in person and testified at the hearing.They also presented the testimony and report of a Missouri Certified Residential Appraiser who testified that her opinion of value of the property as of October 18, 2007, was $640,000.The Complainants offered the following exhibits:
A.Appraisal Report of Sandra Matthes
B.Internet report on property at28 Vouga Lane
C.Internet report on property at 112 FrontenacForest
D.Bids to Repair and Photographs of Property
E.Internet report on properties
F.Summary of assessment record on subject property
Exhibits A and D were admitted into evidence.
Exhibits B, C, E and F were not admitted into evidence.
Respondent placed into evidence the testimony of Mr. Koch, appraiser forSt. LouisCounty.The appraiser testified as to his appraisal of the subject property.The Appraisal Report, Exhibit 1, of Mr.Koch was received into evidence.Mr. Kocharrived at an opinion of value for the subject property of $770,000 based upon a sales comparison approach to value.
FINDINGS OF FACT
1.Jurisdiction over this appeal is proper.Complainants timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.
2.The subject property is located at 3 Country Estates Place, Frontenac,Missouri.The property is identified by locator number 20N610163.The property consists of62,509 square foot lot improved by a one-story brick, ranch, single-family structure of good quality construction.The house is 48 years of age and appears to be in average to good condition.The residence has a total of 9 rooms, which includes 4 bedrooms, 2.5 baths. The residence has 3,639 square feet of gross living area if the enclosed porch with heating and cooling is included in the square footage.There is a full, partially finished basement and an attached two-car garage.
The property does suffer from water issues.The Complainants attempted to relieve the problem by digging shallow trenches on the property.After having an inspection of the property, the Complainant’s learned that there is water damage behind the paneled walls in the basement and the property is in need of piering, sump pump and drainage.There are additional repairs needed such as pool decking.The total repairs is $45,470.
The property had an outdated kitchen which included laminate countertops which is not the typical finish for kitchens in this area.In 2007, the Complainants replaced their appliances and countertops with higher grade materials.
3.The Complainants’ appraiser developed a sales comparison approach using four sale properties and one listing.The properties relied upon by Complainants’ appraiser in performing her appraisal were comparable to the subject property for the purpose of making a determination of value of the subject property. The properties were located within 2.56 miles of the subject.Each sale property sold at a time relevant to the tax date of January 1, 2007.The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability.
4.The comparables were described as follows:
Comparable 1 sold in August 2007 for $650,000.This property consists of a 1 acre lot improved by a one-story single-family structure of good quality construction.The house is 48 years of age and appears to be in good condition.The residence has a total of 8 rooms, which includes 3 bedrooms, 2 baths, and contains 2,256 square feet of living area.There is a full basement, which is mostly finished.There is an attached two-car garage.
Comparable 2 sold in June 2007 for $620,000.This property consists of a 1 acre lot and was improved by a 1.5-story single-family structure of good quality construction.The house was 3,509 square feet and was 68 years of age. The residence had a total of 9 rooms, which includes4 bedrooms, 3 baths, and contained 3,509 square feet of living area.There was a full basement which was mostly finished and an attached two-car garage.Upon cross examination it was learned that the house was sold in November 2005 for $793,000.The sale in June 2007 for $620,000 was a land only sale as the residence sustained damage from a fire.
Comparable 3 sold in August 2007 for $639,000.This property consists of a 1 acre lot improved by a one-story single-family structure of good quality construction.The house is 47 years old and appears to be in good condition.The residence has a total of 8 rooms, which includes 3 bedrooms, 2 full and one half bath, and contains 2,716 square feet of living area.There is a full basement which is mostly finished.There is an attached two-car garage.
Comparable 4 sold in July 2007 for $627,000.The residence is in a different school district and was a foreclosure property.
Comparable 5 was an active listing.
5.The appraiser made various adjustments to the comparable properties for differences which existed between the subject and each comparable.The appraiser made a positive $2000 adjustment on all of the properties for the difference in the lot size – the subject being 1.44 acres and the comparables 1 acre.The appraiser admitted that the adjustment should have been larger.All adjustments appear to be appropriate to bring the comparables in line with the subject for purposes of the appraisal problem.
6.The net adjustments for Comparables 1 and 3 amounted to $30,500 and $25,000 or 4.7% and 3.9% of the sales price.The adjusted sales prices for Comparables 1 and 3 calculated to $680,500 and $664,000 respectively.
7.The appraiser also developed a cost approach however, her land valuation is based upon a percentage of the cost to rebuild the residence rather than a vacant land sale.
8.Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2007, to be $640,000, as proposed.
9.The Respondent’s appraiser developed a sales comparison approach using three sale properties.The properties relied upon by Respondent’s appraiser in performing his appraisal were comparable to the subject property for the purpose of making a determination of value of the subject property. The properties were located within .74 miles of the subject.Each sale property sold at a time relevant to the tax date of January 1, 2007.The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability.
10.The comparables were described as follows:
Comparable 1 sold in May 2005 for $729,000.This property consists of a 1 acre lot improved by a one-story brick single-family structure of good quality construction.The house is 45 years of age and appears to be in average to good condition.The residence has a total of 8 rooms, which includes 4 bedrooms, 2.5 baths, and contains 3,105 square feet of living area.There is a full basement, which is partially finished.There is an attached three-car garage.
Comparable 2 sold in July 2006 for $690,000.This property consists of a 1 acre lot and was improved by a single story brick single-family structure of good quality construction.The house is 3,216 square feet and is 46 years of age. The residence has a total of 8 rooms, which includes3 bedrooms, 2.5 baths, and contains 3,216 square feet of living area.There is a partial basement which is partially finished and an attached two-car garage.
Comparable 3 sold in November 2005 for $740,000.This property consists of a 1 acre lot improved by a one-story brick single-family structure of good quality construction.The house is 41 years old and appears to be in good to very good condition.The residence has a total of 8 rooms, which includes 3 bedrooms, 2 full and one half bath, and contains 2,881 square feet of living area.There is a basement which is partially finished.There is an attached four-car garage.
11.The appraiser made various adjustments to the comparable properties for differences which existed between the subject and each comparable.The appraiser made adjustments for time of sale, size of the site, gross living area, basement finish and a negative $25,000 for the drainage issue.The appraiser inspected the property in 2008.When viewing the property, the kitchen had been updated and the appraiser did not make an adjustment for an outdated kitchen.The installation of updated appliances and upgraded countertops occurred late in 2007.
12.The net adjustments for ranged from $39,600 to $69,500 or 5.4% to 10.1% of the sales price.
13.The adjusted sales prices for Comparables 1, 2 and 3 calculated to $773,500, $759,500, and $779,600 respectively.
CONCLUSIONS OF LAW AND DECISION
The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious.Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, RSMo.The hearing officer shall issue a decision and order affirming, modifying or reversing the determination of the board of equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious.Section 138.431.4, RSMo.
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STC, 308 S.W.2d 748, 759 (Mo. 1958).
The presumption in favor of the Board is not evidence.A presumption simply accepts something as true without any substantial proof to the contrary.In an evidentiary hearing before the Commission, the valuation determined by the Board, even if simply to sustain the value made by the Assessor, is accepted as true only until and so long as there is no substantial evidence to the contrary.
The presumption of correct assessment is rebutted when the taxpayer, or respondent when advocating a value different than that determined by the Board, 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)
Standard for Valuation
Section 137.115, RSMo, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so.St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993); Missouri Baptist Children’s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993).It is the fair market value of the subject property on the valuation date.Hermel, supra.
Market value is the most probable price in terms of money which a property should bring in competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price is not affected by undue stimulus.
Implicit in this definition are the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby:
1.Buyer and seller are typically motivated.
2.Both parties are well informed and well advised, and both acting in what they consider their own best interests.
3.A reasonable time is allowed for exposure in the open market.
4.Payment is made in cash or its equivalent.
5.Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
6.The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction.
Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; See also, Real Estate Valuation in Litigation, J. D. Eaton, M.A.I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80; Uniform Standards of Professional Appraisal Practice, Glossary.
Weight to be Given Evidence
The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled.The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide.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).
Trier of Fact
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 he may deem it entitled to when viewed in connection with all other circumstances.The Hearing Officer is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert’s testimony and accept it in part or reject it in part.St. Louis County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).
Methods of Valuation
Proper methods of valuation and assessment of property are delegated to the Commission.It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case.See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra;Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975).
Missouricourts have approved the comparable sales or market approach, the cost approach and the income approach as recognized methods of arriving at fair market value. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STC, 789 S.W.2d 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm’n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. Div. 2 1974).
Opinion Testimony by Experts
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. SC. 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).
Respondent’s Burden of Proof
Respondent, when advocating a value different from that determined by the original valuation or a valuation made by the Board of Equalization, must meet the same burden of proof to present substantial and persuasive evidence of the value advocated as required of the Complainant under the principles established by case law.Hermel, Cupples-Hesse, Brooks, supra.
Complainants’ Burden of Proof
In order to prevail, Complainants must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2007.Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, at 897. There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a Commission appeal still bears the burden of proof.The taxpayer is the moving party seeking affirmative relief.Therefore, the Complainant bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.” See, Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003); Daly v. P. D. George Co., 77 S.W.3d 645 (Mo. App. E.D. 2002); Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003).Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991).
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.See, Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact.The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief.Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.Rigali v. Kensington Place Homeowners’ Ass’n, 103 S.W.3d 839, 846 (Mo. App. E.D. 2003); Boten v. Brecklein, 452 S.W.2d 86, 95 (Sup. 1970).The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.Cohen v. Bushmeyer, — S.W.3d —-, 2008 WL 820938 (Mo.App. E.D., March 25, 2008); Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992); State, ex rel. Missouri Hwy & Transp. Com’n v. Pracht, 801 S.W.2d 90, 94 (Mo. App. E.D. 1990); Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965).“Where the basis for a test as to the reliability of the testimony is not supported by a statement of facts on which it is based, or the basis of fact does not appear to be sufficient, the testimony should be rejected.”Carmel Energy at 783.
A taxpayer does not meet his burden if evidence on any essential element of his case leaves the Commission “in the nebulous twilight of speculation, conjecture and surmise.” See, Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980).
Hearing Officer Finds Value
The present case provides a record in which two state certified appraisers have developed appraisal reports utilizing the two recognized approaches to value.When two appraisals are presented, both must be considered and varying degrees of weight will be accorded to different aspects of each appraisal.
The Complainant’s appraiser developed two approaches for value.The Hearing Officer places most weight on the sales comparison approach as the appraiser determined a land value using a percentage of the replacement cost rather than using vacant land sales.The Hearing Officer did not consider Comparable 2 as the sale was for the land only, Comparable 4 which was a foreclosure or Comparable 5 which was a listing.The adjusted sale prices for Comparable 1 and 3 were $680,500 and $664,000.The average of the values of the two properties is $672,250.The appraiser conceded on cross examination that her land adjustment was too low.Making a positive adjustment for the land difference of $20,000 the resulting value is $692,250.
The appraiser for the Respondent also developed a sales comparison approach.The appraiser stated that Comparable Sale 2 was one of the best available indicators of value for the subject.The adjusted sales price for Comparable 2 was $759,500.One of the adjustments made to the sales price was a negative adjustment of $25,000 for the drainage.If the additional repair costs are considered, the adjusted sales price is $738,530.
The remaining differences between the appraisal reports is the valuation of the enclosed porch and the valuation of the kitchen.The appraiser for the Respondent included the porch in the gross living area since the area is heated and cooled; the appraiser for the Complainant included the porch as an added amenity in porch/patio/deck.The appraiser for the Respondent saw the kitchen after it was updated with new appliances and granite countertops; the appraiser for the Complainant valued the house with laminate countertops and as of October 28, 2007.
After review of both appraisal reports and all approaches to value, the Hearing Officer has determined that $715,400 is the appropriate valuation for the property as of January 1, 2007.
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization forSt. LouisCountyfor the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2007 and 2008 is set at $135,930.
A party may file with the Commission an application for review of this decision within thirty (30) days of the mailing of such decision.The application shall contain specific grounds upon which it is claimed the decision is erroneous.Said application must be in writing addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.
Failure to state specific facts or law upon which the appeal is based will result in summary denial.Section 138.432, RSMo 2000.
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 a filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of 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 8, 2008.
STATE TAX COMMISSION OFMISSOURI
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 8thday of July, 2008, to:Jay Goldman, #3 Country Estates, St. Louis, MO 63131, Complainant; Paula Lemerman, Associate County Counselor, Attorney for Respondent; Philip A. Muehlheausler, Assessor; John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.