State Tax Commission of Missouri
|JEREMIAH & CATHERINE CAREW||)|
|v.||)||Appeal No. 13-10398|
|JAKE ZIMMERMAN, ASSESSOR||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
Decision of the County Board of Equalization for St. Louis County affirming the assessment made by the Assessor is SET ASIDE. Complainant presented substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization.
True value in money for the subject property for tax years 2013 and 2014 is set at $402,920, residential assessed value of $76,550.
Complainant appeared by counsel Patrick Keefe.
Respondent appeared by attorney Kathryn Linnenbringer.
Case heard and decided by Senior Hearing Officer John Treu.
Complainant appeals, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property. Complainant chose not to pursue the discrimination claim. The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2013. 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 and improvement to the property. Section 137.115.1 RSMo
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.
- Evidentiary Hearing. The Evidentiary Hearing was held on April 20, 2015 at St. Louis County Administration Building, Clayton, Missouri.
- Identification of Subject Property. The subject property is identified by map parcel number or locator number 20N140275. It is further identified as 152 Frontenac Forest Street, St. Louis, Missouri in St. Louis County, Missouri. (Ex. A, B & 1)
- Description of Subject Property. The subject property consists of a 41,818 square foot tract of land improved by a single family, residential one story style home, with a gross living area of 2,360 square feet. Amenities include three bedrooms, two and a half bathrooms, a two car garage, two fireplaces and a patio. The age of the property is 57 years. It is located in the Frontenac Forest Subdivision. (Ex. A)
- Assessment. The Assessor appraised the property at $458,500, residential. The Board of Equalization sustained such value. (Ex. 1)
- Complainant’s Evidence. Complainant offered into evidence Exhibit A and Exhibit B. Exhibit A consisted of an Appraisal Report prepared by Ronald P. Keeven, opining a true market value of the subject property to be $381,000. Exhibit B consisted of the Written Direct Testimony of Mr. Keeven. Both were received into evidence without objection.
- No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2013, to January 1, 2014; therefore the assessed value for 2013 remains the assessed value for 2014. Section 137.115.1, RSMo.
- Respondent’s Evidence. Respondent offered into evidence Exhibits 1 and Exhibit 2. Exhibit 1 consisted of the Board of Equalization Decision regarding the subject property. Exhibit 2 consisted of a list of sales of properties within the Frontenac Forest subdivision. Exhibit 1 was received into evidence without objection. Exhibit 2 was objected to on the grounds that the documents and the identity of Mr. Keeven as an expert witness were not supplied during discovery to Complainant’s counsel and to the extent they would be used beyond rebuttal evidence. The objections were overruled other than as to not allowing the exhibits to be used as direct evidence. See Discovery Issues infa.
- Presumption of Correct Assessment Rebutted. Complainant’s evidence was sufficiently substantial and persuasive to rebut the presumption of correct assessment by the Board and to allow the establishment of the true value in money as of January 1, 2013. See, Complainant Presents Evidence Establishing Value and Discovery Issues infra.
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. 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. 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 and tangible personal property are assessed at set percentages of true value in money. Section 137.115.5, RSMo – residential property at 19% of true value in money.
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. This presumption is a rebuttable rather than a conclusive presumption. It places the burden of going forward with some substantial evidence on the taxpayer – Complainant. 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).
Board Presumption and Computer-Assisted Presumption
There exists a presumption of correct assessment by the Board of Equalization. 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 Board 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 Board, then it also would be applicable to the Respondent. The computer-assisted presumption only comes into play if the Board of Equalization lowered the value of the Assessor and Respondent is seeking to sustain the original assessment. The Board valuation is assumed to be an independent valuation when addressing these issues. In the present appeal the Board of Equalization sustained the valuation of the Assessor and therefore the computer-assisted presumption does not come into play.
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, 2013. Hermel, supra. 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). A valuation which does not reflect the fair market value (true value in money) of the property under appeal is an unlawful, unfair and improper assessment.
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 a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price is not affected by undue stimulus.
Implicit in this definition are the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby:
- Buyer and seller are typically motivated.
- Both parties are well informed and well advised, and both acting in what they consider their own best interests.
- A reasonable time is allowed for exposure in the open market.
- Payment is made in cash or its equivalent.
- Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
- The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction. Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; See also, Real Estate Valuation in Litigation, J. D. Eaton, M.A.I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80; Uniform Standards of Professional Appraisal Practice, Glossary.
Investigation by Hearing Officer
In order to investigate appeals filed with the Commission, the Hearing Officer may inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, sub-classification or assessment of the property. 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. Section 138.430.2, RSMo.
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).
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).
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 State Tax Commission 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, none or parts of the expert’s testimony. 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).
The Hearing Officer utilized the wide discretion afforded him in determining how discovery issues were addressed and if any sanctions were appropriate. The Hearing Officer limited the sanctions to the level appropriate to address to serve the purposes of discovery.
In the present appeal, Respondent’s Exhibit 2 was not disclosed to Complainant’s counsel in discovery. It also was not filed as an exhibit to be used in Respondent’s case in chief. Based upon listening to the transcript, the Hearing Officer believes Respondent used such as both impeachment evidence and contradiction evidence, which are different. Impeachment evidence is used to challenge the credibility of a witness’s testimony and/or opinions. Contradiction evidence is used as substantive evidence.
As to the issue of Exhibit 2 not being produced to Complainant’s counsel in discovery, Fairbanks v. Weitzman, 13 S.W.3d 313 (Mo. App. 2000) states the following regarding sanctions:
A trial court has discretion in the choice of remedies in response to the failure to disclose evidence or witnesses during discovery. Wilkerson, 943 S.W.2d at 648. … “Judicial discretion is abused when the trial court’s ruling is clearly against the logic of the circumstances then before the court and is so arbitrary and unreasonable as to shock the sense of justice and indicate a lack of careful consideration.” Wilkerson, 943 S.W.2d at 648 (internal quotation marks omitted) (quoting Anglim v. Missouri Pacific R.R., 832 S.W.2d 298, 303 (Mo. banc), cert. denied, 506 U.S. 1041, 113 S.Ct. 831, 121 L.Ed.2d 701 (1992)). …“Any Rule 61.01 sanction in excess of that which is necessary to accomplish the purposes of discovery may be an abuse of discretion.” J.B.C. v. S.H.C., 719 S.W.2d 866, 872 (Mo. App. E.D.1986).
In the present appeal, it is the understanding of the Hearing Officer that Respondent did not respond to Complainant’s discovery requests at all. However, no Rule 61.01 Motion to Compel responses was filed by Complainant’s counsel, which could have mitigated the discovery issues at the Evidentiary Hearing. Nevertheless, an appropriate balance must be reached to not condone Respondent’s failure to answer discovery, to recognize that the issue could potentially have been mitigated, to serve the purposes of discovery and to serve the ends of justice and fair play.
The Hearing Officer believes that Exhibit 2 was appropriately used for both impeachment and contraction purposes of Complainant’s appraiser. The Hearing Officer believes that Exhibit 2 was appropriately used as impeachment evidence to initially challenge whether Complainant’s appraiser conducted a sufficient investigation and search for possible comparables, closer to the subject property in distance and within the subjects neighborhood. The Hearing Officer also believes such was appropriately used to establish that other comparables within the Frontenac Forest subdivision could have been utilized and that all sales prices within Exhibit 2 were well above the value ascribed by Complainant’s appraiser to the subject property and above the value of the Assessor, which was sustained by the Board of Equalization, even as to the two properties in Exhibit 2 which were purchased as tear-downs.
In the end, it came out that Complainant’s appraiser had actually looked at the potential use of several of the properties listed in Exhibit 2. Thus, the Hearing Officer finds not substantial prejudice to Complainant in their limited use by the Hearing Officer. Notwithstanding such, none of the values within Exhibit 2 were considered by the Hearing Officer as substantive evidence of the exact dollar figure ascribed to the sale price of each comparable or as to the actual value of the subject property. The Hearing Officer believes this constitutes an appropriate balance in this particular appeal. This is not to say that subsequent discovery failures by the Respondent will not result in harsher sanctions, based upon the particulars of another appeal or based upon the cumulative discovery failures presented to or known to the State Tax Commision.
Complainant Presents Evidence Establishing Value
Complainant ultimately presented substantial and persuasive evidence to allow the establishment of a fair market value as of January 1, 2013, to be $402,920 for the subject property. Mr. Keeven identified five comparables in his appraisal. He made adjustments based upon various differences between the comparables. Complainant’s appraiser developed an opinion of value relying upon an established and recognized approach for the valuation of real property, the sales comparison or market approach. The sales comparison approach is generally recognized to be the most reliable methodology to be utilized in the valuation of single-family residences.
Nevertheless, Respondent adequately impeached Complainant’s appraiser on various issues, including, but not limited to, why he went outside the Frontenac Forest subdivision for comparables and as to condition of property considerations. Complainant’s appraiser equivocated as to his basis of belief as to the condition of the subject property. He did an exterior viewing of the subject property. Although he thought that someone in his office had talked to the homeowner of the subject property, he stated he was “assuming” someone in his staff talked to the owner. When asked why he did not do an interior inspection of the subject property he stated he “didn’t think PAR wanted me to go into this house…” Thus, the Hearing Officer is not confident that any decisions by Complainant’s appraiser regarding the condition of the subject property lay on a sound foundation.
Additionally, Exhibit 2 showed that comparable properties within a unique neighborhood, Frontenac Forest, were available for use as comparables. Complainant’s appraiser had actually considered the use of several of the properties listed in Exhibit 2, yet chose to go outside the Frontenac Forest subdivision for his fiver comparables. Of the comparables used by Complainant’s appraiser, comparables #1 and #5 were the closest to Frontenac Forest subdivision. The Hearing Officer believes the use of Complainant’s appraisers comparable #5 is the most appropriate comparable to use for the value of the subject property, to better reflect what a property within the Frontenac Forest subdivision would have commanded in the open market on January 1, 2013. The adjusted sales price of such comparable was $402,920.
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Louis County for the subject tax day is SET ASIDE. The true market value of the subject property for tax years 2013 and 2014 is set at $402,920. The assessed value for the subject property for tax years 2013 and 2014 is set at $76,550.
Application for Review
A party may file with the Commission an application for review of this decision within thirty days of the mailing date set forth in the Certificate of Service for this Decision. The application shall contain specific facts or law as grounds upon which it is claimed the decision is erroneous. Said application must be in writing addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.
Failure to state specific facts or law upon which the application for review is based will result in summary denial. Section 138.432, RSMo
The Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 139.031.8, RSMo.
Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed. Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.
SO ORDERED this 4th day of May, 2015.
STATE TAX COMMISSION OF MISSOURI
Senior Hearing Officer
Delivery or Notice was made via mail, email, fax, or personally on May 4th, 2015, to the following Individuals of this Order
Patrick Keefe, Attorney for Complainants, email@example.com
Kathryn Linnenbringer, Assistant County Counsel, Attorney for Respondent, KLinnenbringer@stlouis.com
Jake Zimmerman, Assessor, firstname.lastname@example.org
Mark Devore, Collector, email@example.com
Contact Information for State Tax Commission:
Missouri State Tax Commission
301 W. High Street, Room 840
P.O. Box 146
Jefferson City, MO 65102-0146