Jerry & June Rowlett v. Jama Berry, Assessor Ozark County

November 13th, 2018

STATE TAX COMMISSION OF MISSOURI

 

JERRY & JUNE ROWLETT, )    
  )    
              Complainants, )    
  )    
v. ) Appeal No. 18-76001  
  ) Parcel 23-0.2-03-000-000-0017.00  
JAMA BERRY,  ASSESSOR, )  
OZARK COUNTY, MISSOURI, )    
  )    
              Respondent )    

 

DECISION AND ORDER

 

HOLDING

 

The assessment made by the Board of Equalization of Ozark County (BOE) is AFFIRMED.  Complainants Jerry and June Rowlett (Complainants) failed to present substantial and persuasive evidence to rebut the presumption of correct valuation of the subject property as of January 1, 2017 and failed to present substantial and persuasive evidence of discrimination.

Complainants appeared pro se.

Respondent Jama Berry, Assessor, Ozark County, Missouri, (Respondent) appeared pro se.

Case heard and decided by Senior Hearing Officer John Treu (Hearing Officer).

ISSUE

Complainants appealed on the grounds of overvaluation and discrimination.  Respondent set the true value in money (TVM) of the subject property at $37,600 residential and $800 agricultural.  The BOE sustained the valuations.  The State Tax Commission (STC) takes this appeal to determine the TVM for the subject.

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.  Complainants timely appealed to the State Tax Commission.
  2. Evidentiary Hearing. The issues of overvaluation and discrimination were presented at an evidentiary hearing on October 17, 2018, at the Ozark County Courthouse, Gainesville, Missouri.
  3. Identification of Subject Property. The subject property is identified by parcel/locator number 23-0.2-03-000-000-0017.00.  It is further identified as 14411 County Road 522, Gainesville, Missouri.  (Complaint)
  4. Description of Subject Property. The subject property consists of an approximate 11 acre lot improved by a mobile home.  An 18’ x 24’ deck was added in 2016.  The property has a well and septic tank.
  5. Assessment. In 2018 Respondent set the TVM of the subject property at $37,600 residential and $800 agricultural.  1 acre of land is assessed as residential.  10 acres of land are assessed as agricultural.
  6. Board of Equalization. The BOE set the TVM of the subject property at $37,600 residential and $800 agricultural.
  7. Complainants’ Evidence. Complainants opined that the subject property was overvalued and that other properties were not treated the same as the subject property.  To support their opinion of value and discrimination, Complainants offered the following evidence:
Exhibit Description Ruling
Exhibit A Property Record Card (PRC) for Subject Property Admitted
Exhibit B Deck Materials Estimate Admitted
Exhibit C Google Earth View of Subject Property Admitted
Exhibit D Google Earth View of Area Admitted
Exhibits E to I PRC’s of Complainants’ Comparables Admitted
Exhibit J Letter From Century 21 Agent Admitted

 

  1. Respondent’s Evidence. Respondent testified that based upon her small acreage study the 1 acre home site has a value of $13,080, with the well and septic adding $8,700 in value to the land for a total land value of $21,800.  Respondent offered evidence that the TVM of the residential improvement is $15,800.  Respondent offered evidence that the remaining 10 acres was valued at an agricultural productivity TVM of $800 agricultural.  Respondent testified the subject property is considered to be “lake influenced” property.  Respondent testified that Complainants were mistaken in their belief that she had valued their deck at $8,700 while not valuing others decks at such value.  To support her case, Respondent offered the following evidence:
Exhibit Description Ruling
Exhibit 1 Small Acreage Study Admitted
Exhibit 2 Average Cost of Well Drilling Admitted
Exhibit 3 Average Cost of Septic System Installation Admitted
Exhibit 4 Map and 10 CSR 23-3.090 Admitted
Exhibit 5 Estimate of Cost of Well Admitted
Exhibit 6 Cost of Well Receipt Admitted
Exhibit 7 Map Admitted
Exhibit 8 Property Record Card for Other Property Admitted
Exhibit 9 Property Record Card of Subject Property Admitted
Exhibit 10 Septic Tank and Well Drilling Quotes Admitted
Exhibit 11 Small Acreage Chart by Category and Acres Admitted

 

  1. Presumption of Correct Valuation Not Rebutted and No Discrimination Shown. Complainants’ evidence was not substantial and persuasive to rebut the presumption of correct valuation by the BOE and also was not substantial and persuasive to prove discrimination.

CONCLUSIONS OF LAW AND DECISION

Jurisdiction

The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary, or capricious, including the application of any abatement.  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 TVM for the property under appeal.  By statute, real property and tangible personal property are assessed at set percentages of TVM:  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 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, 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.

The Hearing Officer heard the testimony and reviewed the exhibits provided as evidence on the issues of the overvaluation and discrimination for the subject property.

Complainant’s Burden of Proof

There exists a presumption of correct assessment by the BOE – the BOE presumption.  The BOE presumption operates in every case to require the taxpayer to present evidence to rebut it.  In the present appeal, the BOE sustained both the valuation and classification of Respondent.  The issues before the STC are (1) whether the BOE properly valued the subject property at $38,400; and (2) whether Respondent discriminated against Complainants.  Complainants are seeking to change the valuation.  Respondent is seeking to affirm the BOE’s determination.  Complainant must rebut the presumption by substantial and persuasive evidence to prevail.

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.  The taxpayer in a STC 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.”  Westwood Partnership, 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. W.D. 1991).

Claim of Overvaluation

To obtain a reduction in assessed valuation based upon an alleged overvaluation, the Complainants must prove the TVM of the subject property on the subject tax day.  Hermel, Inc., v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978).  TVM 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).  TVM 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, TVM is the fair market value of the subject property on the valuation date.  Hermel, Inc., 564 S.W.2d at 897.  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.

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 Commission “in the nebulous twilight of speculation, conjecture and surmise.”  See Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469 (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 TVM 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).

In this case, neither party presented expert testimony and evidence.

Official and Judicial Notice

Agencies shall take official notice of all matters of which the courts take judicial notice.  Section 536.070(6).  Courts will take judicial notice of their own records in the same cases.  State ex rel. Horton v. Bourke, 129 S.W.2d 866, 869 (1939); Barth v. Kansas City Elevated Railway Company, 44 S.W. 788, 781 (1898).  In addition, courts may take judicial notice of records in earlier cases when justice requires or when it is necessary for a full understanding of the instant appeal.  Burton v. Moulder, 245 S.W.2d 844, 846 (Mo. 1952); Knorp v. Thompson, 175 S.W.2d 889, 894 (1943); Bushman v. Barlow, 15 S.W.2d 329, 332 (Mo. banc 1929); State ex rel St. Louis Public Service Company v. Public Service Commission, 291 S.W.2d 95, 97 (Mo. banc 1956). 

In the present appeal, the Hearing Officer takes official notice of 12 CSR 30-4.010.

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 TVM.”  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.

 

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

 

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

 

  1. Payment is made in cash or its equivalent.

 

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

 

  1. 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.

Discrimination

To obtain a reduction in assessed value based upon discrimination, the complaining taxpayer must (1) prove the true value in money of the subject property as of the taxing date; and (2) show an intentional plan of discrimination by the assessor, which resulted in an assessment at a greater percentage of value than other property within the same class and the same taxing district, or, in the absence of such an intentional plan, show that the level of assessment is “so grossly excessive as to be inconsistent with an honest exercise of judgment.”  Zimmerman v. Mid–America Financial Corp., 481 S.W.3d 564, 571 (Mo. App. E.D. 2015), quoting Savage v. State Tax Comm’n of Missouri, 722 S.W.2d 72, 78 (Mo. banc 1986).

Evidence of value and assessments of a few properties does not prove discrimination.  Substantial evidence must show that all other property in the same class, generally, is actually undervalued.   State ex rel. Plantz v. State Tax Commission, 384 S.W.2d 565, 568 (Mo. 1964).   The difference in the assessment ratio of the subject property the average assessment ratio in the subject county must be shown to be grossly excessive.  Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986). No other methodology is sufficient to establish discrimination.  Cupples-Hesse, supra.

Complainants Fail To Prove Discrimination

In the present appeal Complainants’ assertion of discrimination was based upon a mistaken belief that Respondent valued their deck at $8,700.  This was the value Respondent ascribed to Complainants’ well and sewer.  Consequently, Complainants’ comparison of their property to the other five properties and how their decks were valued was in error.

Furthermore, where there is a claim of discrimination based upon a lack of valuation consistency, Complainants have the burden to prove the level of assessment for the subject property in the relevant taxing year. This is done by independently determining the market value of the subject property and dividing the market value into the assessed value of the property as determined by the assessor’s office.

Complainants must then prove the average level of assessment for the same classification of property in Ozark County that year.  This is done by (a) independently determining the market value of a representative sample of properties in Ozark County; (b) determining the assessed value placed on the property by the assessor’s office for the relevant year; (c) dividing the assessed value by the market value to determine the level of assessment for each property in the sample; and (d) determining the mean and median of the results.

The difference between the actual assessment level of the subject property and the average level of assessment for all residential property, taken from a sufficient representative sample in Ozark County must demonstrate a disparity that is grossly excessive.  Savage, supra.

Complainants’ discrimination claim fails because they failed to establish the market value of their property.  Without establishing their market value, they cannot establish their assessment ratio.  Without establishing their ratio, they cannot establish that they are being assessed at a higher percentage of market value that any other property.

However, even if Complainants had established their market value, their discrimination claim would still fail because they have not demonstrated that a statistically significant number of other like properties within Ozark County are being assessed at a lower ratio of market value than their property.  Complainants’ claim of discrimination is based upon five properties.

Because Complainants have failed to establish the market value of their property and have failed to establish that they are being assessed at a higher percentage of market value than a statistically significant number of other properties in Ozark County, they have failed to establish discrimination.

Overvaluation Discussion

Complainants’ evidence was not substantial and persuasive to rebut the BOE presumption as to their overvaluation claim.  Complainants’ letter from a Century 21 agent was not substantial and persuasive evidence.  Although Respondent did not object to the letter being admitted into evidence, the comparables utilized by the agent were not identified.  The agent was not present for cross-examination by Respondent or the Hearing Officer.  Complainants did not use any other method, specifically one of the three court-approved methods of valuation, to arrive at an opinion of TMV.  Consequently, the Hearing Officer would be required to engage in speculation to conclude that Complainants’ opinion of the TVM of the subject property is correct.

ORDER

The determination of the BOE is AFFIRMED.  The assessed value for the subject property is $7,240 ($37,600 residential TVM, $800 agricultural TVM), as of January 1, 2017, for tax year 2018.

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

Disputed Taxes

The Collector of Ozark 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 November 13, 2018.

STATE TAX COMMISSION OF MISSOURI

John 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 13 day of November, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.

 

Jacklyn Wood

Legal Coordinator

 

[1] This belief was in error as the $8,700 represents the value assigned for the well and septic.