Jerry & Renee Swartz v. Tregnago (Randolph)

State Tax Commission of Missouri

 

JERRY J. & RENEE SWARTZ,)

)

Complainants,)

)

v.)Appeal Number 09-81502

)

RICHARD TREGNAGO, ASSESSOR,)

RANDOLPH COUNTY, MISSOURI,)

)

Respondent.)

 

ORDER

AFFIRMING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

 

On January 14, 2010, Senior Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) setting aside the assessment by the Randolph County Board of Equalization.

By order dated, February 22, 2010, the Hearing Officer set the deadline for filing of application for review upon transmittal of transcript to the parties.

Both parties timely filed their Application for Review of the Decision.Respondent timely filed his Response.

CONCLUSIONS OF LAW

Standard Upon Review

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.[1]

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.[2]

The Commission will not lightly interfere with the Hearing Officer’s Decision and substitute its judgment on the credibility of witnesses and weight to be given the evidence for that of the Hearing Officer as the trier of fact.[3]

DECISION

Complainants’ Points on Review

Complainants raise seven points on review.Each of the points, with the exception of point 3, goes to the weight that Hearing Officer Tichenor gave to the appraisal report received into evidence on behalf of Respondent.In particular, each of the arguments presented address the Hearing Officer’s consideration and reliance on Exhibit 2, the appraisal report of Allan Moore.Exhibit 2 was received into evidence without objection.The Hearing Officer, as per the case law cited above, was free to consider this evidence and the related testimony in both direct and cross-examination.He then could give it as much weight as he deemed it entitled to in light of all other evidence in the record.The Decision shows that the Hearing Officer gave some weight to the conclusion of value determined by the Moore appraisal.The arguments put forth fail to establish that the Hearing Officer erred as a matter of law in his consideration of Exhibit 2.

Point 3 – Exclusion of Appraisal Report

The third point Complainants present asserts that the Hearing Officer erred in not allowing the appraisal report of Gregory S. & Ginger M. Wilson into evidence.The Hearing Officer sustained the objection based upon the grounds of relevancy.A review of Exhibit A confirms the ruling of the Hearing Officer that it was not relevant to establishing the fair market value of the Swartz property as of January 1, 2009.The Hearing Officer did not err in his ruling sustaining the objection to Exhibit A and its exclusion from evidence.

Respondent’s Points on Review

The line of argument advanced by Assessor Tregnago generally relates to his assertions that the appraisal of Kevin Stone, Complainants’ appraiser, was confusing and misleading.Respondent raises a variety of arguments against the Complainants’ appraisal most of which rest upon documents submitted with the Application for Review which are not part of the evidentiary record.The documents tendered with the Application for Review cannot be considered in reviewing the Hearing Officer’s Decision since he did not have access to these as part of the evidentiary record.

Respondent’s argument shows a disagreement with the conclusion reached by the Hearing Officer, especially with his consideration of the Complainants’ appraisal.No objection was made to the admission of Exhibit B.Therefore, as with the Moore appraisal, the Hearing Officer was free to consider the Stone appraisal and the related testimony in both direct and cross-examination and give it as much weight as he deemed it entitled to in light of all other evidence in the record.

The Hearing Officer found both strengths and weaknesses in each appraisal report.It is not required that in any given appeal that the Hearing Officer provide a detailed analysis of each weakness or a detailed explanation of each strength of a given appraisal report.The Hearing Officer deemed in this instance such analysis and explanation was not necessary.It is not reversible error for the Hearing Officer to be persuaded to give equal weight to the opinions of value of two different appraisers, especially when as in this case the opinions of value are significantly divergent.The record supports the conclusion that the value of the subject property as of January 1, 2009, was in a range between $400,000 and $650,000.

Conclusion

A review of the record in the present appeal provides support for the determinations made by the Hearing Officer.There is competent and substantial evidence to establish a sufficient foundation for the Decision of the Hearing Officer.A reasonable mind could have conscientiously reached the same result based on a review of the entire record. The Commission finds no basis to support a determination that the Hearing Officer acted in an arbitrary or capricious manner or abused his discretion as the trier of fact and concluder of law in this appeal.[4]The Hearing Officer did not err in his determinations as challenged by Complainants or Respondent.

ORDER

The Commission upon review of the record and Decision in this appeal, finds no grounds upon which the Decision of the Hearing Officer should be reversed or modified.Accordingly, the Decision is affirmed.The Decision and Order of the hearing officer, including the findings of fact and conclusions of law therein, is incorporated by reference, as if set out in full, in this final decision of the Commission.

Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of the mailing date set forth in the Certificate of Service for this Order.

If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts unless disbursed pursuant to Section 139.031.8, RSMo.

If no judicial review is made within thirty days, this decision and order is deemed final and the Collector of Randolph County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal.

SO ORDERED July 26, 2010.

STATE TAX COMMISSION OF MISSOURI

Bruce E. Davis, Chairman

Jeff W. Schaeperkoetter, Commissioner

 

 

 

 

 

DECISION AND ORDER

 

HOLDING

 

Decision of the Randolph County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE.True value in money for the subject property for tax years 2009 and 2010 is set at $525,000, residential assessed value of $99,750.Complainant, Jerry Swartz, appeared pro se. Respondent appeared pro se.

Case heard and decided by Senior Hearing Officer W. B. Tichenor.

ISSUE

The Commission takes this appeal to determine (1) the true value in money for the subject property on January 1, 2009; and (2) whether the subject residential property was assessed at a ratio greater than 19% or the average residential assessment ratio for Randolph County for 2009.

SUMMARY

Complainants appeal, on the ground of overvaluation and discrimination, the decision of the Randolph County Board of Equalization, which sustained the valuation of the subject property.The Assessor determined an appraised value of $584,098, assessed value of $110,980, as residential property.Complainants proposed a value of $438,000, assessed value of $83,220, in their Complaint for Review of Assessment.A hearing was conducted on December 16, 2009, at the Randolph County Courthouse, Huntsville, Missouri.

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 from the decision of the Randolph County Board of Equalization.

2.Subject Property.The subject property is located at 1201 Epperson, Moberly, Missouri.The property is identified by map parcel number 10-1-11-37.The property consists of an eleven acre lot improved by a one and a half story brick veneer and vinyl siding, single-family structure of very good quality construction.The house was built in 2000 and is in good condition.The residence has a total of nine rooms, with four bedrooms and five bathrooms, and contains 4,060 square feet of living area.There is a 1,201 square foot basement with partial finish and an attached three-car garage. The property is further improved with a detached 960 square foot out building with a loft, an in-ground pool, a pond and deck, a small outbuilding and outdoor barbeque pit and driveway.[5]

3.No New Construction and Improvement.There was no evidence of new construction and improvement from January 1, 2009, to the date of hearing.Mr. Swartz testified there were no plans for any new construction and improvements prior to January 1, 2010.Therefore, in the absence of new construction and improvement during 2009, the value set for 2009 will remain the value for 2010.[6]

4.Complainants’ Evidence.Mr. Swartz testified in his own behalf.He gave his opinion of the fair market value of the property under appeal, as of January 1, 2009 was $400,000 based upon an appraisal of James K. Stone.The following exhibits were offered into evidence on behalf of Complainants.

EXHIBIT	DESCRIPTION	DISPOSITION
A	Documents and photographs regarding property of Gregory S. & Ginger M. Wilson.	Obj. – Relevancy – Sustained – Excluded
B	Appraisal Report – James K. Stone – $400,000 Value	No Obj. – Received
C	MultiList Data Sheets on 9 properties in Columbia, MO	Obj. – Relevancy – Lack of Foundation – Sustained – Excluded
D	Statistical Market Analysis	Obj. – Relevancy – Lack of Foundation – Sustained – Excluded

 

Mr. Stone testified as to his appraisal of Complainants’ property.The only relevant evidence presented by Complainants on the issue of the true value in money of the subject property as of January 1, 2009 was that presented in Exhibit B and the testimony of Mr. Stone.

5.Respondent’s Evidence.Respondent testified as to the documents offered as exhibits.The following exhibits were offered into evidence on behalf of Respondent.

EXHIBIT	DESCRIPTION	DISPOSITION
1	Respondent’s Opinion of Value	No Obj. – Received
2	Appraisal Report of Allen J. Moore – $650,000 Value	No Obj. – Received
3	2007 State Tax Commission Ratio Studies	No Obj. – Received
4	Randolph County 2009 Residential Sales Ratio Study	No Obj. – Received
5	Comparison of Number of Change Notices	No Obj. – Received
6	Letter, dtd 9/9/09 to Mr. Swartz from Respondent	No Obj. – Received

 

Mr. Moore testified as to his appraisal of the subject property.

6.Presumption of Correct Assessment Rebutted.Exhibits B and 2 constituted substantial and persuasive evidence to rebut the presumption of correct assessment and provide a sound basis for the Hearing Officer to determine the true value in money of the property under appeal.

7.Hearing Officer Finds True Value in Money.Based upon a review and analysis of Exhibits B and 2, giving equal weight to the concluded opinions of value of each expert witness, the true value in money of the subject property as of January 1, 2009, is set at $525,000, assessed value as residential property of $99,750.

8.Claim of Discrimination Abandoned.Complainants’ claim of discrimination was abandoned upon Mr. Swartz making an offer of proof to the Hearing Officer as to the basis for the claim and being advised that the information about which Complainant wished to testify did not meet the case law requirements to establish 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.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.[7]

Presumptions In Appeals

There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.[8]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.[9]The evidence presented by both appraisers on the issue of fair market value constituted substantial and persuasive evidence to rebut the presumption of correct assessment and establish a foundation for valuation of the property by the Hearing Officer.

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.[10]True value in money is defined in terms of value in exchange and not value in use.[11]It is the fair market value of the subject property on the valuation date.[12]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.[13]

 

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.[14]

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.[15]

The Hearing Officer found both strengths and weaknesses in each of the appraisal reports.All of the properties utilized in the two appraisals were comparable, in varying degrees to the subject.Weight is given to each appraisal and the opinion of value tendered by each appraiser in arriving at a conclusion of the true value in money of the subject.

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.[16]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.[17]Both appraisers presented a sales comparison approach to value, from which they concluded their opinion of value.Mr. Stone also presented a cost approach in support of the sales comparison approach.Mr. Moore supplemented his sales comparison approach with a listing comparison methodology.

The sales and listing comparisons provide substantial and persuasive evidence upon which the Hearing Officer can conclude true value in money.The range of sales and listing values established by the unadjusted data was:$250,000, $260,000, $265,000, $355,000, $465,000, $525,000, $549,900, $699,900, $778,000 and $780,000.[18]The range of adjusted values was:$323,054, $349,649, $361,526, $396,456, $461,400, $487,504, $513,250, $519,910, $629,910, $725,200 and $773,800.Mr. Stone concluded a value of $400,000.Mr. Moore’s conclusion of value was $650,000.

Burden of Proof

In order to prevail, Complainants, and Respondent when advocating a value different than the value set by the Board of Equalization, 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, 2009.[19]There is no presumption that the taxpayer’s opinion is correct. Nor is there any presumption that the Assessor’s opinion of value is correct.[20]

Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[21]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.[22]

The Hearing Officer has elected to forgo setting out in this decision a detailed and critical analysis of the shortcomings and strengths which he found in each appraisal.Likewise, the Hearing Officer rejected the option of creating his own sales grid utilizing the collection of data present in the record on the ten properties presented by the two experts.The Hearing Officer is persuaded that the true value in money of the Complainants’ home, as of January 1, 2009, lies in a range between the opinions of Mr. Stone ($400,000) and Mr. Moore ($650,000).Accordingly, equal weight is given to each conclusion of value to establish the true value in money as of January 1, 2009, to be $525,000.

Complainants Fail To Prove Discrimination

In order to obtain a reduction in assessed value based upon discrimination, the Complainants would have to (1) prove the true value in money of their property on January 1, 2009; and (2) show an intentional plan of discrimination by the assessing officials resulting in an assessment of that property at a greater percentage of value than other residential property, generally within the same taxing jurisdiction.[23]Substantial evidence must show that all other residential property in Randolph County is actually undervalued.[24]The difference in the assessment ratio of the subject property and the average assessment ratio in Randolph county must be shown to be grossly excessive.[25]No other methodology is sufficient to establish discrimination.[26]

Complainants were not prepared to present any evidence to prove the average level of assessment for residential property in Randolph County for 2009.This is done by (a) independently determining the market value of a representative sample of residential properties in Randolph County; (b) determining the assessed value placed on the property by the assessor’s office for 2009; (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 Randolph County must demonstrate a disparity that is grossly excessive.[27]

Because Complainants had no evidence to establish that they are being assessed at a higher percentage of market value than a statistically significant number of other properties in Randolph County, they could not prove their claim of discrimination.

ORDER

The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Randolph County for the subject tax day is SET ASIDE.

The assessed value for the subject property for tax years 2009 and 2010 is set at $99,750.

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.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, 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. [28]

The Collector of Randolph 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 January 14, 2010.

STATE TAX COMMISSION OFMISSOURI

W. B. Tichenor

Senior Hearing Officer