State Tax Commission of Missouri
v.) Appeal Number 09-81501
RICHARD TREGNAGO, ASSESSOR,)
RANDOLPH COUNTY, MISSOURI,)
DECISION AND ORDER
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 $83,500, residential assessed value of $15,865.Complainant appeared pro se. Respondent appeared pro se.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2009.
Complainant appeals, on the ground of overvaluation, the decision of the Randolph County Board of Equalization, which sustained the valuation of the subject property.The Assessor determined an appraised value of $80,266, assessed value of $15,250, as residential property.Complainant proposed a value of $55,354, assessed value of $10,517.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 215 West Terrill Road, Moberly, Missouri.The property is identified by map parcel number 10-6-13-2-41.001.The property consists of 3.5 acre site.The site is improved with a well maintained two-story house with porches and a detached garage that has a breezeway connected to the house.The house is frame constructed approximately in 1940.It has 1,344 square feet of living area above grade and a full unfinished basement.The property was listed for sale on January 1, 2009, at $129,900.At date of hearing, asking price had been reduced to $109,900.
3.No New Construction and Improvement.There was no evidence of new construction and improvement from January 1, 2009, to the date of hearing, and Complainant testified there were no plans for any new construction and improvement prior to January 1, 2010, therefore, in the absence of new construction and improvement during 2009, the assessed value set for tax year 2009 will remain the assessed value for tax year 2010.
4.Complainant’s Evidence.Complainant testified in his own behalf.Mr. Swartz under questioning of the Hearing Officer as to the fair market value of the property under appeal agreed that $80,266 was fair market value for the property as of January 1, 2009.However, he contended the Assessor did not comply with section 137.115.10, in that no physical inspection was made of the property under appeal.It was the position of Mr. Swartz that the property could only be valued at 15% above the 2007-08 value, or $55,354.
The following two exhibits were received into evidence on behalf of Complainant.Exhibit A – Four photographs, offered to demonstrate that Complainant hadremoved a ten foot portion from the rear of the subject garage in May, 2007.Exhibit B – Fax of a letter to Wayne Wilcox – Randolph County Board of Equalization, dated 12/10/09, requesting his attendance at the evidentiary hearing on 12/16/09.
5.Presumption of Correct Assessment Not Rebutted.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, 2009, to be $55,354, as proposed.
6.Respondent’s Evidence.Respondent testified as to his appraisal of the subject property.The Assessor valued the property relying on both the mass appraisal cost approach and the sales comparison approach.The value concluded under the cost approach was $80,266.The value arrived at applying the sales comparison approach was $83,500.The concluded fair market value was $83,500.
The three properties relied upon by Respondent were comparable to the subject property for the purpose of making a determination of value of the subject property. The properties were located within .88 to 3.9 miles of the subject.Each sale property sold at a time relevant to the tax date of January 1, 2009 – 11/16/07 – 9/19/08.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. Appropriate adjustments were made to account for differences between each comparable and the subject.
7.Respondent Proves Value.Respondent’s evidence met the standard of substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the value of the subject, as of January 1, 2009, to be $83,500, residential assessed value of $15,865.
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.
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.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.Complainant failed to present substantial and persuasive evidence that the true value in money of the subject property as of January 1, 2009, was $55,354.Therefore he did not rebut the presumption of correct assessment by the Board.Respondent presented substantial and persuasive evidence of a value of $83,500 which rebutted the presumption of correct assessment by the Board and established that value as the true value in money for the subject property on January 1, 2009.
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.True value in money is defined in terms of value in exchange and not value in use.It is the fair market value of the subject property on the valuation date.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.
Complainant’s evidence and theory of his case did not comply with the Standard of Valuation required for the determination of value in appeals before the Commission.The basis for the opinion of value tendered by Mr. Swartz finds no support in the elements which constitute the basis for finding true value in money for a property under appeal.Respondent’s evidence, on the other hand, was consistent with the Standard of Valuation.Value was developed from relevant sales which complied with the elements heretofore set forth.
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.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. Respondent relied upon two different valuation methodologies, i.e. mass appraisal cost approach and comparable sales approach.When valuing single family homes the sales comparison approach generally will provide a sound foundation and the most persuasive basis for making the required determination of fair market value.Complainant presented no evidence under any recognized approach to value and conceded that that the value set by the Board relying on the mass appraisal costing system was appropriate.
Complainant’s Burden of Proof
In order to prevail, 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, 2009.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.”
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.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.
The owner of property is generally held competent to testify to its reasonable market value.The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.The owner’s opinion of value of only $55,354 is based upon his contention that the value could not be increased more than 15% from the 2007-08 value because the Assessor had not performed a physical inspection under 137.115.10 RSMo.Mr. Swartz’s opinion of value is based upon improper elements and an improper foundation.It has no probative value for this appeal.
Physical Inspection Argument Lacks Merit
Mr. Swartz relies upon a single phrase which he parsed from the Decision in Reeves v. Snider in support of his “physical inspection” argument.Complainant did not claim that the Assessor had not visited the property under appeal on February 16, 2009.His argument was that since he only viewed three sides of the subject house, and did not view the back of the house that this did not constitute and inspection like a “review, as of troops.”This he had gleaned from reading the Reeves Hearing Officer Decision.
In the Reeves Decision, the Hearing Officer set forth the following dictionary definition for “Inspection.”
Mr. Swartz apparently failed to read the facts of the Reeves case and the subsequent Decisions of the Commission and Court of Appeals.The Hearing Officer found that the inspection of the properties in Reeves “was done by means of a visual analysis of the outside, from the street.”The Hearing Officer found as a matter of law that the actions of the Assessor’s staff “were sufficient to constitute a physical inspection of the subject properties.
Upon an Application for Review being filed in Reeves, the Commission sustained the Hearing Officer stating:“The Hearing Officer’s determination that viewing the outside of the subject properties from the street constitutes a “physical inspection,” is an appropriate application of the term “physical inspection,” as it is used in section 137.115.10, RSMo.”
Finally, the Southern District Court of Appeals also addressed the issue of the physical inspection.The Hearing Officer and Commission decision on this point was upheld.The Court stated the following:
“The testimony overwhelmingly indicates that the inspections, conducted by the appraisers and Snider, clearly meet the “physical inspection” requirements, as that term is used in the statute. The instant inspections fell within any definition cited herein, even the definition provided by Taxpayers.
We are confirmed in this view by a case extremely similar to that found here. In Potter v. Town of Clarendon, 118 Vt. 278, 108 A.2d 394 (1954), the Vermont supreme court held that the term “inspect” as used in the state’s assessment statutes is defined as “to look on or into, to view and examine officially.” Id. at 395. In making their appraisal, the assessors viewed the property and utilized their general knowledge gained from living in the neighborhood and town. The court held:
‘Common sense and practical everyday business experience are their [taxing officials’] best guides. Taxation is a practical problem. A tax will not be rendered void by reason of the manner in which any matter is determined by the listers, if such matter rests fairly within their legitimate discretion.’
FN12. The Potter decision was later cited with approval in Devoid v. Town of Middlebury, 134 Vt. 69, 350 A.2d 349, 351-52 (1975).
Here, the appraisers and Snider did just that, i.e., examined the realty and used their best judgments as professionals in valuation of the properties. There is no evidence that the properties were valued at anything other than their fair market value or true value in money. The purpose of the statute has been fulfilled.Point denied.”
Complainant’s argument is based entirely upon the fact that the Assessor only viewed three sides of the structure and therefore, missed seeing that a ten foot attachment to the garage has been removed during 2007.The argument ventures into the land of the absurd.To borrow from the language of the Potter court, there is no evidence that the property was valued at anything other than fair market value or true value in money.The purpose of the statute has been fulfilled.By Complainant’s admission the value of $80,266 was appropriate.The removal of the ten foot structure from the garage was irrelevant.
Fifteen Percent Limit
The other half of the argument of Mr. Swartz is since the inspection done by the Assessor in February 2009 was not proper that subsection 10 of 137.115 limits the increase in assessment to 15% of the assessed value for the prior assessment cycle.This portion of the argument fails on two counts.First, as just addressed above, there was a physical inspection of the property as required by the statute, as addressed above – Physical Inspection.
However, the statute does not limit the increase to 15%.It simply provides that the physical inspection is to be done before an increase of more than 15% is to be made by the Assessor.The statute does not authorize the Commission to limit the increase in assessed value to only 15% if no physical inspection has been performed.The property is to be valued at its true value in money (fair market value) based upon the evidence in the record.
The argument of Mr. Swartz and accordingly his proposed value is without merit or any probative weight. The argument and value rest on an erroneous understanding and application of the statute upon which Complainant relied, i.e., 137.115.10 RSMo.
Respondent Proves Value
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.The appraisal report presented by Respondent met the evidentiary requirement to both rebut the presumption of correct assessment and to prove value of $83,500.The valuation derived from looking at the relevant sales data of comparable properties was persuasive.It was bolstered by the fact that even Complainant presented no evidence that challenged the reliability or sufficiency of the valuation.Furthermore, the listing of the property in January, 2009 at a price of $129,900, that has only been reduced to $109,900 at the time of hearing, provides further support for the value concluded by the Assessor in Exhibit 1.
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 $15,865.
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.
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.If no Application for Review is filed within thirty days of the mailing date set forth in the Certificate of Service, the collectors shall disburse the disputed taxes in accordance with the assessed value set by this Decision and Order.
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
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 14thday of January, 2010, to:Jerry Swartz, P.O. Box 740, Moberly, MO 65270, Complainant; Michael Fusselman, Prosecuting Attorney, 200 E. Rollins Street, Moberly, MO 65259, Attorney for Respondent; Richard Tregnago, Assessor, 110 S. Main, Huntsville, MO 65259; Jim Sears, Clerk, 110 South Main, Huntsville, MO 65259; Shiela Miller, Collector, 110 South Main, Huntsville, MO 65259.
 Daly v. P. D. George Company, et al, 77 SW3d 645, 649 (Mo.App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 SW2d 376, 380 (Mo.App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).
 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.
 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).
 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).
 Cohen v. Bushmeyer, 251 S.W.3d 345, (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).
 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.