State Tax Commission of Missouri
JOHN PAUL & NANCY QUICK, )
Complainant v.) Appeal No.10-57002
TOM COPELAND, ASSESSOR, )
FRANKLIN COUNTY, MISSOURI, )
DECISION AND ORDER
Decision of the Franklin County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE.True value in money for the subject property for tax year 2010 is set at $108,000, agricultural assessed value of $12,960.Complainants appeared pro se.Respondent appeared in person and by County Counselor, Mark Vincent.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
Complainants appeal, on the ground of overvaluation, the decision of the Franklin County Board of Equalization, which sustained the valuation of the subject property.The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2010, based upon the market conditions as of January 1, 2009.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 from the decision of the Franklin County Board of Equalization.A hearing was conducted on September 21, 2011, at the Franklin County Administration Building, Union, Missouri.
3.Subject Property.The subject property is located at 160 Charles Dr., St. Clair, Missouri.The property is identified by map parcel number 29-1-02.0-1-099-001.500.The property consists of 15.30 acres.The property consists of a mostly wooded tract of land which drops in elevation from 745 feet on its North side to 690 feet on its South tract line 625 feet away.The tract is bordered on three sides by other tracts and there is no access from these adjoining properties.Access to the property is across a portion of the east side of the property.The property was originally part of a 21.38 acre parcel, which was purchased in June 2007 by Complainants for $256,560, approximately $12,000 per acre.In late 2009, approximately 5.70 acres was divided off as a separate lot on the east side of the property for development.
4.Complainant’s Evidence.Complainant submitted Exhibits A and B which were received into the record.Mr. Quick testified at hearing.
Cost Approach Valuation
Written Direct Testimony of Mr. Quick
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 $45,900, as proposed.See, Complainants Fail to Prove Value of $45,900, infra.
5.Respondent’s Evidence.Respondent submitted Exhibits 1 and 2, which were received into evidence.Mr. Dodd testified at hearing.
Appraisal Report – Donald Dwain Dodd – Missouri Certified General Real Estate Appraiser
Written Direct Testimony of Mr. Dodd
Respondent’s evidence was substantial and persuasive to rebut the presumption of correct assessment by the Board and provide a basis for finding the true value in money as of January 1, 2009, to be $108,000.See, Hearing Officer Finds Value, 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.
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.The constitutional mandate is to find the true value in money for the property under appeal. By statute real and tangible personal property is assessed at set percentages of true value in money.In an overvaluation appeal, true value in money for the property being appealed must be determined based upon the evidence on the record that is probative on the issue of the fair market value of the property under appeal.
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.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 or the Respondent when advocating a value different than that set 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.As will be addressed below, Complainants failed to present substantial and persuasive evidence to rebut the presumption of correct assessment.Respondent presented substantial and persuasive evidence that rebutted the presumption of correct assessment by the Board and established a basis for a conclusion of value 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.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.
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.
The Hearing Officer as the trier of fact may consider the testimony of an owner or 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 the owner or of an expert who testify on the issue of reasonable value, but may believe all or none of the owner’s or expert’s testimony and accept it in part or reject it in part.
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.When valuing vacant land, a sales comparison analysis is generally considered to be the most appropriate valuation methodology.Mr. Dodd developed a sales comparison approach to arrive at an indicated value.Mr. Quick while presented information relative to a single sale of property did not perform a sales comparison approach to conclude value.
Complainants Fail to Prove Value of $45,900
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, 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.
Owner’s Opinion of Value
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. Mr. Quick tendered an opinion of value of $3,000 per acre based upon the sale of a horse farm in Franklin County.This sale occurred in January 2011.The property consisted of a 54 + tract of land, without any improvements.The size of this property at 54+ acres is approximately 3.6 times larger than the subject.In this particular appraisal problem, on that factor alone it lacks sufficient basis to be used as a comparable sale.Accordingly, the opinion of value concluded by Mr. Quick based on this property cannot be viewed as based on property elements or a proper foundation.Therefore, no probative weight is given to the owner’s opinion of value.
Hearing Officer Finds Value
Mr. Dodd arrived at his value based upon three vacant land sales.Sales information was research by the appraiser for vacant land sales within a five mile radius of the subject site.His analysis concluded a per acre value of $8,900 for the subject, or a total site value of $136,000.Two of the sales were of tracts which had sold in October and June of 2008.The third sale was of the subject in June 2007, when the 21+ acre tract from which the 5.70 subject acres was carved, leaving the subject 15.30 + acres.
Location Adjustment of +10%
The first two sales were for $6,733 and $7,386 per acre respectively.Mr. Dodd made an upward adjustment to each sale of 10% based upon the sales’ rural location, where the subject was deemed to be in a suburban location.The problem the Hearing Officer has with this adjustment is that no analysis of land sales or listings was provided to support the 10% adjustment.The appraiser’s adjustment to sales 1 and 2 was based upon the conclusion that the sites “. . . being in rural areas that were deemed less desirable than that of the subject property site.”
The adjustment of 10% for this factor must have some basis in fact and not be the mere unsupported conclusion of the appraiser for it to be given probative weight.If market data is not available to establish that the comp sales were in a less desirable area then there is no basis for an adjustment.It is understood that there probably were not sufficient market data to make a comparison between vacant land sales that could be considered rural versus suburban to conclude the rate for an adjustment.That does not mean that the adjustment can simply be created ex nihilo.The maxim ex nihilo nihil fit is applicable in this instance.Where the basis for a conclusion is not supported by a statement of the facts or data upon which the conclusion is based the Hearing Officer is compelled to reject the conclusion.In a situation such as this where no actual market analysis can be made for the location adjustment, then none should be made, for without the support of market data the adjustment is only speculation.
Area Adjustment to Sale 2
The Appraiser made a -10% adjustment to the second sale he used in his sales comparison analysis.This property consisted of a 8.80 acre tract compared to the subject’s 15.30 acres.As with the location adjustment to Sales 1 and 2, there is no explanation or supporting data relative to this area adjustment.The Hearing Officer understands it would appear that an adjustment would be warranted to account for a property that is approximately 57.5% the size of the subject.
However, the question is what is the foundation from which the -10% adjustment is derived.The appraisal provides no data for that foundation.The Hearing Officer is well aware that generally a variance of 6.5 acres would warrant an adjustment.Of course, with regard to Sale 1, there is a variance of 5.3 acres and no adjustment was deemed necessary.In either or both instances, if an adjustment is to be made, it must find more support than simply that an adjustment is needed because of the difference in size.Absent market analysis to establish some percentage or dollar per square foot/acre adjustment, it is not appropriate to simply pull a number out of the air.When no market data does exist to perform the depth of analysis needed, then the conclusion of an adjustment is nothing more or less than pulling a number out of the air.That is not sufficient basis for the Hearing Officer to conclude value.
Utilization of Sales 1 & 2
The foregoing leads the Hearing Officer to the conclusion that the best possible utilization of these two sales would be to give equal weight to the unadjusted per acre value of each to arrive at an indicated land value.This would provide an indicate site value of $7,060 per acre.This is the best this evidence can provide to arrive at value.
Use of the 21+ Acre Sale
The Hearing Officer understands the inclination of an appraiser to use the sale in June 2007 of the 21+ acres, of which the subject 15.3 acres is the remaining portion of that sale.However, even if the present appraisal problem was to value the 21+ acres as of January 1, 2009, the Hearing Officer would expect some recent (2008 – 2009) land sales analysis to determine per acre values for tracts in the 15 – 25 acre range.The sale occurring 18 months prior to valuation date on a tract this size raises some questions as to it holding its value, during the period from mid-2007 to January 2009.
In addition, the 5+ acres of prime development land was carved off the front of the 21+ acre tract.Thus, the subject was left with nearly all of its area on a significant slope, with only a small portion of generally level ground.It readily appears that what was worth $12,000 per acre in June 2007 for 21+ acres, may have had a far less per acre value in January 2009, when all that remains was 15+ acres of heavily wooded hill-side land, not readily accessible for either residential or commercial development.Therefore, the Hearing Officer is not persuaded that the June 2007 sale is appropriate as a comparable for purposes of the present appraisal problem.
Conclusion of Value
From all of the foregoing, the Hearing Officer is left with the evidence of Sales 1 and 2 utilized by Mr. Dodd to conclude value.Based on that evidence, the value of the subject 15.30 acres is $7,060 per acre or $108,018, rounded to $108,000.The assessment applied by the assessor to this property was as vacant and unused agricultural land at 12%.Therefore, the assessed value of the subject is $12,960.
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Franklin County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax year 2010 is set at $12,960.
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, 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 Franklin 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 1, 2011.
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 1stday of November, 2011, to:John Quick, 1015 Springfield Road, Owensville, MO 65066, Complainant; Mark Vincent, Franklin County Counselor, P.O. Box 439, Union, MO 63084, Attorney for Respondent; Tom Copeland, Assessor, 400 E. Locust, Suite 105A, Union, MO 63084; Debbie Door, Clerk, Franklin County Courthouse, 400 E. Locust, Suite 201, Union, MO 63084; Linda Emmons, Collector; Franklin County Courthouse, 400 E. Locust, Suite 103, Union, MO 63084.
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
4 Section 137.115.1, RSMo.
5Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.
6 Article X, Sections 4(a) and 4(b), Mo. Const. of 1945
7 Section 137.115.5, RSMo
8 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)
9 Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo.
10 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).
11 Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 S.W.2d 376, 380 (Mo. App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).
12 Hermel, supra.
13 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.
14 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).
15 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).
16 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).
17 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. 21974).
18 Hermel, supra.
19 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).
20 See, Cupples-Hesse, supra.
21 Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).
22 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).
23 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).
24 Exhibit A – 3, & Exhibit B
25 Exhibit 1 – Subject Property Site Value Development, pp. 15 – 16
26 Exhibit 1 – Land Sale Reconciliation, p. 16
27 “from nothing”
28 “from nothing nothing comes”
29 Carmel Energy at 783.
30 Section 138.432, RSMo.