State Tax Commission of Missouri
JOHN SEXTON,)
)
Complainant,)
)
v.) Appeal No.08-34093
)
RANDY HOLMAN, ASSESSOR,)
JEFFERSON COUNTY, MISSOURI,)
)
Respondent.)
ORDER
AFFIRMING HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
On December 23, 2008, Hearing Officer Maureen Monaghan entered her Decision and Order (Decision) setting aside the assessment by the Jefferson County Board of Equalization and setting true value in money for the property under appeal at $223,000, assessed value of $42,370.
Complainant timely filed his Application for Review of the Decision.Respondent timely filed his Reply.
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 or non-expert witness and give it as much weight and credit as she 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
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]
Grounds for Review
Complainant asserted five “specific facts” as the basis for his Application for Review.The Commission does not find merit in any of the “facts” alleged.None of the allegation of facts relate to determinations made by the Hearing Officer in the Decision.There is no reference to any part of the Decision that is in error as a matter of law or fact.As noted by Counsel for Respondent, Complainant appears in his Application for Review to be attempting to raise some form of claim of discrimination.[5]
As correctly observed by Respondent’s Counsel, no claim of discrimination was plead in the Complaint for Review for Assessment.Nevertheless, Hearing Officer Monaghan addressed in detail the failure of Complainant to establish by substantial and persuasive evidence either the true value in money[6] of his property or discrimination on the part of the Assessor or the Board of Equalization in the assessment of his property.[7]More importantly, the Hearing Officer found that the subject property had been purchased in an arm’s-length transaction in August 2007 for $225,000.[8]This critical fact was not disputed by Complainant.Complainant failed to meet his burden of proof to establish by substantial and persuasive evidence a true value in money of the subject property as of January 1, 2007, of $139,800 as claimed.
There was nothing “unique” in the appraisal methodology used by Respondent’s appraiser.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.[9]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.[10] Respondent’s appraiser presented an opinion of fair market value based upon his development of both the Cost and Sales Comparison approaches.[11]Both methodologies are recognized by the courts of this state and the Commission as valid techniques for the valuation of real property in ad valorem tax appeals.The approaches to value were properly developed and supported by the August 2007 sales price of the property being appraised.
Complainant’s assertions relative to being punished for appealing his assessment and warnings from Respondent’s Counsel to drop the appeal are not well taken.The Commission advises all taxpayers – “It is possible that assessment might remain the same be lowered, or raised.”[12]The action of Respondent’s Counsel of informing Complainant that the assessment could be raises was a courtesy to the taxpayer so that he was not under any misunderstanding or incorrect assumption.[13]When a taxpayer files an appeal with the Commission on overvaluation, both parties have the right to present evidence to establish the fair market value of the subject property.The Hearing Officer has the duty to establish the true value in money of the property being appealed based upon the relevant evidence in the record.
The Hearing Officer properly carried out her duty in this appeal.Complainant’s Application for Review is not well taken.
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 Jefferson 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 February 11, 2009.
STATE TAX COMMISSION OF MISSOURI
Bruce E. Davis, Chairman
Jennifer Tidwell, Commissioner
Charles Nordwald, Commissioner
DECISION AND ORDER
HOLDING
Decision of the Jefferson County Board of Equalization is SET ASIDE.Hearing Officer finds Respondent rebutted the presumption of correct assessment by the Board. True value in money for the subject property for tax year 2008 is set at $223,000, residential assessed value of $42,370.Complainant appeared pro se.Respondent appeared by counsel David Senkel.Case heard and decided by Hearing Officer Maureen Monaghan.
ISSUE
The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2008.
SUMMARY
Complainant appeals, on the ground of overvaluation, the decision of the Jefferson County Board of Equalization, which sustained the valuation of the subject property.The Assessor determined an appraised value of $214,200, assessed value of $40,700, as residential property.Complainant proposed a value of $139,800, assessed value of $26,562.A hearing was conducted on December 8, 2008, at the Jefferson County Administration Building, Hillsboro, Missouri.At the hearing, the Respondent proposed a value of $225,000.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
Complainant’s Evidence
Complainant testified in his own behalf. He proposed a value of $139,800.Complainant submitted Exhibit A.Exhibit A consists of photographs and information on the subject property and four properties in a subdivision next to the subject property’s subdivision.
Respondent’s Evidence
Respondent presented the testimony of Joseph Berezowski, Jefferson County Assessor’s Officer Appraiser. Joseph Berezowski testified relative to his valuation of the subject property and offered into evidence Exhibit 1.Exhibit 1 was received into evidence.Exhibit 1 is a narrative appraisal report on the subject property.
FINDINGS OF FACT
1.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the Jefferson County Board of Equalization.
2.The subject property is located at 1299 Riesling Lane, Pevely, Missouri.The property is identified by parcel number 10-3.0-07.0-219.The subject property is a 0.33 acre lot with an improvement.The improvement is a single-family residence of 1,830 square feet gross living area above grade and 1,830 square foot unfinished basement.The residence has six rooms including three bedrooms and two baths.The improvements were completed in August 2007 with a purchase price of $225,000.A realtor was involved in the transaction.The property was on the open market.
3.Respondent’s evidence was substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2008, to be $223,000.
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.[14]
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[15]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.[16]Complainant’s purchase of the property in 2007 constituted substantial and persuasive evidence of the fair market value of the subject property.
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.[17]It is the fair market value of the subject property on the valuation date.[18]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.[19]
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, 2008.[20]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.”[21]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[22]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.[23]
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.[24]The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[25]
Complainant’s opinion of value is based upon improper elements and foundation.The Complainant presented information regarding four other properties.The information included the sales date of the properties, the selling price and the true value in 2007 as set by the Assessor.The properties are located in a neighboring subdivision.The information contains the size of the comparables and the lot size but not their age.After comparing the properties sales price in 2007 and 2008 with the Assessor’s true values on the property in 2007, the Complainant concluded on a value for his property for 2008 of $139,200.
The methodology in establishing true value of the property is flawed.First, comparing the subject property with other properties that sold requires market based adjustments for differences in age, location, lot sizes, improvement sizes, condition, quality, etc.Second, comparing sales prices in late 2007 and early 2008, with true value as of January 1, 2007, as determined by the Assessor, and using those comparisons to extrapolate a true value for the subject property as of January 1, 2008, is not a methodology recognized by the State Tax Commission to determine the market value of the property.
The Complainant also raises the issue of discrimination.Although, the Complainant did not make that claim on his Complaint for Review of Assessment and did not raise the issue until after the hearing had begun, the Hearing Officer will address that argument.In order to obtain a reduction in assessed value based upon discrimination, the Complainant must (1) prove the true value in money of his property; 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 property, generally, within the same class within the same taxing jurisdiction.[26] 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.[27]The difference in the assessment ratio of the subject property and the average assessment ratio in the subject county must be shown to be grossly excessive.[28] No other methodology is sufficient to establish discrimination.[29]
Where there is a claim of discrimination based upon a lack of valuation consistency, Complainant has the burden to prove the level of assessment for the subject property. 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.
Complainant must then prove the average level of assessment for residential property in Jefferson County.This is done by (a) independently determining the market value of a representative sample of residential properties in Jefferson 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 Jefferson County must demonstrate a disparity that is grossly excessive.[30]
Complainant did not establish market value of his property and did not demonstrate that a statistically significant number of other residential properties within Jefferson County are being assessed at a lower ratio of market value than his property.Complainant’s claim of discrimination is based upon four properties.
Because Complainant has failed to establish the market value of his property and has failed to establish that he is being assessed at a higher percentage of market value than a statistically significant number of other properties in Jefferson County, he has failed to establish discrimination.
Respondent’s Burden of Proof
Respondent, when advocating a value different from that determined 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. [31] In this instance, the Board set the value for the residential property at $214,200.Respondent presented substantial and persuasive evidence of a value of $223,000.The presumption of correct assessment was rebutted and a higher value established.
Respondent’s Opinion of Value
Evidence of the actual sales price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time.The actual sale price is a method that may be considered for estimating true value.The actual sales price, between a willing seller who is not obligated to sell and a willing buyer who is not compelled to buy, establishes an outer limit on the value of real property.[32]
Furthermore, a price agreed to between a willing buyer and seller creates a presumption the transaction was a market transaction.[33]There is no evidence upon which the Hearing Officer can conclude that the Complainant’s purchase was anything other than an arm’s-length, open market transaction.The August 2007 purchase was at a time relevant to the January 1, 2008, valuation.The purchase price of the property was $225,000.
The Respondent further presented a Summary Appraisal Report.The Appraisal used a cost approach and a sales comparison approach, both methodologies recognized by the State Tax Commission.Under the cost approach, the appraiser used the Marshall and Swift Residential Cost Guide and concluded a value of $227,000.Under the sales comparison approach, the appraiser concluded a value of $223,000.The appraiser compared the subject property to three sales.The comparable properties were located in the same subdivision as the subject property.The only differences in the properties were small differences in lot size, the number of garages, and deck/fireplace options.The appraiser made appropriate adjustments to the comparable properties resulting in a range of values from $219,400 to $227,380.The appraiser concluded a value of $223,000.
The appraiser placed most weight on the comparable sales approach as it reflects the actual market and the availability of the recent sales of properties within a close proximity of the subject property.
ORDER
The assessed valuation for the subject property as determined by the Board of Equalization for Jefferson County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax year 2008 is set at $42,370.
A party may file with the Commission an application for review of this decision within thirty days of the date set forth in the Certificate of Service.The application shall contain specific 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. [34]
The Collector of Jefferson County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending a 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 December 23, 2008.
STATE TAX COMMISSION OFMISSOURI
Maureen Monaghan
Hearing Officer
[1] 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).
[2] 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).
[3] Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Lowe v. Lombardi, 957 S.W.2d 808 (Mo. App. W.D. 1997); Forms World, Inc. v. Labor and Industrial Relations Com’n, 935 S.W.2d 680 (Mo. App. W.D. 1996); Evangelical Retirement Homes v. STC, 669 S.W.2d 548 (Mo. 1984); Pulitzer Pub. Co. v. Labor and Indus. Relations Commission, 596 S.W.2d 413 (Mo. 1980); St. Louis County v. STC, 562 S.W.2d 334 (Mo. 1978); St. Louis County v. STC, 406 S.W.2d 644 (Mo. 1966).
[4] Hermel, Inc. v. STC, 564 S.W.2d 888 (Mo. 1978); Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Holt v. Clarke, 965 S.W.2d 241 (Mo. App. W.D. 1998); Smith v. Morton, 890 S.W.2d 403 (Mo. App. E.D. 1995); Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).
[9] 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).
[10] 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).
[15] 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)
[16] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
[17] 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).
[19] 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.
[21] 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).
[24] 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).
[25] 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).