State Tax Commission of Missouri
|JONATHAN AND JOYCE FULLER,||)|
|v.||)||Appeal # 15-86000|
|JIM WARD, ASSESSOR||)|
|SCOTLAND CO., MISSOURI||)|
DECISION AND ORDER
Decision of the County Board of Equalization sustaining the true market value made by the Assessor is SET ASIDE. Substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization was presented. The evidence presented was sufficient for a determination of the true market value for the subject property
True value in money for the subject property for tax year 2015 and 2016 is set at $758,890, residential assessed value of $144,189.
Case submitted on the record and decided by Senior Hearing Officer John Treu.
Complainants appeal on the ground of overvaluation the decision of the Scotland County Board of Equalization, which lowered 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, 2013. The value as of January 1 of the odd numbered year remains the value as of January 1 of the following even numbered year unless there is new construction and improvement to the property. Section 137.115.1 RSMo
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order. The Hearing Officer gave all documents and testimony such weight and consideration as he deemed just, proper and relevant, within the bounds of the evidentiary standards set forth in Missouri.
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over this appeal is proper. Complainants timely appealed to the State Tax Commission from the decision of the Scotland County Board of Equalization.
- Evidentiary Hearing. Exchange and Hearing order was issued by the State Tax Commission. Parties were ordered to file their exhibits by 7/28/2016, Rebuttal and Objections by 8/28/2016 and Responses and Surrebuttal by 9/28/2016. Both parties submitted exhibits by the original due date. Neither party submitted rebuttal and/or objections by the designated date. Respondent did untimely submit additional exhibits on 9/13/2016 and Complainants filed correspondence addressing such on 9/16/2016. By Order of 9/6/2016 the parties were to request a hearing by 9/13/2016 or the appeal would be submitted upon the record. Respondent timely consented to the appeal being submitted on the record and Complainants, through counsel, consented on 9/16/2016. No party requested a hearing on this appeal by the designated date and therefore the appeal was submitted on exhibits.
- Identification of Subject Property. The subject property is identified by map parcel number or locator number 2-11-01.0-02-000.0-00-01.002. It is further identified as RR 3, Box 171, Memphis, MO 63555. (Exhibit A)
- Description of Subject Property. The subject property consists of a 6.2 acre tract of land improved by a single family, two story residence built in 2012, of very good quality and condition with 5,421 square feet of living area. Amenities include 3 bedrooms and 3 bathrooms above grade and 1 bathroom below grade. 2,951 square feet of the basement is finished. The home has a 3 car attached garage, a covered porch, a patio, a deck and an indoor swimming pool. The property is located in a rural area in Memphis, MO. (Exhibit A)
- Assessment. The Assessor appraised the property at $968,910 residential. The Board of Equalization lowered the true market value to $855,000. (Complainants’ Complaint)
- Complainant’s Evidence. Complainants timely submitted an appraisal report (Exhibit A) performed by State Certified Residential Trainee Jesse Lochman and co-signed by State Certified General Real Estate Appraiser Mason Spurgeon.
- No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2015, to January 1, 2016 therefore the assessed value for 2015 remains the assessed value for 2016. Section 137.115.1, RSMo.
- Respondent’s Evidence. Respondent timely submitted Exhibits 1 & 2. Exhibit 1 consisted of an appraisal with an effective date of 10/13/2010. Exhibit 2 consisted of an appraisal with an effective date of 2/24/2015. Respondent also submitted Exhibits 3 through 6 all related to comparable #1 in Complainants’ appraisal report. Exhibit 3 consists of a news headline. Exhibit 4 consists of a first amended inventory in a probate case. Exhibit 5 consists of a second amended inventory in the same probate case. Finally, Exhibit 6 consists of a Report of Private Sale of Real Property.
- Presumption of Correct Assessment Rebutted. The evidence was substantial and persuasive to rebut the presumption of correct assessment by the Board of Equalization and allow a determination of true market value.
CONCLUSIONS OF LAW AND DECISION
Issuance of Decision Absent Evidentiary Hearing
The Hearing Officer, after affording the parties reasonable opportunity for fair hearing, shall issue a decision and order affirming, modifying or reversing the determination of the board of equalization, correcting any assessment which is unlawful, unfair, improper, arbitrary or capricious. Section 138.431.5 RSMo; 12 CSR 30-3.080 (2). The filing of exhibits and written direct testimony establishes the basis upon which opportunity for an evidentiary hearing can be held. The Complainants have the burden to present substantial and persuasive evidence.
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. 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 true value in money for the property under appeal. By statute real and tangible personal property are assessed at set percentages of true value in money. Section 137.115.5, RSMo – residential property at 19% of true value in money; commercial property at 32% of true value in money and agricultural property at 12% of true value in money.
Presumption In Appeal
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. 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). 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. When some substantial evidence is produced by the Complainant, “however slight”, the presumption disappears and the Hearing Officer, as trier of facts, receives the issue free of the presumption. United Missouri Bank of Kansas City v. March, 650 S.W.2d 678, 680-81 (Mo. App. 1983), citing to State ex rel. Christian v. Lawry, 405 S.W.2d 729, 730 (Mo. App. 1966) and cases therein cited. The presumption is not evidence of value. 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. Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See, Cupples-Hesse, supra. 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. Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).
Complainants’ Burden of Proof
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, 2015. Hermel, supra. 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.” 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).
The Assessor’s original value in this appeal was determined by the Board to be incorrect. The taxpayer must rebut that presumption that the Board’s determination was incorrect in order to prevail. The taxpayer must establish by substantial and persuasive evidence that the value concluded by the Board is in error and what the correct value should be. The burden, of course, is discharged by simply establishing the fair market value of the property as of the valuation date, since once fair market value is established it, a fortiori, proves that the Board’s value was in error.
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. 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). True value in money is defined in terms of value in exchange and not value in use. 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). It is the fair market value of the subject property on the valuation date. Hermel, supra. 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:
- Buyer and seller are typically motivated.
- Both parties are well informed and well advised, and both acting in what they consider their own best interests.
- A reasonable time is allowed for exposure in the open market.
- Payment is made in cash or its equivalent.
- Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
- 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.
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. Scotland County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); Scotland 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 he may deem it entitled to when viewed in connection with all other circumstances, but is not bound by the opinions of experts who testify on the issue of reasonable value, and may believe all or none of the expert’s testimony and accept it in part or reject it in part. Scotland County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993).
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, at 615 (Mo. App. W.D. 2000); Hermel, supra; 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. Div. 2 1974).
Three appraisals were submitted – one by Complainant and two by Respondent. Complainants submitted an appraisal of the subject property with an effective date of 1/1/2015. Such appraisal utilized both the comparable sales approach and the cost approach to valuation. The appraiser utilized three comparables within 32 miles of the subject property and one comparable within 62 miles of the subject property. Adjustments for site, room count, living area, basement finish and content, garage space and other amenities were made by Complainants’ appraiser. Of the four comparable utilized, the comparable #3 to be the best indicator of the true market value of the subject property. Such comparable lies 31.90 miles from the subject property. It is located in La Plata, Mo a similar size town as the subject lies in. It also appeared to be the most comparable to the subject property in rooms, gross living area, basement and “rural” location. Excluding the site adjustment for the large difference in acreage between the subject property and comparable #3, the net adjustment amount is only 7% and the gross adjustment amount is only 12.3%. The adjusted sales price of was $758,890.
The remaining comparables within thirty miles of the subject were much smaller than the subject and did not have the amenities. The comparable 66 miles from the subject was much larger than the subject. None of these comparables were as persuasive as comparable #3
The appraiser also developed the cost approach using the Marshall and Swift Cost Handbook. The appraiser determined cost new of $1,131,905 and depreciation of $492,184. The appraiser concluded an indication of value of $674,721 under this approach.
The appraiser considered both approaches. As to the sales approach, the appraiser stated that the approach is typically given the most weight for residential appraisals. However, in this situation the size of the subject and its location made it difficult to find comparable properties. The cost approach can be used except the external obsolescence impacts its accuracy. The appraiser gave both approaches equal weight and concluded a value of $675,000 for the subject as of January 1, 2015.
The Respondent submitted two appraisals, one with an effective date of 10/13/2010 and one with an effective date of 2/24/2015. The pertinent date of valuation for ad valorem tax purposes in this appeal is 1/1/2015 therefore the appraisal report dated October 13, 2010 was given limited consideration.
Appraisal dated 2/24/2015 was limited to the use of the cost approach to valuation. The appraiser stated that “[t]he sales comparison approach to value was not used in this appraisal due to no comparables in the area are similar to the subject property”. The appraiser determined cost new of $1,238,901.55. The appraiser opined depreciation of approximately $350,000 accounting for economic and physical/functional depreciation. The resulting indication of value was $854,842.
After consideration of all the evidence, including the cost approaches and the sale comparables, comparable #3 in the Complainant’s appraisal is the most substantial evidence presented. The indication of value from the adjusted sales price of comparable three is supported by the cost approach developed by both appraisers.
The true market valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Scotland County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2015 and 2016 is set at $144,189 residential.
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
The Collector of Scotland 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 September 23, 2016.
STATE TAX COMMISSION OF MISSOURI
John J. Treu
Senior Hearing Officer
Delivery or Notice was made via mail, email, fax, or personally on September 23, 2016 to the following Individuals of this Order
firstname.lastname@example.org; email@example.com; firstname.lastname@example.org
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