STATE TAX COMMISSION OF MISSOURI

 

KAREN SMITH,	)	Appeal No. 19-10986
	)	Parcel No. 21K440205
Complainant,	)
	)
v.	)
	)
JAKE ZIMMERMAN, ASSESSOR,	)
ST. LOUIS COUNTY, MISSOURI,	)
	)
Respondent.	)

 

ORDER AFFIRMING

HEARING OFFICER DECISION UPON APPLICATION FOR REVIEW

HOLDING

            On March 26, 2021, Senior Hearing Officer Laura Stork-Elam (Hearing Officer) entered a Decision and Order (Decision) affirming the decision of the Board of Equalization of St. Louis County (BOE). Karen Smith (Complainant) subsequently filed an Application for Review of the Decision and Order of the Hearing Officer.

            We AFFIRM the Decision and Order of the Hearing Officer. Segments of the Hearing Officer’s Decision and Order may have been incorporated into our Decision and Order without further reference.

FINDINGS OF FACT AND PROCEDURAL HISTORY

The subject property is identified by Parcel Locator No. 21K440205. The subject property is further identified as being located at 8930 Harrison in St. Louis County, Missouri. The subject property consists of a parcel of residential real property. The subject property is a three-bedroom, one-bathroom, brick bungalow with a full basement built in 1939. The evidence established that some updates had been made to the subject property, including the installation of drain tiles to prevent flooding and the replacement of the HVAC, roof, driveway, kitchen cabinets, kitchen counter tops, and bathroom tile floor.

Jake Zimmerman, Assessor of St. Louis County (Respondent), assessed the subject property at $211,700. Complainant appealed to the BOE, which affirmed Respondent’s valuation. Complainant timely appealed to the State Tax Commission (STC) alleging that the subject property was overvalued. The Hearing Officer held an evidentiary hearing on July 8, 2020, via Webex. Complainant and Respondent each presented evidence in the form of testimony and exhibits. The Hearing Officer issued the Decision and Order on March 26, 2021, affirming the BOE on the ground that Complainant failed to present substantial and persuasive evidence that the BOE’s valuation of the subject property was erroneous.

Complainant timely filed an application for review. The STC thereafter issued its Order allowing the Application for Review and granting Respondent time to file a response. Respondent filed a timely response.

CONCLUSIONS OF LAW

Complainant’s Points on Review

In the Application for Review, Complainant raised three points asserting the Hearing Officer’s Decision was in error because:

• Complainant did not fail to establish that the BOE’s valuation was incorrect;

 

• Respondent’s methodology for valuing properties did not account for factors that influence sale prices; and

 

• Respondent’s valuation procedures should be transparent and easier to understand.

Standard of Review

A party subject to a Decision and Order of a hearing officer of the STC may file an application requesting the case be reviewed by the STC. Section 138.432[1]. The STC may then summarily allow or deny the request. Section 138.432. The STC may affirm, modify, reverse, set aside, deny, or remand to the Hearing Officer the Decision and Order of the Hearing Officer on the basis of the evidence previously submitted or based on additional evidence taken before the STC. Section 138.432.  

Commission’s Ruling

            For the reasons that follow, the Commission finds Complainant’s arguments to be unpersuasive. The Commission, having thoroughly reviewed the whole record and having considered the Hearing Officer’s Decision, and the Application for Review of Complainant, affirms the Hearing Officer’s decision.

There is a presumption of validity, good faith and correctness of assessment by the BOE. 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. The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the BOE’s valuation is erroneous and what fair market value should have been placed on the property. Id.

The taxpayer in a STC appeal bears the burden of proof. The taxpayer is the moving party seeking affirmative relief. Therefore, Complainant bears the burden of proving by substantial and persuasive evidence 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); 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. W.D. 1991). Substantial evidence can be defined as such relevant evidence that a reasonable mind might accept as adequate to support a conclusion. Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is evidence that has sufficient weight and probative value to convince the trier of fact. Cupples Hesse Corp., 329 S.W.2d at 702. 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).

The Hearing Officer is not bound by any single formula, rule, or method in determining true value in money and 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. 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).

Because Complainant’s points are interrelated, we address them all together.

In her first point, Complainant claims that she did not fail to establish the BOE’s valuation of the subject property was incorrect. In her second point, Complainant claims that Respondent’s methodology for valuing properties was improper because it did not account for factors that influence sale prices such as square footage and room count and buyers’ personal preferences. In her third point, Complainant claims that the properties Respondent used as comparables for the subject property during the mass appraisal process were not made available to her prior to her appeal, which caused the process to be unfair and not transparent.[2]

In greater detail, Complainant argues that the condition of the subject property and its lack of features and upgrades do not compare to the comparables used by Respondent. Complainant further argues that Respondent did not account for differences between the subject property and the comparable properties used by Respondent in assessing the subject property; thus, Respondent’s methodology is flawed. (Application for Review) We disagree.

Complainant cannot satisfy her burden of proof by arguing that the BOE’s valuation was incorrect because Respondent should have used other comparables or on the allegation that the comparables used for mass appraisal purposes were not known to her prior to the appeal. The taxpayer in a STC appeal bears the burden of proof. The taxpayer is the moving party seeking affirmative relief. Therefore, in this appeal, the Complainant had the burden of proving that the BOE’s valuation was erroneous and of establishing what should be the value of the subject property. Complainant argued that the subject property should be valued at $190,000 to $200,000 and that the BOE had overvalued the subject property at $211,700. However, Complainant’s evidence consisting of testimony and exhibits containing raw data regarding comparable properties did not comprise a properly-performed sales comparison approach to determining value.[3]

 

A properly-conducted sales comparison approach includes market-based adjustments made to comparable properties to provide a range of value estimates for the subject property and also shows the consummation of sales 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 interest;
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.

   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.

 

Respondent offered his exhibits to support the BOE’s valuation of $211,700.   The Hearing Officer found that Complainant did not object to Respondent’s exhibits, and Exhibits 1 and 2 were received into evidence. Notably, Respondent’s Exhibit 2 contained a map and a comparative market analysis (CMA) performed by a licensed appraiser showing both the list price and the sale price of eight comparable properties, which were located close in proximity to the subject property. The appraiser, Respondent’s witness, who Complainant had the opportunity to cross examine, explained the CMA. The sale dates of the comparables were close in time to the valuation date of January 1, 2019. The sale prices of the comparable properties ranged from $180,000 to $269,450. The Hearing Officer concluded that Respondent’s evidence was persuasive to support the BOE’s valuation of the subject property of $211,700 and noted that the BOE’s valuation “falls below the median and in the low end of this range and appears to take into account the fact that the subject property has minimal updates but is well maintained.” The record supports the Hearing Officer’s conclusion. Furthermore, the record is devoid of any evidence indicating that Respondent’s use of comparables similar to the subject property in the mass appraisal process lacked transparency.

The Hearing Officer found that Complainant did not present substantial and persuasive evidence to rebut the BOE’s valuation of the subject property and to establish the correct value that should be placed on the subject property. The Commission finds that a reasonable mind could have conscientiously reached the same result as the Hearing Officer based on a review of the entire record. Hermel, 564 S.W.2d at 895-96; Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998).

ORDER

            The Decision of the Hearing Officer 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 30 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 30 days, this decision and order is deemed final and the Collector of St. Louis 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 30, 2021.

STATE TAX COMMISSION OF MISSOURI

Gary Romine, Chairman

 

Victor Callahan, Commissioner

 

Will Kraus, Commissioner

 

Certificate of Service

I hereby certify that a copy of the foregoing has been electronically mailed and/or sent by U.S. Mail on July 30, 2021, to: Complainant(s) and/or Counsel for Complainant(s); County Assessor and/or Counsel for Respondent; County Collector; and County Clerk.

 

 

Elaina Mejia

Legal Coordinator

 

 

STATE TAX COMMISSION OF MISSOURI

 

Karen Smith	)	Appeal No. 19-10986
	)	Parcel No. 21K440205
Complainant,	)
	)
v.	)
	)
Jake Zimmerman, ASSESSOR	)
St. Louis County, MISSOURI	)
	)
Respondent.	)

 

DECISION AND ORDER

Karen Smith (Complainant) appeals the St. Louis County Board of Equalization’s (BOE) decision finding the true value in money (TVM) of the subject property on January 1, 2019, was $211,700 with an assessed value of $40,220. Complainant claims the property is overvalued and proposes a value of $190,000 to $200,000. Complainant did not produce substantial and persuasive evidence establishing overvaluation. The BOE’s decision is affirmed. [4] An evidentiary hearing was conducted remotely via Webex video on July 8, 2020. Complainant appeared pro se. Respondent was represented by counsel Monique McNutt.

FINDINGS OF FACT

1. Subject Property. The subject property is located at 8930 Harrison in St. Louis, Missouri. The parcel/locator number is 21K440205.

The subject property consists of a lot and a 1,068 square foot brick home. The home has three bedrooms and one bathroom. Complainant testified that one of the three bedrooms is used as a television room, and she purchased the subject property for approximately $98,000 to $100,000 in 1990.

2. Assessment and Valuation. Respondent classified the subject property as residential and determined the TVM on January 1, 2019, was $211,700. The BOE classified the subject property as residential and independently determined the TVM on January 1, 2019, was $211,700.
3. Complainant’s Evidence. Complainant testified that she believes the TVM of the subject property on January 1, 2019, was around $190,000 to $200,000. Complainant submitted (1) Exhibit A, a three-page statement of Complainant’s key points; (2) Exhibit B, a three-page document that includes eight photographs of the subject property; and (3) Exhibit C, a one-page table of comparable properties prepared by Complainant. Respondent did not object to any of Complainant’s exhibits, and Exhibits A, B, and C were received into evidence.

Complainant testified that Exhibit A summarizes some of the key points she wanted to address during the hearing. Exhibit A includes three sections: (1) a summary of the property; (2) the methodology used to calculate property values; and (3) the process before the BOE. According to Complainant’s testimony and the first section of Exhibit A, only minimal updates have been made to the house, which include the installation of drain tiles to prevent flooding and the replacement of the HVAC, roof, driveway, kitchen cabinets, kitchen counter tops, and bathroom tile floor. According to Complainant’s testimony and the second section of Exhibit A, Complainant believes the methodology used by Respondent is neither reliable nor consistent. In support of these statements, Complainant’s testimony and the second section of Exhibit A discuss a 16% increase that exceeds the rate of inflation, assert inconsistent results in that other property owners who owned properties that have been upgraded received reductions in their valuations, and challenge the comparative properties that were selected by Respondent. Through testimony and the third section of Exhibit A, Complainant discusses the BOE process. Complainant specifically indicates that the BOE process was not followed because although she had been told that three BOE members would hear her appeal, only two did.

Exhibit B consists of photographs of the bathroom, combined living and dining room, kitchen, each of the three bedrooms, the basement, and the garage of the subject property.

Exhibit C includes a table of 16 properties placed in three groups. These groups are (1) seven properties Complainant proposes to use to appraise the subject property (proposed comparables); (2) six properties that Complainant indicates could be used to appraise the subject property (acceptable comparables); and (3) three properties that Complainant states Respondent utilized to appraise the subject property but are excluded from Complainant’s proposed comparables and acceptable comparables (excluded properties).

4. Respondent’s Evidence. Respondent’s appraiser, Adam Luesse, testified that Respondent’s exhibits were offered to support the BOE value. Respondent submitted Exhibit 1, the Complaint for Review of Assessment and the attached October 4, 2019, BOE Findings and Notice of Decision, and Exhibit 2, a map showing the location of eight comparative properties followed by a second page titled “CMA² 1 Line (Landscape).” Complainant did not object to any of Respondent’s exhibits, and Exhibits 1 and 2 were received into evidence.

According to Mr. Luesse’s testimony and Exhibit 2, Exhibit 2 lists one-story homes located within one-quarter mile of the subject property with a square footage from 968 to 1168, which is within 100 feet of the size of the subject property, 1,068 square feet. These eight properties sold between January 1, 2017, and December 31, 2018. The sales range from $180,000 to $269,450 with a median of $231,750.

5. Value. The TVM of the subject property on January 1, 2019, was $211,700 with an assessed value of $40,220.

___________________________

² CMA is an acronym for comparative market analysis.

CONCLUSIONS OF LAW

1. Assessment and Valuation.

Residential real property is assessed at 19% of its TVM as of January 1 of each odd-numbered year. Section 137.115.5(1)(a). “True value in money is the fair market value of the property on the valuation date, and is a function of its highest and best use, which is the use of the property which will produce the greatest return in the reasonably near future.” Snider v. Casino Aztar/Aztar Mo. Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005) (internal quotation omitted). The fair market value is “the price which the property would bring from a willing buyer when offered for sale by a willing seller.” Mo. Baptist Children’s Home v. State Tax Comm’n, 867 S.W.2d 510, 512 (Mo. banc 1993). Determining the TVM is a factual issue for the STC. Cohen v. Bushmeyer, 251 S.W.3d 345, 348 (Mo. App. E.D. 2008). The “proper methods of valuation and assessment of property are delegated to the Commission.” Savage v. State Tax Comm’n, 722 S.W.2d 72, 75 (Mo. banc 1986).

“For purposes of levying property taxes, the value of real property is typically determined using one or more of three generally accepted approaches.” Snider, 156 S.W.3d at 346. The three generally accepted approaches are the cost approach, the income approach, and the comparable sales approach. Id. at 346-48; see also St. Louis Cty. v. Sec. Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977).

The comparable sales approach “is most appropriate when there is an active market for the type of property at issue such that sufficient data are available to make a comparative analysis.” Snider, 156 S.W.3d at 348. “The comparable sales approach uses prices paid for similar properties in arms-length transactions and adjusts those prices to account for differences between the properties.” Id. at 347-48 (internal quotation omitted). “Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character.” Id. at 348.

2. Evidence.

The hearing officer is the finder of fact and determines the credibility and weight of the evidence. Kelly v. Mo. Dep’t of Soc. Servs., Family Support Div., 456 S.W.3d 107, 111 (Mo. App. W.D. 2015). The finder of fact in an administrative hearing determines the credibility and weight of expert testimony. Hornbeck v. Spectra Painting, Inc., 370 S.W.3d 624, 632 (Mo. banc 2012). The hearing officer “may inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, subclassification or assessment of the property.” Section 138.430.2.

3. Complainant’s Burden of Proof.

The taxpayer bears the burden of proof and must show by a preponderance of the evidence that the property was overvalued or misclassified. Westwood P’ship v. Gogarty, 103 S.W.3d 152, 161 (Mo. App. E.D. 2003). The BOE’s valuation is presumptively correct. Tibbs v. Poplar Bluff Assocs. I, L.P., 599 S.W.3d 1, 7 (Mo. App. S.D. 2020). The “taxpayer may rebut this presumption by presenting substantial and persuasive evidence that the valuation is erroneous” and must prove “the value that should have been placed on the property.” Id. “Substantial evidence is that evidence which, if true, has probative force upon the issues, and from which the trier of fact can reasonably decide the case on the fact issues.” Savage, 722 S.W.2d at 77 (internal quotation omitted). Evidence is persuasive when it has “sufficient weight and probative value to convince the trier of fact.” Daly v. P.D. George Co., 77 S.W.3d 645, 651 (Mo. App. E.D. 2002); see also White v. Dir. of Revenue, 321 S.W.3d 298, 305 (Mo. banc 2010) (noting the burden of persuasion is the “party’s duty to convince the fact-finder to view the facts in a way that favors that party”).

4. Complainant Did Not Prove Overvaluation. Complainant does not produce substantial and persuasive evidence establishing that the BOE’s valuation is erroneous and that her opinion of value, $190,000 to $200,000, is the TVM of the subject property as of January 1, 2019. Although Exhibit C lists proposed comparables that are offered to support Complainant’s opinion of value, Complainant’s testimony and Exhibit C neither persuasively explain the exclusion of the excluded properties nor make adjustments for different characteristics between the proposed comparables and the subject property. For example, two of the excluded properties, 13 Stratford Lane and 9008 Bridgeport Avenue, are included in Respondent’s Exhibit 2 and appear to be comparable to the subject property. Based on the information contained in Exhibit C, both of these properties are a similar distance from the subject property as other properties included in the proposed comparables; have a total living area within 100 square feet of the total living area of the subject property; and have the same exterior wall type, architectural style, and number of full baths as the subject property. However, both properties are not included in Complainant’s proposed comparables or acceptable comparables. Further, the proposed comparables include two properties, 2414 Annalee Avenue and 9012 Moritz Avenue, with different exterior wall types than the subject property, aluminum/vinyl and asbestos, respectively. However, no adjustments are made to account for these different characteristics.

Further, although Exhibit B illustrates the condition of the inside of the home and garage at the time the photographs were taken, Exhibit B and Complainant’s related testimony neither establish that the BOE value is erroneous nor the TVM of the subject property as of January 1, 2019.

The second section of Exhibit A, which discusses Respondent’s methodology, and Complainant’s related testimony are not substantial and persuasive evidence that the BOE’s valuation of the subject property is erroneous. General assertions about the short-comings of the methodology of Respondent and how such methodology causes increases that exceed the rate of inflation and increases of some property values by 16% and 24% do not speak specifically as to the TVM of the subject property. Further, the fact that the appraised value of the subject property increased approximately 16% is not substantial and persuasive evidence that the BOE value is incorrect.

Likewise, the third section of Exhibit A, which discusses the BOE process, and Complainant’s related testimony are not substantial and persuasive evidence that the BOE value is erroneous. The evidence does not show that any failures to follow the proper process resulted in the overvaluation of the subject property. Further, as to Complainant’s assertion that only two out of three BOE members heard her appeal, pursuant to Section 138.040.2, a majority of the BOE members “present shall determine all matters of appeal or revision.”

Respondent, although not required to, presents persuasive evidence in support of the BOE’s valuation. Mr. Luesse’s testimony and Exhibit 2 explain that eight properties that sold between January 1, 2017, and December 31, 2018, with one-story homes located within one-quarter mile of the subject property that have a square footage from 968 to 1168 have a sales range from $180,000 to $269,450 with a median of $231,750. The TVM of the subject property determined by the BOE, $211,700, falls below the median and in the low end of this range and appears to take into account the fact that the subject property has minimal updates but is well maintained.

CONCLUSION AND ORDER

The BOE’s decision is affirmed. The TVM of the subject property as of January 1, 2019, was $211,700, with an assessed value of $40,220.

Application for Review

A party may file with the Commission an application for review of this decision within 30 days of the mailing date set forth in the certificate of service for this decision. The application “shall contain specific detailed grounds upon which it is claimed the decision is erroneous.” Section 138.432. The application must be in writing, and may be mailed to the State Tax Commission, P.O. Box 146, Jefferson City, MO 65102-0146, or emailed to Legal@stc.mo.gov. A copy of the application must be sent to each person listed below in the certificate of service.

Disputed Taxes

The Collector of St. Louis 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.

SO ORDERED March 26, 2021.

 

Senior Hearing Officer

State Tax Commission

Certificate of Service

I hereby certify that a copy of the foregoing has been electronically mailed and/or sent by U.S. mail on March 29, 2021, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.

 

Elaina McKee

Legal Coordinator

[1] All statutory citations are to RSMo. 2000, as amended, unless indicated otherwise.

[2] This claim is similar to Complainant’s assertion before the Hearing Officer that the BOE’s failures to follow the proper process (only two of the three BOE members heard her appeal) resulted in the overvaluation of the subject property. The Hearing Officer disagreed with Complainant’s assertion and found that the evidence did not show that any failures to follow the proper process resulted in the overvaluation of the subject property, particularly because, pursuant to Section 138.040.2, a majority of the BOE members, i.e., two of three, “present shall determine all matters of appeal or revision.”

[3] In particular, Complainant’s Exhibit C included a table of 16 properties placed in three groups: (1) seven properties Complainant proposed to use to value the subject property; (2) six properties that Complainant indicated were acceptable to be used to value the subject property; and (3) three properties that Respondent utilized during mass appraisal to value the subject property but which Complainant believed should be excluded. The table listed the comparable properties’ proximity to the subject property; sales dates; sales prices; price per square foot; “sales validity” status; and the physical characteristics of each comparable, such as total living area, room count, and number of bedrooms and bathrooms. The properties Complainant proposed or indicated were acceptable all had characteristics similar to the subject property and similar to the comparables utilized by Respondent in the mass appraisal process of valuing the subject property. Complainant’s own exhibit showed that the comparables utilized by Respondent, however, had characteristics that were nearly identical to the characteristics of the subject property and that all had been valid sales close in time to the valuation date.

[4] Complainant timely filed a complaint for review of assessment. The State Tax Commission (STC) has authority to hear and decide Complainant’s appeal.  Mo. Const. art. X, Section 14; section 138.430.1, RSMo 2000. All statutory citations are to RSMo 2000, as amended.