State Tax Commission of Missouri
| KATHERINE ANN GROSS TRUSTEE ET AL, | ) | |
| ) | ||
| Complainant(s) | ) | |
| ) | ||
| v. | ) | Appeal No. 13-13453 |
| ) | ||
| JAKE ZIMMERMAN, ASSESSOR | ) | |
| ST. LOUIS COUNTY, MISSOURI, | ) | |
| ) | ||
| Respondent. | ) |
DECISION AND ORDER
HOLDING
Decision of the County Board of Equalization for St. Louis County affirming the assessment made by the Assessor is SET ASIDE. Complainant did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization. Although Respondent was under no obligation to prove a lower value than the Assessor and Board of Equalization assigned, Respondent presented substantial and persuasive evidence of a lower value for the subject property, with certain concerns of the Hearing Officer expressed below, rebutting the presumption of correct assessment by the Board of Equalization and allowing the Hearing Officer to set a true market value.
True value in money for the subject property for tax years 2013 and 2014 is set at $658,950, residential assessed value of $125,200.
Complainant appeared by counsel Josh Corson.
Katherine Ann Gross did not personally appear.
Respondent appeared by attorney Priscilla Gunn.
Respondent Jake Zimmerman did not personally appear.
Case heard and decided by Senior Hearing Officer John Treu.
ISSUE
Complainant appeals, on the ground of overvaluation, the decision of the St. Louis 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, 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.
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.
- Evidentiary Hearing. The Evidentiary Hearing was held on March 3, 2015 at St. Louis County Administration Building, Clayton, Missouri.
- Identification of Subject Property. The subject property is identified by map parcel number or locator number 19K610407. It is further identified as 8029 Venetian Drive, St. Louis, Missouri in St. Louis County Missouri. (Ex. A & 1)
- Description of Subject Property. The subject property consists of a 7,560 square foot tract of land improved by a single family, residential two story brick home, built in 1931, which is well maintained. Amenities include four bedrooms, three and half bathrooms, a 2 car, oversized detached garage, two fireplaces and two stoops. It is located within the Davis Place subdivision. (Ex. 1)
- Assessment. The Assessor appraised the property at $682,900, residential. The Board of Equalization sustained such value. (Ex. 1)
- Complainant’s Evidence. Complainant offered into evidence Exhibit A and Exhibit B. Exhibit A consisted of an Appraisal Report prepared by Ernest Demba. Exhibit B consisted of a computer printout from the St. Louis County website relating to 7725 Mohawk Place (one of the comparables used by Respondent’s Appraiser). Exhibit A and B were both received into evidence without objection.
- No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2013, to January 1, 2014; therefore the assessed value for 2013 remains the assessed value for 2014. Section 137.115.1, RSMo.
- Respondent’s Evidence. Respondent offered into evidence Exhibit 1 and Exhibit 2. Exhibit 1 consisted of an Appraisal Report prepared by Ross Hackman where he placed equal weight on all six comparables used. Exhibit 2 consisted of a list, prepared by Mr. Hackman, of comparables in the Davis Place subdivision. Exhibits 1 and 2 were both received into evidence without objection.
- Presumption of Correct Assessment Rebutted – Value Established. The evidence presented by Respondent was substantial and persuasive to both rebut the presumption of correct assessment by the Board and to establish the fair market value of the subject property, with a downward adjustment made by the Hearing Officer to be $658,950, assessed residential value of $125,200. See, Respondent Proves Value, infra.
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. 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. 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).
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, 2013. 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); 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). A valuation which does not reflect the fair market value (true value in money) of the property under appeal is an unlawful, unfair and improper assessment.
Owner’s Opinion of Value
Complainant trustee Katherine Ann Gross did not appear or testify. The only testimony in Complainant’s case came from appraiser Ernest Demba. The owner of property is generally held competent to testify to its reasonable market value. 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). The owner’s opinion is without probative value; however, where it is shown to have been based upon improper elements or an improper foundation. 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).
“Where the basis for a test as to the reliability of the testimony is not supported by a statement of facts on which it is based, or the basis of fact does not appear to be sufficient, the testimony should be rejected.” Carmel Energy at 783. A taxpayer does not meet his burden if evidence on any essential element of his case leaves the Commission “in the nebulous twilight of speculation, conjecture and surmise.” See, Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980). In the present case, the Commission is left in such “nebulous twilight of speculation, conjecture and surmise.” Id.
Complainant’s appraiser, Ernest Demba considered the sales comparison approach, cost approach and income approach. He did not utilize the cost and income approaches as he did not consider them appropriate. Complainant’s appraiser believed the most appropriate approach to be the sales comparison approach. Mr. Demba identified three comparables in his appraisal. When coming up with an indicated value for the subject property Complainant’s appraiser gave “greater consideration” to his comparables #1 & #2 and “less consideration” to his comparable #3. (Ex. A). He did this because comparables #1 & #2 size differential, compared to the subject property, was less than the size differential as to comparable #3. He also cited the reason that comparables #1 and #2 had the least amount of adjustments.
Complainant’s appraiser ascribed no added value for the subject property having an updated kitchen and baths as compared to his selected comparables, which did not have updated kitchens or baths. Complainant’s appraiser testified he did not feel updated kitchens and baths have an impact on market value. Both the subject property and the three comparables used are all 1930’s homes. The Hearing Officer believes that updated kitchens and baths on the subject warrant adjustments. Consequently, the values ascribed to the properties, without such features, were not viewed as reliable.
Complainant simply did not present substantial and persuasive evidence to allow the Hearing Officer to establish the subject property’s value without resorting to speculation, conjecture and surmise.
Board Presumption
The Assessor’s original value in this appeal was determined by the Board to be correct. Accordingly, the taxpayer must rebut that presumption 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 computer-assisted presumption plays no role in this process. As stated above, Complainant did not meet the requisite burden.
Computer-Assisted Presumption
The computer assisted presumption can only come into play in those instances where the Respondent is seeking to have the Assessor’s original valuation affirmed. If in a given appeal, like the present one, the Respondent is offering evidence that would establish a value less than the original valuation, then the computer-assisted presumption is not applicable to that appeal.
Respondent’s Burden of Proof
Respondent was under no obligation to present any evidence in this appeal. Respondent could have simply sat back and allowed the Board of Equalization value to be affirmed. Instead, Respondent presented an appraisal, with certain issues, that would result in the Board of Equalization value being lowered. Consequently, the Hearing Officer, did not wish to deprive Complainant of the benefit of such lower value.
Respondent, when advocating a value different from that determined by the original valuation or a valuation made by the Board of Equalization, must meet the same burden of proof to present substantial and persuasive evidence of the value advocated as required of the Complainant. Hermel, Cupples-Hesse, Brooks, supra. It should be noted that in charter counties or the City of St. Louis, the Respondent, when wishing to advocate for a valuation to return the valuation to the Assessor’s original valuation, which was higher than the value assigned by the Board of Equalization, has imposed upon him by the provisions of Section 137.115.1, RSMo, the burden of proof to present clear, convincing and cogent evidence to sustain a valuation on residential property which is made by a computer, computer-assisted method or a computer program. In the present case, Respondent advocated for a value lower than that determined by the Assessor and Board of Equalization and therefore this heightened level of proof did not come in to play.
Respondent presented an appraisal report and the testimony of an appraiser. Respondent’s appraiser, Ross Hackman, utilized six comparables. The Hearing Officer notes two initial concerns with such Respondent’s appraisal. Respondent’s appraiser measured the subject property and found it to have additional square footage (3,377 sq. ft.) than reflected in the County records (3,256 sq. ft.) on 1/1/2013, and used such new square footage measurement when making adjustments to all six comparables. This is a difference of 121 square feet. Respondent’s appraiser openly acknowledged, during testimony, that buyers do not typically re-measure homes. Respondent presented no evidence to support any contention that the additional square footage would have been known to or reflected in the market on 1/1/2013 or that any additional consideration would have been paid on 1/1/2013 for such unknown amount of additional square footage. Respondent’s appraiser ascribed a $50/sq. ft. adjustment for variances in the square footage of comparables (Respondent’s Exhibit 1, Table). Thus, a downward adjustment of $6,050 (121 sq. ft. X $50/sq. ft.) to Respondent’s appraiser’s valuation is appropriate.
Secondly, Complainant challenged Respondent’s appraisal because he did not ascribe a downward adjustment to his comparable homes with slate roofs, which he openly acknowledges cost significantly more than other roofs (See Respondent’s Exhibit 1, Table). Cost cannot be used as a simple mathematical addition or subtraction to reflect the actual dollar impact on the market. Such must be borne out by the facts relating to the market. Nevertheless, premium roofing, in general, results in some additional value, as does a new roof verses a much older roof. Notwithstanding such, Complainant which bore the burden of proof, presented no substantial and persuasive evidence of the appropriate adjustments, whether upward or downward, which should have been assigned to such comparables, leaving the Commission “in the nebulous twilight of speculation, conjecture and surmise” and thus, none will be made by the Hearing Officer. See, Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980).
The Hearing Officer also notes two other things, such being the closing cost paid by sellers regarding Respondent’s comparable #2, such being $16,880 (Respondent’s Appraiser admitted on cross-examination that he missed such); and the use of comparable #5, which is noted in the County Record as “Not Open Market”; although, the reason for such was apparently unknown to either party. (Complainant’s Ex. B, Page 2). Neither of these issues definitely invalidates these comparables. Nevertheless, further consideration is given such.
Regarding the first issue testimony was made as to the relatively high amount of the closing cost paid as to comparable #2. Respondent’s appraiser testified he believed the sale was still a good comparable. The Hearing Officer believes the use of this comparable, given what appears to have been an extremely high amount paid by sellers, potentially calls into question the true market value of comparable #2. Regarding the second issue, as noted above, non arms-length sales generally require an upward adjustment, thus resulting in the subject property being valued higher. By disregarding each of these two comparables for testing purposes (#2 & #5) and noting that Respondent’s appraiser report reflects he placed equal weight on all of the six comparables he selected (Respondent’s Ex. 1)(weighting of comparables selected falls within acceptable appraisal practice), and weighing the remaining four comparables used by Respondent’s appraiser equally (as did Respondent’s appraiser), a figure of $663,650 is reached, which is reasonably close to the value ascribed to the subject property by Respondent’s appraiser, such being $665,000. Thus, the Hearing Officer believes the $665,000 appraisal amount, adjusted to $658,950 (see above) seems reasonable.
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). 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 a 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.
Investigation by Hearing Officer
In order to investigate appeals filed with the Commission, 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, sub-classification or assessment of the property. The Hearing Officer’s decision regarding the assessment or valuation of the property may be based solely upon his inquiry and any evidence presented by the parties, or based solely upon evidence presented by the parties. Section 138.430.2, RSMo. The Hearing Officer during the evidentiary hearing made inquiry of Complainant’s and Respondent’s appraisers.
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. 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).
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).
Opinion Testimony by Experts
An expert’s opinion must be founded upon substantial information, not mere conjecture or speculation, and there must be a rational basis for the opinion. Missouri Pipeline Co. v. Wilmes, 898 S.W. 2d 682, 687 (Mo. App. E.D. 1995). The State Tax Commission cannot ignore a lack of support in the evidence for adjustments made by the expert witnesses in the application of a particular valuation approach. Drey v. State Tax Commission, 345 S.W. 2d 228, 234-236 (Mo. 1961), Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W. 3d, 341, 348 (Mo. 2005).
The testimony of an expert is to be considered like any other testimony, is to be tried by the same test, and receives just so much weight and credit as the trier of fact may deem it entitled to when viewed in connection with all other circumstances. The Hearing Officer, as the trier of fact, has the authority to weigh the evidence and is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all, none or parts of the expert’s testimony. Beardsley v. Beardsley, 819 S.W. 2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W. 2d 605, 607 (Mo. 1981); Scanlon v. Kansas City, 28 S.W. 2d 84, 95 (Mo. 1930).
In this appeal, the Hearing Officer found certain flaws with both appraisals. The Hearing Officer weighed such and determined an appropriate valuation.
Respondent Proves Value
Respondent ultimately presented substantial and persuasive evidence to allow the establishment of a fair market value as of January 1, 2013, to be $658,950 for the subject property. Respondent’s appraiser developed an opinion of value relying upon an established and recognized approach for the valuation of real property, the sales comparison or market approach. The sales comparison approach is generally recognized to be the most reliable methodology to be utilized in the valuation of single-family residences.
The adjustments made by the appraiser were consistent with generally accepted guidelines for the appraisal of property of the subject’s type; although an additional adjustment was necessary by the Hearing Officer.
ORDER
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Louis County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2013 and 2014 is set at $125,200.
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
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 139.031.8, 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 this 1st day of April, 2015.
STATE TAX COMMISSION OF MISSOURI
John Treu
Senior Hearing Officer
Delivery or Notice was made via mail, email, fax, or personally on April 1st, 2015, to the following Individuals of this Order
Joshua Corson, Attorney for Complainants, josh@rcresolutions.com
Paula Lemerman, Attorney for Respondent, PLemerman@stlouisco.com
Priscilla Gunn, Attorney for Respondent, PGunne@stlouisco.com
Jake Zimmerman, Assessor, syoutzy@stlouisco.com
Mark Devore, Collector, mdevore@stlouisco.com
Jacklyn Wood
Legal Coordinator
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
573-751-2414
573-751-1341 Fax