STATE TAX COMMISSION OF MISSOURI
|KENDALL J. & L. CELESTE BLUMER,||)|
|v.||)||Appeal No. 15-15950|
|JAKE ZIMMERMAN, ASSESSOR||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
The assessment made by the Board of Equalization of St. Louis County (BOE) is AFFIRMED. Complainants Kendall J. and L. Celeste Blumer (Complainants) did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE. Respondent Jake Zimmerman, St. Louis County Assessor, (Respondent) also did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE. The assessed value for the subject property for tax years 2015 and 2016 is set at $56,620 residential ($298,000 TMV).
Complainants appeared pro se.
Respondent appeared by Steven Robson, Assistant County Counselor.
Case heard and decided by Senior Hearing Officer Amy S. Westermann.
Complainants appealed on the ground of overvaluation. Respondent initially set the TMV of the subject property, as residential property, at $331,000. The BOE lowered Respondent’s valuation to $298,000. The Commission takes this appeal to determine the TMV of the subject property on January 1, 2015.
The Senior 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.
- Evidentiary Hearing. The issue of overvaluation was presented at an evidentiary hearing on June 2, 2016, at the St. Louis County Government Administration Building, 41 South Central Avenue, Clayton, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 20H430164. It is further identified as 6318 Alamo Ave., Clayton, Missouri. (Complaint; Exhibit 1)
- Description of Subject Property. The subject property consists of a 5,560 square foot residential lot improved by a 1,389 square foot, single-family, 1.5 story home built in 1923. (Exhibit A; Exhibit 1) The subject property includes three bedrooms; one full bathroom and one half bathroom; a partial basement with 896 square feet of unfinished area; a two-car detached garage; one fireplace; and one patio. The exterior consists of stucco construction. (Exhibit A; Exhibit 1)
- Assessment. Respondent placed a TMV of $331,000 on the subject property, as of January 1, 2015.
- Board of Equalization. The BOE lowered Respondent’s TMV of the subject property to $298,000.
- Complainant’s Evidence. Complainants testified in their own behalf. Complainants testified that they had purchased the subject property in 1990 for $156,000. Complainants testified that the subject property was encumbered by a mortgage of less than $30,000; that it had not been listed for sale or appraised within the three years preceding the Evidentiary Hearing; and that they had not received any offers to purchase the subject property. Complainants testified that they had not made any improvements to the subject property between January 2013 and January 2015. Complainants testified that the subject property backs to an area zoned as commercial, i.e., C2, with businesses situated directly behind the subject property. Complainants opined that the TMV of the subject property was $249,000 as of January 1, 2015.
Complainants offered as evidence photographs of the exterior and interior of the subject property (Exhibits A, B, C, D, E, F, G, H, I, and J); a graph index of Missouri housing prices based on data obtained from the St. Louis Federal Reserve (Exhibit K); data from five comparable properties (Exhibit L); and data from comparables that Respondent had utilized when making his initial assessment of the subject property (Exhibits M and N).
Exhibits A through J consisted of photographs depicting the exterior and interior of the subject property. The photographs showed cracked and peeling paint on exterior doors and windows; cracks in the stucco façade of the residence; a cracked and deteriorated front walkway; the living room and dining room with only minor cosmetic defects (separation of a seam between the tile hearth and the wood floor and a peeling seam of wallpaper); the kitchen with dated finishes; bathrooms with dated finishes; bedrooms with no obvious defects; a closet with peeling wall paint; the basement with painted brick walls and partial carpeting to create what appeared to be an office space; the basement laundry room with cracks in the concrete floor; and the aged boiler heating system. (Exhibits A through J)
Exhibit L contained data from sale listings of five comparable properties. The comparables had sold between August 2014 and August 2015. (Exhibit L) The sale prices of the comparables ranged from $182,000 to $297,000. Two of the comparables had more square footage than the subject property, and three had less square footage than the subject property. Some of the comparables were located in the Clayton school district, like the subject property, while others were located in the Ladue school district. (Exhibit L) None of the comparables were 1.5 story homes like the subject property but were either two-story homes or ranch style homes. No market based adjustments had been performed on the comparables in relation to the subject property from which one could derive an estimate of the subject property’s TMV.
Respondent did not object to Exhibits A and B. Respondent lodged a continuing objection to Exhibits C, D, E, F, G, H, I, and J on the ground that Respondent had not been allowed to inspect the subject property for condition. The Senior Hearing Officer allowed the evidence to be presented and reserved her ruling to be issued with the Decision and Order. Respondent objected to Exhibit K on the ground that it lacked foundation and was irrelevant. Respondent objected to Exhibits M and N on the ground that they were irrelevant to establishing the value of the subject property. The Senior Hearing Officer sustained the objections to Exhibits K, M, and N, which were excluded from the record.
On cross examination, Complainants testified that Respondent sent them an email message prior to the evidentiary hearing indicating that Respondent wanted to inspect the interior of the subject property to view potential deferred maintenance, structural problems, or external issues that could affect value. Complainants testified that they did not respond to the request for an inspection because they believed the presentation of their photographs of the subject property would be sufficient to support their opinion of value.
- Respondent’s Evidence. Respondent offered as evidence the testimony of Missouri State Certified Residential Real Estate Appraiser Nancy McGrath, (Appraiser) along with the Appraiser’s report (Exhibit 1). The Appraiser opined that the TMV of the subject property as of January 1, 2015, was $306,000. The Appraiser testified that she had utilized the sales comparison approach to arrive at her opinion of value. The Appraiser testified that she had chosen four comparables but had given Comparable Nos. 1 and 4 the most weight in arriving at an opinion of TMV.
The Appraiser testified that she had not performed either an interior or exterior inspection of the subject property but had relied on property records to determine the size and characteristics of the subject property. The Appraiser testified that finding comparable properties was somewhat difficult due to the small size of the subject property. (Exhibit 1) Consequently, the Appraiser used comparables located a distance of 1.54 miles, 1.61 miles, 1.63 miles, and 1.74 miles away from the subject property. Although two of the comparables backed to the Forest Park Parkway, which carries heavy traffic, none of the comparables backed to commercially zoned areas.
On cross-examination, the Appraiser testified that she had chosen comparables within the City of Clayton and the Clayton School District; however, because there had been no recent sale in the subject property’s neighborhood, she had reviewed properties located in other neighborhoods to arrive at an opinion of value. The Appraiser testified that the subject property was in a desirable “higher priced neighborhood,” which meant that its sale price would likely be higher than a similar property in a different neighborhood. The Appraiser testified that no adjustments were made as a consequence of the subject property backing to a commercially zoned area even though adjustments were made to two of the comparables that backed to the Forest Park Parkway. When Complainants asked the Appraiser whether a property backing to a parkway is less desirable than backing to a commercially zoned area, the Appraiser replied that she did not believe backing to a “C2” zoned area would make any difference in desirability.
Complainant did not object to Respondent’s evidence, which was received into the record.
- Presumption of Correct Assessment Not Rebutted. Neither Complainant’s nor Respondent’s evidence was substantial and persuasive to rebut the presumption of correct assessment by the BOE.
CONCLUSIONS OF LAW AND DECISION
The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious, including the application of any abatement. The Senior 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 property and tangible personal property are assessed at set percentages of true value in money: residential property at 19%; commercial property at 32%; and agricultural property at 12%. Section 137.115.5 RSMo (2000) as amended.
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, subclassification, or assessment of the property. Section 138.430.2 RSMo (2000) as amended. 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. Id.
During the hearing, the Senior Hearing Officer inquired of Complainant and of the Appraiser.
Complainant’s Burden of Proof
To obtain a reduction in assessed valuation based upon an alleged overvaluation, the Complainant must prove the true value in money of the subject property on the subject tax day. Hermel, Inc., v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978). True value in money is defined as the price that the subject property would bring when offered for sale by one willing but not obligated to sell it and bought by one willing or desirous to purchase but not compelled to do so. Rinehart v. Bateman, 363 S.W.3d 357, 365 Mo. App. W.D. 2012); Cohen v. Bushmeyer, 251 S.W.3d 345, 348 (Mo. App. E.D. 2008); Greene County v. Hermel, Inc., 511 S.W.2d 762, 771 (Mo. 1974). True value in money is defined in terms of value in exchange and not in terms of value in use. Stephen & Stephen Properties, Inc. v. State Tax Commission, 499 S.W.2d 798, 801-803 (Mo. 1973). In sum, true value in money is the fair market value of the subject property on the valuation date. Hermel, Inc., 564 S.W.2d at 897.
A presumption exists that the assessed value fixed by the BOE is correct. Rinehart, 363 S.W.3d at 367; Cohen, 251 S.W.3d at 348; Hermel, Inc., 564 S.W.2d at 895. “Substantial and persuasive controverting evidence is required to rebut the presumption, with the burden of proof resting on the taxpayer.” Cohen, 251 S.W.3d at 348. 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). See also, 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).
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.” Westwood Partnership, 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).
Generally, a property owner, while not an expert, is competent to testify to the reasonable market value of his own land. Cohen, 251 S.W.3d at 348-49; Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992). “However, when an owner’s opinion is based on improper elements or foundation, his opinion loses its probative value.” Carmel Energy, Inc., 827 S.W.2d 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. E.D. 1980).
Respondent’s Burden of Proof
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 under the principles established by case law. Hermel, Inc., 564 S.W.2d at 895; Cupples-Hesse, 329 S.W.2d at 702; Brooks, 527 S.W.2d at 53.
In this case, Respondent presented the Appraiser’s report as evidence indicating a higher valuation than the value finally determined by the BOE but not higher than the value previously determined by Respondent; thus, the Appraiser’s report was received to be considered in light of Respondent’s argument that the BOE’s valuation of the subject property should be raised to $306,000 as of January 1, 2015.
Weight to be Given Evidence
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).
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 deemed necessary when viewed in connection with all other circumstances. Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. W.D. 1991). The Hearing Officer, as the trier of fact, is not bound by the opinions of experts but may believe all or none of the expert’s testimony or accept it in part or reject it in part. Exchange Bank of Missouri v. Gerlt, 367 S.W.3d 132, 135-36 (Mo. App. W.D. 2012).
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 or none of the expert’s testimony and may accept it in part or reject it in part. 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).
Board Presumption and Computer-Assisted Presumption
There exists a presumption of correct assessment by the BOE – the BOE presumption. In charter counties or the City of St. Louis, there exists by statutory mandate a presumption that the Assessor’s original valuation was made by a computer, computer-assisted method or a computer program – the computer-assisted presumption. These two presumptions operate with regard to the parties in different ways.
The BOE presumption operates in every case to require the taxpayer to present evidence to rebut it. If Respondent is seeking to prove a value different than that set by the BOE, then it also would be applicable to the Respondent.
The computer-assisted presumption is applicable only if (1) the BOE lowered the value of the Assessor and Respondent is seeking to sustain the original assessment and (2) it has not been shown that the Assessor’s valuation was not the result of a computer assisted method. The BOE’s valuation is assumed to be an independent valuation.
In the present appeal, the BOE lowered the initial valuation of Respondent, and both Complainant and Respondent are seeking to change the BOE’s valuation; therefore, the BOE presumption applies to both parties while the computer-assisted presumption is not applicable.
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, 615 (Mo. App. W.D. 2000); Hermel, Inc., 564 S.W.2d at 897; 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. 1974).
“For purposes of levying property taxes, the value of real property is typically determined using one or more of three generally accepted approaches.” Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005), citing St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977). “Each valuation approach is applied with reference to a specific use of the property—its highest and best use.” Snider, 156 S.W.3d at 346-47, citing Aspenhof Corp., 789 S.W.2d at 869. “The method used depends on several variables inherent in the highest and best use of the property in question.” Snider, 156 S.W.3d at 347. “Each method uses its own unique factors to calculate the property’s true value in money.” Id. “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 348. “Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character.” Id. (quotation omitted). “This approach is most appropriate when there is an active market for the type of property at issue such that sufficient data [is] available to make a comparative analysis.” Id.
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.
Here, neither party presented substantial and persuasive evidence to rebut the presumption that the BOE’s valuation was correct.
Complainants essentially argued that the subject property’s small size, dated and somewhat deteriorated condition, and location backing to an area zoned as “C2” required a reduction of the BOE’s valuation. Respondent essentially argued that the BOE’s valuation should be increased based on the sale prices of comparables located one-and-a-half to nearly two miles away and without considering the effect of backing to C2 zoning. However, the evidence presented by each party cancelled out the evidence presented by the other. The subject property, while smaller and in a dated and, arguably, minimally deteriorated condition, is located in the City of Clayton and in the Clayton School District – two factors that are generally believed to favorably influence the value of a residential property in St. Louis County. However, given the Appraiser’s opinion that the subject property’s valuation was heavily influenced by its location in a specific “highly desirable” neighborhood, it would be improper to find that the value of the subject property could be accurately estimated using comparables found one-and-a-half miles to nearly two miles away. Similarly, it would be improper to find that the value or desirability of the subject property would not be impacted due to it backing to C2 zoning while the value of two of the Appraiser’s comparables was adversely impacted because they backed to a heavily-travelled thoroughfare.
The true market value for the subject property as determined by the BOE is AFFIRMED. The assessed value for the subject property for tax years 2015 and 2016 is set at $56,620 residential ($298,000 TMV).
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 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 September 20, 2016.
STATE TAX COMMISSION OF MISSOURI
Amy S. Westermann
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 20th day of September, 2016, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.
 The objection is hereby overruled.
 Respondent’s proposed valuation following the Appraiser’s analysis was higher than the BOE’s valuation of the subject property’s value but lower than Respondent’s initial valuation of the subject property, $331,000. Respondent advocated that the subject property’s valuation as of January 1, 2015, should be raised from the BOE’s valuation to $306,000.