STATE TAX COMMISSION OF MISSOURI
|Complainant,||)||Appeal No. 20-10320|
|)||Parcel No. 28K120047|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
ORDER AFFIRMING HEARING OFFICER DECISION UPON APPLICATION FOR REVIEW
On February 11, 2022, State Tax Commission (STC) Senior Hearing Officer Erica Gage (Hearing Officer) entered a Decision and Order (Decision) affirming the assessment as of January 1, 2020, of the subject property in this appeal. Kevin Brennan (Complainant) timely filed an Application for Review of the Decision and Order of the Hearing Officer. Jake Zimmerman, Assessor, St. Louis County, Missouri, (Respondent) timely filed a Response.
We AFFIRM the Decision of the Hearing Officer. Segments of the Hearing Officer’s Decision may have been incorporated into our Order without further reference.
FINDINGS OF FACT AND PROCEDURAL HISTORY
The subject property is identified by Parcel Locator No. 28K120047. The subject property is further identified as being located at 4830 Dorsie Drive, St. Louis, Missouri. The subject property is residential property consisting of a 21,340-square-foot lot improved by a 1,875-square-foot single family home. The home has six rooms, three bedrooms, and two bathrooms.
Respondent assessed the subject property as residential property with a true value in money (TVM) of $271,700 as of January 1, 2019. Complainant purchased the subject property in September 2020 for $165,000. Complainant appealed directly to the STC and provided a closing statement to show the subject property had been purchased after the deadline for filing an appeal with the Board of Equalization. Complainant alleged that the subject property was overvalued as of January 1, 2020. The appeal proceeded to an Evidentiary Hearing in which both parties were represented by counsel, and both parties presented testimony and exhibits. The Hearing Officer subsequently issued the Decision finding the TVM of the subject property on January 1, 2020, was $271,700.
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 timely filed his response. Complainant filed a reply to Respondent’s response.
CONCLUSIONS OF LAW
Complainant’s Points on Review
Complainant alleges the Hearing Officer’s Decision was erroneous because:
- The Hearing Officer incorrectly applied the burden of proof;
- The Hearing Officer erred in not defining the burden of proof prior to or during the hearing; and
- The taxpayer is entitled to relief as a matter of law.
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. 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.
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, the application for review of Complainant, the response of Respondent, and the reply of Complainant, affirms the Hearing Officer’s decision.
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).
With regard to Complainant’s first and second points on Application for Review, we find the allegations to be without merit.
First, the Hearing Officer correctly applied the substantial and persuasive evidence standard to the evidence presented in an appeal before the STC. The standard to which Complainant refers applies to appeals before the board of equalization and is stated in Section 138.060 under the chapter heading “County Boards of Equalization, Generally”:
The county board of equalization shall, in a summary way, determine all appeals from the valuation of property made by the assessor, and shall correct and adjust the assessment accordingly. There shall be no presumption that the assessor’s valuation is correct. In any county with a charter form of government . . . with greater than one million inhabitants . . . the assessor shall have the burden to prove that the assessor’s valuation does not exceed the true market value of the subject property.
The taxpayer in a STC appeal bears the burden of proof. The taxpayer is the moving party seeking affirmative relief. Additionally, there was no presumption in favor of Respondent’s valuation in this appeal, see Section 138.431.4, but Complainant still had the burden of proving that the valuation placed on the subject property was erroneous and of establishing what should be the value of the subject property.
Second, to the extent that Complainant argues the burden of proof should have been explained by the Hearing Officer prior to or at the Evidentiary Hearing, we note that Complainant was represented by counsel who has represented numerous appeals before the STC and that the presentation of evidence relative to the burden of proof is a matter of trial strategy determined by counsel, not a hearing officer or an administrative tribunal.
The record reveals that Complainant advocated the TVM of the subject property on January 1, 2020, was $165,000. However, Complainant’s own evidence established that the purchase price of the subject property, $165,000 in September 2020, was the result of a non-market sale. Complainant’s evidence established that Complainant purchased the property from the owner’s son and in “as-is condition.” Complainant presented no evidence of comparable sales of similar properties close in proximity to the subject property.
The record also reveals that Respondent presented an appraisal report and the testimony of a state certified residential trainee appraiser as evidence that the subject property’s value was $295,000, as of January 1, 2019, a value higher than the value Respondent had placed on the property initially, $271,700. During his testimony at the Evidentiary Hearing, Respondent’s appraiser testified that he had learned of condition issues, which warranted a further downward adjustment in the amount of $20,000, resulting in a revised opinion of value of $275,000. Respondent’s appraiser further testified that in his training and experience, the conditions surrounding Complainant’s purchase of the subject property indicated that the purchase was for investment purposes and not a typically-motivated sale of residential property.
The appraisal report utilized the sales comparison approach to value the subject property. The appraisal report made market-based adjustments to four comparable sales of similar properties to conclude a range of values from $271,000 to $310,000. The sales of the comparable properties occurred within seven months of the valuation date of January 1, 2019. All of the comparable properties were located less than one mile from the subject property. The appraisal report correctly utilized the sales comparison approach to valuing property by adjusting the sale prices of the comparable properties to account for similarities to and differences with the subject property. The Hearing Officer found that, although Respondent did not have the burden of proof, Respondent introduced “evidence indicating a higher value than the value finally determined by the assessor . . . .” The Hearing Officer received the evidence for the purpose of sustaining the Respondent’s valuation, not for increasing the valuation of the subject property. 12 CSR 30-3.075(1).
With regard to Complainant’s third point on Application for Review, we find the allegation also to be without merit. According to the record, the issue of whether Respondent conducted a physical inspection of the subject property before increasing the value of the subject property’s value by more than 15% when valuing the property as of January 1, 2019, was injected at the Evidentiary Hearing during Complainant’s cross examination of Respondent’s appraiser. Respondent’s appraiser testified that Respondent’s office’s practice was to conduct physical inspections of properties prior to increasing their value more than 15% from the prior reassessment, according to Missouri law. Respondent’s appraiser testified that “county records” could verify whether such a physical inspection was performed regarding the subject property. Later, Respondent filed a copy of the written notice of inspection for the subject property along with Respondent’s response to the application for review. The notice of inspection was specific to the subject property, showed that the inspection occurred in February 2019, and was mailed to the owner of record. The notice of inspection also notified the owner of his or her right to request a more complete exterior inspection or an interior inspection, in compliance with Section 137.115.10, .11, and .12.
The Decision of the Hearing Officer is AFFIRMED. Segments of the Decision and Order of the Hearing Officer, including the findings of fact and conclusions of law therein, may have been 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 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.
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 August 12, 2022.
STATE TAX COMMISSION OF MISSOURI
Gary Romine, Chairman
Victor Callahan, Commissioner
Debbi McGinnis, 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 August 12, 2022, to: Complainant(s) and/or Counsel for Complainant(s), Respondent and/or Counsel for Respondent and County Collector.
STATE TAX COMMISSION OF MISSOURI
|Appeal No. 20-10320
Parcel/locator No(s): 28K120047
|JAKE ZIMMERMAN, ASSESSOR,
ST LOUIS COUNTY, MISSOURI,
DECISION AND ORDER
Kevin Brennan (Complainant) appeals the St. Louis County Assessor’s assessment finding the true value in money (TVM) of the subject property on January 1, 2020, was $271,700, with an assessed value of $51,620. Complainant purchased the property September 1, 2020, and appealed pursuant to 12 CSR 30-3.010(1)(B)1. Complainant claims the property is overvalued as assessed and proposes a value of $165,000. Complainant did not produce evidence establishing overvaluation. The 2020 assessment is affirmed.
Complainant, Kevin Brennan, was represented by counsel, Brian Mueller. Respondent was represented by counsel, Tim Bowe. The evidentiary hearing was conducted on September 29, 2021, via WebEx.
FINDINGS OF FACT
- Subject Property. The subject property is located at 4830 Dorsie Dr. in St Louis, Missouri. The parcel/locator number is 28K120047.
The subject property consists of a 21,340 square foot lot and a 1,875 square foot single family home. The home has six rooms, three bedrooms, and two bathrooms. Complainant purchased the subject property in 2020 for $165,000.
- Respondent and BOE. Respondent classified the subject property as residential and determined the TVM on January 1, 2019, was $271,700. The property was purchased in September 1, 2020, by the Complainant for $165,000 and was appealed directly to the STC with a closing statement attached, applicable for property purchased within 30 days of the BOE deadline or after.
- Complainant’s Evidence. Complainant, Kevin Brennan, testified the TVM of the subject property on January 1, 2020, was $165,000. Complainant purchased the property on September 1, 2020. Complainant testified that he purchased the property from the son of the owner and it was not listed for sale. Complainant submitted the following exhibits:
|A||Pictures of the property on date of purchase||Admitted|
|B||Affidavit of Purchase||Admitted|
Complainant testified the subject property required extensive remodeling due to damage from mold to wit he received bids for kitchen, bathrooms, roof and patio, totaling $60,000. Complainant testified he is not an appraiser nor has he taken classes on making adjustments to properties for repairs.
- Respondent’s Evidence. Respondent presented testimony from Adam Luesse, St. Louis County Appraiser senior and submitted Exhibit 1, an appraisal. Exhibit 1 is the appraisal report determining the TVM of the subject property on January 1, 2020, was $275,000 and Mr. Luesse testified he made an additional $20,000 adjustment to the subject property to “fair minus” for its current condition. Mr. Luesse testified that he did not consider the sale to be reflective of market value due to the lack of the property being sold privately without being listed on the market.
Exhibit 1 utilizes the sales comparison approach to estimate the market value of the subject property from recent sales of four comparable properties to find a value of the subject property of $295,000. The four comparables are all within four tenths of a mile of the subject property and all sales in the year 2018.
The key property data in Exhibit 1 are as follows:
|Subject Property||11758 Roundhill Dr||4868 Dorsie||4831 Dorsie||11736 Roundhill|
The comparable properties are similar to the subject property with respect to size, design style, bedrooms and bathrooms and location. The comparable properties differ from the subject property with respect to condition, as all comparables were in fair or good condition and the subject property was fair minus condition.
- Value. The TVM of the subject property on January 1, 2020, was $271,700.
CONCLUSIONS OF LAW
- Assessment and Valuation
Pursuant to Article X, Sections 4(a) and 4(b), Mo. Const. of 1945 real property and tangible personal property is 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. 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. For this reason, the comparable sales approach is typically used to value residential property. “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.
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). “It is within the purview of the hearing officer to determine the method of valuation to be adopted in a given case.” Tibbs v. Poplar Bluff Assocs. I, L.P., 599 S.W.3d 1, 9 (Mo. App. S.D. 2020). 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. 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.
- 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”). A taxpayer does not meet his burden if evidence on any essential element of his case leaves the STC “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).
- Complainant Did Not Prove Overvaluation.
Complainant failed to prove overvaluation. Complainant offered the sales contract for $165,000 and condition photos of the property as the evidence supporting his alleged valuation. 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. Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character. 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. Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W. 3d, 341, 347 (Mo. 2005) (citations omitted). Complainant testified that the sale occurred without a market listing and he approached the seller, who was looking to sell the property. The evidence shows the Complainant’s purchase of the property is not an arms-length transaction. Complainant argues that the price paid is relevant in determining value for this property. However, “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.” Snider, 156 S.W.3d at 347-48 (internal quotation omitted). In contrast, Complainant used no comparable sales or appraisal of the property to arrive at a value. Complainant testified that the prior owner was offered an amount by a company and Complainant offered more in order to secure the property off-market. The nature of the sale constitutes peculiar circumstances, and therefore cannot be the basis for the subject property’s valuation as it is not reflective of a current market.
Respondent, although not required to, submitted Exhibit 1, an appraisal of the property. The comparable sales and adjustments utilized within Exhibit 1 support the January 1, 2019, assessment of $271,700. In a STC hearing, Respondent “shall not advocate nor present evidence advocating a valuation higher than that value finally determined by the assessor or the value determined by the BOE, whichever is higher, for that assessment period.” Section 138.060.1. If Respondent introduces “evidence indicating a higher value than the value finally determined by the assessor or the value determined by the board of equalization … such evidence will only be received for the purpose of sustaining the assessor’s or board’s valuation, and not for increasing the valuation of the property under appeal.” 12 CSR 30-3.075(1).
Respondent’s Exhibit 1 concludes the market value of the subject property is higher than the value determined by the Respondent or the BOE. Respondent, however, did not advocate a value higher than that determined by the BOE. Exhibit 1 is admissible as evidence for sustaining the value assigned by the BOE. 12 CSR 30-3.075(1).
CONCLUSION AND ORDER
The BOE decision is affirmed. The TVM of the subject property as of January 1, 2020, was $271,700, with an assessed value of $51,620.
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.
Failure to state specific facts or law upon which the application for review is based will result in summary denial. Section 138.432.
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 February 11, 2022.
STATE TAX COMMISSION OF MISSOURI
Erica M. Gage
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 February 11th, 2022, to:
Counsel for Complainant,
Counsel for Respondent
 Missouri operates on a two-year reassessment cycle for valuing real property. See Section 137.115.1 RSMo. Absent new construction or improvements to a parcel of real property, the assessed value as of January 1 of the odd year remains the assessed value as of January 1 of the following even year. Id. All statutory references are to RSMo. 2000, as amended, unless otherwise indicated.
 See 12 CSR 30-3.010(1)(B)1, which provides, in part, that an owner may appeal directly to the STC where he or she purchased real property less than 30 days before the deadline for filing an appeal to the BOE or later in the tax year. The owner must provide proof of the date of purchase when filing the appeal with the STC.
 See Section 339.501.5, which provides that an appraisal license or certificate is not required for “[a]ny employee of a local, state or federal agency who performs appraisal services within the scope of his or her employment; except that, this exemption shall not apply where any local, state or federal agency requires an employee to be registered, licensed or certified to perform appraisal services.”
 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.
 The appeal was initially assigned to Senior Hearing Officer Storck-Elam, who conducted an evidentiary hearing on the record but did not issue a decision and order. Pursuant to Section 138.431.5, “The commission may, prior to the decision being rendered, transfer to another hearing officer the proceedings on an appeal determination before a hearing officer.” Accordingly, this appeal is transferred to Senior Hearing Officer Erica Gage for determination.
 Missouri operates on a two-year reassessment cycle for valuing real property. See Section 137.115.1. Absent new construction or improvements to a parcel of real property, the assessed value as of January 1 of the odd year remains the assessed value as of January 1 of the following even year. Id.