STATE TAX COMMISSION OF MISSOURI
|KIMBERLY SHREVES & ROBERT SHREVES,||)|
|v.||)||Appeal No. 17-110872|
|)||Parcel/locator No. 20L130171|
|JAKE ZIMMERMAN, ASSESSOR||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
The assessment made by the Board of Equalization of St. Louis County (BOE) is AFFRIMED. Complainants Kimberly Shreves and Robert Shreves (referred to collectively as Complainants) did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.
Complainants appeared pro se.
Respondent Jake Zimmerman, Assessor, St. Louis County, Missouri, (Respondent) appeared by Counsel Steven Robson.
Case heard and decided by Senior Hearing Officer Amy S. Westermann (Hearing Officer).
Complainants appealed on the ground of overvaluation. Respondent initially set the true value in money (TVM) of the subject property, as residential property, at $1,467,700. The BOE set the TVM of the subject property, as residential property, at $1,375,700, thereby lowering Respondent’s valuation. 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 or improvement to the property. Section 137.115.1 RSMo The State Tax Commission (STC) takes this appeal to determine the true value in money for the subject property as the property existed on January 1, 2017, under the economic conditions as they existed on January 1, 2017.
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 STC.
- Evidentiary Hearing. An Evidentiary Hearing was held on April 9, 2018, at the St. Louis County Government Administration Building, 41 S. Central Avenue, Clayton, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 20L130171. It is further identified as 2024 Log Cabin Lane, St. Louis County, Missouri. (Complaint; Exhibit 1)
- Description of Subject Property. The subject property consists of a 3.0 acre residential lot improved by a 6,567 square-foot, two-and-a-half-story, single-family home built in 1924. (Exhibits A-GG; KK) The home includes five bedrooms; five full bathrooms; one half bathroom; a full unfinished basement beneath the home that houses the heating/cooling and central electrical systems; an attic family room; attached two-stall garage; four fireplaces; a porch; a patio; and an in-ground pool. (Exhibits A-GG; K) The exterior of the home consists of frame and brick construction. (Exhibits A-GG; K) The condition of the home is “average,” and the quality of the home is “good.” (Exhibit KK)
- Assessment. Respondent initially valued the subject property at $1,467,700, as residential, as of January 1, 2017.
- Board of Equalization. The BOE valued the subject property at $1,375,700, as residential, as of January 1, 2017, thereby lowering Respondent’s valuation.
- Complainant’s Evidence. Complainants opined that the subject property’s TVM as of January 1, 2017, was approximately $1,075,000. To support their opinion of value, Complainant offered the following evidence:
|Exhibits A-GG||Photos and descriptions of exterior and interior condition issues and items in need of repair/replacement||Admitted|
|Exhibit HH||Complainants’ written statement of 2017 real property taxes paid under protest||Admitted|
|Exhibit II||MARIS Matrix/MLS sales listing for 2000 Log Cabin Lane, comparable property that shares driveway with subject property, showing sold for 56.39% of list price on August 21, 2014 (list price $1,895,000; sold price $1,125,000)||Admitted|
|Exhibit JJ||MARIS Matrix/MLS sales listing for 2 Barclay Woods, comparable property across the street from subject property, showing sold for 89.58% of list price on December 19, 2017 (list price $1,200,000; sold price $1,075,000)||Admitted|
|Exhibit KK||Property Detail Report for subject property showing sold price $879,250 on July 28, 2010||Admitted|
|Exhibit LL||Shared Driveway Agreement for subject property and comparable property at 2000 Log Cabin Lane||Admitted|
|Exhibit MM||MARIS Matrix/MLS sales listing for 1 Barclay Woods, comparable property across the street from subject property, showing sold for 55.00% of list price on December 19, 2017 (list price $1,299,999; sold price $1,100,000)||Admitted|
|Exhibit NN||BOE Findings and Notice of Decision dated September 23, 2011, lowering Respondent’s valuation of the subject property from $1,805,600 to $1,000,000||Admitted|
Respondent did not object to Complainant’s exhibits, all of which were received into the record.
Complainants testified that they purchased the subject property in July 2010 for $879,200. Complainants testified that the subject property had been listed with a realtor and publicly advertised. Complainants testified that no mortgage encumbered the property; that they had not listed the property for sale in the three years preceding the evidentiary hearing; that no offers had been made to purchase the property; that they had not hired an appraisal within the three years preceding the evidentiary hearing; and that they had made no improvements to the property between January 1, 2015, and January 1, 2017.
Complainants testified that they purchased the subject property in 2010 “as-is.” Complainants testified that the realtor’s opinion of the house was that it was a “teardown.” Complainants testified that they reviewed the dollar per square foot of the subject property against the comparables Respondent had used to value the subject property. Complainants testified that the comparables were built 30 years after the subject property and had been completely updated while the subject property was labeled as poor quality; thus, the comparables Respondent had used were not applicable.
Complainants testified that the subject property is landlocked, is undesirable because of the shape of the lot, and shares a driveway with 2000 Log Cabin Lane. Complainants testified that the subject property has no basement but has a “cellar” with an exterior entrance, which holds some of the utilities that service the home. Complainants testified that the subject property has no modern amenities and that they have no intention of making improvements to the home. Complainants testified that Respondent had improperly used two properties that were considered the most prestigious lots in a country club community as comparables.
- Respondent’s Evidence. Respondent advocated that the BOE’s valuation of the subject property as of January 1, 2017, $1,375,700, was correct. Respondent offered the following evidence:
|Exhibit 1||BOE Findings and Notice of Decision dated September 20, 2017, lowering Respondent’s valuation of the subject property from $1,467,700 to $1,375,700||Admitted|
Complainants did not object to Respondent’s exhibit, which was received into the record.
- Presumption of Correct Assessment Not Rebutted. Complainants’ evidence was not substantial and persuasive to rebut the presumption of correct assessment by the BOE.
CONCLUSIONS OF LAW AND DECISION
The STC has jurisdiction to hear this appeal and to correct any assessment that is shown to be unlawful, unfair, arbitrary or capricious, including the application of any abatement. The Hearing Officer shall issue a decision and order affirming, modifying, or reversing the determination of the BOE, 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.
The Hearing Officer, after affording the parties reasonable opportunity for fair hearing, shall issue a decision and order affirming, modifying, or reversing the determination of the BOE, correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious. Section 138.431.5 RSMo; 12 CSR 30-3.080 (2).
Investigation by Hearing Officer
In order to investigate appeals filed with the STC, 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.
Board Presumption and Computer-Assisted Presumption
There exists a presumption of correct assessment by the BOE – the BOE presumption. 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 Respondent is required to rebut the BOE presumption.
In the present appeal, the BOE lowered the initial valuation of Respondent, and Complainant is now seeking to lower the BOE’s assessment; therefore, the BOE presumption applies to Complainant.
Complainant’s Burden of Proof
To obtain a reduction in assessed value 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.
“’True value’ is never an absolute figure, but is merely an estimate of the fair market value on the valuation date.” Drury Chesterfield, Inc., v. Muehlheausler, 347 S.W.3d 107, 112 (Mo. App. E.D. 2011), citing St. Joe Minerals Corp. v. State Tax Comm’n of Mo., 854 S.W.2d 526, 529 (Mo. App. E.D. 1993). “Fair market value typically is defined as the price which the property would bring when offered for sale by a willing seller who is not obligated to sell, and purchased by a willing buyer who is not compelled to buy.” Drury Chesterfield, Inc., 347 S.W.3d at 112 (quotation omitted).
In order to prevail, Complainant 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, 2017. Hermel, supra. There is no presumption that Complainant’s opinion is correct. The taxpayer in an STC appeal still bears the burden of proof because 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 true market value of the property under appeal is an unlawful, unfair, and improper assessment.
Presumption in Appeal
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. 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 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. E.D. 1980).
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).
In this appeal, no expert witness testified, and no evidence prepared by an expert witness was submitted.
Methods of Valuation
Proper methods of valuation and assessment of property are delegated to the STC. 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.
Highest and Best Use
TVM 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. Aspenhof Corp. v. State Tax Commission, 789 S.W. 2d 867, 869 (Mo. App. 1990). It is true that property can only be valued according to a use to which the property is readily available. But this does not mean that, in order for a specific use to be the highest and best use for calculating the property’s TVM, that particular use must be available to anyone deciding to purchase the property. A determination of the TVM cannot reject the property’s highest and best use and value the property at a lesser economic use of the property. Snider, 156 S.W. 3d at 348-349.
Complainants’ evidence was neither substantial nor persuasive to rebut the presumption of correct assessment by the BOE. Substantial evidence is that which is relevant, adequate, and reasonably supports a conclusion. Cupples Hesse Corp., 329 S.W.2d at 702. Persuasive evidence is that which causes the trier of fact to believe, more likely than not, the conclusion advocated is the correct conclusion. Id.
Complainants argued that the subject property should be valued as a “tear down” due to the condition of the home and because they had no intentions of making improvements to the home. However, the evidence established that the subject property was being used as a residence on the tax date and on the date of the evidentiary hearing and had not been listed for sale as a “tear down” on the tax date or as of the date of the evidentiary hearing. The highest and best use of the subject property, either as a “tear down” or a single-family residence, is the use of the property that will produce the greatest return in the reasonably near future, which influences the determination of its TVM.
Complainants purchased the subject property in 2010, seven years before the relevant tax date and during the collapsed housing market of the Great Recession. According to Complainants’ Exhibit KK, Mrs. Shreves was the selling agent when Complainants purchased the subject property for $879,250. Rather than support the argument that the subject property should be valued as a “tear-down” property, Exhibit KK implies that the sale of the subject property might not have been a market sale between a typically-motivated buyer and seller, particularly in light of the fact that the list price was $1,399,900, approximately 59% more than the purchase price of $879,250. (Exhibit KK) Furthermore, the subject property is located in Ladue, widely considered to be one of the most prestigious residential communities in St. Louis County, Missouri. Consequently, one can reasonably conclude that the location of the subject property positively influences the market value of the subject property regardless of its alleged “as-is” condition, the shape of the lot, and the shared driveway with a neighboring property.
Complainants’ Exhibits II, JJ, and MM, in particular, did not provide evidence that can be considered relevant, adequate, and reasonable to support a conclusion that the subject property should have been valued as a “tear down” as of January 1, 2017. None of the comparable properties in those exhibits were marketed as strictly “tear down” homes. Instead, the comparable properties were marketed primarily as custom homes, which the buyer could choose to live in, “expand,” “restore,” or tear down and build a new home. The comparable properties were described as featuring numerous luxury amenities and premium, private, and exclusive lots and locations. From this evidence, one could reasonably infer that the highest and best use of the subject property on January 1, 2017, was as a single-family residence.
Complainants presented evidence of comparable sales but did not make any market-based dollar-adjustments to the comparables to account for the differences between them and the subject property. The sale of the comparable property in Exhibit II for $1,125,000 was closed on August 21, 2014, more than two years before the relevant tax date. The sale of the comparable property in Exhibit JJ for $1,100,000 was closed on December 19, 2017, nearly one year after the relevant tax date. The sale of the comparable property in Exhibit MM for $1,100,000 also was closed on December 19, 2017. However, neither Exhibit II nor Exhibit JJ nor Exhibit MM accounted for the differences between the comparable properties and the subject property. The subject property and each of the comparable properties are unique; thus, one would be required to engage in speculation in order to value the subject property by simply reviewing the sales listings of the comparables without any market-based dollar adjustments or explanations as to the differences between the properties.
To the extent that Complainant argues that the condition of the subject property should have been factored into its valuation, the photographs of the condition of the subject property showed some outdated components, deterioration, and cosmetic defects. However, Complainants did not provide any evidence as to the costs to cure these components, deterioration, and defects or provide any market-based evidence to explain how the costs to cure detracted from its TVM as of January 1, 2017. Based upon the evidence presented, the Hearing Officer would be forced to speculate to determine such an amount. Consequently, the Hearing Officer was not presented with substantial and persuasive evidence establishing that the subject property’s TVM was $1,075,000.
The TVM for the subject property as determined by the BOE is AFFIRMED. The assessed value for the subject property for tax year 2017 is set at $261,383 residential ($1,375,700 TVM).
Application for Review
A party may file with the STC 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 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 July 3rd, 2018.
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 3rd day of July, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.