State Tax Commission of Missouri
LAWRENCE AND JUDITH DEUTSCH,)
)
Complainants,)
)
v.)Appeal Number 09-10107
)
JAKE ZIMMERMAN, ASSESSOR,)
ST LOUIS COUNTY, MISSOURI,)
)
Respondent.)
ORDER
AFFIRMING HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
On March 2, 2011, Senior Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) setting aside the assessment by the St. Louis County Board of Equalization an setting true value in money at $960,000, residential assessed value of $182,400.
Complainants filed their Application for Review of the Decision.[1]Respondent filed his Response.[2]Complainants filed their Reply.[3]
CONCLUSIONS OF LAW
Standard Upon Review
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.[4]The Hearing Officer as the trier of fact may consider the testimony of an expert or non-expert witness and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances.The Hearing Officer is not bound by the opinions of experts or owners who testify on the issue of reasonable value, but may believe all or none of the expert’s or owner’s testimony and accept it in part or reject it in part.[5]
The Commission will not lightly interfere with the Hearing Officer’s Decision and substitute its judgment on the credibility of witnesses and weight to be given the evidence for that of the Hearing Officer as the trier of fact.[6]
DECISION
Complainants’ Grounds for Review
Complainants put forth the following grounds in support of their Application for Review:
1. Greater weight should have been given to the testimony of Mr. Deutsch as to structural and foundation problems in homes on Wydown Terrace, the subject street, due to the unstable soil condition.
2. The unstable soil condition showed a condition unique to the subject property and a strong inference as to values of real estate on the subject street.
3. Respondent’s appraiser used a higher square footage amount for Complainant’s property which was contrary to what the Assessor’s Office historical tax records showed.
The Commission will consider each of the points raised.
Commission’s Holdings
Weight Given to Deutsch Testimony
The weight to be given any testimony is a matter that rests in the sound discretion of the Hearing Officer.In point of fact, Complainants raise no allegation of error in this point, only that the Hearing Officer should have given more weight to Mr. Deutsch’s testimony with regard to his opinion relative to the ground conditions and soil composition on Wydown Terrace.The Commission notes that Complainants’ appraiser gave no testimony on the matter of the ground and soil conditions of the subject property as a factor which warranted adjustment in her appraisal.In her appraisal, Ms. Kunzler did not address the matter of ground and soil conditions on the subject street contributing to or being the source of any structural or foundation problems.
The Deutsch testimony on this point was general in nature.It was not supported by any study or data to establish exactly what other structures on Wydown Terrace suffered from similar condition problems, if any, with the subject.Nor was there any study or analysis to establish that the overall ground and soil conditions on Wydown Terrace, and in particular under the subject, presented any specific settlement issues that would impact the subject in any particularly unique manner.Mr. Deutsch was not established at the evidentiary hearing to be an expert in ground conditions and soil composition as it might relate to real or potential impact on a structure like the subject.In short, the testimony in the record from Mr. Deutsch was simply the owner’s opinion relative to the ground and soil conditions.The Commission finds no error on the part of the Hearing Officer as to the weight given to the Deutsch testimony on this point.
Unstable Soil Condition
Complainants’ argument that the alleged unstable soil condition showed a condition unique to the subject property and a strong inference as to values of real estate on the subject street is not persuasive.Complainants rely upon a sale on the subject street and conclude that the adjusted sale price determined by Ms. Kunzler was reflective of the unstable soil condition.The fatal error in this reasoning is that, as addressed above, Complainant’s appraiser did not recognize the claimed unstable soil condition.Likewise, as previously discussed, no substantiating evidence from relevant studies was presented on the issue of the asserted unstable soil condition.No analysis was presented to establish a difference in value of homes on Wydown Terrace and homes not located on the subject street that could be attributable solely to the ground and soil condition on the subject street.The Complainants’ claim is based on mere speculation, not on sound verifiable market data.The Commission finds no error on the part of the Hearing Officer in his application of the law to the facts established in the record on this point.
Square Footage of Subject
Complainants’ final argument that Respondent’s appraiser used a higher square footage amount for Complainant’s property which was contrary to what the Assessor’s Office historical tax records showed is without merit.It presents no basis upon which the decision of the Hearing Officer should be overturned.The subject’s square footage historically was different in the Assessor’s records due to additions added to the record in 2007.The records were subsequently corrected using aerial photographs, exterior visual inspection and building plans.The square footage presented in the Respondent’s appraisal was appropriate.The Hearing Officer’s reliance on same was established by the evidence.
Conclusion
A review of the record in the present appeal provides support for the determinations made by the Hearing Officer.There is competent and substantial evidence to establish a sufficient foundation for the Decision of the Hearing Officer.A reasonable mind could have conscientiously reached the same result based on a review of the entire record and have concluded a fair market value for the subject of $960,000. The Commission finds no basis to support a determination that the Hearing Officer acted in an arbitrary or capricious manner or abused his discretion as the trier of fact and concluder of law in this appeal.[7]
The Hearing Officer did not err in his determinations as challenged by Complainants.
ORDER
The Commission upon review of the record and Decision in this appeal, finds no grounds upon which the Decision of the Hearing Officer should be reversed or modified.Accordingly, the Decision is affirmed.The Decision and Order of the hearing officer, including the findings of fact and conclusions of law therein, is incorporated by reference, as if set out in full, in this final decision of the Commission.
Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of the mailing date set forth in the Certificate of Service for this Order.
If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts unless disbursed pursuant to Section 139.031.8, RSMo.
If no judicial review is made within thirty days, this decision and order is deemed final and the Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal.
SO ORDERED July 7, 2011.
STATE TAX COMMISSION OF MISSOURI
Bruce E. Davis, Chairman
Randy B. Holman, Commissioner
DECISION AND ORDER
HOLDING
Decision of the St. Louis County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE.True value in money for the subject property for tax years 2009 and 2010 is set at $960,000, residential assessed value of $182,400.Complainant Larry Deutsch appeared in person and by Counsel, Thomas Connelly,St. Louis,Missouri.Respondent appeared by Associate County Counselor Paula J. Lemerman
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
ISSUE
Complainants appeal, 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, 2009.The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
1.Jurisdiction.Jurisdiction over this appeal is proper.Complainants timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.A hearing was conducted on December 9, 2010, at theSt. LouisCountyGovernmentCenter,Clayton,Missouri.
2.Assessment.The Assessor appraised the property under appeal at $1,193,200, an assessed residential value of $226,710.The Board sustained the assessment.[8]
3.Subject Property.The subject property is located at 14 Wydown Terrace, Clayton, Missouri.The property is identified by locator number 19J620034.The property consists of 15,242 square foot lot improved by a two and a half story residence built in 1922.The gross living area is 4,492.[9]The residence has a total of nine rooms, two bedrooms, three full and one half baths.There is an additional room and full bath in the third floor attic.[10]The residence has an in-ground pool, a large patio area, an enclosed porch on the second level and an attached, rear entry two-car garage.[11]
4.Complainants’ Evidence.Complainants presented the testimony and appraisal report (Exhibit A) of Cheryl A. Kunzler, State Certified Residential Real Estate Appraiser.Exhibit A was received into evidence.Ms. Kunzler concluded her opinion of value as of
January 1, 2009, to be $800,000, based upon a sales comparison approach utilizing three sale properties.Complainant also offered Exhibits B and C, which were received into evidence.
Exhibit B consisted of an email addressing the square footage for the subject home, with attached floor plans.[12]Exhibit C was a copy of the 2009 property record card (PRC) on the subject property dated 11/1/09.
Mr. Deutsch also testified in his own behalf.
There was no evidence of new construction and improvement from January 1, 2009, to January 1, 2010, therefore the assessed value for 2009 remains the assessed value for 2010.[13]
5.Respondent’s Evidence.Respondent presented the testimony and appraisal report (Exhibit 1) of Ross Hackman, Residential Real Estate Appraiser Senior forSt. LouisCounty.Mr. Hackman concluded a value of $1,070,000 based upon a sales comparison approach utilizing four sales.The following exhibits were received into evidence.
Objections were made to Exhibits 1, 3, 4, 5, 6 and 7.See, Ruling on Objections – Respondent’s Exhibits, infra.
6.Hearing Officer Finds Value.The true value in money for the subject property as of January 1, 2009, is $960,000, a residential assessed value of $182,400.See, Hearing Officer Concludes 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.[16]
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.[17]The constitutional mandate is to find the true value in money for the property under appeal. By statute real and tangible personal property is assessed at set percentages of true value in money.[18]In an overvaluation appeal, true value in money for the property being appealed must be determined based upon the evidence on the record that is probative on the issue of the fair market value of the property under appeal.This evidentiary record provides a sufficient basis for the Hearing Officer to satisfy the mandate of the constitution, applicable statutes and relevant case law.
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.[19]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.When some substantial evidence is produced by the Complainant, “however slight,” the presumption disappears and the Hearing Officer, as trier of facts, receives the issue free of the presumption.[20]The presumption of correct assessment is rebutted when the taxpayer or Respondent when advocating a value different than that determined by the Board, 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.[21]Upon presentation of the Complainant’s evidence[22] the presumption in this appeal disappeared.Respondent’s evidence likewise rebutted the presumption.The case is decided free of the presumption.
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.[23]True value in money is defined in terms of value in exchange and not value in use.[24]It is the fair market value of the subject property on the valuation date.[25]Market value is the most probable price in terms of money which a property should bring in 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:
1.Buyer and seller are typically motivated.
2.Both parties are well informed and well advised, and both acting in what they consider their own best interests.
3.A reasonable time is allowed for exposure in the open market.
4.Payment is made in cash or its equivalent.
5.Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
6.The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction.[26]
Both appraisers performed their appraisals under the Standard for Valuation.[27]
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.[28]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.[29]Both appraisers reached their respective conclusions of value relying on the sales comparison approach.When valuing an owner occupied residential property the sales comparison approach generally will provide the best indicator of value.Both appraisers having determined fair market value under a well recognized and accepted appraisal methodology, their conclusions of value warrant consideration as probative on the issue of value presented in this appeal.The two sales comparison approaches provide a sound basis for the Hearing Officer to find value.
Opinion Testimony by Experts
If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto.The specialized knowledge of Ms. Kunzler and Mr. Hackman was of assistance to the Hearing Officer to determine true value in money.The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data need not be admissible in evidence.[30]A review of the respective appraisals and the accompanying testimony of each expert established that the data upon which each appraiser conducted their appraiser were of the type reasonably relied upon by appraisers to address an appraisal problem such as that presented in this case.Furthermore, the data were otherwise reliable for the appraisal problem.
Ruling on Objections – Respondent’s Exhibits
Exhibit 1 – Hackman Appraisal Report
Counsel for Complainants objected to the appraisal report of Mr. Hackman on the ground that comparable sales 2, 3 and 4 did not come within the 500 square foot standard set by Section 137.115, RSMo.Objection was also made because sale 4 was in March 2009, after the valuation date of 1/1/09.The objection was overruled and the exhibit was received into evidence.
The relevant portion of the section[31] which Mr. Connelly’s objection rested on is only applicable in those instances when the Respondent is seeking to sustain the Assessor’s original valuation that is presumed to have been made by a computer program.However, when as in this instance, the Respondent’s evidence is not offered to sustain the original value set by the Assessor the 500 square foot factor is not applicable. Objection is not well taken as there is no basis under the cited statute upon which the Hearing Officer can exclude the appraisal of Mr. Hackman.
As to the use of a sale after the valuation date, this likewise does not constitute grounds for exclusion of the appraisal report.This sale was in point of fact the sale closest to the valuation date.A sale only three months after the valuation date is appropriate to be used, if other factors of comparability are sufficient to make the sale similar to the property being appraised.The objection on this point is not well taken.
Exhibit 3 – Building Permit
Objection was made to Exhibit 3 on the grounds of being irrelevant and immaterial. The objection was overruled and the exhibit was received into evidence.
Mr. Hackman had utilized the floor plans provided in the document as a verification source on the gross living area for the subject.In particular Mr. Hackman utilized the floor plan in the exhibit, along with other sources to verify the living area for the subject property. The Exhibit was a document that had been provided by Complainant through discovery and was part of the appraiser’s file.The exhibit was received as a source document utilized by and relied upon by Respondent’s appraiser only on the issue of the subject’s gross living area.The exhibit was clearly relevant and material on that point.
Exhibit 4 – Subject PRC
Objection was made to Exhibit 4 on the ground that the county record did not take out the attic area from the gross living area.The objection was overruled and the exhibit was received into evidence.
Mr. Hackman testified, that although the property record card showed the gross living area to be 4,944 square feet, he did not utilize that figure, since it included the attic space.Mr. Hackman deducted the attic area and gave it contributory value, without including it in the gross living area for purposes of his appraisal.[32]The fact that the property record card included attic area in gross living square footage and the Hackman appraisal did not is not a ground for exclusion of Exhibit 4.
Exhibit 5 – PRC/Agent Detail Report – 6315 Alexander[33]
Objection was made to Exhibit 5 on the grounds that the exhibit was not exchanged prior to the hearing and hearsay.The objection was overruled and the exhibit was received into evidence.
The Commission Order of April 15, 2010, required each party to file and exchange “exhibits to be used in their case in chief.” The Exhibit was not used as a part of Respondent’s case in chief. The use of Exhibit 5 was as a rebuttal exhibit, used to address points related to the use of the Alexander property as a comparable in the Kunzler appraisal.Ms. Kunzler admitted she had utilized the information contained in the Agent Detail Report[34]The PRC is a record of the St. Louis County Assessor’s office that is made in the ordinary course of business and comes under the business record exception to the hearsay rule.[35]
Exhibit 6 – PRC/Agent Detail Report – 6320 Wydown Blvd[36]
Objection was made to Exhibit 6 on the same grounds as with Exhibit 5.The objection was overruled and the exhibit was received into evidence under the same rationale applicable to Exhibit 5.
Exhibit 7 – PRC/Agent Detail Report – 6 Wydown Terrace[37]
Objection was made to Exhibit 7 on the same grounds as with Exhibit 5.The objection was overruled and the exhibit was received into evidence under the same rationale applicable to Exhibit 5.
Burden of Proof
Complainants’ Burden
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, 2009.[38]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.”[39]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[40]Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact.The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief.[41]
Respondent’s Burden
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.[42]
Prima Facie Cases Meet Burden of Proof
The prima facie cases[43] presented respectively by Complainant and Respondent each met the required burden of proof.However, the Hearing Officer has the responsibility to weigh the entire body of evidence in a given case and arrive at a determination of value.In the present case, this requires analysis and weighing of each party’s appraisal to arrive at a conclusion of value.
Appraisal Reports
Complainants’ Appraisal Report
The Kunzler appraisal concluded a fair market value of $800,000 as of January 1, 2009. This determination of value was based upon the sale of three properties in the period from July 2007 through June 2008.The three properties were located at 6 Wydown Terrace, 6315 Alexander and 6320 Wydown Blvd. The respective properties sold for $676,000, $755,000 and $1,020,000.The sale prices per square foot of living area were: $221.86, $238.70[44] and $217.76.The respective concluded values, after adjustments were: $802,500, $769,500 and $896,500.The respective net percentages of adjustments were: 18.7%, 1.9% and -12.1%.The respective gross percentages of adjustments were: 26.7%, 10.4% and 18%.
Each of the three sale properties was comparable to the subject property for the purpose of making a determination of value of the subject property. The properties were located within .05 to .26 of a mile of the subject.Each property sold at a time relevant to the tax date of January 1, 2009.The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability. Variances in the various factors were addressed by individual adjustments for a given factor.
A significant variance was the difference in the gross living area[45] of sales 1 and 2.Comparable 1 was 1,445 square feet smaller than the subject.Comparable 2 was 1,329 square feet smaller than the subject.Ms. Kunzler adjusted for the differences in gross living area on the basis of $25.00 per square foot.
Respondent’s Appraisal Report
Mr. Hackman concluded a fair market value of $1,070,000 as of January 1, 2009.This determination of value was based upon the sale of four properties in the period from July 2007 through March 2009.The three properties were located at 1 Southmoor Dr., 7100 Wydown Blvd., 6320 Wydown Blvd., and 6441 Cecil Ave.The respective properties sold for $1,050,000, $1,120,000, $1,020,000 and $1,040,000.The sale prices per square foot of living area were: $231.07, $298.83, 228.44 and $308.79.The respective concluded values, after adjustments were: $1,027,500, $1,120,300, $1,004,100 and $1,122,900.The respective net percentages of adjustments were: -2.1%, 0.0%, -1.6% and 8.0%.The respective gross percentages of adjustments were: 11.7%, 13.3%, 19.8% and 13.1%
Each of the three sale properties was comparable to the subject property for the purpose of making a determination of value of the subject property. The properties were located within .17 to .76 of a mile of the subject.Each property sold at a time relevant to the tax date of January 1, 2009.The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability. Variances in the various factors were addressed by individual adjustments for a given factor.
A significant variance was the difference in the gross living area[46] of sales 2 and 4.Comparable 2 was 744 square feet smaller than the subject.Comparable 4 was 1,124 square feet smaller than the subject.Mr. Hackman utilized a square footage of 3,749 for the property at 6320 Wydown (Comp 3).The source for the data was reported to be the Listing Service.However, the Agent Detail Report on this property gives a gross living area of 4,684 square feet.[47]Furthermore the PRC on this property reports the square footage of living area to be 4,465.Mr. Hackman adjusted for the differences in gross living area on the basis of $60.00 per square foot.
Hearing Officer Concludes Value
When presented with an appraisal report by each party, the simplest method for the Hearing Officer to determine fair market value would be to simply give equal weight to the conclusion of each expert.In other words, split the difference and call that true value in money.However, the better approach is to consider the strengths and weaknesses of each appraisal and conclude value.This is the methodology that the Hearing Officer has employed in this instance.
The Hearing Officer does not propose to second guess each appraiser on the individual adjustments made in the respective sale grids and substitute his opinion for that of the individual appraisers.It is recognized that reasonable minds can differ on the dollar adjustment for differences in various amenities.Accordingly, any two appraisers may vary in their adjustments for a variety of reasons.However, in the present appraisal problem, with the evidence presented, there are two areas which the Hearing Officer is led to address in reconciling the appraisals and concluding value.Those two areas are time of sale and living area adjustments.
Time of Sale Adjustments
Mr. Hackman made a time of sale adjustment to his comparables 1, 2 and 3.Ms. Kunzler made no such adjustment.The Hackman adjust was at a -1% per annum, based upon an analysis of sales within the defined neighborhood.[48]On this point to provide consistency, the application of the time of sale adjustment concluded by Mr. Hackman should be applied to the Kunzler comparables.This calculates to the following dollar adjustments to the respective sales: -11,330, -4,700 and -14,500.
Living Area Adjustments
There are a variety of differences concerning the adjustments for living area made by each appraiser.The first matter to be addressed on this point is the square footage to be used for the subject.
Subject Gross Living Area – 4,492
As noted in Finding of Fact 3, the concluded living area, not including the attic space is 4,492 based upon the conclusion reached in the Hackman appraisal.The use of exterior measurements, as opposed to totaling the individual square footages of the component living areas, to arrive at the gross living area is the appropriate method for appraisal practice in appeals before the Commission.The only actual difference in the gross living area between the Kunzler appraisal (4,306 square feet) and the Hackman appraisal (4,492 square feet) appears to be in the use of exterior versus interior measurements and possibly some rounding.For example, the measurements along the back wall of the first floor of the subject house from the Kunzler floor plan are: 32.7, 9.3, 17, 12.6 and 10.8, as compared to the Hackman floor plan of: 34, 10, 18, 10, 11.The verification made by Mr. Hackman using aerial photographs, visual inspection and building plans for the second story master bath renovation and addition, and his reliance on the floor plan provided in Exhibit 1 are most persuasive to the Hearing Officer.The gross living area of 4,492 will be used for the adjustment to the comparables.
Comparables’ Gross Living Areas
The square footage living areas for the sale properties to be used to calculate the adjustment are:
1 |
6 Wydown Terrace |
|
2 |
6315 Alexander |
|
3 |
6320 Wydown Blvd. |
|
4 |
1 Southmoor Dr. |
|
5 |
7100 Wydown Blvd. |
|
6 |
6441 Cecil Ave. |
Dollar Adjustment Amount
Ms. Kunzler’s adjustment of $25.00 per square foot represents 11.3%, 10.1% and 10.9% respectively of the per square foot sale prices of her three comparables, and 10.7% for the average sale price of the comparables.The $25 adjustment was derived from using paired data analysis for the market and finding that the adjustment was $20 – $40.[55]
Mr. Hackman adjusted for the difference in living area based upon $60.00 per square foot.This was based on using a 25% – 30% of the average per square foot price indicated by the comparable properties.[56]Calculating the average per square foot sale price for the four Hackman comparables to be $266.78, results in the $60 per square foot adjustment being 22.5%.[57]
Both appraisers are tendering to the Hearing Officer that their resulting dollar adjustments are derived from the market.However, there is no underlying data presented in either appraisal which the Hearing Officer can review on his own to determine whether the Kunzler or Hackman market analysis is most persuasive.Both appraisals would have been strengthened by providing a summary of the data on which this adjustment rested.
It is understood that generally in the appraisal field, such an item as how the per dollar adjustment factor for living area is derived, does not warrant much, if any, detailed scrutiny.Testimony given before the Hearing Officer over the years from appraisers has generally supported an adjustment based on a percentage of the average per square foot sales price of the comparables.That percentage is generally stated to be in a range from 25% to 30%.However, other appraisers have given their opinion that the proper method for making this adjustment is on simply a given dollar amount, which generally has been $25 or $30.[58]In any case, the Hearing Officer would always prefer to have within his record supporting documentation for the conclusion reached by the appraiser on this adjustment factor.In the absence of being able to analyze any supporting document, the Hearing Officer will weigh the evidence with which he must work.
On the one hand, Ms. Kunzler’s adjustment supports a percentage of 10.7%.On the other hand, Mr. Hackman’s adjustment supports a percentage of 22.5%.There is nothing which causes the Hearing Officer to be swayed to one appraiser’s conclusion over the other.Accordingly, equal weight is given to each in this instance.A factor of 16.6%[59] will be applied to the average per square foot sale price for the five comparable properties.[60]This produces a dollar adjustment for the per square foot difference between the subject and each comparable of $43.[61]
Living Area Adjustment to Comparables
The dollar amount of the adjustment for each of the comparables is:
Comparable |
Sq. Ft. Difference |
|
1 Southmoor |
+52 |
-$2,240 |
7100 Wydown |
-744 |
+$31,990 |
6320 Wydown |
-27 |
+1,160 |
6441 Cecil |
-1124 |
+48,330 |
6 Wydown |
-1445 |
+62,130 |
6315 Alexander |
-1329 |
+57,150 |
Adjusted Sales Prices
Applying the forgoing time of sale adjustment to the Kunzler sales and the living area adjustment to both the Hackman and Kunzler sales, and leaving the individual appraiser’s other adjustments in place as presented in their respective appraisals, produces the following adjusted sales prices:
Comparable |
Adjusted Sale Price/per square foot |
Hackman |
|
1 Southmoor |
$1,025,260/$228.24 |
7100 Wydown |
$1,107,690/$246.59 |
6320 Wydown |
$960,660/$213.86 |
6441 Cecil |
$1,103,830/$245.73 |
Kunzler |
|
6 Wydown |
$821,800/$182.95 |
6315 Alexander |
$790,450/$175.97 |
6320 Wydown |
$892,660/$198.72 |
The range of the Adjusted Sale Prices from the highest to the lowest falls as follows:
Comparable |
Adjusted Sale Price/per square foot |
RP – Comp 2 |
$1,107,690/$246.59 |
RP – Comp 4 |
$1,103,830/$245.73 |
RP – Comp 1 |
$1,025,260/$228.24 |
RP – Comp 3 |
$960,660/$213.86 |
CP – Comp 3 |
$892,660/$198.72 |
CP – Comp 1 |
$821,800/$182.95 |
CP – Comp 2 |
$790,450/$174.97 |
Summary
The per square foot of living area sales prices for the six sales fell in a range of $221.86[63] to $308.79[64] with the average being $269.00 and the median being $239.43.The adjusted per square foot indicated values for Respondent’s Comp 1 and 3 and Complainant’s Comp 3 fall in a very close range of each other.These three sales, as adjusted by the appraisers and with the Hearing Officer’s adjustments provide the greatest probative weight given that they are the two properties that are closest in living area to the subject.The fact that both Ms. Kunzler and Mr. Hackman used the 6320 Wydown sale is very persuasive.
Notwithstanding, the variance in the living areas of the Kunzler sales 1 and 2 and the Hackman sales 2 and 4, some weight is afforded these sales as herein adjusted.Appraisers cannot create sales to simply fall within 500 square feet of the property being appraised.In the absence of evidence indicating that other sales closer in size and relevant in time existed for use by an appraiser the Hearing Officer has no basis to simply reject or ignore sales which go beyond that preferred standard.In this instance there was no such evidence.To the contrary the six sales demonstrate, as is often the case when valuing homes of the subject’s living area, that sales which are within 500 square feet are simply not always available.
Conclusion
In the final analysis the greatest weight is given to the indicated values found for the Southmoor and 6320 Wydown sales.The value of $960,000 is found to be the true value in money of the property under appeal, as of January 1, 2009.
ORDER
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization forSt. LouisCountyfor the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2009 and 2010 is set at $182,400.
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, MO65102-0146, 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 is based will result in summary denial. [65]
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 March 2, 2011.
STATE TAX COMMISSION OFMISSOURI
W. B. Tichenor
Senior Hearing Officer
[4] 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).
[5] St. Louis County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992);Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).
[6] Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Lowe v. Lombardi, 957 S.W.2d 808 (Mo. App. W.D. 1997); Forms World, Inc. v. Labor and Industrial Relations Com’n, 935 S.W.2d 680 (Mo. App. W.D. 1996); Evangelical Retirement Homes v. STC, 669 S.W.2d 548 (Mo. 1984); Pulitzer Pub. Co. v. Labor and Indus. Relations Commission, 596 S.W.2d 413 (Mo. 1980); St. Louis County v. STC, 562 S.W.2d 334 (Mo. 1978); St. Louis County v. STC, 406 S.W.2d 644 (Mo. 1966).
[7] Hermel, Inc. v. STC, 564 S.W.2d 888 (Mo. 1978); Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Holt v. Clarke, 965 S.W.2d 241 (Mo. App. W.D. 1998); Smith v. Morton, 890 S.W.2d 403 (Mo. App. E.D. 1995); Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).
[9] Exhibit 1, Description of the Improvements – subject property, Addendum Page 1 of 5.Exhibit 4.Complainant’s appraiser used a gross living area of 4,306.The difference results from Mr. Hackman utilizing the exterior measurements of the entire structure and Ms. Kunzler utilizing calculations apparently relying on a per room calculation.A gross living area which includes the exterior and interior walls is the appropriate area to be used, since without the exterior and interior walls there would be no structure.
[10] The attic finished area is not included in the above grade room count or the gross living area, but it does contribute to the value of the property – Exhibit 1, Description of the Improvements – subject property, Addendum Page 1 of 5
[12] Objection was made to Exhibit B on the ground of lack of foundation in that it provided no actual dimensions or how the structure was measured to establish the square footage.Objection was sustained as to the exhibit establishing square footage, it was only received for purposes of demonstrating the floor plan.
[14] Exhibit 4 and Exhibit C are substantially the same, with the exception of the figure given for square foot living area (SFLA).Complainants contended that the 2009 SFLA of 5,654 shown on Exhibit c was in error.Exhibit 4 corrected the SFLA to 4,944.
[15] Agent Detail Report 1: sale date 5/8/08 – $676,000;Agent Detail Report 2: sale date 12/21/05 – $762,000
[19] 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)
[20] United Missouri Bank of Kansas City v. March, 650 S.W.2d 678, 680-81 (Mo. App. 1983), citing to State ex rel. Christian v. Lawry, 405 S.W.2d 729, 730 (Mo. App. 1966) and cases therein cited.
[21] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
[23] 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).
[24] Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 S.W.2d 376, 380 (Mo. App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).
[26] 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.
[27] Exhibit A – Value Definition – 6th page;Exhibit 1 – Definition of Market Value – Certification and Signature Page
[28] 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).
[29] 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. Div. 2 1974).
[30] Section 490.065, RSMo; State Board of Registration for the Healing Arts v. McDonagh, 123 S.W.3d 146 (Mo. SC. 2004); Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. E.D. 1992).
[31] In the event a valuation of subclass (1) real property within any county with a charter form of government, or within a city not within a county, is made by a computer, computer-assisted method or a computer program, the burden of proof, supported by clear, convincing and cogent evidence to sustain such valuation, shall be on the assessor at any hearing or appeal. In any such county, unless the assessor proves otherwise, there shall be a presumption that the assessment was made by a computer, computer-assisted method or a computer program. Such evidence shall include, but shall not be limited to, the following:
(1) The findings of the assessor based on an appraisal of the property by generally accepted appraisal techniques; and
(2) The purchase prices from sales of at least three comparable properties and the address or location thereof. As used in this subdivision, the word “comparable” means that:
(a) Such sale was closed at a date relevant to the property valuation; and
(b) Such properties are not more than one mile from the site of the disputed property, except where no similar properties exist within one mile of the disputed property, the nearest comparable property shall be used. Such property shall be within five hundred square feet in size of the disputed property, and resemble the disputed property in age, floor plan, number of rooms, and other relevant characteristics.
[32] Hackman Testimony; Exhibit 1 – Description of the Improvements-Subject Property, Addendum Pages 1 of 5 and 5 of 5.
[34] Also known as an MLS (Multi-Listing Service) data sheet or report.Kunzler Testimony & Exhibit A: Sales Grid – Data Source/Verification lists MLS as the data source.
[39] 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).
[43] Exhibit A and Testimony of Ms. Kunzler – Complainants’ prima facie case
Exhibit 1 and Testimony of Mr. Hackman – Respondent’s prima facie case
[44] Ms. Kunzler reported in her sales grid that the gross living area of Comp 2 was 3,047.Under cross examination, she admitted this was a typographical error and that the square footage as shown on her data source (MLS Sheet) would be 3,163 (same square footage as shown by the county record – PRC), see, Exhibit 5.
[45] The differences in gross living areas for the Kunzler sales are calculated using the square footage for the subject of 4,492, instead of 4,306 used in the Kunzler appraisal.
[46] The differences in gross living areas for the Hackman sales are calculated using the square footage for the subject of 4,492.
[48] It is noted in passing, that the inclusion in the appraisal report of a summary of the supporting sales data which formed the basis for the determination of the -1% per annum adjustment would have been appropriate.
[51] Exhibit 6 – PRC; Kunzler Comp 3; Hackman Comp 3.The PRC gives the living area to be 4,465 square feet.The Agent Detail Report gives it to be 3,684 – the figure used by Ms. Kunzler.Mr. Hackman’s appraisalused the figure of 3,749, reportedly relying on the listing service for this data and the Assessor’s office for verification.Exhibit 6 will not support the Hackman square footage.For consistency, the figure as reported on the PRC will be used.
[56] Exhibit 1 – Comments on the Sales Comparison Approach – Price per Square Foot of Gross Living area, Addendum Page 4 of 5
[57] This percentage was arrived at by using the 44,65 square feet for Comp 3 instead of the 3,749 used in the Hackman appraisal.However, when the per square foot sales prices reported in Exhibit 1 are used, the calculated percentage for the $60 adjustment figure only amounts to 21.6%.