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,