State Tax Commission of Missouri
LAWRENCE & JUDITH DEUTSCH,)
Complainants,)
v. ) Appeal No.11-10112
JAKE ZIMMERMAN, ASSESSOR,)
ST. LOUIS COUNTY, MISSOURI,)
Respondent.)
ORDER
SUSTAINING HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
On December 5, 2012, Senior Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) setting aside the assessment by the St. Louis County Board of Equalization
Respondent filed an Application for Review of the Decision.Complainant filed a Response.Respondent filed its Reply.
A party subject to a Decision and Order of a hearing officer with the State Tax Commission may file an application requesting the case be reviewed by the Commission.The Commission may then summarily allow or deny their request.The Commission may affirm, modify, reverse or set aside the decision.The Commission may take any additional evidence and conduct further hearings.[1]
CONCLUSIONS OF LAW & DECISION
Points Raised Upon Application for Review
Respondent raised the following grounds in its Application for Review.
1. The Hearing Officer erred in relying solely on the unsupported testimony of Complainant’s appraiser to discredit the price range of the Respondent’s appraiser;
2. The Hearing Officer erred in concluding there was no value to the 3rd floor area;
3. The Complainant’s appraiser erred in his sales comparison approach in that:
a. Comparable 1 was not adjusted for basement finish, incorrectly adjusted for zoned HVAC, the property has a carport not an attached garage, and is smaller than subject when attic area is included;.
b. Inclusion of Comparable 2 as it was a short sale and the property has a 2 car detached garage and appraiser reported it as a 3 car;
c. Comparable 3 is smaller than subject when attic area is included;
d. Comparable 4 is smaller than subject when attic area is included;
e. Comparable 6 only has one fireplace.
4. Hearing Officer erred in not using Respondent’s comparables 1, 2, 3 and 5 in his final analysis concluding that the comparables were generally superior.
Range of Comparable Properties by Sales Price
The Respondent alleges that the Hearing Officer erred in relying solely on the unsupported testimony of Complainant’s appraiser to discredit the price range of the Respondent’s appraiser.
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 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 who testify on the issue of reasonable value, but may believe all or none of the expert’s testimony and accept it in part or reject it in part.[2]
The Respondent mischaracterizes the testimony of the Complainant’s appraiser.The appraiser testified that he looked at MLS sales over the past ten years and did not find any sales in the neighborhood of the subject at $900,000 or more.He testified that a property sold recently for $815,000; prior to that sales the highest sale was $750,000 and that sale occurred in 2005 or 2006.
Further, the Hearing Officer did consider the sales selected by the Respondent’s appraiser and included one sale in his final analysis.The Hearing Officer’s final range of sales were from $656,450 to $1,038,570.
Attic Space
Respondent alleges that the Hearing Officer erred in concluding there was no value to the 3rd floor area.The Respondent’s allegation misrepresents the finding of the Hearing Officer.The Hearing Officer did not find that the attic space had no value, the Hearing Officer found that the Complainant’s appraiser erred by making a positive $20,000 adjustment to his comparables for the finished space.The Hearing Officer found the positive adjustment was especially unwarranted in Comparables 1, 2, 4 and 5 in that those comparables had similar finished attic space.
Further, the Hearing Officer found that the subject’s attic space is very small, has no heating or air conditioning, is gabled with limited standing height in the center of the space and could not be marketed as an additional bedroom.
Complainant’s Comparable Sales
Respondent alleges numerous errors in the Complainant’s appraisal report regarding the comparables used by the Complainant’s appraiser.This point is not well taken.A review of the Decision establishes that the Hearing Officer fully reviewed the sales used by each appraiser, the MLS data provided by the parties, and the rebuttal exhibits offered by the Respondent.After review of all the sales presented by each party, the Hearing Officer used the sales most similar and persuasive to conclude a value for the subject property.
Respondent’s Comparables
Respondent alleges that the Hearing Officer erred in rejecting the Respondent’s appraisal and not using Respondent’s comparables 1, 2, 3 and 5 in his final analysis concluding that the comparables were generally superior.
The record establishes that the Hearing Officer did not reject the Respondent’s appraisal.The Hearing Officer reviewed the Respondent’s sales and selected sales he deemed to be relevant based upon price, location, date of sale, gross living area, additional area/extra features and condition.The Hearing Officer noted the difficulty in selecting properties for comparison in that the subject property suffers from structural problems, having only two bedrooms, basement drain tile, sump pump, and finished attic space with no heat or air conditioning.
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 September 23, 2013.
STATE TAX COMMISSION OF MISSOURI
Bruce E. Davis, Chairman
Randy B. Holman, Commissioner
Victor Callahan, Commissioner
DECISION AND ORDER
HOLDING
Decision of the St. Louis County Board of Equalization reducing the assessment made by the Assessor is SET ASIDE.
True value in money for the subject property for tax years 2011 and 2012 is set at $773,200, residential assessed value of $146,910.
Complainants appeared by Counsel Thomas A. 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 appealed, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which reduced 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, 2011.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.
2.Evidentiary Hearing.The Evidentiary Hearing was held on August 28, 2012, at the St. Louis County Government Center, 41 South Central Avenue, Clayton, Missouri.
3.Subject Property.The subject property is identified by locator number 19J620034.It is located at 14 Wydown Terrace, Clayton, Missouri.Descriptions and photographs of the subject can be found in Exhibit C[3] and Exhibit 1.[4]
4.Assessment.The Assessor appraised the property at $1,045,000, a residential assessed value of $198,550.The Board reduced the appraised value to $960,000, a residential assessed value of $182,400.[5]
5.Complainants’ Evidence.Complainants offered into evidence the following exhibits, which were received into evidence without objection:
|
EXHIBIT |
DESCRIPTION |
|
A |
STC Decision – Deutsch v. Brooks – 09-10107, dated 3/2/11 |
|
B |
Structural Engineering Report on Subject, dated 5/18/12 |
|
C |
|
|
D |
MultiList Data – 3 Southmore Dr. |
|
E |
MultiList Data – 16 Crestwood |
|
F |
MultiList Data – 12 Hillvale |
|
G |
MultiList Data – 6428 Cecil |
Complainants presented at the evidentiary hearing the testimony of (1) Ron Barrons, Structural Engineer who prepared Exhibit B;[7] (2) Appraiser Robert Josef;[8] and (3) Owner Lawrence Deutsch.[9]
There was no evidence of new construction and improvement from January 1, 2011, to January 1, 2012, therefore the assessed value for 2011 remains the assessed value for 2012.[10]
6.Respondent’s Evidence.Respondent offered into evidence the following exhibits:
|
EXHIBIT |
DESCRIPTION |
|
1 |
Appraisal – Ross Hackman – $1,086,500 |
|
2 |
STC Order Affirming Hearing Officer Decision – 09-10107 |
|
3 |
Appraisal – Cheryl Kunzler – Subject dated 1/1/09 |
|
4 |
Email and diagram of subject – Gina Hillberry |
|
5 |
Aerial Photo – Subject |
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6 |
Front Aerial Photo – Subject |
|
7 |
MultiList Data & Property Record Cards Josef’s sale properties |
Mr. Hackman testified at the evidentiary hearing.[11]Exhibits 1, 2, 5 and 7 were received into evidence without objection.Exhibits 3, 4 and 6 were objected to on the grounds of relevance.Objections were sustained and Exhibits 3, 4 and 6 were not received into evidence.
7.Exhibits in the Record.
Exhibit A & Exhibit 2:These exhibits constitute the decisions of the Hearing Officer and the Commission with regard to the 2009 appeal of the subject property.Complainants offered Exhibit A to substantiate the square footage of 4,494 and the number of bedrooms.[12]Respondent offered Exhibit 2 in order to have the entire record of the decision in the 2009 appeal before the Hearing Officer.[13]The 2009 Decision actually found a square footage of 4,492.The two foot variance is de minimis and of no material effect.
Exhibit B:The Structural Engineering Report constitutes substantial and persuasive evidence of the structural defects to the Complainants’ home and established an estimate for underpinning repair ranging from $100,000 to $200,000.
Exhibit C:The Josef Appraisal Report constituted prima facie substantial and persuasive evidence to rebut the presumption of correct assessment by the Board and to establish a value of $750,000.
Exhibits D, E, F, G & H:These MultiList Data sheets provide information which goes to the weight and hence the persuasiveness to be given Exhibit 1.
Exhibit 1:Respondent’s appraisal does not meet the standard of clear, convincing and cogent evidence to sustain the Assessor’s value of $1,045,000.See, Respondent’s Burden of Proof, infra.
Exhibit 5:The exhibit was offered to establish that the side of the subject garage measures 24.3 feet, not 20 feet as shown in the Josef appraisal.[14]The point is irrelevant since there is nothing in the Josef appraisal that adjusts any comparable property based upon the measurement of the garage.[15]
Exhibit 7:These MultiList Data sheets and property record cards provide information which goes to the weight and hence the persuasiveness to be given Exhibit C.
8.Subject – Physical Features.The subject has the following physical features which are detrimental to its value:
A.Attic Space:The subject has a walled in attic space without heating or cooling approximately 15 by 30 feet, with a small bathroom.The ceiling is a gabled ceiling.There is limited space in the center where a person can stand upright.[16]
B.Structural Problems:The subject suffers from numerous and significant interior and exterior cracks, floor cracks, wood floor bulging, doors that won’t open, settling, and ground water seepage in the basement.The cracks in the home are due to differential movements of the supporting foundations that will continue unless mitigated.The cost estimate for the underpinning necessary to address the differential movements is $100,000 to $200,000.This would significantly reduce the extent of future differential foundation movements, but will not eliminate them.[17]
C.Bedroom Count:The subject only has two bedrooms, resulting in some functional obsolescence.[18]
D.Basement Drain Tile:The subject has a French drain along the perimeter boundary in the basement floor with a sump pump.[19]
9.Subject – Gross Living Area.The subject has a gross living area of 4,494 square feet.[20]
10.Wydown Terrace Market.Over the ten year period prior to 1/1/11, there were no sales on Wydown Terrace at $900,000 or more.The highest sale in 2011 was believed to be $815,000, prior to that the highest sale was $750,000 in 2005 or 2006.There has not been a sale on the street that fell in the range of $800,000 to $1,000,000.[21]
11.Conclusion of Value.The true value in money of the subject property as of January 1, 2011, is $773,200, a residential assessed value of $146,910.See, Hearing Officer Finds 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.[22]
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.[23]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.[24]
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[25]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.[26]The presumption is not evidence of value.
The presumption of correct assessment is rebutted when the taxpayer 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.[27]The submission of the appraisal report,[28] performed by a state certified real estate appraiser, established prima facie that the Board’s value was in error.On its own, without other evidence in the record, the Josef appraisal would have also established the value of $750,000 for Complainant’s property.
Board Presumption and Computer-Assisted Presumption
As just addressed there exists under operation of case law the presumption of correct assessment by the Board of Equalization.As will be addressed below (See, Respondent’s Burden of Proof, infra), there exists by statutory mandate a presumption that the Assessor’s original valuation was made by a computer, computer-assisted method or a computer program – the computer-assisted presumption.These two presumptions operate with regard to the parties in different ways.The Board 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 Board, then it also would be applicable to the Respondent.The computer-assisted presumption only comes into play if the Respondent is seeking to sustain the original assessment and it has not been shown that it was not the result of a computer assisted method.
Board Presumption
The Assessor’s original value in this appeal was determined by the Board to be incorrect.The taxpayer must establish by substantial and persuasive evidence that the value concluded by the Board is in error and what the correct value should be.The burden, of course, is discharged by simply establishing the fair market value of the property as of the valuation date, since once fair market value is established it, a fortiori,[29] proves that the Board’s value was in error.The computer-assisted presumption plays no role in this process.
Computer-Assisted Presumption
The computer-assisted presumption can only come into play in those instances where the Respondent is seeking to have the Assessor’s original valuation affirmed.If in a given appeal the Respondent is offering evidence that would establish a value less than the original valuation, then the computer-assisted presumption is not applicable to that appeal.Even if the Board has reduced the valuation and the Respondent’s evidence is offered to increase the value, but not to the level of the original valuation, the computer-assisted presumption does not come into play.
In this instance the Hackman appraisal tenders a value in excess of the Board’s value and also above the Assessor’s original value.Accordingly, the only conclusion that can logically be reached is that the Assessor’s evidence is seeking to sustain the original valuation of $1,045,000.By operation of statute, this places a burden upon Respondent to present clear, convincing and cogent evidence to sustain the Assessor’s valuation of $1,045,000.[30]
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.[31]True value in money is defined in terms of value in exchange and not value in use.[32]It is the fair market value of the subject property on the valuation date.[33]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.[34]
Weight to be Given Evidence
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.[35]
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 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 who testify on the issue of reasonable value, but may believe all or none of the expert’s testimony and accept it in part or reject it in part.[36]
As will be addressed below, the appraisal received on behalf of Complainants warrants such weight that it provides substantial and persuasive evidence as a basis upon which the Hearing Officer can arrive at a conclusion of value.Respondent’s appraisal, due to the higher standard of proof imposed by statute cannot be given probative weight in the final analysis to ascertain fair market value from this evidentiary record.
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.[37]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.[38] Both appraisers concluded value under the comparable sales approach.[39]
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 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.[40]
Both appraisers were qualified as an expert on the appraisal of residential real property in St. Louis County based upon their knowledge, skill, experience, training, or education.[41]The data upon which they concluded value were of a type reasonably relied upon by residential real estate appraisers in forming an opinion of the fair market value of the subject.The data is deemed to be otherwise reliable.
Complainants’ Burden of Proof
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, 2011.[42]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.”[43]A valuation which does not reflect the fair market value (true value in money) of the property under appeal is an unlawful, unfair and improper assessment.
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[44]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.[45]
Basis for Conclusion of Value
The Hearing Officer after a detailed review of Exhibit C, the testimony of Mr. Josef and Respondent’s Rebuttal Exhibit 7 concludes that the Josef appraisal provides substantial and persuasive evidence upon which a conclusion of value can be made.
Sale Prices
The range of sale prices for the six comparables was: $266.99, $154.40, $196.04, $232.45, $273.65 and $259.40.This resulted in a median of $245.93 and a mean of $230.59.
Location of Comparables
The six sale properties all were within excellent proximity to the subject.The range of distance was from .09 to .33 of a mile from the subject.The six sales utilized by Mr. Josef are in excellent proximity to Complainants’ home.The locations of these properties provide an extremely sound basis for the appraisal of the Complainant’s property.The locations of the Josef sales 1 through 5 are superior for the present appraisal problem to the Hackman sales 1, 2, 3 and 5.Josef Comp 6 and Hackman Comp 4 are the same property.
Dates of Sale
The six sale properties all sold at dates relevant to a 1/1/11 valuation.Specifically, the sales dates were: 6/10, 6/10, 2/10, 8/10, 5/10 and 9/10.A range of sales from 11 months to only 4 months prior to the valuation date is very appropriate for the present appraisal problem.
Condition
Mr. Josef considered four of his comparables to be Average + like the subject, and two to be Good.Therefore, no adjustment was made to his four Average+ comparables for condition.A -$120,000 adjustment was made to the two other properties to account for their superior condition.This adjustment did not account for the structural problem of the subject.
At the time of performing his appraisal, he did not have access to the Structural Engineering Report.Accordingly, he had no basis upon which to attribute a dollar amount to any adjustment for the factor of structural issues.[46]There is no evidence to indicate that any of the six sale properties suffered from any structural problems such as the subject.Given that the appraiser did not have the benefit of the cost estimate for the underpinning installation that is warranted due to the soil and foundation movements of the subject, it is appropriate that such an adjustment should be made to arrive at a conclusion of value.
Gross Living Area
This factor was contested in the 2009 appeal on the subject property.The concluded square footage in that appeal was 4,492.A review and calculation of the floor plan provided in the Josef appraisal verifies a gross living area of 4,494, as he used in his appraisal.The appraiser did review the 2009 decision, but also considered assessment information from the St. Louis County property database, as well as his own measurements of the property.[47]
The comparables had the following gross living areas:2,575, 4,469, 3,688, 3,334, 4,376 and 4,626.As is often the case when appraising homes in excess of 4,000 square feet, finding sales that fall within a narrow range of living areas can be difficult.While comparables 1, 3 and 4 fall beyond the generally, accepted 500 square foot variance guideline, this does not render them unacceptable for the appraisal problem.As with other differences in amenities, the appraiser must adjust to account for the difference.The adjustments made by the appraiser are appropriate to account for the difference in living area.
Attic Space
The matter of the attic bedroom space arose in both the 2009 and the 2011 appeals.The finished area does have space for a very small and narrow bedroom and there is a bath located on the attic level.However, a viewing of the pictures, as well as the testimony of Mr. Deutsch has left the Hearing Officer with the conclusion that the market would allow little, if any, additional value for this area.The space need not be including in the gross living area.The absence of heating or air conditioning going to the room limits its marketability as an actual third bedroom.
Mr. Josef adjusted each of his comparables a +$20,000 for this feature on the basis that none of the comparable properties had finished attic space.His estimate that the finished third floor space comprises a maximum of 900 to 1,000 square feet is not persuasive.[48]The photographs in the Josef appraisal and the testimony of Mr. Deutsch on this point,[49] has persuaded the Hearing Officer that the actual space is far closer to maybe 400 square feet.In any event, the positive adjustment by Mr. Josef for this feature was unwarranted.This is especially true with regard to his Comparables 1, 2, 4 and 5.
The MLS data on Comp 1 notes a “great teenager suite on the 3rd floor”.[50]The subject’s finished attic space does not qualify as a great teenager suite.Accordingly, the upward adjustment for finished attic space was not warranted to this comparable.
Comparable 2 was described in the MLS data as having an “updated 3rd flr suite (not in tax records) incl large private rm used for theatre, additional bedroom plus an additional full bath.”[51]The Deutschs’ do not have a suite in their third floor attic space.It is not large enough for use as a theatre.It is at best a Spartan bedroom space and a small bathroom.The upward adjustment made by Mr. Josef for this comparable was not appropriate.A possible downward adjustment would have been warranted.However, the Hearing Officer is without sufficient information on the record to make such an amendment to the conclusion of value for Comp 2.
Although Comparable 3 did not have any finished attic space, the upward adjustment of +20,000 is not justified.Mr. Josef adjusted his comparables at the rate of $5,000 per additional bedroom.This adjustment was not for an unheated, non-air conditioned room.Accordingly, even adjusting the attic space to allow for an additional sleeping space would not call for a $5,000 adjustment.Nor does the attic bath room command an adjustment that might otherwise be made for an additional bath on a first or second floor level.
The fourth comparable was described as having a “4th bdrm and 3rd full Bthrom on the 3rd flr w/storage space.”[52]Therefore, at the very least this property and the subject would be considered equal for this amenity.Accordingly, the upward adjustment was not warranted.
Comparable 5 was described as a “Third floor with high level finish, full bath and three additional rooms-one used a study with built-ins.”[53]This is clearly superior, not inferior to the subject.This third floor space would actually warrant a negative adjustment to account for the fact that the subject’s space in no way is of quality or quantity of this Comp.
The final comparable was only a two story house.It had no finished attic space.However, as previously concluded an upward adjustment of +$20,000 overstates what the market would recognize for the subject’s finished attic.
In conclusion, the Extra Feature adjustment for the Finished Attic was not appropriate for comparables 1, 2, 4 and 5.No adjustment should have been made for these sales.The adjustment to Comps 3 and 6 was excessive, if appropriate at all.The Hearing Officer, as previously noted, is not persuaded that the market would recognize the finished attic space in the Deutsch home as providing any significant additional value.
Evidence of Increase in Value
In any case in St. Louis County where the assessor presents evidence which indicates a valuation higher than the value finally determined by the assessor or the value determined by the board of equalization, whichever is higher, for that assessment period, 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.[54]The appraisal report and testimony presented on behalf of the Respondent indicates a valuation of $1,086,500.The Assessor’s original valuation was only $1,045,000.The value set by the Board was only $960,000.Therefore, under the Commission rule just cited and Supreme Court decision[55] the assessed value cannot be increased above $198,550 in this particular appeal, or a fair market value of $1,045,000.
Respondent’s Burden of Proof
The Respondent has imposed upon him by the provisions of Section 137.115.1, RSMo, the burden of proof to present clear, convincing and cogent evidence to sustain a valuation on residential property which is made by a computer, computer-assisted method or a computer program.There is a presumption in this appeal that the original valuation, which was sustained by the Board of Equalization, was made by a computer, computer-assisted method or a computer program.There was no evidence to rebut the presumption, therefore, in order to sustain the valuation of the subject property at $1,045,000, appraised value, Respondent’s evidence must come within the guidelines established by the legislature and must clearly and convincingly persuade the Hearing Officer as to the value sought to be sustained.
The statutory guidelines for evidence to meet the standard of clear, convincing and cogent include 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 paragraph, 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.[56]
Clear, cogent and convincing evidence is that evidence which clearly convinces the trier of fact of the affirmative proposition to be proved.It does not mean that there may not be contrary evidence.[57]The quality of proof, to be clear and convincing must be more than a mere preponderance but does not require beyond a reasonable doubt.[58]“For evidence to be clear and convincing, it must instantly tilt the scales in the affirmative when weighed against the evidence in opposition, and the fact finder’s mind is left with an abiding conviction that the evidence is true.”[59]
Although the Hackman appraisal comes within the statutory standard, the selection of Comparables 1, 2, 3 and 5 raises serious concern in the mind of the Hearing Officer.The evidence that for a ten year period prior to valuation date there had been no sales on the subject street above $800,000 serves to rebut the appropriateness of sales that where each at or just above $1.2 million.In addition, when the per square foot sales prices of these five properties are reviewed against the Josef per square foot sale prices for his Comparables 1, 2, 3 4 and 5, it is clear that the Hackman comparables are generally superior properties to those that sold on Aberdeen, Dartford, Arundel, and Wydown Boulevard in the subject’s more immediate neighborhood.The average of the Hackman sales from the Claverach Park and Southmoor subdivisions was $298.75.The average of the Josef sales from the Hillcrest and Skinker Heights subdivisions was $224.71.
It is clear that Claverach and Southmoor enjoy having properties which will command $1.2 million plus, however, the Hillcrest and the subject street do not a sales history of such priced home.The two Skinker Heights properties commanded right at $1.2 million each placing them clearly at the upper end of any value which could be concluded for the subject.
When Respondent’s evidence was weighed against the Complainants’ evidence, the scales did not instantly tilt in the affirmative for the value concluded by the Hackman appraisal.The Hearing Officer’s mind was not left with an abiding conviction that the conclusion of value of $1,086,500 or even $1,045,000 was the fair market value of the property as of 1/1/11.Respondent did not present clear, cogent and convincing evidence to sustain the Assessor’s value of $1,045,000
Hearing Officer Finds Value
Base on the foregoing discussion with regard to the Josef appraisal, the +$20,000 adjustment to each of the comparables is to be eliminated.This results in adjusted sales prices of $758,450, $656,250, $728,300, $808,000, $1,023,400 and $1,013,400.These indicated values, however, do not take into account the structural deficiencies of the subject home.The concluded value by Mr. Hackman of $1,038,570 for the Cecil Avenue property (Josef Comp 6) can be considered by the Hearing Officer as it did not by itself indicate a value of $1,045,000 or greater.Mr. Hackman did adjust this sale a -$100,000 to account for the subject’s structural problems.
To account for the subject’s structural deficiency, it is necessary to make a deduction to each of the Josef Comps.The Hearing Officer will apply the -$100,000 adjustment which Mr. Hackman made to the Cecil sale to the Josef sales.This provides the following adjusted sale prices (Josef Comps) $656,450, $565,250, $628,300, $708,000, $923,400, $913,400 and (Hackman Cecil Comp) $1,038,570.
Due to the fact that the subject street has not seen a single sale in the ten years prior to the valuation date that was above $800,000 and the most recent sale in 2011 being only $815,000 (See, FINDING OF FACT 10, supra), lesser weight is to be given to the adjusted sale price for Josef Comps 5 and 6, and Hackman Comp 4.It would appear that an adjustment for location for these two sales would be warranted, since after all other adjustments, the indicated values are still significantly above the recent historical sale level for Wydown Terrace.However, the Hearing Officer has no basis in the record to apply such an adjustment.
The Hearing Officer weights the sales in order 16 – 16 – 16 – 16 – 12 – 12 – 12, this results in an overall value of $773,200.[60]
ORDER
The assessed valuation for the subject property as determined by the Board of Equalization for St. Louis County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2011 and 2012 is set at $146,910.
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.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 for review is based will result in summary denial. [61]
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 December 5, 2012.
STATE TAX COMMISSION OFMISSOURI
W. B. Tichenor
Senior Hearing Officer
[2] 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).
[4] Description of The Improvements – Subject Property, Addendum Page 1 of 5; Photographs following Professional Qualifications
[5] Residential property is assessed at 19% of its appraised value (true value in money, fair market value) – Section 137.115.1 (5); Exhibit 1 – Assessment Information and Tax Data, Addendum Page 1 of 5
[15] The Hearing Officer had understood at hearing the exhibit to be for the purpose of demonstrating where Mr. Hackman had measured the garage, and also understood the 24.3 feet to have been the measurement of Mr. Hackman.Upon review of the transcript, the Exhibit is simply hearsay.It provides no probative weight on any material issue in the appeal.
[16] Tr. 63:18 – 64:15; Tr. 65:15 – 67:12; Exhibit C: Photographs – 3rd Floor finished attic area bedroom & bathroom; 3rd floor bathroom
[20] Exhibit C – Floorplan Sketch.Hearing Officer checked and calculated the various areas of the home by 3 difference divisions of living area to confirm the square footage to be 4,494.
[25] 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)
[26] 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.
[27] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
[31] 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).
[32] 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).
[34] 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.
[35] 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).
[36] 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).
[37] 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).
[38] 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).
[40] 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).
[41] Exhibit C – Robert Josef is a Missouri State Certified Residential Real Estate Appraiser;Exhibit 1- Personal Qualification – Ross Hackman
[43] 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).
[44] See, Cupples-Hesse, supra.
Substantial and persuasive evidence is not an extremely high standard of evidentiary proof.It is the lowest of the three standards for evidence (substantial & persuasive, clear and convincing, and beyond a reasonable doubt).It requires a small amount of evidence to cross the threshold to rebut the presumption of correct assessment by the Board.The definitions, relevant to substantial evidence, do not support a position that substantial and persuasive evidence is an extremely or very high standard.
“Substantial evidence: Evidence that a reasonable mind would accept as adequate to support a conclusion; evidence beyond a scintilla.”Black’s Law Dictionary, Seventh Edition, p. 580.
The word scintilla is defined as “1. a spark,2. a particle; the least trace.” Webster’s New World Dictionary, Second College Edition.Black’s definition at 1347 is “A spark or trace <the standard is that there must be more than a scintilla of evidence>.”There must be more than a spark or trace for evidence to have attained the standard of substantial.Once there is something more than a spark or trace the evidence has reached the level of substantial.Substantial evidence and the term preponderance of the evidence are essentially the same.“Preponderance of the evidence.The greater weight of the evidence; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”Black’s at 1201.Substantial evidence is that a reasonable mind would accept as adequate to support the conclusion.Preponderance is sufficient to incline a fair and impartial mind to one side of the issue rather than the other, i.e. support the proposed conclusion.
[55] The Supreme Court of Missouri has interpreted Section 138.060.The Court stated:
“Section 138.060 prohibits an assessor from advocating for or presenting evidence advocating for a higher ‘valuation’ than the ‘value’ finally determined by the assessor. … . Because the legislature uses the singular terms ‘valuation’ and ‘value’ in the statute, however, it clearly was not referring to both true market value and assessed value.While the assessor establishes both true market value and assessed value, which are necessary components of a taxpayer’s assessment, as noted previously, the assessed value is the figure that is multiplied against the actual tax rate to determine the amount of tax a property owner is required to pay.The assessed value is the ‘value that is finally determined’ by the assessor for the assessment period and is the value that limits the assessor’s advocacy and evidence.Section 138.060.By restricting the assessor from advocating for a higher assessed valuation than that finally determined by the assessor for the relevant assessment period, the legislature prevents an assessor from putting a taxpayer at risk of being penalized with a higher assessment for challenging an assessor’s prior determination of the value of the taxpayer’s property.”State ex rel. Ashby Road Partners, LLC et al v. STC and Muehlheausler, 297 S.W.3d 80, 87-88 (Mo 8/4/09)