State Tax Commission of Missouri
LEON STEINBACH,)
)
Complainant,)
)
v.) Appeal No.07-10165
)
PHILIP MUEHLHEAUSLER, ASSESSOR,)
ST. LOUIS COUNTY,MISSOURI,)
)
Respondent.)
ORDER
AFFIRMING HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
On November 5, 2008, Senior Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) setting aside the assessment by the St. Louis County Board of Equalization.
Complainant filed his Application for Review of the Decision.Respondent filed his Response.
CONCLUSIONS OF LAW
And
DECISION
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.[1]
The Hearing Officer as the trier of fact may consider the testimony of an expert and 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.[2]
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.[3]
Decision Supported by Evidence
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. 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.[4]
Complainant’s Grounds for Appeal
Complainant set forth the following points as the basis for his appeal.
1. Rejection of factual information in paragraphs 3, 4 and 5 of Enclosure 3 of letter of September 2, 2008, providing justification and substantiates the information in Residential Appraisal Report dated July 14, 2007.
2. Rejection of Complainant’s October 3, 2008 letter (sic – letter is dated October 2, 2008) as Exhibit 3.The letter provides factual information that refuted the Respondent’s Objections to Complainant’s Exhibits.
3. Unsubstantiated and false statements contained in the Order Ruling on Objections to Exhibits.
4. The St. Louis County Appraiser’s inflated value of $90,000 for the subject 570 Coach Light Lane property.
5. Objection to the St. Louis County Appraiser Comments regarding the condition of the home at 519 Coach Light Lane (Sales Comp 1 on Appraisal Report).
6. Objection to the Subjective and Prejudicial Decisions made by the Hearing Officer during the October 22, 2008, evidentiary hearing and Order, dated
October 7, 2008.
7. Complainant has necessary skills, academic credentials and experience in real estate appraising, and market analysis of residential properties as a real estate broker.
The Commission does not find merit to any of the grounds asserted by Complainant.A review of the record shows that the Hearing Officer did not err in his determinations as challenged by Complainant.
Ruling on Objections to Exhibits – Points 1, 2 & 3
The points raised by Mr. Steinbach in items 1, 2 and 3 relate to the Hearing Officer’s Order Ruling on Objections to Exhibits, issued October 7, 2008.Complainant only states his claim but failed to provide any explanation as to how the Hearing Officer erred in his October 7th Order.A review of that Order and the filings made by Complainant[5] and Respondent[6] establishes that the Hearing Officer properly sustained the objections raised by Respondent.There was no error in the exclusion of paragraphs 3, 4 and 5 of Complainant’s 9/2/08 letter and Enclosure 3.Nor was it error for the Hearing Officer to exclude the October 2, 2008, letter.
As to Mr. Steinbach’s assertion of “unsubstantiated and false statements in the Order Ruling on Objections to Exhibits,” he only presents this general claim.No details are provided in support of this argument.Complainant fails to point out what parts of the Order fall under his assertion.In the absence of Complainant presenting to the Commission details relative to this point, it is without merit.The Commission’s review of the Order provides nothing to support the Complainant’s claim of unsubstantiated and false statements.
The Hearing Officer provided a detailed explanation for his rulings.It would serve no purpose to restate the rulings and the basis for same.In response to Complainant’s point, the Order of October 7, 2008, is incorporated by reference as if set out in full herein.
Appraiser’s Value of $90,000 – Point 4
This argument is nothing more than a restatement and expansion of the argument Mr. Steinbach put forth in his October 2nd letter.The Complainant’s attempt to appraise his property was completely in error as to his “adjustments” for both the subject’s pool and deck.The Hearing Officer addressed both of these matters in detail.[7]The discussion of the Hearing Officer properly pointed out the fatal deficiencies in the methodology used by Complainant and the appropriate treatment of these factors in the Armstrong appraisal.There is no basis to conclude error on the part of the Hearing Officer with regard to this point.
Condition of Comp 1
Mr. Steinbach next asserts his objection to the characterization by Mr. Armstrong in his appraisal relative to the condition of Comparison Sale 1.The review of the filings made by Complainant, as well as the transcript of the hearing, establishes that Mr. Steinbach never raised any question or issue relative to the conclusion of Mr. Armstrong that his Comp 1 was “inferred to have been in poor condition prior to rehab.”[8]The hearsay information contained in the Application for Review under this point was not evidence in the proceeding.It cannot now be received into the record.Therefore, the Hearing Officer could not have erred on this point.Accordingly there is no basis under this point to reverse the Decision.
Complainant Not An Expert In Real Estate Appraisal
The 6th and 7th points presented address the issue of the Complainant’s claim that he should be considered an expert in real estate appraisal for purposes of this hearing.Mr. Steinbach takes exception to the Hearing Officer’s finding that Complainant is not qualified as an expert witness on the appraisal of residential real estate in proceedings before the Commission.[9]Complainant argues that “Since there is no Missouri State Statute that forbids Mr. Steinbach from qualifying and testifying as an ‘expert witness’, Mr. Tichenor’s statement is false.”[10]
Complainant misunderstands the applicable law on this point.The controlling statute with regard to this matter is §490.065.1, RSMo.[11]The statute states:“In any civil action, if scientific, technical or other 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 by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise.”This statute does not give an unqualified right to testify to any person who is a self-proclaimed expert.It is only a witness qualified by knowledge, skill, experience, training or education that may testify in the form of an opinion as an expert.
It is the responsibility of the Hearing Officer to determine whether a given witness is qualified as an expert on the subject on which a person desires to testify.The determination of whether Mr. Steinbach was qualified to testify as an expert on the matter of appraisal of his own property was within the discretion of the Hearing Officer.[12]The failure to satisfy the statutory foundation requirements[13] renders proffered expert testimony inadmissible.[14]Hearing Officer Tichenor’s finding that Mr. Steinbach is not qualified as an expert on the appraisal of residential real estate is well founded.The detailed examination of Exhibit A[15] gives sound support for the Hearing Officer’s finding.
The owner of property is always permitted to give an opinion of fair market value. The Hearing Officer properly received Mr. Steinbach’s testimony as the owner.[16]The appraisal form that the taxpayer had filled in as the basis for his opinion of value was also received into evidence.[17]However, neither the owner’s testimony, nor the valuation document were considered by the Hearing Officer to consist of expert testimony or an appraisal by an expert.This Hearing Officer did not err in this regard.Due to the numerous inconsistencies, flaws and defects detailed by the Hearing Officer, the owner’s opinion was without any probative value.
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 February 11, 2009.
STATE TAX COMMISSION OF MISSOURI
Bruce E. Davis, Chairman
Jennifer Tidwell, Commissioner
Charles Nordwald, Commissioner
DECISION AND ORDER
HOLDING
Decision of the St. Louis County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE.Hearing Officer finds Respondent’s evidence rebutted the presumption of correct assessment by the Board. True value in money for the subject property for tax years 2007 and 2008 is set at $90,000, residential assessed value of $17,100.
Evidentiary hearing held on October 22, 2008, at theSt. LouisCountyGovernmentCenter,Clayton,Missouri.
Complainant appeared pro se.
Respondent appeared by Assistant County Counselor, Robert Fox.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
ISSUE
The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2007.
SUMMARY
Complainant appeals, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property.The Assessor determined an appraised value of $114,500, assessed value of $21,750, as residential property.Complainant proposed a value of $51,000, assessed value of $9,690.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
Complainant’s Evidence
Complainant testified on his own behalf.He gave his opinion of true value in money as of January 1, 2007 to be $51,000.The owner’s opinion of value was based upon Exhibit A.Exhibit A was received into evidence as the Owner’s Valuation, with paragraphs 3, 4 and 5 of the cover letter and Enclosure # 3 attached thereto stricken as per Order, dated 10/7/08.Exhibits 2 and 3 submitted by Complainant were also excluded per Order, dated 10/7/08.Said Exhibits are maintained in the file for this appeal, but are not part of the evidentiary record.Order Ruling on Objections to Exhibits, 10/7/08, is incorporated by reference as if set out in its entirety in this Decision.
Respondent’s Evidence
Respondent placed into evidence the testimony of Mr. Kyle J. Armstrong, Residential Appraiser Senior for St. LouisCounty.The appraiser testified as to his appraisal of the subject property.The Appraisal Report (Exhibit 1) of Mr. Armstrong was received into evidence.Mr. Armstrong arrived at an opinion of value for the subject property of $90,000 based upon a sales comparison approach to value.In performing his sales comparison analysis, the appraiser relied upon the sales of three properties deemed comparable to the subject property.
FINDINGS OF FACT
1.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.
2.The subject property is located at 570 Coach Light Lane, Hazelwood, Missouri.The property is identified by Locator Number 08L320754.The property consists of 7,479 square foot lot improved by a split-foyer single-family structure of average quality (frame) construction.The house was built in 1963 and appears to be in poor condition.The residence has six rooms, which includes three bedrooms, one bath, and contains 1,026 square feet of above grade living area.There is a full basement with a half bath and approximately forty-five percent finished area.The house has an attached one-car garage.[18]
3.There was no evidence of new construction and improvement from January 1, 2007, to January 1, 2008.
4.Complainant is not qualified as an expert witness on the appraisal of residential real estate in proceedings before the Commission.[19]
5.Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2007, to be $51,000, as proposed.
6.The properties relied upon by Respondent’s appraiser were comparable to the subject property for the present appraisal problem. The properties were located within less than a mile (.15 – .87 of a mile) of the subject.Each sale property sold at a time relevant to the tax date of January 1, 2007 (9/05 – 4/06).The sale properties were similar to the subject in style, quality of construction (Average), age (43 – 44 years), condition (Poor – Average), room, bedroom (3) and bathroom count, living area (within 92 – 130 square feet), location, site size (within 423 – 1023 square feet) and other amenities of comparability.[20]
7.The appraiser made various adjustments to the comparable properties for differences existing between the subject and each comparable.All adjustments were appropriate to bring the comparables in line with the subject for purposes of the appraisal problem.The net adjustments ranged from -6% to -13.8%.This range of adjustments is well within generally accepted appraisal standards.The adjusted sales prices for the comparables calculated to $84,600, $94,800 and $89,900, respectively.The appraiser concluded on a $90,000 value.That calculated to a value per square foot of $87.72 compared with the sales prices per square foot of living area for the comparables of $100.45, $118.53 and $91.23.The indicated value per square foot of living area is reflective of the subject’s generally poor condition. The comparison of the value per square foot provides a validation check for the appraisal, to demonstrate that the indicated value is consistent with the market for properties such as the subject.[21]
8.Respondent’s evidence met the standard of substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the value of the subject, as of January 1, 2007, to be $90,000.
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]
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.[23]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.[24]In the present appeal, Complainant’s evidence fails to meet the required standard to rebut the presumption of correct assessment by the Board.Respondent presented substantial and persuasive evidence to establish that the Board’s valuation was in error.Respondent’s appraisal establish what the fair market value should have been for the property as of January 1, 2007.
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.[25]It is the fair market value of the subject property on the valuation date.[26]
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.[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]
Respondent’s appraiser developed an opinion of value relying upon an established and recognized approach for the valuation of real property, the sales comparison or market approach.The sales comparison approach is generally recognized to be the most reliable methodology to be utilized in the valuation of single-family residences.The valuation methodology offered by Mr. Steinbach purports to be a sales comparison approach.However, Mr. Steinbach is not recognized as an expert in appraisal of residential real estate.Therefore, his methodology cannot be recognized as a sales comparison approach.Furthermore, as addressed in detail below the Steinbach methodology is fundamentally and fatally flawed so that is has no probative weight on the issue of true value in money of the property under appeal.
Complainant’s Burden of Proof
In order to prevail, Complainant must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the
market value of the subject property on January 1, 2007.[30]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.”[31]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[32]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.[33]
As will be addressed below, Mr. Steinbach did not meet the required standard.His evidence was inadequate to establish a market value as of January 1, 2007 of $51,000.Therefore, Complainant failed to meet the burden of proof imposed upon a taxpayer in an appeal before the Commission.
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.[34]The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[35]Mr. Steinbach’s opinion of value is based upon Exhibit A.As has previously been determined Exhibit A does not constitute an appraisal of Complainant’s property.<a style="mso-endnote-id: edn36;" title="" name