State Tax Commission of Missouri
LOREN L. LANDAU,)
)
Complainant,)
)
v.) Appeal Number 09-10622
)
MICHAEL BROOKS,)
ACTING ASSESSOR,)
ST. LOUIS COUNTY,MISSOURI,)
)
Respondent.)
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 $348,000, residential assessed value of $66,120.Complainant appeared pro se.Respondent appeared by Associate County Counselor Paula Lemerman
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
ISSUE
Complainant appeals, on the ground of overvaluation and discrimination, 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.Complainant timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.A hearing was conducted on July 27, 2010, at the St. LouisCountyGovernmentCenter,Clayton,Missouri.
2.Assessment. The Assessor appraised the property under appeal at $350,000, a residential assessed value of $66,500.The Board sustained the assessment.[1]
3.Subject Property.The subject property is located at 365 Lyonnais Dr., Creve Coeur, Missouri.The property is identified by locator number 18O430156.The property consists of a 26,412 square foot lot improved by a single-family, ranch-style home, built in 1973.The gross living area is 3,382 square feet.The home has a full basement with 950 square feet of finish.There is a two-car basement, rear-entry garage and an oversized three-car, side-entry attached garage.The home has a total of eight rooms, four bedrooms, two full and one half bathrooms.The overall condition of the home is poor due to various deferred maintenance items.[2]
4.Complainant’s Evidence.Mr. Landau testified in his own behalf.He stated his opinion of the fair market value of his property to be $262,500.This opinion of value was based upon Mr. Landau having made a 20% – 25% reduction in the Assessor’s appraised value for the property in the 2007-08 assessment.The Complainant’s opinion was that 20% to 25% was representative of the overall decline in the real estate market.Mr. Landau testified that his discrimination claim was based on the comps used for the original valuation of his property for 2009-10 were not from the subject subdivision.
The following exhibits were offered into evidence on behalf of Complainants.
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EXHIBIT |
DESCRIPTION |
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A |
28 photographs showing the various items of deferred maintenance on the house |
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B |
Realtor’s Listing Information on 12360 Montaouris Dr. |
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C |
Realtor’s Listing Information on 12451 Montsouris Dr. and 12334 Montsouris Dr. |
Exhibit A was received into evidence.Counsel for Respondent objected to Exhibits B and C on the grounds of lack of foundation and relevance.Objections were sustained.Listing information, by itself, lacks the proper foundation to be relevant to the issue of fair market value.Such information may be useful to an appraiser when selecting comparables and adjusting for differences between sale properties and the subject.There is nothing in either Exhibit B or C from which it can be concluded that the fair market value of the subject on January 1, 2009, was $262,500.In addition, Mr. Landau did not rely upon any of the information in Exhibit B or C to conclude his opinion of value, a further element of non-relevance.
Exhibits B and C are maintained in the Commission file as an offer of proof.They are not part of the evidentiary record for concluding value of the property under appeal.
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.[3]
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, 2009, to be $262,500, as proposed.
Complainant’s evidence was not substantial and persuasive to establish discrimination in the assessment of the subject property based upon the owner’s claim that the original comparables used in the mass valuation were not from the subject subdivision.
5.Respondent’s Evidence.The appraisal report[4] and testimony of Ross Hackman, Residential real Estate Appraiser was presented on behalf of Respondent.Relying on the sales comparison approach, Mr. Hackman concluded an opinion of fair market value for the subject property on January 1, 2009, of $348,000.The properties utilized by Respondent’s appraiser were comparable to the subject property for the purpose of making a determination of value of the subject property.The four sale properties were located within less than six-tenths of a mile from the subject.Each sale 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, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability.
The appraiser made various adjustments to the comparable properties for differences which existed 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.In particular, the appraiser accounted for the numerous items of deferred maintenance which resulted in the over-all condition of the home being considered as poor.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, 2009, to be $348,000.
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.[5]
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[6]It places the burden of going forward with some substantial evidence on the taxpayer – Complainant.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.[7]Complainant failed to meet the required standard to rebut the presumption of correct assessment by the Board.Respondent’s evidence was substantial and persuasive to rebut 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.[8]True value in money is defined in terms of value in exchange and not value in use.[9]It is the fair market value of the subject property on the valuation date.[10]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.[11]
Respondent’s appraiser concluded value for the subject property under the Standard for Valuation.[12]
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.[13]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.[14]The methodology to find value tendered by Mr. Landau was to apply an arbitrary percentage range of 20% to 25% as a reduction in value from the Assessor’s prior appraised value for the property.This is not a recognized method of arriving at fair market value.Respondent’s appraiser, on the other hand, developed and relied upon the sales comparison approach to value, a well recognized and accepted appraisal tool for the valuation of owner occupied residential properties.
Complainant Failed to Prove Value of $262,500
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, 2009.[15]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.”[16]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[17]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.[18]
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.[19]The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[20]Mr. Landau gave his opinion of value to be $265,500.This was based on a 20 – 25% reduction in the Assessor’s 2007-08 appraised value for the property.The percentage reduction was based upon the taxpayer’s asserted decline in real estate market values.
There are two fatal flaws to the method by which Mr. Landau concluded his opinion of value.First, no evidence was presented that would establish that in point of fact the Assessor’s appraised value for 2007-08 did in fact represent market value as of January 1, 2007. There is no presumption that the Assessor’s value is correct.[21]The second fatal flaw is that no evidence was presented that established that real property in the subject neighborhood or market area had decreased in value by 20 – 25% from January 2007 to January 2009.
General information and news relative to the nationwide house market decline is not substantial and persuasive evidence to establish any given percentage of decline for a given neighborhood, or any given value for a single property.Applying some general percentage deduction from a prior appraised value is not an accepted appraisal approach.The owner’s opinion of value was not based upon proper elements or a proper foundation.No probative weight can be given to the value asserted of $265,500.
Complainant Failed to Prove Discrimination
In order to obtain a reduction in assessed value based upon discrimination, the Complainant must (1) prove the true value in money of their property on January 1, 2009; and (2) show an intentional plan of discrimination by the assessing officials resulting in an assessment of that property at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction.[22]Evidence of value and assessments of a few properties does not prove discrimination.Substantial evidence must show that all other property in the same class, generally, is actually undervalued.[23]The difference in the assessment ratio of the subject property the average assessment ratio in the subject county must be shown to be grossly excessive.[24]No other methodology is sufficient to establish discrimination.[25]
Complainant failed to prove the true value in money of the subject property and presented no evidence to establish that the average residential assessment ratio for St. Louis County for the 2009-2010 assessment was less than the statutory mandated ratio of nineteen percent.Complainant’s claim of discrimination was that comparables in the original assessment were not in the subject subdivision.This is not a legal basis to establish discrimination.
Respondent Proves Value
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.[26]Respondent presented substantial and persuasive evidence to establish a fair market value as of January 1, 2009, to be $348,000 for the subject.
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 adjustments made the Mr. Hackman were consistent with generally accepted guidelines for the appraisal of property of the subject’s type.The adjustments properly accounted for the various differences between the subject and each comparable.
ORDER
The assessed valuation for the subject property as determined by the Assessor and sustained 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 2009 and 2010 is set at $66,120.
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 appeal is based will result in summary denial. [27]
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 September 3, 2010.
STATE TAX COMMISSION OFMISSOURI
_____________________________________
W. B. Tichenor
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 3rdday of September, 2010, to:Loren Landau, 365 Lyonnais, St. Louis, MO 63141, Complainant;Paula Lemerman, Associate County Counselor, Attorney for Respondent, County Government Center, 41 South Central Avenue, Clayton, MO 63105; Michael Brooks, Acting Assessor, County Government Center, 41 South Central Avenue, Clayton, MO 63105; John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.
___________________________
Barbara Heller
Legal Coordinator
Contact Information for State Tax Commission:
Missouri State Tax Commission
301 W. High Street, Room 840
P.O. Box 146
Jefferson City, MO 65102-0146
573-751-2414
573-751-1341 Fax
[6] 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)
[7] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
[8] 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).
[9] 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).
[11] 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.
[13] 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).
[14] 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).
[16] 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).
[19] Rigali v. Kensington Place Homeowners’ Ass’n, 103 S.W.3d 839, 846 (Mo. App. E.D. 2003); Boten v. Brecklein, 452 S.W.2d 86, 95 (Sup. 1970).
[20] Cohen v. Bushmeyer, 251 S.W.3d 345, (Mo. App. E.D., March 25, 2008); Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992); State, ex rel. Missouri Hwy & Transp. Com’n v. Pracht, 801 S.W.2d 90, 94 (Mo. App. E.D. 1990); Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965).