State Tax Commission of Missouri
LOUIS A. & MAE M. STANGLE,)
)
Complainants,)
)
v.)Appeal Number 09-10148
)
MICHAEL BROOKS,)
ACTING ASSESSOR,)
ST. LOUIS COUNTY, MISSOURI,)
)
Respondent.)
ORDER
AFFIRMING HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
On July 2, 2010, Senior Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) setting aside the assessment by the St. Louis County Board of Equalization and increasing the true value in money on the subject property to $264,000, a residential assessed value of $50,160.[1]
Complainants timely filed their Application for Review.[2]
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.[3]
The Hearing Officer as the trier of fact may consider the testimony of an expert or lay 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.[4]
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.[5]
DECISION
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.[6]
Complainant asserts that the Hearing Officer erred in his ruling on objections to Exhibits A, B, C and D which were excluded from evidence on the grounds of hearsay, relevance and lack of foundation.The Hearing Officer did not err in his ruling sustaining the objections made by Counsel for Respondent.[7]The Hearing Officer properly applied the rules of evidence in finding that the tendered exhibits constituted hearsay, lacked relevance and did not have a proper foundation for admission into evidence.The Hearing Officer correctly concluded that the methodology proffered by the taxpayer of average per square foot sales prices was not a proper appraisal methodology.[8]
The Hearing Officer did not err in his determinations as challenged by Complainant.
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 August 9, 2010.
STATE TAX COMMISSION OF MISSOURI
Bruce E. Davis, Chairman
Jeff W. Schaeperkoetter, 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 2009 and 2010 is set at $264,000, residential assessed value of $50,160.Complainants appeared pro se.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 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.Complainants timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.A hearing was conducted on June 22, 2010, at the St. LouisCountyGovernmentCenter,Clayton,Missouri.
2.Assessment. The Assessor appraised the subject property at $264,000, residential assessed value of $50,160.The Board of Equalization reduced the value to $259,700, residential assessed value of $49,340.[9]
3.Subject Property.The subject property is located at 1839 Rockmoor Dr. Chesterfield, Missouri.The property is identified by locator number 19S610506.The property consists of a 9,900 square foot lot improved by a one-story brick and vinyl sided, ranch, single-family structure of average quality construction.The house was built in 1974 and appears to be in average condition for its age.The residence has eight rooms, with four bedrooms, two baths, and contains 2,144 square feet of living area.There is a full basement, with 1,400 square feet of finished recreation area and a full bath.The home has an attached two-car garage.[10]
4.Complainant’s Evidence.Complainant testified in his own behalf.He gave his opinion of the fair market value of the property as of January 1, 2009, to be $220,400 to $240,000.The $220,400 value was based upon the owner’s calculation of an average per square foot sales price from ten sales and applying this to the subject’s square footage.The $240,000 opinion of value was based on his conversation with four or five real estate sales persons.[11]
The following exhibits were offered into evidence:
|
EXHIBIT |
DESCRIPTION |
DISPOSTION |
|
A |
Calculation of a per square foot sales value |
Obj – sustained/excluded |
|
B |
Sales Sheets on properties used in Exhibit A |
Obj – sustained/excluded |
|
C |
Listing Sheet – next door property to subject |
Obj – sustained/excluded |
|
D |
Sale Sheet – property across street from subject |
Obj – sustained/excluded |
|
E |
Photos of cracks in patio and basement |
Received |
Counsel for Respondent objected to Exhibits A, B, C and D on the grounds of lack of foundation, hearsay, and relevancy.The objections were sustained.Sale and Listing Sheets, absent appropriate appraisal adjustments, are not probative on the issue of the fair market value of the subject property.Averaging of unadjusted sales prices is not a proper appraisal methodology.
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.[12]
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 $220,400 or 240,000, as proposed.
5.Respondent’s Evidence.Respondent presented the appraisal report and testimony of Sarah Curran, Missouri Certified Residential Real Estate Appraiser.Ms. Curran arrived at a conclusion of the fair market value of the Complainants’ property as of January 1, 2009, of $274,000 based upon a sales comparison approach utilizing five sales.The properties relied upon by Respondent’s appraiser comparable to the subject property. The properties were located within less than a third of a mile of 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, condition, 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.
Respondent’s evidence met the standard of substantial and persuasive to establish the value of the subject, as of January 1, 2009, to be $274,000.However, Respondent’s appraisal was accepted only to sustain the original assessment made by the Assessor.Respondent meet the standard of clear, convincing and cogent evidence in this appeal to sustain the original valuation of $264,000.
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.[13]
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.[14]The presumption in favor of the Board is not evidence.A presumption simply accepts something as true without any substantial proof to the contrary.In an evidentiary hearing before the Commission, the valuation determined by the Board is accepted as true only until and so long as there is no substantial evidence to the contrary.
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.[15]The taxpayer failed to present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board.Respondent’s evidence was substantial and persuasive to both rebut the presumption and to prove the true value in money for the property under appeal.
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.[16]True value in money is defined in terms of value in exchange and not value in use.[17]It is the fair market value of the subject property on the valuation date.[18]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.[19]
Respondent’s appraiser arrived at her conclusion of value under the Standard for Valuation.[20]
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.[21]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.[22]The owner’s opinion of value was based on an averaging of per square foot sales prices.This is not a methodology that has been recognized by either Court decision or any decision of the Commission. It is not an approved appraisal practice.Respondent’s appraiser, on the other hand, appraised the property under appeal by developing a sales comparison approach which utilized sales of five properties.When appraising owner occupied residential property, the sales comparison approach is generally recognized to be the most reliable methodology for arriving at air market value.
Complainants’ Failed to Meet 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, 2009.[23]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.”[24]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[25]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.[26]
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.[27]The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[28]Mr. Stangle’s opinion of value was based upon his conversations with four or five realtors.No supporting evidence was presented to support this rank hearsay.None of the realtors were identified by name.No testimony was provided that would establish if the realtors were offering opinions of value as of January 1, 2009, or a later date.Conversations with real estate agents or brokers do not qualify as substantial and persuasive evidence for the valuation of the subject property, or any other property under appeal before the Commission.
Mr. Stangle also presented information, which was excluded from evidence, by which he averaged the per square foot sales prices of ten properties which had sold during 2009 and 2010 and applied that average to his property.The value asserted under this calculation was less than his opinion of $240,000 derived from his hearsay conversations with real estate sales persons.Neither of the means to arrive at an opinion of value presented by the taxpayer is a methodology for appraising property that is recognized by the Courts or by the Commission.The opinion of value was not based upon proper elements or a proper foundation.Therefore, the owner’s opinion can be given no probative weight in this appeal.Complainants failed to meet their burden of proof to both rebut the presumption of correct assessment by the Board and to prove the fair market value of their property as of January 1, 2009.
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.[29]The evidence presented by the Respondent was substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the fair market value of the property under appeal, as of January 1, 2009, to be $274,000.However, under the Commission rule just cited and Supreme Court decision[30] the assessed value cannot be increased above $50,160 in this particular appeal.
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 reduced 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 $264,000, 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.[31]
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.[32]The quality of proof, to be clear and convincing must be more than a mere preponderance but does not require beyond a reasonable doubt.[33]“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.”[34]
Respondent’s evidence met the standard for clear and convincing evidence of the true value in money of $264,000, and assessed value of $50,160 as originally determined by the Assessor.
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 2009 and 2010 is set at $50,160.
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. [35]
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 July 2, 2010.
STATE TAX COMMISSION OFMISSOURI
W. B. Tichenor
Senior Hearing Officer
[1] The increase in value was based on the Respondent’s Appraisal report which concluded a value of $274,000, however, the assessed value could not be raised above $50,160, or an appraised value of $264,000.See, DECISION, Evidence of Increase in Value.
[3] 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).
[4] 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).
[5] Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Lowe v. Lombardi, 957 S.W.2d 808 (Mo. App. W.D. 1997); Forms World, Inc. v. Labor and Industrial Relations Com’n, 935 S.W.2d 680 (Mo. App. W.D. 1996); Evangelical Retirement Homes v. STC, 669 S.W.2d 548 (Mo. 1984); Pulitzer Pub. Co. v. Labor and Indus. Relations Commission, 596 S.W.2d 413 (Mo. 1980); St. Louis County v. STC, 562 S.W.2d 334 (Mo. 1978); St. Louis County v. STC, 406 S.W.2d 644 (Mo. 1966).
[6] Hermel, Inc. v. STC, 564 S.W.2d 888 (Mo. 1978); Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Holt v. Clarke, 965 S.W.2d 241 (Mo. App. W.D. 1998); Smith v. Morton, 890 S.W.2d 403 (Mo. App. E.D. 1995); Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).
[11] The owner first testified that he had talked to four realtors about the value of his property.Later he testified that it was five realtors with which he had talked.
[14] 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).
[15] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
[16] 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).
[17] 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).
[19] 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.
[21] 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).
[22] 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).
[24] 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).
[27] 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).
[28] 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).
[30] 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)