State Tax Commission of Missouri
|v.||)||Appeal Number 16-73001|
|JIM ANDERSON, ASSESSOR,||)|
|MORGAN COUNTY, MISSOURI,||)|
DECISION AND ORDER
Decision of the County Board of Equalization of Morgan County lowering the assessment made by the Assessor is AFFIRMED. Complainant did not present substantial and persuasive evidence to rebut the presumption of correct assessment (valuation and classification) by the Board of Equalization.
True value in money for the subject property for tax years 2016 is set at $304,600, commercial assessed value of $97,470.
Complainant appeared by attorney Andrew Hardwick.
Complainant himself did not appear and no witnesses on behalf of Complainant testified.
Respondent appeared pro se.
Case heard and decided by Senior Hearing Officer John Treu.
Complainant appeals, on the ground of overvaluation and misclassification, the decision of the Morgan County Board of Equalization, which lowered the valuation of the subject property but sustained the classification as commercial. The Commission takes this appeal to determine the true value in money and classification for the subject property. The assessment as of January 1 of the odd numbered year remains the assessment as of January 1 of the following even numbered year unless there is new construction and improvement to the property. Section 137.115.1 RSMo
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Morgan County Board of Equalization.
- Evidentiary Hearing. The Evidentiary Hearing was held on October 12, 2016 at Morgan County Courthouse in Versailles, Missouri.
- Identification of Subject Property. The subject property is identified by map parcel number or locator number 15-80-27-400-005-00-003000. It is further identified as 27533 Shorty Road, Barnett, Morgan County, Missouri. (Complainant for Review of Assessment)
- Description of Subject Property. The subject property consists of a 1 acre tract of land improved by a 3,868 square foot structure which previously housed a lake front restaurant. The subject property also has 4 bungalows, each with a full bathroom. The property was marketed as a turnkey opportunity as a bar/restaurant. (Ex. E)
- Sale of Subject. The subject property was purchased by Complainant on July 3, 2015 for $215,000. The seller was Keokuk Savings Bank out of Keokuk, Iowa. The bank originally listed the property for $479,000 in September of 2013. In March of 2014 the list price was reduced by $20,000 to $459,000. In August of 2014 the list price was reduced by $160,000 to $299,000. The list price remained at $299,000 until the sale of the property in July of 2015 for $215,000, $84,000 below the list price and approximately 44.9% of the original list price. (Ex. B & E)
- Assessment. The Assessor valued the property at $327,300, as commercial property. The Board of Equalization reduced the assessor’s valuation of the property to $304,600 and sustained the classification as commercial. (Complainant for Review of Assessment)
- Complainant’s Evidence. Complainant offered into evidence the following exhibits. No witness testified for Complainant. All exhibits were received into evidence without objection.
|A||Affidavit of Complainant|
|C||Real Estate Contract|
|F-H||Photographs Depicting Gas and Commercial Dock which were removed|
|N||Title Insurance Commitment|
|P||Picture of July 4, 2016|
- Evidence of Improvement. There was evidence of improvement from January 1, 2015 to January 1, 2016, such being the removal of two docks.
- Respondent’s Evidence. Respondent offered into evidence Exhibit 1 which consisted of the property record card and two pictures. Exhibit 1 was received into evidence without objection.
- Presumption of Correct Assessment Not Rebutted. Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board.
CONCLUSIONS OF LAW AND DECISION
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. Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.
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. Article X, Sections 4(a) and 4(b), Mo. Const. of 1945. The constitutional mandate is to find the true value in money for the property under appeal. By statute real and tangible personal property are assessed at set percentages of true value in money. Section 137.115.5, RSMo – residential property at 19% of true value in money; commercial property at 32% of true value in money and agricultural property at 12% of true value in money.
Presumption In Appeal
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. 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). The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the Board’s classification and/or valuation is erroneous and what the fair market value should have been placed on the property. Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
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, 2015. Hermel, supra. 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.” 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)
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. 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). True value in money is defined in terms of value in exchange and not value in use. Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), (internal citation omitted) It is the fair market value of the subject property on the valuation date. Hermel, supra. Market value is the most probable price in terms of money which a property should bring in a 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:
- Buyer and seller are typically motivated.
- Both parties are well informed and well advised, and both acting in what they consider their own best interests.
- A reasonable time is allowed for exposure in the open market.
- Payment is made in cash or its equivalent.
- Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
- 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. 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.
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. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977)
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. 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).
Sale of Subject and Failure to Prove Value
Evidence of the actual sales price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time. The actual sale price is a method that may be considered for estimating true value. The actual sales price between a willing seller who is not obligated to sell and a willing buyer who is not compelled to buy, establishes an outer limit on the value of real property. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526 (App. E.D. 1993).
The subject property was purchased by Complainant on July 3, 2015 for $215,000. The seller was Keokuk Savings Bank out of Keokuk, Iowa. The property had been on the market for over 21 months. The bank originally listed the property for $479,000 in September of 2013 and reduced the listed price by $20,000 to $459,000 in March of 2014. In August of 2014 the list price was further reduced by $160,000 to $299,000 where it remained until the sale of the property in July of 2015 for $215,000, $84,000 below the list price and approximately 44.9% of the original list price. Complainant’s sales price was not a reliable indicator of market value.
The Hearing Officer is not persuaded that the sale fulfilled the factors set forth in the Standard for Valuation section above. For example, the evidence did not establish that the seller was typically motivated. Exhibit E is the listing information which includes the statement, “The Seller of this waterfront restaurant and bar located in the Gravois Arm is motivated!” The seller in this case is a bank. Although a bank sale will not automatically render the sale ineligible as proof of market value, the conditions of the sale should be investigated. Further, one sale does not establish a market. Sales of comparable properties can provide support that the price paid by a buyer was a market price.
Complainant did not produce substantial and persuasive evidence of the true value of the property on January 1, 2015.
Two Year Cycle
137.115.1 RSMo states in pertinent part that [t]he assessor shall annually assess all real property in the following manner: new assessed values shall be determined as of January first of each odd-numbered year and shall be entered in the assessor’s books; those same assessed values shall apply in the following even-numbered year, except for new construction and property improvements which shall be valued as though they had been completed as of January first of the preceding odd-numbered year. Assessment is made up of two components, the true value and the classification of the property. The issue of true value has been addressed.
The classification of a property as residential is determined by the actual use put to the property. Northtown Village v. Don Davis, Assessor, Jasper County. Mo., Appeal Nos. 03-62558 (May 27, 2004) Residential property is defined as real property improved by a structure which is used or intended to be used for residential living by human occupants. Section 137.016 RSMo.
In the present case, the property was assessed as commercial property in 2015. The property was used as a waterfront restaurant and bar. A restaurant/bar was not operating after September 2014. The property was vacant. However, the property was not being utilized as a residence on January 1, 2015.
Subsequently, the subject property was purchased and closed on by Complainant in July of 2015. Both the true market value and the classification remain the same during the two year cycle, absent property improvements. Such improvements occurred. Two docks were removed from the property prior to January 1, 2016. Since there were “improvements” to the property in the odd-year, the property may be re-assessed in the even-year.
As stated above, the subject property was assessed as commercial property in 2015, the odd numbered year. The property was not being utilized as a residence on January 1, 2015. The evidence presented shows that the prior restaurant’s dining area now has living room furniture in such and that some beds have been placed in one room. The evidence also shows that public bathroom and other commercial type signs remained on the property as of June of 2016. Complainant also presented a title insurance policy showing a restriction on the subject property from being utilized for commercial use; however, it is undisputed that a restaurant operated on the subject property for many years and then went out of business and thus sat vacant immediately prior to the purchase of the property by Complainant. There was no evidence presented that structure was used for residential living by human occupants as of January 1, 2016. Restrictive covenants and zoning; although relevant, are not determinative of classification. Section 137.016.5 RSMo.
Based upon all the factors set forth above and considering the evidence presented, the Hearing Officer finds that no substantial and persuasive evidence was presented showing an improper classification of the subject property as commercial property. No testimony by a witness for Complainant was elicited. The affidavit of Complainant was offered into evidence; however, such affidavit showed no residential usage of the property on or before January 1, 2016. Consequently, Complainant failed to meet his burden of proof
The assessed valuation for the subject property as determined by the Board of Equalization for Morgan County for the subject tax day is AFFIRMED.
The assessed value for the subject property for tax year 2016 is set at $97,470.
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, MO 65102-0146, 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. Section 138.432, RSMo
The Collector of Morgan 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 this 1st day of November, 2016.
STATE TAX COMMISSION OF MISSOURI
Senior Hearing Officer
Delivery or Notice was made via email, fax, or personally on November 1st, 2016 or by mail to the following Individuals of this Decision/Order/Holding
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
 The assertions of a parties counsel do not constitute evidence.