Mark A Long v. Jake Zimmerman, Assessor St. Louis County

August 3rd, 2018

STATE TAX COMMISSION OF MISSOURI

 

MARK LONG, )

)

  
              Complainants, )  
  )  
v. ) Appeal No. 17-10187
  )

)

  
JAKE ZIMMERMAN,  ASSESSOR, )  
ST. LOUIS COUNTY, MISSOURI )  
  )  
              Respondent. )  

 

ORDER

AFFIRMING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

HOLDING

On August 3, 2018, Chief Counsel Maureen Monaghan (Hearing Officer) entered her Decision and Order (Decision) setting aside the decision of the Board of Equalization of St. Louis County (BOE) and finding that Mark Long (Complainant) presented substantial and persuasive evidence to rebut the presumption of correct valuation of the subject property.  Complainants subsequently filed his Applications for Review of the Hearing Officer’s Decision and Order.  On September 13, 2018, Jake Zimmerman, Assessor of St. Louis County (Respondent), filed a Response in Opposition to Complainant’s Application for Review.

We AFFIRM the Decision and Order of the Hearing Officer.  Segments of the Hearing Officer’s Decision may have been incorporated into our Decision without further reference.

FACTS AND PROCEDURAL HISTORY

The subject property is identified by parcel/locator number 25P120207.  It is further identified as 525 Vest Ave., Valley Park, St. Louis County, Missouri.  The subject property consists of a four unit apartment building with between 3,640 and 3,770 square foot, as addressed in the Decision and Order.  It was built in either 1970 or 1971.  Two units are on the street level with two upper units, with each unit having two bedrooms and one bathroom.  Respondent set a true value in money (TVM) on the subject property at $185,000, residential, as of January 1, 2017.  Complainant appealed to the BOE.  The BOE reduced the value, finding a TVM on the subject property of $160,000, residential, as of January 1, 2017.

Complainant alleged overvaluation and intentional discrimination.  An Evidentiary hearing was conducted on July 17, 2018, at the St. Louis County Government Administration Building, 41 South Central Aveneue, Clayton, Missouri.

Complainant offered Exhibits A through L[1] and he testified at the hearing. Complainant opined that the subject property had a TVM of $100,000.  However, Complainant’s opinion of TVM was not based upon any of the court approved methods of valuation.  Complaiant also presented the testimony of Stephen Sauter (Sauter), a Missouri Certified Residential Appraiser.  Sauter opined that the subject property had a TVM of $117,000, as of January 1, 2017.

Respondent offered Exhibit 1[2] and the testimony of Nancy McGrath (McGrath), a Missouri Certified Residential Appraiser.  McGrath opined that the subject property had a TVM of $156,000.

The Hearing Officer found that the evidence presented by the parties was substantial and persuasive evidence to rebut the BOE presumption  The Hearing Officer weighed all the evidence, including the appraisals and methodologies of both appraisers.  The Hearing Officer noted the comparables utilized by each appraiser, each appraisers’ market based adjustments, the sale prices of the comparables, and the adjusted sales prices of the comparables.  The Hearing Officer, based upon all evidence presented, reduced the TVM of the property, finding a TVM on the subject property of $140,000, residential, as of January 1, 2017.

CONCLUSIONS OF LAW

Complainant’s Points on Review

            Complainant filed an application for review alleging the following errors:

“1.       The Respondent’s Appraisal Report and Appraiser, Nancy McGrath showed EXTREME BIAS and questionable truthfulness in her appriasal and during questioning making her appraisal invalid:

  1. Complainant objected to the appraisal being submitted due to properties being used outside the allotted 2015/2016 window and extreme bias by the appraiser which was not documented in Decision.
  2. McGrath was given a copy of the Complainant’s appraisal before performing her own with the objective of getting a higher appraisal.
  3. Respondent’s attorney requested a copy of Complainant’s Appraisal once completed via e-mail on May 1, 2018 with the implication of working out a settlement before trial. See attached Exhibit A1.
  4. Complainant sent appraisal to Respondent’s attorney May 21, 2018. See attached Exhibit A2.
  • Respondent’s attorney turned this over to Respondent’s Appraiser prior to her completing her appraisal. The appraisal should have been done independently with no bias.
  1. McGrath showed her extreme bias and questionable truthfulness when Complainant ask her the simple question if she received it before performing her analysis and she lied under oath. The respondent’s attorney then spoke up for her to correct that lie.  Listen to the transcript tapes provided in file.
  2. McGrath showed EXTREME BIAS by going out of her way to exclude the same properties as Complainant’s other than the highest value property even though the said properties were virtually identical buildings and actually sold during the designated time frame outlined by the BOE, January 1, 2015 to December 31, 2016.
  3. The bias is blantantly evidence in her picking two properties, 318 Mount Everest ($141,500) and 273 Mount Everest ($165,000), which were both sold after January 1, 2017 vs Respondent’s Appraiser using 253 Mount Everest ($105,000) sold in 2016.
  4. When questioned by she excluded 253 Mount Everest sold in 2016 for $105,000, she stated that she called the real estate agent for the seller and based on a hearsay statement from that agent ‘they did not appear to be motivated’ even though the sale was classified as a valid sale by the Assessor’s office. Complainant had no ability to question the agent or cross examine.
  5. When asked if she called the agents for the other properties to check their so called ‘validity’, she stated she only called the lowest value property which shows extreme bias and motivation to inflate the value of said property. She had no response to why she failed to check validity of all properties including the extremely high valued property, 273 Mount Everest at $165,000 which she included.
  6. The true market value was supposed to be determined as of January 1, 2017 using sales comparables from January 1, 2015 to December 31, 2016. Two of the three sales comparables by Mrs. McGrath were after the January 1, 2017 using sales from date even though comparable properties inside the proper date range were available.
  7. Complainant was e-mailed a copy of Respondent’s Appraisal at 12:45 pm on July 16, 2018 which did not allow Complainant sufficient time to prepare. See attached Exhibit A3.
  8. Error and omissions were done by both appraisers in the calculations for 313 Mount Everest and if corrected and properly calculated then the true value of the subject property would be significantly less than $140,000 based on 313 Mount Everest and I would argue 253 Mount Everest should have been used in the calculation as well seeing it was a valid sale and the only like property sold in 2015/2016.
  9. Complainant’s  Appraisal errors:
  10. Complainant’s appraisal (Exhibit A) had the wrong square footage for the subject property of 3,770 sq. ft. vs. the correct value of 3,640 sq. ft as shown on Respondent’s appraisal (Exhibit 1) and the St. Louis Revenue official website (Exhibit D).
  11. Complainant’s appraisal (Exhibit A) had the wrong square footage for 313 Mount Everest of 2,900 sq. ft while the correct square footage of 3,456 sq.ft on Respondent’s appraisal. (Exhibit 1)

iii.  Complainant’s appraisal (Exhibit A) did make adjustments for central air of $10,000 only but failed to adjust for the following (See Exhibit C):

  1. Foundation not cracked ($5K)
  2. Laundry hook-ups ($5)
  3. 3 off-street parking spots per unit ($10K)
  4. New windows ($10K)
  5. Dishwasher ($2K)
  6. Built in 1985 vs. 1970 – 15 years older
  7. Subject sits in a potential flood zone.
  8. Respondent’s Appraisal errors:
  9. Respondent’s appraisal (Exhibit 1) made a positive adjustment of $15,000 for C5 vs C4 condition but clearly the pictures show 313 Mount Everest to be in superviour condition.  (See Exhibit C)
  10. Respondent’s appraisal (Exhibit 1) did make an adjustment for central air of only $5,000 even though she testified to the fact it costs $2,5000 per AC unit and there are 4 units in the subject property. Agains showing more bias.

iii. Complaintant’s appraisal (Exhibit 1) failed to adjust for the following (see Exhibit C):

  1. Foundation not cracked ($5K)
  2. Laundry hook-ups ($5)
  3. 3 off-street parking spots per unit ($10K)
  4. New windows ($10K)
  5. Dishwasher ($2K)
  6. Built in 1985 vs. 1970 – 15 years older
  7. Subject sits in a potential flood zone.
  8. She made adjustments to other properties for new windows but failed to do so on this property.  More bias.
  9. If the abve errors and ommissions are corrected and properly calculated then the true value of the subject property would be significantly less than $140,000 based on 313 Mount Everest and I would argue 253 Mount Everest should have been used in the calculation as well seeing it was a valid sale and the only like property sold in 2015/2016.
  10. Both 253 Mount Everest and 313 Mount Everest have assessed values of $124,200 for 2017 and 2018 based on comparable sales in the area vs. my subject property being evaluated based on just one single sale of $137,000.  See Exhibit D.  Also see attached Exhibit A4 and A5.  Makes no sense.”

 

State Tax Commission’s (STC) Ruling

The STC, having thoroughly reviewed the whole record and having considered the Hearing Officer’s Decision and the Application for Review of Complainant affirms the Hearing Officer’s decision.

Standard of Review

A party subject to a Decision and Order of a Hearing Officer with the State Tax Commission (STC) may file an application requesting the case be reviewed by the STC.  Section 138.432 RSMo Cum. Supp. 2015; 12 CSR 30-3.080(4).  The STC may then summarily allow or deny the request.  Section 138.432; 12 CSR 30-3.080(5).  The STC may affirm, modify, reverse, set aside, deny, or remand to the Hearing Officer the Decision and Order of the Hearing Officer on the basis of the evidence previously submitted or based on additional evidence taken before the STC.  Section 138.432; 12 CSR 30-3.080(5)(A).

Weight to be Given Evidence

The Hearing Officer 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); 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).

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 deemed necessary when viewed in connection with all other circumstances.  Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. W.D. 1991).  The Hearing Officer, as the trier of fact, is not bound by the opinions of experts but may believe all or none of the expert’s testimony or accept it in part or reject it in part.  Exchange Bank of Missouri v. Gerlt, 367 S.W.3d 132, 135-36 (Mo. App. W.D. 2012).

Relevance

            The principle of relevance must be considered when testimony and documents are tendered for admission into an evidentiary record.  For facts, information or opinions to be relevant they must be connected in a logical manner and tend to prove or disprove a matter that is at issue in the proceeding.[1]  McCormick explains that “There are two components to relevant evidence: materiality and probative value.  Materiality looks to the relation between the propositions for which the evidence is offered and the issues of the case.  If the evidence is offered to help prove a proposition which is not a matter in issue, the evidence is immaterial.  . . .  The second aspect of relevance is probative value, the tendency of evidence to establish the proposition that it is offered to prove.”[2]  Evidence, that tends to prove or disprove a fact that is at issue or of consequence, is relevant.[3]

In appeals on the value of property, the issue is what a willing buyer and seller would have agreed to as the purchase price on the applicable valuation date.

Discussion

            The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide.  The Hearing Officer set forth the the Decision and Order the relevant facts and testimony for determination of TVM of the subject property.  The Hearing Officer found the testimony of both the Complainant’s and Respondent’s Missouri Certified Appraiser to be persuasive.   The Hearing Officer found their testimony and reports to be substantial and persuasive to establish the TVM for the subject property.

A review of all evidence establishes that the appraisers developed the income approach using Gross Rent Multiplier method.  The method may support the value indicator developed using the sales comparison approach.  Both appraisers developed the sales comparison.

In their sales comparison approach, both appraisers inspected the subject from the exterior, and reviewed a market area of approximately 5 miles.  Both appraisers reviewed six comparable sales. The appraisers appropriately adjusted for differences in the properties that the market recognized.  An appraiser may use a sale relevant in location, time and comparability in their approach.  The condition of the subject property was compared to the sold properties as well as other factors such as size.  A review of the sales comparables that were 4 units showed sale prices of $105,000, $132,000, $137,000, $141,500, and $165,000.  The adjusted sales prices ranged from $109,500 to $154,760.  The sales support a finding of TVM of the subject property as of January 1, 2017 was $140,000.

Summary & Conclusion

The Hearing Officer found that the evidence presented constituted substantial and persuasive evidence to rebut the BOE presumption regarding the TVM of the property and that Complainants failed to present substantial and persuasive evidence of intentional discrimination.  STC finds that a reasonable mind could have conscientiously reached the same result as the Hearing Officer based on a review of the entire record.  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).

ORDER

The Decision of the Hearing Officer 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 STC.

Segments of the Decision and Order of the Hearing Officer, including the findings of fact and conclusions of law therein, have been incorporated without reference, as if set out in full, in this final decision of the STC.

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 October 30th, 2018.

STATE TAX COMMISSION OF MISSOURI

 

Bruce E. Davis, Chairman

 

Victor Callahan, Commissioner

 

Will Kraus, Commissioner

 

Certificate of Service

 

I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 30th day of October, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.

Jacklyn Wood

Legal Coordinator

 

 [1] Rulings on the admissibility of the Exhibits are set forth in the Decision and Order and incorporated by reference.

[2] Rulings on the admissibility of the Exhibits are set forth in the Decision and Order and incorporated by reference.

[1] Black’s, supra – relevant, p. 1293

 

[2] McCormick, supra – p. 541

 

[3] Missouri Practice,  supra – p. 95

 

STATE TAX COMMISSION OF MISSOURI

 

MARK A LONG, )
)
Complainant, )
)
v. ) Appeal No. 17-10187
)
JAKE ZIMMERMAN, ASSESSOR )
ST. LOUIS COUNTY, MISSOURI, )
)
Respondent. )

 

DECISION AND ORDER

 

HOLDING

 

The assessment made by the Board of Equalization of St. Louis County (BOE) is SET ASIDE.  Evidence presented was substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE and to establish the true market value of the subject property of $140,000 as of January 1, 2017.    The evidence presented was not substantial and persuasive evidence to establish an intentional plan by the assessing officials to assess property at a ratio greater than 19% of true value in money or at a ratio grossly excessive to the average 2017 residential assessment ratio for St. Louis County.

Complainant Mark Long (Complainant) appeared pro se.

Respondent Jake Zimmerman, Assessor, St. Louis County, Missouri, (Respondent) appeared by Counsel Steven Robson.

Case heard and decided by Chief Counsel Maureen Monaghan (Hearing Officer).

ISSUE

Complainant appealed on the ground of overvaluation and discrimination.  Respondent initially set the true value in money (TVM) of the subject property, as residential property, at $185,600.  The BOE lowered Respondent’s valuation and set the TVM at $160,000. The value as of January 1 of the odd numbered year remains the value as of January 1 of the following even numbered year unless there is new construction or improvement to the property.  Section 137.115.1 RSMo   The State Tax Commission (STC) takes this appeal to determine the true value in money for the subject property as the property existed on January 1, 2017, under the economic conditions as they existed on January 1, 2017.

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.
  2. Evidentiary Hearing. The issues of overvaluation and discrimination were presented at an evidentiary hearing on July 17, 2018, at the St. Louis County Government Administration Building, 41 South Central Avenue, Clayton, Missouri.
  3. Identification of Subject Property. The subject property is identified by parcel/locator number 25P120207.  It is further identified as 525 Vest Ave, Valley Park, St. Louis County, Missouri.  (Complaint; Exhibit 1)
  4. Description of Subject Property. The subject property consists of a 6,500 square foot lot improved by a 3,770[1] square foot, four unit, apartment building. (Exhibit A) The apartment building was constructed in 1971[2] and is in average condition. (Exhibit A) There are 2 units on the main or street level and two upper units.  The units are 2 bedroom and 1 bath.    The units have baseboard heating and window unit cooling.    
  5. Assessment. Respondent set a TMV on the subject property at $185,600 residential, as of January 1, 2017.
  6. Board of Equalization. The BOE lowered Respondent’s TMV of the subject property and set the TVM at $160,000.
  7. Complainant’s Evidence. Complainant opined that the subject property’s TVM as of January 1, 2017, was $100,000.  To support his opinion of value, Complainant offered the following evidence:
Exhibit Description Ruling
Exhibit A Appraisal – Steve Sauter Admitted
Exhibit B County’s Property Record Card on 604 Marshall Admitted
Exhibit C Photographs and information on comparable properties Admitted
Exhibit D Property Record Cards and Realtor Information Admitted
Exhibit E Cost Information from Internet Excluded – Hearsay
Exhibit F Land Value Table Admitted
Exhibit G St. Louis County “How To Appeal the Value of Your House” Admitted
Exhibit H Complainant’s Schedule E Admitted
Exhibit I BOE Documents Excluded -Relevance, Hearsay
Exhibit J No exhibit submitted
Exhibit K Invoice of Appraiser $700 Admitted
Exhibit L Section 138.434 RSMo Admitted

 

Complainant presented the testimony of Stephen Sauter (Sauter).  Sauter is a Missouri Certified Residential Appraiser.  He valued the subject property as of January 1, 2017.  His opinion of value was $117,000.

Sauter completed an exterior inspection of the property.  He developed the sales and income approaches to value.   Sauter used the gross rent multiplier to develop his income approach.  He reviewed three comparable properties.  The comparable rental properties were located within .01 to 4.94 miles from the subject.  One property was a four unit building and the other two comparables were 2 unit buildings. Sauter selected the comparables due to their location being within the subject’s competing market.  The monthly rents ranged from $1200 to $1850 or a per unit rate range of $475 to $650.  The properties sold for $80,000 – $105,000.  Sauter opined a monthly per unit rate for the subject of $500.  The monthly rate for the subject property would be $2000. The appraiser opined the multiplier to be 60 for a resulting indication of value of $120,000.

Sauter also developed the sales comparison approach.  He selected six sales of rental properties within approximately five miles of the subject which sold from 2014 to 2018.  The properties were 2 and 4 unit rentals.  The appraiser made adjustments for items recognized by the market.  Sauter adjusted for the total building area, basement area, updates to the building, and for type of cooling and heat.  Sauter did not adjust for condition of the properties, window updates, or parking area as he found all rentals to be average condition and did not find any differences in the market for parking and window updates. Sauter did not adjust for location of the comparables. The sale prices for the properties ranged from $34.68 to $51.15 per square foot.

Comparable Address of Comparable Sale Price Year of Sale No. of Units Adjusted Price
1 604 Marshall $80,000 2015 2 $103,830
2 253 Mount Everest $105,000 2016 4 $109,500
3 257 Mount Everest $132,000 2014 4 $117,000
4 313 Mount Everest $137,000 2016 4 $140,050
5[3] 525 Vest  #1 $80,000 2017 2 $103,090
6 608-610 Marshall $80,000 2018 2 $106,390

 

The concluded indication of value under the sales comparison approach was $117,000. The appraiser reconciled the approaches and concluded his opinion of value to $117,000.

Complainant testified as to his opinion of value and the remaining exhibits.  He opined a value of $100,000.

He offered Exhibit B.  Exhibit B is the property record card for a property located at 604 Marshall Road.  It was a property used in Sauter’s income and sales comparison approaches to value.  Complainant stated that the property has central air conditioning, laundry in the unit, fenced yard and updated windows.  He opined that renters would pay more for these amenities.

Exhibit C are photographs of the subject property and comparable properties located at 525 Vest Ave, 604 Marshall Road, 608 Marshall Road, 318 Mount Everest Drive, 313 Mount Everest Drive, and 273 Mount Everest Drive.  Complainant testified that other properties have additional parking, central air conditioning, laundry, basement, exterior hose hook ups, foundation cracks and/or upgrades. Complainant testified that the sale prices of the comparables should be adjusted for those items by the cost to obtain or correct conditions.  Complainant adjusted the sale prices of comparable properties by $10,000 for any difference in air conditioning, $5,000 for lack of cracks in foundation, $5,000 for laundry hook ups, $10,000 for basement, $10,000 for additional parking, $5,000 for fence, and $10,000 for new windows.  The Complainant’s adjustments were based on Exhibit E.  Exhibit E is cost for repair estimates generated by a computer website.  Complainant testified that he relies on the information to estimate repairs for his properties.  Respondent objected on hearsay and the objection was sustained.

Exhibit D consists of property record card and sales information on comparables 525 Vest Building 1, 604 Marshall Road, 608 Marshall Road, 318 Mount Everest Drive, 313 Mount Everest Drive, and 273 Mount Everest Drive.

Exhibit F is an Assessed Value Comparison Chart for properties on Vest Avenue.  Complainant stated he was demonstrating the differences in the computer assisted mass appraisal system’s land value between land with multi-unit buildings and land with other improvements.

Exhibit G is a pamphlet titled “How to Appeal the Value of Your House” produced by the St. Louis County Assessor.  The pamphlet provides a list of suggested evidence including “sales of similar houses in the same or comparable neighborhood that occurred before January 1, 2017…”

Exhibit H is Complainant’s IRS Schedule 1040 on the subject property.

Exhibit I is a packet from the BOE.  Respondent objected on the grounds of hearsay.  The objection was sustained.

Exhibit K is an invoice from Sauter for his appraisal and court appearance of $700.

Exhibit L is Section 138.434 RSMo.

  1. Respondent’s Evidence. Respondent offered the following evidence:
Exhibit Description Ruling
Exhibit 1 Appraisal Report of Nancy McGrath Admitted

 

Respondent presented the testimony and appraisal report of Nancy McGrath (McGrath). McGrath is a Missouri Certified Residential Appraiser.  She valued the subject property as of January 1, 2017.  Her opinion of value was $156,000.

McGrath completed an exterior inspection of the property.  She developed the sales and income approaches to value.  McGrath selected six comparable properties for each approach.

The comparable rental properties were located within .01 to 5.11 miles from the subject.  Three properties were 4 unit buildings and three were 2 unit buildings. McGrath selected the comparables due to their location being within the subject’s competing market.  The monthly rents ranged from $1200 to $2400 or a per unit rate range of $550 to $650.  The properties sold for $80,000 – $165,000.  McGrath opined a monthly per unit rate for the subject of $600.  The monthly rate for the subject property would be $2400. The appraiser opined the multiplier to be 65 for a resulting indication of value of $156,000.

McGrath also developed the sales comparison approach.  She selected six sales of rental properties within approximately five miles of the subject which occurred from 2015 to 2018.  The properties were 2 and 4 unit rentals.  The appraiser made adjustments for items recognized by the market.  McGrath adjusted for the total building area, condition, terms, window updates, and air conditioning and heating style. McGrath did not adjust for fenced areas or parking area as she did not find any differences in the market for those items.  The concluded indication of value under the sales comparison approach ranged from $34,815 to $38,690 per unit.   Her indication of value under the approach was $155,600.

Comparable Address of Comparable Sale Price Year of Sale No. of Units Adjusted Price[4]
1 318 Mount Everest $141,500 2017 4 $139,260
2 313 Mount Everest $137,000 2016 4 $149,760
3 273 Mount Everest $165,000 2017 4 $154,760
4 525 Vest, Building 1 $80,000 2017 2 $186,186
5 604 Marshall $80,000 2015 2 $157,575
6 608 Marshall $80,000 2018 2 $152,952

 

She reconciled her opinion of value to $156,000.

  1. Presumption of Correct Assessment Rebutted. Evidence presented by the parties was substantial and persuasive to rebut the presumption of correct assessment by the BOE and establish a TVM of $140,000.

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, including the application of any abatement.  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 property and tangible personal property are assessed at set percentages of true value in money:  residential property at 19%; commercial property at 32%; and agricultural property at 12%.  Section 137.115.5 RSMo (2000) as amended.

Investigation by Hearing Officer

In order to investigate appeals filed with the Commission, the Hearing Officer may inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, subclassification, or assessment of the property.  Section 138.430.2 RSMo (2000) as amended.  The Hearing Officer’s decision regarding the assessment or valuation of the property may be based solely upon his inquiry and any evidence presented by the parties or based solely upon evidence presented by the parties.  Id.

During the hearing, the Hearing Officer inquired of Complainant.

Complainant’s Burden of Proof

To obtain a reduction in assessed valuation based upon an alleged overvaluation, the Complainant must prove the true value in money of the subject property on the subject tax day.  Hermel, Inc., v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978).  True value in money is defined as the price that the subject property would bring when offered for sale by one willing but not obligated to sell it and bought by one willing or desirous to purchase but not compelled to do so.  Rinehart v. Bateman, 363 S.W.3d 357, 365 (Mo. App. W.D. 2012); Cohen v. Bushmeyer, 251 S.W.3d 345, 348 (Mo. App. E.D. 2008); Greene County v. Hermel, Inc., 511 S.W.2d 762, 771 (Mo. 1974).  True value in money is defined in terms of value in exchange and not in terms of value in use.  Stephen & Stephen Properties, Inc. v. State Tax Commission, 499 S.W.2d 798, 801-803 (Mo. 1973).  In sum, true value in money is the fair market value of the subject property on the valuation date.  Hermel, Inc., 564 S.W.2d at 897.

A presumption exists that the assessed value fixed by the BOE is correct.  Rinehart, 363 S.W.3d at 367; Cohen, 251 S.W.3d at 348; Hermel, Inc., 564 S.W.2d at 895.  “Substantial and persuasive controverting evidence is required to rebut the presumption, with the burden of proof resting on the taxpayer.” Cohen, 251 S.W.3d at 348.  Substantial evidence can be defined as such relevant evidence that a reasonable mind might accept as adequate to support a conclusion.  Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).  Persuasive evidence is evidence that has sufficient weight and probative value to convince the trier of fact.  Cupples Hesse Corp., 329 S.W.2d at 702.  The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief.   Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975). See also, 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).

There is no presumption that the taxpayer’s opinion is correct.  The taxpayer in a STC appeal still bears the burden of proof.  The taxpayer is the moving party seeking affirmative relief.  Therefore, Complainant bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.”  Westwood Partnership, 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. W.D. 1991).

Generally, a property owner, while not an expert, is competent to testify to the reasonable market value of his own land.  Cohen, 251 S.W.3d at 348-49; Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992).  “However, when an owner’s opinion is based on improper elements or foundation, his opinion loses its probative value.”  Carmel Energy, Inc., 827 S.W.2d at 783.  A taxpayer does not meet his burden if evidence on any essential element of his case leaves the Commission “in the nebulous twilight of speculation, conjecture and surmise.”  See Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. E.D. 1980).

Weight to be Given Evidence

The Hearing Officer is not bound by any single formula, rule, or method in determining true value in money and 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); 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).

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 deemed necessary when viewed in connection with all other circumstances.  Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. W.D. 1991).  The Hearing Officer, as the trier of fact, is not bound by the opinions of experts but may believe all or none of the expert’s testimony or accept it in part or reject it in part.  Exchange Bank of Missouri v. Gerlt, 367 S.W.3d 132, 135-36 (Mo. App. W.D. 2012).

Board Presumption and Computer-Assisted Presumption

            There exists a presumption of correct assessment by the BOE – the BOE presumption.  In charter counties or the City of St. Louis, 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 BOE 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 BOE, then it also would be applicable to the Respondent.

The computer-assisted presumption is applicable only if (1) the BOE lowered the value of the Assessor and Respondent is seeking to sustain the original assessment and (2) it has not been shown that the Assessor’s valuation was not the result of a computer assisted method.  The BOE’s valuation is assumed to be an independent valuation.

In the present appeal, the BOE lowered the initial valuation of Respondent, and Complainant is now seeking to change the assessment; therefore, the BOE presumption applies to Complainant.

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, 615 (Mo. App. W.D. 2000); Hermel, Inc., 564 S.W.2d at 897; Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975).  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.   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. 1974).

“For purposes of levying property taxes, the value of real property is typically determined using one or more of three generally accepted approaches.”  Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005), citing St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977).  “Each valuation approach is applied with reference to a specific use of the property—its highest and best use.” Snider, 156 S.W.3d at 346-47, citing Aspenhof  Corp., 789 S.W.2d at 869.  “The method used depends on several variables inherent in the highest and best use of the property in question.”  Snider, 156 S.W.3d at 347.  “Each method uses its own unique factors to calculate the property’s true value in money.”  Id.

“The ‘comparable sales approach’ uses prices paid for similar properties in arms-length transactions and adjusts those prices to account for differences between the properties.  Id. at 348.  “Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character.”  Id. (quotation omitted).  “This approach is most appropriate when there is an active market for the type of property at issue such that sufficient data [is] available to make a comparative analysis.”  Id.

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.

 

  1. Both parties are well informed and well advised, and both acting in what they consider their own best interests.

 

  1. A reasonable time is allowed for exposure in the open market.

 

  1. Payment is made in cash or its equivalent.

 

  1. Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.

 

  1. 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.

The income approach may be used to opine a value for a property.  In the approach, the appraiser analyzes a property’s capacity to generate income.  A buyer of income property is trading present dollars for the expectation of receiving future dollars.  The method converts the property’s ability to generate income into an indication of value.

One income method is the gross income multiplier, also called the gross rent multiplier.  It is the quotient of the property’s true value in money divided by the property’s gross income or rent. Property Assessment Valuation, International Association of Assessing Officers, 1977.   The use of the gross rent multiplier requires assumptions. First, the highest and best use of the subject property will not change over the economic life of the property. The property will remain rented at a constant rate without any unusual vacancy factor. The subject property and the comparables are truly comparable in that they are subject to the same market influences, they are competitive with one another, they have similar operating expenses, and they have similar utility and amenities. Finally, any differences in the subject and comparables are reflected in the rents of each property. The gross rent multiplier does not allow for abnormal physical deterioration, or unusual operating expenses, or differences in zoning.

Discrimination

In addition to disputing the valuation of the property, Complainant alleges discrimination.  The issue is whether the assessment is in violation of the Fourteenth Amendment of the Constitution of the United States, as it attempts to deprive and deny the Complainant the equal protection of the laws.  “The purpose of the equal protection clause of the Fourteenth Amendment is to secure every person within the state’s jurisdiction against intentional and arbitrary discrimination, whether occasioned by express terms of a statute or by its improper execution through duly constituted agents.”  Sunday Lake Iron Co v Wakefield Tp, 247 U.S. 350, 38 S. Ct 495, 62 L.Ed 1154 (1918)

To obtain a reduction in assessed value based upon discrimination, the complaining taxpayer must (1) prove the true value in money of the subject property as of the taxing date; and (2) show an intentional plan of discrimination by the assessor, which resulted in an assessment at a greater percentage of value than other property within the same class and the same taxing district, or, in the absence of such an intentional plan, show that the level of assessment is “so grossly excessive as to be inconsistent with an honest exercise of judgment.”  Zimmerman v. Mid–America Financial Corp., 481 S.W.3d 564, 571 (Mo. App. E.D. 2015), quoting Savage v. State Tax Comm’n of Missouri, 722 S.W.2d 72, 78 (Mo. banc 1986).

There is no evidence that there was an intentional plan of discrimination by the assessing officials, so we must determine if the Complainant presented substantial and persuasive evidence to show that the level of their assessment is so grossly excessive as to be inconsistent with an honest exercise of judgment.

Missouri courts have consistently held that (1) a taxpayer alleging discrimination must show the [TVM] of his property as a necessary part of his discrimination claim; and (2) the proper method of determining discrimination is to compare the actual level of assessment of the subject property as determined by the assessor to the common level of assessment for the subject property’s subclass.  Mid-America Financial Corp., 481 S.W.3d at 574, citing Savage, 722 S.W.2d at 72.

“By requiring that the level of an assessment be so grossly excessive as to be inconsistent with an honest exercise of judgment in cases in which intentional discrimination is not shown, the courts and the STC refrain from correcting assessments which reflect no more than de minimus errors of judgment on the part of assessors.”  Mid-America Financial Corp., 481 S.W.3d at 571 (internal quotation omitted).  “This standard recognizes that while practical uniformity is the constitutional goal, absolute uniformity is an unattainable ideal.”  Id. (internal quotation omitted).

In deciding whether the assessment of the subject property is “grossly excessive” or nothing more than a “de minimus error of judgment,” the STC must determine the common level of assessment for the class of property at issue within the taxing district.   In Savage, 722 S.W.2d at 79, the Missouri Supreme Court reasoned:

The “common level of assessment” has been defined as a single ratio of true value used in assessing each property in a taxing district.  [citation omitted]  The “average level of assessment” means the “arithmetical mean of the varying percentages of true value applied by . . . the assessor in assessing properties within a taxing district.”  [citation omitted]

A taxpayer has the right to have his “assessment reduced to the percentage of that value at which others are taxed[.]” [citation omitted]

 

The Missouri Supreme Court has held that the proper method of analyzing discrimination compares the common level of assessment for similarly-situated properties to the actual level of assessment imposed on the subject property.  Mid-America Financial Corp., 481 S.W.3d at 571; Savage, 722 S.W.2d at 74.  A necessary component of this comparison is the TVM of both the subject property and the similarly-situated properties, i.e., properties within the same class as the subject property.  See Id.; see also Savage, 722 S.W.2d at 74.  Once the TVM of the subject property and the similarly-situated properties has been determined, the STC can calculate at what percentage or ratio of TVM the subject property and the similarly-situated properties, respectively, have been assessed.  Mid-America Financial Corp., 481 S.W.3d at 571.  This determination requires a comparison not between the common level of assessment and the statutory assessment ratio, but between the common level of assessment and the actual level of assessment for the subject property.  Id. at 574.   Neither Missouri courts nor the STC has established a “bright-line” test to identify what constitutes a grossly excessive assessment as opposed to a mere de minimus error in judgment.  Id. at 575.  The assessment in each given case must be analyzed against the assessment under the median ratio to address the grossly excessive factor.  Id.  The STC has found a 5% disparity between the common level of assessment and the actual level assessment to be de minimus.  Town and Country Racquet Club v. Morton, 1989 WL 41005 (Missouri State Tax Commission) (affirmed on appeal in Town & Country Racquet Club v. State Tax Commission of Missouri, 811 S.W.2d 403 (Mo. App. E.D. 1991).

Discussion

Complainant’s evidence was neither substantial nor persuasive to support the subject property suffered discrimination nor establish the true market value of the subject property as of January 1, 2017 of $100,000.  Substantial evidence is that which is relevant, adequate, and reasonably supports a conclusion.  Cupples Hesse Corp., 329 S.W.2d at 702.  Persuasive evidence is that which causes the trier of fact to believe, more likely than not, the conclusion advocated is the correct conclusion.  Id.  To obtain a reduction in assessed value based upon discrimination, the complaining taxpayer must (1) prove the true value in money of the subject property as of the taxing date; and (2) show an intentional plan of discrimination by the assessor, which resulted in an assessment at a greater percentage of value than other property within the same class and the same taxing district, or, in the absence of such an intentional plan, show that the level of assessment is “so grossly excessive as to be inconsistent with an honest exercise of judgment.”

There is no evidence that there was an intentional plan of discrimination by the assessing officials and Complainant failed to present substantial and persuasive evidence to show that the level of his assessment was so grossly excessive compared to other property within the same class and the same taxing district.

Complainant failed to establish TVM of $100,000.  Complainant did not use any of the court approved methods of valuation to arrive at his opinion of TMV.  Complainant’s evidence focused on the differences between the comparable properties and the subject property, however, the evidence did not establish market based adjustments to the comparables’ sale prices.

The Missouri Certified Appraisers properly developed the sales comparison approach.  Their testimony and reports was substantial and persuasive to establish the TVM for the subject property.

The appraisers developed the income approach using GRM method.  The method may support the value indicator developed using the sales comparison approach.  Although the GRM is a recognized approach to value, due to the number of assumptions made to develop an indication of value, it is assumed not to be reliable.

The appraisers developed the sales comparison.  Both appraisers are certified, inspected the subject from the exterior, and reviewed a market area of approximately 5 miles.  Both appraisers reviewed six comparable sales. The appraisers appropriately adjusted for differences in the properties that the market recognized.  The appraisers’ opinions of value ranged from $117,000 to $156,000.

Sauter’s sale comparables:

Comparable Address of Comparable Sale Price Year of Sale No. of Units Adjusted Price
1 604 Marshall $80,000 2015 2 $103,830
2 253 Mount Everest $105,000 2016 4 $109,500
3 257 Mount Everest $132,000 2014 4 $117,000
4 313 Mount Everest $137,000 2016 4 $140,050
5[5] 525 Vest  #1 $80,000 2017 2 $103,090
6 608-610 Marshall $80,000 2018 2 $106,390

 

McGrath’s comparable sales:

Comparable Address of Comparable Sale Price Year of Sale No. of Units Adjusted Price
1 318 Mount Everest $141,500 2017 4 $139,260
2 313 Mount Everest $137,000 2016 4 $149,760
3 273 Mount Everest $165,000 2017 4 $154,760
4 525 Vest, Building 1 $80,000 2017 2 $186,186
5 604 Marshall $80,000 2015 2 $157,575
6 608 Marshall $80,000 2018 2 $152.952

 

A review of the sales comparables that were 4 units showed sale prices of $105,000, $132,000, $137,000, $141,500, and $165,000.  The adjusted sales prices ranged from $109,500 to $154,760.  Both appraisers selected 313 Mount Everest as a comparable sale. The property sold for $137,000.  Sauter’s adjusted sales price for the comparable was $140,050 and McGrath’s adjusted price was $149,760.

Considering the condition of the property as testified to by the Complainant, the sale comparables and their adjusted sale prices, the subject property’s TVM as of January 1, 2017 is found to be $140,000 or assessed value of $26,600.

Attorney Fees

Complainant moved for appraisal cost of $800.

 

“Any first class charter county or a city not within a county may require by ordinance or charter the reimbursement to a taxpayer for the amount of just and reasonable appraisal costs, attorney fees and court costs resulting from an evidentiary hearing before the state tax commission or a court of competent jurisdiction if such appeal results in a final decision reducing the appraised value of residential property by at least fifteen percent or the appraised value of utility, industrial railroad and other subclass three property by at least twenty-five percent from the appraised value determined by the board of equalization for that tax year. The commission or court awarding such fees and costs shall consider the reasonableness of the fees and costs within the context of the particular case. Such fees and costs shall not exceed one thousand dollars for a residential property appeal. Such fees and costs for utility, industrial railroad or other subclass three property appeals shall not exceed the lesser of four thousand dollars or twenty-five percent of the tax savings resulting from the appeal. The provisions of this section shall only apply to the first contested year when cases are tried on a consolidated basis.”

 

The TVM set by the BOE was $160,000.  The Hearing Officer found TVM to be $140,000. The finding is a reduction of 12.5%.[6]  The property’s value was reduced less than 15% and therefore no fees may be awarded.

 

ORDER

The TVM for the subject property as determined by the BOE is SET ASIDE.  The assessed value for the subject property is $26,600 residential ($140,000 TVM), as of January 1, 2017.

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

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 August 3, 2018.

 

STATE TAX COMMISSION OF MISSOURI

 

Maureen Monaghan

Chief Counsel

 

Certificate of Service

I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 3rd day of August, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.

 

Jacklyn Wood

Legal Coordinator

 

[1] Exhibit 1 estimates the gross building area to be 3,640 square feet.

[2] Exhibit 1 states the building was constructed in 1970

[3] Both the subject property and this comparable property are addressed as 525 Vest as they are adjacent.  Subject is referenced as “A” and the comparable is referenced as “1”.

[4] For Comparables 4, 5 and 6, McGrath calculated the sale price per square foot.  Applying the calculated price per square foot to the subject provides for an adjusted value indicator.  McGrath opined the indication of value from these comparables was $160,000.

[5] Both the subject property and this comparable property are addressed as 525 Vest as they are adjacent.  Subject is referenced as “A” and the comparable is referenced as “1”.

[6] (160,000-140,000)/160,000 = 12.5%