State Tax Commission of Missouri
v.) Appeal Number 09-10299
ST. LOUIS COUNTY,MISSOURI,)
DECISION AND ORDER
Decision of the St. Louis County Board of Equalization sustaining the assessment made by the Assessor is AFFIRMED.True value in money for the subject property for tax years 2009 and 2010 is set at $193,200, residential assessed value of $36,700.Complainant appeared pro se.Respondent appeared by Associate County Counselor Paula Lemerman.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
Complainant appeals, on the ground of overvaluation and discrimination, the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property.The Commission takes this appeal to determine: (1) the true value in money for the subject property on January 1, 2009; and (2) whether there was an intentional plan by the assessing officials to assess the property under appeal at a ratio greater than 19% of true value in money, or at a ratio greater than the average 2009 residential assessment ratio for St. Louis County.The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
1.Jurisdiction.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.A hearing was conducted on July 27, 2010, at the St. LouisCountyGovernmentCenter,Clayton,Missouri.
3.Subject Property.The subject property is located at 7540 Terri Lynn Dr., St. Louis County, Missouri.The property is identified by locator number 24J330614.The property consists of 5,200 square foot lot improved by a two-story, brick and vinyl, single-family residence built in 1987.The gross living area is 2,086 square feet.The house has a full unfinished basement and an attached two-car garage.The residence has eight rooms, four bedrooms, two full and one half bathrooms.The structure is in average condition for its age.The quality of construction is average, consistent with surrounding properties.There was no listing or sale of the property within three years prior to the tax date of January 1, 2009.
4.Complainant’s Evidence.Mr. Varwig testified that his opinion of the fair market value of his property as of January 1, 2009, was $164,600.He arrived at his opinion of value by making a percentage reduction in the assessor’s 2007-08 appraised value for the property.The following exhibits were received into evidence on behalf of Complainant:
Owner’s Statement, List of Repairs/Renovations Estimated Costs,
35 photographs of condition items.
Internet Property Record Cards Properties at 7527, 7536,
7544 Terri Lynn Dr.
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 $164,600, as proposed.See, Complainant Fails to Prove Value of $164,600, infra.
5.Respondent’s Evidence.Respondent presented the appraisal report and testimony of Dale Smith, Missouri State Certified Residential Real Estate Appraiser.Mr. Smith arrived at a conclusion of the fair market value of the Complainant’s property as of January 1, 2009, to be $223,000 relying on the sales comparison approach.The properties relied upon by Respondent’s appraiser were comparable to the subject property for the purpose of making a determination of value of the subject property.The three 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.Mr. Smith was aware of the number of deferred maintenance items with the subject prior to completing his appraisal and took those into account in reaching his conclusion of value.
Respondent’s evidence met the standard of substantial and persuasive to establish the value of the subject, as of January 1, 2009, to be $223,000.However, Respondent’s appraisal was accepted only to sustain the original assessment made by the Assessor and sustained by the Board and not for the purpose of raising the assessment above that value.Respondent meet the standard of clear, convincing and cogent evidence in this appeal to sustain the original valuation of $193,200, assessed value of $36,700.
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.
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.This presumption is a rebuttable rather than a conclusive presumption.It places the burden of going forward with some substantial evidence on the taxpayer – Complainant.The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the Board’s valuation is erroneous and what the fair market value should have been placed on the property.An opinion of value given by the Complainant derived from making a percentage deduction from the prior
assessment’s appraised value does not constitute substantial and persuasive evidence to rebut the presumption of correct assessment by the Board.
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.True value in money is defined in terms of value in exchange and not value in use.It is the fair market value of the subject property on the valuation date.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.
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.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.The methodology testified to by Mr. Varwig of making an arbitrary percentage reduction in the 2007-08 assessor appraised value of the property under appeal to arrive at his opinion of value is not a recognized approach for the appraisal of property to establish ad valorem tax value.Respondent’s appraiser valued the subject property by development and application of the sales comparison approach to value.This approach is generally recognized as the most appropriate methodology for the valuation of owner occupied residential property.There was adequate relevant sales data to develop this approach.
Complainant Fails to Prove Value of $164,600
In order to prevail, Complainant must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2009.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.”
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation. The opinion of value offered by Mr. Varwig of $164,600 derived by making a percentage reduction from the prior assessment value, which he stated was $183,600 is not a proper methodology for establishing fair market value of a property.Accordingly, the owner’s opinion was not based upon proper elements or a proper foundation.It has no probative value on the issue of overvaluation.
No market data was presented by the owner to establish that similar properties were selling at a time relevant to the January 1, 2009, valuation date for a value of only $164,600.This calculates to a per square foot of living area value of only $78.91 per square foot.The evidence in the record established that similar properties on the subject street and an adjoining street were selling in an unadjusted range of $108.60 to $126.18 per square foot of living area.After appropriate adjustments, the range of per square foot values was from $103.69 to $107.96.Respondent’s evidence rebuts the owner’s claim of value based upon a per square foot value of less than $79.
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.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 $223,000.However, under the Commission rule just cited and Supreme Court decision the assessed value cannot be increased above $36,700 in this particular appeal.
Respondent’s Evidence Sustains Original Value
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 sustained 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 $193,200, 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.
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.The quality of proof, to be clear and convincing must be more than a mere preponderance but does not require beyond a reasonable doubt.“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.”The appraisal of Mr. Smith complied with the statutory standard of clear, cogent and convincing evidence.The appraisal while establishing the fair market value as of January 2, 2009, to be $223,000 can only be accepted for the purpose of affirming the assessed value of $36,700, as noted above.See, Evidence of Increase in Value, supra.
Complainant Fails To Prove Discrimination
In order to obtain a reduction in assessed value based upon discrimination, the Complainants must (1) prove the true value in money of their property on January 1, 2009; and (2) show an intentional plan of discrimination by the assessing officials resulting in an assessment of that property at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction.Evidence of value and assessments of a few properties does not prove discrimination.Substantial evidence must show that all other property in the same class, generally, is actually undervalued.The difference in the assessment ratio of
In order to establish a claim on inequitable assessment, Complainant had the burden to prove the level of assessment for the subject property in 2009. This is done by independently determining the market value of the subject property and dividing the market value into the assessed value of the property as determined by the assessor’s office.Complainant failed to complete this required initial step to prove a claim of discrimination.
Complainant must then prove the average level of assessment for residential property in St. Louis County for 2009.This is done by (a) independently determining the market value of a representative sample of residential properties in St. Louis County; (b) determining the assessed value placed on the property by the assessor’s office for the relevant year; (c) dividing the assessed value by the market value to determine the level of assessment for each property in the sample; and (d) determining the mean and median of the results.Complainant performed none of these steps. The difference between the actual assessment level of the subject property and the average level of assessment for all residential property, taken from a sufficient representative sample in St. LouisCountymust demonstrate a disparity that is grossly excessive.
Complainant’s discrimination claim fails because of the failure to establish the market value of their property.Without establishing market value, the assessment ratio cannot be established.Without establishing the assessment ratio for the property under appeal, it is not possible to establish that the subject property is being assessed at a higher percentage of market value that any other property.
However, even if Mr. Varwig had established market value, the discrimination claim would still fail because he did not demonstrate that a statistically significant number of other residential properties within St. Louis County are being assessed at a lower ratio of market value than his property.Complainant’s claim of discrimination is based only upon the fact that three properties on the subject street had their appraised/assessed values reduced from the 2007-08 assessment to the 2009-2010 assessment and the value on the subject property was not likewise reduced.This is not satisfy the required methodology to establish a claim of discrimination.This does not provide a representative sample of the residential property in St. Louis County, nor does it establish at what percentage of true value in money these three properties are being assessed in 2009.
Because Complainant failed to establish the market value of his property and failed to establish that the property is being assessed at a higher percentage of market value than a statistically significant number of other properties in St. Louis County, the taxpayer failed to prove discrimination.Accordingly, the subject property for the 2009-10 assessment must be assessed at the statutory assessment ratio of 19%.
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Louis County for the subject tax day is AFFIRMED.
The assessed value for the subject property for tax years 2009 and 2010 is set at $36,700.
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.
The Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 139.031.8, RSMo.
Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed.Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.
SO ORDERED September 3, 2010.
STATE TAX COMMISSION OFMISSOURI
W. BOE Decision Letter, Exhibit 1, Page 1 of 4.
 Section 137.115.1, RSMo.
 Exhibit 1.
 Testimony of Dale Smith.
 Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.
 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)
 Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
 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).
 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).
 Hermel, supra.
 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.
 Exhibit 1, Certification & Signature Page.
 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).
 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).
 Hermel, supra.
 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).
 See, Cupples-Hesse, supra.
 Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).
 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).
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).
 The percentage reduction of 10.32% was derived from the calculation of the average percentage decrease in the Assessor’s appraised values for the three properties in Exhibit B.
 Exhibit, p. 1 – Owner’s Statement.
 Exhibit 1, Page 2 of 2.
 Section 138.060, RSMo; 12 CSR 30-3.075.
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 SW3d 80, 87-88 (Mo 8/4/09)
 Section 137.115.1(1) & (2).
 Grissum v. Reesman, 505 S.W.2d 81, 85, 86 (Mo. Div. 2, 1974).
 30 AmJur2d. 345-346, Evidence section 1167.
 Matter of O’Brien, 600 S.W.2d 695, 697 (Mo. App. 1980).
 Koplar v. State Tax Commission, 321 S.W.2d 686, 690, 695 (Mo. 1959).
 State ex rel. Plantz v. State Tax Commission, 384 S.W.2d 565, 568 (Mo. 1964).
 Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986).
 Cupples-Hesse, supra.
 Savage, supra.
 Section 137.115.
 Section 138.432, RSMo.