STATE TAX COMMISSION OF MISSOURI
|MARY L. LEWIS,||)|
|v.||)||Appeal No. 17-10780|
|JAKE ZIMMERMAN, ASSESSOR||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
The assessment made by the Board of Equalization of St. Louis County (BOE) is AFFIRMED. Complainant Mary L. Lewis (Complainant) did not present 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 as of January 1, 2017.
Complainant appeared pro se.
Respondent Jake Zimmerman, Assessor, St. Louis County, Missouri, (Respondent) appeared by Counsel Steven Robson.
Case heard and decided by Senior Hearing Officer Amy S. Westermann (Hearing Officer).
Complainant appealed on the ground of overvaluation. Respondent initially set the true value in money (TVM) of the subject property, as residential property, at $158,800. The BOE lowered Respondent’s valuation and set the TVM at $152,400. 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.
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.
- Evidentiary Hearing. The issue of overvaluation was presented at an evidentiary hearing on May 21, 2018, at the St. Louis County Government Administration Building, 41 South Central Avenue, Clayton, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 15O140308. It is further identified as 1774 Round Robin Court, St. Louis County, Missouri. (Complaint; Exhibit 1)
- Description of Subject Property. The subject property consists of an irregularly-shaped sloping residential lot improved by a 1,189 square foot, single-family, ranch-style home built in 1971. (St. Louis County Real Estate Records Database) The home includes three bedrooms; two full bathrooms; a full unfinished basement; a two-car attached garage; two porches and a wood deck. The exterior consists of brick construction. (St. Louis County Real Estate Records Database)
- Assessment. Respondent set a TMV on the subject property at $158,800 residential, as of January 1, 2017.
- Board of Equalization. The BOE lowered Respondent’s TMV of the subject property and set the TVM at $152,400.
- Complainant’s Evidence. Complainant opined that the subject property’s TVM as of January 1, 2017, was between $102,000 and 112,000. To support her opinion of value, Complainant offered the following evidence:
|Exhibit A||Copy of 2017 tax bill for subject property||Admitted|
|Exhibit B||Real Estate Information – Ownership, Legal and Assessments data for subject property||Admitted|
|Exhibit C||St. Louis County Parcel Viewer satellite image of subject property||Admitted|
|Exhibits D and E||Photos of front elevation, street frontage, driveway, and storm sewer curb of subject property||Admitted|
|Exhibits F1 – F9||Photos depicting cracking and sinking of subject property’s garage floor; bid proposal from Bumb Construction, Inc., dated September 5, 2017, in the amount of $11,7000 for labor, material, equipment to replace garage floor||Admitted/Excluded (see explanation, below)|
|Exhibits G1 – G4||Photos depicting cracking and deterioration of subject property’s driveway; bid proposal from Terrill Concrete Contracting dated September 15, 2017, in the amount of $5,175 to remove and replace driveway||Admitted/Excluded (see explanation, below)|
|Exhibits H1 – H4||Photos depicting cracked and sinking of subject property’s basement floor; bid proposal from Joe Cusumano D/B/A Handimaster dated October 16, 2017, in the amount of $2,000 for materials and labor to repair basement floor||Admitted/Excluded (see explanation, below)|
|Exhibits I1 – I13||Photos depicting sharp downward slope of backyard; steep inclines and wooded terrain on rear of subject property’s lot; lower area on rear of subject property’s lot where lot line meets MODOT easement for Highway 364; drainpipes; leaning trees; bid proposal from LaFarge North America, Inc., no date, in the amount of $5,494.24 for fill material and hauling to the subject property||Admitted/Excluded (see explanation, below)|
|Exhibits J1-J9||Brief written statement of Complainant alleging two-thirds of subject property’s lot washed away due to Metropolitan Sewer District (MSD); photos depicting pipe and washed out areas on rear of subject property’s lot; written statement of Complainant dated 2003 recording a visit from a MSD senior civil engineer who informed Complainant that MSD “was not going to do anything about it”; MSD work order showing initiated by a complaint call from Complainant in 2010 and finding storm sewer near subject property open and clear and in good condition and outfall pipe near rear of subject property’s lot standard; notes of Complainant’s telephone conversations with MSD representatives||Admitted|
|Exhibit K||Photos depicting drainage slopes from Highway 364||Admitted|
|Exhibits L1-L2||Photos depicting unidentifiable land with erosion and a corrugated drain pipe||Admitted|
|Exhibits M1-M3||Photos depicting what is labeled as Shriner’s Pond over-flow pipe; planning map depicting location of Shriner’s Pond in relation to permanent drainage easements and subject property boundary line||Admitted|
|Exhibits N1-N7||Written statement of Complainant alleging two-thirds of rear of subject property washed away due to MSD pipe outlet; photos depicting a view of highway beyond rear property line of subject property; letters from MODOT informing Complainant that a sound wall would not be built between the highway and the subject property; sound wall planning maps||Admitted|
|Exhibit O||Change of Assessment Notice for subject property dated May 8, 2017||Admitted|
|Exhibits P1-P2||Real Estate Information Property and Sales for two comparable properties||Admitted|
Complainant testified in her own behalf. Complainant testified that she had purchased the subject property in 1981 for approximately $61,000. Complainant testified that the subject property was not encumbered by a mortgage. Complainant testified that the subject property had not been listed for sale or appraised within the three years preceding the Evidentiary Hearing. Complainant testified that she had never considered listing the subject property for sale or an asking price. Complainant testified that no offers “in dollars” had been made to purchase the property but that she had received cards in the mail from potential buyers. Complainant testified that the subject property is not for sale. Complainant testified that she had performed maintenance on the subject property between January 1, 2015, and January 1, 2017, but had not made any improvements.
Complainant testified at length regarding the problem of erosion on the rear of the subject property’s lot. Complainant testified that the erosion has been caused by numerous years of drainage from MSD pipes and from Highway 364. Complainant’s testimony was unclear as to whether the erosion is present on utility easements across the subject property. Complainant’s evidence established that MSD and MODOT have consistently denied any erosion of the subject property was due to their action or inaction.
Respondent objected to Exhibits F9, G4, H4, and I13 on hearsay grounds because all of these exhibits were bid proposals prepared by professionals in the field offering services, but the individuals who had prepared the bid proposals were not present at the evidentiary hearing to testify or to be cross examined about the bid proposals. The Hearing Officer reserved ruling on the objection until the entry of the Decision and Order in the case. Upon review, the bid proposals constitute hearsay in that they were unsworn documents created out of court and offered into evidence to prove the amount of the costs to cure specific problems associated with the subject property; thus, Exhibits F9, G4, H4, and I13 are excluded from evidence. Respondent did not object to Complainant’s remaining exhibits, all of which were admitted into the record.
- Respondent’s Evidence. Respondent advocated that the BOE’s valuation of the subject property as of January 1, 2017, $152,400, was correct. Respondent offered the following evidence:
|Exhibit 1||BOE Findings and Notice of Decision dated September 20, 2017, valuing the subject property at $152,400||Admitted|
|Exhibit 2||Comparable property located at 1775 Round Robin Court, on same street as subject property, showing sale price of $188,000 on May 31, 2017||Admitted|
Complainant objected to Respondent’s Exhibit 2 on the ground that the comparable property was not a true comparable because of the updates to the home. Respondent argued that the comparable was similar in style to the subject property and had a drop-off at the back of its lot, similar to the subject property. The Hearing Officer overruled the objection and admitted Exhibit 2 to be given the weight deemed necessary in light of all of the evidence. Complainant did not object to Respondent’s Exhibit 1, which also was received into the record.
- Presumption of Correct Assessment Not Rebutted. Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the BOE.
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, 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:
- 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.
Complainant’s evidence was neither substantial nor persuasive to support an opinion as to the true market value of the subject property as of January 1, 2017. 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.
Complainant did not use any of the court approved methods of valuation to arrive at an opinion of TMV. Complainant’s evidence focused on the erosion to the rear of the subject property’s lot, which, Complainant argued, had depreciated the value of the property. This evidence, however, does not adequately support an opinion that the TVM of the subject property as of January 1, 2017, was between $102,000 and $112,000.
Although not required to present evidence, Respondent’s Exhibit 2 established that a neighboring property at 1775 Round Robin Court sold in April 2017 for $188,000. The neighboring property was similar to the subject property in all major respects: ranch-style; 1,429 square feet; three bedrooms; two full bathrooms; one half bathroom; and a two-car attached garage. (Exhibit 2) The neighboring property, like the subject property, backed to trees and to Highway 364. (Exhibit 2) There was no evidence that the neighboring property had problems with erosion of its lot. There was evidence that the neighboring property had an updated kitchen, an updated master bathroom, and a partially-finished basement. However, it is reasonable to believe that these factors were accounted for by the sale price of the neighboring property, which was nearly 19% higher than the BOE’s determination of the subject property’s TVM.
The TVM for the subject property as determined by the BOE is AFFIRMED. The assessed value for the subject property is $28,956 residential ($152,400 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
The Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 139.031.8, RSMo.
Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed. Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.
SO ORDERED July 31, 2018.
STATE TAX COMMISSION OF MISSOURI
Amy S. Westermann
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 31st day of July, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.