State Tax Commission of Missouri
MARY K. NOVELLY TRUST,)
v.) Appeal No.09-57038
TOM COPELAND, ASSESSOR,)
DECISION AND ORDER
Decision of the Franklin County Board of Equalization reducing 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 $970,000, residential assessed value of $184,300.Complainant appeared by Counsel, Deborah Weedman,St. Louis,Missouri.Respondent appeared by County Counselor Mark Vincent.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
Complainant appeals, on the ground of overvaluation, the decision of the Franklin County Board of Equalization, which reduced the valuation of the subject property.The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2009.The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
1.Jurisdiction.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the Franklin County Board of Equalization.Evidentiary hearing was held on February 23, 2010, at theFranklinCountyGovernmentBuilding,Union,Missouri.
2.Assessment.The Assessor appraised the property at $1,104,860, residential assessment of $209,923.The Board of Equalization reduced the appraised value to $970,000, residential assessed value of $184,300. 
3.Subject Property.The subject property is located at 218 St. Andrews Drive, St. Albans, Missouri.The property is identified by map parcel number 57-8-1-2-7-94.The property consists of a 1.43 acre lot improved by a one and half-story brick, ranch, single-family structure of good quality construction.The house was built in 1995 and appears to be in normal condition for its age.The residence has a total of ten rooms, which includes four bedrooms.The home has five full baths and one half-bath.It contains 4,475 square feet of living area.There is a full basement with 1,302 square feet of finished living area.There is an attached three-car garage and a detached three-car garage. There was no sale of the property within three years prior to the tax date of January 1, 2009.There was no evidence of new construction and improvement from January 1, 2009, to January 1, 2010.Therefore, the value set for 2009 will remain the value for 2010.
The home has not been occupied for approximately four years, therefore, its interior condition would not be the same as occupied homes.There is some carpet repair which may need to be done.There is some ceiling staining from apparent roof leaks.
4.Complainant’s Evidence.Counsel for Complainant offered into evidence the following exhibits:
Affidavit of John C. Hottle, State Certified General Real Estate Appraiser
Settlement Statement – 12/10/07 – 209 S. Andrews Dr.,St. Albans
Settlement Statement – 8/20/09 – 258 St. Georges Dr.,St. Albans
Settlement Statement – 1/30/09 – 258 St. Georges Dr.,St. Albans
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 $800,000, as proposed by the Complaint for Review of Assessment.Complainant’s evidence consisted of an offer of proof by Counsel for Complainant.The offer of proof failed to provide testimony of the owner as to an opinion of value and failed to present a methodology recognized for the appraisal of real property for ad valorem tax purposes to establish the taxpayer’s proposed value in the Complaint.See, Complainant Fails To Prove Value, infra.
5.Objection to Exhibit A.Counsel for Respondent objected to Exhibit A on the ground of improper foundation.Respondent had not been provided the Affidavit in advance of the hearing.The Exhibit provided no evidence as to the fair market value of the subject property as of January 1, 2009.Exhibit A was received only to the extent that the Hearing Officer takes official notice of the referenced USPAP statement within the Affidavit.Any conclusions, assertions, claims of appraisal practice, or opinions otherwise set forth in the Affidavit are not relevant evidence on any issue presented in this appeal.
6.Respondent’s Evidence.Respondent had no burden of proof to meet in this case.Respondent presented the testimony of Lori Ruby, State Certified Residential Appraiser for the Office of the Franklin County Assessor.Ms. Ruby testified as to her appraisal – Exhibit 1 – of the subject property.Exhibit 1 and the supporting testimony of Ms. Ruby constituted substantial and persuasive evidence of the fair market value of the subject property on January 1, 2009 to be $970,000.See, Respondent Presents Substantial and Persuasive Evidence, infra.
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.
Official and Judicial Notice
Agencies shall take official notice of all matters of which the courts take judicial notice.The Hearing Officer takes official notice that under the Uniform Standards of Professional Appraisal Practice (USPAP): “Data subsequent to the effective date may be considered in developing a retrospective value as a confirmation of trends that would reasonably be considered by a buyer or seller as of that date.”The cited language does not mandate a course of action by an appraiser, only that consideration of certain data may be considered in developing a retrospective.The language provides no basis upon which the Hearing Officer may, or should reject the evidence of value conclude by Respondent’s appraiser.
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.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.Complainant failed to present substantial and persuasive evidence to rebut the presumption of correct assessment and to establish the value of the property under appeal to be worth $800,000 on January 1, 2009.
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.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. Complainant failed to present an opinion of value that was based upon any accepted methodology for the appraisal of real property for ad valorem tax purposes.Respondent’s appraiser presented a conclusion of value derived from the sales comparison approach to value.This approach concluded a value correlated to the Standard for Valuation required in appeals before the Commission.
Complainant Fails To Prove Value
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.”
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact.The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief.
As addressed below, Complainant failed to present any evidence upon which a conclusion of value of $800,000, as proffered in the Complaint for Review Assessment, could be reached.Accordingly, the required standard of presenting substantial and persuasive evidence to prove value was not met.
Owner’s Opinion of Value
The owner’s opinion in the present appeal was presented in the Complaint for Review of Assessment as $800,000.An owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.No evidence was presented as to the basis for the owner’s opinion.It is impossible from Complainant’s evidence to determine if the opinion was based upon proper elements and a proper foundation.Therefore, under the applicable case law, no probative value can be accorded to the claim of a value of $800,000.
“Where the basis for a test as to the reliability of the testimony is not supported by a statement of facts on which it is based, or the basis of fact does not appear to be sufficient, the testimony should be rejected.”In this instance, there is no actual testimony from the owner or the Trustee of the owner, therefore, the test for reliability of the opinion of value has not been met.There are no facts upon which a value of $800,000 was established.Accordingly, the “testimony of the owner” in the form of the amount stated as the taxpayer’s proposed value on the Complaint must be rejected.
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.”The essential element in this case was quite simple.Complainant bore the burden to rebut the presumption of correct assessment and establish the value proposed of $800,000 by substantial and persuasive evidence.The Hearing Officer has nothing in the evidentiary record that establishes under any recognized methodology of real estate appraisal practice that the most probable price that would have been paid for the subject property in a hypothetical sale on January 1, 2009, would have been only $800,000.To conclude such a value on this evidentiary record would be to rest upon nothing but speculation, conjecture and surmise.As the case law notes, those empty shadows cannot establish the basis to satisfy the evidentiary burden placed on Complainant.
Assuming, without finding, that Complainant’s opinion of value was based on the settlement statements received into evidence, since there was no testimony or offer of proof that such was in fact the basis for the owner’s opinion.The Hearing Officer is still entangled in a web of speculation, conjecture and surmise.The two sales evidenced by the three settlement statements do not establish an appraisal of the subject property under any recognized approach to value.A settlement statement is not a sales comparison.
Exhibit B – 209 St. Andrews
Exhibit B establishes that the property at209 St. Andrews Drive,St. Albansclosed on December 10, 2007, for $875,000.Notwithstanding, the offer of proof that in the opinion of Ms. McCarthy this is a better comparable than any of the three utilized by the Respondent’s appraiser, the Hearing Officer has nothing but the representation of the real estate agent on this point.The Hearing Officer is not questioning the experience and expertise of Ms. McCarthy as a real estate salesperson.Her testimony established that she no doubt has particular knowledge and experience in the marketing of theSt. Albansproperties.However, Ms. McCarthy was not established by education, training and experience to be qualified to testify as an expert on the appraisal of real property before the Commission.
Her general testimony concerning this property fails to rise to a conclusion of value of $800,000 for the subject.In fact no such statement was ever given by Ms. McCarthy and the offer of proof did not tender that she was prepared to testify to an opinion of value.There is no evidence to permit the Hearing Officer to make a deduction of $75,000 from the sale price of this property and conclude that it establishes value for the subject at $800,000.To do so would be no different than pulling the value out of thin air.Thin air does not constitute evidence.This sale might indeed, in the hands of a qualified appraiser be utilized as a comparable along with other sales to arrive at a conclusion of value.In the form in which it was presented, the sale has no probative weight on the issue of value of the subject.Nor does it establish that this sale should have been used by Respondent’s appraiser in arriving at true value in money for the subject.
Exhibits C & D – 258 St. Georges Drive
These two exhibits establish that the property at 258 St. Georges Drive sold on
January 30, 2009, for $865,000 and then sold eight months later for $888,000.That is all the exhibits really establish.The exhibits provide nothing to establish value for the subject property. Here again, to utilize these sales, the Hearing Officer would have to resort to the non-evidentiary thin air technique of making deductions of $65,000 and $88,000 to conclude the value tendered on the Complaint.Like Exhibit B, these transactions might be utilized by an appraiser in an appraisal of the subject.However, since that was not done, they have no evidentiary value on the issue of what a willing buyer and seller might have agreed to as the purchase price of the subject on January 1, 2009.
The presentation of the settlement statements on these three transactions was, for all practical purposes, no better than simply providing a newspaper listing of various properties that had sold in St. Albans.Sales dates and prices do not constitute substantial and persuasive evidence to prove value in a hearing before the Commission.
Offer of Proof
Counsel for Complainant summarized that Ms. McCarthy was prepared to testify that Respondent’s comparables were not the best comparables, due to various differences between the comparables and the subject on factors such a living area, location, interior finishes, age and dates of sale.This offer of proof was apparently an attempt to discredit the appraisal prepared by Ms. Ruby so that it could be given no weight in a determination of value.Ms. McCarthy’s opinions on these matters have no probative weight to either establish the true value in money of the subject or to attempt to rebut the conclusion of value reached by Ms. Ruby.
The Hearing Officer will simply not defer to a lay witness on the comparability or non-comparability of sale properties.Sufficient information needs to be presented in an appropriate form that the Hearing Officer will determine for himself as to what sale properties are the strongest comparables in a given case.The Hearing Officer is certainly not going to abdicate to a witness on such a matter when that witness is not established to be qualified to testify as an expert on the appraisal of the property under appeal.The offer of proof was fatally flawed.It presented no evidence under a recognized appraisal methodology to establish the fair market value of the subject property to be $800,000 or any other value on January 1, 2009.It did not establish that the use of the three sales in the Ruby appraiser was not appropriate.All that was established was that a lay witness was of the opinion there were two better comparable sale properties.
Respondent’s Evidence Substantial and Persuasive
Respondent had no burden of proof in this appeal.Upon the failure of Complainant to make its case, the value set by the Board must be affirmed.However, Respondent presented substantial and persuasive evidence to establish a fair market value as of January 1, 2009, to be $970,000.Respondent’s appraiser developed an opinion of value relying upon an established and recognized approach for the valuation of real property, the sales comparison or market approach.The sales comparison approach is generally recognized to be the most reliable methodology to be utilized in the valuation of single-family residences.The adjustments made by Ms. Ruby were consistent with generally accepted guidelines for the appraisal of property of the subject’s type.The adjustments properly accounted for the various differences between the subject and each comparable.
The assessed valuation for the subject property as determined by the Board of Equalization forFranklinCountyfor the subject tax day is AFFIRMED.
The assessed value for the subject property for tax years 2009 and 2010 is set at $184,300.
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 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 Franklin County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending a 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 March 11, 2010.
STATE TAX COMMISSION OFMISSOURI
W. B. Tichenor
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 11thday of March, 2010, to:Deborah Weedman, 8235 Forsyth Blvd., Suite 400, St. Louis, MO 63105, Attorney for Complainant; Mark Vincent, Franklin County Counselor, P.O. Box 439, Union, MO 63084, Attorney for Respondent; Tom Copeland, Assessor, 400 E. Locust, Suite 105A, Union, MO 63084; Debbie Door, Clerk, Franklin County Courthouse, 400 E. Locust, Suite 201, Union, MO 63084; Linda Emmons, Collector; Franklin County Courthouse, 400 E. Locust, Suite 103, Union, MO 63084.
Contact Information for State Tax Commission:
Missouri State Tax Commission
P.O. Box 146
301 W. High Street, Room 840
Jefferson City, MO 65102
 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).
 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, p. 5.
 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).
 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).
 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).