STATE TAX COMMISSION OF MISSOURI
|MOHAMED ISSAM FAKHANI,||)|
|Complainant(s),||)||Appeal No. 21-10133|
|)||Parcel No. 23Q130045|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
Mohamed Issam Fakhani (Complainant) appealed the St. Louis County Board of Equalization’s (BOE) decision finding the true value in money (TVM) of the subject property on January 1, 2021, was $687,600. Complainant alleges overvaluation and proposed that the TVM as of that date was $639,300. The BOE decision is affirmed. The TVM of the subject property on January 1, 2021, was $687,600.
The evidentiary hearing was held on April 14, 2022, via Webex. Complainant appeared pro se via phone. Respondent was represented by counsel, Tim Bowe. The appeal was heard and decided by Senior Hearing Officer Benjamin Slawson.
FINDINGS OF FACT
- The Subject Property. The subject residential real property is located at 712 Joyce Ann Dr., Ballwin, Missouri. Complainant testified that the subject property consists of a two-story single family home with four bedrooms and four and half bathrooms, with 4,150 square feet of living space. The lot size of the property is 0.818 acres. Complainant built the house in 2014. He purchased the land for $146,500, and the house construction cost was about $384,000. Complainant testified that he did not list the property for sale in the last three years.
- Assessment and Valuation. Respondent determined the TVM of the subject property as of January 1, 2021, was $687,600. The BOE also determined the TVM of the subject property as of January 1, 2021, was $687,600.
- Complainant’s Evidence. Complainant introduced Exhibits A through E which were all admitted into evidence without objection. Complainant’s exhibits are described as follows:
|A||St. Louis County Real Estate Information about the subject property and blueprint diagram of square footage from building plans|
|B||St. Louis County Real Estate Information about the subject property showing previous appraised values and assessed values from 2012 to 2021|
|C||Detailed builders’ spreadsheet of the estimated cost of construction for the subject property in 2014|
|D||St. Louis County Real Estate Information about the three comparables used by Respondent in his 2021 assessment of the subject property|
|E||Pictures of the subject property showing the condition issues raised by Complainant|
Complainant testified that he believes that the BOE overvalued the subject property for several reasons. First, he believes the County information on the property’s square footage is incorrect. As listed on Exhibit A, the County’s records show the subject having 4,336 square feet. However, Complainant testified that his original building plans in Exhibit A add up to 4,150 square feet.
Second, Complainant testified that he believes the increases in assessment of his property have been excessive and unfair. Complainant includes the assessment history of the last few years by St. Louis County in Exhibit B. It shows that the assessed value of the property has increased a total of $159,600 or 30% from 2015 to 2021. In his Complaint for Review, Complainant proposed a value of $639,300, which is what Respondent appraised the value as of January 1, 2019. At hearing on cross examination, while not stating a specific dollar amount, Complainant said that he believes a fair value would be 10% to 20% more than what his original cost for the property was.
Third, Complainant asserted that one of the comparables used by Respondent in assessing his property, 86 Irene Dr., should not have been used. Complainant noted that this house is very expensive, was recently built and sold for a much higher price, has a larger square footage of living space and back yard, is one and half stories instead of two, and is not in his neighborhood. Complainant stated that the pictures in Exhibit D show how nice the comparable house is on the inside.
Finally, Complainant testified as to some of the condition issues with the property that he thinks devalue his property such as cracks in the driveway and garage floor, cracks around the sump pump area in the basement, and mold on the siding on the front of the house. Complainant also mentioned that the carpet and other interior conditions are worn with the age of the home. Complainant did not present any estimates from contractors showing the costs of replacing or fixing these issues.
Complainant admitted that he is not a licensed appraiser. Cross examination revealed that he also has no professional training or experience making market-based adjustments to comparable properties. Complainant admitted that in his opinion the prices of lumber, labor, and other costs for construction have gone up in recent years.
- Respondent’s Evidence. Respondent introduced the following Exhibit which was admitted into evidence without objection:
|1||A copy of the BOE decision letter determining the subject appraised value as of January 1, 2021, was $687,600|
- Value. The TVM of the subject property as of January 1, 2021, was $687,600.
CONCLUSIONS OF LAW
- Assessment and Valuation. Residential real property is assessed at 19% of its TVM as of January 1 of each odd-numbered year. Section 137.115.5(1)(a). The TVM is “the fair market value of the property on the valuation date[.]” Snider v. Casino Aztar/Aztar Mo. Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005) (internal quotation omitted). The fair market value is “the price which the property would bring from a willing buyer when offered for sale by a willing seller.” Mo. Baptist Children’s Home v. State Tax Comm’n, 867 S.W.2d 510, 512 (Mo. banc 1993). “True value in money is defined in terms of value in exchange not value in use.” Tibbs v. Poplar Bluff Assocs. I, L.P., 599 S.W.3d 1, 7 (Mo. App. S.D. 2020) (internal quotation omitted). “Determining the true value in money is an issue of fact for the STC.” Cohen v. Bushmeyer, 251 S.W.3d 345, 348 (Mo. App. E.D. 2008).
“For purposes of levying property taxes, the value of real property is typically determined using one or more of three generally accepted approaches.” Snider, 156 S.W.3d at 346. The three generally accepted approaches are the cost approach, the income approach, and the comparable sales approach. Id. at 346-48. The STC has wide discretion in selecting the appropriate valuation method but “cannot base its decision on opinion evidence that fails to consider information that should have been considered under a particular valuation approach.” Id., at 348.
The comparable sales approach “is most appropriate when there is an active market for the type of property at issue such that sufficient data are available to make a comparative analysis.” Snider, 156 S.W.3d at 348. For this reason, the comparable sales approach is typically used to value residential property. “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 347-48 (internal quotation omitted). “Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character.” Id. at 348.
- Evidence. “Although technical rules of evidence are not controlling in administrative hearings, fundamental rules of evidence are applicable.” Mo. Church of Scientology v. State Tax Comm’n, 560 S.W.2d 837, 839 (Mo. banc 1977). The hearing officer is the finder of fact and determines the credibility and weight of the evidence. Kelly v. Mo. Dep’t of Soc. Servs., Family Support Div., 456 S.W.3d 107, 111 (Mo. App. W.D. 2015). “It is within the purview of the hearing officer to determine the method of valuation to be adopted in a given case.” Tibbs v. Poplar Bluff Assocs. I, L.P., 599 S.W.3d 1, 9 (Mo. App. S.D. 2020). 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. 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.
- Complainant’s Burden of Proof. The taxpayer bears the burden of proof and must show by a preponderance of the evidence that the property was overvalued. Westwood P’ship v. Gogarty, 103 S.W.3d 152, 161 (Mo. App. E.D. 2003). The BOE’s valuation is presumptively correct. Tibbs, 599 S.W.3d at 7. The “taxpayer may rebut this presumption by presenting substantial and persuasive evidence that the valuation is erroneous.” Id. (internal quotation omitted). The taxpayer also must prove “the value that should have been placed on the property.” Id. “Substantial evidence is that evidence which, if true, has probative force upon the issues, and from which the trier of fact can reasonably decide the case on the fact issues.” Savage v. State Tax Comm’n, 722 S.W.2d 72, 77 (Mo. banc 1986) (internal quotation omitted). Evidence is persuasive when it has “sufficient weight and probative value to convince the trier of fact.” Daly v. P.D. George Co., 77 S.W.3d 645, 651 (Mo. App. E.D. 2002); see also White v. Dir. of Revenue, 321 S.W.3d 298, 305 (Mo. banc 2010) (noting the burden of persuasion is the “party’s duty to convince the fact-finder to view the facts in a way that favors that party”).
- Complainant Did Not Produce Substantial and Persuasive Evidence of Overvaluation.
Complainant did not produce substantial and persuasive evidence to support his opinion of value.
The comparable sales approach is typically used to value residential properties. “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.” Snider, 156 S.W.3d at 347-48 (internal quotation omitted).
Complainant did not offer any comparable sales. At hearing on cross examination, while not stating a specific dollar amount, Complainant said that he believes a fair value would be 10% to 20% more than what his original cost for the property was. However, Complainant did not prove this proposed value by using comparable sales or submitting an appraisal of the property. Additionally, while Complainant feels that one of the comparables used by Respondent in assessment of the subject property should not have been used, Complainant did not establish with substantial and persuasive evidence that Respondent did not make the appropriate market-based adjustments to account for differences between that property and the subject when determining the appraised value of the subject. The BOE’s valuation is presumptively correct. Tibbs, 599 S.W.3d at 7.
Complainant also testified that Respondent’s assessment overvalues the subject because Respondent’s records have inaccurate data regarding the square footage of the property. However, Exhibit A’s blueprint diagram of planned construction is not substantial and persuasive evidence that the actual square footage of living space in the home is not consistent with Respondent’s records. Even if this fact had been proven, there is no evidence offered by Complainant quantifying this issue as to how it specifically affects the subject property’s TVM.
Last, Complainant testified as to some of the condition issues with the property that he alleges devalue his property such as cracks in the driveway and garage floor, cracks around the sump pump area in the basement, and mold on the siding on the front of the house. Complainant also mentioned that the carpet and other interior conditions are worn with the age of the home. However, Complainant did not present any evidence of the specific monetary impact that these condition issues have had on the TVM of the subject property as of January 1, 2021.
Even if Complainant had rebutted the presumption of correct valuation by the BOE, Complainant has not proven that the TVM of the subject property is the amount he has proposed. While a property owner’s opinion of value is generally admissible, the opinion lacks “probative value where it is shown to have been based upon improper elements or an improper foundation.” Shelby Cty. R-IV Sch. Dist. v. Herman, 392 S.W.2d 609, 613 (Mo. 1965); see also Cohen v. Bushmeyer, 251 S.W.3d 345, 349 (Mo. App. W.D. 2008) (noting a property owner’s opinion of value loses probative value when it rests on an improper foundation).
Complainant did not produce substantial and persuasive evidence showing that the subject property was overvalued. Therefore, Complainant’s evidence does not provide the necessary foundation and elements to support his overvaluation claim. Because the STC “cannot base its decision on opinion evidence that fails to consider information that should have been considered” under a recognized approach to value, Snider, 156 S.W.3d at 348, the BOE decision is affirmed.
CONCLUSION AND ORDER
The BOE decision is affirmed. The TVM of the subject property as of January 1, 2021, was $687,600.
Application for Review
A party may file an application for review of this decision within 30 days of the mailing date set forth in the certificate of service for this decision. The application “shall contain specific detailed grounds upon which it is claimed the decision is erroneous.” Section 138.432. The application must be in writing, and may be mailed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, or emailed to Legal@stc.mo.gov. A copy of the application must be sent to each person 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.
The Collector of St. Louis County, and 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 the disputed taxes have been disbursed pursuant to a court order under the provisions of section 139.031.
SO ORDERED September 9, 2022.
Benjamin C. Slawson
Senior Hearing Officer
State Tax Commission
Certificate of Service
I hereby certify that a copy of the foregoing has been electronically mailed and/or sent by U.S. Mail on September 9, 2022, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.
 Complainant timely filed a complaint for review of assessment. The State Tax Commission (STC) has authority to hear and decide Complainant’s appeal. Mo. Const. art. X, sec. 14; Section 138.430.1, RSMo 2000. All statutory citations are to RSMo 2000, as amended.