STATE TAX COMMISSION OF MISSOURI
| NASRIN TAUK, | ) | |
| ) | ||
| Complainants, | ) | |
| ) | ||
| v. | ) | Appeal No. 15-13545 |
| ) | ||
| 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. Complainant Nasrin Tauk (Complainant) did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE. Respondent Jake Zimmerman, St. Louis County Assessor, (Respondent) presented substantial and persuasive evidence to rebut the BOE’s valuation and to establish the true market value of the subject property as of January 1, 2015.
Complainant appeared pro se.
Respondent appeared by Steven Robson, Assistant County Counselor.
Case heard and decided by Senior Hearing Officer Amy S. Westermann.
ISSUE
Complainant appealed on the ground of overvaluation. Respondent initially set the true market value (TMV) of the subject property, as residential property, at $1,260,700. The BOE lowered Respondent’s valuation to $1,100,000. The Commission takes this appeal to determine the TMV of the subject property on January 1, 2015.
The Senior 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 June 30, 2016, 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 20O110264. It is further identified as 12816 Tundra Ct., Town & Country, Missouri. (Complaint; Exhibit 1)
- Description of Subject Property. The subject property consists of a 54,014 square foot (approximately 1.25 acres) residential lot improved by a 5,400 square foot, single-family, two-story home built in 1990. (Exhibit 1) The subject property includes five bedrooms; three full bathrooms and two half bathrooms; a 3,125 square foot basement with 1,000 square feet of finished area that includes a recreation room and one full bathroom; a three-car attached garage; two fireplaces; patios and a deck; and an in-ground swimming pool. (Exhibit 1) The exterior consists of brick construction. (Exhibit 1)
- Assessment. Respondent set a TMV on the subject property at $1,260,700 residential, as of January 1, 2015.
- Board of Equalization. The BOE lowered Respondent’s TMV of the subject property to $1,100,000.
- Complainant’s Evidence. Complainant testified in her own behalf. Complainant testified that she had purchased the subject property in 1991 for approximately $803,000. Complainant testified that the subject property had not been listed with a realtor because the builder sold it to Complainant. 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, that she had not received any offers to purchase the subject property, and that she had not made improvements to the subject property between January 2013 and January 2015. Complainant testified that her opinion of the subject property’s TMV as of January 1, 2015, was $800,000. This amount was lower than value Complainant had proposed in her complaint for review, $861,959.
Complainant offered as evidence to support her opinion of value (1) a summary of Complainant’s position, including the argument that the other three residential properties in the subject property’s neighborhood had been assessed at lowered values (Exhibit A1); (2) a table comparing the subject property to the other three other properties in the subject property’s neighborhood (Exhibit A2); data summarizing ownership and legal information for the subject property obtained from the St. Louis County Real Estate Information database (Exhibit A-3); data summarizing ownership and legal information for three properties in the subject property’s neighborhood (Exhibits B, C, and D); bids for repairs and/or replacement costs of the subject property’s driveway, roof, and new pool tile and plaster (Exhibits E, F, and G); a supplemental statement Complainant had filed with the BOE and indicating that the subject property’s kitchen had been remodeled in 2007 for a cost of $50,000 (Exhibit H); sale listings for the comparable properties Respondent had used in his initial assessment of the subject property (Exhibits I-1, I-2, I-3, I-4, I-5); sale listings for comparable properties researched by Complainant (Exhibits J-1, J-2, J-3, J-4, J-5, J-6); and a bid for a second floor bathroom remodel (Exhibit K).
Respondent objected to Exhibits A, B, C, and D for lack of relevance. The Senior Hearing Officer overruled the objections and received the exhibits to be given the weight deemed necessary when viewed in context with all of the evidence. Complainant’s remaining exhibits were also received into the record.
- Respondent’s Evidence. Respondent offered as evidence the testimony of Residential Appraiser Senior Sharon Kuelker (the Appraiser) along with the Appraiser’s report (Exhibit 1). The Appraiser opined that the TMV of the subject property as of January 1, 2015, was $1,080,000.[1]
Complainant did not object to Respondent’s evidence, which was received into the record. Complainant did not cross examine the Appraiser.
- Presumption of Correct Assessment Rebutted – Value Established. The evidence presented by Respondent was substantial and persuasive to both rebut the presumption of correct assessment by the Board and to establish the fair market value of the subject property to be $1,080,000, assessed (residential) value of $205,200.
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 Senior 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 Senior 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 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.” 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).
Respondent’s Burden of Proof
Respondent, when advocating a value different from that determined by the original valuation or a valuation made by the Board of Equalization, must meet the same burden of proof to present substantial and persuasive evidence of the value advocated as required of the Complainant under the principles established by case law. Hermel, Cupples-Hesse, Brooks, supra.
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 both Complainant and Respondent are seeking to change the assessment; therefore, only the BOE presumption applies.
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.
Discussion
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, 2015. 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. At first glance, Complainant’s Exhibit A2 appears to present a sales comparison approach to valuing the subject property by comparing it to the other three properties in the neighborhood. However, on closer inspection, Complainant’s Exhibit A2 did not contain any market based adjustments to the comparables to arrive at an adjusted sale price to assist in drawing a conclusion as to what the TMV of the subject property should have been on January 1, 2015. Rather, Exhibit A2 showed the assessed values of the land and the improvements of the subject property and the neighboring residential properties, the square footage of each, and the calculated price per square foot of each. Although Exhibit A2 included a short list of “adjustments” (driveway replacement, roof replacement, pool repair), the exhibit did not indicate how the value of the comparables would be affected by those adjustments. More important, Exhibit A2 and the related Exhibits B, C, and D, which consisted of information obtained primarily from the St. Louis County Real Estate Records Database, showed that none of Complainant’s comparables had been recently sold. The property in Exhibit B was last sold in 1999. The property in Exhibit C was last sold in 1990, and a conveyance transferring the title from the individual owners to a trust occurred in 2010. The property in Exhibit D was last sold in 1990. In order to conduct a proper sales comparison analysis, the comparable properties must have been the objects of valid sales within a relatively short time of the tax date in question. Similarly, Complainant’s Exhibits J-1 through J-6 provided list prices for “comparable” properties, but the trier of fact could not determine if any of those properties were truly comparable to the subject property because (1) the exhibit did not provide any market based adjustments to any of those properties to account for similarities and differences between them and the subject property; and (2) the descriptions of those properties indicated they were significantly different from the subject property (two had been built in 1953).
In contrast, Respondent’s opinion of value was supported by an appraisal report that utilized the sales comparison approach. The Appraiser testified that she had chosen four comparable properties that had sold between May 2012 and April 2015. In arriving at an opinion of value, the Appraiser placed equal weight on all of the comparables. The sale prices of the comparables ranged from $1,195,000 to $1,438,000. The Appraiser made adjustments for the size of the lots of the comparables, all of which consisted of roughly 10,000 square feet less than the subject property. (Exhibit 1) The Appraiser made market based negative adjustments to Comparable Nos. 1, 3, and 4 for age because those comparables were newer than the subject property; Comparable 2 received a positive adjustment because it was older than the subject property. The Appraiser also made market based adjustments to the comparables for condition; square footage of the gross living area; number of bedrooms and bathrooms; total square footage and finished square footage in the basement; number of full or half bathrooms in the basement; number of garage stalls; number of fireplaces; screened porches; whether the comparables included an in-ground swimming pool; and exterior construction. (Exhibit 1) The adjusted prices of the comparables ranged from $1,014,600 to $1,172,600. (Exhibit 1)
The Appraiser viewed only portions of the exterior of the subject property from the street due to the Appraiser’s inability to gain access from Complainant. At the time of her viewing, the Appraiser concluded that the exterior appeared consistent with the C4 rating for condition, i.e., the subject property showed signs of some minor deferred maintenance and physical deterioration due to normal wear and tear. The Appraiser viewed specific issues, including two windows in need of repair or replacement, the driveway in below average condition, and overgrown bushes. In conducting the appraisal, the Appraiser took into consideration Complainant’s statements that the subject property suffers from deferred maintenance and needs repairs in the amount of $94,000. The Appraiser accounted for these expenses by making a 10% condition adjustment to all of the comparables.
Given this substantial and persuasive evidence, Respondent rebutted the presumption of correct valuation by the BOE and established that the TMV of the subject property on January 1, 2015, was $1,080,000.
ORDER
The true market valuation for the subject property as determined by the BOE is SET ASIDE. The assessed value for the subject property for tax years 2015 and 2016 is set at $205,200 residential ($1,080,000 TMV).
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 September 20, 2016.
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 20th day of September, 2016, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.
Jacklyn Wood
Legal Coordinator
[1] Respondent’s proposed valuation was lower than the BOE’s valuation.