State Tax Commission of Missouri
NC INVESTMENT LLC,)
)
Complainant,)
)
v.) Appeal Number 09-57039
)
TOM COPELAND, ASSESSOR,)
FRANKLIN COUNTY, MISSOURI,)
)
Respondent.)
DECISION AND ORDER
HOLDING
Decision of the Franklin County Board of Equalization reducing the assessment made by the Assessor is SET ASIDE.True value in money for the subject property for tax years 2009 and 2010 is set at $375,000, residential assessed value of $71,250.Complainant appeared by Counsel, Deborah Weedman, St. Louis, Missouri.Respondent appeared, in person and by Counsel, Mark Vincent, Franklin County Counselor.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
ISSUE
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.A hearing was conducted on February 23, 2010, at the Franklin County Government Building, Union, Missouri.
2.Assessment.The Assessor appraised the property at $583,100, assessed residential value of $110,789.[1]The Board reduced the value to $523,000, assessed residential value of $99,370.[2]
3.Subject Property.The subject property is located at 785 Bordeaux Circle, St. Albans, Missouri.The property is identified by map parcel number 57-8-1-11-4-2.55.
4.Stipulation at Hearing.The parties at hearing stipulated:(1) The subject property was foreclosed in June 2007 and sold at foreclosure to the lender – U.S. Bank; (2) The property was listed with a Realtor for sale in July 2007 at $399,900; & (3) Ms. Weedman purchased the property on behalf of Complainant 12/31/2007 for $375,000.[3]
5.Complainant’s Evidence.Complainant submitted the following exhibits which were received into evidence.
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EXHIBIT |
DESCRIPTION |
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A |
Affidavit – John C. Hottle |
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B |
Settlement Statement – 770 Bordeaux Circle – 9/29/09 |
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C |
Settlement Statement – 762 Bordeaux Circle – 11/23/09 |
Exhibits B and C established that neighboring properties to the subject sold nine and eleven months after January 1, 2009, for unadjusted prices of $258,000 and $375,000 respectively.
There was no evidence of new construction and improvement from January 1, 2009, to January 1, 2010, therefore the assessed value for 2009 remains the assessed value for 2010.[4]
6.Respondent’s Evidence.Respondent presented the testimony of Lori Ruby, State certified Residential Real Estate Appraiser.Ms. Ruby concluded a value of $523,000 based upon her appraisal of the subject property.The appraisal report – Exhibit 1 – was received into evidence.The conclusion of value was based upon the sales comparison approach relying on sales of three properties Ms. Ruby deemed comparable to the subject.
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.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.[5]
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.[6]The presumption in favor of the Board is not evidence.A presumption simply accepts something as true without any substantial proof to the contrary.In an evidentiary hearing before the Commission, the valuation determined by the Board is accepted as true only until and so long as there is no substantial evidence to the contrary.The presumption of correct assessment is rebutted when the taxpayer, or respondent when advocating a value different than that determined by the Board, 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.[7]Evidence that established the actual sale of the subject at a time not too remote from the valuation date of 1/1/09 was sufficient to rebut the presumption of correct assessment and establish the true value in money of the property under appeal.
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.[8]True value in money is defined in terms of value in exchange and not value in use.[9]It is the fair market value of the subject property on the valuation date.[10]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.
6.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.[11]
There is nothing in the evidentiary record from which the Hearing Officer can conclude that the December 31, 2007, purchase of the subject property did not meet the elements of the Standard for Valuation.
Complainant’s Burden of Proof
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.[12]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.”[13]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[14]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.[15]
The owner of property is generally held competent to testify to its reasonable market value.[16]The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[17]The opinion of value tendered on behalf of the owner by Counsel for Complainant of $375,000 was based upon the actual sale of the property on December 31, 2007, for $375,000.[18]
St. Joe Mineral Reviewed
The case which most directly and most recently addressed the issue of an actual sale of property and its impact on estimating true value in money was the St. Joe Mineral case.[19]Although the case involved the sale of a business, with real and personal property, the principle established by the decision of the Court has application to any real property that is the subject of a sale in an ad valorem tax appeal.In the St. Joe case, the State Tax Commission had valued the real property under appeal relying on the income approach to value.The value produced by this method concluded a value for the real property at a value greater than the entire mining operation had brought in an open market transaction.The Court concluded that the true value in money of the real property could not exceed the total value of the entire corporate assets.[20]
The holding of the court on the matter of true value in money of a property when it has been the subject of a recent sale established a general principle which cannot be ignored.The Court wrote, at 529, the following (citations omitted):
“ ‘True Value’ is never an absolute figure, but is merely an estimate of the fair market value on the valuation date.Fair market value typically is defined as the price which the property would bring when offered for sale by a willing seller who is not obligated to sell, and purchased by a willing buyer who is not compelled to buy.
“There are various methods that may properly be considered for estimating true value, including actual sale price, comparable sales, replacement costs, and income capitalization.The Commission is not required to adopt any particular valuation technique. …
“The actual purchase price is not conclusive for tax purposes.Rather, evidence of the consideration paid may be admissible to establish value at the time of an assessment, provided that such evidence is competent, i.e., a voluntary purchase not too remote in time.”
Application of St. Joe to Present Facts
In the present case, there was no sale of a business.There was simply the sale of the actual real estate that is the subject of this appeal.Although the subject property had been foreclosed six months prior to sale, it was listed with a realtor in July 2007 and marketed as other homes on the market.In other words, the subject was part of the market.It competed directly with Respondent’s comparables two and three, since those two properties sold in August and December of 2007.Clearly the sale of the subject on 12/31/07 was at a time relevant for the January 1, 2009, valuation, since Respondent’s appraiser deemed sales on 12/28/07 and 8/20/07 to be relevant.
Respondent’s appraiser made no time of sale adjustment to the two sales in 2007, or for the sale of comparable one in November 2008.Therefore, there is no basis to adjust the subject’s December 2007 sale price on account of selling 12 months prior to the present valuation date.The three comparable sales had sales prices of $507,000, $500,000 and $550,000 respectively.After adjustments, the indicated values were $527,700, $522,700 and $505,300.Had the subject not sold as it did, the evidence of Ms. Ruby’s appraisal would have provided substantial and persuasive evidence of the true value in money of the subject property as of January 1, 2009.
However, the actual sale price of the subject, originally offered at $399,900 in July 2007, which could only command a price of $375,000 on December 31, 2007, cannot be rejected out of hand or ignored.To do so would be not only unreasonable, but simply arbitrary.The St. Joe principle comes into play.The December 2007 sale is not conclusive on value per se, but it does establish the upper limit of the true value of Complainant’s property.There is, however, no evidence supporting a conclusion of value lower than the December 2007 purchase price.Furthermore, Complainant is not contending for a lower value.
Just as in St. Joe, a recognized approach to appraising property produced a value which the market established is not correct.The sales comparison methodology shows that some properties in the subject development were commanding prices in the $500,000 range.However, the subject did not sell in that range, therefore, the appraisal analysis yields to the actual market activity involving the subject directly.Irrespective of what the three other properties sold for in the same time period as the subject sold, the subject did not sell at the level of those sales.
Conclusion
The evidence establishes the true value in money of the subject property as of January 1, 2009, to be $375,000.Assertions and generalizations that Complainant got a “good deal” do not constitute market evidence.A rationalization that the purchasers in the sales of Respondent’s comparables got “bad deals” would be just as persuasive as the “good deal” argument against the subject’s sale.Neither is of any benefit in a proper analysis of the evidentiary record.
Deals in the purchase of real estate are perceived as good or bad relative to a multitude of factors, many of which can never be known and are susceptible to a variety of interpretations and conclusions.None are subject to any quantitative analysis for purposes of valuing real property.Subsequently, there is no benefit to any such good deal-bad deal claims in an appeal before the Commission.
The inescapable conclusion is that all kinds of deals make up the market.The seller who thinks he came out of a transaction in really good shape is as much a part of the market as the buyer who feels that he likewise got a very good deal.In similar fashion a given buyer may believe after the transaction that he got a bad deal and his seller may feel the he also didn’t get the best deal.In other words, after the fact neither feel they got a good deal, both perceive the deal they made was not the best.
What a given buyer and seller believe after the transaction is quite subjective to their own motivations and interests.The terms good or bad deals are neither terms of art, nor are they helpful in the valuation of real property in an appeal before the Commission.The most such conclusions establish is that a single individual has a particular opinion in hindsight regarding the transaction.This is no basis upon which valuations can or should be made in tax commission appeals.
The most compelling evidence as to the value of the subject property is derived from its sale in December 2007.That is the price the property commanded after a reasonable time on the market and having not sold for the higher listed price.Given that no evidence to establish a time of sale adjustment was forthcoming, the purchase priced agreed to between a willing buyer and seller a year in advance of the January 1, 2009, valuation date meets the standard of substantial and persuasive evidence to establish true value in money.
ORDER
The assessed valuation for the subject property as determined by the Board of Equalization for Franklin County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2009 and 2010 is set at $71,250.
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.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.
Failure to state specific facts or law upon which the appeal is based will result in summary denial. [21]
Disputed Taxes
The Collector of Franklin 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 April 6, 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 6thday of April, 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.
____________________________
Barbara Heller
Legal Coordinator
Contact Information for State Tax Commission:
Missouri – State Tax Commission
P.O. Box 146
301 W. High Street, Room 840
Jefferson City, MO 65102
573-751-2414
573-751-1341 FAX
[6] 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).
[7] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
[8] 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).
[9] 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).
[11] 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.
[13] 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).
[16] 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).
[17] 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).
[20] The sale of the stock of the corporation had brought a total of $13,364,899.The valuation by the Commission under the income capitalization approach to value for the years 1988, 1989 and 1990 was $17,703,500, $14,603,500 and $19,503,500 respectively.The Court held, at 530:“While the actual sale price of Pea Ridge does not, as a matter of law, establish the value of the Mine, (citation omitted) clearly, as a matter of evidence, it establishes an outer limit on the value of the taxable realty.… We simply hold that, based upon the record, the value of the Mine itself is necessarily less than the combined assets of Pea Ridge.Consequently, the Commission’s assessments are unreasonable.”