Patrick Bellinger v. Jake Zimmerman, Assessor St. Louis County

State Tax Commission of Missouri

 

 

PATRICK BELLINGER,	)
	)
Complainants,	)
	)
v.	)	Appeal No.    15-15850
	)
JAKE ZIMMERMAN, ASSESSOR,	)
ST. LOUIS COUNTY, MISSOURI,	)
	)
Respondent.	)

 

DECISION AND ORDER

UPON APPLICATION FOR REVIEW

 

On November 3, 2015, Senior Hearing Officer Amy Westermann (Senior Hearing Officer) entered her Decision and Order (Decision) affirming the assessment by the Board of Equalization of St. Louis County (BOE), which reduced the assessed value for the subject property (the Property) for tax years 2015-2016 at $71,250. (True value of $375,000)

Jake Zimmerman, Assessor for St Louis County, (Respondent) subsequently filed his Application for Review of the Decision with the State Tax Commission (the Commission).  Patrick Bellinger, property owner and taxpayer, (Complainant) filed his Response.  Respondent filed his Reply.

 

CONCLUSIONS OF LAW

Standard of Review

 

 

A party subject to a Decision and Order of a Hearing Officer may file an application requesting the case be reviewed by the Commission.  Section 138.432 RSMo Cum. Supp. 2015; 12 CSR 30-3.080(4).  The Commission may then summarily allow or deny the request.  Section 138.432; 12 CSR 30-3.080(5).  The Commission may affirm, modify, reverse, set aside, deny, or remand to the Hearing Officer the Decision and Order of the Hearing Officer on the basis of the evidence previously submitted or based on additional evidence taken before the Commission.  Section 138.432; 12 CSR 30-3.080(5)(A). 

The relative weight to be accorded any relevant factor in a particular case is for the Senior Hearing Officer to decide.  St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County, 515 S.W.2d at 450; Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).  Likewise, the Commission is free to consider all pertinent facts and give them such weight as reasonably the Commission deems them entitled.

The Commission, having reviewed the record in this appeal and having considered the Decision of the Senior Hearing Officer and the briefs of the parties, enters its Decision and Order.  Segments of the Senior Hearing Officer’s Decision have been incorporated into our Decision and Order without further reference.

DECISION

 

Respondent’s Point on Review

            Respondent argues the Decision is erroneous, arbitrary, capricious, unreasonable, constitutes an abuse of discretion and is contrary to Missouri law in that Respondent presented clear, cogent and convincing evidence to rebut the presumption in favor of the BOE’s determination of value and support the original finding of value by the Assessor.

Commission’s Decision

After review of the evidence previously submitted, the Commission summarily denies the Respondent’s Application.

Procedural History

The subject property consists of an 8,160 square foot residential lot improved by a 1,278 square foot, single-family, ranch style home built in 1949.  The subject property includes two bedrooms; one full bathroom and one half bathroom; a full, unfinished basement that includes a two-car garage; and one fireplace.  Respondent set a TMV for the subject property of $407,700 residential, as of January 1, 2015.  The BOE, after hearing, lowered Respondent’s TMV of the subject property to $375,000.  The Complainant appealed to the STC.

The issue of overvaluation was presented at an evidentiary hearing on July 20, 2016, at the St. Louis County Government Administration Building, 41 South Central Avenue, Clayton, Missouri.   On November 1, 2016, after a review of all evidence presented, the Senior Hearing Officer found: (1) Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and to establish the true value in money as of January 1, 2015, to be $315,000 as proposed by Complainant; and (2) Respondent’s evidence was not clear, convincing, and cogent to return to the Assessor’s initial assessment of $407,700 as of January 1, 2015, as proposed.

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-Respondent 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, Complainant is seeking to lower the BOE’s assessment, and Respondent is seeking a return to the initial assessment; therefore, the BOE presumption and the computer assisted presumption apply.

Substantial and Persuasive

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).

Clear, Convincing and Cogent – Respondent’s Burden of Proof

In charter counties or the City of St. Louis, the Assessor-Respondent, when wishing to advocate for a valuation to return the valuation to the Assessor’s original valuation, which was higher than the value assigned by the BOE, has imposed upon him by the provisions of Section 137.115.1, RSMo, the burden of proof to present clear, convincing, and cogent evidence to sustain a valuation on residential property which is made by a computer, computer-assisted method or a computer program.

In this appeal, the BOE lowered the original valuation presumably made by a computer, computer-assisted method, or a computer program.  There was no evidence to refute that the original valuation was made by a computer, computer-assisted method, or a computer program; consequently, in order to sustain the valuation of the subject property at $407,700, assessed value $77,463, Respondent’s evidence must come within the guidelines established by the legislature and must clearly, convincingly, and cogently persuade the Hearing Officer as to the value sought to be sustained.

 

Clear, cogent and convincing evidence is that evidence which clearly convinces the trier of fact of the affirmative proposition to be proved.  The proof “must be so clear, so unequivocable, so cogent, and impelling as to exclude every reasonable doubt;…so clear, cogent and convincing that no reasonable doubt can be entertained of its truth.”  Pursley v Pursley, 215 S.W. 2d 302( SD 1948)  Standard of proof of clear, cogent, and convincing evidence is extremely high as it requires exclusion of every reasonable doubt.  Estate of Hayward, 884 S.W.2d 10 (1994).

 

Weight to be Given Evidence

The Senior 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 Senior 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).

Conclusion

The Commission reaches its findings based upon the evidence presented by the Respondent in this appeal.  Respondent’s evidence must be clear and convincing.  Under the specific circumstances in this case, no such conclusion can be drawn.  The Senior Hearing Officer gave proper weight to the evidence presented^[1] and such evidence was not clear, cogent and convincing evidence, i.e., it did not clearly convince the trier of fact of the affirmative proposition to be proved.

ORDER

Upon review of the record and Decision and Order in this appeal, the Commission finds no grounds upon which the Decision and Order of the Senior Hearing Officer should be modified.

Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of the mailing date set forth in the Certificate of Service for this Order.

If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts unless disbursed pursuant to Section 139.031.8, RSMo.

If no judicial review is made within thirty days, this decision and order is deemed final and the Collector of  St. Louis County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal.

SO ORDERED February 21, 2017.

STATE TAX COMMISSION OF MISSOURI

 

Bruce E. Davis, Chairman

 

 

Victor Callahan, Commissioner

 

Certificate of Service

 

I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 21st day of February, 2017, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.

 

Jacklyn Wood

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

 

[1] Given the Appraiser’s determination that the subject property was a “tear down,” the Appraiser performed only an exterior inspection of the subject property from the street.  (Exhibit 1)  The Appraiser did not acknowledge the problem with storm water runoff in the backyard of the subject property and did not make a related market based adjustment to the comparables to account for it.  Complainant’s evidence established that the storm water runoff had been a problem prior to January 1, 2015, to the extent that Complainant had documented the problem and had repeatedly asked the City for assistance.  Even accepting as true Respondent’s argument that the subject property is a “tear down,” the demolition of the current residence and the construction of a new, larger, more expensive residence would not necessarily correct or eliminate an existing problem with storm water runoff on the land, especially if the problem exists due to the construction of improvements situated on neighbors’ properties.  Consequently, even though the evidence indicates the subject property could be considered a “tear down,” an adjustment to the sale prices of the comparables accounting for the storm water runoff should have been considered.

STATE TAX COMMISSION OF MISSOURI

 

PATRICK BELLINGER,	)
	)
Complainant,	)
	)
v.	)	Appeal No. 15-15850
	)
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 AFFIRMED.  Complainant Patrick Bellinger (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) did not present clear, convincing, and cogent evidence to support a return to the Assessor’s original valuation of the subject property as of January 1, 2015.

Complainants 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 $407,700.  The BOE lowered Respondent’s valuation to $375,000.  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

1. Jurisdiction. Jurisdiction over this appeal is proper.  Complainant timely appealed to the State Tax Commission.
2. Evidentiary Hearing. The issue of overvaluation was presented at an evidentiary hearing^[1] on July 20, 2016, at the St. Louis County Government Administration Building, 41 South Central Avenue, Clayton, Missouri.
3. Identification of Subject Property. The subject property is identified by parcel/locator number 18K240333.  It is further identified as 121 Brighton Way, Clayton, Missouri.  (Complaint; Exhibit 1)
4. Description of Subject Property. The subject property consists of an 8,160 square foot residential lot improved by a 1,278 square foot, single-family, ranch style home built in 1949.  (Exhibit B)  The subject property includes two bedrooms; one full bathroom and one half bathroom; a full, unfinished basement that includes a two-car garage; and one fireplace.  (Exhibit 1; Exhibit B) The exterior consists of brick.  (Exhibit B)
5. Assessment. Respondent set a TMV for the subject property of $407,700 residential, as of January 1, 2015.
6. Board of Equalization. The BOE lowered Respondent’s TMV of the subject property to $375,000.
7. Complainant’s Evidence. Complainant testified in his own behalf.  Complainant testified that he had purchased the subject property in 2010.  Complainant testified that he did not recall the purchase price.  Complainant testified that the subject property had not been listed with a realtor or publicly advertised and that he had obtained it through calls and inquiries.  Complainant testified that the subject property was encumbered by a mortgage but that he did not know the amount.  Complainant testified that he had received generic letters from realty companies expressing interest in purchasing the subject property but not making specific offers to purchase.  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 he had upgraded the deck, had painted, and had installed underground electric wiring in 2011 but had not made improvements to the subject property between January 2013 and January 2015.  Complainant argued that Respondent had overvalued the subject property as a “tear down,” which was inappropriate because Complainant wished to remain in the subject property.  Complainant opined that the subject property’s TMV as of January 1, 2015, was $315,000.

On cross examination, Complainant admitted that the purchase price he paid for the subject property in 2010, as shown in the certificate of value filed with the St. Louis County Recorder’s Office, was $413,500.  Complainant further admitted that he was not a certified residential appraiser but testified that he had worked on property values in the oil and gas industry and with family and that he believed that property values are subjective.  In response to cross examination questions concerning his evidence and exhibits, Complainant testified that he did not know the meaning of “not open market” or of sale validity code indicators related to recorded sales in the St. Louis County Real Estate Information database.

Complainant offered as evidence to support his opinion of value (1) the notice of assessment concerning the subject property (Exhibit A); (2) several packets of printed data obtained from the St. Louis County Real Estate Information Database along with photos of the subject property and several comparable properties Complainant had researched (Exhibits B, C, D, E, and F); letters from Complainant to the City of Clayton concerning a problem with storm water runoff in the backyard that Complainant believed affected the value of the subject property (Exhibit G); a packet containing a list of improvements and their estimated costs, additional letters from Complainant to the City concerning the problem with storm water runoff in the backyard, and photographs depicting the areas of the subject property in need of repair or replacement (Exhibit H, H1-H5); and a map of the area of the subject property and Complainant’s comparables (Exhibit I).

Respondent objected to Exhibit F on the ground it lacked relevance for proving Complainant’s opinion of value.  The Senior Hearing Officer overruled the objection and received Exhibit F into the record to be given the weight deemed appropriate when viewed in the context of all the evidence.  Respondent did not object to Complainants’ other exhibits, which were received into the record.

8. Respondent’s Evidence. Respondent offered as evidence the testimony of State Certified Residential Real Estate Appraiser Nancy McGrath (the Appraiser) along with the Appraiser’s report containing the Appraiser’s professional credentials.  (Exhibit 1)  The Appraiser had not conducted an interior inspection of the subject property but had visited the neighborhood.  The Appraiser considered the highest and best use of the property to be a sale of the subject property in its current condition so that the residence could be demolished and a new, larger, more expensive residence could be built on the land.  In conducting her appraisal using comparable properties, the Appraiser found that all of the purchase prices of the comparables included an existing residence that was demolished after the sales, then a new residence was built, and the comparables were sold again.  The Appraiser also found that the comparables were so similar to the subject property that no adjustments had been necessary.  The Appraiser made no adjustment based on the storm water runoff problem in the backyard of the subject property.  The Appraiser’s report indicated that the TMV of the subject property was higher than the BOE’s valuation and Respondent’s initial valuation.  The Appraiser opined that the TMV of the subject property as of January 1, 2015, was $425,000, $38,500 above the value determined by the BOE.  During the evidentiary hearing, Respondent advocated returning the subject property’s valuation to Respondent’s initial assessment of $407,700.

Complainant objected to Respondent’s Exhibit 1 on the ground of relevance.  Complainant argued that the Appraiser’s report was a land appraisal that erroneously analyzed the subject property based on the conclusion that the residence was a “tear down,” a conclusion with which Complainant disagreed.  The Senior Hearing Officer overruled the objection, and Exhibit 1 was received into the record.

9. Presumption of Correct Assessment Not Rebutted. Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and to establish the true value in money as of January 1, 2015, to be $315,000 as proposed.

Respondent’s evidence was not clear, convincing, and cogent to return to the Assessor’s initial assessment of $407,700 as of January 1, 2015, as proposed.

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.

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, Complainant is seeking to lower the BOE’s assessment, and Respondent is seeking a return to the initial assessment; therefore, the BOE presumption and the computer assisted presumption apply.

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.

“’True value’ is never an absolute figure, but is merely an estimate of the fair market value on the valuation date.”  Drury Chesterfield, Inc., v. Muehlheausler, 347 S.W.3d 107, 112 (Mo. App. E.D. 2011), citing St. Joe Minerals Corp. v. State Tax Comm’n of Mo., 854 S.W.2d 526, 529 (Mo. App. E.D. 1993).  “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.”  Drury Chesterfield, Inc., 347 S.W.3d at 112 (quotation omitted).

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

In charter counties or the City of St. Louis, the Respondent, when wishing to advocate for a valuation to return the valuation to the Assessor’s original valuation, which was higher than the value assigned by the BOE, has imposed upon him by the provisions of Section 137.115.1, RSMo, the burden of proof to present clear, convincing, and cogent evidence to sustain a valuation on residential property which is made by a computer, computer-assisted method or a computer program.  If the BOE sustained the valuation of the Assessor, the computer assisted presumption does not come into play because the BOE’s valuation is an independent valuation.  However, in this appeal, the BOE lowered the original valuation presumably made by a computer, computer-assisted method, or a computer program.  There was no evidence to refute that the original valuation was made by a computer, computer-assisted method, or a computer program; consequently, in order to sustain the valuation of the subject property at $407,700, assessed value $77,463, Respondent’s evidence must come within the guidelines established by the legislature and must clearly, convincingly, and cogently persuade the Hearing Officer as to the value sought to be sustained.

The statutory guidelines for evidence to meet the standard of clear, convincing, and cogent include the following:

(1)        The findings of the assessor based on an appraisal of the property by generally accepted appraisal techniques; and

 

(2)        The purchase prices from sales of at least three comparable properties and the address or location thereof.  As used in this paragraph, the word comparable means that:

 

(a)        Such sale was closed at a date relevant to the property valuation; and

 

(b)        Such properties are not more than one mile from the site of the disputed property, except where no similar properties exist within one mile of the disputed property, the nearest comparable property shall be used.  Such property shall be within five hundred square feet in size of the disputed property, and resemble the disputed property in age, floor plan, number of rooms, and other relevant characteristics.  Section 137.115.1(1) & (2).

 

Clear, cogent and convincing evidence is that evidence which clearly convinces the trier of fact of the affirmative proposition to be proved.  It does not mean that there may not be contrary evidence. Grissum v. Reesman, 505 S.W.2d 81, 85, 86 (Mo. Div. 2, 1974).  The quality of proof, to be clear and convincing, must be more than a mere preponderance but does not require beyond a reasonable doubt. 30 AmJur2d. 345-346, Evidence section 1167.  “For evidence to be clear and convincing, it must instantly tilt the scales in the affirmative when weighed against the evidence in opposition and the fact finder’s mind is left with an abiding conviction that the evidence is true.” Matter of O’Brien, 600 S.W.2d 695, 697 (Mo. App. 1980).

Weight to be Given Evidence

The Senior 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 Senior 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 Senior 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 Senior 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).

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:

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.

 

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.

Evidence of Increase in Value

            In any case in charter counties or St. Louis City where the assessor presents evidence indicating a valuation higher than the value finally determined by the assessor or the value finally determined by the BOE, whichever is higher, for that assessment period, such evidence will only be received for the purpose of sustaining the assessor’s or BOE’s valuation, and not for increasing the valuation of the property under appeal.  Section 138.060, RSMo; 12 CSR 30-3.075.

Under the Commission rule just cited and Supreme Court decision, the assessed value cannot be increased above $407,700 in this particular appeal. State ex rel. Ashby Road Partners, LLC et al v. STC and Muehlheausler, 297 S.W.3d 80, 87-88 (Mo 8/4/09).

Highest and Best Use

True value in money is the fair market value of the subject property on the valuation date and is a function of the subject property’s highest and best use, which is the use of the property that will produce the greatest return in the reasonably near future.  Aspenhof Corp. v. State Tax Commission, 789 S.W.2d 867, 869 (Mo. App. E.D. 1990).  It is true that property can only be valued according to a use to which the property is readily available.  However, this does not mean that in order for a specific use to be the highest and best use for calculating the property’s value in money, the particular use must be available to anyone deciding to purchase the property.  A determination of the true value in money cannot reject the property’s highest and best use and then value the property at a lesser economic use of the property.  Snider, 156 S.W.3d at 348-49.

Discussion

This case requires the consideration of the highest and best use of the subject property in relation to choosing the most appropriate appraisal method for valuing the subject property.  Complainant approached the valuation of the subject property from the perspective that it is not a “tear down” but is in need of repairs or renovations, which should be reflected in the valuation.  Respondent approached the valuation of the subject property from the perspective it is a “tear down” similar to other “tear down” properties in the neighborhood that have been sold so larger, more expensive homes could be built on the land, which should be reflected in the valuation.

Complainant’s Evidence

Complainant’s evidence was neither substantial nor persuasive to support an opinion that the TMV of the subject property as of January 1, 2015, was $315,000.  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.

In particular, Complainant, who is not a certified residential real estate appraiser, did not properly use any of the court approved methods of valuation to arrive at an opinion of TMV.

Complainant presented Exhibits B, C, D, and E containing information concerning sales of comparable properties; however, Complainant’s evidence of comparables carried no weight on the issue of TMV because the exhibits amounted to raw data.  Complainant did not conduct any market based analysis evaluating the specific similarities and differences between the comparables and the subject property to support an opinion of value.  Moreover, the data from Complainant’s comparables indicated that some sales were not arms-length transactions.  Complainant testified that he did not know the meaning of “not open market” or the meaning of sale validity codes contained in the data.

Complainant also presented evidence of the subject property’s condition issues and argued that they detracted from the subject property’s TMV, thus requiring a reduction of the BOE’s valuation.  Complainant specifically argued that the flow of stormwater from neighbors’ yards into the backyard of the subject property was a nuisance and caused continually-worsening problems, such as sink holes and dying grass.  Complainant presented Exhibit G, which contained copies of typed letters he had sent to the City of Clayton to explain his position concerning the water issue and to question the permitting of a neighbor’s fence and wall that Complainant believed was contributing to the problem with stormwater runoff.  (Exhibit G)  Complainant also presented Exhibit H, which contained numerous photographs depicting cracked kitchen floor tile, peeling paint on windowsills, outdated finishes in the kitchen, outdated electrical fixtures, patched roofing shingles, cracks along the brick façade of the residence, cracks in the concrete garage floor, cracks in the asphalt driveway, pooling and standing water in the backyard, and a dead tree in the front yard.  (Exhibit H)  Complainant presented a typed list of “Required Improvements” listing the following repairs and dollar amounts:

1. Kitchen Remodeling, see photos $40,000.
2. Roof Replacement, see photos – 15 plus years old and Hail damage $9,000.

Brick repair, tuckpoint

3. Driveway pavement replacement, see photos $10,000.
4. Rear yard damage, sink holes and water build-up, see photos $40-60,000.
5. Dieing (sic) trees + curb appeal $15,000.

 

(Exhibit H)

The evidence in Exhibits G and H resembled an attempt to utilize the replacement-cost-less-depreciation method for determining TMV, but Complainant failed to establish the current depreciated value of the subject property to be subtracted from the value of the subject property if the repairs and replacements were completed.  Specifically, neither Exhibit G nor Exhibit H provided any market data assigning a particular value to the problems created by the stormwater runoff nor provided bids or estimates for repairing the backyard or for remediating the water problem.  Although Complainant testified that he had notified the City about the stormwater runoff and had asked for assistance, the evidence indicated that the City had taken no action to resolve the problem.

Respondent’s Evidence

Respondent presented substantial and persuasive evidence through the Appraiser’s testimony and report establishing that the subject property’s highest and best use is as a “tear down.”  Respondent’s evidence of TMV through the Appraiser’s testimony and report reveals that the 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 residential property. 

The Appraiser chose four comparable properties located within less than one-quarter of a mile from the subject property that had sold between March 2013 and July 2014.  (Exhibit 1)  All of the comparables were from the same neighborhood as the subject property.  (Exhibit 1)  In arriving at an opinion of value, the Appraiser placed the most weight on Comparable Nos. 1, 2, and 3 and less weight on Comparable No. 4 due to the older date of that sale.  The Appraiser noted that Comparable Nos. 1, 2, and 4 had existing older ranch-style homes situated on the lots at the time of sale while Comparable No. 3 had an older two-story home situated on the lot at the time of sale.  The sale prices of the comparables ranged from $390,000 to $460,000.  The Appraiser did not make any market based adjustments to the comparables for “nominal site differences” between the subject property and the comparables, so the adjusted sale prices were equal to the sale prices.  (Exhibit 1)  Comparable No. 3 sold in July 2014 for $415,000, and was a slightly smaller lot (less than 1,000 square feet smaller) than the subject property.  Comparable No. 2 sold in March 2015 for $460,000, and was slightly larger (less than 400 square feet larger) than the subject property.  A reasonable conclusion from this evidence could be that the TMV of the subject property on January 1, 2015, would have fallen somewhere between $415,000 and $460,000.  The Appraiser opined that the subject property’s TMV on January 1, 2015, was $425,000.  Based on this information, Respondent advocated a return to the Assessor’s original assessment of $407,700.

However, to conclude that the TMV of the subject property should be returned to $407,700, Respondent’s evidence must be clear and convincing.  In other words, it must instantly tilt the scales in favor of Respondent’s position when weighed against Complainant’s evidence in opposition, causing the fact finder to conclude Respondent’s evidence is true.  Under the specific circumstances in this case, no such conclusion can be drawn.

Given the Appraiser’s determination that the subject property was a “tear down,” the Appraiser performed only an exterior inspection of the subject property from the street.  (Exhibit 1)  The Appraiser did not acknowledge the problem with stormwater runoff in the backyard of the subject property and did not make a related market based adjustment to the comparables to account for it.  Complainant’s evidence established that the stormwater runoff had been a problem prior to January 1, 2015, to the extent that Complainant had documented the problem and had repeatedly asked the City for assistance.  Even accepting as true Respondent’s argument that the subject property is a “tear down,” the demolition of the current residence and the construction of a new, larger, more expensive residence would not necessarily correct or eliminate an existing problem with stormwater runoff on the land, especially if the problem exists due to the construction of improvements situated on neighbors’ properties.  Consequently, even though the evidence indicates the subject property could be considered a “tear down,” an adjustment to the sale prices of the comparables accounting for the stormwater runoff should have been considered.

ORDER

The true market valuation for the subject property as determined by the BOE is AFFIRMED.  The assessed value for the subject property for tax years 2015 and 2016 is set at $71,250 residential ($375,000 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 November 1st, 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 1st day of November, 2016, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.

 

Jacklyn Wood

Legal Coordinator

 

^[1] The evidentiary hearing in this case was scheduled to begin at 1:00 p.m.  Complainant did not arrive until 1:15.  Complainant was then provided with approximately 30 minutes of additional time prior to the start of the hearing to review Respondent’s evidence and exhibits.