Paul Foeller v. Debbie James, Assessor, Texas County

July 30th, 2021

STATE TAX COMMISSION OF MISSOURI

 

PAUL FOELLER ) Appeal No. 19-90000
) 30-0.1-02-004-015-002.5
           Complainant, )  
  )  
v. )  
  )  
DEBBIE JAMES,   ASSESSOR, )

)

  
TEXAS COUNTY, MISSOURI )  
  )  
             Respondent. )  

 

DECISION AND ORDER AFFIRMING HEARING OFFICER DECISION UPON APPLICATION FOR REVIEW

HOLDING

On January 2, 2020, Senior Hearing Officer John Treu (Hearing Officer) entered a Decision and Order (Decision) affirming the decision of the Board of Equalization of Texas County (BOE). Paul Foeller (Complainant) subsequently filed an Application for Review of the Decision and Order of the Hearing Officer (Decision).

We AFFIRM the Decision of the Hearing Officer. Segments of the Hearing Officer’s Decision may have been incorporated into our Decision without further reference.

FINDINGS OF FACT AND PROCEDURAL HISTORY

The subject property is identified by Parcel Locator No. 30-0.1-02-004-015-002.5. The subject property is further identified as being located at 1331 Highland Street, Cabool, Missouri. The subject property consists of a residential lot improved by a single-family ranch-style home with 1,344 square feet of base area and 1,796 square feet of adjusted area. The home was built in 1996; has three bedrooms; one full bathroom; one half bathroom; an attached garage; and external walls clad in vinyl siding. Complainant purchased the subject property in 2003 for $86,000.

Respondent valued the subject property as residential property at $100,640, as of January 1, 2019. Complainant appealed to the BOE. The BOE valued the subject property as residential property at $100,640, as of January 1, 2019. Complainant timely filed his appeal with the STC. A Hearing Officer was assigned, and the appeal proceeded to an evidentiary hearing at which evidence was presented.

The Hearing Officer subsequently issued his Decision with findings of fact and conclusions of law. The Hearing Officer specifically concluded that Complainant did not produce substantial and persuasive evidence to establish the value of the subject property in that the evidence showing the value of other properties was not an accurate indicator of the value of the subject property. Consequently, the Hearing Officer affirmed the BOE’s valuation of the subject property as of January 1, 2019.

Complainant timely filed his Application for Review. The STC thereafter issued its Order allowing the Application for Review and granting Respondent time to file a response. Respondent did not file a response.

CONCLUSIONS OF LAW

Complainant’s Point on Review

            In his point on Application for Review, Complainant claims that the Hearing Officer’s Decision was in error because the “Assessor and BOE, derived all values and formulations, in determining a value of my home, solely from a proportional tax percentage, stated as the “Missouri State Tax Commission State Mandate.”

Standard of Review

A party subject to a Decision and Order of a Hearing Officer of the STC may file an application requesting the case be reviewed by the STC. Section 138.432[1]. The STC may then summarily allow or deny the request. Section 138.432. The STC 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 STC. Section 138.432.  

Commission’s Ruling

For the reasons that follow, the Commission finds Complainant’s arguments to be unpersuasive. After thoroughly reviewing the whole record and having considered the Hearing Officer’s Decision, the Application for Review of Complainant, and Complainant’s exhibits and evidence in the record, the Commission affirms the Hearing Officer’s Decision.

Complainant filed his complaint for review of assessment alleging the subject property was overvalued. To obtain an assessment reduction based on overvaluation, Complainant bears the burden of proving the true value in money of the subject property on the valuation date. Hermel, Inc., v. State Tax Comm’n, 564 S.W.2d 888, 897 (Mo. banc 1978). The “true value in money” is the same as fair market value, and refers to “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). Determining the proper method of valuation is delegated to the Commission. Hermel, 564 S.W.2d at 897. Determining the true value in money is a factual issue. Parker v. Doe Run Co., 553 S.W.3d 356, 360 (Mo. App. 2018). The Hearing Officer, as the trier of fact, determines both the credibility and weight of the evidence.   Exchange Bank of Missouri v. Gerlt, 367 S.W.3d 132, 135-36 (Mo. App. 2012).

The BOE’s valuation is presumed correct. Hermel, Inc., 564 S.W.2d at 895. The BOE presumption is rebuttable with “substantial controverting evidence.” Id.; see also Cupples Hesse Corp. v. State Tax Comm’n, 329 S.W.2d 696, 702 (Mo. 1959).

“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). If the taxpayer produces substantial evidence rebutting the BOE presumption, “the burden of proof on the facts and inferences would still rest on petitioner, for it is the moving party seeking affirmative relief.” Cupples Hesse, 329 S.W.2d at 702. The taxpayer must then produce “persuasive” evidence sufficient to convince the trier of fact. White, 321 S.W.3d at 305; see also Daly v. P.D. George Co., 77 S.W.3d 645, 651 (Mo. App. 2002) (evidence is persuasive when it has “sufficient weight and probative value to convince the trier of fact”).

The Hearing Officer correctly determined Complainant did not produce substantial and persuasive evidence rebutting the correctness of the BOE’s valuation of the subject property and establishing that Complainant’s opinion of value was correct.

First, Complainant’s application for review and arguments before the Hearing Officer focused on Complainant’s claim that the 2019 valuation of the subject property was due to a state-mandated tax increase or proportional tax without regard to the “inherent individuality in value that each individual parcel” possesses. This premise did not provide substantial and persuasive evidence from which the factfinder could reasonably conclude that the subject property was overvalued as of January 1, 2019. Notably, there was no “state-mandated” tax increase or proportional tax issued by the STC.

The assessor in any county in Missouri or in the City of St. Louis is required to assess property at its TVM as of the assessment date, January 1. See Section 137.115. Where a taxpayer claims that the assessor has overvalued his or her property, the taxpayer may appeal to the county BOE. Sections 137.180 and 137.275. The STC shall equalize the valuation of real and tangible personal property among the several counties. Section 138.390. The STC does not assess property at the local county level; the assessment of property within the county is the duty of the assessor. Sections 53.030 and 137.115. The STC has no power to fix the rate of levy for the state or any political or municipal subdivision thereof and has no power or authority to supervise the fixing of any tax levied or to be levied. Section 138.340.

Missouri operates on a two-year re-assessment cycle for real property and an annual assessment cycle for personal property. See Sections 137.075, 137.080, 137.115.1. In short, this means that real property is valued as of January 1 of each odd year and, unless there is new construction or improvement to the property, the value remains the same for the even year. See Id.

The process of assessment and taxation are related but are separated in law and in practice. For example, a county assessor has the authority to only assess or place a value on property. A county collector has the authority to only calculate the taxes based upon the levies of the local taxing districts and apply the levies to the values assessed by the county assessor and then issue the bills and collect the taxes. The STC does not have authority to do any of these.

The record reveals that taxpayer appealed Respondent’s valuation to the BOE, and the BOE affirmed the valuation. According to the record, Complainant alleged, and Respondent mistakenly agreed during the hearing before the BOE, that the valuation of the subject property was due in part to a “state-mandated increase” of real property tax for 2019. As explained above, no state-mandated increase to real property tax occurred. Moreover, this argument and misunderstanding of the assessment process do not establish an overvaluation of the TVM of the subject property.

Second, the evidence did not establish by any recognized approach to valuing property that the BOE’s valuation was incorrect and that Complainant’s opinion of value was correct.

“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). 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).

“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 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 transaction and adjusts those prices to account for difference 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.

In addition to market-based adjustments made to comparable properties to provide a range of value estimates for the subject property, a properly-conducted sales comparison approach shows 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 interest;
  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.

 

Although Complainant’s evidence contained information about two neighboring properties designated as comparable to the subject property, Complainant did not present a sales comparison approach to value. (Exhibit A) Exhibit A did not include market-based adjustments accounting for the differences between the subject property and other properties contained in the exhibit. Instead, Exhibit A contained unverifiable statements that would require one to speculate in order to agree with Complainant’s opinion that the subject property was overvalued.

Specifically, with regard to Comparable No. 2, Exhibit A stated, “What is not disclosed in in (sic) this sale, is the additional incentives that were added to entice this sale, that would take away from its true TVM if subtracted from its sale price.” This statement alone indicates that the sale price of Comparable No. 2 was not necessarily an arm’s-length transaction and, therefore, incapable of supporting a sales comparison approach to determining the value of the subject property. Exhibit A also contains blanket, unsubstantiated statements regarding the comparables, such as “The market condition for this area remains unchanged from April 2017 to this present day,” and “To the best of my recollection, the listed price was at or near its appraised value of $153,000 . . . [then] the home was reduced to $132,000 and then to $125,000 where it stayed . . . when it sold for $123,000. (This is not a publicly disclosed price, and is not for public disclosure, as this is [a] complete explanation).” (Exhibit A) The Hearing Officer found, and we also find, that to accept Complainant’s opinion of the value of the subject property based upon this information would require us to engage in speculation, which would be improper. See Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980).

The Commission finds that a reasonable mind could have conscientiously reached the same result as the Hearing Officer based on a review of the entire record. Hermel, 564 S.W.2d at 895-96; Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998). The TVM of the subject property as of January 1, 2019, was $100,640, with an assessed value of $19,120.

ORDER

The Decision of the Hearing Officer is AFFIRMED. Segments of the Decision of the Hearing Officer, including the findings of fact and conclusions of law therein, have been incorporated without reference in this final decision of the Commission.

Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140 within 30 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.

If no judicial review is made within 30 days, this decision and order is deemed final, and the Collector of Texas 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 July 30, 2021.

 

STATE TAX COMMISSION OF MISSOURI

 

Gary Romine, Chairman

 

Victor Callahan, Commissioner

 

Will Kraus, Commissioner

Certificate of Service

I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid, July 30, 2021 to: Complainant(s) and/or Counsel for Complainant(s); County Assessor and/or Counsel for Respondent; County Collector; and County Clerk.

 

 

Elaina Mejia

Legal Coordinator

 

 

STATE TAX COMMISSION OF MISSOURI

 

PAUL FOELLER ) Appeal No. 19-90000
) 30-0.1-02-004-015-002.5
           Complainant, )  
  )  
v. )  
  )  
DEBBIE JAMES,   ASSESSOR, )

)

  
TEXAS COUNTY, MISSOURI )  
  )  
             Respondent. )  

 

DECISION AND ORDER

Paul Foeller (Complainant) appeals the determination of the Texas County Board of Equalization (BOE) that the fair market value of the subject property on January 1, 2019 was $100,640. Debbie James (Respondent), Assessor of Texas County, Missouri, determined the fair market value of the subject property on January 1, 2019 was $100,640. Complainant claims the property was overvalued.

The hearing officer conducted an evidentiary hearing. Complainant did not present substantial and persuasive evidence establishing overvaluation. The determination of the BOE is affirmed.

FINDINGS OF FACT

          A. The Subject Property

  1. The subject residential property is located at 1331 Highland Street, Cabool, Missouri. The parcel number is 30-0.1-02-004-015-002.5.
  2. The subject property consists of an approximately 19,200 square foot lot, an approximately 1,360 square foot house, and a 2-car attached garage.
  3. The house was constructed in 1996 or 1997. The external walls are vinyl. There are 3 bedrooms, 1 full bathroom, and 1 half bathroom. The home contains no fireplace.
  4. The home was purchased by Complainant in 2003 for $86,000.

    B. The BOE Decision

  5. The BOE determined the fair market value of the subject property on January 1, 2019 was $100,640.

    C. Complainant’s Appeal

  6. Complainant timely appealed to the State Tax Commission (Commission).
  7. Complainant alleged the subject property was overvalued and that he was subjected to discrimination.

    D. Overvaluation

  8. Complainant submitted exhibits A through X.   Each exhibit was admitted into evidence without objection. Complainant’s exhibits were as follows:
Exhibit A Complainant’s Board of Equalization Submission
Exhibit B Memorandum for Record Regarding County Clerk
Exhibit C July 30, 2019 Email
Exhibit D Missouri Sunshine Law Request
Exhibit E Board of Equalization Decision
Exhibit F Board of Appeals Transcript
Exhibit G Email
Exhibit H 2017 Notice of Change of Value
Exhibit I Memorandum for Record
Exhibit J Board of Equalization Transcript
Exhibit K Wright County Tax Statement
Exhibit L Osborn Estates Covenants (Wright County)
Exhibit M Settlement Statement for Wright County Property
Exhibit N Osborn Estates Plot
Exhibit O Email To Respondent
Exhibit P Email To Button
Exhibit Q Email to Respondent
Exhibit R 2017 Auditor’s Report
Exhibit S 2014 Auditor’s Report
Exhibit T Consumer Price Index
Exhibit U 2019 Board of Equalization Workshop Handout
Exhibit V Texas County Land Auction
Exhibit W Subject Property Tax Documents
Exhibit X Audio & Video Recordings

 

Exhibit A consists of an analysis of 3 homes, one being the subject property, with the other 2 being neighboring homes. Complainant sets forth the specifications of each home, including the sales price if sold in the last few years. Complainant then compares the 2019 valuation of each home compared to its sales price. Finally, Complainant draws certain conclusions regarding the validity of Respondent’s valuation of property in Texas County.

  1.  Complainant testified the subject property was purchased in 2003 by him and his wife for $86,000. Complainant contends the subject property had a true value in money of $80,000, as of January 1, 2019.
  2. Complainant presented no evidence based upon the sales comparison approach (market approach), the income approach or the cost approach. Complainant offered no appraisal report. Complainant did not testify that he is an appraiser or realtor, or that he has any expertise in the valuation of property.
  3. Respondent submitted Exhibit 1. The exhibit was admitted into evidence without objection. Respondent’s exhibit was as follows:
Exhibit 1 Wright County Land Value Document

 

E. Value

  1. The true value in money of the subject property as of January 1, 2019 is $100,640. The assessed value of such is $19,120.

CONCLUSIONS OF LAW

  1. Authority

The Commission has authority, “under such rules as may be prescribed by law, to hear appeals from local boards in individual cases and, upon such appeal, to correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious.” Mo. Const. art. X, § 14. Section 138.430.1, RSMo 2000, authorizes the Commission to hear appeals concerning assessment, valuation, the method or formula used in determining valuation, or the assignment of a discriminatory assessment.[2] “The commission shall investigate all such appeals and shall correct any assessment or valuation which is shown to be unlawful, unfair, improper, arbitrary or capricious.” Id. “To hear and decide appeals pursuant to section 138.430, the commission shall appoint one or more hearing officers.” Section 138.431.1. 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.” Section 138.431.5.

  1. True Value in Money

All real property and tangible personal property must be assessed at its value or a percentage of its value as fixed by law for each class and for each subclass.  Mo. Const. art. X, sec. 4(a), 4(b). Section 137.115.5(1) (a) provides residential property is assessed at 19% of its true value in money. The true value in money “is an estimate of the fair market value on the valuation date.” Hermel, Inc. v. State Tax Comm’n, 564 S.W.2d 888, 897 (Mo. banc 1978). 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). Determining the true value in money is a factual issue. Parker v. Doe Run Co., 553 S.W.3d 356, 360 (Mo. App. 2018).

  1. Evidentiary Standards

The hearing officer is the trier of fact and determines the credibility and weight of the evidence. Citizens for Rural Pres., Inc. v. Robinett, 648 S.W.2d 117, 132 (Mo. App. 1982); see also Exch. Bank of Mo. v. Gerlt, 367 S.W.3d 132, 136 (Mo. App. 2012) (the trier of fact determines credibility and is free to disbelieve all or part of a party’s 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 to.” St. Louis Cty. v. State Tax Comm’n, 515 S.W.2d 446, 450 (Mo. 1974); see also Kelly v. Mo. Dep’t of Soc. Servs., Family Support Div., 456 S.W.3d 107, 111 (Mo. App. 2015) (the relative weight of any relevant factor is for the administrative hearing officer to decide). “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).

  1. Complainant’s Burden of Proof

A taxpayer challenging the assessment, valuation, the method or formula used in determining valuation, or the assignment of a discriminatory assessment bears the burden of proving the assessment or valuation was “unlawful, unfair, improper, arbitrary or capricious.”  Section 138.430.1; Westwood P’ship v. Gogarty, 103 S.W.3d 152, 161 (Mo. App. 2003).

Substantial evidence is evidence which “has probative force upon the issues . . . and from which the trier of fact can reasonably decide the case on the fact issues.”  Cupples Hesse, 329 S.W.2d at 702 (internal quotation omitted). To prevail, the taxpayer must produce “persuasive” evidence sufficient to convince the trier the disputed fact has been established. White v. Dir. of Revenue, 321 S.W.3d 298, 305 (Mo. banc 2010); see also Daly v. P.D. George Co., 77 S.W.3d 645, 651 (Mo. App. 2002) (evidence is persuasive when it has “sufficient weight and probative value to convince the trier of fact”).

  1. Overvaluation

Complainant did not produce substantial and persuasive evidence to establish the true value in money of the subject property. The value of other properties is not an accurate indicator of the value of the subject property, unless appropriate adjustments are made for the different characteristics of the other properties compared to the subject property. Complainant presented evidence in an attempt to call into question the validity of the accuracy of the valuation of the subject property. A taxpayer must prove both that the subject property is overvalued and its true value in money. Complainant did not present substantial and persuasive evidence to meet his burden of proof to establish the true value in money of the subject property. In the absence of persuasive evidence of value, speculation, conjecture, and surmise is all that remains. The Hearing Officer will not participate in speculation, conjecture and surmise to determine a true value in money of the subject property.

CONCLUSION AND ORDER

The determination of the BOE is affirmed. The true value in money of the subject property as of January 1, 2019 is $100,640. The assessed value of such is $19,120.

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, or emailed to legal@stc.mo.gov, and a copy of the application must be sent to each person listed below in the certificate of service.

Failure to state the specific facts or law upon which the application for review is based will result in summary denial. Section 138.432.

Disputed Taxes

The Collector of Texas 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 this 2nd day of January, 2020.

 

STATE TAX COMMISSION OF MISSOURI

John J. Treu

Senior Hearing Officer

 

Certificate of Service

I certify that on January 2nd, 2020, a copy of the foregoing was sent via email to

 

 

Legal Coordinator

 

[1] All statutory citations are to RSMo. 2000, as amended, unless indicated otherwise.

[2] All statutory citations are to RSMo 2000, as amended.