STATE TAX COMMISSION OF MISSOURI
|PELTS ENTERPRISES, INC||)|
|v.||)||Appeal No. 15-15846|
|JAKE ZIMMERMAN, ASSESSOR||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
The assessment made by the Board of Equalization of St. Louis County (BOE) is AFFIRMED. Pelts Enterprises, Inc. (Complainant) did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.
Complainant appeared by counsel Matthew Singer.
Respondent appeared by counsel Ed Corrigan.
Case heard and decided by Hearing Officer Maureen Monaghan (Hearing Officer).
Complainant appealed on the ground of overvaluation. Respondent determined the true market value (TMV) of the subject property at $476,700, commercial assessed value of $152,550. The BOE sustained the valuation. The State Tax Commission (STC) takes this appeal to determine the TMV of the subject property on January 1, 2015. The value as of January 1 of the odd numbered year remains the value as of January 1 of the following even numbered year unless there is new construction and improvement to the property. Section 137.115.1
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission.
- Evidentiary Hearing. The issue of overvaluation was presented at an evidentiary hearing on February 24, 2017. The evidentiary hearing occurred via telepresence with the Hearing Officer being located in Jefferson City, Missouri, and the parties located in St. Louis, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 15M430353. It is further identified as 2304 N. Lindbergh Blvd, St. Louis County, Missouri. (Complaint; Written Direct Testimony of Svetlana Pelts [Owner])
- Description of Subject Property. The subject property consists of an 1.25 acre commercial lot improved by a 2,000 square foot, warehouse/office building constructed in 1993; a second, smaller building; fencing and parking. (Testimony of Owner)
- Assessment. Respondent set a TMV for the subject property of $476,700 and classified the property as commercial, as of January 1, 2015.
- Board of Equalization. The BOE sustained Respondent’s TMV of the subject property.
- Complainant’s Evidence. The owner opined the property’s value at $375,000. The owner’s opinion of value was based upon sales of commercial properties and properties on the market in the area of the subject property. The owner is a licensed realtor working on a “referral basis”. She works with one to two properties a year. She testified that she looked at lot and building square footage to form her opinion of value. She did not develop a sales comparison approach or determine appropriate, market based adjustments to apply to the sale prices of the comparable properties.
To support her opinion of value, the owner offered as evidence the following exhibits:
|Exhibit A||Income Information|
|Exhibit C||Loan, Tax and Expense Information|
|Exhibit D||Depreciation and vehicle worksheet|
|Exhibit E||Depreciation and vehicle worksheet|
|Exhibit F||MLS information on Comparable Property|
|Exhibit G||MLS information on Comparable Property|
|Exhibit H||MLS information on Comparable Property|
|Exhibit I||MLS information on Comparable Property|
|Exhibit J||MLS information on Comparable Property|
|Exhibit K||MLS information on Comparable Property|
|Exhibit L||MLS information on Comparable Property|
|Exhibit M||MLS information on Comparable Property|
|Exhibit N||MLS information on Comparable Property|
|Exhibit O||MLS information on Comparable Property|
|Exhibit Q||Articles of Incorporation|
|Exhibit R||Registration of Fictitious Name|
|Written Direct Testimony||Svetlana Pelts (Owner)|
Respondent did not object to Complainant’s Exhibits and therefore the exhibits and testimony were admitted into the record.
On cross-examination, the Respondent established that the owner was not an appraiser or active in the real estate market. The Respondent also established that the owner did not inspect the comparable properties, verify the sales, or use criteria other than square footage of lot and building when forming an opinion of value. Respondent established that the owner was not an expert in determining the true value of a property.
- Respondent’s Evidence. Respondent offered no evidence.
- Presumption of Correct Assessment Not Rebutted. Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the BOE.
CONCLUSIONS OF LAW AND DECISION
STC 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 Hearing Officer shall issue a decision and order affirming, modifying or reversing the determination of the BOE, 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.
There exists a presumption of correct assessment by the BOE – the BOE presumption. The BOE presumption operates in every case to require the taxpayer to present evidence to rebut it. The owner testified as to the proceedings prior to the filing of the Complaint for Review of Assessment with the STC. The owner testified that she appeared before a “hearing officer” of the BOE. The “hearing officer” made a finding of value which was lower than the Respondent’s TMV. However, the owner received a Decision of the BOE sustaining the Respondent’s value.
The hearing before the STC is a de novo hearing and creates the record for judicial review. Koplar v. State Tax Commission, 321 S.W.2d 686, 694 (Mo. 1959); Ulman v. Evans, 247 S.W.2d 693, 694 (Mo. 1952). The Hearing Officer cannot consider the findings prior to the appeal to the STC other than the presumption in favor of the BOE’s decision.
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 complainant’s opinion is correct. The complainant in a Commission appeal still bears the burden of proof. The complainant 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.
Weight to be Given Evidence
The Hearing Officer is not bound by any single formula, rule, or method in determining true value in money and is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled. The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).
Methods of Valuation
Proper methods of valuation and assessment of property are delegated to the Commission. It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case. See, Nance v. STC, 18 S.W.3d 611, 615 (Mo. App. W.D. 2000); Hermel, Inc., 564 S.W.2d at 897; Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975). Missouri courts have approved the comparable sales or market approach, the cost approach, and the income approach as recognized methods of arriving at fair market value. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STC, 789 S.W.2d 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm’n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. 1974).
“For purposes of levying property taxes, the value of real property is typically determined using one or more of three generally accepted approaches.” Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005), citing St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977). “Each valuation approach is applied with reference to a specific use of the property—its highest and best use.” Snider, 156 S.W.3d at 346-47, citing Aspenhof Corp., 789 S.W.2d at 869. “The method used depends on several variables inherent in the highest and best use of the property in question.” Snider, 156 S.W.3d at 347. “Each method uses its own unique factors to calculate the property’s true value in money.” Id. “The ‘comparable sales approach’ uses prices paid for similar properties in arms-length transactions and adjusts those prices to account for differences between the properties. Id. at 348. “Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character.” Id. (quotation omitted). “This approach is most appropriate when there is an active market for the type of property at issue such that sufficient data [is] available to make a comparative analysis.” Id.
Implicit in this definition are the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby:
- Buyer and seller are typically motivated.
- Both parties are well informed and well advised, and both acting in what they consider their own best interests.
- A reasonable time is allowed for exposure in the open market.
- Payment is made in cash or its equivalent.
- Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
- The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction.
Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; see also, Real Estate Valuation in Litigation, J. D. Eaton, M.A.I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80; Uniform Standards of Professional Appraisal Practice, Glossary.
In this case, Complainant’s evidence was neither substantial nor persuasive to rebut the presumption of correct assessment by the BOE. 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, the owner, who testified that she is a real estate agent but is not a certified general real estate appraiser, did not use any of the court approved methods of valuation to arrive at an opinion of TMV for the subject property.
One approved method is the sales comparison approach. It uses the market to estimate value by comparing the subject to similar properties which have sold. When utilizing sold properties to opine value, one must consider similarities and differences that affect value. Financing terms, market conditions, location and physical characteristics are examples of items to consider when making adjustments to the sales prices of the comparable properties for their differences from the subject. The basic steps in the sales comparison approach are:
- Defining the appraisal problem;
- Collecting and analyzing the data;
- Selecting appropriate units of comparison;
- Making reasonable adjustments based on the market; and
- Applying the data to the subject of the appraisal.
Property Assessment Valuation, International Association of Assessing Officers.
The Owner did not complete all of the necessary steps of a sales or market comparable approach. The Owner did not establish herself as an expert or with sufficient life experience, training, education and/or knowledge to an extent that would allow her to opine on property values. The Missouri Court of Appeals in State ex rel. Missouri Highways and Transportation Commission v. Boer, 495 S.W.3d 765, (Mo App SD 2016) noted that “[g]enerally, expert testimony is admissible as long as the expert’s competence on the subject matter is superior to that of the ordinary juror and the expert’s opinion aids the jury in deciding an issue in the case”. Id., citing Freight House Lofts Condo Ass’n v. VSI Meter Services, Inc., 402 S.W.3d 586, 596 (Mo., App. W.D. 2013). The Court found the owner in that appeal to have the necessary experience to be deemed an expert and present a sales comparison approach.
In the present appeal, sufficient evidence was not adduced as to the Owner’s competence on real estate appraisal, the valuation of real estate, or that her expertise and training would be superior to the fact-finder in the present appeal, namely the STC, which expertise and competence is addressed in Savage v. State Tax Commission of Missouri, 722 S.W.2d 72 (Mo. banc 1986). As pointed out in the Boer decision, “[a]ll parties recognize and acknowledge that ‘[w]hile property owners may always testify as to their opinion concerning the value of their own property, they may not support that opinion by reference to comparable sales unless they qualify as an expert.’” Boer, citing State ex rel. Missouri Highway & Transp. Comm’n v. McDonald’s Corp., 872 S.W.2d 108, 113 (Mo. App. E.D. 1994).
The evidence presented was not substantial and persuasive. The owner’s testimony regarding sales and marketed commercial properties did not constitute a sales or market comparable approach. The owner did not establish a foundation as an expert to testify as to such approach. Lastly, the Owner’s testimony was not substantial and persuasive to establish a market value of $375,000. The presumption of correct assessment by the BOE was not rebutted.
The assessed valuation for the subject property as determined by Respondent and sustained by the BOE for St. Louis County for the subject tax day is AFFIRMED.
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
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 March 14, 2017.
STATE TAX COMMISSION OF MISSOURI
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 14th day of March, 2017, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.