State Tax Commission of Missouri
RAMAIAH MADDIPATI,)
)
Complainant,)
)
v.) Appeal Number 09-10329
)
MICHAEL BROOKS, ACTING ASSESSOR,)
ST. LOUIS COUNTY,MISSOURI,)
)
Respondent.)
DECISION AND ORDER
HOLDING
Decision of the St. Louis County Board of Equalization reducing the assessment made by the Assessor is AFFIRMED.True value in money for the subject property for tax years 2009 and 2010 is set at $675,000, residential assessed value of $128,250.Complainant appeared pro se.Respondent appeared by Associate County Counselor Paula J. Lemerman.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
ISSUE
Complainant appeals, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property.The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2009.The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
1.Jurisdiction.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.A hearing was conducted on October 12, 2010, at the St. LouisCountyGovernmentCenter,Clayton,Missouri.
2.Assessment.The assessor appraised the property at $820,600, a residential assessed value of $155,910.The Board reduced the value to $675,000, a residential assessed value of $128,250.[1]
3.Subject Property.The subject property is located at 12747 Wynfield Pines Court, Des Peres, Missouri.The property is identified by locator number 22O220363.The property consists of a 20,230 square foot lot improved by a two-story, single-family residence built in 1999.The gross living area calculates out to 4,465 square feet.It has a full basement that contains 3,072 square feet and it is about 65% (2,000 sq. ft.) finished with a full bathroom and a wet bar.The exterior had brick veneer on three sides, and frame, with vinyl siding on the back.The home is a good quality, semi-customized tract build structure.There is a three-car attached side-entry brick garage.The residence has a total of ten rooms, four bedrooms and three full and two half baths above grade.Overall the structure is in good condition and the quality of materials and workmanship are very good, consistent with surrounding properties.[2]
4.Sale History.The property was purchased by Complainant on April 16, 2009, by Trustee’s deed Under Foreclosure of Deed of Trust.The property had been listed for sale between September 2007 and early 2010.It was initially listed for $789,000.In July 2008 the asking price was reduced to $729,000, and by December 2008 had been reduced to $725,000.
During the summer of 2009, the property was listed for $750,000.In early 2010, the list price was reduced to $725,000.[3]
5.Complainant’s Evidence.Mr. Maddipati testified in his own behalf.He stated his opinion of value as of January 1, 2009, to be $526,151.This was based on the amount paid to purchase the property at the foreclosure sale.The following exhibits were offered into evidence by Complainant.
|
EXHIBIT |
DESCRIPTION |
DISPOSITION |
|
A |
Income Valuation Calculation |
Objection – Sustained – Excluded |
|
B |
Trustee’s Deed under Foreclosure |
No Objection – Received |
|
C |
Subject Expenses 5/16/09–7/25/10 |
Objection – Sustained – Excluded |
|
D |
Residential Lease 5/16/10 |
No Objection – Received |
Counsel for Respondent objected to Exhibits A and C on the ground of lack of foundation and relevance.Complainant testified to some repairs and remodeling made after his purchase.However, there was no substantiating documentation as to the extent or cost of the repairs and remodeling.The evidence was inconclusive to establish that sufficient new construction and improvements had been made during 2009 to warrant a change in value from 2009 to 2010. Therefore the assessed value for 2009 remains the assessed value for 2010.[4]
Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2009, to be $526,151.
6.Respondent’s Evidence.Respondent presented the Appraisal Report[5] and testimony of Kyle J. Armstrong, Residential Appraiser – Senior for St. Louis County.Mr. Armstrong concluded a value of $735,000 based upon the sales comparison approach to value. Absent the fact that the subject had been marketed for approximately 16 months in advance of the valuation date, Exhibit 1 would have provided substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the value of the subject, as of January 1, 2009, to be $735,000.
7.Board Presumption Not Rebutted.The presumption of correct assessment by the Board was not rebutted.Therefore, the value of $675,000, assessed value of $128,250 is affirmed.
CONCLUSIONS OF LAW AND DECISION
Jurisdiction
The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious.The hearing officer shall issue a decision and order affirming, modifying or reversing the determination of the board of equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious.[6]
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.[7]The constitutional mandate is to find the true value in money for the property under appeal. By statute real and tangible personal property is assessed at set percentages of true value in money.[8]In an overvaluation appeal, true value in money for the property being appealed must be determined based upon the evidence on the record.
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[9]This presumption is a rebuttable rather than a conclusive presumption.It places the burden of going forward with some substantial evidence on the taxpayer – Complainant.The presumption of correct assessment is rebutted when the taxpayer or the Respondent, when advocating a value different than that determined by the Board, presents substantial and persuasive evidence to establish that the Board’s valuation is erroneous and what the fair market value should have been placed on the property.[10]When all evidence in the record is considered, neither Complainant’s evidence nor Respondent’s evidence was substantial and persuasive to establish the values tendered of $526,151 or $735,000, respectively.
Standard for Valuation
Section 137.115, RSMo, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so.[11]True value in money is defined in terms of value in exchange and not value in use.[12]It is the fair market value of the subject property on the valuation date.[13]Market value is the most probable price in terms of money which a property should bring in competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price is not affected by undue stimulus.
Implicit in this definition are the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby:
1.Buyer and seller are typically motivated.
2.Both parties are well informed and well advised, and both acting in what they consider their own best interests.
3.A reasonable time is allowed for exposure in the open market.
4.Payment is made in cash or its equivalent.
5.Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
6.The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction.[14]
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.[15]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.[16]Respondent rested upon the well recognized sales comparison approach to value the property under appeal.
Complainant based his opinion of value upon the price he paid to buy the property at foreclosure.Evidence of the actual sales price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time.The actual sale price is a method that may be considered for estimating true value.[17]
Burden of Proof
In order to prevail, Complainant must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2009.[18]Respondent, when advocating a value different from that determined by the Board of Equalization, must meet the same burden of proof to present substantial and persuasive evidence of the value advocated as required of the Complainant under the principles established by case law.[19]
There is no presumption that the taxpayer’s opinion is correct. Likewise, there is no presumption that the opinion of value tendered on behalf of the Assessor is correct.[20]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[21]Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact.The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief.[22]
The persuasive evidence on the issue of value comes from the fact that for a period of time from approximately 16 months prior to the valuation date of January 1, 2009, the subject property was listed at a series of decline values of $789,000, $729,000, and $725,000.Given that in July 2008 the asking price was some $6,000 below the valued concluded by Mr. Armstrong for the property just six months later, a substantial shadow of doubt is cast upon the concluded value of $735,000.
Then in December of 2008, the asking price had been further reduced to $725,000.This further weakens the conclusion that as of January 2009, a willing buyer and seller would have agreed to a purchase price of $735,000.When the seller had the property listed for only $725,000, one has to question why any prospective purchaser would have insisted on paying $735,000.The logic escapes the Hearing Officer.The fact that in the summer of 2009 Complainant had the property offered at $750,000 does nothing to rehabilitate the $735,000 value, given that by early 2010 the asking price was back down to $725,000.
The Hearing Officer simply cannot ignore the foregoing.It rebuts the concluded value of $735,000.
As for Mr. Maddipati’s reliance on the foreclosure purchase price, the Hearing Officer is not persuaded on this evidentiary record that the foreclosure price was representative of the property’s fair market value on January 1, 2009.When a taxpayer wishes to rely upon a purchase at foreclosure[23] to establish fair market value, it appears that it would be appropriate for evidence establishing the following to be presented for consideration in arriving at what, if any, probative weight might be given to an owner’s opinion based upon a foreclosure sale:
(1)the amount owed against the property;
(2)the amount of the bid of the financial institution holding the note;
(3)how the foreclosure sale was advertised (only legal notice, or use of yard signs,
newspaper adds, internet adds, available to real estate sales community);
(4)the size of the bidder pool, i.e. number in attendance at the foreclosure sale;
(5)actual bidders, i.e. actual number of individuals who bid on the property, other
than the financial institution holding the note;
(6)listings, efforts to sell, and offers to purchase made before the foreclosure saleand the time presented to the market prior to advertisement of the foreclosuresale; and
(7)any appraisal done in preparation for the foreclosure sale or to arrangefinancing for purchase at foreclosure.
A taxpayer who provides evidence of these elements may have met the standard of substantial and persuasive evidence to support a finding of value based upon the foreclosure sale.
Conclusion
Neither opinion of value was persuasive to rebut the presumption of correct assessment by the Board.Accordingly, the presumption stands.
ORDER
The assessed valuation for the subject property as determined by the Board of Equalization for St. Louis County for the subject tax day is AFFIRMED.
The assessed value for the subject property for tax years 2009 and 2010 is set at $128,250.
Application for Review
A party may file with the Commission an application for review of this decision within thirty days of the mailing date set forth in the Certificate of Service 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, MO65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.
Failure to state specific facts or law upon which the application for review is based will result in summary denial. [24]
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 24, 2010.
STATE TAX COMMISSION OFMISSOURI
_____________________________________
W. B. Tichenor, Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 24thday of November, 2010, to:Ramaiah Maddipati, 998 Delvin Drive, St. Louis, MO 63141, Complainant; Paula Lemerman, Associate County Counselor, County Government Center, 41 South Central Avenue, Clayton, MO 63105, Attorney for Respondent; Michael Brooks, ActingAssessor, County Government Center, 41 South Central Avenue, Clayton, MO 63105; John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.
___________________________
Barbara Heller
Legal Coordinator
Contact Information for State Tax Commission:
Missouri State Tax Commission
301 W. High Street, Room 840
P.O. Box 146
Jefferson City, MO 65102-0146
573-751-2414
573-751-1341 Fax
[9] Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STC, 308 S.W.2d 748, 759 (Mo. 1958)
[10] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
[11] St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993); Missouri Baptist Children’s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993).
[12] Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 S.W.2d 376, 380 (Mo. App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).
[14] 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.
[15] See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra;Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975).
[16] 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. Div. 2 1974).
[20] Section 138.431.2 RSMo – The manner in which appeals shall be presented and the conduct of hearings shall be made in accordance with rules prescribed by the commission for determining the rights of the parties; … .There shall be no presumption that the assessor’s valuation is correct.