State Tax Commission of Missouri
|REAL ESTATE INVESTOR WHOLESALE, LLC.||)|
|JAKE ZIMMERMAN, ASSESSOR||)||#13-14942|
DECISION AND ORDER
The assessment made by the Assessor is SET ASIDE. Complainant presented substantial and persuasive evidence to establish the true value of the properties. True value in money for the subject properties for tax years 2013 and 2014 is set at $1,099,500, residential assessed value of $208,900.
Complainant appeared by attorney James Gamble.
Respondent appeared by attorney Edward Corrigan.
Case heard and decided by Senior Hearing Officer John Treu.
Complainant appeals, on the ground of overvaluation, the valuation made by the St. Louis County Assessor of the subject property. The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2013. 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 RSMo
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 Evidentiary Hearing was held on April 8, 2015 at St. Louis County Administration Building, Clayton, Missouri.
- Identification of Subject Property. The subject properties are identified by map parcel numbers or locator numbers 12E610004 & 12E610302. It is further respectively identified as 9639 & 9640 Diamond Drive, St. Louis, Missouri in St. Louis County, Missouri. (Ex. A)
- Description of Subject Property. The subject properties consist of “an 86-unit apartment development located within the Village of Riverview…One of the two bedroom units is currently being utilized as an office for the development.” There are 68 one bedroom, one bath units and 18 two bedroom, two bath units. The 86 units are located in 4 multi-family buildings. The subject properties’ gross building area is approximately 55,766 square feet with 40,620 square feet of net rentable area. The subject properties were completed in 1972 and 1976. (Ex. A)
- Assessment. The Assessor appraised the property at $2,120,400, residential. (Complaint for Review)
- Complainant’s Evidence. Complainant offered into evidence Exhibits A through E. Exhibit A consisted of an Appraisal Report prepared by William Heyden, opining a true market value of the subject property to be $854,000. Exhibit B consisted of the Written Direct Testimony of Mr. Heyden. Exhibit C consisted of a Special Sale Contract of the subject properties with a purchase price of $850,000 on 7/23/2013. Exhibit D consisted of the Buyer’s Settlement Statement of the subject property. Exhibit E consisted of the Written Direct Testimony of Gregory Daney. Respondent did not timely file objections to the aforementioned exhibits. All were received into evidence without objection.
- No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2013, to January 1, 2014; therefore the assessed value for 2013 remains the assessed value for 2014. Section 137.115.1, RSMo.
- Respondent’s Evidence. Respondent offered into evidence Exhibits 1 and Exhibit 2. Exhibit 1 consisted of a prior appraisal of the subject properties by W. H. Heyden & Associates with a date of August 9, 2013. Exhibit 2 consisted of a St. Louis County Record regarding Complainant’s comparable #5. Both Exhibit 1 and Exhibit 2 were objected to on the grounds that the documents were not supplied during discovery to Complainant’s counsel by the deadline established in the Order issued August 21, 2014 (not disclosed until cross examination by Respondent). The parties were advised the objections would be ruled upon in the Decision. See Discovery Issues infa.
- Complainant Proves Value. Complainant’s evidence was sufficiently substantial and persuasive to establish the true value of the properties as of January 1, 2013. See, Complainant Presents Evidence Establishing Value and Discovery Issues infra.
CONCLUSIONS OF LAW AND DECISION
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. Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo. No board of equalization hearing occurred in these appeals.
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 and tangible personal property are assessed at set percentages of true value in money. Section 137.115.5, RSMo – residential property at 19% of true value in money.
Complainants’ Burden of Proof
In order to prevail, Complainants 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, 2013. Hermel, supra. 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.” See, Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003); Daly v. P. D. George Co., 77 S.W.3d 645 (Mo. App. E.D. 2002); Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003); Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991). A valuation which does not reflect the fair market value (true value in money) of the property under appeal is an unlawful, unfair and improper assessment.
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. 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). It is the fair market value of the subject property on the valuation date. Hermel, supra. Market value is the most probable price in terms of money which a property should bring in a 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:
- 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.
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, sub-classification or assessment of the property. 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. Section 138.430.2, RSMo.
Weight to be Given Evidence
The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but 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, at 615 (Mo. App. W.D. 2000); Hermel, supra; Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975).
Opinion Testimony by Experts
An expert’s opinion must be founded upon substantial information, not mere conjecture or speculation, and there must be a rational basis for the opinion. Missouri Pipeline Co. v. Wilmes, 898 S.W. 2d 682, 687 (Mo. App. E.D. 1995). The State Tax Commission cannot ignore a lack of support in the evidence for adjustments made by the expert witnesses in the application of a particular valuation approach. Drey v. State Tax Commission, 345 S.W. 2d 228, 234-236 (Mo. 1961), Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W. 3d, 341, 348 (Mo. 2005).
The testimony of an expert is to be considered like any other testimony, is to be tried by the same test, and receives just so much weight and credit as the trier of fact may deem it entitled to when viewed in connection with all other circumstances. The Hearing Officer, as the trier of fact, has the authority to weigh the evidence and is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all, none or parts of the expert’s testimony. Beardsley v. Beardsley, 819 S.W. 2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W. 2d 605, 607 (Mo. 1981); Scanlon v. Kansas City, 28 S.W. 2d 84, 95 (Mo. 1930).
The Hearing Officer utilized the wide discretion afforded him in determining how discovery issues were addressed and if any sanctions were appropriate. The Hearing Officer limited the sanctions to the level appropriate to address to serve the purposes of discovery.
In the present appeal, Respondent’s Exhibits 1 & 2 were not disclosed to Complainant’s counsel in discovery. Respondent used both exhibits as both impeachment evidence and contradiction evidence, which are different. Impeachment evidence is used to challenge the credibility of a witness’s testimony and/or opinions. Contradiction evidence is used as substantive evidence.
Fairbanks v. Weitzman, 13 S.W.3d 313 (Mo. App. 2000) states the following regarding sanctions:
A trial court has discretion in the choice of remedies in response to the failure to disclose evidence or witnesses during discovery. Wilkerson, 943 S.W.2d at 648. … “Judicial discretion is abused when the trial court’s ruling is clearly against the logic of the circumstances then before the court and is so arbitrary and unreasonable as to shock the sense of justice and indicate a lack of careful consideration.” Wilkerson, 943 S.W.2d at 648 (internal quotation marks omitted) (quoting Anglim v. Missouri Pacific R.R., 832 S.W.2d 298, 303 (Mo. banc), cert. denied, 506 U.S. 1041, 113 S.Ct. 831, 121 L.Ed.2d 701 (1992)). …“Any Rule 61.01 sanction in excess of that which is necessary to accomplish the purposes of discovery may be an abuse of discretion.” J.B.C. v. S.H.C., 719 S.W.2d 866, 872 (Mo. App. E.D.1986).
The Hearing Officer believes that absolute exclusion of both Exhibits 1 & 2 is too harsh in the present appeals; however, balances by giving such little if any weight. The Hearing Officer finds not substantial prejudice to Complainant in this approach. This is not to say that subsequent discovery failures by the Respondent will not result in harsher sanctions, based upon the particulars of another appeal or based upon the cumulative discovery failures presented to or known to the State Tax Commission. In future appeals Respondent is expected to timely file rebuttal exhibits, whether such will be used for impeachment or contradiction.
Complainant Presents Evidence Establishing Value
Substantial and persuasive evidence to establish a fair market value as of January 1, 2013, to be $1,099,500 for the subject properties was presented at the hearing. At page 77 of Exhibit 1, a previous sale of the subject property on July 23, 2012 for $1,099,500 is shown. No evidence was put forth by either party that such was not a true, arms-length market sale. Such sale is devoid of any of the potential adverse motivations which may have accompanied the sale on 7/23/2013. Even without the use of Respondent’s Exhibits 1 & 2, the Hearing Officer is not persuaded that the sale on 7/23/2013 meets all of the 7 conditions for an open market sale.
Furthermore, the Hearing Officer is not persuaded by Complainant’s appraiser’s income approach as Complainant’s appraiser utilized certain properties for potential income and completely separate properties for expenses, instead of utilizing the same properties for both, which would result in more consistency and reliability. The vacancy rate utilized by Complainant’s appraiser is also not persuasive.
Regarding Complainant’s appraiser’s sales comparison approach, such is also not persuasive. Complainant’s appraiser made adjustment between the subject properties and the comparables, as if the subject properties were renovated, instead of in the condition the subject properties were in on January 1, 2013 and which still existed at the time of the appraisal report. Moreover, Complainant’s appraiser appears to have at least partially made adjustment in both “condition” and “age” based upon the effective age of the subject properties and the comparables, thus resulting in a lack of clarity regarding such appraisal. Finally, the Hearing Officer is not persuaded that the all of the comparable sales utilized by Complainant’s appraiser meet all of the 7 conditions for an open market sale.
The assessed valuation for the subject property as determined by the Assessor for St. Louis County for the subject tax day is SET ASIDE. The true market value of the subject property for tax years 2013 and 2014 is set at $1,099,500. The assessed value for the subject property for tax years 2013 and 2014 is set at $208,900.
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 June 24, 2015
STATE TAX COMMISSION OF MISSOURI
Senior Hearing Officer
Delivery or Notice was made via mail, email, fax, or personally on June 24th, 2015 to the following Individuals of this Decision/Order/Holding
James Gamble, Attorney for Complainant, firstname.lastname@example.org
Edward Corrigan, Associate County Counsel, Attorney for Respondent, email@example.com
Genevieve Frank, Clerk, firstname.lastname@example.org
Mark Devore, Collector, email@example.com
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