State Tax Commission of Missouri
REGEON HOMES, INC,)
)
Complainants,)
)
v. ) Appeal No. 11-91004 through 11-91028
)
WENDY NORDWALD, ASSESSOR,)
WARREN COUNTY, MISSOURI,)
)
Respondent.)
DECISION AND ORDER
HOLDING
Decision of the Warren County Board of Equalization sustaining the assessment made by the Assessor is AFFIRMED.
True value in money for the subject property for tax years 2011 and 2012 is set as follows
Appeal Number |
Parcel Number |
Lot Number |
True Value |
Residential Assessed Value |
11-91004 |
04-20.0-0-00-012.085 |
3 |
$24,000 |
$4,560 |
11-91005 |
04-20.0-0-00-012.087 |
5 |
$24,000 |
$4,560 |
11-91006 |
04-20.0-0-00-012.099 |
17 |
$24,000 |
$4,560 |
11-91007 |
04-20-0-0-00-012.101 |
19 |
$24,000 |
$4,560 |
11-91008 |
04-20.0-0-00-012.102 |
20 |
$24,000 |
$4,560 |
11-91009 |
04-20.0-0-00-012.105 |
23 |
$24,000 |
$4,560 |
11-91010 |
04-20.0-0-00-012.106 |
24 |
$24,000 |
$4,560 |
11-91011 |
04-20.0-0-00-012.107 |
25 |
$24,000 |
$4,560 |
11-91012 |
04-20.0-0-00-012.108 |
26 |
$24,000 |
$4,560 |
11-91013 |
04-20.0-0-00-012.109 |
27 |
$24,000 |
$4,560 |
11-91014 |
04-20.0-0-00-012.110 |
28 |
$24,000 |
$4,560 |
11-91015 |
04-20.0-0-00-012.111 |
29 |
$24,000 |
$4,560 |
11-91016 |
04-20.0-0-00-012.114 |
32 |
$24,000 |
$4,560 |
11-91017 |
04-20.0-0-00-012.115 |
33 |
$24,000 |
$4,560 |
11-91018 |
04-20.0-0-00-012.118 |
36 |
$24,000 |
$4,560 |
11-91019 |
04-20.0-0-00-012.123 |
41 |
$24,000 |
$4,560 |
11-91020 |
04-20.0-0-00-012.125 |
43 |
$24,000 |
$4,560 |
11-91021 |
04-20.0-0-00-012.127 |
66 |
$24,000 |
$4,560 |
11-91022 |
04-20.0-0-00-012.128 |
67 |
$24,000 |
$4,560 |
11-91023 |
04-20.0-0-00-012.129 |
68 |
$24,000 |
$4,560 |
11-91024 |
04-20.0-0-00-012.130 |
69 |
$24,000 |
$4,560 |
11-91025 |
04-20.0-0-00-012.131 |
70 |
$24,000 |
$4,560 |
11-91026 |
04-20.0-0-00-012-132 |
71 |
$24,000 |
$4,560 |
11-91027 |
04-20.0-0-00-012.135 |
74 |
$24,000 |
$4,560 |
11-91028 |
04-20.0-0-00-012.137 |
58 |
$24.000 |
$4,560 |
Complainant Regeon Homes, Inc., appeared by Counsel, Stephen Martin.
Respondent appeared in person and by Assistant Prosecuting Attorney, Kathryn A. Busch.
Appeals were consolidated and heard at the same time due to the similarity of issue and evidence.Case heard and decided by Hearing Officer Maureen Monaghan.
ISSUE
Complainants appeal, on the ground of overvaluation, the decision of the Warren 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, 2011.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 the appeals is proper. Complainant timely appealed to the State Tax Commission from the decisions of the Warren County Board of Equalization.A hearing was conducted on August 21, 2012, at the Warren County Courthouse, Warrenton, Missouri.[1]
2.Subject Property.The subject properties are located in the Trotters Creek Subdivision in Wright City, Missouri.The properties are individual residential lots.The lots range in size from .23 to .34 acres.They are completed, fully developed residential parcels with underground public utilities and lighted concrete streets.The properties were listed for sale on January 1, 2011, at $25,000 or a bulk lot price of $18,900.[2]
3.Assessment.The assessor appraised each individual parcel at $24,600, assessed residential value of $4,560.The Board sustained the assessment.
4.Complainant’s Evidence.Complainant presented the following Exhibits
EXHIBIT |
DESCRIPTION |
A |
Appraisal Report |
B |
Subdivision Property Identification |
C |
Written Direct Testimony Jerry Regeon |
D |
Written Direct Testimony of Appraiser Greg Bailey |
E |
MLS Report |
F |
MLS Listing on Trotter’s Creek |
G |
USPAP Standard Rule 1-5 |
Respondent objected to exhibits E, F, and G as they were not submitted in advance of the hearing as part of the exchange schedule.The objections were overruled as the exhibits were part of re-direct of the witnesses after issues were raised on cross-examination.
There was no evidence of new construction and improvement from January 1, 2011, to January 1, 2012, therefore the assessed value for 2011 remains the assessed value for 2012.[3]
5.Respondent’s Evidence.Respondent presented the following exhibits:
EXHIBIT |
DESCRIPTION |
1 |
Appraisal Report – Donald Dwain Dodd |
2 |
Written Direct Testimony of Appraiser Dodd |
6.True Value and Assessed Value.The true value in money for each of the subject properties is $24,600, residential assessed value of $4,560.
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.[4]
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.[5]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.[6]In an overvaluation appeal, true value in money for the property being appealed must be determined based upon the evidence on the record that is probative on the issue of the fair market value of the property under appeal.
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[7]It places the burden of going forward on the taxpayer – Complainant.The presumption of correct assessment is rebutted when the taxpayer 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.[8]
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.[9]True value in money is defined in terms of value in exchange and not value in use.[10]It is the fair market value of the subject property on the valuation date.[11]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.[12]
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.[13]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. According to The Appraisal of Real Estate, 12th Edition p 337, the sales comparison approach is the most commonly used and preferred method of valuing land.Data on sales of similar parcels of land is collected, analyzed, compared, and adjusted to reflect the similarity or dissimilarity of those parcels to the site of the subject property.Respondent’s appraiser concluded value based upon the development of a sales comparison approach to value.
Opinion Testimony by Experts
If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto.
The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data need not be admissible in evidence.[14]
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, 2011.[15]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.”[16]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.
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[17]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.[18]
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.[19]The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.
Complainant’s Valuation
Complainant’s appraiser determined a value of $375,000 for 26 lots in the subdivision (an average value of $14,423.08 per lot) for the purpose of mortgage financing with an effective date of March 21, 2011.Complainant’s appraiser claims he used a sales comparison approach known as a “subdivision analysis.”The subdivision analysis is actually a yield capitalization, discounted cash flow analysis.According to The Appraisal of Real Estate, 12th Edition page 337, “[T]his technique is applicable when…[v]acant land that has the potential for development as a subdivision represents the likely highest and best use of the land.”The approach requires significant amounts of data on development sales and costs for the developed lots.An absorption study is also necessary to develop such an approach.The Appraisal of Real Estate concludes that it is the “least accurate raw land valuation technique.”It can be persuasive if there is a sales comparison analysis conducted to support the findings.
The appraiser should not have used this technique for many reasons.First, the land is not raw, vacant land; the parcels are individual residential lots that are fully developed with utilities, paved roads, curbing, and lighting.Second, the appraiser developed and presented this approach to value without the necessary data.The appraiser states that he estimated sales, estimated values, estimated sale prices, estimated increases in prices, estimated profit, and estimated administrative costs.He “expected” the capitalization rate would be in a range of 10-14%.The appraiser obtained a MLS list for every vacant lot in Warren County.The appraiser admitted that he did not view the lots for comparability nor did he verify the sales.The appraiser had no studies, no authoritative sources, no documentation of any findings to establish accuracy on all his estimations and expectations.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.”[20]
The appraiser stated in his appraisal report that he did not conduct a bulk lot sales valuation because he could not find any bulk sales.Further, he states in his subdivision development analysis that builders are not making bulk purchases but purchasing one to two lots at a time. The appraiser is correct not to develop an appraisal approach without sufficient sales or data.Further, neither the State Tax Commission nor Missouri cases have supported a reduced value for developers based upon either the volume of unsold lots held by the developer or upon the projected length of time it will take to sell the lots.[21]The appeals represent 25 separate appeals of 25 separate parcels.Each parcel may be heard separately and valuation determined separately.
Respondents Opinion of Value
Respondent’s appraiser developed a sales comparison approach to value.
The appraiser located sales of three vacant residential properties within ½ mile of the subject parcels.The properties sold between November 23, 2009, and May 2010.The sold lots were a little smaller that the subject parcels but in all other aspects comparable to the subject parcels.The lots sold for $17,500, $25,000 and $25,000.The most weight was placed on the comparable properties that sold for $25,000 as those properties were within ¼ mile of the subject, were closer in time to the valuation date.The sale price of the comparable properties was $25,000.
Respondent admitted on cross-examination that the sales were not verified or part of MLS.He did not know if the parties to the sales were related.According to Complainant, the parties to the sales of the properties within ¼ mile were related.
Conclusion
Respondent’s evidence was not substantial and persuasive, however, it is not Respondent’s burden in this case.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, 2011.[22]Complainant’s evidence did not carry the burden.
The presumption in favor of the Board of Equalization was not rebutted.Further, the Board’s value was supported by the Complainant’s appraiser.He stated in his report that there are 2 adjacent subdivisions to Trotter’s Creek which provide direct competition to the subject properties as they are in the same location and are the same size.The lots in the other subdivisions are advertised for sale at $25,000 per lot or $18,900 for a bulk sale.
ORDER
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Warren County for the subject tax day is AFFIRMED.
The assessed value for the subject properties for tax years 2011 and 2012 is set as follows:
Appeal Number |
Parcel Number |
Assessed Value |
11-91005 |
04-20.0-0-00-012.087 |
$4,560 |
11-91006 |
04-20.0-0-00-012.099 |
$4,560 |
11-91007 |
04-20-0-0-00-012.101 |
$4,560 |
11-91008 |
04-20.0-0-00-012.102 |
$4,560 |
11-91009 |
04-20.0-0-00-012.105 |
$4,560 |
11-91010 |
04-20.0-0-00-012.106 |
$4,560 |
11-91011 |
04-20.0-0-00-012.107 |
$4,560 |
11-91012 |
04-20.0-0-00-012.108 |
$4,560 |
11-91013 |
04-20.0-0-00-012.109 |
$4,560 |
11-91014 |
04-20.0-0-00-012.110 |
$4,560 |
11-91015 |
04-20.0-0-00-012.111 |
$4,560 |
11-91016 |
04-20.0-0-00-012.114 |
$4,560 |
11-91017 |
04-20.0-0-00-012.115 |
$4,560 |
11-91018 |
04-20.0-0-00-012.118 |
$4,560 |
11-91019 |
04-20.0-0-00-012.123 |
$4,560 |
11-91020 |
04-20.0-0-00-012.125 |
$4,560 |
11-91021 |
04-20.0-0-00-012.127 |
$4,560 |
11-91022 |
04-20.0-0-00-012.128 |
$4,560 |
11-91023 |
04-20.0-0-00-012.129 |
$4,560 |
11-91024 |
04-20.0-0-00-012.130 |
$4,560 |
11-91025 |
04-20.0-0-00-012.131 |
$4,560 |
11-91026 |
04-20.0-0-00-012-132 |
$4,560 |
11-91027 |
04-20.0-0-00-012.135 |
$4,560 |
11-91028 |
04-20.0-0-00-012.137 |
$4,560 |
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.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. [23]
Disputed Taxes
The Collector of Warren 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 August 28, 2012.
STATE TAX COMMISSION OF MISSOURI
_____________________________________
Maureen Monaghan
Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 28thday of August, 2012, to:Stephen Martin, 330 Jefferson Street, St. Charles, MO 63301, Attorney for Complainant; Kathryn Busch, Assistant Prosecuting Attorney, 104 W. Main, Suite E, Warrenton, MO 63383, Attorney for Respondent; Wendy Nordwald, Assessor, 101 Mockingbird Lane, Suite 202, Warrenton, MO 63383; Barbara Daly, Clerk, 101 Mockingbird Lane, Suite 302, Warrenton, MO 63383; Linda Stude, Collector, 101 Mockingbird Lane, Suite 200, Warrenton, MO 63383.
___________________________
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
[1] Hearing was originally set for January 10, 2012, it was continued to January 26, 2012, at the January 10th Hearing when Complainant’s appraiser Susan K. Lewis did not appear.
[7] 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)
[8] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
[9] 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).
[10] 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).
[12] 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.
[13] 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).
[14] Section 490.065, RSMo; State Board of Registration for the Healing Arts v. McDonagh, 123 S.W.3d 146 (Mo. SC. 2004); Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. E.D. 1992).
[16] 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).