State Tax Commission of Missouri
RICHARD & MADALEEN SHOAF, )
)
Complainant, )
)
v. ) Appeal Number 07-32607
)
SCOTT SHIPMAN, ASSESSOR, )
ST. CHARLES COUNTY, MISSOURI, )
)
Respondent. )
DECISION AND ORDER
HOLDING
Decision of the St. Charles County Board of Equalization sustaining the assessment made by the Assessor is AFFIRMED. Hearing Officer finds presumptions of correct assessment not rebutted. True value in money for the subject property for tax years 2007 & 2008 is set at $506,760, residential assessed value of $96,280.
Complainants appeared pro se.
Respondent appeared by Assistant County Counselor, Charissa Mayes.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
ISSUE
The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2007.
SUMMARY
Complainant appeals, on the ground of overvaluation, the decision of the St. Charles County Board of Equalization, which sustained the valuation of the subject property. The Assessor determined an appraised value of $506,760, assessed value of $96,280, as residential property. Complainants proposed a value of $433,270, assessed value of $82,320. A hearing was conducted on May 6, 2008, at the St. Charles County Administration Building, St. Charles, Missouri.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
Complainants’ Evidence
Both Complainants testified in support of their opinion of value. The opinion of value tendered was $433,270, which was the 2005 appraised value set by the Assessor. Complainants also asserted as a basis for the proposed value that the percentage of increase on the subject property was not the same as the average in St. Charles County. Mr. & Mrs. Shoaf asserted their property had increased by 17%.
Complainants offered into evidence Exhibit A. The exhibit consisted of Multi-List Service (MLS) information on a Statistical Market Analysis Report, Comparative Market Analysis Reports and copies of three articles from Business Week, regarding the national housing market. Counsel for Respondent objected to Exhibit A on the ground of hearsay. The objection was sustained and Exhibit A was not received into evidence. It is maintained in the file only for the purpose of preserving the record. It is not considered in rendering the decision and order herein.
Respondent’s Evidence
Respondent placed into evidence the testimony of Mr. Thomas P. Babb, Missouri State Certified General Real Estate Appraiser. The appraiser testified as to his appraisal of the subject property. The Appraisal Report, Exhibit 1, of Mr. Babb was received into evidence. Mr. Babb arrived at an opinion of value for the subject property of $610,000 based upon a sales comparison approach to value. A cost approach to value was also presented.
In performing his sales comparison analysis, the appraiser relied upon the sales of four properties which he deemed to be comparable to the subject property. The adjusted sales prices of the comparables fell in a range from $588,150 to $673,381, with a median of $623,740, and an average of $627,250. The adjusted per square foot values were in a range of $195.92 to $224.31 compared to the unadjusted range of $196.22 to $263.04. The percentage of sale price adjustments ranged from 3.2% to 18.1%, with a 12.6% median and an 11.6% average.
FINDINGS OF FACT
1. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the St. Charles County Board of Equalization.
2. The subject property is located at 61 Catamaran Dr., Lake St. Louis, Missouri. The property is identified by parcel number 4-0020-6575-00-2 and Assessor’s account number A904000127. The property consists of .36 of an acre lot improved by a one-story brick and frame, atrium ranch, single-family home of good quality construction. The house was built in 1966 and appears to be in average condition. The residence has a total of seven rooms, which includes three bedrooms, three bath, and contains 3,018 square feet of living area. There is a full basement, with 1,448 square feet of finish and an attached three-car garage.
3. There was no evidence of new construction and improvement from January 1, 2007, to January 1, 2008.
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, 2007, to be $433,270.
5. The properties relied upon by Respondent’s appraiser were comparable to the subject property for the purpose of making a determination of value of the subject property. The properties were located within .62 to 1.37 miles of the subject. Each sale property sold at a time relevant to the tax date of January 1, 2007, in a range from November, 2005 to March, 2007. The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability.
6. The appraiser made various adjustments to the comparable properties for differences which existed between the subject and each comparable. All adjustments were appropriate to bring the comparables in line with the subject for purposes of the appraisal problem.
7. Respondent’s evidence met the standard of clear, convincing and cogent evidence in this appeal, under the provisions of Section 137.115, RSMo. Respondent’s appraisal was accepted only to sustain the original assessment made by the Assessor and not for the purpose of raising the assessment above that value.
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. Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, RSMo. 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 138.431.4, RSMo.
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. 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).
Notwithstanding the provision of Section 138.431.3, RSMo – “There shall be no presumption that the assessor’s valuation is correct,” – the Supreme Court of Missouri has held, “A tax assessor’s valuation is presumed correct.” Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341 (Mo. 2005). Citing to Hermel, supra; and Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
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. Snider, Hermel & Cupples Hesse, supra. Complainants failed to present substantial and persuasive evidence to rebut the presumption of correct 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 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.
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, Exhibit 1, p. 4.
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).
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. Div. 2 1974). Respondent’s appraiser developed two of the recognized approaches to value for an ad valorem property tax appeal. The methodology relied upon by Complainants was not a recognized method for appraisal of property before the Commission.
Respondent’s Burden of Proof
The Respondent has imposed upon him by the provisions of Section 137.115.1, RSMo, the burden of proof to present clear, convincing and cogent evidence to sustain a valuation on residential property which is made by a computer, computer-assisted method or a computer program. There is a presumption in this appeal that the original valuation, which was sustained by the Board of Equalization, was made by a computer, computer-assisted method or a computer program. There was no evidence to rebut the presumption, therefore, in order to sustain the valuation of the subject property at $506,760, appraised value, Respondent’s evidence must come within the guidelines established by the legislature and must clearly and convincingly persuade the Hearing Officer as to the value sought to be sustained.
The statutory guidelines for evidence to meet the standard of clear, convincing and cogent include the following:
(1) The findings of the assessor based on an appraisal of the property by generally accepted appraisal techniques; and
(2) The purchase prices from sales of at least three comparable properties and the address or location thereof. As used in this paragraph, the word comparable means that:
(a) Such sale was closed at a date relevant to the property valuation; and
(b) Such properties are not more than one mile from the site of the disputed property, except where no similar properties exist within one mile of the disputed property, the nearest comparable property shall be used. Such property shall be within five hundred square feet in size of the disputed property, and resemble the disputed property in age, floor plan, number of rooms, and other relevant characteristics.
Section 137.115.1(1) & (2).
Clear, cogent and convincing evidence is that evidence which clearly convinces the trier of fact of the affirmative proposition to be proved. It does not mean that there may not be contrary evidence. Grissum v. Reesman, 505 S.W.2d 81, 85, 86 (Mo. Div. 2, 1974). The quality of proof, to be clear and convincing must be more than a mere preponderance but does not require beyond a reasonable doubt. 30 AmJur2d. 345-346, Evidence section 1167. “For evidence to be clear and convincing, it must instantly tilt the scales in the affirmative when weighed against the evidence in opposition and the fact finder’s mind is left with an abiding conviction that the evidence is true.” Matter of O’Brien, 600 S.W.2d 695, 697 (Mo. App. 1980).
Respondent’s appraisal met the standard of clear, cogent and convincing, notwithstanding that two of the comparable properties fell just outside the 500 square feet of living area factor and one property was .37 of a mile beyond the 1 mile factor. Appraisers do not always have the luxury of having sufficient sales which neatly fit each of the statutory factors. When such is the case, the appraiser must exercise his or her judgment and select those sale properties which to their judgment and experience comprise the best of the possible sale properties from which they have to choose.
Evidence of Increase in Value
In any case in St. Charles County where the assessor presents evidence which indicates a valuation higher than the value finally determined by the assessor or the value determined by the board of equalization, whichever is higher, for that assessment period, such evidence will only be received for the purpose of sustaining the assessor’s or board’s valuation, and not for increasing the valuation of the property under appeal. Section 138.060, RSMo; 12 CSR 30-3.075. Therefore, Exhibit 1 was only received to sustain the value of $506,760 determined by the Assessor and sustained by the Board.
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, 2007. Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, at 897. 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).
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See, Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). 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. Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value. Rigali v. Kensington Place Homeowners’ Ass’n, 103 S.W.3d 839, 846 (Mo. App. E.D. 2003); Boten v. Brecklein, 452 S.W.2d 86, 95 (Sup. 1970). The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation. Cohen v. Bushmeyer, 2008 WL 820938 (Mo.App. E.D., March 25, 2008); Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992); State, ex rel. Missouri Hwy & Transp. Com’n v. Pracht, 801 S.W.2d 90, 94 (Mo. App. E.D. 1990); Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965).
In the present case, the opinion of value that was offered by the owners was simply the value the assessor had determined in the 2005 assessment cycle. There was no evidence presented to establish that the value of the property as of January 1, 2007 was only $433,270. No attempt was made to correlate the 2005 value to the data sought to be offered in the rejected Exhibit A. Valuation of property based upon a prior assessment cycle is not recognized as a proper or accepted means to arrive at value in a contested case before the Commission. Therefore, the owner’s opinion of value has no probative weight in this appeal.
Turning to the Shoafs’ assertion regarding the 17% increase for their property from the 2005 to the 2007 assessment, it likewise is without merit. The percentage of increase for a given property does nothing to establish fair market value. One property might have been grossly undervalued in an assessment cycle and therefore require a larger percentage increase than other properties which were not significantly undervalued. Quite simply, taxpayers who rest their case on a percentage of increase argument have a case that is a rope of sand. It will not stand up to establish the fair market value.
Finally, as to the proffered Exhibit A, it was not persuasive as to fair market value for a number of reasons. First as to the articles from Business Week, such articles simply have nothing to do with finding of true value in money for a given property. Nothing in any of the articles was relevant to what a willing buyer and seller would pay for the property under appeal on January 1, 2007. Taxpayers in appeals before the Commission would be well advised to refrain from seeking to have such documents introduced into evidence.
As to the Statistical and Comparative Market Analysis compiled for the taxpayers, it is not a recognized methodology for appraisal of property in an ad valorem tax appeal. A comparative market analysis does not meet the standards required by 12 CSR 30-3.065(1)(B)2 for appraisals before the Commission. Such documents fail to provide necessary adjustments to the listing of properties to account for differences between the sales properties and the property being valued.
The Commission does not recognize a realtor’s market analysis as a basis for establishing fair market value in an appeal. The Hearing Officer after a review of Exhibit A finds no reasonable basis to do so in this appeal. Exhibit A does not constitute substantial and persuasive evidence of fair market value as of January 1, 2007.
A taxpayer does not meet the burden of proof if evidence on any essential element of the case leaves the Commission “in the nebulous twilight of speculation, conjecture and surmise.” See, Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980). Complainants offered the 2005 Assessor’s value as their opinion of value, without any substantiation that the value represented the fair market value of the property on January 1, 2007. No documentation was provided upon which a decision could be rendered to set value at $433,270. To do so would be nothing more or less than setting a value based on speculation, conjecture and surmise. Such is not the basis upon which value is to be found in appeals before the Commission.
ORDER
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Charles County for the subject tax day is AFFIRMED.
The assessed value for the subject property for tax years 2007 and 2008 is set at $96,280.
A party may file with the Commission an application for review of this decision within thirty (30) days of the mailing of such decision. The application shall contain specific 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 appeal is based will result in summary denial. Section 138.432, RSMo 2000.
If an application for review of this decision is made to the Commission, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the Commission and an order to the Collector to release and disburse the impounded taxes, unless said taxes have been disbursed pursuant an order of the circuit court under the provisions of Section 139.031.8, RSMo. §139.031.3, RSMo. If no application for review is received by the Commission within thirty (30) days, this decision and order is deemed final and the Collector of St. Charles 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.
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 May 23, 2008.
STATE TAX COMMISSION OF MISSOURI
_____________________________________
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 23rd day of May, 2008, to: Richard Shoaf, 61 Catamaran Drive, Lake St. Louis, MO 63367, Complainant; Charissa Mayes, Assistant County Counselor, 100 North Third Street, Room 216, St. Charles, MO 63301, Attorney for Respondent; Scott Shipman, Assessor, 201 North Second, Room 247, St. Charles, MO 63301-2870; Amy Gann, Registrar, 100 North Third Street, Suite 206, St. Charles, MO 63301; Michelle McBride, Collector, 201 North Second Street, Room 134, St. Charles, MO 63301.
___________________________
Barbara Heller
Legal Coordinator