STATE TAX COMMISSION OF MISSOURI
| RICHARD COOK, | )
) ) ) ) |
Appeal No. 19-30326
Parcel/locator No(s): 29-120-24-06-00-0-00-000
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| Complainant(s), | ) | |
| ) | ||
| v. | ) | |
| ) | ||
| GAIL MCCANN-BEATTY, ASSESSOR,
JACKSON, COUNTY, MISSOURI, |
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) |
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| Respondent. | ) |
DECISION AND ORDER
Richard Cook (Complainant) appeals the Jackson County Board of Equalization’s (BOE) decision finding the true value in money (TVM) of the subject property on January 1, 2019, was $55,000, with an assessed value of $17,600. Complainant claims the property is overvalued and proposes a value of $4,000. Complainant claims the property is misclassified as commercial and should be classified as residential. Complainant did not produce substantial and persuasive evidence establishing either overvaluation or misclassification. The BOE’s decision is affirmed.[1]
Complainant appeared pro se. Respondent was represented by counsel Elizabeth Judy. The evidentiary hearing was conducted on August 25, 2021 via WebEx.
FINDINGS OF FACT
- Subject Property. The subject property is located at 901 Tracy Ave, Kansas City, in Jackson County, Missouri. The parcel/locator number is 29-120-24-06-00-0-00-000. The subject property consists of a 6,950 square foot vacant lot. Complainant purchased the subject property on or about April 4, 2019, for $55,000.
- Respondent and BOE. Respondent classified the subject property as commercial and determined the TVM on January 1, 2019, was $39,100. The BOE classified the subject property as commercial and independently determined the TVM on January 1, 2019, was $55,000.
- Complainant’s Evidence. Complainant testified the TVM of the subject property on January 1, 2019, was $4,000. Complainant submitted Exhibits A-N, which were received and admitted into evidence. Exhibits A-M include photographs and tax receipts of comparable parcels/lots in the area of the subject property. Exhibit N includes photographs and recent tax information regarding the subject property.
- Respondent’s Evidence. Respondent submitted Exhibits 1 and 2. Exhibit 1 is WDT of staff appraiser, Bill Everly, and Exhibit 2 is the appraisal report concluding the TVM of the subject property on January 1, 2019, was $55,000. Exhibit 2 utilizes the sales comparison approach to estimate the market value of the subject property from recent sales of two comparable properties. Mr. Everly testified he could not find any additional recent comparable sales and he made a good faith effort to conduct a comparison of three sales to the subject property, but could not find more than two sales. Exhibit 2 includes the two lots sold at $7.12 per square foot and $8.77 per square foot, which are both close in price to the subject property at $7.91 per square foot. See Exhibit 2.
- Value. The TVM of the subject property on January 1, 2019, was $55,000, with an assessed value of $17,600.
CONCLUSIONS OF LAW
- Assessment and Valuation
Pursuant to Article X, Sections 4(a) and 4(b), Mo. Const. of 1945 real property and tangible personal property is 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. Commercial real property is assessed at 32% of its TVM as of January 1 of each odd-numbered year. Section 137.115.5(1)(c). “True value in money is the fair market value of the property on the valuation date, and is a function of its highest and best use, which is the use of the property which will produce the greatest return in the reasonably near future.” Snider v. Casino Aztar/Aztar Mo. Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005) (internal quotation omitted). The fair market value is “the price which the property would bring from a willing buyer when offered for sale by a willing seller.” Mo. Baptist Children’s Home v. State Tax Comm’n, 867 S.W.2d 510, 512 (Mo. banc 1993). Determining the TVM is a factual issue for the STC. Cohen v. Bushmeyer, 251 S.W.3d 345, 348 (Mo. App. E.D. 2008). The “proper methods of valuation and assessment of property are delegated to the Commission.” Savage v. State Tax Comm’n, 722 S.W.2d 72, 75 (Mo. banc 1986).
“For purposes of levying property taxes, the value of real property is typically determined using one or more of three generally accepted approaches.” Snider, 156 S.W.3d at 346. The three generally accepted approaches are the cost approach, the income approach, and the comparable sales approach. Id. at 346-48; see also St. Louis Cty. v. Sec. Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977).
The comparable sales approach “is most appropriate when there is an active market for the type of property at issue such that sufficient data are available to make a comparative analysis.” Snider, 156 S.W.3d at 348. For this reason, the comparable sales approach is typically used to value residential property. “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 347-48 (internal quotation omitted). “Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character.” Id. at 348.
True value in money is the fair market value of the property on the valuation date, and is a function of its highest and best use, which is the use of the property which will produce the greatest return in the reasonably near future. Aspenhof Corp. v. State Tax Commission, 789 S.W. 2d 867, 869 (Mo. App. 1990). It is true that property can only be valued according to a use to which the property is readily available. But this does not mean that in order for a specific use to be the highest and best use for calculating the property’s true value in money that particular use must be available to anyone deciding to purchase the property. . . .A determination of the true value in money cannot reject the property’s highest and best use and value the property at a lesser economic use of the property. Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W. 3d, 341, 348-349 (Mo. 2005)
- Evidence
The hearing officer is the finder of fact and determines the credibility and weight of the evidence. Kelly v. Mo. Dep’t of Soc. Servs., Family Support Div., 456 S.W.3d 107, 111 (Mo. App. W.D. 2015). The finder of fact in an administrative hearing determines the credibility and weight of expert testimony. Hornbeck v. Spectra Painting, Inc., 370 S.W.3d 624, 632 (Mo. banc 2012). “It is within the purview of the hearing officer to determine the method of valuation to be adopted in a given case.” Tibbs v. Poplar Bluff Assocs. I, L.P., 599 S.W.3d 1, 9 (Mo. App. S.D. 2020). 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, subclassification or assessment of the property.” Section 138.430.2. 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. Id.
- Complainant’s Burden of Proof
The BOE’s valuation is presumptively correct. Rinehart v. Laclede Gas Co., 607 S.W.3d 220, 227 (Mo. App. W.D. 2020). To prove overvaluation, a taxpayer must rebut the BOE’s presumptively correct valuation and prove the “value that should have been placed on the property.” Snider, 156 S.W.3d at 346. The taxpayer’s evidence must be both “substantial and persuasive.” Id. “Substantial evidence is that evidence which, if true, has probative force upon the issues, and from which the trier of fact can reasonably decide the case on the fact issues.” Savage, 722 S.W.2d at 77 (internal quotation omitted). Evidence is persuasive when it has “sufficient weight and probative value to convince the trier of fact.” Daly v. P.D. George Co., 77 S.W.3d 645, 651 (Mo. App. E.D. 2002); see also White v. Dir. of Revenue, 321 S.W.3d 298, 305 (Mo. banc 2010) (noting the burden of persuasion is the “party’s duty to convince the fact-finder to view the facts in a way that favors that party”). A taxpayer does not meet his burden if evidence on any essential element of his case leaves the STC “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).
- Complainant Did Not Prove Overvaluation.
Complainant testified that in his opinion, the value of the property was $4,000. He testified that he paid $55,000 for the property with the intention to build a family home, but that upon inspection, the slab from a prior building had a basement underneath, which would be costly to remove before he could begin building. Complainant testified that the cost for that would approximate $50,000, calculated as $300 per square meter. Complainant’s updated value was based on subtracting the costs to ready the property for construction from the price he paid for the property. All of Complainant’s evidence is admitted into the record; however, the evidence lacks authentication and is speculative and is weighed accordingly. Complainant offered no evidence of any appraisal to value the subject property, aside from his own testimony as a Construction Manager. Specifically, Exhibit N is unpersuasive because it is not backed by any proper appraisal. See Shelby Cty. R-IV Sch. Dist. v. Herman, 392 S.W.2d 609, 613 (Mo. 1965); see also Cohen v. Bushmeyer, 251 S.W.3d 345, 349 (Mo. App. W.D. 2008) (holding a landowner’s opinion of value lacks probative value when there is “no other evidence as to what he based his opinion on or how he arrived at his opinion of [value]”).
The data submitted by Complainant for the comparable lots was not authenticated and the valuations were tax values, not sales prices, with no market-based adjustments to allow for a comparison between the comparable lots and the subject property. Therefore, all of the comparable lots data and analysis submitted in Complainants Exhibit(s) is both speculative and incomplete (see Exhibits A – N).
Respondent’s Exhibit 1 utilizes the comparable sales approach to estimate that the value of the subject property on January 1, 2019, was $55,000. (Ex. 1 at 2). Mr. Everly credibly testified in the WDT that the comparable sales approach was the best valuation approach for the subject property. Respondent presented market-based sales data for the only recent sales of two comparable lots. Although Complainant testified that Respondent should have presented three comparables, Complainant had the burden of rebutting the BOE’s determination of value through substantial and persuasive evidence, which Complainant did not.
- Complainant Did Not Prove Misclassification.
Section 137.016.1(3) defines “Utility, industrial, commercial, railroad and other real property” as “all real property used directly or indirectly for any commercial, mining, industrial, manufacturing, trade, professional, business, or similar purpose….” In pertinent part, Section 137.016.1(1) defines “residential property” as “all real property improved by a structure which is used or intended to be used for residential living by human occupants….” “All other real property not included in the property listed in subclasses (1) and (2) of Section 4(b) of Article X of the Missouri Constitution, as such property is defined in this section, shall be deemed to be included in the term “utility, industrial, commercial, railroad and other real property.” Section 137.016.1(3). “Determining whether a property’s use falls within one of the subclassification definitions set forth in section 137.016.1 is an issue of fact for the STC.” Rinehart v. Bateman, 363 S.W.3d 357, 366 (Mo. App. W.D. 2012). Complainant argued that the property is misclassified, as he intends to use it for residential purposes. Complainant testified that the property does have utilities available, there is no current building on the property, and that the prior use was for an event space. Complainant testified that the property is zoned both residential and commercial. Complainant further testified that he has not begun construction on any type of residence despite having owned the property for over two years. Respondent’s witness Mr. Everly testified that the prior commercial building had burned down and was demolished prior to January 1, 2019. All parties agreed in the hearing that the prior use was commercial and the area of the property was industrial, with no residences nearby. The evidence presented supports the BOE’s classification of the subject property as commercial. See Snider, 156 S.W. 3d, 341, 348-349 (Mo. 2005) (property can only be valued according to a use to which the property is readily available. But this does not mean that in order for a specific use to be the highest and best use for calculating the property’s true value in money that particular use must be available to anyone deciding to purchase the property). Complainant failed to prove the property was residential, and there is no basis in the record for concluding the subject property is not properly classified as commercial property. Under these circumstances, there is no classification ambiguity requiring an analysis of the section 137.016.5 factors. Complainant did not prove misclassification.
CONCLUSION AND ORDER
The BOE decision is affirmed. The TVM of the subject property as of January 1, 2019, was $55,000, classified as commercial, with an assessed value of $17,600. [2]
Application for Review
A party may file with the Commission an application for review of this decision within 30 days of the mailing date set forth in the certificate of service for this decision. The application “shall contain specific detailed grounds upon which it is claimed the decision is erroneous.” Section 138.432. The application must be in writing, and may be mailed to the State Tax Commission, P.O. Box 146, Jefferson City, MO 65102-0146, or emailed to Legal@stc.mo.gov. A copy of the application must be sent to each person 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.
Disputed Taxes
The Collector of Jackson 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.
SO ORDERED September 10, 2021.
STATE TAX COMMISSION OF MISSOURI
Erica M. Gage
Senior Hearing Officer
State Tax Commission
Certificate of Service
I hereby certify that a copy of the foregoing has been electronically mailed and/or sent by U.S. Mail on September 10, 2021, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.
Elaina Mejia
Legal Coordinator
[1] Complainant timely filed a complaint for review of assessment. The State Tax Commission (STC) has authority to hear and decide Complainant’s appeal. Mo. Const. art. X, Section 14; section 138.430.1, RSMo 2000. All statutory citations are to RSMo 2000, as amended.
[2] Missouri operates on a two-year reassessment cycle for valuing real property. See Section 137.115.1. Absent new construction or improvements to a parcel of real property, the assessed value as of January 1 of the odd year remains the assessed value as of January 1 of the following even year.