State Tax Commission of Missouri
RICHARD W. COX,)
v.)Appeal Number 07-10194
PHILIP MUEHLHEAUSLER, ASSESSOR,)
ST. LOUIS COUNTY, MISSOURI,)
AFFIRMING HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
On June 24, 2008, Senior Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) affirming the assessment by the St. Louis County Board of Equalization.
Complainant timely filed his Application for Review of the Decision.
CONCLUSIONS OF LAW
Standard Upon Review
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).
The Hearing Officer as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances.The Hearing Officer is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert’s testimony and accept it in part or reject it in part.St. Louis County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992);Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).
The Commission will not lightly interfere with the Hearing Officer’s Decision and substitute its judgment on the credibility of witnesses and weight to be given the evidence for that of the Hearing Officer as the trier of fact.Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Lowe v. Lombardi, 957 S.W.2d 808 (Mo. App. W.D. 1997); Forms World, Inc. v. Labor and Industrial Relations Com’n, 935 S.W.2d 680 (Mo. App. W.D. 1996); Evangelical Retirement Homes v. STC, 669 S.W.2d 548 (Mo. 1984); Pulitzer Pub. Co. v. Labor and Indus. Relations Commission, 596 S.W.2d 413 (Mo. 1980); St. Louis County v. STC, 562 S.W.2d 334 (Mo. 1978); St. Louis County v. STC, 406 S.W.2d 644 (Mo. 1966).
A review of the record in the present appeal provides support for the determinations made by the Hearing Officer.There is competent and substantial evidence to establish a sufficient foundation for the Decision of the Hearing Officer.A reasonable mind could have conscientiously reached the same result based on a review of the entire record. The Commission finds no basis to support a determination that the Hearing Officer acted in an arbitrary or capricious manner or abused his discretion as the trier of fact and concluder of law in this appeal.Hermel, Inc. v. STC, 564 S.W.2d 888 (Mo. 1978); Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Holt v. Clarke, 965 S.W.2d 241 (Mo. App. W.D. 1998); Smith v. Morton, 890 S.W.2d403 (Mo. App. E.D. 1995); Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).
Complainant’s Application for Review was a rearguing of the points raised at the evidentiary hearing.Complainant failed to set forth any legal claim or basis as a ground to find the Hearing Officer had abused his discretion or acted in an arbitrary or capricious manner.Complainant failed to state specific grounds upon which it was claimed the decision was erroneous.The Hearing Officer correctly addresses the issues which Complainant raised at hearing and raised again in his Application for Review.In the absence of specific facts of error or specific errors in applying the law, the Application for Review must be summarily denied.
The Hearing Officer did not err in his determinations as challenged by Complainant.
The Commission upon review of the record and Decision in this appeal, finds no grounds upon which the Decision of the Hearing Officer should be reversed or modified.Accordingly, the Decision is affirmed.
Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of the date of the mailing of this Order.
The Collector of St. Louis County shall continue to hold the disputed taxes pending an Order from the Commission as to whether a Petition for Judicial Review of the Order has been filed.
SO ORDERED August 12, 2008.
STATE TAX COMMISSION OF MISSOURI
Bruce E. Davis, Chairman
Jennifer Tidwell, Commissioner
Charles Nordwald, Commissioner
DECISION AND ORDER
Decision of the St. Louis County Board of Equalization reducing the assessment made by the Assessor is AFFIRMED.Hearing Officer finds presumption of correct assessment not rebutted by Complainant.Respondent’s evidence rebuts presumption of correct assessment by the Board. True value in money for the subject property for tax years 2007 and 2008 is set at $173,300, residential assessed value of $32,930.
Complainant appeared pro se.
Respondent appeared by Associate County Counselor, Paula J. Lemerman.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
The Commission takes this appeal to determine: (1) the true value in money for the subject property on January 1, 2007; and (2) whether there was an intentional plan by the assessing officials to assess the property under appeal at a ratio greater than 19% of true value in money, or at a ratio greater than the average residential assessment ratio for St. Louis County.The Commission has no jurisdiction to render a decision as to whether any given tax levy imposed by a taxing entity inSt. LouisCountyon the property under appeal was an illegal tax.
Complainant appeals, on the grounds of overvaluation, discrimination and illegal tax, the decision of the St. Louis County Board of Equalization, which reduced the valuation of the subject property.The Assessor determined an appraised value of $173,300, assessed value of $32,930, as residential property.The Board reduced the value to $150,000, assessed value of $28,500.Complainant proposed in his Complaint for Review of Assessment a value of $81,070, assessed value of $15,405.At the evidentiary hearing Complainant proposed a fair marked value of $133,537.23, assessed value of $25,370.A hearing was conducted on June 3, 2008, at theSt. LouisCountyGovernmentCenter,Clayton,Missouri.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
Mr. Cox testified in his own behalf.He gave his opinion of the fair market value of his property as of January 1, 2007 to be $133,537.23.This was based upon his calculation of multiplying the appraised value set by the Assessor for 2001 by the Consumer Price Index for 2001 and adding that product to the 2001 appraised value to arrive at the value for 2002.Mr. Cox then performed the same calculations for each succeeding year to arrive at his value for 2007.
The Complainant raised three claims in his appeal.These claims were: (1) increase in value on his property for 2007 was in violation of Section 137.073; (2) increase in value on his property for 2007 was greater than his neighbor; and (3) the tax imposed on his property was illegal because the increase in value was greater than the Consumer Price Index for 2006 or 5%.Mr. Cox also asserted that there was no burden of proof on him, that the Respondent had the burden of proof to establish value.
Exhibit A was received into evidence on behalf of the Complainant.Exhibit A consisted of the following documents:
(1) a one page campaign flyer for Dooley forSt. LouisCounty;
(2) Statement of Complainant: Appeal to Protect My Home from Illegal Property Tax;
(3) a copy of Section 137.073, RSMo.;
(4) a copy of a letter dated 12/2/06 from Mr. Cox to Speaker of the Missouri House of Representatives Rod Jetton;
(5) a copy of a letter dated 12/11/06, from Speaker Jetton to Mr. Cox;
(6) a copy of a letter dated 8/27/07 from Missouri State Senator Michael R. Gibbons to Mr. Cox;
(7) a copy of a St. Louis Post-Dispatch article titled: In search of fairness, dated 8/18/07; (8) a copy of a St. Louis Post-Dispatch article titled: Tax rates should be cut to offset assessment increases, senator says, dated 7/31/2007;
(9) a copy of pages 8 and 9 of the pamphlet – Property Tax Appeals Before the State Tax Commission of Missouri; and
(10) a chart with the headings Tax Years, Valuation, and Tax Limit, with calculations of values and taxes for each year 2002 through 2007.
Respondent placed into evidence the testimony of Mr. Kyle J. Armstrong, Residential Appraiser Senior for St. LouisCounty.The appraiser testified as to his appraisal of the subject property.The Appraisal Report (Exhibit 1) of Mr. Armstrong was received into evidence.Mr. Armstrong arrived at an opinion of value for the subject property of $177,000 based upon a sales comparison approach to value.In performing his sales comparison analysis, the appraiser relied upon the sales of three properties he deemed comparable to the subject property.
FINDINGS OF FACT
1.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.
2.The subject property is located at 11037 Easy Street, St. Ann, Missouri.The property is identified by parcel number 13M210461.The property consists of approximate 21,840 square foot lot improved by a one-story brick ranch style, single-family structure of average quality construction.The house appears to be in average condition.The residence has a total of six rooms, which includes three bedrooms, and 2 full baths.There is a full unfinished basement and an attached two car garage.Exhibits 1, 2 & 3.
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 $81,070, as stated on the Complaint for Review of Assessment, or $81,070 as testified to at the evidentiary hearing.
6.The properties relied upon by Respondent’s appraiser were comparable to the subject property for the appraisal problem presented. The three properties were located within less than a tenth of a mile of the subject, all being from 11033 to 11055 on Easy Street.Each sale property sold at a time relevant to the tax date of January 1, 2007.The sales dates ranged from March 2006 to February June, 2007.These sales are well within a relevant time frame for a January 1, 2007 valuation.The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area (ranging from 1,676 to 1,943 square feet)location, site size and other amenities of comparability.Exhibit 1.
7.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.The net adjustments ranged from -4.2% to -18.2%.
8.The adjusted sales prices for the comparables calculated to $176,700, $177,700 and $179,900, respectively.The appraiser concluded on a $177,000 value which calculated to a value per square foot of $110.21 compared with the sales prices per square foot of living area for the comparables of $106.79, 100.38 and $131.26.
9.Respondent’s evidence met the standard of clear, convincing and cogent evidence to establish the value of $173,300 as originally determined by the Assessor.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
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.
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof 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).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.Complainant failed to present substantial and persuasive evidence to establish the fair market value to be as he asserted.Therefore, the presumption of correct assessment by the Board was not rebutted.The Board’s value, even though it was the Assessor’s original value, stood irrespective of any evidence which Respondent presented.
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.
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).
The valuation methodology presented in Respondent’s appraisal – sales comparison approach – was a recognized and accepted approach to determine true value in money for an ad valorem tax appeal.It is the approach to value that is generally developed and the most reliable in most cases when valuing single family properties.Therefore, it carries significant probative weight on the issue of value.
The method to arrive at an opinion of value used by Mr. Cox was not any approach to value accepted in appeals before the Commission.Taxpayers who present their own theories and self-contrived methods, outside of those recognized by the Commission and the courts, to support their opinion of fair market value present nothing that is relevant on the issue the Hearing Officer must decide.It does not matter if the calculations for the proposed methodology are correct.The underlying premise supporting the method is fatally flawed.
Complainant Fails To Prove Value
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, 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.” The taxpayer must prove the fair market value asserted. 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).
Therefore, Complainant as the party seeking affirmative relief, i.e. a reduction in assessed value, must come forward with substantial and persuasive evidence to prove the value which he asserts.The claim by Mr. Cox that he has no burden of proof is simply contrary to the law.As is discussed below, Complainant has failed to meet his burden of proof and cannot prevail.
Substantial and Persuasive Evidence
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).A review of the various documents contained in Complainant’s Exhibit A will demonstrate their irrelevance to the issue of overvaluation. Documents which are not relevant do not meet the standard of being substantial and persuasive evidence.
Exhibit A, Document 1
Complainant’s first document was a copy of a campaign flyer with a quote by the St. Louis County Executive.The quote read, “Through many sacrifices our seniors have built this community, and they don’t deserve to be taxed out of their homes.”No one would seriouslydispute or disagree with the statement of Executive Dooley.However, it is simply not probative on the issue of what a willing buyer and seller would have agreed to as the purchase price of Mr. Cox’s property on January 1, 2007.The quote provides no market data for determining fair market value.Therefore, it is not substantial and persuasive evidence on the issue of overvaluation.
Exhibit A, Document 2
Mr. Cox’s second document in his exhibit is his assertion that based upon Section 137.073, RSMo, he has overpaid taxes since 2002 in the amount of $1,431.73, and a penalty of $41.31 should be imposed along with interest of $986.46 charged against the Assessor, on the alleged overpayment of real estate taxes.The taxpayer asserts he is due a payment in the total amount of $2,424.78.Here again this document has no bearing on the true value in money of the property under appeal for January 1, 2007.Therefore it is irrelevant on that issue and cannot constitute substantial and persuasive evidence of value.To the extent this document is offered in support of the claim of an “illegal” tax asserted by Mr. Cox it will be addressed below.
Exhibit A, Document 3
The third document presented by the taxpayer is a copy of Section 137.073, RSMo.It is this section of law upon which Mr. Cox bases his claim of overvaluation and illegal tax.The section of the law fails in any form or fashion to present evidence to establish fair market value of the subject property for January 1, 2007.Therefore, it is not substantial and persuasive evidence on this point.It is irrelevant on the issue of overvaluation.This section of law and its misinterpretation and misapplication by Mr. Cox is discussed in detail below.
Exhibit A, Document 4
Mr.Cox’s letter of December 2, 2006 to Missouri House Speaker Rod Jetton regarding House Bills No. 1150, 1237 and 1327 (Section 137.073, RSMo) has no bearing on the issue of fair market value.It is therefore irrelevant on this issue and does not meet the standard of substantial and persuasive evidence of value.
Exhibit A, Document 5
Speaker Jetton’s reply of December 11, 2006 to Mr. Cox is also irrelevant on the issue of value of the subject property.The letter addresses only that House Bills No. 1150, 1237 and 1327 were, “intended to protect property owners from cities or counties being able to levy excessive increases in property taxes.”This is not substantial and persuasive evidence on the issue of value.To the extent this document is offered in support of the taxpayer’s claim of an illegal tax, it is addressed below.
Exhibit A, Document 6
The letter from Senator Gibbons to Mr. Cox addresses the rate of tax levy, not assessment of real estate.It has no probative benefit relative to determining the true value in money for the subject property for the 2007 – 2008 assessment cycle.It is not substantial and persuasive evidence of value.To the extent this document is offered in support of the taxpayer’s claim of an illegal tax, it is addressed below.
Exhibit A, Documents 7 & 8
Newspaper articles are hearsay.These articles present no evidence to establish the fair market value of the property that is the subject of this appeal.Newspaper articles never present substantial and persuasive evidence of value.Newspaper articles have no relevance on the claim of overvaluation in appeals before the Commission.
Exhibit A, Document 9
Mr. Cox presents this document because he takes exception to the presenting of sales of other homes to value his property.His erroneous claim is that the Tax Commission pamphlet says that sales prices of homes cannot be used by the taxpayer to prove value and therefore they cannot be used by the Assessor.Mr. Cox has totally misread and misapplied the instructions provided in the document.
The language the taxpayer has reference to is in response to a question provided as an aid for taxpayers having an appeal before the Commission.The pamphlet presents the question: Would copies of the Assessor’s Records on other homes in my neighborhood be good to prove value? The answer given is:No.The value placed on other homes by the assessor does not prove the value of your home.
When an appraiser for the Assessor presents an appraisal report which develops a sales comparison approach, the appraiser is not using appraised values set by the Assessor on the sale properties.The appraiser is relying on actual sales prices.This is the proper method for performing the sales comparison approach to value.
The pamphlet goes on to explain that sales data by itself is not sufficient to prove value.However, sales data properly adjusted as in a sales comparison approach to account for differences between the sale properties and the property being appraised is relevant evidence for arriving at an indicated fair market value on the property. Mr. Cox has simply misconstrued and misunderstood what the pamphlet is instructing.In any event the pamphlet developed to assist taxpayers in appeals, does not preclude the Assessor from presenting an appraisal on the property under appeal.
Exhibit A, Document 10
The final document in Exhibit A is the Complainant’s calculations to support his opinion of value on his property.Mr. Cox asserts he has calculated, based upon the consumer price index, the value which should have been placed on his property for the years 2002 through 2007.In like manner relying on the consumer price index, the Complainant claims to have calculated the limit on his real estate property taxes for each of those years.This is his valuation methodology.This is the basis for his opinion of value.It is not relevant to prove value as it is not addressing what a willing buyer and seller would agree to as the sales price on January 1, 2007.It does not constitute substantial and persuasive evidence of fair market value.
Owner’s Opinion of Value Not Probative
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, — S.W.3d —-, 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).The opinion of value testified to by Mr. Cox is not derived from or supported by a methodology that the Commission recognizes.Calculation of an increase in value from year to year based upon the consumer price index has never been accepted as a proper method to appraise property.The opinion asserted by the taxpayer is not based upon proper elements and a proper foundation.Therefore, it simply has no probative value.
Claims Asserted by Complainant
The taxpayer presented three lines of argument in this appeal.The arguments presented were: (1) increase in value on his property for 2007 was in violation of Section 137.073; (2) increase in value on his property for 2007 was greater than his neighbor; and (3) the tax imposed on his property was illegal because the increase in value was greater than the Consumer Price Index for 2006 or 5%.Each of these claims will be discussed in detail.
Increase in Value Violates Section 137.073
This argument is based upon the erroneous interpretation and application of a portion of Section 137.073.This was enacted by the General Assembly in 2002.Exhibit A, Jetton Letter, 12/11/06.This enactment (House Bills, 1150, 1237 & 1327) relates to the Hancock Amendment to the Missouri Constitution and addresses increases in tax levies.Exhibit A, Jetton Letter, 12/11/06; Gibbons Letter 8/27/07.The specific language which Mr. Cox testified to at hearing as the basis for this argument is found in subsection 2 of Section 137.073.The subsection reads as follows:
2. Whenever changes in assessed valuation are entered in the assessor’s books for any personal property, in the aggregate, or for any subclass of real property as such subclasses are established in section 4(b) of article X of the Missouri Constitution and defined in section 137.016, the county clerk in all counties and the assessor of St. Louis City shall notify each political subdivision wholly or partially within the county or St. Louis City of the change in valuation of each subclass of real property, individually, and personal property, in the aggregate, exclusive of new construction and improvements. All political subdivisions shall immediately revise the applicable rates of levy for each purpose for each subclass of real property, individually, and personal property, in the aggregate, for which taxes are levied to the extent necessary to produce from all taxable property, exclusive of new construction and improvements, substantially the same amount of tax revenue as was produced in the previous year for each subclass of real property, individually, and personal property, in the aggregate, except that the rate may not exceed the greater of the rate in effect in the 1984 tax year or the most recent voter-approved rate. Such tax revenue shall not include any receipts from ad valorem levies on any real property which was assessed by the assessor of a county or city in such previous year but is assessed by the assessor of a county or city in the current year in a different subclass of real property. Where the taxing authority is a school district for the purposes of revising the applicable rates of levy for each subclass of real property, the tax revenues from state-assessed railroad and utility property shall be apportioned and attributed to each subclass of real property based on the percentage of the total assessed valuation of the county that each subclass of real property represents in the current taxable year. As provided in section 22 of article X of the constitution, a political subdivision may also revise each levy to allow for inflationary assessment growth occurring within the political subdivision. The inflationary growth factor for any such subclass of real property or personal property shall be limited to the actual assessment growth in such subclass or class, exclusive of new construction and improvements, and exclusive of the assessed value on any real property which was assessed by the assessor of a county or city in the current year in a different subclass of real property, but not to exceed the consumer price index or five percent, whichever is lower. Should the tax revenue of a political subdivision from the various tax rates determined in this subsection be different than the tax revenue that would have been determined from a single tax rate as calculated pursuant to the method of calculation in this subsection prior to January 1, 2003, then the political subdivision shall revise the tax rates of those subclasses of real property, individually, and/or personal property, in the aggregate, in which there is a tax rate reduction, pursuant to the provisions of this subsection. Such revision shall yield an amount equal to such difference and shall be apportioned among such subclasses of real property, individually, and/or personal property, in the aggregate, based on the relative assessed valuation of the class or subclasses of property experiencing a tax rate reduction. Such revision in the tax rates of each class or subclass shall be made by computing the percentage of current year adjusted assessed valuation of each class or subclass with a tax rate reduction to the total current year adjusted assessed valuation of the class or subclasses with a tax rate reduction, multiplying the resulting percentages by the revenue difference between the single rate calculation and the calculations pursuant to this subsection and dividing by the respective adjusted current year assessed valuation of each class or subclass to determine the adjustment to the rate to be levied upon each class or subclass of property. The adjustment computed herein shall be multiplied by one hundred, rounded to four decimals in the manner provided in this subsection, and added to the initial rate computed for each class or subclass of property. Notwithstanding any provision of this subsection to the contrary, no revision to the rate of levy for personal property shall cause such levy to increase over the levy for personal property from the prior year. Emphasis Added.
The language appearing in bold, italic and underlined is the specific language on which Mr. Cox rests his argument.It is noted the only reference to assessed valuation and the assessor’s responsibility is found in the first sentence of the subsection.The assessor has the duty to notify each political subdivision wholly or partially within the assessment jurisdiction of the change in value in the aggregate, exclusive of new construction and improvements.The remainder of this subsection has nothing to do with valuation of real property.The subsection has to do with revision of rates of levy.
The effect of this subsection is to allow taxing entities in the various counties to revise tax levies in accordance with the provisions set forth in section 22 of Article X of the Missouri Constitution.This section of the constitution reads as follows:
Section 22. (a) Counties and other political subdivisions are hereby prohibited from levying any tax, license or fees, not authorized by law, charter or self-enforcing provisions of the constitution when this section is adopted or from increasing the current levy of an existing tax, license or fees, above that current levy authorized by law or charter when this section is adopted without the approval of the required majority of the qualified voters of that county or other political subdivision voting thereon. If the definition of the base of an existing tax, license or fees, is broadened, the maximum authorized current levy of taxation on the new base in each county or other political subdivision shall be reduced to yield the same estimated gross revenue as on the prior base. If the assessed valuation of property as finally equalized, excluding the value of new construction and improvements, increases by a larger percentage than the increase in the general price level from the previous year, the maximum authorized current levy applied thereto in each county or other political subdivision shall be reduced to yield the same gross revenue from existing property, adjusted for changes in the general price level, as could have been collected at the existing authorized levy on the prior assessed value.
Again, it must be noted that there is nothing in this constitutional provision which addresses the valuation of real property.Section 22 does not limit the rate of increase in the valuation of real estate.The provision relates to tax levies, not assessment of property.The language in Section 137.073 cited to by Mr. Cox limiting the inflationary growth factor to the consumer price index or five percent, whichever is lower applies to tax levies.It is not applicable to the setting of the true value in money on real property.It is not applicable to the calculation of the assessed value on real property.
Complainant’s argument on this point is a misinterpretation and misapplication of Section 137.073.The assessor’s increase in value on the property under appeal from the 2005 to the 2007 assessment cycle was not in violation of Section 137.073.Nor were any increases in value on this property from 2002 to 2007 in violation of Section 137.073.The section relied on is irrelevant to the valuation and assessment of real property.
Increase for 2007 Greater Than Increase on Neighboring Property
Complainant presented no evidence to address his claim of discrimination.To establish discrimination, the taxpayer had to prove the average level of assessment for residential property in St. LouisCountyfor 2007.This is done by (a) independently determining the market value of a representative sample of residential properties in St. Louis County; (b) determining the assessed value placed on the property by the assessor’s office for the relevant year; (c) dividing the assessed value by the market value to determine the level of assessment (assessment ratio) for each property in the sample; and (d) determining the mean and median of the results.Koplar v. State Tax Commission, 321 S.W.2d 686, 690 (Mo. 1959).Evidence of value and assessments of a few properties does not prove discrimination.Substantial evidence must show that all other property in the same class, generally, is actually undervalued.State ex rel. Plantz v. State Tax Commission, 384 S.W.2d 565, 568 (Mo. 1964).
The taxpayer then must prove the assessment ratio on the property under appeal.This is done by proving the true value in money for the subject property and then dividing that into the assessed value set by the Assessor for 2007 to determine the assessment ratio on the subject property.The difference between the actual assessment level of the subject property and the average level of assessment for all residential property, taken from a sufficient representative sample in St. LouisCountymust demonstrate a disparity that is grossly excessive.Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986).No other methodology is sufficient to establish discrimination.Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696 (Mo. 1958).
The evidence on the record establishes that Complainants property is being valued at its true value in money and it is being assessed at 19% of that value – the residential assessment ratio.There is no evidence to establish that the average assessment ratio for residential property inSt. LouisCountyfor 2007 was not at 19%.Complainant’s claim of discrimination based upon a difference in the percentage of increase in value between his property and a single neighboring property fails to meet the required standard established by the case law.
Complainant finally argues that the tax imposed on his property for 2007 is an illegal tax because his real estate property taxes for 2007 increased by more than the consumer price index from 2006 to 2007.This is a claim based upon the taxpayer’s reading of Section 137.073, RSMo.The Commission has no jurisdiction with regard to claims of an illegal tax under the provisions of Section 137.073.There is no authority given to the Commission in any part of Section 137.073 to order a refund of taxes, with penalty and interest as claimed by Mr. Cox.Exhibit A, Appeal To Protect My Home From Illegal Tax.Since Mr. Cox believes the taxing authorities inSt. LouisCounty have not complied with the provisions of Section 137.073 he must seek redress for his claim under that statute, and not through his appeal to the Commission.
Section 137.073.8 specifically provides, “whenever a taxpayer has cause to believe that a taxing authority has not complied with the provisions of this section, the taxpayer may make a formal complaint with the prosecuting attorney of the county.Where the prosecuting attorney fails to bring an action within ten days of the filing of the complaint, the taxpayer may bring a civil action pursuant to this section and institute” a class action.This is the remedy provided by law under a claimed violation of Section 137.073.There is no remedy under Section 137.073 in an appeal to the Commission.Therefore, there the Hearing Officer is without authority to rule on the claim of an illegal tax.
Respondent’s Burden of Proof
Complainant asserts that the burden of proof in the appeal is on the Respondent.The taxpayer is mistaken.Respondent could have elected, after the close of Mr. Cox’s case to have simply not introduced any evidence and relied upon the presumption of correct assessment by the Board.If in fact, Respondent would have elected that course of action in this appeal, the outcome would have been the same.The Complainant, as addressed above, failed to meet his burden of proof and rebut the presumption of correct assessment in the board.Therefore, irrespective of Respondent’s evidence, Complainant would not have prevailed in this instance.
In an instance, as here where the Respondent offers evidence in support of his original valuation, the burden of proof is 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 reduced 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 $173,300, 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 evidence met the clear, cogent and convincing standard in this instance.However, as discussed above, until the Complainant has rebutted the presumption of correct assessment to begin with, the Respondent can still rely on the presumption.
In any case in St. Louis 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 for the purpose of affirming the Assessor’s original value of $173,300, and not for increasing the value to $177,000.
The assessed valuation for the subject property as determined by the Board of Equalization forSt. LouisCountyfor the subject tax day is SET ASIDE.The assessed valuation for the subject property as determined by the Assessor for St. Louis County for the subject tax day is AFFIRMED.
The assessed value for the subject property for tax years 2007 and 2008 is set at $32,930.
Complainant 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, 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 appeal is based will result in summary denial.Section 138.432, RSMo 2000.
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 a filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of 139.031.8 RSMo.If no Application for Review is filed, the Collector is ordered to disburse the disputed taxes in accordance with the assessment set by this Decision and Order.
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, 2008.
STATE TAX COMMISSION OFMISSOURI
W. B. Tichenor
Senior Hearing Officer