Robert & Bonnie Palmer v. Gray (Christian)

ROBERT & BONNIE PALMER,	)
	)
Complainants,	)
	)
v.	)	Appeal Number 13-50501
	)
DANNY GRAY, ASSESSOR,	)
CHRISTIAN COUNTY, MISSOURI,	)
	)
Respondent.	)

ORDER

AFFIRMING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

 

On March 12, 2014, Senior Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) setting aside the assessment by the Christian County Board of Equalization and setting the appraised value of Complainant’s property at $464,720, and assessing same as a mixed-use property with an assessed value of $114,910.

Complainants filed their Application for Review of the Decision.[1] Respondent filed his Response. Complainant filed a Reply.

 

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.[2]

The Hearing Officer as the trier of fact may consider the testimony of witnesses 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 witnesses who testify

on the issue of reasonable value, but may believe all or none of the testimony and accept it in part or reject it in part.[3]

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.[4]

DECISION

Complainants raised the following points in their Application for Review:[5]

1. Hearing Officer erred in rulings of admissibility of evidence.
2. Hearing Officer showed extreme prejudice.
3. Hearing Officer erred in not granting a continuance for the evidentiary hearing due to the medical condition of Complainants’ appraiser.
4. Hearing Officer erred in ridiculing Complainants’ appraiser.
5. Hearing Officer erred in receiving evidence (Exhibit 6) presented by Assessor.
6. Hearing Officer erred in his reliance on evidence and theory of the case presented by Respondent.

The Commission will briefly address the points raised.

Admissibility of Evidence

            Complainants presented no specific allegations or reasoning to establish how the Hearing Officer erred in his rulings on the admissibility of evidence tendered by Complainants. A review of the record shows that there was sound basis for the rulings the Hearing Officer made. Mr. Palmer failed to establish himself as an expert relative to the appraisal of real property and wished to use methodologies that were not established to be correct or appropriate appraisal approaches. The Hearing Officer did not err in his exclusion of Complainants’ exhibits as addressed in the Decision and Transcript.

Showing of Prejudice

            The record fails to show that the Hearing Officer ever made the statement to Mr. Palmer “Don’t insult my intelligence! This building was never a barn!” The Transcript shows that under questioning by Mr. Klusmeyer relative to the use of the “Great Hall” or “Castle”, Mr. Palmer made reference to a picture of the structure. At that point, the Hearing Officer concluded that the structure was not a garage and went on to say;

“Sir, to come before the State Tax Commission with a claim that his structure right here is a garage, and should be appraised as – assessed and classified as part of a residence insults the intelligence of the Commission and this hearing officer. And to say that this utilization is all just a part of your residence does likewise.”[6]

 

The Commission does not find that the comments made by the Hearing Officer constituted prejudice in his conduct of the hearing or in his rendering of the Decision. The comments constitute nothing more than his observation relative to the position that Complainants were taking regarding the use of the improvement.

The Hearing Officer did not err in his conduct of the hearing and did not show prejudice as alleged by Complainants.

Failure to Grant Continuance

            Complainants complain of procedural error in not granting a continuance to a different date for the hearing because of their appraiser (Mr. Siemer) having a medical procedure the morning of the hearing. However, Complainants failed to allege exactly how their case was prejudiced by the appraiser appearing and testifying relative to his appraisal. The Commission file shows that by email dated 12/18/13 – 8:01 AM, the Hearing Officer informed the parties as follows:

“The Hearing Officer is aware that Mr. Siemer may not be available until later in the morning or afternoon. However, we will proceed with the direct and cross-examination of Mr. Palmer and if completed before Mr. Siemer is available, we will stand in recess until Mr. Siemer arrives.”

 

From this the Commission concludes that the Hearing officer did not err, but made specific accommodation relative to permitting Complainants’ appraiser to testify at a time when he could appear.

At the hearing when Mr. Siemer was called as a witness, the Hearing Officer informed the witness: “I understood that you had had a procedure … And if during the course of this you need to take a break, you simply let me know and we’ll take a recess.”[7] Mr. Palmer made no request at that time that the hearing be continued to a later time for the testimony from Mr. Siemer. The Hearing Officer proceeded to conduct in essence a direct examination of the appraiser so as to lay the foundation in the record for the offering of the exhibits and receiving of any objections from Respondent’s Counsel.[8] At no time during the examination that extends through 10 pages of the transcript did either the witness or Mr. Palmer request that the Hearing Officer grant a continuance of the hearing due to the physical condition of Mr. Siemer. During the entirety of the cross-examination of the appraiser by Respondent’s Counsel neither Mr. Siemer not Mr. Palmer requested the Hearing Officer to recess, adjourn or continue the hearing due to Mr. Siemer not being able to physically continue to testify.[9]

In summary, there is nothing in the Transcript to establish that the Hearing Officer was ever requested to grant a continuance in the hearing due to the inability of Mr. Siemer to testify. Complainants failed to establish any harm that resulted from holding the hearing. The Hearing Officer provided an accommodation via his email to insure that Mr. Siemer would be permitted to testify. The Hearing Officer cannot be found to have erred when no request was made at the hearing for a continuance because of Mr. Siemer’s physical condition. The fact that Mr. Siemer did testify without any need of being granted a recess or continuance validates the decision of the Hearing Officer to hold the hearing on the date originally scheduled.

The Hearing Officer did not err in his conduct of the hearing relative to the appearance of Complainants’ appraiser.

Ridiculing Appraiser

            Complainants assert “The appraiser was recently under sedation at the time of the hearing and was unable to coherently answer questions about his appraisal. And was ridiculed by the hearing officer.” Complainants fail to point out a single instance during the entire examination of Mr. Siemer where he complained of feeling bad due to any side effect of sedation, or of his inability to answer questions. Complainants point to nothing specific as to where the witness was incoherent in his testimony. There is also a failure to cite to any specific example of the hearing officer ridiculing the appraiser.

A review of the questioning of the appraiser by the Hearing Officer fails to provide any basis to support the claim of ridicule. The fact that a hearing officer may question an expert witness as to his procedure, methodology or theory in a given case does not equate to ridicule. Ridicule consists of “the act of making someone or something the object of scornful laughter by joking, mocking, etc.”[10] There is nothing from the record which shows any such action by the Hearing Officer.

Receiving Respondent’s Evidence – Exhibit 6

            Complainants allege error on the part of the Hearing Officer in accepting into evidence Exhibit 6[11] which contained two photographs of a sign that had been posted on the property in 2010 advertising a nativity celebration. A review of the record shows that both Complainants were permitted to explain and testify relative to what was being depicted in the photograph.[12] The record clearly shows the photograph was accurate in what it depicted and Mr. and Mrs. Palmer testified and gave the explanation for why the sign had been placed on their property. Complainants provide no specific assertion as to exactly what in the Decision is in error due to reliance on the two photographs in Exhibit 6 referencing a nativity celebration. There is nothing in the Decision indicating that the final determinations made by the Hearing Officer rested upon anything portrayed in the two photographs.

The Hearing Officer did not err in his admission into evidence of Exhibit 6.

Reliance on Respondent’s Theory and Evidence

            The final allegation of error presented by Complainants took exception on the assessor’s opinion that the disputed structure was Class C, that the disputed structure was a commercial building and that respondent presented as evidence Complainant’s 2012 tax return (Exhibit 7). Complainants presented no line of argument as to what specifically in the Decision was in error due to any of these factors. Exhibit 7 was received into evidence without objection.[13] Raising an argument against the evidence at this stage comes too late. There was no error on the part of the Hearing Officer in receiving Exhibit 7 into evidence. The Hearing Officer concluded that Complainants failed to carry their burden of proof on either the overvaluation or misclassification claims. Therefore, the points argued by Complainants are nothing more than disagreement with the conclusions reached in the Decision. However, they provide no basis upon which the Commission should reverse the Hearing Officer.

Summary and Conclusion

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.[14]

The Hearing Officer did not err in his determinations as challenged by Complainants.

ORDER

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. The Decision and Order of the hearing officer, including the findings of fact and conclusions of law therein, is incorporated by reference, as if set out in full, in this final decision of the Commission.

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 mailing date set forth in the Certificate of Service for this Order.

If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts unless disbursed pursuant to Section 139.031.8, RSMo.

If no judicial review is made within thirty days, this decision and order is deemed final and the Collector of 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.

SO ORDERED June 23, 2014.

STATE TAX COMMISSION OF MISSOURI

 

Bruce E. Davis, Chairman

 

Randy B. Holman, Commissioner

 

Victor Callahan, Commissioner

 

                                                              Certificate of Service

 

I hereby certify that a copy of the foregoing has been mailed postage prepaid this 25^th day of June, 2014, to: Robert Palmer, 1500 Martins Branch Rd., Fordland, MO 65652, Complainant; Aaron Klusmeyer, 901 St Louis, 20^th Floor, Springfield, MO 65806, Attorney for Respondent; David Stokely, Assessor, 100 W. Church Rm. 301, Ozark, MO 65721, Kay Brown, Christian County Clerk 100 West Church, Room 206, Ozark, MO 65721; Ted Nichols Christian County Collector 100 W. Church, Room 101, Ozark, MO 65271.

 

Jackie Wood

Legal Coordinator

 

Contact Information for State Tax Commission:

Missouri State Tax Commission

P.O. Box 146

301 W. High Street, Room 840

Jefferson City, MO 65102

573-751-2414

573-751-1341 FAX

 

[1] The document filed opened with the following statement: “Request for an appeal before a panel in reference to the decision and order issued on March 12, 2015 by W. B. Tichenor, Senior Hearing Officer.” The Commission deems this to be an Application for Review and proceeds accordingly.

 

[2] 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).

 

[3] 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).

 

[4] 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).

 

[5] The points presented have been rephrased to couch the Complainants’ points in terms of allegations as to Hearing Officer error.

 

[6] Tr. 77:24 – 78:1; 78:16 – 23

 

[7] Tr. 84:14 – 19

 

[8] Tr. 85:8 – 95:8

 

[9] Tr. 95:12 – 121:5

 

[10] Webster’ New World Dictionary, Second College Edition, p. 1224

 

[11] Exhibit 6 consists of 9 different photographs of the subject property, two of which advertised “Free Annual – Nativity Celebration – First 2 Weekends in December – Entertain Displays – Live Nativity – nativityclelbration.com”

 

[12] Tr.140:13 – 141:25

 

[13] Tr.71:11 – 19

 

[14] 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.2d 403 (Mo. App. E.D. 1995); Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).

 

 

DECISION AND ORDER 

HOLDING

Decision of the Christian County Board of Equalization reducing the assessment made by the Assessor is SET ASIDE.Complainants failed to present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization.Respondent presented substantial and persuasive evidence to establish the basis for valuation.

True value in money for the subject property for tax years 2013 and 2014 is set at $464,720, residential assessed value of $114,910.

Complainants appeared pro se.

Respondent appeared in person and by Counsels, Aaron M. Klusmeyer and John Housley, Christian County Counselor, Lowther & Johnson, Springfield, Missouri.

Case heard and decided by Senior Hearing Officer W. B. Tichenor.

ISSUE

Complainants appeal, on the grounds of overvaluation and misclassification, the decision of the Christian County Board of Equalization, which reduced the valuation of the subject property.The Commission takes this appeal to determine the true value in money and classification for the subject property on January 1, 2013.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 this appeal is proper.Complainants timely appealed to the State Tax Commission from the decision of the Christian County Board of Equalization.

2.Evidentiary Hearing.The Evidentiary Hearing was held on December 19, 2013, at the Christian County Courthouse, Ozark, Missouri.Transcript was filed with the Commission February 3, 2014.

3.Identification of Subject Property.The subject property is identified by map parcel number 01-0.9-32-000-000-013-000.It is located at 1500 & 1700 Martins Branch Road, Fordland, Missouri.[1]

4.Description of Subject Property.The subject property consists of a total of 142.13 acres, 139.13 of which are under an agricultural land classification.The remaining three acres are divided as 1 acre classified as residential and 2 acres classified as commercial.The property is improved by various structures identified on the Property Record Card.These include Structure 1 – Barn, Structure 2 – Mobile Home; Exhibit 3 – Meeting Hall; Structure 4 – Castle; Structure 5 – Shed; Structure 6 – parking area.[2]

The property is known as Chateau Charmant has been further described as follows:[3]

“The castle was modeled after a 14^th century French chateau; it was built almost entirely by three people.Chateau Charmant is French for Charming Castle.Each room is painted to reflect a different castle from Europe.The Castle has six main rooms, with two bedroom suites for overnight guests.The beans in the great hall are 42 feet high and all hand made by Amish craftsmen.There are clouds painted on the ceilings, the tour of the castle lasts about one hour; admission is $7.50 for adults; $5 for students; and $3.50 for toddlers.You must call in advance to arrange a tour.Chateau Charmant is available for private parties and weddings.”

5.Assessment Challenge.Complainants did not challenge the assessment of the agricultural portion of the property – the barn (Structure 1) or land value.The challenge went only to the issue of the value of Structures 2, 3, 4, 5 & 6, and classification of the two commercial acres.[4]

6.Assessor’s Assessment.The Assessor[5] assessed the Complainants’ property as follows:[6]

7.Board of Equalization Assessment.The Board of Equalization assessed Complainants’ property as follows:[7]

8.Complainant’s Evidence.Complainants offered into evidence the following exhibits:

See, Exclusion of Exhibits, Weight to be Given Evidence, and Methods of Value, infra.

9.No Evidence of New Construction & Improvement.There was no evidence of new construction and improvement from January 1, 2013, to January 1, 2014, therefore the assessed value for 2013 remains the assessed value for 2014.[8]

10.Mr. Palmer Not an Expert Witness.Mr. Palmer failed to establish that by education, training or experience he would qualify as an expert in the appraisal of real property.

11.Complainants Fail to Rebut Presumption.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, 2013, to be $300,000, as proposed on the Complaint for Review of Assessment, or to establish misclassification of the commercial portions of the property.See, Presumption In Appeal, Burden of Proof, Misclassification Not Established, and Complainants Fail to Prove Overvaluation, infra.

12.Respondent’s Evidence.Respondent offered into evidence the following Exhibits, which were received into the record:

13.Respondent’s Adjusted Property Record Card.Mr. Gray made certain adjustments to the Property Record Card after his visit to the property and review of the information he had obtained.Those adjustments are reflected in Exhibit 4A.The proposed assessment tendered by Respondent at the hearing was as follows:[9]

14.Structure 6 Not Part of Valuation.Complainants’ evidence established that the value given to the parking area was not appropriate given that this was simply a graded area and not an area that had been prepared by spreading of gravel for a parking area.There is no basis that this graded area provides any contributory value that would be recognized by the market.[10]

15.Basis for Value Established.Respondent’s evidence established the basis for concluding fair market value of the subject property as set out below:

 

See, Respondent Established Basis for Value, infra

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.[11]

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.[12]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.[13]

Presumption In Appeal

There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[14]This presumption is a rebuttable rather than a conclusive presumption.It places the burden of going forward with some substantial evidence on the taxpayer – Complainant.The presumption is not evidence of value.

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.[15]

Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[16]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.[17]As will be addressed in detail under Misclassification Not Established and Complainants Fail to Prove Overvaluation, Complainants did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board, with the exception of the matter of assessment for a parking area.

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.[18]True value in money is defined in terms of value in exchange and not value in use.[19]It is the fair market value of the subject property on the valuation date.[20]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.[21] 

The Appraisal of Mr. Siemer contained a Definition of Market Value which comes within the Standard For Valuation.[22]However, the valuation was for only Structures 3, 4 & 5 and did not include the land on which these buildings set.Therefore, the Siemer valuation was for what a willing buyer and seller would pay for three structures absent the land.

Exclusion of Exhibits

This case illustrates what happens when a taxpayer believes that a multitude of documents equates to substantial and persuasive evidence.The critical factor is that in order for a document to achieve the status of “evidence” it must have a proper foundation and be shown to be relevant to the issue to be decided in the appeal.In this instance, the vast majority of the Exhibits tendered on behalf of Complainants failed to clear the hurdle of proper foundation and relevance.

The bulk of Mr. Palmer’s exhibits[23] were presented in support of his attempt to adjust the valuation made by the Board of Equalization on the property record card.In other words, Mr. Palmer attempted to develop a type of cost approach as it related to structures 3, 4 and 5.Notwithstanding Mr. Palmer’s background, the evidence did not establish him as an expert in either the application of the Hunnicut mass valuation methodology or as an expert in the appraisal of real property.The documents, assertions, calculations and conclusions advanced in the various excluded documents were all provided in an attempt to support Mr. Palmer’s “cost methodology.”The fatal error is that lacking a foundation to establish expert credentials for performing such a valuation, the documents had no probative value.

Mr. Palmer also tendered a group of exhibits which related to properties in Webster County and a property on Osceola Road in Christian County.[24]The tendered documents are neither appropriate for conducting a cost approach or for constructing a sales comparison methodology to arrive at the fair market value of the contested property.To the extent they were offered for either purpose, they were irrelevant and lacking any foundation for admissibility.

Weight to be Given Evidence

The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled.The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide.[25]

The Hearing Officer as the trier of fact may consider the testimony of an expert or lay 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 lay or expert witnesses who testify on the issue of reasonable value, but may believe all or none of the testimony and accept it in part or reject it in part.[26]The Hearing Officer can accord no probative weight to the asserted value for the contested structures as opined by Mr. Palmer.As to the opinion of Complainant’s appraiser, Mr. Siemer, the Hearing Officer is not persuaded that his appraisal correctly established the fair market value of the contested property as of 1/1/13. This will be discussed in detail below.

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.[27]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.[28]The methodology advanced by Mr. Palmer did not constitute a cost approach for concluding the value of the property under appeal.The Siemer appraisal while performing both a sales comparison and cost approach to arrive at a conclusion of value was not found to be persuasive.

Burden of Proof

In order to prevail on an overvaluation claim, Complainants must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2013.[29]In order to prevail on a claim of misclassification and obtain a residential classification on the disputed property, Complainants must establish that the land in dispute is improved by a structure which is used or intended to be used for residential living by human occupants.[30]

There is no presumption that the taxpayer’s opinion as to value or classification is correct. The taxpayer bears the burden of proof.The taxpayer is the moving party seeking affirmative relief and bears the burden of proof on the elements necessary to establish the claim of overvaluation and misclassification.Therefore, the Complainants bear the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.”[31]

As to the claim of overvaluation, Complainants must establish, by substantial and persuasive evidence, what a willing buyer and seller would have paid for the contested property – 3 acres and structures 2, 3, 4 & 5 as of 1/1/13.As to the claim of misclassification, Complainants must establish, by substantial and persuasive evidence, that the contested property – Structure 3 – Castle – and the land which supports it meets the statutory definition for residential property.As will now be addressed in detail, Complainants have failed to meet the burden to establish their claim of overvaluation and the claim of misclassification.The Hearing Officer will first address the misclassification ground for the appeal.

Misclassification Not Established

The Board’s assessment affirmed the prior Assessor’s classification of Structure 3 and 2 acres of land as commercial.Complainants challenge this classification asserting that the use of Structure 3 (the Castle) for some weddings was simply a use of the portion of their residence.Complainants and their appraiser attempted to treat the structure as a garage.[32] In classification of an ordinary house with an attached garage/carport or even a detached garage/carport that is actually used to house the family automobile(s), such structures are considered by the Commission to be a part of the residence.

However, this is not a case of a residence with an attached garage structure that is used to house motor vehicles for the Palmers.The assertion that the Castle or Meeting Hall is simply a 10 car garage is not persuasive.No evidence was presented to establish that the structure had been constructed to be used as a garage.There was no evidence that the Meeting Hall had ever been used as a garage.There was no photographic evidence, or testimony that the structure actually has openings, i.e. garage doors, for the entering and exiting of 10 vehicles.

The photographic evidence which does exist depicts anything but a 10 car garage.The Hearing Officer starts with Mr. Siemer’s appraisal and his photographs of the subject.The photograph of the “Subject Rear” shows a structure which indeed does remind one of a medieval castle or a gothic church.The photo provides nothing that would lead a reasonable mind to conclude that the structure is or was intended to be a garage.The appraiser then provided four interior photographs of the Castle (p. 16).One photograph depicts what is a portion of the floor, the other two pictures show an interior set up with chairs and tables.One view looking toward the large end window gives the clear impression of a setting for indeed weddings or other such meetings.Nothing in the photographs leads the Hearing Office to conclude that the facility was being used or had been used to store motor vehicles.The interior and exterior photographs in Respondent’s Exhibit 5 only give additional support to the conclusion that the Castle has not been used and was not designed as a 10 car garage.Moreover, the additional photographs of the subject property presented by Respondent[33] clearly rebut any claim by the Palmers or their appraiser that the Castle can be classified as simply a garage.

Furthermore, the testimony of Complainants established that the Castle, along with the adjoining residence, was build for a business purpose.They wanted to operate a business utilizing especially the Castle, as well as their residence, that would conduct various events, including fairytale weddings, castle tours, Balloons, Bentleys & Bridal Show, Murder Mystery Dinner Theatre, Princess Parties, Children’s Theatre on the Lawn, Medieval Faire, Masquerade Ball, Christkindlmarket, Search for Treasure, and Christmas Eve at the Castel. See, FINDING OF FACT 4, supra.The fact that the business venture has proven to be unsuccessful and apparently was, has been or will be abandoned, does not negate that as of 1/1/13 that Structure 3 and the 2 acres on which it sits and which surround it were being actively used and had been used for commercial purposes.

Finally, during 2012 the Complainants operated a business on the subject property.[34] The Schedule C they filed showed that the principal business was a “Wedding Chapel” and the business name was Chateau Charmant.The Palmers had gross income of $46,595.Total expenses, not including depreciation,[35] amount to $29,434.Net income before taking an allowance against income for depreciation was $17,161.

For all the foregoing reasons, the Hearing Officer can only conclude that Structure 3 and two acres of the subject land are properly classified as commercial for purposes of assessment.

Complainants Fail to Prove Overvaluation

The remaining issue of the true value in money of the subject property must now be addressed.

Palmer Opinion of Value Not Persuasive

The owner of property is generally held competent to testify to its reasonable market value.[36]The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[37]The Hearing Office does not find that the owner’s opinion of $300,000 stated in the Complaint for Review of Assessment has any probative value, due to the fact that it was not established to have been based upon proper elements and a proper foundation.Furthermore, the additional and conflicting proffers of value set forth in various of the excluded exhibits are all likewise non-probative as the elements and foundation on which they rest do not constitute any recognized and accepted appraisal methodology and Mr. Palmer was not established as an expert in the field of appraisal of real property.

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.”[38]The conclusions of value presented in the Exhibits provided in support of the methodologies developed by Mr. Palmer, even if they had been admissible into evidence, left the Hearing Officer in the “nebulous twilight of speculation, conjecture and surmise.”The determination of a value proposed by a taxpayer in appeals before the Commission can never rest upon the faulty and unacceptable three-legged stool of speculation, conjecture and surmise.Those legs are totally insufficient to bear the burden of substantial and persuasive evidence.Accordingly, the owners’ opinion has failed to meet the required burden of proof to prove true value in money for the three acres and structures there on.

Siemer Appraisal Not Persuasive

The final matter to be considered is the appraisal of Mr. Siemer and whether it constitutes substantial and persuasive evidence to establish fair market value as of 1/1/13.Mr. Siemer performed a valuation of Structures 3, 4 & 5 relying on a sales comparison methodology and a cost approach.His final opinion of value for the structures alone was $293,000.This value was assuming completion of the unfinished Structures 4 and 5.

Under his sales comparison methodology he concluded a value for the structures only, as he did not value the land, derived from sales of four properties he deemed to be comparable.His adjusted sale prices for his four comparables were: $293,110, $283,970, $296,630 and $293,170.

The cost approach relied upon the Marshall and Swift Residential Handbook and concluded a value of the structures only of $293,288, assuming completion of the unfinished Structures 4 and 5.

Sales Comparison Methodology

The Hearing Officer finds neither the sales comparison nor cost approach performed by Mr. Siemer to be persuasive.The sales comparison presentation is lacking in persuasive effect for various reasons.Mr. Siemer decided that his appraisal would only address a value for Structures 3, 4 & 5.No land value would be considered.He made no attempt to establish land value for either the subject or his four comparables.None of the B Exhibits have any market data relative to land value.

The Board of Equalization placed a land value of $4,000 per acre on the Palmers’ three acres on which Structures 3, 4 & 5 sit.For each of the asserted comparable sale properties the appraiser simply made deductions of what he concluded were the land values without any substantiating evidence to establish that the deductions for land values were appropriate.His Comp 1 with a land area of .352 of an acre was given a value of $30,000, or $83,270 per acre.Comp 2 land at 3.48 acres was valued at $40,000 or $11,490 an acre.Comp 3’s land was considered by Mr. Siemer to be worth $10,000 per acre.The land value attributed to Comp 4 was $14,700 per acre.The Hearing Officer was provided no basis to explain the variances.Additionally, it appears that Mr. Siemer believed that the subject property for purposes of his appraisal consisted of 30 acres and the three structures (3, 4 & 5).[39]

“Where the basis for a test as to the reliability of the testimony is not supported by a statement of facts on which it is based, or the basis of fact does not appear to be sufficient, the testimony should be rejected.”[40]Such is the case with this aspect of the Siemer appraisal.The reliability of the adjustments relative to land value is not supported by any facts and as such this aspect of the appraisal must be rejected.

Furthermore, the entire concept of propose by Mr. Siemer of subtracting what appear to be arbitrary land values so that the sale prices of the four comparables reflect only the value of improvements is not persuasive.The subject for appraisal purposes should have properly been considered as a three acre tract of land improved by a 9,000+ square foot partially finished residence and a completed meeting hall, and a 500+ square foot partially completed concrete shed.The Siemer methodology presents an opinion of value of what someone would pay for the improvements but not the land.This is not the subject property.The property was not valued as a whole improvements and land, the concluded opinion of value was only for the improvements.

The appraisal was as of an effective date of October 18, 2013, not as of 1/1/13.No adjustment was made for the fact that the appraiser did not value the property as of 1/1/13.In other words, the appraisal presents no opinion of value as of 1/1/13.There is no substantiating evidence upon which the Hearing Officer can conclude that no time of sale adjustments would have been warranted for the four sale properties, or that in fact based upon a market study that some adjustment should have been made for the three properties which sold in June through September of 2013.Accordingly, on this aspect of the Siemer appraisal the Hearing Officer finds himself once again in the “nebulous twilight of speculation, conjecture and surmise.”Therefore, no probative weight can be given to the opinion of value for the structures only as of 10/18/13 as it relates to the assessment date of 1/1/13.

Another significant deficiency in the development of the Siemer sales comparison approach and the resulting conclusion of value was the treating of Structure 3 as a 10 car garage and shop.The structure was not built as a garage.It was not constructed for the purpose of using it as a garage.It has never been used as a garage.It was constructed and used as a meeting hall for the variety of used previously noted above.It is quite simply an amenity to the property which cannot be valued as if it were a $20,000 – 10 car garage.[41]To do so presented a fatal defect in the appraisal and the resulting conclusion of value.

The final problem the Hearing Officer concludes as to the Siemer sales comparison approach is that none of the four sale properties are in fact comparable to the subject 3 acres and Structures 3 and 4.The houses used as comparisons are all simply residential structures.Each was no doubt constructed to serve as a family home.None of them contain a 5,000+ square foot chapel, meeting hall suitable for hosting weddings, banquets, proms and other similar events.Simply looking at the subject and then each of the sale properties instantly establishes that the sale properties are not like the subject.

Based upon the sales data presented in the Complainants’ appraisal, the Hearing Officer is persuaded that the appropriate course of action for the appraiser was to conclude that adequate comparable sale properties could not be found for the subject.This is further reinforced by the fact that portions of Structure 4 were unfinished as of 1/1/13.Quite simply, it does not seem feasible or plausible that an appraiser could extract from the market sufficient data to adjust the four sale properties to account for the super adequacy of Structure 3, as well as, the incomplete nature of Structure 4, to perform the sales comparison approach for the Palmers’ property.In other words, the subject property (3 acres, improved by Structures 3, 4 & 5), was not an appropriate property for the development of the sales comparison approach.

Cost Approach

Mr. Siemer also developed a cost approach for Structures 3, 4 & 5 which concluded a value of $293,288.The appraiser relied upon the Marshall & Swift Residential Handbook and information from local builders, suppliers, contractors and his own knowledge of area costs.The value for Structure 4 was based on a replacement cost new of $65.00 per square foot, and a replacement cost new for Structure 3 of $25.00 per square foot.No supporting documentation was provided to establish if these amounts were taken directly from Marshall & Swift or from other information.Construction of both of these structures was commenced in 2009.The meeting hall was completed in that year or sometime in 2010.Therefore, the appraiser had at his disposal from the taxpayers the actual costs for construction of Structure 3 as completed, with some possible allowance for labor contributed by the taxpayers.The same would likewise apply to Structure 4.This data would have provided a reality check as to whether Structure 3 had actually been built for only $25 per square foot and if the completed portions of Structure 4 had actually been constructed for only $65 per square foot.

It is clear that Mr. Siemer valued Structure 3 as simply a 5331 square foot garage.His cost approach used a quality rating for the improvements of only average.Therefore, the Hearing Officer can only conclude that he utilized the standard average cost factor under Marshall & Swift for construction of a garage.Structure 3 is not a garage, let alone an “average” garage.To value Structure 3 for a cost approach using a factor for garage construction renders the Siemer cost approach meaningless.In the absence of supporting documentation from which the Hearing Officer could ascertain the basis and how the square foot construction cost was determined by Mr. Siemer, the conclusion of construction cost new for Structure 4 is also unpersuasive.

Summary

For all the foregoing reasons, the conclusion of value by Mr. Siemer for Structures 3, 4 & 5 does not constitute substantial and persuasive evidence to establish what a willing buyer and seller would have agreed to as the purchase price as of 1/1/13.

Respondent Established Basis for Value

Respondent presented substantial and persuasive evidence that certain adjustments or corrections should be made to the value concluded by the Board of Equalization.These adjustments reduced the appraised value of the Castle, increased the appraised value of the residence and reduced the value of the shed.Complainants’ evidence was persuasive to establish that there was no graveled parking area, only a portion of the land that had been graded after 1/1/13 in preparation for a raised garden bed.Therefore, the valued attributed to this must be removed from the Respondent’s conclusion of value.With these adjustments the appraised and assessed values are as set forth in FINDING OF FACT 15, supra.The total appraised or true value in money is $464,720.The total mixed-use assessed value is $114,910.

ORDER

The assessed valuation for the subject property as determined by the Board of Equalization for Christian County for the subject tax day is SET ASIDE.

The assessed value for the subject property for tax years 2013 and 2014 is set at $114,910.

Application for Review

A party may file with the Commission an application for review of this decision within thirty days of the mailing date set forth in the Certificate of Service for this Decision.The application shall contain specific facts or law as grounds upon which it is claimed the decision is erroneous.Said application must be in writing addressed to the State Tax Commission of Missouri,P.O. Box 146,Jefferson City,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. [42]

Disputed Taxes

The Collector of Christian 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 March 12, 2014.

STATE TAX COMMISSION OFMISSOURI

W. B. Tichenor

Senior Hearing Officer