State Tax Commission of Missouri
ROBERT & MELISSA ELLIOTT,)
)
Complainants,)
)
v.) Appeal No.09-20006
)
ED BUSHMEYER, ASSESSOR,)
ST. LOUIS COUNTY,MISSOURI,)
)
Respondent.)
DECISION AND ORDER
HOLDING
Decision of the St. Louis City Board of Equalization reducing the assessment made by the Assessor is SET ASIDE.True value in money for the subject property for tax years 2009 and 2010 is set at $464,000, residential assessed value of $88,160.Complainant, Robert Elliott appeared pro se.Respondent appeared by Associate City Counselor, Carl W. Yates III.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
ISSUE
Complainant appeals, on the ground of overvaluation and discrimination, the decision of the St. Louis City Board of Equalization, which reduced the valuation of the subject property.The Commission takes this appeal to determine (1) the true value in money for the subject property on January 1, 2009; and (2) whether they 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 2009 residential assessment ratio for St. Louis City.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.Complainant timely appealed to the State Tax Commission from the decision of the St. Louis City Board of Equalization.Evidentiary hearing was held on February 10, 2010, in the Assessor’s Conference Room, City Hall, St. Louis, Missouri.
2.Assessment.The Assessor appraised the property at $702,260, residential assessment of $133,430.The Board of Equalization reduced the value to $525,000, residential assessed value of $99,750.
3.Subject Property.The subject property is located at 5211 Washington Ave., St. Louis, Missouri.The property is identified by map parcel number 5050-01-0190-0.The property consists of 16,078 square foot lot improved by a two and one-half story brick single-family house built in 1902, with 6,257 square feet of living area, which includes a 357 square foot room addition.The room count was not obtainable due to the owner’s refusal of an interior inspection.City records indicate there are two and a half baths.A carriage house sits to the rear of the lot by a public alley.The carriage house was renovated in 2001 and includes a living room, dining room, kitchen, two bedrooms, one and one-half baths and parking for two cars.The exterior of the improvements appears to be properly maintained with no major deferred maintenance.The subject is on a double lot.The subject street has limited excess traffic due to the street being blocked by the City.Houses surrounding the subject are of similar age and quality.The house adjacent and east of the subject is vacant and in disrepair.The Third Degree Glass Factory is directly behind the subject on Delmar.[1]
4.Complainant’s Evidence.Complainant testified in his own behalf. Exhibit A was received into evidence over the objection of Respondent.Exhibit A consisted of(1) photographs of three houses on Westminister and two houses on Washington; (2) photograph of the subject; (3) aerial photograph of 5221 and 5211 Washington; (4) sales dates, sales prices and house size for the homes shown in the photographs; (5) aerial photo of the subject area, and (6) photographs of the house at 5203 Washington and its collapsed carriage house roof.
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, 2009, to be $300,163 as proposed at hearing, or $335,000 as set forth on the Complaint for Review of Assessment.See, Complainants Fail To Prove Value, infra.No evidence to establish discrimination was presented.See, Complainants Fail To Prove Discrimination, infra.There was no evidence of new construction and improvement during 2009, therefore the value for 2009 remains as the assessment for 2010.[2]
5.Respondent’s Evidence.Respondent presented the testimony of Tim Keller, Real Estate Appraiser for Respondent.Exhibit 1, Mr. Keller’s appraisal of the property was received into evidence.The properties relied upon by Respondent’s appraiser were comparable to the subject property for the purpose of making a determination of value of the subject property. The properties were located within four blocks of the subject.Each sale property sold at a time relevant to the tax date of January 1, 2009.The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability.
Respondent’s evidence met the standard of substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the value of the subject, as of January 1, 2009, to be $464,000, assessed residential value of $88,160.
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.[3]
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.[4] The presumption in favor of the Board is not evidence.A presumption simply accepts something as true without any substantial proof to the contrary.The presumption of correct assessment is rebutted when the taxpayer, or respondent when advocating a value different than that determined by the Board, 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.[5]Complainant failed to present any evidence to rebut the presumption of correct assessment by the Board.Respondent’s evidence was substantial and persuasive to rebut the presumption and establish the fair market value of the property under appeal as of January 1, 2009.[6]
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.[7]It is the fair market value of the subject property on the valuation date.[8]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.[9]
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.[10]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.[11]The testimony and exhibit presented by Complainant did not conform to any of the recognized approaches to the appraisal of real estate for ad valorem tax purposes in an appeal before the Commission.Mr. Keller, on the other hand, developed the sales comparison approach to conclude value for the subject property.
Complainants Fail To Prove Value
In order to prevail, Complainants must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2009.[12]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.”[13]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[14]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.[15]
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.[16]The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[17]In the present case, Mr. Elliott filed his Complaint for Review of Assessment stating a true value in money of $335,000.At hearing he abandoned this opinion in favor of an opinion of $300,163.
The concluded value at hearing was derived by taking the average sale price per square foot for two properties on Washington ($29.47) times Mr. Elliott’s calculated square foot area of his home.This produced an indicated value of $173,873.He then multiplied the square footage he determined for his home times the per square foot sales price of a single home on Westminster.The resulting product of this multiplication was $426,453.By averaging these two figures Mr. Elliott arrived at the amount of $330,163.
When a taxpayer elects to develop his own unique valuation methodology, he assumes the burden, of not just showing that the math is correct, but he must establish by competent evidence that the methodology is recognized within the appraisal field as an approach employed in the valuation of real property.This Mr. Elliott failed to do.The method he utilized falls completely outside the bounds of sound appraisal approaches.
The opinion of value has no basis in sound valuation practice.It is not founded upon proper elements or a proper foundation.It has no probative value.Complainants failed to meet their burden of proof.
Complainants Fail To Prove Discrimination
In order to obtain a reduction in assessed value based upon discrimination, the Complainants must (1) prove the true value in money of their property on January 1, 2009; and (2) show an intentional plan of discrimination by the assessing officials resulting in an assessment of that property at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction.[18]Evidence of value and assessments of a few properties do not prove discrimination.Substantial evidence must show that all other property in the same class, generally, is actually undervalued.[19]The difference in the assessment ratio of the subject property the average assessment ratio in the subject county must be shown to be grossly excessive.[20]No other methodology is sufficient to establish discrimination.[21]
Where there is a claim of discrimination based upon a lack of valuation consistency, Complainants have the burden to prove the level of assessment for the subject property in 2009. This is done by independently determining the market value of the subject property and dividing the market value into the assessed value of the property as determined by the assessor’s office.
Complainants must then prove the average level of assessment for residential property in St. Louis City for 2009.This is done by (a) independently determining the market value of a representative sample of residential properties in St. Louis City; (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 for each property in the sample; and (d) determining the mean and median of the results.
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. Louis City must demonstrate a disparity that is grossly excessive.[22]
Complainants’ discrimination claim fails because they failed to establish the market value of their property.Without establishing their market value, they cannot establish their assessment ratio.Without establishing their ratio, they cannot establish that they are being assessed at a higher percentage of market value that any other property.
However, even if Complainants had established their market value, their discrimination claim would still fail because they have not demonstrated that a statistically significant number of other residential properties within St. Louis City are being assessed at a lower ratio of market value than their property.In point of fact, Complainants presented no evidence to demonstrate that any property is being assessed at a lower ratio of market value than the subject property.
Because Complainants failed to establish the market value of their property and failed to establish that they are being assessed at a higher percentage of market value than a statistically significant number of other properties in St. Louis City, they have failed to establish discrimination.
Respondent Proves Value
Respondent, when advocating a value different from that determined by the original valuation or a valuation made by the Board of Equalization, must meet the same burden of proof to present substantial and persuasive evidence of the value advocated as required of the Complainant under the principles established by case law.[23]Respondent presented substantial and persuasive evidence to establish a fair market value as of January 1, 2009, to be $464,000.Respondent’s appraiser developed an opinion of value relying upon an established and recognized approach for the valuation of real property, the sales comparison or market approach.The sales comparison approach is generally recognized to be the most reliable methodology to be utilized in the valuation of single-family residences.
The adjustments made the Mr. Keller were consistent with generally accepted guidelines for the appraisal of property of the subject’s type.The adjustments properly accounted for the various differences between the subject and each comparable.
ORDER
The assessed valuation for the subject property as determined by the Board of Equalization for St. Louis City for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2009 and 2010 is set at $88,160.
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 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. [24]
Disputed Taxes
The Collector of St. Louis City, 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 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 February 26, 2010.
STATE TAX COMMISSION OFMISSOURI
_____________________________________
W. B. Tichenor
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 26thday of February, 2010, to:Robert Elliott, 52121 Washington, St. Louis, MO 63108, Complainant; Carl W. Yates III, Associate City Counselor, 314 City Hall, St. Louis, MO 63103, Attorney for Respondent; Ed Bushmeyer, Assessor, 120 City Hall, St. Louis, MO 63103; Gregory Daly, Collector, 110 City Hall, St. Louis, MO 63103.
___________________________
Barbara Heller
Legal Coordinator
[4] 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).
[5] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
[7] 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).
[9] 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.