State Tax Commission of Missouri
v.) Appeal Number 09-10158
MICHAEL BROOKS, ACTING ASSESSOR,)
ST. LOUIS COUNTY,MISSOURI,)
DECISION AND ORDER
Decision of the St. Louis County Board of Equalization sustaining the assessment made by the Assessor is AFFIRMED.True value in money for the subject property for tax years 2009 and 2010 is set at $230,600, residential assessed value of $43,820.Complainant appeared pro se.Respondent appeared by Associate County Counselor Paula J. Lemerman.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
Complainant appeals, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property.The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2009.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 County Board of Equalization.A hearing was conducted on December 9, 2010, at the St. LouisCountyGovernmentCenter,Clayton,Missouri.
3.Subject Property.The subject property is located at 1445 Bridle Road, Webster Groves, Missouri.The property is identified by locator number 24L310742.The property consists of a 12,825 square foot lot improved by a one-story ranch style, single-family residence built in 1951.The gross living area is 1,870 square feet and has a partial unfinished basement.The exterior is frame siding with some brick veneer over frame construction.The residence has a total of seven rooms, three bedrooms and two full bathrooms.There is a fireplace.The house is considered to be in average condition and the quality of the materials and workmanship is average, consistent with surrounding properties.
4.Complainant’s Evidence.Complainant testified in his own behalf.He gave his opinion of the fair market value of his property as of January 1, 2009, to be $203,000.This opinion was concluded from a methodology developed by Mr. O’Connor.See, Owner’s Opinion of Value, infra.
The taxpayer offered the following exhibits into evidence.See, Exclusion of Exhibits A & B, infra.
Spreadsheet listing 53 properties, sales dates/prices and other data
Spreadsheet same as A, but with one additional property
Spreadsheet listing 13 properties, sales dates/prices and other data
Page 1 of Property Record Card for Subject
Floor Plan of Subject from Property Record Card
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 $215,000 or 203,000, as proposed.
5.Respondent’s Evidence.Respondent presented the Appraisal Report and testimony of Timothy Hannan, Residential Real Estate Appraiser for St. Louis County.Mr. Hannan concluded a fair market value of the subject property of $245,000 based upon his development of the sales comparison approach to value relying on sales of three properties.Complainant objected to Exhibit 1 on the basis of the sales dates of the comparable properties.Objection was overruled and Exhibit 1 was received into evidence.See, Ruling on Objection, infra.
Respondent met the standard of clear, convincing and cogent evidence in this appeal, under the provisions of Section 137.115, RSMo, to sustain the original valuation, sustained by the Board, presumed to have been made by a computer, computer-assisted method or a computer program.See, Statutory Guidelines Met, infra.Respondent’s appraisal was accepted only to sustain the original assessment made by the Assessor, sustained by the Board, and not for the purpose of raising the assessment above that value.See, Evidence of Higher Value, infra.
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.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.
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.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.In an overvaluation appeal, true value in money for the property being appealed must be determined based upon the evidence on the record that is probative on the issue of the fair market value of the property under appeal.The only evidence in the present appeal that is probative on the issue before the Commission was that presented by Respondent.Accordingly, value must be set based upon that evidence.
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.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 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.Complainant failed to meet his burden of proof to either rebut the presumption of correct assessment or to establish the true value in money of the property under appeal.
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.True value in money is defined in terms of value in exchange and not value in use.It is the fair market value of the subject property on the valuation date.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.
Respondent’s Appraiser concluded his value relying on the Standard For Valuation.Complainant’s approach to value was not demonstrated to be in accordance with this Standard.
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.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.
The methodology developed and relied upon by Complainant is not a technique recognized in the field of real estate appraisal.It is not an approach accepted by the Commission or Missouri courts for the determination of value for ad valorem tax purposes.Therefore, it cannot be relied upon to make a determination of the fair market value of the property under appeal.
Respondent’s appraisal provides a conclusion of value based upon a well accepted and recognized approach to finding value, the sales comparison approach.
Complainant Fails To Prove Value of $215,000 or $203,000
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, 2009.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
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.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.
As is address below, Complainant failed to meet his burden of proof.
Exclusion of Exhibits A, Substitute Exhibit A & B
Counsel for Respondent objected to Exhibits A, Substitute Exhibit A and B on the grounds of relevance and lack of foundation.The objections were sustained and the exhibits were excluded.The spreadsheets list a number of properties which Mr. O’Connor wished to use as comparable sale properties to conclude an indicated value for his property.The owner of the subject property cannot testify regarding comparable sales without being qualified as an expert on valuation of real estate.No foundation was provided that the taxpayer was by education, training and experience an expert in the appraisal of real estate.Therefore, there was not a proper foundation established that any of the properties were in fact appropriates sales to be utilized as comparables for a valuation of the property under appeal.
Complainant failed to establish from any source that the methodology he used based upon the exhibits was a recognized and generally accepted technique for the appraisal of real property in an ad valorem tax appeal before the Commission.The O’Connor methodology is not.See, Methods of Valuation, infra.When a taxpayer comes before the Commission with their own novel appraisal plan, he bears the burden to establish that the technique that has been devised has validity to provide a conclusion of value which would be supported by the market.That was not done in this instance.Exhibits A, Substitute A and B provide no evidence which moves forward the inquiry as to what the fair market value of the subject property was on the valuation date.Accordingly, the O’Connor method has no relevance to establish what a willing buyer and seller would have agreed to as the purchase price of the subject on January 1, 2009.
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.The owner’s opinion of value is based upon his calculation of an average per square foot value for a listing of 54 properties which sold during 2008.The resulting average was then applied to the subject’s living area to arrive at the owner’s opinion of value.
Mr. O’Conner presented no evidence to establish a foundation that this technique was a recognized and establish appraisal methodology for real property.This method is not based upon proper elements or a proper foundation.Accordingly, no probative weight can be given to the owner’s opinion of value.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.”The value based on the O’Conner valuation method concludes a value that only rests upon speculation, conjecture and surmise.Therefore, it does not constitute credible evidence of value.
The inherent fallacy in the O’Connor method can be illustrated by simply applying the average price per square foot that he calculated (assuming without finding it to be correct) to a random sample of four of the 54 sale properties he utilized in Substitute Exhibit A.
Example 1:Property 24K111166 had a square footage of 1,749.Multiplying 1,749 x $109.70 results in a product of $191,865.This property sold in August 2008 for only $91,000.The O’Connor methodology would value the property at over two times the sale price approximately four months prior to 1/1/09.
Example 2:Property 25K440474 had a square footage of 994.Multiplying 994 x $109.70 results in a product of $109,041.This property sold in February 2008 for $151,000.The O’Connor methodology would value the property at only 72% of the sale price approximately eleven months prior to 1/1/09.
Example 3:Property 25L440871 had a square footage of 1,344.Multiplying 1,344 x $109.70 results in a product of $147,436.This property sold in December 2008 for $179,900.The O’Connor methodology would value the property at only 82% of the sale price approximately less than a month prior to 1/1/09.
Example 4:Property 23L310374 had a square footage of 1,442.Multiplying 1,442 x $109.70 results in a product of $158,187.This property sold in February 2008 for $205,000.The O’Connor methodology would value the property at only 77% of the sale price approximately eleven months prior to 1/1/09.
The O’Connor method applied to these for properties would have resulted in a more than 200% overvaluation in one instance and under valuations from 28%, 18% and 23% in the other illustrations.The foregoing demonstrates why such a method as that proposed has no validity and is not accepted in the field of real estate appraisal.Likewise it has no evidentiary merit and can be given no probative value in hearings before the Commission.
Complainant presented a flawed and unacceptable method to arrive at his opinion of value.He failed to present substantial and persuasive evidence to rebut the presumption of correct assessment and establish the true value in money of the property under appeal.There is no evidentiary basis for the Hearing Officer to conclude the value the taxpayer proposed.
Respondent Presented Clear, Convincing and Cogent Evidence to Sustain Value
The Respondent has imposed upon him by the provisions of Section 137.115.1, RSMo, the burden of proof to present clear, convincing and cogent evidence to sustain a valuation on residential property which is made by a computer, computer-assisted method or a computer program.There is a presumption in this appeal that the original valuation, which was sustained by the Board of Equalization, was made by a computer, computer-assisted method or a computer program.There was no evidence to rebut the presumption, therefore, in order to sustain the valuation of the subject property at $230,000, 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.
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.The quality of proof, to be clear and convincing must be more than a mere preponderance but does not require beyond a reasonable doubt.“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.”
Ruling on Objection
Complainant objected to the receiving into evidence of Exhibit 1 on the basis of the dates of sale for the three comparable properties.The objection was overruled.The three sales dates respectively were 7/09, 6/07 and 10/07.Mr. Hannan made no time of sale adjustment for any of the sales.The appraiser concluded that “No time adjustments were considered necessary as sales within the subject’s immediate neighborhood showed slightly increasing property values.”<span style="mso-sp