Robert Proost v. Jake Zimmerman, Assessor St. Louis County

November 20th, 2018

 STATE TAX COMMISSION OF MISSOURI

 

ROBERT PROOST,

Complainant,

 

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Appeal Nos. 17-10283

17-10284

17-10286

17-10287

  ) Parcel/locator Nos. (See below)
v. )  
  )  
JAKE ZIMMERMAN,  ASSESSOR,

ST. LOUIS COUNTY, MISSOURI,

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               Respondent. )  

 

DECISION AND ORDER

 

HOLDING

 

The decisions of the St. Louis County Board of Equalization (BOE) with regard to these four appeals are SET ASIDE.  Robert Proost (Complainant) presented substantial and persuasive evidence to rebut the presumption of correct assessments by the BOE.

Complainant appeared in person and by counsel Jerome Wallach.

Jake Zimmerman, Assessor, St. Louis County, Missouri, (Respondent) appeared by counsel Steven Robson.

Case heard and decided by Senior Hearing Officer Amy S. Westermann (Hearing Officer).

ISSUE

Respondent and the BOE, respectively, set the true value in money (TVM) of the subject properties, as residential property, as of January 1, 2017, as follows:

Appeal No. Parcel/Locator No. Assessor’s value BOE’s value
17-10283 27Y230031 $106,400 $106,400
17-10284 28Y420022 $416,200 $416,200
17-10286 28Z630055 $146,300 $146,300
17-10287 28Z640021 $253,400 $253,400

 

Complainant appealed to the State Tax Commission (STC) on the ground of overvaluation.  The STC takes these appeals to determine the TVM for the subject properties as of January 1, 2017, under the economic conditions as they existed on January 1, 2017.  The value as of January 1 of the odd numbered year remains the value as of January 1 of the following even numbered year unless there is new construction or improvement to the property.  Section 137.115.1 RSMo.

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.
  2. Evidentiary Hearing. The issue of overvaluation was presented at an evidentiary hearing on August 29, 2018, at the St. Louis County Government Administration Building in Clayton, Missouri.
  3. Identification of Subject Properties. The subject properties are identified as follows:
Appeal No. Parcel/Locator No. Address
17-10283 27Y230031 4340 Fox Creek Road
17-10284 28Y420022 4602 Chateau Lane
17-10286 28Z630055 19102 Sunset Hollow Court
17-10287 28Z640021 2134 Timberline Valley Drive

 

  1. Description of Subject Properties. The subject properties are described as follows:
Appeal No. Parcel/Locator No. Description
17-10283 27Y230031 2.94 acres vacant land zoned non-urban, single-family residential
17-10284 28Y420022 29.78 acres vacant land zoned non-urban, single-family residential
17-10286 28Z630055 6.72 acres vacant land zoned non-urban, single-family residential
17-10287 28Z640021 15.88 acres vacant land zoned non-urban, single-family residential

 

  1. Assessment of the Properties. Respondent and the BOE, respectively, set the TVM of the subject properties, as residential property, as of January 1, 2017, as follows:
Appeal No. Parcel/Locator No. Assessor’s value BOE’s value
17-10283 27Y230031 $106,400 $106,400
17-10284 28Y420022 $416,200 $416,200
17-10286 28Z630055 $146,300 $146,300
17-10287 28Z640021 $253,400 $253,400

 

  1. Complainant’s Evidence. Complainant opined that the TVM of the subject properties, as of January 1, 2017, was as follows:
Appeal No. Parcel/Locator No. Complainant’s opinion of TVM
17-10283 27Y230031 $11,526
17-10284 28Y420022 $116,790
17-10286 28Z630055 $26,345
17-10287 28Z640021 $62,256

 

To support his opinions of value, Complainant offered the following exhibits:

Appeal No. Exhibit Description Ruling
17-10283 WDT of Demba Written Direct Testimony of Demba Admitted
17-10283 Exhibit A Appraisal Report of Demba Admitted
17-10284 WDT of Demba Written Direct Testimony of Demba Admitted
17-10284 Exhibit A Appraisal Report of Demba Admitted
17-10286 WDT of Demba Written Direct Testimony of Demba Admitted
17-10286 Exhibit A Appraisal Report of Demba Admitted
17-10287 WDT of Demba Written Direct Testimony of Demba Admitted
17-10287 Exhibit A Appraisal Report of Demba Admitted

 

Complainant presented the testimony of Ernest Demba (Demba), who is a Missouri certified real estate appraiser.   Demba has been working in the field of real estate appraisal since 1972 – nearly 50 years.  Demba holds numerous designations from the American Society of Appraisers; is a certified appraisal instructor; is an instructor of real estate appraisal, economics, mathematics, and business at Washington University, University of Missouri, Lindenwood University, St. Louis Community College, and The Missouri Bar Real Estate Practice Institute; and is a member of the faculty for the American Society of Appraisers and the National Association of Independent Fee Appraisers.  Demba’s appraisal experience includes work on behalf of federal, state, and local governments; local taxing districts; lenders and financial institutions; and individuals.  Demba has been a hearing officer for the BOE and has been admitted to testify as an expert witness in various federal and state courts.  Demba has authored and presented numerous articles on the subject of appraisal.

            According to the appraisal reports for the subject properties, all of the properties are located in southwest St. Louis County in the municipality of Wildwood.

17-10283 – 4340 Fox Creek Road

According to the appraisal report, the subject property is comprised of 2.94 acres of vacant land.  The subject property has rugged, rocky terrain; is densely wooded; and has other undesirable natural conditions.  The subject property is trapezoidal in shape; has minimally level frontage and steep sloping topography overall; has adequate ingress and egress along a public road; and has adequate drainage.  The subject property is typical for and conforms to the area and is expected to remain undeveloped into the foreseeable future.  (17-10283 Exhibit A)  The subject property is unimproved raw land that is considered “undesirable and too costly to attempt to develop.”  (Id.)  The subject property is less than three acres in size while local zoning regulations require a minimum of three acres to build a single-family residence.  (Id.)  The highest and best use of the subject property would be vacant as “neighborhood oriented residential land use similar to other residential developments in the area.”  (Id.)  The appraisal report stated:

Most of this area developed between the 1920’s and 1960’s with some homes and structures over 100 years old. Most buildings that exist here today are original structures.

The main characteristic of the subdivisions in the area is the flood zone, secondly is the rugged terrain. This makes a difference to the buying public for a moderate to high valued residence. . . .

The subject’s immediate area consists of older typical, moderate and upper valued quality homes. There are other lower valued homes and properties in the same immediate area as a metropolitan mix is observed. The typical buyer for the subject will not be interested in the flood problems and topo (sic) problems the subject presents. The subject properties (sic) will not draw the same level of buyer traffic as other properties located in the general area. The potential purchaser may be adjoining owners. This purchaser will most likely be of upper middle to upper level of income required to purchase and maintain this property. This may be a transfer, but not a market value transaction. But it may be the only market.

(Id.)

The appraisal report developed the sales comparison approach to valuing the subject property, analyzing the sales of five comparable properties, which were located 1.53 miles to 23.15 miles from the subject property.  (Id.; 17-10283 Exhibit 8)  The sale prices of the comparable properties ranged from $2,500 to $590,000 ($0.07 to $0.78 per square foot).  The sizes of the comparable properties ranged from 2.42 acres to 100.67 acres.  (Id.; St. Louis County Real Estate Database)  Three of the comparable properties were in a 100-year floodplain, and one was in a 500-year floodplain.  (Id.)

The appraisal report gave the most weight to Comparable No. 1 and Comparable No. 5, which were in the same general area as the subject property.  Comparable No. 1, 2.91 miles from the subject property, was comprised of 3.22 acres “very similar to the subject” and sold on February 28, 2017, for $10,000.  Comparable No. 1 was in a 100-year floodplain, had steep hills and creeks, appeared to be undevelopable, and was purchased by an adjoining property owner.   Comparable No. 5, 1.53 miles from the subject property, was comprised of 2.42 acres and sold on December 1, 2016, for $2,500.  Comparable No. 5 had a creek running through the property but no flood plain issues.  According to the appraisal report, St. Louis County records showed the sale was not an open-market transaction, but the BOE had reduced the 2017 appraised valuation from $17,100 to $2,500, the sale price.  (Id.)  The appraisal report concluded that the subject property’s highest and best use was recreational and its TVM as of January 1, 2017, was $11,526 ($0.09 per square foot).  (Id.)

Demba testified that he viewed the subject property and comparable properties in the area during the week prior to the Evidentiary Hearing.  He observed the frontage in relation to the public road and saw boulders, a narrow level frontage, and a steep incline leading from the frontage toward the rear of the property.  Demba testified that the subject property has physical challenges due to limited access.

On cross examination, Demba testified that the subject property is not in a flood zone.  Demba testified that the subject property could be developed with the use of bulldozers and dynamite, which can “develop anything.”  Demba testified that the subject property is not marketable for a single-family residence because it is less than three acres and does not meet the zoning requirements.  Demba testified that Complainant could not get a variance of the local zoning requirements with 100% certainty.  Demba testified that Comparable Nos. 1 and 5 were adjusted for distressed sale as they were undevelopable/unmarketable, similar to the subject property.  Demba testified that the price per square foot calculation was the result of weighing Comparable No. 1 ($0.07 per square foot) and Comparable No. 5 ($.14 per square foot).  Demba testified that the frontage was not physically adequate for a typical driveway cutout.

17-10284 – 4602 Chateau Lane

According to the appraisal report, the subject property is comprised of 29.78 acres of vacant land.  The subject property has rugged, rocky, steep sloping terrain; has flood prone areas; and is difficult to access over a creek that floods and via a private easement roadway.  The subject property has no street frontage; has inadequate ingress and egress along a privately-maintained fronting street; and has adequate drainage.  The subject property is typical for and conforms to the area but is undevelopable due to its natural features and easement access through a flood plain and flood hazard area.  It is expected to remain undeveloped into the foreseeable future.  (17-10284 Exhibit A)  The appraisal report stated:

Due to the high cost of development and flood issues for the parcel, the costs to cure the problems are greater than the rewards of the developments. This is evident by the lack of development in the area and the lack of market transactions.

. . .

There is no financially feasible use for the subject.

(Id.)

The appraisal report developed the sales comparison approach to valuing the subject property, analyzing the sales of five comparable properties.  The sale prices of the comparable properties ranged from $10,000 to $590,000 ($0.06 to $0.78 per square foot).  The sizes of the comparable properties ranged from 3.10 acres to 100.67 acres.  Three of the comparable properties were in a 100-year floodplain, and one was in a 500-year floodplain.  (Id.)

The appraisal report gave the most weight to Comparable No. 5, which sold on September 2, 2016, for $45,000.  Comparable No. 5 was a 16.70 acre site.  This comparable property had no flood plain issues but had creeks running through the property.  (Id.)  The appraisal report concluded that the subject property’s highest and best use was recreational and its TVM as of January 1, 2017, was $116,790.  (Id.)

On cross examination, Demba testified the subject property is more than 20 acres of vacant land with roads from neighboring properties running through the subject property to access them.  Demba testified that part of the subject property is in a flood zone.  Demba testified that he visited the subject property twice and traveled in vehicles on the roads crossing the subject property up a steep hill.  Demba testified that the flood zone characteristics of the subject property greatly influence marketability and that the comparable properties were either in flood zones or had challenges to their marketability.  Demba noted that Comparable No. 5 had creeks but no flood plain issues.  Demba testified that the most weight was given to Comparable No. 5 even though the sale was not an open market transaction.

17-10286 – 19102 Sunset Hollow Court

According to the appraisal report, the subject property is comprised of 6.72 acres of vacant land.  The subject property has rugged, rocky terrain; is densely wooded; and has other undesirable natural conditions.  The subject property is mostly trapezoidal in shape; has significant to more than adequate amount of street frontage; slight to severe sloping topography; has inadequate ingress and egress due to a creek that floods; has adequate drainage to creeks; and is under threat of flooding or flood damage.  The adjoining properties are residential “in nature,” but “flood issues are a problem throughout the area and limit access at times” to the subject property.  Although the subject property is larger than the minimum acres required by zoning for a single-family residence, it is has significant physical limitations for development.  (17-10286 Exhibit A)  The subject property has “no financially feasible uses.”  (Id.) 

The appraisal report developed the sales comparison approach to valuing the subject property, analyzing the sales of six comparable properties.  The sale prices of the comparable properties ranged from $2,500 to $590,000 ($0.06 to $0.78 per square foot).  The sizes of the comparable properties ranged from 2.42 acres to 100.67 acres.  Three of the comparable properties were in a 100-year floodplain, and one was in a 500-year floodplain.  (Id.)

The appraisal report gave the most weight to Comparable Nos. 1, 5, and 6.  Comparable No. 1, comprised of 3.22 acres, sold on February 28, 2017, for $10,000.  Comparable No. 1 was in a 100-year floodplain, had steep hills and creeks, appeared to be undevelopable, and was purchased by an adjoining property owner.  The appraisal report viewed Comparable No. 1 as “the most probable sales price for the subject with regard to the subject as the configuration of the site is most similar to the subject and the sale is most representative of the typical sale for the subject.”  Comparable No. 5 was smaller, and Comparable No. 6 was larger than the subject.  Comparable No. 5, comprised of 2.42 acres, sold on December 1, 2016, for $2,500.  Comparable No. 5 had a creek running through the property but no flood plain issues.  St. Louis County records showed the sale was not an open-market transaction, but the BOE had reduced the 2017 appraised valuation from $17,100 to $2,500, the sale price.  (Id.)  Comparable No. 6, comprised of 16.70 acres, sold on September 2, 2016, for $45,000.  Like Comparable No. 5, St. Louis County records showed the sale was not an open-market transaction, but the 2015 appraised value was reduced from $155,700 to the sale price of $45,000 for the 2016 tax year.  The appraisal report concluded that the subject property’s highest and best use was recreational and its TVM as of January 1, 2017, was $26,345 ($0.09 per square foot).  (Id.)

On cross examination, Demba testified that the property could only be accessed through creeks, floodplains, or flood zones.  Demba testified that the difference between a 100-year floodplain and a 500-year floodplain is a 1 in 100 chance of flooding annually versus a 1 in 500 chance of flooding annually.  Demba testified that one can build in a 500-year floodplain pretty readily.  Demba testified that the ingress/egress point of the subject property borders on a public road but leads into a heavily wooded area.

In rebuttal and during recross examination, Demba acknowledged that Respondent’s evidence showed the subject property in a 500-year floodplain.  Demba testified that he personally visited the subject property and confirmed with Complainant that it is within a 100-year floodplain.  (17-10286 Exhibits 4 and 5)  Demba testified that the search for comparable properties centered around unmarketable problem properties with distressed sales.  Demba testified that the subject property was not flooded when he visited but that Complainant stated the property was “flood locked” at times.  Demba testified that maps indicated the subject property has been flooded and a prospective buyer would investigate.  Demba testified that  floodzones were the main consideration for comparables but that he considered the subject property to be in a 100-year floodplain, verified with the map he had at the time.

17-10287 – 2134 Timberline Valley Drive

According to the appraisal report, the subject property is comprised of vacant land.  The subject property has rugged, rocky terrain; is densely wooded; and has other undesirable natural conditions.  The subject property is mostly trapezoidal in shape; has minimally level to steep sloping topography overall; has inadequate ingress and egress for residential use as the entire frontage along the roadway is through a floodplain; and has adequate drainage to the creek.  (17-10287 Exhibit A)  Part of the subject property is “under a threat of flooding or flood damage.”  (Id.)  Although the adjacent properties are residential in nature and use, the subject property is considered not readily accessible for residential use due to inadequate ingress and egress from flooding that blocks access.  (Id.)  The subject has no financially feasible uses due to the high cost of development and the flood issues; the costs to cure these problems are greater than the “rewards of the developments . . . evident by the lack of development in the area and the lack of market transactions.”  (Id.)

The appraisal report developed the sales comparison approach to valuing the subject property, analyzing the sales of six comparable properties.  The sale prices of the comparable properties ranged from $2,500 to $590,000.  The sizes of the comparable properties ranged from 2.42 acres to 100.67 acres.  Three of the comparable properties were in a 100-year floodplain, and one was in a 500-year floodplain.  (Id.) 

The appraisal report gave the most weight to Comparable No. 6 with some consideration given to Comparable Nos. 1 and 5.  Comparable No. 6, 16.70 acres, sold on September 2, 2016, for $45,000 ($0.06 per square foot).  Comparable No. 6 was similar in size to the subject property but had “no flood plain issues.”  St. Louis County records showed the sale of Comparable No. 6 was not an open-market transaction, but the 2015 appraised value was reduced from $155,700 to the sale price of $45,000 for the 2016 tax year.  Comparable No. 1, 3.22 acres, sold on February 28, 2017, for $10,000.  Comparable No. 1 was in a 100-year floodplain.  Comparable No. 5, 2.42 acres, sold on December 1, 2016, for $2,500.  Comparable No. 5 had a creek running through the property but no flood plain issues.  St. Louis County records showed the sale was not an open-market transaction, but the BOE had reduced the 2017 appraised valuation from $17,100 to $2,500, the sale price.  (Id.)  The appraisal report concluded that the subject property’s TVM as of January 1, 2017, was $62,256.  (Id.)

  1. Respondent’s Evidence.  Respondent opined that the TVM of the subject properties, as of January 1, 2017, was as follows:
Appeal No. Parcel/Locator No. Respondent’s opinion of TVM
17-10283 27Y230031 $106,000
17-10284 28Y420022 $265,000
17-10286 28Z630055 $180,000
17-10287 28Z640021 $280,000

 

To support the his opinions of value, Respondent offered the following exhibits:

Appeal No. Exhibit Description Ruling
17-10283 Exhibit 1 Appraisal Report of Hough Admitted
17-10283 Exhibit 2 Qualifications of Hough Admitted
17-10283 Exhibit 3 Written Direct Testimony of Hough Admitted
17-10283 Exhibit 4 Aerial photograph of Comparable No. 1 Admitted
17-10283 Exhibit 5 Overhead photograph of topography of Comparable No. 3 Admitted
17-10283 Exhibit 6 Aerial photograph of pond on Comparable No. 4 Admitted
17-10283 Exhibit 7 Aerial photograph of subject property and neighboring parcels Admitted
17-10283 Exhibit 8 Aerial map noting location of Complainant’s comparable properties Admitted
17-10284 Exhibit 1 Appraisal Report of Hough Admitted
17-10284 Exhibit 2 Qualifications of Hough Admitted
17-10284 Exhibit 3 Written Direct Testimony of Hough Admitted
17-10284 Exhibit 4 Aerial map Admitted
17-10286 Exhibit 1 Appraisal Report of Hough Admitted
17-10286 Exhibit 2 Qualifications of Hough Admitted
17-10286 Exhibit 3 Written Direct Testimony of Hough Admitted
17-10286 Exhibit 4 Floodplain overview Admitted
17-10286 Exhibit 5 Overview map of flooplain showing 0.2% chance flood hazard (500-year floodplain) not on subject property Admitted
17-10287 Exhibit 1 Appraisal Report of Hough Admitted
17-10287 Exhibit 2 Qualifications of Hough Admitted
17-10287 Exhibit 3 Written Direct Testimony of Hough Admitted
17-10287 Exhibit 4 Statistical description of 500-year floodplain in area of subject property Admitted
17-10287 Exhibit 5 Map of floodplain showing 0.2% annual chance flood hazard (500-year floodplain) on subject property Admitted

 

Respondent presented the testimony of Barry Hough (Hough), who is a Missouri certified real estate appraiser.  Hough has been employed as an appraiser by Respondent since 2016.  Hough has been a certified appraiser since 2002.  Hough has attended courses at the Appraisal Institute, Burk Baker Schood of Real Estate & Appraising, and The Appraisal Foundation, Washington, D.C.

17-10283 – 4340 Fox Creek Road

The appraisal report compared eight parcels located within less than seven miles from the subject property.  (17-10283 Exhibit 1)  The comparable properties had been vacant at the time of sale and had sold between August 2014 and June 2017.  (Id.)  The sale prices of the comparable properties ranged from $106,000 to $280,000.  The appraisal report made market-based time adjustments to Comparable Nos. 4, 6, and 7, which sales had occurred in 2014 and 2015, because the median sale prices of vacant residential lots declined by about 20% in 2016.  The appraisal report made market-based adjustments to Comparable Nos. 1 and 2 because they were larger than the subject property.  The appraisal report described the subject property’s topography as “Generally level” but described the topography of five of the comparable properties as some form of “Steep.”  (Id.)  No adjustments were made for topography.  (Id.)  Hough considered all of the comparables to be good indicators of the subject property’s TVM and gave them equal weight.  The appraisal report concluded that the estimated TVM was the median of the adjusted sales prices, rounded to the nearest $1,000.  The adjusted sale prices ranged from $88,000 to $150,000.  (Id.)

With regard to whether the subject property could be developed, the appraisal report stated:

The appraiser discussed the subject lots (sic) utility, configuration, topographical characteristics, and flood plain status with Steve Vogel, the Planning Technician for the City of Wildwood. Mr. Vogel’s professional responsibilities include assisting property owners, residents, business owners, and development interests with interpreting the City’s regulations and requirements for land use planning in this community. These areas of assistance involve: enforcing land use ordinances; reviewing all subdivisions of properties and requirements for their design and service under the City’s Subdivision and Development Regulations; promoting best development practices in land use; reviewing zoning applications, conditional use permits, and site development plans; and implementing sustainable practices for land use, new and site development plans; and implementing sustainable practices for land use, new construction, and stormwater management. According to Mr. Vogel, as far as Wildwood is concerned there are no readily apparent conditions that would impede the development of the subject property as a residential homesite. Specifically, despite being 2.95 acres as opposed to 3.0 acres there is no legal impediment to building a single family home on this site.

 

(Id. at page 6)

17-10284 – 4602 Chateau Lane

The appraisal report compared six parcels located within less than nine miles from the subject property.  (17-10284 Exhibit 1)  The comparable properties had been vacant at the time of sale and had sold between December 2014 and April 2017.  (Id.)  The sale prices of the comparable properties ranged from $74,493 to $270,000.  The appraisal report made market-based time adjustments to Comparable No. 4, which sale had occurred in 2014, because the median sale prices of vacant residential lots declined by about 20% in 2016.  The appraisal report made market-based adjustments to all of the comparables for size; five of the comparables were significantly smaller than the subject property while one was only three acres larger than the subject property.  The appraisal report described the subject property’s topography as “Slopes to Front” but described the topography of four of the comparable properties as “Steep Slope” “Steep/Ravines.”  (Id.)  No adjustments were made for topography.  (Id.)  Hough placed the most weight on Comparable Nos. 1, 2, 3, and 4, which ranged in adjusted sale price from $224,493 to $366,000.  This range represented the range of the adjusted sale prices of all of the comparables.  (Id.)

            With regard to whether the subject property could be developed, the appraisal report included “site comments” noting the presence of right-of-way easements on the subject property that allow for neighbors’ driveways and concluding that the easements “likely have no negative impact on the market value of the subject property.”  (17-10284 Exhibit 1)  The appraisal report included comments acknowledging that “.24 acres at the southwest corner of the property appears to be located within the 100 year flood plain.”  (Id.)  The appraisal report concluded that this “small area has no adverse impact on the market value of the property.”  (Id.)

17-10286 – 19102 Sunset Hollow Court

The appraisal report compared six parcels located within less than six miles from the subject property.  (17-10286 Exhibit 1)  The comparable properties had been vacant at the time of sale and had sold between May 2014 and October 2016.  (Id.)  The sale prices of the comparable properties ranged from $86,000 to $270,000.  The appraisal report made market-based time adjustments to Comparable Nos. 2, 3, 4, 5, and 6, which sales had occurred in 2015 and 2015, because the median sale prices of vacant residential lots declined by about 20% in 2016.  The appraisal report made market-based adjustments to Comparable Nos. 1, 2, 3, 5, and 6 because they were either larger or smaller than the subject property.  The appraisal report made a $108,000 positive adjustment to Comparable No. 3 for location, but the report did not specify the reason for the adjustment.  The description of the location of Comparable No. 3 was the same as the other comparable properties and of the subject property.  The appraisal report described the subject property’s topography as “Gentle Slope to Rear” but described the topography of all of the comparable properties as “Steep Slope” to rear or side.  (Id.)  No adjustments were made for topography.  (Id.)  Hough placed the most weight on Comparable Nos. 1 and 6 due to their close proximity (.50 miles or less from the subject property) and their similarity (approximately three acres more or less than the subject property).  The adjusted sale prices of Comparable Nos. 1 and 6 were $199,900 and $176,000 respectively.

            With regard to whether the subject property could be developed, the appraisal report included “site comments” similar to those contained in the appraisal report for Appeal No. 17-10284 and Appeal No. 17-10287, which concluded that “there are no readily apparent conditions that would impede the development of subject property as a residential homesite.”  (17-10286 Exhibit 1)  However, the appraisal report included comments acknowledging that “1.9 acres at the rear of the lot (28%) is in a 500 year flood plain.”  (Id.)

17-10287 – 2134 Timberline Valley Drive

The appraisal report compared six parcels located within less than six miles from the subject property.  (17-10287 Exhibit 1)  The comparable properties had been vacant at the time of sale and had sold between May 2014 and October 2016.  (Id.)  The sale prices of the comparable properties ranged from $86,000 to $270,000.  The appraisal report made market-based time adjustments to Comparable Nos. 2, 3, 4, 5, and 6, which sales had occurred in 2014 and 2015, because the median sale prices of vacant residential lots declined by about 20% in 2016.  The appraisal report made positive market-based adjustments to each of the comparables except Comparable No. 5 because they were significantly small acreages than the subject property.  The appraisal report analyzed the subject property as a 10-acre residential lot with 5.88 acres of surplus land but made no adjustments for surplus land.  (17-10287 Exhibit 1)  The appraisal report described the subject property’s topography as “Level to Steep Slope” but described the topography of all of the comparable properties as “Steep Slope” to rear, front, or side.  (Id.)  No adjustments were made for topography.  (Id.)  Hough gave the comparable properties equal weight.  The adjusted sale prices ranged from $216,000 to $308,500.  (Id.)

            With regard to whether the subject property could be developed, the appraisal report included “site comments” similar to those contained in the appraisal report for Appeal No. 17-10284 and Appeal No. 17-10286, which concluded that “there are no readily apparent conditions that would impede the development of subject property as a residential homesite.”  (17-10286 Exhibit 1)  However, the appraisal report included comments acknowledging that “5.9 acres of the lot (37%) is in a 500 year flood plain.”  (Id.)

  1. Presumption of Correct Assessment Rebutted – TVM Established. Complainant presented substantial and persuasive evidence to rebut the presumption of correct assessment of the subject properties by the BOE and to establish their TVMs as of January 1, 2017.

 

CONCLUSIONS OF LAW AND DECISION

Jurisdiction

The STC has jurisdiction to hear this appeal and correct any assessment, which is shown to be unlawful, unfair, arbitrary or capricious, including the application of any abatement.  The Hearing Officer shall issue a decision and order affirming, modifying or reversing the determination of the BOE, and correcting any assessment that is unlawful, unfair, improper, arbitrary, or capricious.  Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo

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.  Article X, Sections 4(a) and 4(b), Mo. Const. of 1945.  The constitutional mandate is to find the true value in money for the property under appeal.  By statute, real property and tangible personal property are assessed at set percentages of true value in money:  residential property at 19%; commercial property at 32%; and agricultural property at 12%.  Section 137.115.5 RSMo (2000) as amended.

Complainant’s Burden of Proof

To obtain a reduction in assessed valuation based upon an alleged overvaluation, the Complainant must prove the true value in money of the subject property on the subject tax day.  Hermel, Inc., v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978).  True value in money is defined as the price that the subject property would bring when offered for sale by one willing but not obligated to sell it and bought by one willing or desirous to purchase but not compelled to do so.  Rinehart v. Bateman, 363 S.W.3d 357, 365 (Mo. App. W.D. 2012); Cohen v. Bushmeyer, 251 S.W.3d 345, 348 (Mo. App. E.D. 2008); Greene County v. Hermel, Inc., 511 S.W.2d 762, 771 (Mo. 1974).  True value in money is defined in terms of value in exchange and not in terms of value in use.  Stephen & Stephen Properties, Inc. v. State Tax Commission, 499 S.W.2d 798, 801-803 (Mo. 1973).  In sum, true value in money is the fair market value of the subject property on the valuation date.  Hermel, Inc., 564 S.W.2d at 897.

“’True value’ is never an absolute figure, but is merely an estimate of the fair market value on the valuation date.”  Drury Chesterfield, Inc., v. Muehlheausler, 347 S.W.3d 107, 112 (Mo. App. E.D. 2011), citing St. Joe Minerals Corp. v. State Tax Comm’n of Mo., 854 S.W.2d 526, 529 (Mo. App. E.D. 1993).  “Fair market value typically is defined as the price which the property would bring when offered for sale by a willing seller who is not obligated to sell, and purchased by a willing buyer who is not compelled to buy.”  Drury Chesterfield, Inc., 347 S.W.3d at 112 (quotation omitted).

A presumption exists that the assessed value fixed by the BOE is correct.  Rinehart, 363 S.W.3d at 367; Cohen, 251 S.W.3d at 348; Hermel, Inc., 564 S.W.2d at 895.  “Substantial and persuasive controverting evidence is required to rebut the presumption, with the burden of proof resting on the taxpayer.” Cohen, 251 S.W.3d at 348.  Substantial evidence can be defined as such relevant evidence that a reasonable mind might accept as adequate to support a conclusion.  Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).  Persuasive evidence is evidence that has sufficient weight and probative value to convince the trier of fact.  Cupples Hesse Corp., 329 S.W.2d at 702.  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). See also, 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).

There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a STC 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.”  Westwood Partnership, 103 S.W.3d 152; Daly, 77 S.W.3d 645; Reeves, 115 S.W.3d 375; Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. W.D. 1991).

Complainant advocated the reduction of the BOE’s valuations of the subject properties.  Therefore, Complainant bore the burden of rebutting the presumption that those valuations were correct and of establishing that his opinions of TVM were correct.

Respondent’s Burden of Proof

Respondent, when advocating a value different from that determined by the BOE, 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.  Hermel, Inc., 564 S.W.2d at 895; Cupples-Hesse, 329 S.W.2d at 702; Brooks, 527 S.W.2d at 53.

Respondent specifically advocated that the BOE’s valuations of the subject properties should be affirmed.  Accordingly, Respondent did not have the burden of proof in these appeals.

Weight to be Given Evidence

The Hearing Officer is not bound by any single formula, rule, or method in determining true value in money and 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 deemed necessary when viewed in connection with all other circumstances.  Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. W.D. 1991).  The Hearing Officer, as the trier of fact, is not bound by the opinions of experts but may believe all or none of the expert’s testimony or accept it in part or reject it in part.  Exchange Bank of Missouri v. Gerlt, 367 S.W.3d 132, 135-36 (Mo. App. W.D. 2012).

Both Complainant and Respondent presented the testimony and reports of experts in the field of real property valuation.

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, 615 (Mo. App. W.D. 2000); Hermel, Inc., 564 S.W.2d at 897; 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. 1974).

“For purposes of levying property taxes, the value of real property is typically determined using one or more of three generally accepted approaches.”  Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341, 346 (Mo. banc 2005), citing St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977).  “Each valuation approach is applied with reference to a specific use of the property—its highest and best use.” Snider, 156 S.W.3d at 346-47, citing Aspenhof  Corp., 789 S.W.2d at 869.  “The method used depends on several variables inherent in the highest and best use of the property in question.”  Snider, 156 S.W.3d at 347.

“Each method uses its own unique factors to calculate the property’s true value in money.”  Id.

Comparable Sale Approach

“The ‘comparable sales approach’ uses prices paid for similar properties in arms-length transactions and adjusts those prices to account for differences between the properties.”  Id. at 348.  “Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character.”  Id. (quotation omitted).  “This approach is most appropriate when there is an active market for the type of property at issue such that sufficient data [is] available to make a comparative analysis.”  Id.

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.

 

  1. Both parties are well informed and well advised, and both acting in what they consider their own best interests.

 

  1. A reasonable time is allowed for exposure in the open market.

 

  1. Payment is made in cash or its equivalent.

 

  1. Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.

 

  1. 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.

 

Discussion

In this case, Complainants’ evidence was substantial and persuasive to rebut the presumption of correct assessment by the BOE.  Substantial evidence can be defined as such relevant evidence that a reasonable mind might accept as adequate to support a conclusion.  Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)Persuasive evidence is evidence that has sufficient weight and probative value to convince the trier of fact.  Cupples Hesse Corp., 329 S.W.2d at 702.

Both Complainant and Respondent presented expert testimony and evidence, and each expert drew different conclusions as to the TVM of the subject properties.  On the whole, the opinions of Demba, Complainant’s expert, were based upon the fact that the subject properties would be difficult to market, sell, and develop due to their rough, hilly terrain and their locations in or near foodplains or flood zones and their tendency of localized flooding.  All of the subject properties were vacant land located in a rural residential area.  Importantly, Complainant’s evidence established that Complainant had no intention as of January 1, 2017, to develop the properties by adding single-family residences or other improvements to the properties.  Respondent’s evidence, however, implied that Respondent’s opinions of value were based, at least in part, on the properties’ potential for development.  In his testimony and in the appraisal reports for each of the subject properties, Hough repeatedly stated and/or suggested that the subject properties were “buildable.”  However, Respondent did not define “buildable” or include an adjustment for the cost of making the subject properties “buildable” as of January 1, 2017.  Additionally, Respondent’s evidence was essentially dismissive of the adverse effects that flooding and the potential for flooding had on the values of the subject properties.

For example, in Appeal No. 17-10283,  Respondent’s appraisal report stated that “despite being 2.95 acres as opposed to 3.0 acres there is no legal impediment to building a single family home on this site.”  (17-10283 Exhibit 1)  On the contrary, the evidence in the record established that the zoning restrictions (legal impediments) applicable to the subject property require “3 acres minimum lot size” in order for a property to be improved with a single-family home.  (17-10283 Exhibit A)  To conclude that Complainant could actually build a single-family home on the subject property without obtaining a variance of the zoning restrictions would require one to engage in impermissible speculation.  Additionally, Respondent’s evidence did not establish the costs Complainant would incur for attempting to obtain a variance of the zoning restrictions and did not make any market-based adjustments to the comparables for said costs.

ORDER

The assessed values for the subject properties for tax years 2017 and 2018  as determined by the BOE are SET ASIDE. The valuations for the subject properties are set as follows:

Appeal No. Parcel/Locator No. 2017-2018 TVM 2017-2018 Assessed value
17-10283 27Y230031 $11,526 $2,189
17-10284 28Y420022 $116,790 $22,190
17-10286 28Z630055 $26,345 $5,005
17-10287 28Z640021 $62,256 $11,828

 

Application for Review

A party may file with the STC 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, MO 65102-0146, 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. Section 138.432, RSMo

Disputed Taxes

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 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 November 20, 2018.

STATE TAX COMMISSION OF MISSOURI

Amy S. Westermann

Senior Hearing Officer

 

Certificate of Service

I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 20th day of November, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.

 

Jacklyn Wood

Legal Coordinator