State Tax Commission of Missouri
|RONALD R. HERING,||)|
|Appeal No. 15-13746
|JAKE ZIMMERMAN, ASSESSOR||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
The assessment made by the Board of Equalization of St. Louis County (BOE) is AFFIRMED. Complainant Ronald R. Hering (Complainant) did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE. Assessed value in money for the subject property for tax years 2015 and 2016 is set at $23,750 residential ($125,000 true market value or TMV).
Complainant appeared pro se.
Respondent Jake Zimmerman, St. Louis County Assessor, (Respondent) appeared by attorney Steven Robson, Assistant County Counselor.
Case heard and decided by Senior Hearing Officer Amy S. Westermann.
Complainant appealed on the ground of overvaluation. Respondent initially set the true market value (TMV) of the subject property, as residential property, at $125,000. The BOE sustained Respondent’s valuation. The Commission takes this appeal to determine the TMV of the subject properties on January 1, 2015.
The Senior Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission.
- Evidentiary Hearing. The issue of overvaluation was presented at an evidentiary hearing, which was held on May 25, 2016, at the St. Louis Government Administration Building, 41 South Central Avenue, Clayton, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 26L610028. The subject property is further identified as 9144 Desmond Dr., Crestwood, Missouri. (Exhibit A; Exhibit 1)
- Description of Subject Property. The subject property is a 10,000 square foot residential lot improved by a 2,120 square foot, single family, ranch-style residence built in 1963. The residence has a concrete slab foundation, four bedrooms, and three bathrooms. (Transcript; Exhibit 1) The subject property has a two-car attached garage, one fireplace, a patio, radiant hearing, and central air conditioning. (Exhibit 1) The exterior consists of masonry and frame construction. (Exhibit 1)
- Assessment. Respondent set a TMV of $125,000, residential, as of January 1, 2015. (Exhibit 1)
- Board of Equalization. The BOE sustained Respondent’s TMV of the subject property.
- Complainant’s Evidence. Complainant testified in his own behalf. Complainant offered as evidence Exhibit A, which contained: (1) a typed letter addressed to the BOE that described generally the condition of the subject property and provided an index of photographs of the interior of the subject property (Exhibit A1-A2); and 11 color, 8-1/2 inch by 11 inch photographs of parts of the interior of the subject property (Exhibit A3-A13).
Complainant opined that the subject property’s TMV was $67,000 as of January 1, 2015. Complainant testified that he had purchased the subject property in 1981 for approximately $80,000. Complainant testified that no mortgage encumbered the home. Complainant testified that the subject property had not been listed for sale or appraised within the three years prior to the evidentiary hearing. Complainant testified that the only improvement to the property between January 1, 2013, and January 1, 2015, had been the replacement of the garage doors at a cost of approximately $2,000.
Complainant testified that the condition of the home detracted from the subject property’s value. Complainant also testified that he did not wish to sell the subject property but, if it were to be sold, it would have to be sold “as is.” Complainant presented several photographs of the home’s interior depicting deterioration to the floors, dated finishes in the kitchen and one of the bathrooms, a lack of electrical outlets in one of the bedrooms used as a home office, and the original furnace and the original electrical box. (Exhibit A3-A13)
Complainant testified that other houses in the neighborhood had been rehabilitated and were being sold for $200,000 to $250,000. Complainant testified that he knew of an approximately 2,100 square foot house in the neighborhood that had sold for $81,000 and was then rehabilitated at a cost of $70 per square foot in order to bring the house up to current building codes. Complainant testified that he had consulted with the company performing the upgrades to the other house and that the company informed Complainant that the cost to upgrade his home would be about the same as the other house. According to Complainant’s Exhibit A1-A2, the other house had sold for $240,000 in March 2014 after upgrades were complete. (Exhibit A1-A2) On cross-examination, Complainant testified that he did not know whether the other house had been sold on the open market because he did not see a sign in the yard. Complainant further testified that properties in his neighborhood often sold without being formally advertised.
Respondent did not object to Complainant’s exhibit, which was received into the record.
- Respondent’s Evidence. Respondent offered as evidence the testimony of St. Louis County Residential Real Estate Appraiser Senior Sharon Kuelker (the Appraiser). Respondent also offered Exhibit 1, which contained the professional qualifications of the Appraiser and the Appraisal Report for the subject property. (Exhibit 1)
The Appraiser opined that the subject property had a TMV of $130,000 as of January 1, 2015, which supported the BOE’s valuation of $125,000 as of January 1, 2015. The Appraiser testified that she had used the sales comparison approach to arrive at her opinion of value. The Appraiser testified that she had performed an interior inspection of the subject property and had concluded it showed significant deferred maintenance. The Appraiser chose five comparable properties close in proximity to the subject property that had sold between March 2013 and October 2015. (Exhibit 1) The adjusted sales prices ranged from $124,900 to $143,780. (Exhibit 1) The Appraiser found Comparable No. 4 to be most similar to the subject property based on the interior condition of the two houses. (Exhibit 1) The adjusted sale price of Comparable No. 4 was $128,000. (Exhibit 1) The Appraiser testified that she had viewed photographs of the interior of Comparable No. 4 and had reviewed descriptive notes on MLS that had been posted when Comparable No. 4 was on the market for sale.
In conducting her analysis as described in Exhibit 1, the Appraiser made adjustments to the sale price of each of the comparables based on the size of the lot; the condition of the improvements; the number of bathrooms; the type of exterior construction; and miscellaneous extras such as fireplaces, patios, and decks. (Exhibit 1) The Appraiser also made a negative adjustment to the comparables to acknowledge an interior water leak in two of the bedrooms of the subject property. (Exhibit 1) The Appraiser specifically noted that the adjustment did not necessarily represent the cost to cure the problem. (Exhibit 1)
Exhibit 1 described the subject property as showing significant deferred maintenance and no updates. Most wall coverings, floor coverings, plumbing fixtures, and lighting fixtures were original. Exhibit 1 noted that the home had missing floor moldings; broken and missing floor tiles; asbestos floor tiles; a heavy smoke residue covering the ceiling and walls; radiant heating under the floors; original windows; and the original furnace, which was in poor condition. (Exhibit 1) Exhibit 1 further described the floor plan as including an in-law suite with a mini kitchenette, living room, full bath, and a private entrance.
Complainant did not object to Respondent’s evidence, which was received into the record.
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, including the application of any abatement. The Senior 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. Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo (2000) as amended.
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.
Investigation by Hearing Officer
In order to investigate appeals filed with the Commission, the Hearing Officer may inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, subclassification, or assessment of the property. Section 138.430.2 RSMo (2000) as amended. The Hearing Officer’s decision regarding the assessment or valuation of the property may be based solely upon his inquiry and any evidence presented by the parties or based solely upon evidence presented by the parties. Id. The Hearing Officer during the evidentiary hearing made inquiry of Complainant and Respondent’s Appraiser.
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).
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 is 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.
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 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.” Westwood Partnership, 103 S.W.3d 152 (Mo. App. E.D. 2003); Daly v. P. D. George Co., 77 S.W.3d 645 (Mo. App. E.D. 2002); Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003); Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. W.D. 1991).
Generally, a property owner, while not an expert, is competent to testify to the reasonable market value of his own land. Cohen, 251 S.W.3d at 348-49; Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992). “However, when an owner’s opinion is based on improper elements or foundation, his opinion loses its probative value.” Carmel Energy, Inc., 827 S.W.2d at 783. 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.” See Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. E.D. 1980).
Board Presumption and Computer-Assisted Presumption
There exists a presumption of correct assessment by the BOE. In charter counties or the City of St. Louis, there exists by statutory mandate a presumption that the Assessor’s original valuation was made by a computer, computer-assisted method or a computer program – the computer-assisted presumption. These two presumptions operate with regard to the parties in different ways. The BOE presumption operates in every case to require the taxpayer to present evidence to rebut it. If Respondent is seeking to prove a value different than that set by the BOE, then it also would be applicable to the Respondent. The computer-assisted presumption is applicable only if (1) the BOE lowered the value of the Assessor and Respondent is seeking to sustain the original assessment and (2) it has not been shown that the Assessor’s valuation was not the result of a computer assisted method. The BOE’s valuation is assumed to be an independent valuation.
In the present appeal, the BOE sustained the initial valuation of Respondent; therefore, the computer-assisted presumption is not applicable in the present appeal.
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, 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).
Evidence of Increase in Value
In any case in charter counties or the City of St. Louis where the assessor presents evidence that indicates a valuation higher than the value finally determined by the assessor or the value determined by the board of equalization, whichever is higher, for that assessment period, such evidence will only be received for the purpose of sustaining the assessor’s or board’s valuation and not for increasing the valuation of the property under appeal. Section 138.060 RSMo (2000) as amended; 12 CSR 30-3.075. The evidence presented by the Respondent was substantial and persuasive to rebut the presumption of correct assessment by the BOE and establish the fair market value of the property under appeal, as of January 1, 2015, to be $130,000. However, the assessed value cannot be increased above $125,000 in this particular appeal. CSR 30-3.075; State ex rel. Ashby Road Partners, LLC et al. v. STC and Muehlheausler, 297 S.W.3d 80, 87-88 (Mo. banc 2009).
In the present appeal based upon overvaluation, Complainant failed to present substantial and persuasive evidence to rebut the presumption of true market value advocated by Respondent. First, Complainant did not utilize a recognized approach to valuing the property, i.e., the sales comparison approach, the cost approach, or the income approach. Second, Complainant’s evidence did not compel a conclusion that the subject property was worth $67,000. Complainant argued that the condition of the home would require him to sell the subject property “as is” and that the condition of the subject property caused it to be worth less than other properties in the same neighborhood. Complainant presented several photographs depicting damage or deterioration to the interior of the home. Complainant testified that he had a conversation with a representative of a company performing a rehabilitation of a neighboring property. Complainant testified that he was told the cost to rehabilitate his own home would be $70 per square foot or approximately $140,000. However, Complainant did not present any bids or estimates for repair or rehabilitation of the home and did not present the testimony of the individual who provided the verbal estimate that would support a $58,000 reduction in the TMV of the subject property.
Consequently, although Complainant presented evidence to support his opinion of the subject property’s TMV, it is neither substantial nor persuasive because, if relied upon, the fact finder would be required to resort to speculation to conclude the TMV of the subject property on January 1, 2015, should be $67,000.
Conversely, Respondent presented substantial and persuasive evidence to support his conclusion that the TMV of the subject property was $125,000 on January 1, 2015.
In arriving at an opinion of value, the Appraiser considered all three approaches to value the subject property: the cost approach, the income approach, and the sales comparison approach. The Appraiser ultimately utilized the sales comparison approach because the cost approach and the income approach were not applicable to valuing the subject property.
The Appraiser selected five comparable sales located in the same or similar marketing areas and made adjustments to the comparables. The Appraiser gave the most weight to Comparable No. 4 because of its similarity to the subject property. Market data showed that Comparable No. 4 had sold for $131,500 in October 2013. However, the Appraiser adjusted the sale price of Comparable No. 4 down to $128,000 to account for one less bathroom than the subject property; 81 square feet less than the subject property; the addition of a second fireplace; and the lack of a water leak into the house. (Exhibit 1) Both Comparable No. 4 and the subject property received a C5 condition rating, meaning that the “improvements feature obvious deferred maintenance and are in need of some significant repairs . . . rehabilitation, or updating. The functional utility and overall livability is somewhat diminished due to condition, but the dwelling remains useable and functional as a residence.” (Exhibit 1)
From this substantial and persuasive evidence presented by Respondent, it is reasonable to find and conclude that the TMV of the subject property on January 1, 2015, was $125,000.
The true market valuation for the subject property as determined by Respondent for the subject tax day and sustained by the BOE is AFFIRMED.
The assessed value for the subject property for tax years 2015 and 2016 is set at $23,750 ($125,000 TMV).
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, 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
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 July 11, 2016.
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 electronically mailed or sent by U.S. Mail on this 11 day of July, 2016 to:
Ronald R. Hering, Complainant, 9144 Desmond Dr., Crestwood, Missouri, 63126
Steven Robson, St. Louis County Associate County Counselor, SRobson@stlouisco.com
Jake Zimmerman, St. Louis County Assessor, email@example.com, firstname.lastname@example.org
 Respondent did not advocate increasing the BOE’s assessment of the subject property’s value.