State Tax Commission of Missouri
STANLEY F. & JUDITH A. WILSON,)
)
Complainants,)
)
v.) Appeal Number 11-60000
)
KAY CHILTON, ASSESSOR,)
HICKORY COUNTY, MISSOURI,)
)
Respondent.)
DECISION AND ORDER
HOLDING
Decision of the Hickory County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE.True value in money for the subject property for tax years 2011 and 2012 is set at $44,720, combined residential and agricultural assessed value of $7,800.Complainant, Stanley Wilson appeared pro se.Respondent appeared pro se.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
ISSUE
Complainants appeal, on the ground of overvaluation, the decision of the Hickory County Board of Equalization, which reduced the valuation of the residential portion of Complainants’ property.The Commission takes this appeal to determine the true value in money for the residential portion of Complainants’ property on January 1, 2011.The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
1.Jurisdiction.Jurisdiction over this appeal is proper.Complainants timely appealed to the State Tax Commission from the decision of the Hickory County Board of Equalization.A hearing was conducted on November 8, 2011, at the Hickory County Courthouse, Hermitage, Missouri.
2.Assessment.The Assessor valued the residential portion of the property at $34,760, an assessed value of $6,600, and the agricultural portion of the property at $9,960, an assessed value of $1,200.[1]The Board reduced the residential value to $32,310, an assessed value of $6,120 and affirmed the agricultural assessment.The Board reduction was based upon reducing the physical condition factor from 55% good as determined by the Assessor to 50% good.
3.Subject Property.The subject property is the residential portion of the real property located at Route 1, Box 145, Preston, Missouri.[2]The property is identified by parcel number 07-6.0-23-2-1-5.The property consists of a one acre home site.It is improved by a ranch style residence, built in 1954.The home has a total of 1,184 square feet of living area on a slab, with a carport.The home has six rooms, with three bedrooms and one bathroom.
4.Complainants’ Evidence.Mr. Wilson (hereinafter Complainant) testified on behalf of the Complainants.He presented three exhibits which were received into evidence.[3]Complainant gave his opinion of value to be $24,083 based on applying a 35% good physical condition factor to the Assessor’s mass valuation replacement cost new calculation, instead of a 50% factor as was done by the Board of Equalization.
There was no evidence of new construction and improvement from January 1, 2011, to January 1, 2012, therefore the assessed value for 2011 remains the assessed value for 2012.[4]
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 for the property under appeal as of January 1, 2011, to be $24,083.
5.Respondent’s Evidence.Respondent testified relative to an appraisal which she had performed on the subject property utilizing a sales comparison approach to value.Respondent presented her valuation data, which was received into evidence.It was identified as Exhibit 1 and contained the following documents: Uniform Residential Appraisal Report – Sales Grid; Property Record Card and photos of the subject; Property Record Card and photos of Comparable 1; Property Record Card and photos of Comparable 2; Property Record Card and photos of Comparable 3; and a locator map of subject and the three comparables.Respondent’s evidence was offered in support of the original appraised value on the subject property.
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 $34,760, as originally determined by the Assessor.
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.[5]
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.[6]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.[7]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.
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[8]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.[9]Complainants failed to present substantial and persuasive evidence to rebut the presumption of correct assessment.Respondent did present substantial and persuasive evidence to rebut the presumption.
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.[10]True value in money is defined in terms of value in exchange and not value in use.[11]It is the fair market value of the subject property on the valuation date.[12]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.[13]
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.[14]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.[15]The methodology to calculate value presented by Mr. Wilson is not a recognized and accepted methodology for valuation in an appeal before the Commission.The valuation of the property under the Respondent’s sale comparison approach is a recognized methodology for making a determination of value.
Complainants’ Failed to Prove Residential Value of $24,083
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, 2011.[16]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.”[17]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[18]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.[19]
Complainant made his calculation of value relying on cost figures from the property record card.The only difference in the calculation of value was that Mr. Wilson applied a depreciation factor for physical condition of 35% good while the Board had used a 50% good factor.The Assessor had originally rated the physical condition at 55% good.The basis for Complainant’s utilization of the 35% factor was the Condition Guidelines for Hickory County for homes that are 56 – 60 years old.The subject is 57 years old.
The condition guidelines are exactly that, guidelines.They are a tool which the Assessor is able to use in the mass appraisal of residential property in the county.In any given instance, a residence could be in much better or a much worse physical condition than the percentage rating set out in the guidelines.No market data was presented by Mr. Wilson that would establish that the appropriate depreciation factor under a replacement cost new less depreciation methodology would have been 65%.
When the valuation of a property moves from the mass appraisal, that takes place under general reassessment every two years, to the valuation of a single property in an appeal before the Commission, the mass appraisal cost approach generally will not represent the best valuation method to be presented.For the application of the cost approach, it is necessary to develop the necessary steps in conducting a proper cost approach.
Those steps are generally recognized to be:[20]
1. Determine the cost to construct the structure new.
2. Estimate depreciation and deduct it from the replacement cost new.
3. Add the contributory value of any other site improvements, not included in the cost to construct the structure.
4. Determine the land value from an acceptable methodology and add it to the value for the structure and other site improvements.
At first glance, this is what it appears Mr. Wilson did in his Exhibit A.However, he simply lifted data from the Assessor’s property record card mass appraisal.He did not independently establish or verify that the factors that he was utilizing were in fact representative of the market.By statutory mandate, in hearings before the Commission, there is no presumption that the assessor’s valuation of a property is correct.[21]Therefore, a taxpayer who seeks to utilize cost data contained in a property record card assumes the burden of establishing that data relating to replacement cost new, amount of depreciation, contributory value of other site improvements and land value are in fact representative of market values.Failing to so establish the validity of such data renders any conclusion of value derived there from as void of any probative value.Such is the case in this situation.
Mr. Wilson presumed that all of the Assessor’s mass appraisal cost data was correct except for the depreciation factor.However, the statute cited above does not allow such a presumption.Complainant did not present evidence from which the Hearing Officer can conclude that the various factors put forth in Exhibit A are in fact representative of the market.A taxpayer does not meet his burden if evidence on any essential element of his case leaves the trier of fact “in the nebulous twilight of speculation, conjecture and surmise.”[22]Complainants failed to meet their burden of proof on the fundamental elements to establish a proper cost approach to value.The Hearing Officer would be remiss to conclude value as tendered by Mr. Wilson when the opinion only rests on “speculation, conjecture and surmise.”Complainants failed to prove the Board’s valuation was in error and failed to prove the proffered value of $24,083.
Respondent’s Burden of Proof
The Respondent, if only resting on the presumption of correct assessment by the Board, does not bear any burden of proof.However, Respondent, when advocating a value different from that determined by the Board, 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]In this case, the Assessor presented a sales comparison approach to value in support of the original valuation on Complainant’s property.[24]
The sales comparison approach relied upon the sales of three properties, which the Assessor deemed to be comparable to the subject.Adjustments were made for various differences to render each comparable like the subject in the amenities of each individual property.The Hearing Officer concludes that the three sale properties were appropriate comparables for utilization in the development of a cost approach.The adjustments were appropriate.
The Hearing Officer is of the opinion that an age adjustment should have probably been made since the subject home was constructed in 1954 and the comparable homes date from 1975, 1938 and 1977.However, there is not sufficient data on the record for the Hearing Officer to make an age adjustment.Furthermore, it may well be that the market in Hickory county would not in fact recognize a significant difference between homes that are between 17 years old and 23 years newer than the property being appraised.
The adjusted range of values for the three comparables was: $51,010, $55,685 and $58,175.Respondent did not conclude a specific value from this range since her appraisal was given in support of the original value on the property of $34,760.While the Hearing Officer, based on the sales data, would feel comfortable concluding a value of $52,000 to $58,000 (or slightly less) for the subject, deference to the Respondent’s position, that her appraisal was provided in support of her original valuation, will be given.Respondent’s evidence is clearly sufficient to rebut the presumption of correct assessment by the Board and to establish that as of January 1, 2011, the true value in money for the subject property was, at least, $34,760.Accordingly, the value determined by the Board must be set aside and the Assessor’s original value reinstated.
ORDER
The assessed valuation for the residential portion of Complainants’ property as determined by the Board of Equalization for Hickory County for the subject tax day is SET ASIDE.The assessed valuation for the agricultural portion of Complainants’ property as determined by the Assessor and sustained by the Board of Equalization is AFFIRMED.
The assessed value for the subject property for tax years 2011 and 2012 is set at $7,800.
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.The application shall contain specific facts or law as grounds upon which it is claimed the decision is erroneous.Said application must be in writing addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.
Failure to state specific facts or law upon which the application for review is based will result in summary denial. [25]
Disputed Taxes
The Collector of Hickory 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 29, 2011.
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 29thday of November, 2011, to:Stanley Wilson, Rt. 1, Box 121, Preston, MO 65732, Complainant; James Hackett, Prosecuting Attorney, P.O. Box 154, Hermitage, MO 65668, Attorney for Respondent; Kay Chilton, Assessor, P.O. Box 97, Hermitage, MO 65668; Jeanne Lindsey, Clerk, P.O. Box 3, Hermitage, MO 65668-0003; Karen Stokes, Collector, P.O. Box 92, Hermitage, MO 65668.
___________________________
Barbara Heller
Legal Coordinator
Contact Information for State Tax Commission:
Missouri State Tax Commission
301 W. High Street, Room 840
P.O. Box 146
Jefferson City, MO 65102-0146
573-751-2414
573-751-1341 Fax
[1] Residential property is assessed at 19% of its true value in money (fair market value) and agricultural property is assessed at 12 percent of its true value in money.Section 137.115.5 RSMo
[2] Complainants did not challenging the assessment on the agricultural portion of their property – Testimony at hearing.
[3] Exhibit A – Computation of Value; Exhibit B – Record of Assessed Values; Exhibit C – Condition Guidelines – Hickory County
[8] 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)
[9] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
[10] 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).
[11] Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 S.W.2d 376, 380 (Mo. App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).
[13] 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.
[14] See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra;Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975).
[15] 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. Div. 2 1974).
[17] See, 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).Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991).
[20] See, The Appraisal of Real Estate, Thirteenth Edition, Appraisal Institute, 2008, Chapter 17 – The Cost Approach, pp. 377 – 394; Chapter 18 – Building Cost Estimates, pp. 395 – 408.