State Tax Commission of Missouri
STEPHEN & PATRICIA SCHOENBECK,)
)
Complainants,)
)
v.) Appeal Number 09-10041
)
MICHAEL BROOKS,)
ACTING ASSESSOR,)
ST. LOUIS COUNTY,MISSOURI,)
)
Respondent.)
DECISION AND ORDER
HOLDING
Decision of the St. Louis County Board of Equalization sustaining the assessment made by the Assessor is AFFIRMED in part and SET ASIDE in part.True value in money for the subject property for tax year 2009 is set at $677,200, residential assessed value of $128,670.True value in money for the subject property for tax year 2010 is set at $695,000, residential assessed value of $132,050.Complainants appeared pro se.Respondent appeared by Associate County Counselor Paula Lemerman.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
ISSUE
Complainants appeal, 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.Complainants timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.A hearing was conducted on July 29, 2010, at the St. LouisCountyGovernmentCenter,Clayton,Missouri.
2.Assessment.The Assessor appraised the property under appeal at $677,200, a residential assessed value of $128,670.The Board sustained the assessment.[1]
3.Subject Property.The subject property is located at 255 Blackmer Place, Webster Groves, Missouri.The property is identified by locator number 23L610289.The property consists of a 14,580 square foot lot.The lot is improved with a two and a half story, single-family residence built in 1930.The gross living area is 3,854 square feet.The house has a full basement and no finished area in the third floor attic.The exterior walls are brick construction.There is a deck and a two car basement garage.The residence has nine rooms, five bedrooms, three full and one half bathrooms.There are two fireplaces and the basement has 500 square feet of finished area.The kitchen is outdated, the flooring in the kitchen is torn, and one full bathroom is outdated.The home is well maintained and in overall good condition.The quality of materials and workmanship is good, consistent with surrounding properties.[2]
4.Complainant’s Evidence.Mr. Schoenbeck testified on behalf of Complainants.He stated his opinion of the fair market value of the subject property on January 1, 2009, to be $604,200.This was the value agreed to during the informal conference with the assessor in 2007.The basis for the owners asserting the 2007 valuation of the property was a general decline in real estate values, all other houses on Blackmer had been reduced in their appraised valuations for 2009 by the Assessor and the condition of the subject was unchanged from 2007 to 2009.Complainants offered the following exhibits into evidence.
|
EXHIBIT |
DESCRIPTION |
|
A |
Comparison 2007 & 2009 Assessor’s Appraised Values – Blackmer Properties |
|
B |
Assessor’s 2009 Mass Appraisal Sales Comps for subject |
|
C |
Page 1 of a Fannie Mae Underwriter Appraisal |
|
D |
Assessor’s Website Property Record Card (PRC) – 364 Gray Ave. |
|
E |
Assessor’s Website PRC – 303 W. Jackson Rd |
|
F |
Assessor’s Website PRC – 148 S. Elm Ave. |
|
G |
Assessor’s Website PRC – 230 Blackmer Place |
|
H |
Assessor’s Website PRC – 200 Blackmer Place |
|
I |
Assessor’s Website PRC – 144 S. Rock Hill Rd. |
Exhibits A and B were received into evidence.Counsel for Respondent objected to Exhibits C through I on the grounds of lack of relevance.Objection was sustained.Exhibits C through I and the testimony relating thereto were only received and maintained in the Commission file as an offer of proof.Exhibits C through I were excluded from evidence and not considered in making a determination of value for the subject property.See, Owner’s Opinion of Value, infra.
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 $604,200, as proposed.
5.New Construction and Improvement.There was new construction and improvement from January 1, 2009, to January 1, 2010.Complainants spent approximately $20,000 on remodeling and total updating of a full bathroom, plus plaster maintenance and
repairs.[3]Therefore the assessed value for 2010 must reflect the increase in value from the new construction and improvements.[4]
6.Respondent’s Evidence.Respondent presented the appraisal report[5] and testimony of Mark Hannan, Residential Real Estate Appraiser for St. Louis County.Mr. Hannan concluded a fair market value of the subject property as of January 1, 2009, to be $680,000 relying on the development of the sales comparison approach to value.The properties relied upon by Respondent’s appraiser were comparable to the subject property for the purpose of the appraisal problem in this appeal.
The properties were located within a half mile of the subject.Each sale property sold at a time relevant to the tax date of January 1, 2009.The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability.The appraiser made various adjustments to the comparable properties for differences which existed between the subject and each comparable.All adjustments were appropriate to bring the comparables in line with the subject for purposes of the appraisal problem.
Respondent’s evidence met the standard of substantial and persuasive to establish the value of the subject, as of January 1, 2009, to be $680,000.However for tax year 2009, Respondent’s appraisal was accepted only to sustain the original assessment made by the Assessor and sustained by the Board and not for the purpose of raising the assessment above that value.See, Evidence of Increase in Value, infra.Respondent met the standard of clear, convincing and cogent evidence in this appeal to sustain the original valuation of $677,200, residential assessed value of $128,670.See, Respondent Sustains Value of $677,200, infra.
7.Assessment for 2010.The valuation for 2010 must reflect the new construction and improvements.[6]Therefore the true value in money for the Complainants’ property as of January 1, 2010, is $695,000, residential assessed value of $132,050.See, Valuation for 2010, infra.
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.[7]
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[8]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 by the Board and to establish the fair market value of the property under appeal as of January 1, 2009.
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]
Respondent’s appraiser concluded value relying on the Standard for Valuation.[14]
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.[15]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.[16]Complainants did not present a conclusion of value as of January 1, 2009, derived from an accepted appraisal methodology.Respondent’s appraiser concluded fair market value based upon the sales comparison approach.This approach is generally considered to be the most reliable method for the valuation of owner occupied residential property, when, as in this case, there is adequate relevant sales data to develop the approach.
Complainants Fail To Prove Value of $604,200
In order to prevail, Complainants must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2009.[17]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.”[18]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[19]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.[20]
Owners’ Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.[21]The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[22]The owners’ opinion of value was based upon the value set for 2007 by agreement of the taxpayers and assessor’s staff as the result of an informal conference.This is not an opinion of value for January 1, 2009, based upon proper elements or a proper foundation.Accordingly, the owners’ opinion of value has no probative weight for this appeal.
Exhibit A
Complainant’s further argument that all the other houses on Blackmer had their appraised values by the Assessor reduced for 2009, by an average of 11.6%[23]is not relevant to establish the true value in money for the subject property.Such information does not constitute substantial and persuasive evidence of what a willing buyer and seller would have agreed to as the purchase price for the property under appeal on January 1, 2009.Furthermore, Complainants did not demonstrate how the reduction in values to other properties established the 2009 value of their property to be $604,200.
Exhibit B
This is a copy of the Assessor’s Comparable Sales and a concluded value utilizing the mass appraisal valuation system.Complainants point out that it was calculated relying on total living area of 4,239 square feet.This was in error.Respondent’s appraise did not use that living area for his appraisal, but corrected it to 3,854 square feet.Here again, this exhibit does not establish the value of $604,200 advocated by the taxpayers.
Exhibit C
This document is the first page of a Fannie Mae Desktop Underwriter Qualitative Analysis Appraisal Report.It is plain hearsay.The Exhibit has three properties listed with sale prices and there is a conclusion of value of $677,200 at the bottom of the page.However, there are no dollar adjustments or any other correlation of figures and data demonstrating how the value of $677,200 was concluded.In any event, the exhibit has no probative value to support the taxpayer’s opinion of value of $604,200.
Exhibits E – I
This series of documents provides assessment information on six properties.It is noted that two of the properties were utilized by Respondent’s appraiser in his sales comparison approach.However, none of the exhibits individually or collectively provide any material evidence to support, Complainants’ claimed value of $604,200.Accordingly, the objection to these exhibits on the ground of relevance made by Counsel for Respondent at the evidentiary hearing was sustained.All the documents really establish is what the appraised values for the 2009-10 assessment were and some information on the dwelling on each property.Submission of property record cards on other properties is not a methodology for appraising a property in an appeal before the Commission.
Conclusion
Complainants failed to meet their burden of proof to present substantial and persuasive evidence that the true value in money of their property as of January 1, 2009, was $604,200.
Valuation for 2010
Complainant had $20,000 of total updating and repair work performed during calendar year 2009.This constitutes new construction and improvements to the subject home.Accordingly, the new construction and improvements must be valued for the 2010 tax year as if they had been in place on January 1, 2009.[24]Respondent’s appraiser testified in his opinion the updating and repair work would have added $20,000 to his concluded value.The Hearing Officer is persuaded that the market would not necessarily recognize the contributory value of the remodeling and repairs to be the full $20,000.An amount of $15,000 is appropriate to account for the increase in value to the property for 2010 due to new construction and
improvement.Therefore, the appraised value of the property as of January 1, 2010, would be $695,000, an assessed residential value of $132,050.[25]
Evidence of Increase in Value
In any case in St. Louis County where the assessor presents evidence which 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.[26]The evidence presented by the Respondent was substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the fair market value of the property under appeal, as of January 1, 2009, to be $680,000.However, under the Commission rule just cited and Supreme Court decision[27] the assessed value cannot be increased above $128,670[28] for tax year 2009, in this particular appeal.
Respondent Sustains Value of $677,200
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 $677,200, 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.[29]
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.[30]The quality of proof, to be clear and convincing must be more than a mere preponderance but does not require beyond a reasonable doubt.[31]“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.”[32]The appraisal report of Mr. Hannan, presented on behalf of Respondent, met the statutory guidelines for clear, cogent and convincing evidence to establish value.According, the value of $677,200 for tax year 2009 must be sustained.[33]
ORDER
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Louis County for the subject tax day is AFFIRMED in part and SET ASIDE in part.
The assessed value for the subject property for tax year 2009 is set at $128,670.
The assessed value for the subject property for tax year 2010 is set at $132,050.
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, MO65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.
Failure to state specific facts or law upon which the appeal is based will result in summary denial. [34]
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 September 3, 2010.
STATE TAX COMMISSION OFMISSOURI
_____________________________________
W. B. Tichenor
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 3rdday of September, 2010, to:Stephen Schoenbeck, 255 Blackmer Place, Webster Groves, MO 63119, Complainant; Paula Lemerman, Associate County Counselor, Attorney for Respondent, County Government Center, 41 South Central Avenue, Clayton, MO 63105; Michael Brooks, Acting Assessor, County Government Center, 41 South Central Avenue, Clayton, MO 63105; John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.
___________________________
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
[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.
[15] 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).
[16] 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).
[18] 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).
[21] Rigali v. Kensington Place Homeowners’ Ass’n, 103 S.W.3d 839, 846 (Mo. App. E.D. 2003); Boten v. Brecklein, 452 S.W.2d 86, 95 (Sup. 1970).
[22] Cohen v. Bushmeyer, 251 S.W.3d 345, (Mo. App. E.D., March 25, 2008); Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992); State, ex rel. Missouri Hwy & Transp. Com’n v. Pracht, 801 S.W.2d 90, 94 (Mo. App. E.D. 1990); Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965).
[24] Section 137.115.1 – The assessor shall annually assess all real property in the following manner: new assessed values shall be determined as of January first of each odd-numbered year and shall be entered in the assessor’s books; those same assessed values shall apply in the following even-numbered year, except for new construction and property improvements which shall be valued as though they had been completed as of January first of the preceding odd-numbered year.
[27] The Supreme Court of Missouri has interpreted Section 138.060.The Court stated:
“Section 138.060 prohibits an assessor from advocating for or presenting evidence advocating for a higher ‘valuation’ than the ‘value’ finally determined by the assessor. … . Because the legislature uses the singular terms ‘valuation’ and ‘value’ in the statute, however, it clearly was not referring to both true market value and assessed value.While the assessor establishes both true market value and assessed value, which are necessary components of a taxpayer’s assessment, as noted previously, the assessed value is the figure that is multiplied against the actual tax rate to determine the amount of tax a property owner is required to pay.The assessed value is the ‘value that is finally determined’ by the assessor for the assessment period and is the value that limits the assessor’s advocacy and evidence.Section 138.060.By restricting the assessor from advocating for a higher assessed valuation than that finally determined by the assessor for the relevant assessment period, the legislature prevents an assessor from putting a taxpayer at risk of being penalized with a higher assessment for challenging an assessor’s prior determination of the value of the taxpayer’s property.”State ex rel. Ashby Road Partners, LLC et al v. STC and Muehlheausler, 297 SW3d 80, 87-88 (Mo 8/4/09)