STATE TAX COMMISSION OF MISSOURI
|STEVEN G. & DEBRA K. TESON,||)
|v.||)||Appeal No. 17-32555|
|)||Parcel/Locator No. 325330A035|
|SCOTT SHIPMAN, ASSESSOR,||)|
|ST. CHARLES COUNTY, MISSOURI,
DECISION AND ORDER
The assessment made by the Board of Equalization of St. Charles County (BOE) is AFFIRMED. Complainants Steven G. Teson (Mr. Teson) and Debra K. Teson (Mrs. Teson) (referred to collectively as Complainants) did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.
Complainants appeared pro se.
Respondent Scott Shipman, St. Charles County Assessor, (Respondent) appeared by counsel Amanda M. Jennings.
Case heard and decided by Senior Hearing Officer Amy S. Westermann.
Complainants appealed on the ground of overvaluation. Respondent initially set the true market value or true value in money (TVM) of the subject property, as residential property, at $293,812. The BOE valued the subject property at $250,000, thereby lowering Respondent’s valuation. The State Tax Commission (STC) takes this appeal to determine the TVM for the subject property as of January 1, 2017.
The 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 March 26, 2018, at the St. Charles County Government Administration Building, 201 N. Second Street, St. Charles, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 325330A035. It is further identified as 509 Bridle Path Lane, O’Fallon, Missouri. (Complaint; Exhibit 1)
- Description of Subject Property. The subject property consists of a 3.63 acre residential lot improved by a 3,270 square foot, single family, two-story residence built in 1993. (Exhibit 1) The subject property includes a full, partially-finished basement; three bedrooms; two full bathrooms; one half bathroom; a fireplace; a patio; a porch; and a two car garage. (Testimony of Complainants; Exhibit 1) The exterior consists of vinyl and stone finishes. (Exhibit 1)
- Assessment. Respondent set a TVM for the subject property of $293,812, residential, as of January 1, 2017.
- Board of Equalization. The BOE set a TVM of the subject property at $250,000, residential, as of January 1, 2017.
- Complainants’ Evidence. In their Complaint for Review filed with the STC, Complainants proposed that the subject property had a TVM of $0. During the Evidentiary Hearing, Complainants were unable to provide a definite opinion of value and stated that the land had a recreational value of $80,000. Complainants offered as evidence the following exhibits:
|Exhibits A through T||Photographs of subject property dated May 11, 2008, June 10, 2014, December 28, 2015, Summer 2016, April 29, 2017, May 20, 2017, and September 2017 depicting Complainants’ home; flood waters on portions of the subject property and in the surrounding area; the creek running along the rear boundary of the subject property; and the flooded curb and street in front of the subject property||Admitted|
|Exhibit U||Bid proposal prepared by Johnson Earthworks, LLC||Excluded as hearsay because individual who prepared bid not present to authenticate it or to be cross examined|
|Exhibit V||St. Charles County government News Release dated November 20, 2017, stating that Collector of Revenue to Mail tax bills by November 30, 2017||Excluded as lacking relevance and lacking foundation|
|Exhibit AA||Notice of Real Estate Assessment dated April 18, 2017||Admitted|
|Exhibit BB||Printed pages from website for AFB International, http://afbinternational.com, explaining the company’s purpose and showing global locations, including in St. Charles County, Missouri||Objection as to relevance; admitted to be given weight deemed necessary|
|Exhibit CC||Plat map of subject property in relation to subdivision and Peruque Creek||Admitted|
|Exhibit DD||Aerial map from St. Charles County depicting subject property in relation to 100-year flood plain||Admitted|
Complainants testified that they had purchased the subject property in 1998 for $192,000. Complainants testified that the subject property had been listed with a realtor and publicly advertised. Complainants testified that the subject property is encumbered by a mortgage in the amount of approximately $62,000. Complainants testified that the subject property had not been listed for sale during the three years prior to the evidentiary hearing and that they had not received any offers to purchase the property. Complainants testified that had not discussed a list price if they were to place the subject property on the market. Complainants testified that they had not made any improvements to the subject property between January 1, 2015, and January 1, 2017.
Complainants testified at length about two issues that they believed to be the reasons the subject property should be valued at either $0 or $80,000: repeated flooding of a creek running along the property’s boundary and the odor from a pet food palatants factory.
With regard to the repeated flooding of the creek, Complainants testified that three inches of rain would cause the creek to flood portions of the subject property, which is situated in a valley. In conjunction with their Exhibits A through T, Complainants testified that water from flooding had entered the garage and basement in May 2008. Complainants testified that they had flood insurance at one point in time. Complainants testified that they had constructed earthen berms and installed drains and pumps to keep the floodwater away from the house. Complainants testified that the flooding was not disclosed when they purchased the subject property and that the inspection did not reveal evidence of previous flooding. Complainants testified that flooding in the street and driveway prevented or interfered with ingress and egress of the subject property.
With regard to the odor from the factory, Complainants testified that the odor “invades” the subject property, either when the windows are open or when they are closed. Complainants testified that the odor was not permanent but intermittent and that they never know when the odor will occur. Complainants testified that the odor is strong enough to wake them from sleep at night. Complainants testified that they have notified the factory about the offensive odor.
On cross examination, Complainants testified that the photographs in Exhibit C showing floodwater entering the garage and basement of the home in 2008 did not depict the house as it was on January 1, 2017. Complainants testified that they had a wall built where the garage doors once were located. Complainants testified that floodwater entered the house in December 2015 through a cold joint in the concrete wall but that they did not have photographs of the damage to carpet and drywall. Complainants testified that they had flood insurance but did not file a claim because they believed the deductible would have been higher than the amount of the actual damages, about $1,250. Complainants testified that no floodwater has entered the house since December 2015. Complainants testified that they had made improvements to the subject since 2008, e.g., berms, drains, built a garage addition to the house, built a new driveway on higher ground. Complainants testified that the addition to the house in 2013 required an appraisal to obtain the loan. Complainants testified that value from the appraisal was $390,000. Complainants testified that new siding, a new roof, new gutters, a new driveway, and a new two-story garage were built. Complainants testified that the flooding issue never came up with regard to the appraisal.
Complainants testified that the flooding in 2008 had been their worst property loss, under $10,000. Complainants testified that the floodwater in 2015 inside the house was not substantial and that no floodwater entered the house in 2017. Complainants testified that they finished part of the basement after the wall was built. Complainants testified that they repair damaged drywall themselves so they can enjoy the space. Complainants testified that the BOE lowered Respondent’s original valuation of the subject property due to their evidence regarding flooding. Complainants testified that the BOE had overlooked the offensive odor from the factory, which is approximately one-half of a mile from the subject property.
Complainants also presented the testimony of a neighbor, Patricia Bratcher (Ms. Bratcher). Ms. Bratcher testified that she had purchased a house on the same street as the subject property in 2007. Ms. Bratcher testified that, approximately one month after she purchased her house, the City of Lake St. Louis released water from a dam into the creek that flows behind her property and the subject property, resulting in three feet of floodwater entering her basement. Ms. Bratcher testified the seller of her property had disclosed that flooding had previously occurred. Ms. Bratcher testified that flooding had occurred on her property three times in 11 years and that she had made improvements to prevent or mitigate flooding. Ms. Bratcher testified that she had tried to sell her property but that it did not sell during the six months that it was on the market. Ms. Bratcher testified that at least one contract was cancelled due to the flooding problem. Ms. Bratcher testified that the flooding makes it impossible to sell the property. Ms. Bratcher testified that she would need to obtain an elevation certificate or have $30,000 to $60,000 of work performed to mitigate the high risk of being located in a flood plain or flood zone.
On cross examination, Ms. Bratcher testified that she had listed her property for $250,000. She testified that it had been built in 1972 and was a different style than the subject property.
- Respondent’s Evidence. Respondent advocated for the reinstatement of his original determination of the subject property’s TVM, $293,812. Respondent offered as evidence the testimony and appraisal report (Exhibit 1) of state certified residential real estate appraiser Christina A. Aguilar (The Appraiser). Respondent also offered the findings and notice of decision of the BOE (Exhibit 2). Complainants did not object to Respondent’s exhibits, which were received into the record.
The Appraiser testified that she has been a state certified appraiser since 2007. The Appraiser opined that the subject property had a TVM of $302,000 as of January 1, 2017, which supported the BOE’s valuation of $250,000 as of January 1, 2017, and supported Respondent’s initial valuation of $293,812, as of January 1, 2017. The Appraiser considered both the cost approach and the sales comparison approach in conducting the appraisal. The Appraiser found the income approach to be inapplicable to the subject property.
Based on the cost approach, the Appraiser opined the subject property had a TVM of $292,854 (total replacement cost new of the improvements minus the total accrued depreciation of the improvements left a cost value of $256,554 plus the site value of $36,300). (Exhibit 1)
The Appraiser subsequently found that the sales comparison approach “best recognizes the actions between buyers and sellers and demonstrates a defendable indication of value.” (Exhibit 1) Based on the sales comparison approach, the Appraiser opined the subject property had a TMV of $302,000 as of January 1, 2017. The Appraiser analyzed four comparable properties that had sold between December 2015 and October 2016. (Exhibit 1) The sale prices of the comparables ranged from $259,900 and $355,000. (Exhibit 1)
The Appraiser made market-based adjustments to the sale prices of the comparables to account for the differences between them and the subject property. The Appraiser made negative adjustments to all of the comparables based on financing concessions and positive adjustments of 2% to all of the comparables based on their dates of sale. (Exhibit 1)
All of Respondent’s comparable properties were either one-and-a-half or two-story homes built between 1981 and 1987. Negative adjustments were made to Comparable Nos. 3 and 4 due to their “average” lots; the subject property and the other comparables had “below average” lots due to their location in a flood plain. (Exhibit 1) The Appraiser made positive adjustments to Comparable Nos. 2, 3, and 4 for inferior exterior wall finishes (cedar, log, siding/brick). The Appraiser made either positive or negative adjustments of $35 per square foot to Comparable Nos. 1, 2, and 3, for either more or less square feet of living area. (Exhibit 1) The appraiser made either positive or negative adjustments to Comparable Nos. 1, 3, and 4 for total room and bathroom count. (Exhibit 1) The Appraiser made a positive adjustment to Comparable No. 2 for the lack of a fireplace. The Appraiser made negative adjustments to Comparable Nos. 2 and 4 for a third garage stall and the presence of a carport. The Appraiser made negative adjustments to Comparable Nos. 1, 3, and 4 for the presence or absence of a deck a patio, a porch, and a screened porch. The adjusted sales prices ranged from $300,710 to $324,279. (Exhibit 1)
The Appraiser testified that she had conducted an exterior inspection of the subject property and that the subject property did not have a finished basement according to St. Charles County records. The Appraiser testified that she reviewed over 100 properties then narrowed her analysis based comparables located in a flood plain and with similar house style and used paired sale analysis and made market based dollar adjustments to the chosen comparables. The Appraiser testified that the sale prices of the comparables were verified through recorded certificates of sale. The Appraiser testified that she relied on the sales comparison approach because it is based on local sales rather than a national cost guide and therefore reflects local issues affecting market price, i.e., flooding. The Appraiser testified that flooding on some of the flood plain of Comparable No. 3 did not prevent ingress and egress of that property. The Appraiser testified that Comparable Nos. 4 experienced minor flooding.
On cross examination, the Appraiser testified that she did not talk with the owners of Comparable Nos. 1 and 2 regarding the flooding issues, so she did not know if floodwater enters the interior of those homes. The Appraiser testified that the flood maps she reviewed were provided by the Federal Emergency Management Administration (FEMA) and that she understands the labels on the maps “to a point” but that she is not an expert in FEMA mapping. The Appraiser testified that Comparable Nos. 3 and 4 do not have the same type and degree of flooding as the subject property. The Appraiser testified that she did not see evidence of drainage or water determent on Comparable Nos. 1 and 2. The Appraiser testified that, in her personal opinion, there could be market resistance to properties situated in flood zones and that she was unsure if that was the reason not many comparable properties were from flood zones.
- Presumption of Correct Assessment Not Rebutted – True Market Value Established. Complainants did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE and to establish the TVM of the subject property as of January 1, 2017, to be $0 or $80,000. Respondent presented substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE and to establish the TVM of the subject property as of January 1, 2017, to be $293,812. However, Respondent’s evidence did not meet the statutory standard of clear, convincing, and cogent in order to return the valuation to the assessor’s original valuation; thus, the valuation will not be increased over the TVM set by the BOE, $250,000.
CONCLUSIONS OF LAW AND DECISION
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 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.
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 STC, 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.
Board Presumption and Computer-Assisted Presumption
There exists a presumption of correct assessment by the BOE. As will be addressed below in the section describing Respondent’s Burden of Proof, 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 – this is known as 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 only comes into play if the Board of Equalization lowered the value of the assessor and Respondent is seeking to sustain the original assessment and 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 this appeal, the BOE determined that the assessor’s original valuation was incorrect. Both Complainant and Respondent advocated that the BOE’s valuation was incorrect. Therefore, in order to prevail, Complainant and Respondent must rebut that presumption by substantial and persuasive evidence that the value concluded by the BOE is in error and must establish what the correct value should be. The computer-assisted presumption plays no role in this process.
The computer-assisted presumption can only come into play in those instances where Respondent is seeking to have the valuation of the subject property returned to the assessor’s original valuation. If in a given appeal the Respondent is offering evidence that would establish a value less than the original valuation, then the computer-assisted presumption is not applicable to that appeal. Even if the BOE has reduced the valuation and Respondent’s evidence is offered to increase the value, but not to the level of the original valuation, the computer-assisted presumption does not come into play.
If the BOE sustained the valuation of the assessor, such does not negate the fact that the BOE presumption remains operative as to evidence which is presented by the taxpayer and Respondent. The computer-assisted presumption only comes into play if the BOE lowered the value of the Assessor and Respondent is seeking to sustain the original assessment and it has not been shown that the Assessor’s valuation was not the result of a computer assisted method. The Board valuation is assumed to be an independent valuation.
In the present appeal, the BOE lowered the initial valuation of Respondent. Both Complainant and Respondent are seeking to change the BOE’s assessment; therefore, the BOE presumption applies to both Complainant and Respondent. The computer-assisted presumption also applies to Respondent in this case and will be analyzed further in the section regarding Respondent’s burden of proof, below.
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 (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 STC “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).
Respondent’s Burden of Proof
Respondent, when advocating a value different from that determined by the original valuation or a valuation made 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.
In this case, Respondent presented substantial and persuasive evidence rebutting the presumption of correct assessment by the BOE. Respondent presented the appraisal report of the Appraiser, Exhibit 1, and her testimony as evidence indicating a higher valuation than the value finally determined by the BOE and higher than the value previously determined by Respondent. However, because Respondent advocated that the subject property’s TVM should be returned to the original valuation of $293,812, Respondent’s evidence also must be clear, convincing, and cogent.
The Clear, Convincing, and Cogent Standard
In charter counties or the City of St. Louis, Respondent, when wishing to advocate for a valuation to return to the assessor’s original valuation, which was higher than the value assigned by the BOE, has imposed upon him by the provisions of Section 137.115.1, RSMo, i.e., 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. If the BOE sustained the valuation of the assessor, the computer assisted presumption does not come into play, as the Boards valuation, is an independent valuation.
There is a presumption in this appeal that the original valuation, which was lowered by the BOE, was made by a computer, computer-assisted method, or a computer program. There was no evidence to rebut the computer-assisted presumption; therefore, in order to sustain the valuation of the subject property at $293,812, Respondent’s evidence must come within the guidelines established by the legislature and must clearly, convincingly and cogently 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. Section 137.115.1(1) & (2).
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. Grissum v. Reesman, 505 S.W.2d 81, 85, 86 (Mo. Div. 2, 1974). The quality of proof, to be clear and convincing must be more than a mere preponderance but does not require beyond a reasonable doubt. 30 AmJur2d. 345-346, Evidence section 1167. “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.” Matter of O’Brien, 600 S.W.2d 695, 697 (Mo. App. 1980).
Here, Respondent’s evidence, when weighed against evidence in opposition, did not instantly tilt the scales in the affirmative when weighed against Complainant’s evidence to leave the fact finder with an abiding conviction that the TVM of the subject property as of January 1, 2015, was $302,000 to justify a return to the assessor’s original valuation of $293,812. Exhibit 1 analyzed four comparables. Only two of the comparables were within the statutory guideline of not more than one mile from the subject property. Only one of the comparables was within the statutory guideline of within five hundred square feet in size of the subject property. Comparable No. 3, which the Appraiser testified was the most comparable to the subject property due to having the fewest net dollar adjustments, was the oldest comparable, approximately 12 years older than the subject property; was nearly eight miles from the subject property; was situated in an “average” location versus the subject property’s “below average” location; was a log cabin-style home (frame with log siding exterior); had a living area of 2,384, nearly 1,000 less square feet than the subject property; had fewer full bathrooms than the subject property; and had an additional porch plus a screened porch that the subject property did not have.
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). If the evidence would support either of two opposed findings, a reviewing court is bound by the STC’s determination. Nance v. STC, 18 S.W.3d 611, 615 (Mo. App. W.D. 2000). The STC is the judge of the credibility of the witnesses and of the evidence. Nance, 18 S.W.3d at 615, citing Equitable Life Assur. Soc’y of U.S./Marriott Hotels, Inc. v. State Tax Comm’n of Missouri, 852 S.W.2d 376, 380 (Mo. App. E.D.1993).
Complainants did not present any expert witnesses. Respondent presented the expert testimony and appraisal report of the Appraiser, who opined the TVM of the subject property was $302,000 as of January 1, 2017, to support returning the value to the original valuation of the BOE’s value of $293,812.
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 BOE, whichever is higher, for that assessment period, such evidence will only be received for the purpose of sustaining either 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.
Respondent presented the testimony and appraisal report of the Appraiser in an effort to rebut the presumption of correct assessment by the BOE and to establish the fair market value of the property under appeal, as of January 1, 2017, to be $302,000. However, the assessed value cannot be increased above the assessor’s original valuation of $293,812 in this particular appeal. See Section 138.060; State ex rel. Ashby Road Partners, LLC et al. v. STC and Muehlheausler, 297 S.W.3d 80, 87-88 (Mo. banc 2009).
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, 18 S.W.3d at 615; 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. “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:
- Buyer and seller are typically motivated.
- Both parties are well informed and well advised, and both acting in what they consider their own best interests.
- A reasonable time is allowed for exposure in the open market.
- Payment is made in cash or its equivalent.
- Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
- 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.
In this case, Complainants did not present substantial and persuasive evidence rebutting the presumption that the BOE’s valuation was correct and supporting Complainants’ opinion of the TVM of the subject property was either $0 or $80,000 as of January 1, 2017. Although Complainants’ evidence of substantial flooding events on and near the subject property was significant and carefully considered, the totality of Complainant’s evidence does not support a finding that subject property has either no market value or should be valued as recreational land. The lot is improved by a 3,000-plus square-foot home, and Complainants made improvements to both the lot and to the home between 2008 and 2013, despite repeated flooding on areas of the lot and water entering the garage and basement of the home. Significantly, on cross examination, Complainants testified that they obtained a loan to finance the construction of a two-story addition to the home in 2013. Complainants testified that the lender required an appraisal to be performed, which valued the subject property at $390,000 in 2013. In light of this evidence and given that Complainants presented no evidence indicating that the subject property had sustained any unrepaired or unrepairable damage between 2013 and January 1, 2017, one cannot reasonably conclude that the subject property was worth either $0 or $80,000 as of January 1, 2017.
Although Respondent presented substantial and persuasive evidence for the purpose of rebutting the presumption of the correctness of the BOE’s valuation, the evidence did not meet the statutory standard of clear, convincing, and cogent. Consequently, the TVM of the subject property will not be returned to the original valuation set by the assessor.
The 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 2017 and 2018 is set at $47,500 residential ($250,000 TVM).
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. Charles 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 June 19, 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 19th day of June, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.
 Complainants did not offer exhibits labeled X, Y, and Z.
 Exhibit BB described the company as “Specialists in Palatant R&D” and “the global science and technology leader in pet food palatability.”
 Respondent advocated setting aside the BOE’s valuation and returning the TVM of the subject property to $293,812.