State Tax Commission of Missouri
SUNIL & NILMA CHAND,)
)
Complainants,)
)
v.)Appeal No.11-84001
)
DAN WARD, ASSESSOR,)
ST. FRANCOIS COUNTY, MISSOURI,)
)
Respondent.)
ORDER
AFFIRMING HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
On November 1, 2011, Hearing Officer Maureen Monaghan entered her Decision and Order (Decision) affirming the assessment by the St. Francois County Board of Equalization, on the basis of Complainants’ failure to present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2011.[1]
Complainants filed (date) their Application for Review.Respondent elected to not file a Response.[2]
CONCLUSIONS OF LAW
Standard Upon Review
The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but 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.[3]
The Hearing Officer as the trier of fact may consider the testimony of an expert or lay witness and give it as much weight and credit as she may deem it entitled to when viewed in connection with all other circumstances.The Hearing Officer is not bound by the opinions of owners or experts who testify on the issue of reasonable value, but may believe all or none of the testimony of any witness and accept it in part or reject it in part.[4]
The Commission will not lightly interfere with the Hearing Officer’s Decision and substitute its judgment on the credibility of witnesses and weight to be given the evidence for that of the Hearing Officer as the trier of fact.[5]
DECISION
Complainants’ Grounds for Appeal of Decision
Complainants present the following four grounds for reversal of the Decision.
1. The Hearing Officer erred by failing to address the lawfulness of the increased valuation of the subject property by the Assessor pursuant to sections 99.800 to 99.865.[6]
2. The Hearing Officer erred in affirming the Vanguard Cost Approach by the Assessor as the Vanguard system violates Missouri Constitution Article X, Section 3 and is unlawful and unfair.[7]
3. The Hearing Officer erred in not using the 2009 – 2010 value since it was not opposed by Respondent.[8]
4. The Hearing Officer erred by allowing an increase in taxation for asphalt but failed to consider the totality of the evidence of the case where serious erosion on Complainants’ property which required the use of the asphalt cause a decrease in property value.[9]
5.
Commission Rulings on Grounds for Appeal
The Commission will address each of the grounds presented by Complainants.
Increase Pursuant to Section 99.800 – 99.865
The Complaint for Review Assessment filed by Complainants gave as a ground Unjust Increase and cited to an attached statement which contained the following statement:
“The County Tax Assessor erred when he increased my property value pursuant to a non applicable Missouri Statutes T.I.F Section 99-800 to 99.865.Neither the State of Missouri, County of St. Francois nor the City of Leadington has done any T.I.F. improvements in the property location such that will motivate a T.I.F. statute increase in property value.”
Complainants attached as Exhibit 2 to the Complaint for Review of Assessment a copy of the Notice of Change in Assessed Value of Real Property for their property.At that bottom of the Change Notice the following statement appears:
“The county abates the following assessed values pursuant to sections listed:Section 99.900 to 99.865 – T.I.F.27,173,510”
The statement on the Change Notice has absolutely nothing to do with the increase in the assessed value of Complainants’ property from $257,120 for the 2009-2010 assessment to $270,230 for the 2011-2012 assessment.The insertion of the cited sentence at the end of the notice is required by statute.
Section 137.237 RSMo provides in relevant part the following mandate:
“The county assessor of each county . . . shall, beginning January 1, 1989, and every odd-numbered year thereafter, identify, list, and state the true value in money of the property in such county . . . which is totally or partially exempt from ad valorem taxes for such taxable year pursuant to sections 99.800 to 99.865; . . .”
It was not an error of fact or law for the Hearing Officer to not discuss what is a totally erroneous and irrelevant claim by Complainants.The Change Notice provides no evidence that the change in assessment had anything to do with section 99.800 to 99.865.Complainants presented no evidence to establish their erroneous assertion that the value of their property was increase because of the T.I.F. statutes.It was not.Complainants are simply mistaken in their belief that the change in value was prompted by anything in the T.I.F statutes.In accordance with section 137.115, RSMo,[10] the Assessor must reassess all real property every two years and establish the true value in money as of January 1 of each odd-numbered year.There is no evidence in the record to establish that the Assessor did anything other than carry out his statutory duty with regard to the assessment of Complainants’ property for 2011.
Vanguard Cost Approach
Complainants’ arguments under this point are not supported by any evidence in the record.No evidence was presented that would have permitted the Hearing Officer to make any finding as to the constitutionality of the use of the Vanguard Cost Approach (Vanguard) for the mass appraisal of real property in St. Francois County.The record has no evidence to support Complainants’ assertion that Vanguard is unreasonable and unreliable.Nor is there any evidence to support the claim that the use of Vanguard violated Complainants’ equal protection rights.
Vanguard is a recognized and accepted mass appraisal methodology.It is approved by the Commission for use by assessors in various counties in Missouri.There is no evidence that the Assessor utilized this system in an erroneous manner when appraising Complainants’ property.
Complainants’ claim is unfounded and unsupported by any evidence in the record.The claim is nothing more than Complainants’ unsubstantiated opinion.Respondent had no burden of proof to establish the correctness of validity of Vanguard.Complainants failed to present substantial and persuasive evidence of what a willing buyer and seller would have agreed to as the purchase price of their property on January 1, 2011, and the Hearing Officer so concluded.The Hearing Officer did not err as a matter of either law or fact in this regard.
2009 – 2010 Valuation
Complainant’s third point is without merit.The Respondent by the mere fact that he increased the value of Complainant’s property from the 2009-10 assessment cycle to the 2011-12 assessment cycle did not agree with Complainants’ assertion that the value should have remained the same.As the Hearing Officer properly pointed out an owner generally may testify to an opinion of reasonable market value.[11]It is not necessary that a Respondent object when the owner wishes to state an opinion of value.The fact that no objection is made to an owner giving an opinion of value does not equate to an admission on the part of the Assessor that the opinion is correct.Nor does a lack of objection establish the opinion of an owner as an uncontroverted fact.
The test of an owner’s opinion always is whether it is based upon proper elements and a proper foundation.[12]Complainants’ assertion that their statement of an opinion of value on the record is a statement of uncontroverted fact unopposed by the Assessor is a mischaracterization of the facts and the law applicable to this appeal.The Hearing Officer’s discussion addressed the two fatal flaws in the owners relying on the previous valuation of their property.This was appropriate to establish why the opinion of the owners was rejected.The Hearing Officer did not err in this matter as asserted by Complainants.
Erosion to Subject Property
Complainants claim that the Hearing Officer erred because of a failure to determine that some erosion on the subject property had decreased the property value.The point is not well taken.Complainants presented two exhibits addressing the erosion issue.The photographs of some erosion[13] prove nothing as far as what a willing buyer and seller would have paid for the property on January 1, 2011.Likewise, the 2007 letter[14] informing Complainants they “should immediately stop and desist from this construction activity, should take immediate steps to install erosion and water control and should immediately have your property restored to its natural drainage or similar to the natural drainage into the culvert” has no probative weight to establish the fair market value of the property on January 1, 2011.
The Hearing Officer could make no analysis, evaluation and determination as to what, if any, impact erosion prior to 2011 may have had on the value of the property under appeal.Complainants had the burden to present substantial and persuasive evidence to prove the value of the property as of 1/1/11.If such evidence had been presented it would have accounted for any negative impact from prior erosion.However, because Complainants failed to present any such evidence, the Hearing Officer had no basis to make any reduction in value.Therefore, there was no error in this regard on the part of the Hearing Officer.
Summary and Conclusion
A review of the record in the present appeal provides support for the determinations made by the Hearing Officer.There is competent and substantial evidence to establish a sufficient foundation for the Decision of the Hearing Officer.A reasonable mind could have conscientiously reached the same result based on a review of the entire record. The Commission finds no basis to support a determination that the Hearing Officer acted in an arbitrary or capricious manner or abused her discretion as the trier of fact and concluder of law in this appeal.[15]
The Hearing Officer did not err in her determinations as challenged by Complainant.
ORDER
The Commission upon review of the record and Decision in this appeal, finds no grounds upon which the Decision of the Hearing Officer should be reversed or modified.Accordingly, the Decision is affirmed.The Decision and Order of the hearing officer, including the findings of fact and conclusions of law therein, is incorporated by reference, as if set out in full, in this final decision of the Commission.
Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of the mailing date set forth in the Certificate of Service for this Order.
If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts unless disbursed pursuant to Section 139.031.8, RSMo.
If no judicial review is made within thirty days, this decision and order is deemed final and the Collector of St. Francois County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal.
SO ORDERED March 20, 2012.
STATE TAX COMMISSION OF MISSOURI
Bruce E. Davis, Chairman
Randy B. Holman, Commissioner
DECISION AND ORDER
HOLDING
Decision of the St. Francois County Board of Equalization sustaining the assessment made by the Assessor is AFFIRMED.True value in money for 2011 is set at $884,470, commercialproperty with an assessed value of $270,230.Complainant appeared pro se.Respondent appeared in person and by Assistant Prosecuting Attorney, Patrick King.Case heard and decided by Hearing Officer Maureen Monaghan.
ISSUE
The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2011.
SUMMARY
Complainant appeals, on the ground of overvaluation, the decision of the St. Francois County Board of Equalization, which sustained the valuation of the subject property.The Assessor determined an appraised value of $884,470, assessed value of $270,230, as commercial property.Complainant proposed a value of $803,490.A hearing was conducted on October 6, 2011, at the St. Francois County Courthouse,Farmington,Missouri.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
1.Jurisdiction.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the St. Francois County Board of Equalization.
2.Complainant’s Evidence.Complainant testified in his own behalf.He testified his opinion of the true value in money for his property as of January 1, 2011, was $803,490.The opinion was based upon the 2009-10 valuation of the property by the Assessor; the Complainant testified that the value of his property did not increase and therefore the value should not have increased from the 2009 assessment cycle. Complainant testified that he added asphalt on the property due to erosion issues.The asphalt was installed after he was contacted by the City of Leadington and the Department of Natural Resources.Complainant testified that he believed his valuation increased due to a TIF in the County.Complainant offered the following exhibits into evidence:
|
EXHIBIT |
DESCRIPTION |
DISPOSITION |
|
1 |
Photographs of Erosion |
Received |
|
3 |
Letter from City of Leadington |
Received |
In his filing with the Commission, the Complainant filed the Board of Equalization Decision, the Notice of Change in Assessed Value of Real Property, the letter from the City of Leadington, a letter from the Department of Natural Resources, and the photographs.
3.Respondent’s Evidence.Assessor Ward testified in his own behalf.Exhibit A and B were received into evidence.Exhibit A is the Property Record Card for the subject property and includes all the Vanguard cost approach appraisal information and Assessor’s Office notes.Exhibit B is property record cards from other commercial properties.The Assessor presented the information as examples of the Vanguard cost appraisal system’s calculation of asphalt improvements.
4.Subject Property.The subject property is located at 112 Union, Leadington, Missouri.The property is identified by map parcel number 9-20-9-3-24-10.The property consists of an 8.15 acre commercial site improved with self storage units and office building.In 2010, Complainant added additional asphalt to the property.
5.Complainant Failed To Prove Value.Complainant failed to present substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2011.
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.[16]
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.[17] 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.[18]When as in this case, Complainant fails to present any relevant evidence to establish the fair market (true value in money) value of the property being appealed, the Board presumption stands.
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.[19]It is the fair market value of the subject property on the valuation date.[20]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.[21]
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.[22]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.[23]Complainant’s opinion of value was not derived from any recognized methodology for the appraisal of real estate.
Complainant’s Burden of Proof
In order to prevail, Complainant 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.[24]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.”[25]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[26]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.[27]
Owner’s Opinion of Value
The owner of property is generally held competent to testify to its reasonable market value.[28]The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[29]In the present appeal, Complainant’s opinion of value was based upon the assessment for the 2009-10 assessment cycle.He believed the value should not change due to existing economic conditions.There are two fatal flaws to the taxpayer’s opinion of value.First, it assumes that the 2009-10 valuation of the property was at true value in money for January 1, 2009. Second, it assumes that current economic conditions for a property like the subject have resulted in no increase in value and that the addition of asphalt to the property to address the erosion issue added no value.
No market data was presented that would establish the value of the property, as of January 1, 2009, was $803,490. Furthermore, no market data was introduced to establish that the subject property did not increase in value from 2009 to 2011 or data regarding the addition of asphalt or remedial efforts for the erosion having no impact on the market value. In short, the basis for the owner’s opinion of value was mere speculation, simply conjecture. Speculation and conjecture never form the proper elements or a proper foundation for an opinion of value. Absent sound and relevant market data on these two elements, the owner’s opinion is not entitled to any probative weight.
Complainant failed to meet his burden of proof.
ORDER
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Francois County for the subject tax day is AFFIRMED.
The assessed value for the subject property for tax year 2011 is set at $270,230.
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 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 appeal is based will result in summary denial. [1]
The Collector of St. Francois County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending a 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 1, 2011.
STATE TAX COMMISSION OF MISSOURI
Maureen Monaghan
Hearing Officer
[1] DECISION – FINDING OF FACT 5, p. 3
[2] By Order dated 11/29/11, Respondent was given until and including December 30, 2011, to file Response.
[3] 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).
[4] St. Louis County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).
[5] Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Lowe v. Lombardi, 957 S.W.2d 808 (Mo. App. W.D. 1997); Forms World, Inc. v. Labor and Industrial Relations Com’n, 935 S.W.2d 680 (Mo. App. W.D. 1996); Evangelical Retirement Homes v. STC, 669 S.W.2d 548 (Mo. 1984); Pulitzer Pub. Co. v. Labor and Indus. Relations Commission, 596 S.W.2d 413 (Mo. 1980); St. Louis County v. STC, 562 S.W.2d 334 (Mo. 1978); St. Louis County v. STC, 406 S.W.2d 644 (Mo. 1966).
[6] Application for Review – Ground # 1, pages 2 – 3
[7] Application for Review – Ground # 2, pages 3 – 4
[8] Application for Review – Ground # 2, page 5
[9] Application for Review – Ground # 4, page 6
[10] Section 137.115.1 RSMo – All other laws to the contrary notwithstanding, the assessor or the assessor’s deputies in all counties of this state . . . shall annually make a list of all real and tangible personal property taxable in the assessor’s city, county, town or district. Except as otherwise provided in subsection 3 of this section and section 137.078, the assessor shall annually assess all personal property at thirty-three and one-third percent of its true value in money as of January first of each calendar year. The assessor shall annually assess all real property, including any new construction and improvements to real property, and possessory interests in real property at the percent of its true value in money set in subsection 5 of this section.
[11] DECISION – Owner’s Opinion of Value, pp. 5 – 6
[12] DECISION – FN 14, citing to:
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).
[13] Exhibit 1
[14] Exhibit 3
[15] Hermel, Inc. v. STC, 564 S.W.2d 888 (Mo. 1978); Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Holt v. Clarke, 965 S.W.2d 241 (Mo. App. W.D. 1998); Smith v. Morton, 890 S.W.2d 403 (Mo. App. E.D. 1995); Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).
[16] Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.
[17] 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).
[18] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
[19] 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).
[20] Hermel, supra.
[21] 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.
[22] 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).
[23] 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).
[24] Hermel, supra.
[25] 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).
[26] See, Cupples-Hesse, supra.
[27] Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).
[28] 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).
[29]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).
[30] Section 138.432, RSMo.