Surjit & Kaval Sethi v. Muehlheausler (SLCO)

State Tax Commission of Missouri

 

SURJIT & KAVAL SETHI,)

)

Complainants,)

)

v.)Appeal Number 07-10492

)

PHILIP MUEHLHEAUSLER, ASSESSOR,)

ST. LOUIS COUNTY, MISSOURI,)

)

Respondent.)

 

ORDER

AFFIRMING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

 

On July 8, 2008, Senior Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) setting aside the assessment by the St. Louis County Board of Equalization and reducing the valuation on Complainants property.

Complainants timely filed (7/23/08) their Application for Review of the Decision.Respondent elected to not file a Response by the date set for same (8/25/08).

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.[1]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 he may deem it entitled to when viewed in connection with all other circumstances.The Hearing Officer is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert’s testimony and accept it in part or reject it in part.[2]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.[3]

DECISION

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 his discretion as the trier of fact and concluder of law in this appeal.[4]

Complainants’ Ground for Review

Complainants set forth one ground for review of the Hearing Officer Decision.Complainant asserts Respondent’s appraisal upon which the Hearing Officer based his reduction in value was incomplete and flawed in that it failed to take into account that the Sethi property is located in a flood plain and the comparables were not so located.A review of the record does show that Mr. Sethi at hearing asserted that his property was located in a flood plain.However, he provided no documentation to support this claim.Each of the documents contained in Complainants’ Exhibit A have been reviewed.None of them address the issue of the property being in a flood plain.

The Hearing Officer did not err on this point.Respondent’s appraiser, Lela Tulley, did address the flood plain issue.The Tulley appraisal report (Exhibit 1) contains on the first page the following notation under Site Comments:“No readily apparent adverse conditions were noted.FEMA Flood Zone X.FEMA Map # 29189C0276H, dated August 23, 2000.The subject does not appear to be located within the FEMA identified 100 year flood plain.”It was not necessary for the Hearing Officer to make any specific finding on the flood plain issue, Mr. Sethi presented no documentation on the matter, and the evidence from Exhibit 1 provided a basis for finding the subject was not impacted by being in a flood plain.

Mr. Sethi filed with his Application for Review a two page document – Letter of Map Revision Based on Fill Determination Document.Since this document was not introduced into evidence at the evidentiary hearing, the Hearing Officer committed no error in not finding that Mr. Sethi’s claim of the property being in a flood plain was correct based upon this document.Parties are not permitted to supplement the record after the close of hearing.Therefore, in ordinary circumstances no consideration could be given to the document submitted by Mr. Sethi. However, the Commission notes that the actual determination of the Letter of Map Revision is that the structure (i.e. the Sethi house at 13031 Pingry Place) was removed from the Special Flood Hazard Area (SFHA).The document states the following:

“This document provides the Federal Emergency Management Agency’s determination regarding a request for a Letter of Map Revision based on Fill for the property described above.Using the information submitted and the effective National Flood Insurance Program (NFIP) map, we have determined that the structure(s) on the property (ies) is/are not located in the SFHA, an area inundated by the flood having a 1-percent chance of being equaled or exceeded in any given year (base flood).This document revises the effective NFIP map to remove the subject property from the SFHA located on the effective NFIP map; therefore, the Federal mandatory flood insurance requirement does not apply.”(Emphasis added)

 

Complainants’ document does not establish that the subject property is in a flood plain.It establishes that the property is not in the Special Flood Hazard Area.Nor does the document refute the finding of Ms. Tully that the property is not located in the 100 year flood plain.Therefore, the Tully appraisal was neither incomplete nor flawed.

Complainant, Mr. Sethi raised the claim that the subject property was in a flood plain at the evidentiary hearing.Therefore, the burden of proof on this point was on Complainants to offer documentation to substantiate the claim.However, he failed to offer into evidence either the document submitted with the Application for Review or to provide the applicable flood plain map to support his assertion.Ms. Tully had reviewed the flood plain map and concluded the property was not in the 100 year flood plain.The document now provided only reinforces the conclusion drawn by Ms. Tully.

The Hearing Officer did not err in his determinations as challenged by Complainants.

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.

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 date of the mailing of this Order.

The Collector of St. Louis County shall continue to hold the disputed taxes pending an Order from the Commission as to whether a Petition for Judicial Review of the Order has been filed.

SO ORDERED September 23, 2008.

STATE TAX COMMISSION OF MISSOURI

Bruce E. Davis, Chairman

Jennifer Tidwell, Commissioner

Charles Nordwald, Commissioner

 

 

 

DECISION AND ORDER

 

HOLDING

 

Decision of the St. Louis County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE.Hearing Officer finds presumption of correct assessment rebutted. True value in money for the subject property for tax years 2007 and 2008 is set at $870,000, residential assessed value of $165,300.

Complainant, Surjit Sethi, appeared pro se.

Respondent appeared by Associate County Counselor, Robert Fox

Case heard and decided by Senior Hearing Officer W. B. Tichenor.

ISSUE

The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2007; and whether there was an intentional plan by the assessing officials to assess the property under appeal at a ratio greater than 19% of true value in money or at a ratio greater than the average 2007 residential assessment ratio for St. Louis County

SUMMARY

Complainants appeal, on the ground of overvaluation and discrimination, the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property.The Assessor determined an appraised value of $898,600, assessed value of $170,730, as residential property.Complainants proposed a value of $700,000, assessed value of $133,000.A hearing was conducted on June 17, 2008, at theSt. LouisCountyGovernmentCenter,Clayton,Missouri.

The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

Complainants’ Evidence

Mr. Sethi testified on behalf of Complainants.Exhibit A was received into evidence on behalf of Complainants.Exhibit A consisted of the following documents: (1) Letter dated

June 17, 2008, to the Commission setting forth the basis for Complainants’ appeal; (2) Letter dated September 8, 2007, to the St. Louis County Director of Revenue on the matter of Complainants’ appeal of their assessment; (3) Undated later to the St. Louis County Director of Revenue on the matter of Complainants’ challenge to the assessment of their property; and (4) listing of sale dates and prices on six properties and listing of the 2007 assessed values on five other properties on Pingry Place (subject street).

Mr. Sethi stated his opinion of value to be $700,000 based on the arguments made in Exhibit A.Essentially, Complainant asserted that the increase of 28% over the 2005 assessment was not supported by current market conditions.He also relied on a representation from his meeting with the appraiser at his Board of Equalization hearing that the value was to be lowered to $813,000.His final point related to the property at13019 Pingry Placewhich was auctioned in February 2007 for $725,000 but was not closed at that price.

Respondent’s Evidence

Respondent placed into evidence the testimony of Ms. Lela Tulley, Missouri State Certified Residential Real Estate Appraiser.The appraiser testified as to her appraisal of the subject property.The Appraisal Report (Exhibit 1) of Ms. Tulley was received into evidence.Ms. Tulley arrived at an opinion of value for the subject property of $870,000 based upon a sales comparison approach to value.In performing her sales comparison analysis, the appraiser relied upon the sales of four properties which she deemed to be comparable to the subject property.

FINDINGS OF FACT

1.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.

2.The subject property is located at 13031 Pingry Place, Town&Country, Missouri.The property is identified by parcel number 22P610152.The property consists of a 1.10 of acre lot improved by a two-story brick and vinyl-sided, single-family structure of good quality construction.The house was built in 1995 and appears to be in good condition.The residence has a total of nine rooms, which includes five bedrooms, three full and two half baths, and contains 4,679 square feet of living area.There is a full basement with 1,400 square feet of finished area, with a full bath.The house has an attached three-car garage. Exhibit 1.

3.There was no evidence of new construction and improvement from January 1, 2007, to January 1, 2008.

4.Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2007, to be $700,000.

5.The properties relied upon by Respondent’s appraiser were comparable to the subject property for the appraisal problem.The four properties were located within less than a mile of the subject.Each sale property sold at a time relevant to the tax date of January 1, 2007, in a range from September, 2004 to August 2006.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.

6.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.The net adjustments ranged from -0.3% to 6.8% of sale prices.The adjusted sales prices for the comparables calculated to $860,000, $875,900, $857,500 and $920,300, respectively.The appraiser concluded on a value of $870,000 which calculated to a value per square foot of $185.94 compared with the sales prices per square foot of living area for the comparables of $175.01, $184.23, $229.39 and $252.42.

7.Respondent’s evidence met the standard of substantial and persuasive to rebut the presumption of correct assessment and establish the value of the subject, as of January 1, 2007, to be $870,000.

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.Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, RSMo.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.Section 138.431.4, RSMo.

Presumption In Appeals

There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.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).The presumption of correct assessment is rebutted when the taxpayer, or respondent when advocating a value different than that determined by the Board, presents substantial and persuasive evidence to establish that the assessor’s or Board’s valuation is erroneous and what the fair market value should have been placed on the property.Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).In the present hearing, the evidence tendered by Complainants did not meet the required standard to rebut the presumption of correct assessment.However, Respondent’s appraisal report did constitute substantial and persuasive evidence sufficient to rebut the presumption in favor of the Board.

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.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).It is the fair market value of the subject property on the valuation date.Hermel, supra.

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.

 

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; Exhibit 1.

Methods of Valuation

Proper methods of valuation and assessment of property are delegated to the Commission.It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case.See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra;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. Div. 2 1974). Complainant failed to present any evidence under a recognized methodology for the valuation of real property in an ad valorem valuation case before the Commission.Respondent’s evidence presented the development of a sales comparison approach to value which is an accepted methodology to use in hearings before the Commission.

Respondent’s Burden of Proof

Respondent, when advocating a value different from that determined by the original valuation or a valuation made by the Board of Equalization, 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, Cupples-Hesse, Brooks, supra.The Tulley appraisal has met the required burden of proof and established the true value in money for the subject property as of January 1, 2007, to be $870,000.The sales comparison approach to value is generally considered to be the strongest of the three approaches utilized in appraisal of owner occupied residences.It provides a sound basis to reflect the actions of buyers and sellers in the open market when there is sufficient market data, as there was in this instance.

Complainants’ Burden of Proof

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, 2007.Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, at 897. 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.” The taxpayer must prove the fair market value asserted. 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).

Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.See, Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).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.Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).

The owner of property is generally held competent to testify to its reasonable market value.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).The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.Cohen v. Bushmeyer, — S.W.3d —-, 2008 WL 820938 (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).In this instance the opinion of value suggested by Mr. Sethi is not supported by proper elements or a proper foundation.Therefore it can be given no probative weight.A conclusion of value derived from the prior assessment is not a sound basis for establishing fair market value.The prior valuation may not have properly valued the property.The argument relating to value asserted by Mr. Sethi based upon one property that is currently on the market is rebutted by the actual sales data presented in the Respondent’s appraisal.

Complainants failed to meet their burden of proof and establish the fair market value of their property as of January 1, 2007.

Complainants Fail to Prove Discrimination

Where there is a claim of discrimination based upon a lack of valuation consistency, Complainants must prove the average level of assessment for residential property in St. LouisCountyfor 2007.This is done by (a) independently determining the market value of a representative sample of residential properties in St. Louis County; (b) determining the assessed value placed on the property by the assessor’s office for the relevant year; (c) dividing the assessed value by the market value to determine the level of assessment for each property in the sample; and (d) determining the mean and median of the results.The difference between the actual assessment level of the subject property and the average level of assessment for all residential property, taken from a sufficient representative sample in St. LouisCountymust demonstrate a disparity that is grossly excessive.Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986).Complainants presented no evidence upon which a determination could be made that the average assessment ratio for residential property inSt. LouisCounty for the 2007 assessment cycle was less than 19%, as mandated by statute.Therefore, Complainants’ claim of discrimination is without merit.

ORDER

The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. LouisCountyfor the subject tax day is SET ASIDE.

The assessed value for the subject property for tax years 2007 and 2008 is set at $165,300.

Complainants may file with the Commission an application for review of this decision within thirty (30) days of the mailing of such decision.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, 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.Section 138.432, RSMo 2000.

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 a filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of 139.031.8 RSMo.If no Application for Review is filed, the Collector is ordered to disburse the disputed taxes in accordance with the assessment set by this Decision and Order.

Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed.Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.

SO ORDERED July 8, 2008.

STATE TAX COMMISSION OFMISSOURI

W. B. Tichenor

Senior Hearing Officer