State Tax Commission of Missouri
TERRY AND DONNA UNNERSTALL,)
v.) Appeal Number 07-57014
BILL OVERSCHMIDT, ASSESSOR,)
DECISION AND ORDER
Decision of the Franklin County Board of Equalization sustaining the assessment made by the Assessor, AFFIRMED. Hearing Officer finds true value in money for the subject property for tax years 2007 and 2008 to be $152,880, residential, assessed value of $29,047.
Complainant Terry Unnerstall appeared in person.
Respondent appeared in person and by Counsel, Mark Vincent.
Case heard and decided by Hearing Officer Maureen Monaghan.
The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2007.
Complainants appeal, on the ground of overvaluation, the decision of the Franklin County Board of Equalization, which increased the valuation of the subject property.The Assessor determined an appraised value of $152,880, assessed value of $29,047, as residential property.The Board of Equalization sustained the valuation.Complainants proposed a value of $144,000, assessed value of $27,360.A hearing was conducted on April 11, 2008, at the Assessor’s Conference Room,Union,Missouri.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
Complainant Terry Unnerstall testified.
The following exhibits were received into evidence on behalf of the Respondent.
Exhibit 1 – Appraisal of Subject Property
All Exhibits were received into evidence.
State Certified Appraiser, Donald Dodd, testified.
FINDINGS OF FACT
1.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the Franklin County Board of Equalization.
2.The subject property is located at 2A&B Whispering Oaks,Washington,Missouri.The property is identified by parcel number 10-7-26.0-0-007-035.130.The site is approximately 9,381 square feet.The improvement is a fourteen year old, two-story, brick and vinyl sided residential duplex.It is in average condition and appears to be average quality construction.The improvement is 1,836 square feet with a two-car attached garage and no basement.
3.There was no evidence of new construction and improvement from January 1, 2007, to January 1, 2008.
4.Complainants’ evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board.
5.The Respondent’s appraiser developed three approaches and reconciled those approaches to determine the market value of the subject property.
6.Respondent’s appraisal was accepted only to sustain the original assessment made by the Assessor and not for the purpose of raising the assessment above that value.
CONCLUSIONS OF LAW
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.
Presumptions 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 presents substantial and persuasive evidence to establish that the assessor’s or Board’s valuation is erroneous and hat the fair market value should have been placed on the property.Snider, Hermel & Cupples Hesse, supra.
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.
In Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003), the court of appeals described the taxpayer’s burden as follows:
Taxpayers were the moving parties seeking affirmative relief, and as such, they bore the burden of proving the vital elements of their case, i.e., the assessments were “unlawful, unfair, improper, arbitrary or capricious.” Cupples Hesse Corp. v. State Tax Comm’n, 329 S.W.2d 696, 702 (Mo.1959); Westwood P’ship v. Gogarty, 103 S.W.3d 152, 161 (Mo. App. 2003); 84 C.J.S. Taxation §§710, 726. This is true regardless of the existence or non-existence of the challenged presumption. As the Supreme Court of Missouri explained, “even were we to hold that it [the presumption] has been overcome, the burden of proof on the facts and inferences would still remain on petitioner, for it is the moving party seeking affirmative relief.”Cupples, 329 S.W.2d at 702. See also 84 C.J.S. Taxation §710, which states: “Even where there is no presumption in favor of the assessor’s ruling, if no evidence is offered in support of the complaint, the reviewing board is justified in fixing the valuation complained of in the amount assessed by the assessor.”
To prevail, Taxpayers had to “present an opinion of market value and then … present substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on tax day.” Daly v. P.D. George Co., 77 S.W.3d 645, 651 (Mo. App. 2002).
Substantial and Persuasive Evidence
Substantial evidence is that evidence which, if true, has probative force upon the issues, i.e., evidence favoring facts which are such that reasonable men may differ as to whether it established them, and from which the Commission can reasonably decide an appeal on the factual issues.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).
Complainant has failed to present substantial and persuasive evidence tending to demonstrate that his property would sell for no more than $144,000 on January 1, 2007.Likewise, Complainant failed to present any evidence tending to demonstrate that the subject property would have sold for less than $152,880 on the tax day.Values are based upon market conditions.
Complainant testified that his income from the property in 2003 was $13,950, in 2004 his income was $13,450, and in 2005-2007 his income was $14,400.Complainant testified that using the “Rule of 10”, the property is not worth more than $144,400.This methodology is not a recognized approach to value.It does not comply with the requirements of the income approach.The Complainant also argues for a per square foot valuation calculation using the valuation as determined by the appraiser for the Respondent in his sales comparison approach.However, the appraiser had already used market data to adjust the prices for square footage differences.
Missouricourts 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).
The “income approach” determines value by estimating the present worth of what an owner will likely receive in the future as income from the property. The income approach is “based on an evaluation of what a willing buyer would pay to realize the income stream that could be obtained from the property when devoted to its highest and best use….” Equitable Life Assurance Society v. State Tax Commission, 852 S.W.2d 376, 380 (Mo. App. 1993). This approach is most appropriate in valuing investment-type properties and is reliable when rental income, operating expenses and capitalization rates can reasonably be estimated from existing market conditions. An income approach should include a complete reconstructed income and expense statement for the subject property showing economic or market values for potential gross income, vacancy and collection loss, miscellaneous income, effective gross income, operating expenses, and net operating income. The approach should also set forth the capitalization method and rate used including all calculations, a narrative explanation of why the capitalization method is appropriate and an explanation of each element of the selected method. 12 CSR 30-3.065
The Respondent’s appraiser, a State Certified General Appraiser, developed three approaches to value: cost, sales comparison and income.The appraiser first developed the cost approach.For the cost approach, the appraiser used comparable land sales to determine the market value of the site.The appraiser then determined the cost of the improvements using Marshall and Swift’s Residential Cost Handbook.Depreciation was calculated using the age-life method.The resulting fair market value of the subject property was $154,000.
The appraiser then developed the sales comparison approach.The appraiser located three sales of duplexes located within 1.75 miles of the subject property.The properties sold for $161,500 to $180,000.The appraiser made adjustments for size and basements.The adjusted sales prices ranged from $161,500 to $162,000.
The appraiser also developed an income approach using market data and calculated a value of $154,000.
The appraiser reconciled the three approaches.The appraiser placed the least weight on the cost approach.The Sales Comparison approach was given the most consideration as the comparable sales reflected what the open market would bear for a similar property.The appraiser opined that the fair market value of the subject property, as of January 1, 2007, was $160,000.This value was used to support the value as sustained by the Board of Equalization.
The assessed valuation for the subject property as determined by the Board of Equalization forFranklinCountyfor the subject tax day is AFFIRMED.
The assessed value for the subject property for tax years 2007 and 2008 is set at $29,047.
A party 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, 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.Section 138.432, RSMo 2000.
If an application for review of this decision is made to the Commission, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the Commission.If no application for review is received by the Commission within thirty (30) days, this decision and order is deemed final and the Collector of Franklin 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.If any or all protested taxes have been disbursed pursuant to Section 139.031(8), RSMo, either party may apply to the circuit court having jurisdiction of the cause for disposition of the protested taxes held by the taxing authority.
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 April 21, 2008.
STATE TAX COMMISSION OFMISSOURI
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 21stday of April, 2008, to:Terry Unnerstall, #8 Forest Hills Drive, Washington, MO 63090, Complainant; Mark Vincent, Franklin County Counselor, P.O. Box 439, Union, MO 63084, Attorney for Respondent; Bill Overschmidt, Assessor, 400 E. Locust, Suite 105A, Union, MO 63084; Debbie Door, Clerk, Franklin County Courthouse, 400 E. Locust, Suite 201, Union, MO 63084; Linda Emmons, Collector; Franklin County Courthouse, 400 E. Locust, Suite 103, Union, MO 63084.