STATE TAX COMMISSION OF MISSOURI
|THOMAS R. DOWD & DELOISE T. DOWD,||)|
|v.||)||Appeal No. 17-10750|
|JAKE ZIMMERMAN, ASSESSOR||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
DECISION AND ORDER
The assessment made by the Board of Equalization of St. Louis County (BOE) is AFFIRMED. Complainants Thomas R. and Deloise T. Dowd did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE and to establish the true market value of the subject property as of January 1, 2017.
Complainant Thomas R. Dowd (Complainant) appeared pro se; Deloise T. Dowd appeared not.
Respondent Jake Zimmerman, Assessor, St. Louis County, Missouri, (Respondent) appeared by Counsel Steven Robson.
Case heard and decided by Senior Hearing Officer Amy S. Westermann (Hearing Officer).
Complainant appealed on the ground of overvaluation. Respondent initially set the true value in money (TVM) of the subject property, as residential property, at $196,500. The BOE sustained Respondent’s valuation. The value as of January 1 of the odd numbered year remains the value as of January 1 of the following even numbered year unless there is new construction or improvement to the property. Section 137.115.1 RSMo The State Tax Commission (STC) takes this appeal to determine the true value in money for the subject property as the property existed on January 1, 2017, under the economic conditions as they existed on January 1, 2017.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
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 on May 11, 2018, at the St. Louis County Government Administration Building, 41 South Central Avenue, Clayton, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 16M340022. It is further identified as 10 Branford Dr., Olivette, Missouri. (Complaint; Exhibit 1)
- Description of Subject Property. The subject property consists of a 20,000 square foot residential lot improved by a 1,940 square foot, single-family, ranch-style home built in 1956. (Appeal No. 15-15837 STC Decision and Order, September 20, 2016) The subject property includes a total of three bedrooms; two full bathrooms and one half bathroom; a two-car attached carport; one fireplace; and a patio. The exterior consists of brick construction. (Appeal No. 15-15837 STC Decision and Order, September 20, 2016) The subject property also includes a 1,320 square foot, attached, second residence or “mother-in-law quarters.” (Appeal No. 15-15837 STC Decision and Order, September 20, 2016) One of the bedrooms and one of the full bathrooms is located in the mother-in-law quarters. (Appeal No. 15-15837 STC Decision and Order, September 20, 2016
- Assessment. Respondent set a TVM on the subject property at $196,500 residential, as of January 1, 2017.
- Board of Equalization. The BOE sustained Respondent’s TVM of the subject property.
- Complainant’s Evidence. Complainant opined that the subject property’s TVM as of January 1, 2017, was between $120,000 and $125,000. To support his opinion of value, Complainant offered the following evidence:
|Exhibit A||Copy of email dated July 2, 2017, from Complainant to undisclosed recipients and entitled “BOE Appeal;” describing needed repairs to lateral sewer lines, electrical system replacement, and other repairs and replacements with an estimated total cost of $56,850||Admitted|
|Exhibit B||Photos of #14 Branford, next door to subject property, showing state of disrepair||Admitted|
|Exhibit C||Photo of subject property’s porch; condition in early 2017; drainage from neighboring properties undermines surface||Admitted|
|Exhibit D||Photos of three properties located south of Olive Street allegedly used by Respondent as comparables for valuing subject property||Objection on ground of relevance in that the exhibit and accompanying testimony assumes facts not in evidence and exhibit does not support Complainant’s opinion of TVM of subject property; objection noted and ruling reserved for Decision and Order; SUSTAINED as to relevance; Exhibit D is hereby Excluded|
|Exhibits E through Q||Photos depicting various exterior and interior areas and components of subject property in need of repair/replacement||Admitted|
|Exhibit R||Photos of Grandview Bike Trail at rear of subject property and showing clay and mud on asphalt after rainstorm||Admitted|
|Exhibit S||Photos depicting auto radiator hose repair to leak in radiant heating copper pipe behind wall in corner of family room; pipe could not be welded due to proximity to bathtub||Admitted|
|Exhibit T||Letter from Complainant dated March 9, 2017, to neighbors informing them that a house in the subdivision of the subject property was burglarized on February 27, 2017, and the owner’s truck was stolen; informing them of similar occurrences on other streets; warning them to lock doors, windows, and cars and to turn on porch lights at night||Admitted|
|Exhibit U||Letter from CoCa Properties, LLC, dated June 4, 2016, and offering to purchase the subject property for $118,000 in as-is condition||Excluded as hearsay; author of letter not presented to be cross examined|
|Exhibit V||Letter for electrical contractor dated June 27, 2016, informing Complainant that upgrading the electrical system of the subject property from a two-wire system to a three-wire system would not be recommended and would be cost prohibitive at between $30,000 to $40,000||Excluded as hearsay; author of letter not presented to be cross examined|
Complainant testified in his own behalf. Complainant testified that he had purchased the subject property in 1981 for approximately $80,000. Complainant testified that the subject property was not encumbered by a mortgage. Complainant testified that the subject property had not been listed for sale or appraised within the three years preceding the Evidentiary Hearing. Complainant testified that he had contacted 11 certified appraisers, all of whom refused to appraise the subject property due to the lack of comparables because of the configuration of the residence, which includes an attached mother-in-law quarters. Complainant testified that the mother-in-law quarters could not be used as a rental due to restrictions set by local ordinance. Complainant argued that the residence’s configuration with a mother-in-law quarters made the property undesirable to potential buyers. Complainant testified that the plumbing and electrical systems were original to the subject property and needed to be replaced, which would be difficult given that the residence was situated on top of a concrete slab with no basement. Complainant testified that the front porch of the residence is flooded by water runoff from a neighboring property during and following substantial rainfall. Complainant testified that the subject property borders a public bike trail, which had become a nuisance because bike riders would cut through the yard. Complainant further testified that the presence of the bike trail had degraded the privacy of the subject property and had caused an increase in crime in the neighborhood, all of which adversely affected the TVM of the subject property. Complainant testified that his daughters had offered to purchase the subject property for $125,000 and that, as of the date of the Evidentiary Hearing, Complainant and his wife were in the process of completing the sale of the property to their daughters.
Complainant testified that the residence contained two distinct units, each with kitchens, living/dining combination rooms, one bathroom, and a shared family room. Complainant testified that the larger side of the residence contained two bedrooms and the smaller side contained one bedroom. Complainant testified that three real estate companies had looked at the subject property and had estimated the TVM of the subject property to range from $120,000 to $125,000 (in its “as is” condition and with the need for substantial improvements). Complainant testified that his opinion of the subject property’s TVM as of January 1, 2017, was $120,000 to $125,000.
On cross examination, Complainant testified that he had received some inquiries about purchasing the subject property but that potential purchasers “back off” due to the character of the property. Complainant testified that a sale contract had fallen through due to a failed retaining wall. In response to questioning about two signed contracts, one in 2016 and one in 2018, Complainant testified that the contracts did not close because he really was not interested in selling at the amount the buyer thought the property was worth. Complainant testified that he had never received an offer “anywhere close” to $200,000. Complainant testified that the bike trail had been present behind the subject property for three or four years and that three empty homes were in the neighborhood.
- Respondent’s Evidence. Respondent advocated that the BOE’s valuation of the subject property as of January 1, 2017, $196,500, was correct. Respondent offered the following evidence:
|Exhibit 1||BOE Findings and Notice of Decision dated September 20, 2017, valuing the subject property at $196,500||Admitted|
Complainant objected to Respondent’s exhibit on the ground that the exhibit was unfair in that it assumes Respondent’s comparables were correct. Hearing no legal objection, the Hearing Officer overruled the objection, and Respondent’s exhibit was received into the record.
- Presumption of Correct Assessment Not Rebutted. Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the BOE.
CONCLUSIONS OF LAW AND DECISION
The Commission 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 Board of Equalization, 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.
Official and Judicial Notice
Agencies shall take official notice of all matters of which the courts take judicial notice. Section 536.070(6) RSMo. Courts will take judicial notice of their own records in the same cases. State ex rel. Horton v. Bourke, 129 S.W.2d 866, 869 (1939); Barth v. Kansas City Elevated Railway Company, 44 S.W. 788, 781 (1898).
Additionally, courts may take judicial notice of records in earlier cases when justice requires or when it is necessary for a full understanding of the instant appeal. Burton v. Moulder, 245 S.W.2d 844, 846 (Mo. 1952); Knorp v. Thompson, 175 S.W.2d 889, 894 (1943); Bushman v. Barlow, 15 S.W.2d 329, 332 (Mo. banc 1929); State ex rel St. Louis Public Service Company v. Public Service Commission, 291 S.W.2d 95, 97 (Mo. banc 1956).
Courts may take judicial notice of their own records in prior proceedings involving the same parties and basically the same facts. In re Murphy, 732 S.W.2d 895, 902 (Mo. banc 1987); State v. Gilmore, 681 S.W.2d 934, 940 (Mo. banc 1984); State v. Keeble, 399 S.W.2d 118, 122 (Mo. 1966).
Complainant appealed the 2015 assessment of the subject property. The previous appeal involved basically the same facts as the instant appeal. Therefore, the STC takes judicial notice of the Decision and Order related to the 2015 assessment of the subject property.
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 Commission, 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.
During the hearing, the Senior Hearing Officer inquired of Complainant.
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.
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 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.” 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 Commission “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 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.
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).
Board Presumption and Computer-Assisted Presumption
There exists a presumption of correct assessment by the BOE – the BOE presumption. In charter counties or the City of St. Louis, 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 – 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 is applicable only if (1) the BOE lowered the value of the Assessor and Respondent is seeking to sustain the original assessment and (2) 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 the present appeal, the BOE sustained the initial valuation of Respondent, and Complainant is now seeking to change the assessment; therefore, the BOE presumption applies to Complainant.
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, 615 (Mo. App. W.D. 2000); 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.
Complainant’s evidence was neither substantial nor persuasive to support an opinion as to the true market value of the subject property as of January 1, 2017. Substantial evidence is that which is relevant, adequate, and reasonably supports a conclusion. Cupples Hesse Corp., 329 S.W.2d at 702. Persuasive evidence is that which causes the trier of fact to believe, more likely than not, the conclusion advocated is the correct conclusion. Id.
First, Complainant did not use any of the court approved methods of valuation to arrive at an opinion of TVM. Complainant testified that he had contacted appraisers who declined to perform an appraisal based on a lack of sales of comparable properties and due to the existence of the mother-in-law quarters. Although Complainant testified that his daughters were purchasing the subject property for $125,000, such evidence indicates a sale between family members and not a market-based arm’s length transaction. Second, the evidence concerning the condition of the property was incomplete in that it did not establish the depreciated value of the subject property in the first instance and did not include admissible evidence of replacement and repair costs to establish how the condition of the property affected its TVM as of January 1, 2017. Consequently, the evidence does not adequately support an opinion that the TVM of the subject property as of January 1, 2017, was between $120,000 and $125,000.
The true market valuation for the subject property as determined by the BOE is AFFIRMED. The assessed value for the subject property is $37,335 residential ($196,500 TVM), as of January 1, 2017.
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. Louis County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 139.031.8, RSMo.
Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed. Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.
SO ORDERED July 31, 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 31st day of July, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.