STATE TAX COMMISSION OF MISSOURI
|v.||)||Appeal No. 17-10067|
|JAKE ZIMMERMAN, ASSESSOR,||)|
|ST. LOUIS COUNTY, MISSOURI,
DECISION AND ORDER
The decision of the St. Louis County Board of Equalization (BOE) is AFFIRMED. Complainant Tim Estepp (Complainant) did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.
Complainant appeared pro se.
Respondent Jake Zimmerman, Assessor, St. Louis County, Missouri, (Respondent) appeared by counsel Steve 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 at $556,800, as residential property, as of January 1, 2017. The BOE valued the subject property at $505,500, 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.
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 January 24, 2018, at the St. Louis County Government Building, 41 South Central Avenue, Clayton, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 21N410085. It is further identified as 1857 Bopp Road, Des Peres, St. Louis County, Missouri. (Complaint; Exhibit 1)
- Description of Subject Property. The subject property consists of 29,580 square feet (.679 acres) improved by a one-and-a-half story, 2,671 square foot, single family home built in 1965. (Exhibit 1) The subject property includes four bedrooms; two full bathrooms; one half bathroom; a 1,696 square foot basement with 1,000 square feet of finished area and a full bathroom; a two-car attached garage; a patio; a three-season room; and one fireplace. (Exhibit 1) The exterior consists of brick construction. (Exhibit 1)
- Assessment. Respondent set a TVM for the subject property of $556,800, residential, as of January 1, 2017.
- Board of Equalization. The BOE set a TVM of the subject property at $505,500, residential, as of January 1, 2017.
- Complainant’s Evidence. Complainant opined that the subject property’s TVM as of January 1, 2017, was $480,000. To support Complainant’s opinion of value, Complainant offered as evidence the following exhibits:
|Exhibit A||Information on four comparable properties: 2160 Grandview Drive; 12129 Saint Clement Street; 12330 Borcherding Lane; 11954 Country Club Drive
Respondent did not object to Complainant’s exhibit, which was admitted into the record.
Complainant testified that he had purchased the subject property in 2013 but that he did not know the purchase price. Complainant testified that a mortgage encumbered the subject property but that he did not know the amount of the mortgage. Complainant testified that, if he were to list the subject property for sale, he would price it at $495,000. Complainant testified that the only improvement he made to the property between January 1, 2017, and January 1, 2018, was painting a portion of the home.
Complainant testified that the comparable properties contained in Exhibit A had average sale prices that calculated to an average of $177 per square foot. The first page of Exhibit A consisted of a summary of data for the comparable properties that had been obtained through the multi-listing service. (Exhibit A) The remaining pages of Exhibit A contained detailed information for each of the comparable properties such as bedroom and bathroom count, lot size, age of the improvements, list price, sold price, and sold date. Complainant argued that the comparables in Exhibit A were reasonable and relevant in terms of their sale dates, their size, and the fact that they were not distressed sales.
On cross examination, Complainant testified that he compiled the information in Exhibit A as a comparative market analysis. Complainant further testified on cross examination that he placed a $400,000 to $500,000 price limit restriction on the search that produced the comparative market analysis. Complainant testified that he is not an appraiser.
- Respondent’s Evidence. Respondent offered as evidence the following exhibits:
|Exhibit 1||Appraisal report of Sharon Kuelker|
Complainant did not object to Respondent’s exhibit, which was admitted into the record.
Respondent also presented the testimony of Sharon Kuelker (the Appraiser). The Appraiser testified that page 5 of Exhibit 1 needed correction due to a typo. In the “Comments on Sales Comparison, Location,” the report should have stated “Comps 2 and 3 are located within subdivisions with lower traffic volumes . . . ” rather than “Comps 3 and 4 are located within subdivisions with lower traffic volumes . . . .” The corrections were necessary because the report contained a total of three comparable properties, not four.
In her report, the Appraiser analyzed three comparable sales within less than two-thirds of a mile from the subject property and all within the same school district. (Exhibit 1) The sale prices ranged from $490,000 to $532,000. (Exhibit 1) All of the comparables were two-story single family homes with four bedrooms, two full bathrooms, one half bathroom, a two-car garage, a fireplace, and brick construction. (Exhibit 1) All of the comparables were built in the 1960s, within five years of the age of the subject property. (Exhibit 1) The Appraiser made market-based dollar adjustments to the price of the comparables for specific items that were either superior or inferior in relation to the subject property, such as location; lot size; gross living area; basement size and finished area; energy efficient items; patio or porch size; and in-ground swimming pool. (Exhibit 1) The comparables sold between September 28, 2016, and April 28, 2017. The adjusted sale prices of the comparables ranged from $495,500 to $520,000. (Exhibit 1)
On cross examination, the Appraiser testified that she did not use Comparable Nos. 1 and 4 from Complainant’s comparative market analysis as comparables because they were in a different school district than the subject property. The Appraiser testified that, in her opinion, buyers shop for homes by school district. The Appraiser further testified that she had tried to find homes of the same quality and size as the subject property and that the comparables in the appraisal report were similar. The Appraiser acknowledged that the comparable properties Complainant had included in Exhibit A were similar in size to the subject property but that they were sales primarily from 2015. The Appraiser testified that she had used sales occurring within six months of January 1, 2017, even though she would have made a market-based dollar adjustment for time if an earlier sale had been used.
- Presumption of Correct Assessment Not Rebutted – True Market Value Established. Complainant 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 $480,000. However, even though not required to present any evidence, Respondent presented substantial and persuasive evidence supporting the assessment made by the BOE of $505,500 as of January 1, 2017.
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 – the BOE presumption. The BOE presumption requires the taxpayer to substantial and persuasive present evidence to rebut it. If Respondent is seeking to prove a value different than that set by the BOE, then Respondent is required to rebut the BOE presumption. The BOE’s valuation is assumed to be an independent valuation.
In the present appeal, the BOE lowered the initial valuation of Respondent, and Complainant is now seeking to lower the BOE’s assessment; therefore, the BOE presumption applies to 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.
“’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).
In this case, Complainant testified that the TVM of the subject property was $480,000 as of January 1, 2017.
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 did not advocate a value different from his initial valuation or the valuation made by the BOE. Respondent argued that the BOE’s determination of value was correct and should be affirmed and, even though not required, presented substantial and persuasive evidence supporting the BOE’s valuation.
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).
Respondent presented the expert testimony and report of the Appraiser.
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.
In this case, Complainant’s evidence was neither substantial nor persuasive to rebut the presumption of correct assessment by the BOE. 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. Complainant’s Exhibit A showed four comparable properties. Exhibit A did not indicate the proximity of the comparables to the subject property but established that two of the comparables were located in a different school district. Exhibit A did not make any market-based dollar adjustments to the comparables to account for similarities and differences between them and the subject property. The sales prices and the square footage of the comparables were averaged to arrive at an average price of $177 per square foot. This method is not one of the three court-approved methods for valuing real property for purposes of assessing property.
Even though not required to present evidence, Respondent presented substantial and persuasive evidence supporting the BOE’s determination of the TVM of $505,500 as of January, 1, 2017. Respondent’s appraisal report and the testimony of the Appraiser concluded that, after making market-based dollar adjustments to the comparables in Exhibit 1, the BOE’s valuation of the subject property fell within the range of adjusted sale prices of similar properties, $495,500 to $520,000, situated less than two-thirds of one mile from the subject property.
The TVM for the subject property as determined by the BOE is AFFIRMED. The assessed value for the subject property for tax year 2017 is set at $96,045 residential ($505,500 TVM).
Application for Review
A party may file with the STC 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.
SO ORDERED March 13 , 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 13th day of March, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.