Timothy & Carissa Alfaro v. Jake Zimmerman, Assessor St. Louis County

STATE TAX COMMISSION OF MISSOURI

 

TIMOTHY & CARISSA ALFARO,	)
	)
Complainants,	)
	)
v.	)	Appeal No. 15-13346
	)
JAKE ZIMMERMAN, ASSESSOR	)
ST. LOUIS COUNTY, MISSOURI,	)
	)
Respondent.	)

 

DECISION AND ORDER

 

HOLDING

 

The assessment made by the Board of Equalization of St. Louis County (BOE) is SET ASIDE.  Complainants Timothy M. and Carissa M. Alfaro (Complainants) presented substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.

Complainants appeared by counsel Daniel S. Peters.

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 (Hearimg Officer).

ISSUE

Complainants appealed on the ground of overvaluation.  Respondent initially set the true market value (TMV) of the subject property, as residential property, at $1,651,400.  The BOE sustained Respondent’s valuation at $1,651,400.  The State Tax Commission (STC) takes this appeal to determine the TMV of the subject property on January 1, 2015.

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.  Complainants timely appealed to the STC.
2. Evidentiary Hearing. The issue of overvaluation was presented at an evidentiary hearing on December 21, 2016, at the St. Louis County Government Administration Building, 41 South Central Avenue, Clayton, Missouri.
3. Identification of Subject Property. The subject property is identified by parcel/locator number 20V330319.  It is further identified as 1215 Shepard Oaks Ct., Glencoe, St. Louis County, Missouri.  (Exhibit A)
4. Description of Subject Property. The subject property consists of 2.17 acres improved by a 5,738 square-foot, 2-story single-family home built in 2005.  (Exhibit A)  The subject property includes six bedrooms; seven full bathrooms; three half bathrooms; a full basement with 1,500 square feet of finished area; a three-car, 1,050 square foot attached garage; two masonry porches; one open frame porch; two wood decks; and five fireplaces.  (Exhibit A)  The exterior consists of masonry and frame construction.  (Exhibit A)  The subject property is located in a residential area in a somewhat rural setting but near suburban amenities, such as retail stores.  The subject property is located in the Rockwood School District.  (Exhibit A1)    
5. Assessment. Respondent set a TMV for the subject property of $1,651,400 residential, as of January 1, 2015.
6. Board of Equalization. The BOE sustained Respondent’s TMV of the subject property at $1,651,400.
7. Complainant’s Evidence. Complainants testified in their own behalf.^[1]    Complainants opined that the subject property’s TMV as of January 1, 2015, was $1,251,400.

To support their opinion of value, Complainants offered as evidence the following:

Exhibit 1	Written Direct Testimony of Complainant Timothy M. Alfaro
Exhibits A1 through A10	Photographs, property record cards, and data describing the subject property and nine comparable properties located near the subject property
Exhibit B	Affidavit of Michael Coyne, neighboring property owner
Exhibit C	Affidavit of Barbara Towerman, neighboring property owner
Exhibit D	Satellite imagery maps depicting Highway 40, creeks, and roads in relation to the area of the subject property
Exhibit E	Satellite imagery map closeup of the subject property
Exhibit F	List of 126 sales records of properties in the area of the subject property, obtained from Respondent’s online database
Exhibit 2	Written Direct Testimony of Complainant Carissa M. Alfaro

 

Exhibits A1 through A10 consisted of the following detailed information:

Property	Address	Year Built	Sale Date and Sale Price	Lot Size	Square Footage of Living Area	Bedrooms	Full Baths/Half Baths	Basement finished area
A1 Subject	1215 Shepard Oaks Court	2005	Nov. 2010 $2,000,000	2.17 acres	5,738	6	7/3	1,500 sq. ft.
A2 Comp. #1	1128 Shepard Oaks Drive	2015	March 2015 $1,430,000	2.0 acres	4,445	4	5/1	1,563 sq. ft.
A3 Comp. #2	1164 Shepard Oaks Drive	2003	Dec. 2011 $1,200,00	3.0 acres	6,131	4	5/2	2,000 sq. ft.
A4 Comp. #3	1002 Chesterfield Forest Drive	2005	Aug. 2013 $820,000	3.01 acres	4,703	5	4/1	2,200 sq. ft.
A5 Comp. #4	1128 Breton Woods Court	2014	June 2014 $912,000	3.53 acres	4,548	4	3/1	unfinished
A 6 Comp. #5	1016 Orrville Wood Lane	1970	Dec. 2014 $1,114,220	5.92 acres	4,146	5	3/2	1,700 sq. ft.
A7 Comp. #6	27 Grand Meridien Court	2011	June 2014 $1,125,000	1.51 acres	5,447	4	5/3	2,175 sq. ft.
A8 Comp. #7	110 Grand Meridien Forest Drive	2008	Sept. 2014 $1,340,000	2.44 acres	5,117	4	4/1	3,000 sq. ft.
A9 Comp. #8	73 Grand Meridien Forest Drive	2006	Feb. 2012 $1,150,000	3.2 acres	4,498	4	4/1	1,200 sq. ft.
A10 Comp. #9	690 Eatherton Road	1999	May 2014 $946,000	14.11 acres	4,522	5	5/2	1,570 sq. ft.

 

In his written direct testimony filed prior to the evidentiary hearing, Mr. Alfaro testified that he and Mrs. Alfaro had met with representatives of St. Louis County prior to going before the BOE.  Mr. Alfaro testified that he and Mrs. Alfaro met with Chris, an appraiser for St. Louis County, and Sam Salamone, an independent Hearing Officer working at the BOE’s Crestwood location.  Mr. Alfaro testified that he, Mrs. Alfaro, Chris, and Sam together reviewed the comparable properties St. Louis County had used to value the subject property.  According to Mr. Alfaro’s testimony, those comparables did not exceed $1,200,000, and Chris and Sam agreed that the value of the subject property should be reduced.  Mr. Alfaro testified that he and Mrs. Alfaro signed “paperwork agreeing on a reduced appraised value and were told that we did not have to go to the full Board of Equalization and that was it.”  Mr. Alfaro testified that Complainants later received documentation indicating that the BOE had not agreed to the reduced valuation submitted by Complainants, Chris, and Sam, so the BOE sustained Respondent’s initial valuation.  Respondent did not object to or cross examine Mr. Alfaro regarding this testimony.

During the evidentiary hearing, Mr. Alfaro further testified that Complainants’ comparables in Exhibit A were in close proximity to the subject property, had similar square footage as the subject property, and were of similar construction and quality.  Mr. Alfaro testified that he had verified the similarity of the comparables to the subject property through the St. Louis County Records database, a Missouri licensed real estate broker, a Missouri certified appraiser, and some of the owners of the comparable properties.  Mr. Alfaro testified that only one of Complainants’ comparables, 1128 Shepard Oaks Drive (Comparable No. 1), had a sale price higher than Complainants’ opinion of the TMV of the subject property and had a sale date after the valuation date of January 1, 2015.  Notably, the information in the St. Louis County Records database indicated that 1128 Shepard Oaks Drive was built in 2015 and was a new home sale in March 2015.

In his written direct testimony, Mr. Alfaro testified that the location of the subject property in relation to Highway 40 must be considered when determining the TMV of the subject property.  Mr. Alfaro testified that the subject property’s location south of Wild Horse Creek and Kiefer Creek made it less accessible by Highway 40 and Wild Horse Creek Road and Kiefer Creek Road.  Mr. Alfaro testified that using property values of homes north of the creeks would not be true comparables.  Mr. Alfaro also testified that “the wrap around nature of Shepard Oaks Court” in relation to the subject property negatively impacted the TMV of the property.

Mr. Alfaro testified that Respondent’s own records of properties comparable to the subject property showed the comparables at a dollar value per square foot ranging from $115.00 per square foot to $178.00 per square foot.  Mr. Alfaro referred to Complainants’ adjacent neighboring property, 1227 Shepard Oaks Court.  According to the St. Louis County Records database, 1227 Shepard Oaks Court had been assessed for the 2015-2016 tax cycle at $244.00 per square foot.  The subject property had been assessed at $287.00 per square foot.  However, 1227 Shepard Oaks had 6,663 square feet of living area compared to the subject property’s 5,758 square feet of living area, a difference of only 905 square feet.  Additionally, 1227 Shepard Oaks was similar to the subject property in other ways:  it had been built in 2001, only a few years prior to the subject property; it had 2.07 acres of land; it had seven bedrooms, six full bathrooms, and one half bathroom; it had a full basement with 1,900 square feet of finished area; and it had an attached 872 square foot garage, masonry porches and patios, and four fireplaces.  (St. Louis County Records database property record card)

On cross-examination, Mr. Alfaro testified that the subject property was located in a neighborhood of 11 homes.  Mr. Alfaro testified that one new home had been constructed in the neighborhood since 2015 and that he was not aware of any foreclosures in the neighborhood.  Mr. Alfaro testified that Complainants had purchased the subject property in 2010 for $2,000,000.

On cross-examination, Mr. Alfaro testified that the subject property had been listed for sale in September 2014 after Complainants consulted with a licensed agent/broker.  Mr. Alfaro testified that the list price of $2,399,000 was the result of a collaborative decision between Complainants and the agent/broker.  Mr. Alfaro testified that Complainants were “testing the market” at the list price but that Complainants did not have one interested buyer or receive a contract at the list price.

With regard to Complainants’ exhibits, Mr. Alfaro testified that he had conducted research into the nature of the comparable sales; he knew the identity of the selling parties but not the buying parties; he had utilized the St. Louis County Real Property database; and he had consulted with real estate agents who were experts in the field regarding market based adjustments and who were familiar with the local area. Mr. Alfaro testified that he did not have any training to allow him to make market-based adjustments.  Mr. Alfaro testified that Complainants took into consideration the proximity of the comparables to the subject property but did not specifically consider bedroom and bathroom counts or amenities in arriving at an opinion of value.  Mr. Alfaro testified that Complainants had not actually made any market-based adjustments or arbitrary additions and deductions to the comparables but used an average of sales prices and comparisons of price per square foot to arrive at an opinion of the TMV of the subject property.  In rebuttal testimony, Mr. Alfaro testified that he divided the recorded sale price of the comparables by the square footage of the comparables to assist Complainants in arriving at an opinion of value.

Respondent objected to Complainant’s Exhibit B, the affidavit of Michael Coyne, and Exhibit C, the affidavit of Barbara Towerman, on the ground of hearsay because the affiants were not present for cross examination.  Respondent specifically objected to statement No. 4 in each affidavit, which consisted of the affiants’ statements concerning the comparable quality of their homes with the subject property.  Complainants counter argued that the affidavits were being offered to show Complainants’ diligence in researching comparable properties and were not being offered to prove the TMV of the comparable properties or of the subject property.  The Hearing Officer ordered stricken statement No. 4 in Exhibit B and statement No. 4 in Exhibit C concerning the comparable quality of the affiants’ homes with the subject property.  The Hearing Officer admitted the remainder of exhibits subject to Respondent’s objection and reserved the ruling for the Decision and Order.

Upon further review of Exhibit B and Exhibit C, the affidavits constituted out-of-court statements, the accuracy and veracity of which could not be tested through cross-examination because Complainants did not present the witnesses.  However, Section 536.070(12) provides:

In any contested case:

Any party or the agency desiring to introduce an affidavit in evidence at a hearing in a contested case may serve on all other parties (including, in a proper case, the agency) copies of such affidavit in the manner hereinafter provided, at any time before the hearing, or at such later time as may be stipulated. Not later than seven days after such service, or at such later time as may be stipulated, any other party (or, in a proper case, the agency) may serve on the party or the agency who served such affidavit an objection to the use of the affidavit or some designated portion or portions thereof on the ground that it is in the form of an affidavit; provided, however, that if such affidavit shall have been served less than eight days before the hearing such objection may be served at any time before the hearing or may be made orally at the hearing. If such objection is so served, the affidavit or the part thereof to which objection was made, may not be used except in ways that would have been permissible in the absence of this subdivision; provided, however, that such objection may be waived by the party or the agency making the same. Failure to serve an objection as aforesaid, based on the ground aforesaid, shall constitute a waiver of all objections to the introduction of such affidavit, or of the parts thereof with respect to which no such objection was so served, on the ground that it is in the form of an affidavit, or that it constitutes or contains hearsay evidence, or that it is not, or contains matters which are not, the best evidence, but any and all other objections may be made at the hearing. Nothing herein contained shall prevent the cross-examination of the affiant if he or she is present in obedience to a subpoena or otherwise and if he or she is present, he or she may be called for cross-examination during the case of the party who introduced the affidavit in evidence. If the affidavit is admissible in part only it shall be admitted as to such part, without the necessity of preparing a new affidavit. The manner of service of such affidavit and of such objection shall be by delivering or mailing copies thereof to the attorneys of record of the parties being served, if any, otherwise, to such parties, and service shall be deemed complete upon mailing; provided, however, that when the parties are so numerous as to make service of copies of the affidavit on all of them unduly onerous, the agency may make an order specifying on what parties service of copies of such affidavit shall be made, and in that case a copy of such affidavit shall be filed with the agency and kept available for inspection and copying. Nothing in this subdivision shall prevent any use of affidavits that would be proper in the absence of this subdivision.

(Emphasis added.)

 

Although technical rules of evidence are not controlling in administrative hearings, fundamental rules of evidence apply.  Homa v. Carthage R-IX School District, 345 S.W.3d 266, 282 (Mo. App. S.D. 2011); see also Luscombe v. Missouri State Bd. of Nursing, 2013 WL 68899 (Mo. App. W.D. 2013) at *13.  When proper objection is made and preserved, statements in violation of evidentiary rules do not qualify as competent and substantial evidence to support an agency’s decision.  Homa, 345 S.W.3d at 282, quoting Dorman v. State Bd. of Registration for Healing Arts, 62 S.W.3d 446, 454 (Mo. App. W.D. 2001).  Section 536.070(7) requires an administrative tribunal to receive proffered evidence into the record regardless of any evidentiary objections. “Reception of hearsay or other inadmissible evidence does not dictate a reversal unless there is not sufficient competent evidence to sustain the decision.”  Homa, 345 S.W.3d at 282 (quotation omitted).

Complainants filed Exhibits B and C with their other exhibits on November 14, 2016, the due date set by the Hearing Officer for the parties to file and exchange their exhibits and evidence.  Exhibits B and C were filed longer than eight days in advance of the evidentiary hearing, which occurred on December 21, 2016.  Respondent did not file any objection to the affidavits not later than seven days after the Exhibits B and C were served upon Respondent.  Therefore, pursuant to Section 536.070(12), any objection Respondent had to the admission of the affidavits on hearsay grounds was waived.  Accordingly, the previous ruling during the evidentiary hearing striking statement No. 4 in both Exhibit B and Exhibit C as hearsay is hereby RESCINDED and the affidavits, in their entirety, are received into the record to be given the weight deemed appropriate when considering all of the evidence.

8. Respondent’s Evidence.^[2] Respondent offered as evidence the Notice of Decision from the BOE.  (Exhibit 5)  Complainants did not object to Respondent’s Exhibit 5, which was received into the record.        
9. Presumption of Correct Assessment Rebutted – True Market Value Established. Complainants’ evidence was substantial and persuasive to rebut the presumption of correct assessment by the BOE and to establish the TMV of the subject property as of January 1, 2015, to be $1,503,356.

CONCLUSIONS OF LAW AND DECISION

Jurisdiction

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 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.

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 Respondent is required to rebut the BOE presumption.

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 Complainants are now seeking to lower the BOE’s assessment; therefore, the BOE presumption applies.

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 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 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’s evidence indicating a higher valuation than the value finally determined by the BOE and higher than the value previously determined by Respondent was excluded from evidence as explained in Footnote1.

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).

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:

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.

Discussion

In this case, Complainant’s evidence was substantial and persuasive to rebut the presumption of correct assessment by the BOE.  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.  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.  Security Bonhomme, Inc., 558 S.W.2d at 659.

The Comparable Properties

Complainants presented substantial evidence of nine comparable properties close in proximity to the subject property, some of which were in the same neighborhood.  (Exhibits A1-A10; Exhibits B and C)  The comparable properties in Exhibits A5-A8 and A10 were relevant for developing an opinion of the TMV of the subject property.^[3]  The sale dates of Exhibits A5-A8 and A10 occurred between May 2014 and December 2014, just prior to the tax date of January 1, 2015.  The sale prices of Exhibits A5-A8 and A10 ranged between $912,000 and $1,134,000.  The dollar per square foot amounts of Exhibits A5-A8 and A10 ranged between $201 per square foot and $269 per square foot.  Although Complainants did not make any market-based adjustments to account for the specific similarities and differences between the comparables and the subject property, such as number of bedrooms and bathrooms, Exhibits A5-A8 and A10 compel the reasonable conclusion that the subject property had been overvalued by the BOE.

Notably, of the comparables presented, Comparable No. 7, Exhibit A8, appeared to be the one with the most relevant sales date and most similar to the subject property:

Property	Address	Year Built	Sale Date and Sale Price	Lot Size	Square Footage of Living Area	Bedrooms	Full Baths/Half Baths	Basement finished area
A1 Subject	1215 Shepard Oaks Court	2005	Nov. 2010 $2,000,000	2.17 acres	5,738	6	7/3	1,500 sq. ft.
A8 Comp. #7	110 Grand Meridien Forest Drive	2008	Sept. 2014 $1,340,000	2.44 acres	5,117	4	4/1	3,000 sq. ft.

 

While the lot size and square footage of the living area of the subject property and Comparable No. 7 were similar, Comparable No. 7 was three years newer, had approximately a quarter of an acre more land, and included twice the finished basement square footage as the subject property, yet it had a sale price $311,400 less than the valuation the BOE had placed on the subject property.  The sale price of Comparable No. 7 was $1,340,000, or $262 per square foot, in September 2014.  This evidence was a reliable indicator of value of a similar property, such as the subject property, as of January 1, 2015.

Exhibit B and Exhibit C

            The subject property, the neighboring properties in Exhibits B and C, and Complainants’ comparables were all large, single-family homes sited on multiple acres of land located in an “exclusive” area of western St. Louis County.  Through Exhibits B and C, Complainants essentially claimed that their neighbors’ properties were valued correctly while the subject property was valued incorrectly.  This often is an unsuccessful argument because, to prevail, a complainant must prove the TMV of his property on the subject tax date.  However, under the totality of the circumstances of this case, Exhibits B and C were persuasive because the exhibits indicated that the TMV of the subject property was less than BOE’s value of $1,651,400 on January 1, 2015.

Exhibit B was the affidavit of Michael Coyne, Complainants’ neighbor and the owner of 1116 Shepard Oaks Drive.  Mr. Coyne attested that he had purchased his property in April 2012 for $988,000 and that his property was “of comparable quality and built by the same builder as the [Complainants’] house . . . .”  Exhibit C was the affidavit of Barbara Towerman, Complainants’ neighbor and the owner of 1164 Shepard Oaks Drive.  Ms. Towerman attested that she had purchased her property in December 2011 for $1,200,000 and that her property was “of comparable quality to the [Complainants’] house . . . .”

According to the St. Louis County Records database, on January 1, 2015, the TMV of Mr. Coyne’s property was $1,153,700, or $210 per square foot.  Mr. Coyne’s property was built in 1999; included 3.16 acres; had 5,492 square feet of living area; contained four bedrooms; four full bathrooms; three half bathrooms; and 1,900 square feet of finished basement area.

According to the St. Louis County Records database, on January 1, 2015, the TMV of Ms. Towerman’s property was $1,188,200, or $193 per square foot.  Ms. Towerman’s property was built in 2003; included 3.00 acres; had 6,131 square feet of living area; contained four bedrooms; five full bathrooms; two half bathrooms; and 2,000 square feet of finished basement area.

In contrast, the BOE valued the subject property at $1,651,400, or $288 per square foot.  The subject property was built in 2005; included 2.17 acres; had 5,738 square feet of living area; contained six bedrooms; seven full bathrooms; three half bathrooms; and 1,500 square feet of finished basement area.

The sale dates of Mr. Coyne’s and Ms. Towerman’s properties were too remote in time to establish the TMV of the subject property on January 1, 2015.  However, Mr. Coyne’s and Ms. Towerman’s statements concerning the “comparable quality” of their homes to the subject property, all of which were similar in terms of acreage and square footage and located within the same 11-home “exclusive” neighborhood, were persuasive for rebutting the presumption of correct valuation by the BOE.

ORDER

The TMV for the subject property as determined by the BOE is SET ASIDE.  The assessed value for the subject property for the 2015-2016 tax cycle is set at $285,637 residential ($1,503,356 TMV, or $262 per square foot).

 

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

Disputed Taxes

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 March 28, 2017.

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 28th day of March, 2017, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.

 

Jacklyn Wood

Legal Coordinator

 

^[1] Mrs. Alfaro testified that she was in agreement with Mr. Alfaro’s testimony and did not disagree with any of his testimony and did not need to add any information to his testimony.

^[2] On December 1, 2016, Complainants filed their Objection and Motion to Strike Respondent’s Exhibit 1 on the ground that Respondent had violated the Commission’s rules and the Senior Hearing Officer’s Order related to the exchange of exhibits and evidence.  Complainants argued they were prejudiced by Respondent’s failure to file the written direct testimony of its appraiser and the appraiser’s report provided incomplete and/or inaccurate information.  On December 15, 2016, Respondent filed his Response to Complainant’s Objection and Motion to Strike Respondent’s Exhibit 1.  Respondent attached the appraiser’s written direct testimony and qualifications as Respondent’s Exhibits 2 and 3.  Respondent acknowledged he was submitting the testimony after the exhibit exchange date but stated that there had been no intent to prejudice Complainants and that they were not prejudiced because they already had much of the information Respondent would have provided.  That same day, Complainants filed their reply to Respondent’s response.  Complainants alleged that they would be prejudiced by the filing of Respondent’s appraiser’s written direct testimony three business days prior to the evidentiary hearing and that Complainants would not have the opportunity to file a response to the written direct testimony or rebuttal or surrebuttal evidence.  Complainants further alleged that they had served a Notice of Deposition on Respondent on November 21, 2016, pursuant to Rule 57.03.  Complainants alleged that Respondent had stated he would not respond to the notice and would not appear for the deposition, which Respondent in fact did not appear, a violation of 12 CSR 30-3.060.  On December 20, 2017, the Senior Hearing Officer entered her ruling excluding Respondent’s Exhibits 1, 2, and 3 from evidence and found that Respondent did not comply with the scheduling order requiring the simultaneous filing and exchange of exhibits and written direct testimony.  The Senior Hearing Officer further found that, without the appraiser’s written direct testimony, Respondent did not lay a foundation for the admission of the appraisal report, which is rendered hearsay and that Respondent’s attempt to cure the failure to file the appraiser’s written direct testimony only three business days prior to the evidentiary hearing would prejudice Complainants, particularly in light of the fact that Respondent had flatly refused to allow Complainant to depose the appraiser. Immediately prior to the Evidentiary Hearing, Respondent requested the Senior Hearing Officer to reconsider her ruling excluding Respondent’s Exhibits 1, 2, and 3.  Following argument on the record, the Senior Hearing Officer denied Respondent’s request and upheld the exclusion of Respondent’ Exhibits 1, 2, and 3.

[3] Although Comparable No. 1, Exhibit A2, was located within the same neighborhood as the subject property and had similar acreage, Comparable No. 1 was a newly constructed home sold in March 2015, 10 years newer than the subject property and, therefore, not a reliable comparison.