Timothy & Laura Boeker v. Zimmerman (SLCO)

v.                                                         )                      Appeal No.12-10691

JAKE ZIMMERMAN,ASSESSOR,            )

ST. LOUIS COUNTY, MISSOURI,            )

                                        Respondent.            )

 DECISION AND ORDER

HOLDING

                Decision of the St. Louis County Assessor is SET ASIDE.Respondent presented substantial and persuasive evidence to establish the true value in money of the subject property.

True value in money for the subject property for tax year 2012 is set at $285,000, residential assessed value of $54,150.

Complainant Timothy Boeker appeared pro se.

Respondent appeared by Associate County Counselor, Paula Lemerman.

Case heardby Senior Hearing Officer W. B. Tichenor.

Case decided by State Tax Commission.

ISSUE

Complainants appeal, on the ground of overvaluation, the valuation determined by the Assessor.The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2011.[1]Having considered all of the competent evidence upon the whole record, the Commission enters the following Decision and Order.

FINDINGS OF FACT

1.  Jurisdiction.  Jurisdiction over this appeal is proper.Complainants timely appealed to the State Tax Commission.[2]

2.  Evidentiary Hearing.  The Evidentiary Hearing was held on July 18, 2013, at the St. Louis County Government Center, Clayton, Missouri.

3.  Identification of Subject Property.  The subject property is identified by locator number 22L410440.It is located at 939 Joanna Ave., Glendale, Missouri.[3]

4.  Description of Subject Property.  The subject property consists of a 12,000 square foot lot, improved by a two-story single-family residence.A detailed description of the subject property was provided in Exhibit 1.[4]

5.  Assessment.  The Assessor appraised the property at $339,300, an assessed residential value of $64,470.[5]

6.  Complainant’s Evidence.  Complainant offered into evidence the following Exhibits:

 No objection was made to Exhibits A and E, they were received into evidence.Counsel for Respondent objected to Exhibit B, the objection was sustained and the exhibit excluded from the evidentiary record.[6]  Objection was also made to Exhibit C, the objection was overruled.

Objection was made to Exhibit D.Objection was taken under advisement to be ruled on in the Decision.Objection is sustained.Exhibit D is excluded from evidence.See, Rulings on Objections, infra.

7.  Respondent’s Evidence.  Respondent offered into evidence the following Exhibits:

 

8.  Condition of Subject.  The subject property at the time of purchase suffered from a variety of items of deferred maintenance which placed a negative impact on its value.The items of deferred maintenance would have been in existence as of 1/1/11.[7]

9.  Subject’s Listing History.  The listing price history for the property, as set forth in Exhibit 2, established a listing price in February 2010 was $324,900 and the listing price was reduce to $269,900.The appraisal report submitted by Respondent indicated there was a transfer of the property on January 26, 2012 for $207,920 to US Bank under a foreclosure and a sale to the Complainant on August 17, 2012, for $217, 500.

10.  True Value in Money for the Subject Property.  Evidence established that the true value in money for the subject property was $285,000.

CONCLUSIONS OF LAW AND DECISION

Jurisdiction

The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious.

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.[8]The constitutional mandate is to find the true value in money for the property under appeal. By statute real and tangible personal property is assessed at set percentages of true value in money.[9]

Rulings on Objections

There are two items regarding documents tendered as exhibits which must now be addressed.Those two items are the sustaining of Respondent’s objections to Exhibit B – Appraisal Report of James Dolan and to Exhibit D – Zillow Price History.

Exclusion of Exhibit B

It is the well established practice of the Commission that appraisals are received into evidence when the appraiser is present to lay the foundation for the admission of his or her appraisal.In the absence of an appraiser, and upon timely objection by the opposing party, an appraisal will be excluded due to the appraiser not being present.The basis for this is well founded in the laws of evidence relating to hearsay.

Black’s[10] defines hearsay as follows: “Traditionally, testimony that is given by a witness who relates not what he or she knows personally, but what others have said, and that is therefore dependent upon the credibility of someone other than the witness.Such testimony is generally inadmissible under the rules of evidence.”McCormick[11] defines the term as; “a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.”The Courtroom Handbook on Missouri Evidence[12] follows the definition given by the Federal Rules and cited by McCormick.The out of court statement can take the form of either oral or written assertions.Therefore, documents which make assertions of facts are hearsay, just as well, as the speech of another person.

The hearsay rule provides that “no assertion offered as testimony can be received unless it is or has been open to test by cross-examination or an opportunity for cross-examination, except as otherwise provide by the rules of evidence, by court rules or by statute.”[13]The rationale behind the rule is quite simply that out of court hearsay statements are not made under oath and cannot be subject to cross-examination.Accordingly, an appraisal, even though prepared by a state licensed or certified real estate appraiser, is a hearsay document.It is an out of court (or evidentiary hearing) statement offered to prove the truth of itself.There are various appraisers, being unfamiliar with the rules of evidence, who operate under the mistaken belief that simply because they are licensed or certified by the state that their appraisals can be accepted into evidence in a court or administrative law proceeding without their presence to testify relative to the appraisal.

In the present case, Mr. Dolan apparently was operating under this mistaken belief when he informed Mr. Boeker that it was not necessary for him to attend the evidentiary hearing.Due to the absence of the appraiser, the proper foundation for admission of the appraisal could not be laid.It was not sufficient for the taxpayer to testify that the document is a copy of what he was provided – that does not lay the proper foundation.The person who has made the out of court statement (appraisal) must verify that it is in fact his or her work product.Otherwise, it is nothing more than simply hearsay and does not come in under any of the recognized exclusions to the hearsay rule.

Finally, there is the matter of the right of cross-examination.The opposing party has the right to cross-examine every witness in an evidentiary hearing.Unless the party waives that right and consents to an appraisal coming into the record absent testimony of the appraiser, the document must be excluded as an exhibit.The failure of the appraiser to be present deprived Respondent of the right of cross-examination.The objection on the grounds of hearsay and lack of foundation was therefore sustained and Exhibit B was excluded from evidence.

Accordingly, a determination of value cannot be grounded upon the conclusion of value contained in the Dolan appraisal.

Admission of Exhibit D

Exhibit D is a Price History which Mr. Boeker printed off from the Zillow website.Counsel for Respondent objected on the grounds of hearsay and lack of foundation.The objections were taken under advisement to be ruled on in this Decision.

Taxpayers often wish to rely upon information contained in Zillow Data Sheets.Such reliance is greatly misplaced.Zillow reports are hearsay; as such they are not admissible into evidence.There is no exception to the hearsay rule under which a Zillow document may come into evidence.The person who created the Zillow report is not available to be cross-examined as to either the underlying facts in the document and the source for such facts.

Furthermore, without establishing that the data is of a type reasonably relied upon by experts in the field of residential appraisal in forming their opinions of value and that the information is otherwise reliable, the Zillow information has no probative value.[14]

Standard for Valuation

Section 137.115, RSMo, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so.[15]True value in money is defined in terms of value in exchange and not value in use.[16]It is the fair market value of the subject property on the valuation date.[17]Market value is the most probable price in terms of money which a property should bring in competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price is not affected by undue stimulus.

Implicit in this definition are the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby: 

1.Buyer and seller are typically motivated.

 2.Both parties are well informed and well advised, and both acting in what they consider their own best interests.

 3.A reasonable time is allowed for exposure in the open market.

 4.Payment is made in cash or its equivalent.

 5.Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.

 6.The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction.[18]

 Methods of Valuation

Proper methods of valuation and assessment of property are delegated to the Commission.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.[19] The Supreme Court of Missouri has also held that evidence of the actual sales price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time.The actual sale price is a method that may be considered for estimating true value.[20]Complainant elected to rely upon the actual sale price as the method to establish value for his property.This is an accepted methodology for setting value.Respondent presented an appraisal which developed the sales comparison approach to conclude value.In owner occupied residential appeals, the sales comparison approach is generally viewed as the most reliable provided adequate sales data is available for performing the appraisal.

Evidence of True Value

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, 2011.[21]Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[22]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.[23]

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.”[24]A valuation which does not reflect the fair market value (true value in money) of the property under appeal is an unlawful, unfair and improper assessment.The Complainants’ evidence was sufficient to establish that the Assessor’s value of $339,300 did not reflect the fair market value of their property as of January 1, 2011.Therefore, the assessment at that value was unlawful, unfair and improper.Furthermore, Respondent’s own evidence (Exhibits 1 and 2) likewise establish the original assessment to have been in error.

The owner of property is generally held competent to testify to its reasonable market value.[25]The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[26]Reliance upon the actual sales price, of an arms-length, open market transaction, does not constitute either an improper element or an improper foundation for an owner’s opinion of value.To the contrary, the purchase price is an appropriate element and foundation for an owner’s opinion of value.

The owner testified that he purchased the property in August 2012 for $217,500.The owner testified that there were condition issues at the time of purchase.An inspection report was tendered into evidence.The cost to remediate the issues was not presented.The lack of cost data, the transaction date being so far removed from the valuation date and the transaction history of the property weigh against the owner’s opinion of value of $217,500.Further, one sale price is not proof of a market price for a property.

The Respondent presented an appraisal of the property reviewing numerous sales and selecting three sales for a sales comparison approach.The comparable sales were within 1 mile of the subject, the sales occurred from June 2010 to August 2011.Adjustments to the sales were made for superior condition, lot size, baths, and garages.The Respondent made the adjustments by reviewing market data.

The Respondent’s evidence meets the burden of substantial and persuasive evidence to establish a market value of $285,000 as of January 1, 2011.

ORDER

The assessed valuation for the subject property as determined by the Assessor for St. Louis County for the subject tax day is SET ASIDE.

The assessed value for the subject property for tax year 2012 is set at $54,150.

Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of the mailing date set forth in the Certificate of Service for this Order.

If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts unless disbursed pursuant to Section 139.031.8, RSMo.

If no judicial review is made within thirty days, this decision and order is deemed final and the Collector of St. Louis 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.

SO ORDERED September 30, 2013.

 Bruce E. Davis, Chairman

 Randy B. Holman, Commissioner

Victor Callahan, Commissioner