STATE TAX COMMISSION OF MISSOURI
| TIMOTHY ROBERT FRITZ, | ) | |
| ) | ||
| Complainants, | ) | |
| ) | ||
| v. | ) | Appeal No. 17-10015 |
| )
) |
Parcel/Locator No. 20K110224 | |
| JAKE ZIMMERMAN, ASSESSOR, | ) | |
| ST. LOUIS COUNTY, MISSOURI,
Respondent. |
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DECISION AND ORDER
HOLDING
The decision of the St. Louis County Board of Equalization (BOE) is AFFIRMED. Complainant Timothy Robert Fritz (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 Nauman Wadalawala.
Case heard and decided by Senior Hearing Officer Amy S. Westermann (Hearing Officer).
ISSUE
Complainant appealed on the ground of overvaluation. Respondent initially set the true value in money (TVM) of the subject property at $402,900, as residential property, as of January 1, 2017. The BOE valued the subject property at $402,900, thereby sustaining Respondent’s valuation. The State Tax Commission (STC) takes this appeal to determine the TMV for the subject property as of January 1, 2017.
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 January 3, 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 20K110224. It is further identified as 2206 Hatton Lane, Brentwood, St. Louis County, Missouri. (Complaint; Exhibit A; Exhibit 1)
- Description of Subject Property. The subject property consists of .144 acres (6,273 square feet), improved by a 2,272 square-foot, two-story single-family home constructed in approximately 1953. (Exhibit 3) The subject property includes three bedrooms; two full bathrooms; two half bathrooms; a walk-out basement with recreation room, office, and custom built-ins; two fireplaces; one covered porch; and one deck. (Exhibit 3) The subject property does not have a garage. The exterior consists of predominately brick construction. (Exhibit A; Exhibit 3) The subject property is located in central St. Louis County near Tilles Park. (Exhibit 3) The subject property is serviced by public utilities. (Exhibit 3)
- Assessment. Respondent set a TVM for the subject property of $402,900, residential, as of January 1, 2017.
- Board of Equalization. The BOE set a TVM of the subject property at $402,900, residential, as of January 1, 2017.
- Complainant’s Evidence. Complainant opined that the subject property’s TVM as of January 1, 2017, was $360,000 to $365,000. To support Complainant’s opinion of value, Complainant offered as evidence the following exhibits:
| Exhibit A | Photographs of the exterior and interior of the subject property |
| Exhibit B | Comparable property 2205 Parkridge Avenue, Brentwood, MO, situated behind the subject property with a sale price of $331,500 on February 10, 2016. |
| Exhibit C | Comparable property 2118 Hatton Lane, Brentwood, MO, situated on the same street as the subject property with a sale price of $323,000 on January 29, 2016. |
| Exhibit D | Comparable property 2114 Hatton Lane, Brentwood, MO, situated on the same street as the subject property with a sale price of $322,000 on May 10, 2016. |
| Exhibit E | Comparble property 9418 Pine, Brentwood, MO, situated ¼ of 1 mile from the subject property, with a sale price of $407,000 on April 22, 2016. |
| Exhibit F | Comparable property 9349 Sonora Avenue, Brentwood, MO, with no sales price or date reported. |
Respondent objected to Complainant’s exhibits depicting properties comparable to the subject property on the ground of hearsay. The Hearing Officer overruled the objection and admitted Complainant’s exhibits into the record to be given the weight deemed necessary in light of all of the evidence.
Complainant testified on his own behalf. Complainant testified that he had purchased the subject property in April 2016 for $405,000 but that he had overpaid for the subject property. Complainant testified that the subject property had been listed with a realtor and had been publicly advertised. Complainant testified that the subject property was encumbered by a mortgage in the amount of $352,000. Complainant testified that, if he listed the subject property for sale, he was not sure what would be the asking price. Complainant testified that no offers had been made to purchase the subject property from him. Complainant testified that the only improvement he had made to the subject property between the date of purchase and January 1, 2017, was to paint some of the interior.
As he presented his exhibits, Complainant testified that the subject property had condition issues that affected its TVM. Complainant testified that the condition issues included a low quality shower; cracks in the first floor ceiling; water damage to the basement floors and walls; missing tile in a shower surround; and wood floors in need of replacement. With regard to Complainant’s comparable properties, Complainant testified that Exhibit B appeared to be much nicer than the subject property; Exhibit C was “more in line” with the subject property; and Exhibits E and F were comparables that had been used by Respondent in valuing the subject property. Complainant testified that Exhibit F should not have been used as a comparable because the lot size, home size, and home condition were better than the subject property and that the hearing officer at the BOE had disregarded the comparable property in Exhibit F.
On cross examination, Complainant testified that he was not a licensed appraiser and had no education as an appraiser but followed the market and every sale within the area of the subject property. Complainant testified that he followed transactions related to the comparables through the MLS. Complainant testified that he had been represented by a real estate agent when he purchased the subject property. Complainant testified that he knew one or two of the buyers and sellers of the comparable properties. Complainant testified that Exhibit E was not a foreclosure and that Exhibit C had been sold as a fixer-upper. Complainant testified that he had not commissioned an inspection of the subject property prior to purchasing it and that the omission of an inspection might have been “negligence” on his part. Complainant testified that the condition of the subject property depicted in the photographs in Exhibt A was the same as the condition on the date of purchase except for the water damage in the basement and the leaking shower, which appeared after Complainant lived in the house.
- Respondent’s Evidence. To support Respondent’s opinion of value, Respondent offered as evidence the following exhibits:
| Exhibit 1 | BOE Notice of Decison |
| Exhibit 2 | St. Louis County Real Property Certificate of Value |
| Exhibit 3 | MARIS Matrix Sale Listing for the subject property |
Complainant did not object to Respondent’s exhibits, which were received into the record.
Exhibit 2 established that Complainant had purchased the subject property for $405,000 in April 2016. Exhibit 3 established that the subject property had been listed for sale at a list price $425,000 on or about March 4, 2016. Exhibit 3 also established that the subject property had sold for $405,000 on or about April 21, 2016.
- Presumption of Correct Assessment Not Rebutted. Complainant did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the BOE.
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 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.
During the Evidentiary Hearing, the Hearing Officer inquired of Complainant.
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 independently determined the TVM of the subject property was $402,900, which was the same as the initial valuation of Respondent. 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 $360,000 to $365,000 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 advocated upholding the BOE’s valuation and, therefore, was not required to present evidence, substantial and persuasive or otherwise.
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).
Neither Complainant nor Respondent presented expert testimony. Complainant was not recognized as an expert in the field of real estate appraisal.
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.
Discussion
In this case, Complainants’ evidence was not 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.
Complainant opined that the TVM of the subject property was $360,000 to $365,000 as of January 1, 2017. Significantly, Complainant acknowledged that he purchased the subject property in April 2016, approximately eight months prior to the relevant tax date, for $405,000, which is higher than the BOE’s determination of TVM. Complainant testified that he had been represented by a real estate agent during the purchase of the subject property and that he had not commissioned an inspection of the subject property. Although Complainant testified and presented exhibits depicting some issues with the interior condition of some elements of the subject property, Complainant testified that the photographs essentially showed the subject property as it was when Complainant purchased it. Furthermore, the photographs reveal what appear to be issues in the cosmetic condition of some elements of the subject property. Complainant did not present any evidence of estimates for repairs or replacement of the condition issues depicted in the photos.
Complainant presented evidence concerning several comparable properties, resembling the comparable sales approach method for estimating TVM. However, Complainant did not adjust the sale prices of the comparables by performing a market analysis of the similarities and differences between the comparbles and the subject property to arrive at a reliable estimate of TVM for the subject property.
Complainant’s comparables, close in proximity to the subject property, actually implied that BOE’s valuation of the subject property was correct. The comparbles in Exhibits B, C, D, and E were brick, two-story or one-and-a-half story, traditional homes. The homes in Exhibits B, C, D, and E ranged from 1,932 square feet to 2,074 square feet, all smaller than the subject property. The homes in Exhibits B, C, D, and E all had three bedrooms and two full bathrooms; Exhibit D also had one half bathroom. The lots in Exhibits B, C, D, and E ranged from 6,250 square feet to 6,838 square feet, similar to the lot of the subject property. The reported sale dates of the comparables in Exhibits B, C, D, and E ranged from January 2016 to May 2016. The sale prices of the comparables in Exhibits B, C, D, and E ranged from $322,000 to $407,000. The home in Exhibit E was approximately 200 square feet smaller than the subject property; the lot in Exhibit E was approximately 150 square feet larger than the subject property. Significantly, the comparable in Exhibit E sold on April 22, 2016, for $407,000 – one day after the sale of the subject property and for $2000 more than the subject property.
Although not required to present any evidence in this appeal, Respondent’s Exhibit 3, the sale listing for the subject property, described the subject property as “beautifully updated” with “new granite countertops” and appliances included in the sale. Exhibit 3 established the subject property’s original list price when it was placed on the market in March 2016 was $425,000. Given that Complainant was represented by a real estate agent, this evidence implies that Complainant, the buyer, was well informed and well advised and acted in what he considered his own best interest in purchasing the subject property for $405,000, which was less than its list price and less than the comparable in Exhibit E.
ORDER
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 $76,551 residential ($402,900 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
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 February 27, 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 27th day of February, 2018, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.
Jacklyn Wood
Legal Coordinator