STATE TAX COMMISSION OF MISSOURI
|WALDENCORP, INC.||)||Appeal No. 19-79098|
|Complainant,||)||Parcel/Loc. No. 20-5.0-15-100-003-004.000|
|DAVID COX, ASSESSOR||)|
|PLATTE COUNTY, MISSOURI||)|
DECISION AND ORDER
The assessment of the subject property by David Cox, Assessor of Platte County, Missouri (Respondent) is SET ASIDE. Both Waldencorp, Inc. (Complainant) and Respondent presented substantial and persuasive evidence to establish the TVM of the subject property.
TVM for the subject property for tax years 2019 and 2020 is $240,000 residential (assessed value $45,600).
Complainant appeared by attorney Gary Steinman.
Respondent appeared by attorney Stephen Magers.
Case heard and decided by Senior Hearing Officer John Treu (Hearing Officer).
Complainant appealed, on the ground of overvaluation, the assessment of Respondent. No Board of Equalization (BOE) appeal was filed due to the last increase notice being mailed too late for Complainant to appeal to the BOE. The State Tax Commission (STC) takes this appeal to determine the TVM for the subject property on January 1, 2019. The value as of January 1 of the odd numbered year remains the value as of January 1 of the following even numbered year unless there is new construction and/or improvement to the property. Section 137.115.1 RSMo.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
- Authority. Authority over these appeals is proper. Complainant timely appealed to the STC from the decision of the BOE.
- Evidentiary Hearing. The Evidentiary Hearing was held on October 9, 2020, via Webex.
- Identification of Subject Property. The subject property is identified by map parcel number/locator number 20-5.0-15-100-003-004.000 and street address 7911 N.W. Westside Drive, Weatherby Lake, Missouri. (Ex. ZZZZ, Ex. 17 and Complaint for Review of Assessment)
- Description of Subject Property. The subject property consist of a 22,041 square foot lot improved by a single family residential, ranch style house. It has three bedrooms and one full bathroom on the main level. The improvement contains a full, unfinished basement. The improvement has 1,246 square feet of gross living area, with a two-car detached garage. The subject property has a lake view and is in below average to fair condition. The neighborhood has a shortage of supply, with increasing property values and marketing times of less than three months. (Ex. ZZZZ and Ex. 17)
- Assessment. Respondent valued the property at $377,994 residential (assessed value $71,819). (Complaint for Review)
- Complainant’s Evidence. Complainant offered into evidence the following:
|Exhibit A||Beacon Printout on Comparable Property||Admitted|
|Exhibit B||Beacon Printout on Comparable Property||Admitted|
|Exhibit ZZZZ||Appraisal Report of Thomas Pryor (Pryor)||Admitted|
Complainant’s evidence included an appraisal report by Pryor. Pryor identified the subject property’s area as suburban, with a stable growth rate, increasing property values, a shortage of supply, with marketing times of under three months. Pryor performed a sales comparison analysis to opine a TVM of the subject property. He searched Weatherby Lake for both 1st and 2nd tier lake views. Pryor felt that the subject property was not a full 2nd tier property because it is not located across the street from the lake, but that it also was not a 1st tier property because the lot does not go all the way down to the water and is prohibited to build a sea wall on the portion that touches the water.
Under his sales comparison analysis Pryor utilized three comparable sales, which sold on 5/18/2018, 1/2/2018, and 1/12/2018 respectively. They sold for $157,000, $256,000, and $435,000 respectively. After making adjustments for view, sales or financing concessions, condition, room count, gross living area, basement, garages, and decks/docks/patios, the adjusted sales prices were $229,000. $245,350, and $245,000. Pryor adjusted both comparable #1 and comparable #2 up by $125,000 for inferior views. Pryor adjusted comparable #3 down by $125,000 for superior view.
Exhibits YYY, ZZZ, OOOO, and PPPP show trees between the subject property and the lake, partially obstructing the view of the lake. The aerial photograph of the subject property in Exhibit ZZZZ shows all of the trees lie on the subject property.
Pryor concluded a TVM of $240,000 as of January 1, 2019
- No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2019, to January 1, 2020, therefore the assessed value for 2019 remains the assessed value for 2020. Section 137.115.1.
- Respondent’s Evidence. Respondent offered into evidence the following:
|Exhibit 8||Written Direct Testimony of Jeff Weedman (Weedman)||Admitted|
|Exhibit 16||Written Direct Tesimony of Jack Baines (Baines)||Admitted|
|Exhibit 17||Appraisal Report of Baines||Admitted|
|Exhibit 18||Aerial Image||Admitted|
Respondent’s evidence included an appraisal report by Baines. He performed a highest and best use analysis. After looking at the condition of the property, the cost to fix the deferred maintenance, and others sales in Weatherby Lake with subsequent tear-downs, Baines determined the highest and best use of the subject property was as vacant. To determine the land value of the subject property Baines utilized the sales comparison approach. He utilized three comparable properties. Sale 1 sold for $472,500 in September of 2017 with an improvement, which was subsequently torn down after the purchase. Sale 2 sold for $500,000 in June of 2017 without an improvement. Sale 3 sold for $542,500 in August of 2017 with an improvement which was subsequently torn down shortly after the purchase. Baines applied adjustments to sale 2 and sale 3, which resulted in adjusted prices per square foot of $15.22 and $32.91 respectively. The price per square foot sales prices of the three sales were $15.60, $15.22, and $32.91 respectively. Baines averaged the sales prices and applied a 25% downward adjustment for proximity to public access. Notably, Baines stated “[w]hile three sales do not present enough market evidence of all the factors needed in determining credible land values, they do indicate the upper limits of vacant land of properties with unimpeded lake views.” Finally, Barnes deducted $20,000 for estimated demolition costs. Baines concluded a TVM of $344,468 (after reversal of mathematical error during evidentiary hearing).
- TVM Established. Both Complainant’s and Respondent’s evidence was substantial and persuasive to establish the TVM as of January 1, 2019. See, Presumption In Appeal, infra.
CONCLUSIONS OF LAW AND DECISION
STC Authority Over Ad Valorem Taxation Appeals
The STC has authority to hear this appeal and to correct any assessment that is shown to be unlawful, unfair, arbitrary or capricious. The hearing officer shall issue a decision and order affirming, modifying or reversing the determination of the board of equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious. Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431.
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 and tangible personal property are assessed at set percentages of true value in money. Section 137.115.5: residential property at 19% of true value in money; commercial property at 32% of true value in money and agricultural property at 12% of true value in money.
Complainant’s Burden of Proof
In order to prevail, Complainant 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, 2019. Hermel, supra. 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.” See, 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); Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991). 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. 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. 1980).
Standard for Valuation
Section 137.115 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. St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993); Missouri Baptist Children’s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993). True value in money is defined in terms of value in exchange and not value in use. Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 S.W.2d 376, 380 (Mo. App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).
It is the fair market value of the subject property on the valuation date. Hermel, supra.
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. 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. Section 138.430.2. The Hearing Officer made inquiry of Complainant during the evidentiary hearing.
Weight to be Given Evidence
The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but 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).
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 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 transaction and adjusts those prices to account for difference 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 interest;
- A reasonable time is allowed for exposure in the open market;
- Payment is made in cash or its equivalent;
- Financing, if any, is on terms generally available in the community at the specified date and typical for the property type in its locale;
- The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction.
Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; see also, Real Estate Valuation in Litigation, J.D. Eaton, M.A.I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80’ Uniform Standards of Professional Appraisal Practice, Glossary.
Complainant and Respondent Prove Value
Both Complainant and Respondent presented substantial and persuasive evidence to establish the TVM of the subject property, as of January 1, 2019. Although both appraisals were somewhat persuasive, the Hearing Officer was persuaded the most by Complainant’s appraisal (Ex. 17) with Respondent’s appraisal supporting Complainant’s appraisal.
Baines, Respondent’s appraiser, did a highest and best use analysis which resulted in a conclusion that the subject’s highest and best use is as vacant. Although the subject property has some trees partially obstructing its lake view, all of the trees lie on the subject property and could be removed. Baines averaged the sales prices of his three comparables but did so after stating “[w]hile three sales do not present enough market evidence of all the factor needed in determining credible land values, they do indicate the upper limits of vacant land of properties with unimpeded lake views.” Consequently, the Hearing Officer is persuaded by Baines’ lowest per square foot value, Baines’ 25% downward adjustment, and Baines’ $20,000 deduction for demolition of the improvement on the subject property. This results in a figure of $231,107 (($15.22 x 21,998) x .75 -$20,000). Pryor, Complainant’s appraiser, concluded on a TVM of $240,000. This constitutes a difference of less than 4%. Given Baines’ statement about the “three sales [not presenting] enough market evidence of all the factors needed in determining credible land values” Complainant’s appraiser’s opined TVM of $240,000 will be accepted.
The assessed valuation for the subject property or the subject tax day is SET ASIDE.
The assessed value for the subject property for tax years 2019 and 2020 is set at $45,600.
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.
The Collector of Platte 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.
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, October 30, 2020.
STATE TAX COMMISSION OF MISSOURI
John J. Treu
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been electronically mailed and/or sent by U.S. Mail on October 30, 2020, to:
Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.
 All statutory citations are to RSMo. 2000, as amended.