State Tax Commission of Missouri
WEI LIU & WANG XUEYING,)
v.) Appeal No.07-13056
PHILIP MUEHLHEAUSLER, ASSESSOR,)
ST. LOUIS COUNTY,MISSOURI,)
DECISION AND ORDER
Decision of the St. Louis County Board of Equalization reducing the assessment made by the Assessor is SET ASIDE.Hearing Officer finds Complainants did not rebut the presumption of correct assessment by the Board.Respondent rebutted presumption of correct assessment by the Board and established value by clear, cogent and convincing evidence.True value in money for the subject property for tax years 2007 and 2008 is set at $720,000, residential assessed value of $136,800.
Complainant, Wei Liu, appeared pro se.
Respondent appeared by Counsel, Paula J. Lemerman, Associate County Counselor.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2007.
Complainants appeal, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which reduced the valuation of the subject property.The Assessor determined an appraised value of $720,000, assessed value of $136,800, as residential property.The Board reduced the value to $653,300, assessed value of $124,130.Complainants proposed a value of $580,000, assessed value of $110,200.A hearing was conducted on July 15, 2007, at theSt. LouisCountyGovernmentCenter,Clayton,Missouri.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
Mr. Liu testified on behalf of Complainants.He stated the owners’ opinion of value as of January 1, 2007 to be $580,000.The opinion was based upon his experience as a real estate broker and his evaluation of the market.In support of his opinion of value, Mr. Liu offered into evidence Exhibit A.
Exhibit A consisted of (1) sale data sheet on property at 6 Blaytonn Lane, Ladue, which sold in August, 2007; (2) sale data sheet on the subject property for its 2004 sale; and (3) listing of active and sold properties (2007 & 2008) from a multi-list service.Objection was made to Exhibit A on the grounds of hearsay, lack of foundation, relevance as to time of sales and comparability.The objection was sustained.Exhibit A is maintained in the appeal filed, but is not part of the evidentiary record in the appeal.
Respondent placed into evidence the testimony of Mr. Eric Hubbard, Missouri State Licensed Residential Real Estate Appraiser for St. LouisCounty.The appraiser testified as to his appraisal of the subject property.The Appraisal Report (Exhibit 1) of Mr. Hubbard was received into evidence.Mr. Hubbard arrived at an opinion of value for the subject property of $734,000 based upon a sales comparison approach to value.In performing his sales comparison analysis, the appraiser relied upon the sales of five properties deemed comparable to the subject property.
FINDINGS OF FACT
1.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.
2.The subject property is located at 23 Salem Estates Dr., Ladue, Missouri.The property is identified by parcel number 18M230277.The property consists of 30,444 (.70 of an acre) lot improved by a one-story brick, ranch, single-family structure of good quality construction.The house was built in 1963 and appears to be in good condition.The residence has a total of eight rooms, which includes three bedrooms, three full and one half bath, and contains 3,344 square feet of living area.There is a full basement, with 1,500 square feet of finish and a full bath.The home has an attached two-car garage. The property was purchased by Complainants in July, 2004 for $580,000.
3.There was no evidence of new construction and improvement from January 1, 2007, to January 1, 2008.
4.Complainants’ evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2007, to be $580,000, as proposed.
5.The properties relied upon by Respondent’s appraiser were comparable for the purpose of making a determination of value of the subject property. The five properties were located within less than a mile of the subject.Each sale property sold at a time relevant to the tax date of January 1, 2007 (6/05 – 12/06).The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability.
6.The appraiser made various adjustments to the comparable properties for differences which existed between the subject and each comparable.All adjustments were appropriate to bring the comparables in line with the subject for purposes of the appraisal problem.A substantial adjustment was required to four of the sale properties to account for their excellent condition as compared to the subject’s good condition.The net adjustments ranged from -9.9% to 5.1% of the sale prices.
7.The adjusted sales prices for the comparables calculated to $750,200, $698,650, $762,000, $698,400 and $732,600, respectively.The appraiser concluded on a $734,000 value which calculated to a value per square foot of $219.50 compared with the sales prices per square foot of living area for the comparables of $240.89, $224.70, $238.80, $244.92 and $261.46. The comparison of the value per square foot provides a validation check for the appraisal, to demonstrate that the indicated value is consistent with the market for properties such as the subject.The lower per square foot of living area indicated value for the subject is an appropriate reflection of the superior condition of four of the five sale properties.
8.Respondent’s evidence met the standard of substantial and persuasive to establish the value of the subject, as of January 1, 2007, to be $734,000.However, Respondent’s appraisal was accepted only to sustain the original assessment made by the Assessor and not for the purpose of raising the assessment above that value.Respondent met the standard of clear, convincing, and cogent evidence in this appeal to sustain the original valuation of $720,000.
CONCLUSIONS OF LAW AND DECISION
The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious.Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, RSMo.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.Section 138.431.4, RSMo.
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STC, 308 S.W.2d 748, 759 (Mo. 1958).The presumption in favor of the Board is not evidence.A presumption simply accepts something as true without any substantial proof to the contrary.In an evidentiary hearing before the Commission, the valuation determined by the Board is accepted as true only until and so long as there is no substantial evidence to the contrary.The presumption of correct assessment is rebutted when the taxpayer, or respondent when advocating a value different than that determined by the Board, presents substantial and persuasive evidence to establish that the Board’s valuation is erroneous and what the fair market value should have been placed on the property.Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).Complainants failed to present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board.Respondent presented substantial and persuasive evidence to rebut the presumption that the Board had correctly valued the subject property.
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.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).It is the fair market value of the subject property on the valuation date.Hermel, supra.
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.
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; Exhibit 1.
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, at 615 (Mo. App. W.D. 2000); Hermel, supra;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. Div. 2 1974).
Complainants did not present an opinion of value based upon any recognized appraisal methodology. Respondent’s appraiser developed an opinion of value relying upon an established and recognized approach for the valuation of real property, the sales comparison or market approach.The sales comparison approach is generally recognized to be the most reliable methodology to be utilized in the valuation of single-family residences.
Complainants’ Burden of Proof
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, 2007.Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, at 897. 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).
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.See, Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).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.Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).
The owner of property is generally held competent to testify to its reasonable market value.Rigali v. Kensington Place Homeowners’ Ass’n, 103 S.W.3d 839, 846 (Mo. App. E.D. 2003); Boten v. Brecklein, 452 S.W.2d 86, 95 (Sup. 1970).The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.Cohen v. Bushmeyer, 251 S.W.3d 345, (Mo.App. E.D., March 25, 2008); Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992); State, ex rel. Missouri Hwy & Transp. Com’n v. Pracht, 801 S.W.2d 90, 94 (Mo. App. E.D. 1990); Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965).
The opinion of value tendered by Mr. Liu was not tied to any recognized approach to the appraisal of real property.For all intents and purposes the opinion of value was simply the opinion that the property was worth the same as when Complainant’s purchased it two and a half years prior to the tax date.There was insufficient market data to establish that proposition.
Respondent’s adjusted market data established that properties comparable to the subject at a time relevant to January 1, 2007 were selling in at the per square foot of living area range of $208.85 – $227.87, at an average of $217.81.Complainants’ proposed value was only a per square foot value of $173.45.Respondent’s evidence clearly rebutted the position put forth by Complainants.
The information contained in the excluded Exhibit A does not constitute an appraisal under the rules of the Commission.12 CSR 30-3.065.Such real estate data is open to a multitude of factors of speculation and conjecture.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. 1980).Presentation of lists of sale properties or real estate data sheets essentially calls on the Hearing Officer to assume the role of an appraiser and to develop an appraisal utilizing the Complainants’ raw data.That is not the appropriate role for the Hearing Officer.Furthermore, given the generally recognized position that the real estate market in mid-2007 and thereafter was significantly down from the 2006 market, the validity of such sales data to establish value as of 1/1/07 is questionable.It is a further element of speculation which undermines any opinion of value that would be derived from such data.
The opinion of value presented by Mr. Liu was not based upon proper elements or a proper foundation.Therefore no probative weight can be given to it.Accordingly, the opinion of value stands alone without any substantiation.Such an opinion fails to establish the fair market value for the property under appeal.
Respondent’s Burden of Proof
Respondent, when advocating a value different from that determined by the Board of Equalization, 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, Cupples-Hesse, Brooks, supra.The Appraisal Report of Mr. Hubbard met the required standard, with regard to the value established by the Board.Exhibit 1 proved that the value of $653,300 was in error.
The Respondent has imposed upon him by the provisions of Section 137.115.1, RSMo, the burden of proof to present clear, convincing and cogent evidence to sustain a valuation on residential property which is made by a computer, computer-assisted method or a computer program.There is a presumption in this appeal that the original valuation, which was sustained by the Board of Equalization, was made by a computer, computer-assisted method or a computer program.There was no evidence to rebut the presumption, therefore, in order to sustain the valuation of the subject property at $720,000, appraised value, Respondent’s evidence must come within the guidelines established by the legislature and must clearly and convincingly persuade the Hearing Officer as to the value sought to be sustained.
The statutory guidelines for evidence to meet the standard of clear, convincing and cogent include the following:
(1)The findings of the assessor based on an appraisal of the property by generally accepted appraisal techniques; and
(2) The purchase prices from sales of at least three comparable properties and the address or location thereof.As used in this paragraph, the word comparable means that:
(a)Such sale was closed at a date relevant to the property valuation; and
(b)Such properties are not more than one mile from the site of the disputed property, except where no similar properties exist within one mile of the disputed property, the nearest comparable property shall be used.Such property shall be within five hundred square feet in size of the disputed property, and resemble the disputed property in age, floor plan, number of rooms, and other relevant characteristics.
Section 137.115.1(1) & (2).
Clear, cogent and convincing evidence is that evidence which clearly convinces the trier of fact of the affirmative proposition to be proved.It does not mean that there may not be contrary evidence.Grissum v. Reesman, 505 S.W.2d 81, 85, 86 (Mo. Div. 2, 1974).The quality of proof, to be clear and convincing must be more than a mere preponderance but does not require beyond a reasonable doubt.30 AmJur2d. 345-346, Evidence section 1167.“For evidence to be clear and convincing, it must instantly tilt the scales in the affirmative when weighed against the evidence in opposition and the fact finder’s mind is left with an abiding conviction that the evidence is true.”Matter of O’Brien, 600 S.W.2d 695, 697 (Mo. App. 1980).
Respondent presented substantial and persuasive evidence to establish a fair market value as of January 1, 2007, to be $734,000 for the subject.However, in any case in St. Louis County where the assessor presents evidence which indicates a valuation higher than the value finally determined by the assessor or the value determined by the board of equalization, whichever is higher, for that assessment period, such evidence will only be received for the purpose of sustaining the assessor’s or board’s valuation, and not for increasing the valuation of the property under appeal.Section 138.060, RSMo; 12 CSR 30-3.075.Therefore, Respondent’s evidence was received only to sustain the Assessor’s original value of $720,000.The Hubbard appraisal report constituted clear, cogent and convincing evidence that the subject property, as of January 1, 2007 was worth at least $720,000.
The assessed valuation for the subject property as determined by the Board of Equalization forSt. LouisCountyfor the subject tax day is SET ASIDE.The assessed valuation as established by the Assessor is AFFIRMED.
The assessed value for the subject property for tax years 2007 and 2008 is set at $136,800.
Complainants may file with the Commission an application for review of this decision within thirty (30) days of the mailing of such decision.The application shall contain specific 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, MO65102-0146, 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 appeal is based will result in summary denial.Section 138.432, RSMo 2000.
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 a filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of 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 August 7, 2008.
STATE TAX COMMISSION OFMISSOURI
W. B. Tichenor
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 7thday of August, 2008, to:Wei Liu, 23 Salem Estates Drive, St. Louis, MO 63124, Complainant; Paula Lemerman, Associate County Counselor, County Government Center, 41 South Central Avenue, Clayton, MO 63105, Attorney for Respondent; Philip Muehlheausler, Assessor, County Government Center, 41 South Central Avenue, Clayton, MO 63105; John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.
W. B. Tichenor, Senior Hearing Officer