State Tax Commission of Missouri
v.) Appeal Number 08-10074
PHILIP MUEHLHEAUSLER, ASSESSOR,)
ST. LOUIS COUNTY,MISSOURI,)
DECISION AND ORDER
Decision of the St. Louis County Board of Equalization sustaining the assessment made by the Assessor is AFFIRMED.True value in money for the subject property for tax year 2008 is set at $412,900, residential assessed value of $78,450.Complainant appeared pro se.Respondent appeared by Associate County Counselor, Paula J. Lemerman. 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, as the property existed and was improved on January 1, 2008.
Complainant appeals, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property.The Assessor determined an appraised value of $412,900, assessed value of $78,450, as residential property.Complainant proposed a value of $384,399 in the Complaint for Review of Assessment.A hearing was conducted on April 21, 2009, at the St. LouisCountyGovernmentCenter,Clayton,Missouri.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
Complainant testified in his own behalf.He stated his opinion of value to be $332,500.This opinion was based upon the computer adjusted value of a single sale for a preliminary valuation of the subject property by the assessor for the 2009-10 assessment cycle.Complainant tendered Exhibit A – Assessor’s Comparable Sales from Assessor’s website on a preliminary valuation of the subject property.
Counsel for Respondent objected to the exhibit on the ground it was only a tentative valuation by the Assessor and that it was a value for the 2009 assessment cycle and not for the 2007 cycle.The objection was sustained.Exhibit A is maintained in the Commission file, but was not received into the record.
Respondent placed into evidence the testimony of Mr. Arthur Froeckmann, Missouri State Certified 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. Froeckman was received into evidence.Mr. Froeckman arrived at an opinion of value for the subject property of $430,000 based upon a sales comparison approach to value.The opinion determined under the sales comparison approach was based upon the sales of three properties. The appraiser also performed a cost approach.It yielded an indicated value of $432,800.
Complainant objected to Exhibit 1 on the ground that Comparable 1 had sold in May 2005 and that this sales date was too remote from the 1/1/07 valuation date due to the real estate market being lower in 2007 than in 2005.Objection was overruled. See, Respondent’s Burden of Proof, Objection to Exhibit 1, infra.
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 800 North Woods Mill Road, Chesterfield, Missouri.The property is identified by parcel number 17Q520751.The property consists of .32 of an acre lot improved by a two-story brick and vinyl single-family structure of good quality construction.The house was built in 2007 and appears to be in good condition.The residence has a total of nine rooms, which includes four bedrooms, three full and one half baths, and contains 3,183 square feet of living area.There is a full unfinished basement and an attached three-car garage. The subject lot was purchased in 2006 for $113,000 and the house was constructed in 2007 for a cost of $337,499, for a total cost of lot and improvements of $450,499.
4.Complainant’s 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 $332,500, as proposed.
5.The properties relied upon by Respondent’s appraiser in performing his appraisal were comparable to the subject property for the purpose of making a determination of value of the subject property. The three properties were located within .6 to less than .9 of a mile from the subject.Each sale property sold at a time relevant to the tax date of January 1, 2007.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.The net adjustments ranged from 5.8% to -11.3%.
7.The adjusted sales prices for the comparables calculated to $430,300, $435,000 and $411,900, respectively.The appraiser concluded on a $430,000 value which calculated to a value per square foot of $135.09 compared with the sales prices per square foot of living area for the comparables of $165.91, $157.82 and $141.74. 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 indicated per square foot value falling just below the lower end of the market range provides validation that the value established by the Froeckmann appraisal is appropriate to and reflective of the market for the subject property.
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 $430,000.However, Respondent’s appraisal was accepted only to sustain the original assessment made by the Assessor and sustained by the Board and not for the purpose of raising the assessment above that value.Respondent meet the standard of clear, convincing and cogent evidence in this appeal to sustain the original valuation of $412,900.
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.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.
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.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, even if simply to sustain the value made by the Assessor, 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.The presumption in favor of the Board was not rebutted by Complainant’s opinion of value.Therefore, under this case law standard the Board’s value must be affirmed.However, because the value determined by the Board is identical to the Assessor’s valuation presumed to be the product of a computer assisted methodology, a further analysis is required.That analysis is set out below under Respondent’s Burden of Proof.
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.True value in money is defined in terms of value in exchange and not value in use.It is the fair market value of the subject property on the valuation date.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.
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.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.Respondent’s appraiser developed two of the three recognized approaches to value, i.e. cost and sales comparison.Complainant did not present an opinion of fair market value derived from a standard methodology.Accordingly, probative weight can be given to the opinion of value presented by Mr. Froeckmann, while none can be given to Complainant’s opinion.
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, 2007.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.”
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.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.
The owner of property is generally held competent to testify to its reasonable market value.The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.Mr. Wu’s opinion of value of $332,500 testified to at the hearing was not supported by any reliable indicator of the fair market
value of the property as improved in 2007, as if the improvements had been in place on
January 1, 2007.
Exclusion of Exhibit A
Exhibit A proffered by Complainant was excluded from evidence upon timely objection by Counsel for Respondent.Therefore, it is not a part of the evidentiary record in this appeal and provides no basis for a determination of value as of January 1, 2007.Nevertheless, in order to explain the sustaining of the Respondent’s objection and exclusion of the document it is necessary to discuss in some detail the fatal deficiencies in Exhibit A.
The first problem with Exhibit A is that it was not established that the indicated value given in the document was the final value determined by the Assessor for the property, or if it was simply a preliminary estimation.The next deficiency is that the indicated value for the subject property reflects a value as of January 1, 2009, not the tax date in this appeal of
January 1, 2007.The market value estimate for 2009 is $363,200, not $332,500 as tendered by Mr. Wu as his opinion for the property as of January 1, 2008, under the economic conditions as of January 1, 2007.The final flaw with the Exhibit is that to place any reliance on it would require the use of sales of properties from 2007 to value the subject property as of January 1, 2007.
The Commission has recently addressed the issue of utilization of sales data after the tax date in four appeals from St. Louis City.In the May cases, the Commission found that the Hearing Officer committed reversible error in receiving closing statements into evidence showing sales occurring after the valuation date due to the fact that sales occurring after the valuation date are irrelevant for purposes of a determination of fair market value.Therefore, Exhibit A is inadmissible on the same ground as established by the Commission with regard to closing statements in the May appeals.The sales data on the three properties listed in Exhibit A are for sales occurring after the date of January 1, 2007, and therefore are irrelevant for purposes of a determination of fair market value as of that date.
For all the foregoing reasons, Exhibit A was excluded from evidence.
An owner’s opinion not supported by relevant market data is founded upon improper elements and has no evidentiary foundation.Mr. Wu’s reliance on an adjusted value for a single sale property after January 1, 2007, has no probative weight in this appeal.
Complainant failed to meet the required standard of proof to establish fair market value for the property as improved on January 1, 2008, under the economic conditions existing on January 1, 2007, due to the subject lot having been improved by the construction of a new home in the year 2007.
Evidence of Increase in Value
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.Therefore, the valuation tendered by Mr. Froeckmann was received only for the purpose of sustaining the assessor’s original valuation of $412,900 and not for increasing the value to $430,000.
Respondent’s Burden of Proof
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 $412,900, 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.
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.The quality of proof, to be clear and convincing must be more than a mere preponderance but does not require beyond a reasonable doubt.“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.”
The appraisal report of Mr. Froeckmann constitutes clear and convincing evidence that the subject property’s value as improved in 2007 would have been at least $412,900 on
January 1, 2007.Accordingly, the Assessor’s original value sustained by the Board must be affirmed.
Use of 2007 Sale
Mr. Froeckmann placed in his sales grid, information on the 2007 sale of the property next to Complainant’s home.This was the property on which Mr. Wu based his value of $332,500.Mr. Froeckman’s adjustment to this property rebuts any conclusion that the computer generated valuation illustrated in Exhibit A represented an appropriate value for the subject as of January 1, 2007.However, the appraiser placed no weight on this sale due to it having occurred after the valuation date of January 1, 2007.This is consistent with the Commission determination on this point in the May cases discussed above.The inclusion of this data in Exhibit 1 is not ground for exclusion of the appraisal report.The sales data was for informational purposes only and did not form the basis for the appraiser’s opinion of fair market value.
Objection to Exhibit 1
Complainant’s objection to Exhibit 1 was not well taken.The use of a sale from May 2005 is not to remote from the January 1, 2007, valuation date as to exclude the appraisal report.The object goes to the weight to be given that sales information as adjusted by the Appraiser and not to whether the appraisal report is admissible.The ground for objection was not established by relevant evidence at hearing.
Mr. Wu testified to the general slump in the real estate market from 2005 to 2007.Taxpayers often want to rely upon media reports on economic conditions to bolster their claims of overvaluation.However, news reports from whatever media source are mere hearsay.They have no relevance to the issue of the value of a specific property in an appeal before the Commission.Accordingly, they are not probative on the issue of the fair market value of any given property.
More importantly, in the present appeal, as has been the case in other appeals where the taxpayer wants the Hearing Officer to consider a slump in the real estate market, no scientific data has been presented to establish what if any change in value has been occasioned for a given area where a property under appeal is located.In other words, without a valid survey showing appropriate paired sales analysis to establish that for a given market strata in which a subject property would fall there was a decrease in values, it is nothing more than mere speculation and pure conjecture to assert that the value for a given sale comparable or for a given subject property has decreased in a set period of time.
While the Hearing Officer is aware of news reports and articles regarding the current real estate market and the markets of 2005, 2006, 2007 and 2008, that knowledge is not evidence in any given hearing.It is hearsay information, outside the record and can be given no consideration in arriving at fair market value, or in ruling on the admissibility of evidence in a given case.
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Louis County for the subject tax day is AFFIRMED.
The assessed value for the subject property for tax year 2008 is set at $78,450.
Complainant 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.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, MO65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.
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 April 29, 2009.
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 29thday of April, 2009, to:Wei Wu, 800 N. Woods Mill Rd., Chesterfield, MO 63017, Complainant; Paula Lemerman, Associate County Counselor, Attorney for Respondent, County Government Center, 41 South Central Avenue, Clayton, MO 63105; 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.
 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).
 Daly v. P. D. George Company, et al, 77 SW3d 645, 649 (Mo.App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 SW2d 376, 380 (Mo.App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).
 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.
 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).
 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).
 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).