White Oak Holding LLC Et al v. Rick Kessinger, Assessor Greene County

IN THE STATE TAX COMMISSION OF MISSOURI

White Oak Holding, LLC	)	Appeal Nos.	15-33068
Starwood Realty, LLC	)		15-33069
White Oak Holding, LLC	)		15-33071
Starwood Realty LLC	)		15-33076
White Oak Holding LLC	)		15-33077
White Oak Holding LLC	)		15-33078
White Oak Holding LLC	)		15-33079
Starwood Realty LLC	)		15-33080
White Oak Holding LLC	)		15-33081
White Oak Holding LLC	)		15-33082
White Oak Holding LLC	)		15-33083
White Oak Holding LLC	)		15-33084
White Oak Holding LLC	)		15-33085
White Oak Holding LLC	)		15-33086
White Oak Holding LLC	)		15-33087
White Oak Holding LLC	)		15-33088
White Oak Holding LLC	)		15-33089
White Oak Holding LLC	)		15-33090
White Oak Holding LLC	)		15-33091
White Oak Holding LLC	)		15-33092
White Oak Holding LLC	)		15-33093
White Oak Holding LLC	)		15-33094
Starwood Realty LLC	)		15-33095
White Oak Holding LLC	)		15-33096
White Oak Holding LLC	)		15-33097
Complainants,	) )
v.	) )
Rick Kessinger, ASSESSOR.	)
GREENE COUNTY, MISSOURI, Respondent.	)

 

 

DECISION AND ORDER

HOLDING

The decisions of the Greene County Board of Equalization (BOE) independently valuing the subject properties in these appeals at the same amount as the valuations made by Rick Kessinger, Assessor, Greene County, Missouri, (Respondent) are AFFIRMED.  White Oak Holding, LLC, and Starwood Realty, LLC, (Complainants) did not present substantial and persuasive evidence to rebut the presumption of correct assessment of each of the subject properties as of January 1, 2015.

For efficiency, the appeals have been consolidated in this Decision and Order.

Complainants appeared by counsel Steve Crawford.^[1]

Respondent appeared personally and by counsel Aaron Klusmeyer.

Appeals decided by Senior Hearing Officer Amy S. Westermann (Hearing Officer).

ISSUE

Complainants appealed on the ground of overvaluation.  As shown in Decision Exhibit A, attached to this Decision and Order, Respondent initially set the true market value (TMV) of the subject properties, as residential properties, and the BOE independently valued the subject properties at the same amount as the valuations Respondent’s valuations.  The State Tax Commission (STC) takes these appeals to determine the TMV of the subject properties on January 1, 2015.

The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

FINDINGS OF FACT

1. Jurisdiction. Jurisdiction over these appeals is proper.  Complainant timely appealed to the State Tax Commission (STC) from the decisions of the BOE.
2. Evidentiary Hearing. In December 2016, the parties appeared at a Pre-hearing Conference with the Hearing Officer at the Greene County Historic Courthouse, 940 North Booneville Avenue, Springfield, Missouri.  At the conclusion of the Pre-hearing Conference, the parties indicated that they would continue to discuss the possible resolution of some of the appeals but agreed to submit most of the appeals on the evidence and exhibits, including Written Direct Testimony (WDT), without an evidentiary hearing.  The parties subsequently filed their Joint Waiver of Evidentiary Hearing, which was granted.  The parties also submitted a signed stipulation as to Appeal No. 15-33073.  Later, in February 2017, the parties provided the Hearing Officer with a status update regarding Appeal No. 15-33076 stating that the parties were unable to resolve that appeal through settlement and wished to have the appeal decided on the record of exhibits and evidence along with the other remaining pending appeals.[2]  The Hearing Officer informed the parties that Appeal No. 15-33076 would be taken under advisement along with the other remaining pending appeals.
3. Identification of Subject Property. As shown in Decision Exhibit A, the subject properties are identified by parcel numbers and street addresses in Springfield and in Republic, Greene County, Missouri.  Complainants rent the subject properties to residential tenants.     
4. Assessment. Respondent’s appraised values of the subject properties, classified as residential property, are listed according to their parcel numbers as shown in Decision Exhibit A.
5. Board of Equalization. The BOE sustained Respondent’s appraised value of the subject properties as shown in Decision Exhibit A.
6. Complainants’ Evidence. Complainants offered the following Exhibits to support their opinion of the TMV of the subject properties as of January 1, 2015:

APPEAL NUMBER	EXHIBITS	BRIEF DESCRIPTION
15-33068	NONE	No Exhibits filed with the STC.
15-33069	A B C	Written Direct Testimony of Steve Crawford, Member/Owner of Starwood Realty, LLC Receipts for repairs after purchase MLS listing
15-33071	NONE	No Exhibits filed with the STC.
15-33076	A B C D	Written Direct Testimony of Steve Crawford, Member/Owner of Starwood Realty, LLC Receipts for repairs after purchase Sale contract Comparable sale next door contract (This exhibit was not included in the filed exhibits even though it was listed on the coverpage for all of the exhibits.)
15-33077	NONE	No Exhibits filed with the STC.
15-33078	A B C D E	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Receipts for repairs after purchase Assessor comparables Sale contract Final page of Uniform Residential Appraisal Report dated 1/13/2012
15-33079	A B C D	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Assessor comparables Sale contract Final page of Uniform Residential Appraisal Report dated 3/20/2012
15-33080	A B C D	Written Direct Testimony of Steve Crawford, Member/Owner of Starwood Realty, LLC Receipts for repairs after purchase Sale contract Assessor comparables
15-33081	A B	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Assessor comparables
15-33082	A B C D	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Receipts for repairs after purchase Sale contract Assessor comparables
15-33083	A B C D	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Receipts for repairs after purchase Comparable properties Sale contract
15-33084	A B C D	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Receipts for repairs after purchase Final page of Uniform Residential Appraisal Report dated 10/9/2013 Assessor comparables
15-33085	A B	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Assessor comparables
15-33086	A B	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Sale contract
15-33087	A B	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Receipts for repairs after purchase
15-33088	A B C   D E	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Receipts for repairs after purchase “Flood plain docs” (This exhibit was not included in the filed exhibits even though it was listed on the coverpage for all of the exhibits.) Assessor comparables Sale contract
15-33089	A B C   D E	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Receipts for repairs after purchase “Flood plain docs” (This exhibit was not included in the filed exhibits even though it was listed on the coverpage for all of the exhibits.) Assessor comparables Sale contract
15-33090	A B C   D	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Receipts for repairs after purchase Assessor comparables Sale contract (This exhibit was not included in the filed exhibits even though it was listed on the coverpage for all of the exhibits.)
15-33091	A B C	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Sale contract Assessor comparables
15-33092	A B C D	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Photographs taken by Respondent’s Office Receipts for repairs after purchase Assessor comparables
15-33093	A B C D	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Comparable properties Receipts for repairs after purchase Final page of Uniform Residential Appraisal Report dated 6/14/2012
15-33094	A B	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Assessor comparables
15-33095	A B C	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Receipts for repairs after purchase Sale contract
15-33096	A B C D	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Assessor comparables Sale contract Assessor’s 2BR listing (This exhibit was not included in the filed exhibits even though it was listed on the coverpage for all of the exhibits.)
15-33097	A B	Written Direct Testimony of Steve Crawford, Member/Owner of White Oak Holding, LLC Assessor comparables

 

Respondent filed written objections to Complainants’ exhibits in each case^[3] on multiple grounds, such as:  Mr. Crawford was not a qualified expert in appraisal or comparable sales analysis and some of his WDT questions and answers should be excluded; certain exhibits were not provided to Respondent and should be excluded; some exhibits lacked authentication and/or foundation and should be excluded as hearsay; and certain exhibits did not conform to the best evidence rule and should be excluded.  Nothwithstanding Respondents’ numuerous objections, Complainants’ exhibits and evidence are received into the record to be given the consideration and weight deemed proper under the fundamental rules of evidence.  12 CSR 30-3.010(5).

7. Respondent’s Evidence. Respondent offered the following Exhibits to support his opinion of TMV of the subject properties as of January 1, 2015:

APPEAL NUMBER	EXHIBITS	BRIEF DESCRIPTION
15-33068	1 2	Written Direct Testimony of Sandra Burnett Appraisal Report of Sandra Burnett
15-33069	1 2	Written Direct Testimony of Andrea Burton Appraisal Report of Andrea Burton
15-33071	1 2	Written Direct Testimony of Andrea Burton Appraisal Report of Andrea Burton
15-33076	1 2	Written Direct Testimony of Andrea Burton Appraisal Report of Andrea Burton
15-33077	1 2	Written Direct Testimony of Kelli Featherstone Appraisal Report of Kelli Featherstone
15-33078	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33079	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33080	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33081	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33082	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33083	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33084	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33085	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33086	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33087	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33088	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33089	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33090	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33091	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33092	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33093	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33094	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33095	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33096	1 2	Written Direct Testimony of John Stiber Appraisal Report of John Stiber
15-33097	1 2	Written Direct Testimony of Sandra Burnett Appraisal Report of Sandra Burnett

 

Complainants did not file any objections to Respondent’s Exhibits, which are received into the record.

8.   Presumption of Correct Assessment Not Rebutted.  Complainants’ evidence was not substantial and persuasive to rebut the presumption of correct assessment by the BOE.

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.  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 (TMV) for the property under appeal.  By statute, real property and tangible personal property are assessed at set percentages of TMV:  residential property at 19%; commercial property at 32%; and agricultural property at 12%.  Section 137.115.5 RSMo (2000) as amended.

Issuance of Decision Absent Evidentiary Hearing

                The Hearing Officer, after affording the parties reasonable opportunity for fair hearing, shall issue a decision and order affirming, modifying or reversing the determination of the BOE, correcting any assessment which is unlawful, unfair, improper, arbitrary or capricious.  Section 138.431.5 RSMo; 12 CSR 30-3.080 (2).   In these cases, following a Pre-hearing Conference in which the parties appeared before the Hearing Officer, the parties agreed to submit these appeals upon the record of exhibits and evidence.  In all but three of the appeals, Complainant filed exhibits and evidence that included the written direct testimony of Mr. Crawford as owner/member of Complainants’ organizations, some receipts for repairs made to some of the subject properties, and data related to comparable properties.  Respondent filed the written direct testimony of several appraisers and the reports of the appraisers to support Respondent’s argument that the BOE’s valuations as to each of the subject properties should be affirmed.

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.

In this case, the parties agreed to submit the case on the record of exhibits and evidence they would have presented at an evidentiary hearing.  Accordingly, the Hearing Officer’s decision is based upon the exhibits and evidence submitted, all of which have been received into the record.

Presumption In Appeal

There is a presumption of validity, good faith and correctness of assessment by the BOE.  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).  This presumption is a rebuttable rather than a conclusive presumption.   The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the BOE’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).

“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., 329 S.W.2d at 702.  Persuasive evidence is evidence that has sufficient weight and probative value to convince the trier of fact.  Id.  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).

Board Presumption and Computer-Assisted Presumption

            There exists a presumption of correct assessment by the BOE – the BOE presumption.  The BOE presumption operates in every case to require the taxpayer to 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.

In the present appeals, the BOE independently valued the properties at the same amount as Respondent’s valuations.  Complainants are now seeking to lower the BOE’s valuations.  Respondent presented evidence in the form of expert testimony and appraisal reports that found the TMV of the subject properties to be higher than the BOE valuations, but Respondent’s evidence was offered to support the validity of the BOE valuations, not to prove a value different than that set by the BOE.  Consequently, in these appeals, the BOE presumption, which requires Complainants to present evidence to rebut the presumption, applies.

Complainants’ Burden of Proof

To obtain a reduction in assessed valuation based upon an alleged overvaluation, Complainants must prove the TMV of the subject property on the subject tax day.  Hermel, Inc., v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978).  TMV 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).  TMV 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, TMV 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).

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, 2016.  Hermel, supra.   There is no presumption that Complainants’ opinion is correct. The taxpayer in an STC appeal still bears the burden of proof because the taxpayer is the moving party seeking affirmative relief.   Therefore, the Complainants bear 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 true market value of the property under appeal is an unlawful, unfair and improper assessment.

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).

Weight to be Given Evidence

The Hearing Officer is not bound by any single formula, rule, or method in determining TMV 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).

Methods of Valuation

Proper methods of valuation and assessment of property are delegated to the STC.  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:

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.

The cost approach may be based on either reproduction cost or replacement cost.  The reproduction cost, or cost of construction, is a determination of the cost of constructing an exact duplicate of an improved property using the same materials and construction standards.  The replacement cost is an estimate of the cost of constructing a building with the same utility as the building being appraised but with modern materials and according to current standards, design and layout.

The cost approach is most appropriate when the property being valued has been recently improved with structures that conform to the highest and best use of the property or when the property has unique or specialized improvements for which there are no comparables in the market.

While reproduction cost is the best indicator of value for newer properties where the actual costs of construction are available, replacement cost may be more appropriate for older properties.  Snider, 156 S.W. 3d. at 347 (citations omitted).

The income approach determines value by estimating the present worth of what an owner will likely receive in the future as income from the property.  The income approach is based on an evaluation of what a willing buyer would pay to realize the income stream that could be obtained from the property when devoted to its highest and best use.

When applying the income approach to valuing business property for tax purposes, it is not proper to consider income derived from the business and personal property; only income derived from the land and improvements should be considered.  This approach is most appropriate in valuing investment-type properties and is reliable when rental income, operating expenses and capitalization rates can reasonably be estimated from existing market conditions. The initial step in applying the income approach is to find comparable rentals and make adjustments for any differences.  Snider, 156 S.W. 3d. at 347 (citations omitted).

Discussion

In these appeals, Complainants’ evidence was neither substantial nor 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.

Appeal Nos. 15-33068, 15-33071, and 15-33077

Complainant White Oak Holding, LLC, owns the subject properties in Appeal Nos. 15-33068, 15-33071, and 15-33077.  White Oak Holding, LLC, did not file exhibits and evidence with the STC to support the proposed TMV stated on the complaints for review associated with these three appeals; thus, White Oak Holding, LLC, did not meet its burden of proving the TMV of the subject properties by substantial and persuasive evidence.

However, in all three of these appeals, Respondent presented evidence based on the sales comparison approach to support an opinion that the BOE’s determinations as to the TMV of the subject properties as of January 1, 2015, was correct.  Respondent submitted the WDT of state certified residential real estate appraisers along with their appraisal reports.  In each of the reports, the appraisers used comparable sales to determine a range of values for comparable properties.  The appraisers specifically testified that they did not use the cost approach or the income approach to estimating value due to the ages of the subject properties and the lack of available data.  In all three appeals, the appraisers opined that the market value of the subject properties fell within a range of values indicated by the sale prices of the comparable properties and market-based adjustments to those sale prices.  Upon reviewing the testimony of the appraisers along with their analysis of the comparable properties contained in the appraisal reports, it is reasonable to conclude that the BOE’s determinations as the TMV of the subject properties in Appeal Nos. 15-33068, 15-33071, and 15-33077 as of January 1, 2015, was correct.

The Remaining Appeals

Complainants Starwood Realty, LLC, and White Oak Holding, LLC, own the subject properties involved in the remaining appeals.  Although Complainants filed exhibits related to all of these remaining appeals, Complainants did not meet their burden of proving the TMV of the subject properties by substantial and persuasive evidence for several reasons.

Complainants submitted the WDT of Mr. Crawford.  Mr. Crawford did not testifiy that he is a state certified residential real estate appraiser; rather, Mr. Crawford testified that he is the owner of “the LLC that owns” the subject property in each appeal.  Mr. Crawford testified that the subject properties were in “poor condition” when Complainants purchased them.  Mr. Crawford testified that the subject properties had not been “fixed up, improved or cared for.”  Complainants submitted receipts for repairs or replacement items for many of the subject properties.  Complainants submitted copies of the MLS listing or the sale contract for some of the subject properties.  Complainants also submitted raw data regarding properties comparable to the subject properties.

Even if all of Complainants’ exhibits were free from evidentiary concerns such as lack of foundation and hearsay, Complainants’ evidence did not support Mr. Crawford’s opinions of TMV of the subject properties.  Regardless of whether Mr. Crawford could be considered, by extension, the “owner” of the subject properties, he is competent to testify as to his opinion of TMV only if his opinion is based on a proper foundation.  If the evidence presented to support his opinion is speculative, the owner’s opinion loses its probabitve value.  Cohen, 251 S.W.3d at 348-49; Carmel Energy, Inc., 827 S.W.2d at 783.  Here, Mr. Crawford’s opinions of TMV were not based on a proper foundation.  First, on the whole, Complainants’ evidence indicates that Complainants’ purchases of the subject properties were not typical sales between similarly motivated buyers and sellers but were below-market sales.^[4]  Second, although several of Complainants’ exhibits included parts of appraisal reports for some of the subject properties, the full reports showing the nature of the appraisers’ analyses of comparable properties and any market adjustments to the sale prices of the comparables were not provided.  Furthermore, some of the appraisals had been conducted more than a year prior to the subject tax date of January 1, 2015.  Third, with regard to the receipts for repairs and replacements Complainants made to the subject properties, Complainants’ presented no evidence specifically linking Mr. Crawford’s opinion of TMV to the cost of the repairs and replacements to the subject properties.  The replacement cost is an estimate of the cost of constructing a building with the same utility as the building being appraised but with modern materials and according to current standards, design and layout.  Simply subtracting the cost of repairing or replacing defunct or deteriorated components of the subject properties from the BOE’s assessment is not a proper method for determining the market impact of the repairs on TMV.  Fourth, the lists of raw data of “comparables” in the vicinity of the subject properties and the copies of “Assessor comparables” are not supportive of Mr. Crawford’s opinion of TMV because it is illogical to conclude that the comparable properties were properly assessed while the subject properties were overvalued.

While Respondent was not required to present any evidence to support the BOE’s determinations of TMV in these appeals, a review of Respondent’s evidence compels the conclusion that the BOE’s valuations were correct.  Notably, state certified residential real estate appraisers – experts in the field of appraisal – conducted appraisals of each of the subject properties.  In each report, the appraisers researched and analyzed sales of comparable properties, reasonably related in time to January 1, 2015, and in distance to the subject properties, and made market-based adjustments to the sale prices to form a range of values.  In each report, the appraisers concluded that the subject property fell within that range of values.

ORDER

In each of these appeals, which are listed in Decision Exhibit A, the assessed valuations of the subject properties as determined by the BOE for the subject tax day are AFFIRMED.

Application for Review

A party may file with the Commission an application for review of this decision within 30 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.  The 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 Greene 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 this 16^th day of August, 2017.

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 16^th day of August, 2017, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.

Jacklyn Wood

Legal Coordinator

 

Contact Information for State Tax Commission:

Missouri State Tax Commission

301 W. High Street, Room 840

P.O. Box 146

Jefferson City, MO 65102-0146

573-751-2414

573-751-1341 Fax

 

DECISION EXHIBIT A
APPEAL NUMBER	PARCEL/LOCATOR NUMBER	OWNER/COMPLAINANT	ADDRESS	RESPONDENT’S TMV	BOE’S TMV	COMPLAINANTS’ PROPOSED TMV[5]
15-33068	1322318014	White Oak Holding, LLC	2422 W. Bodeb, Springfield, MO	$76,900	$76,900	$38,000
15-33069	1810204007	Starwood Realty, LLC	2606 W. Primrose, Springfield, MO	$70,600	$70,600	$54,900
15-33071	1801106023	White Oak Holding, LLC	811 E. Woodland, Springfield, MO	$85,000	$85,000	$70,000
15-33076	1813201152	Starwood Realty, LLC	4528-B S. Jefferson, Springfield, MO	$72,100	$72,100	$44,935
15-33077	1918408025	White Oak Holding, LLC	1565 E. Briar, Springfield, MO	$118,800	$118,800	$90,000
15-33078	1721100036	White Oak Holding, LLC	308 N. Teakwood, Republic, MO	$70,100	$70,100	$41,700
15-33079	1721100038	White Oak Holding, LLC	210 N. Teakwood, Republic, MO	$70,100	$70,100	$42,550
15-33080	1721200187	Starwood Realty, LLC	117 N. Oakwood, Republic, MO	$69,100	$69,100	$59,000
15-33081	1721200235	White Oak Holding, LLC	125 N. Wynwood, Republic, MO	$70,300	$70,300	$43,000
15-33082	1721200229	White Oak Holding, LLC	110 N. Drenda, Republic, MO	$69,800	$69,800	$47,000
15-33083	1721200249	White Oak Holding, LLC	206 N. Wynwood, Republic, MO	$71,500	$71,500	$60,000

 

 

15-33084	1721400035	White Oak Holding, LLC	108 S. Teakwood, Republic, MO	$73,800	$73,800	$54,000
15-33085	1721300010	White Oak Holding, LLC	144 S. Pinewood, Republic, MO	$68,400	$68,400	$40,000
15-33086	1721200378	White Oak Holding, LLC	1732 E. Lee, Republic, MO	$91,100	$91,100	$64,500
15-33087	1319102003	White Oak Holding, LLC	220 S. Casa Grande, Springfield, MO	$67,400	$67,400	$37,800
15-33088	1624400023	White Oak Holding, LLC	1029 W. Crestview Lane, Republic, MO	$87,400	$87,400	$62,000
15-33089	1624400052	White Oak Holding, LLC	1031 W. Ridgecrest, Republic, MO	$86,700	$86,700	$72,500
15-33090	1718407002	White Oak Holding, LLC	644 N. Phelps, Republic, MO	$39,400	$39,400	$14,000
15-33091	1730300098	White Oak Holding, LLC	1350 S. Concordia, Republic, MO	$88,200	$88,200	$66,500
15-33092	1717402007	White Oak Holding, LLC	1020 N. Boston Lane, Republic, MO	$69,400	$69,400	$42,500
15-33093	1721400051	White Oak Holding, LLC	104 S. Cedarwood, Republic, MO	$70,500	$70,500	$44,000
15-33094	1730200024	White Oak Holding, LLC	706 S. Countryside, Republic, MO	$86,500	$86,500	$72,500
15-33095	1730200030	Starwood Realty, LLC	608 S. Countryside, Republic, MO	$86,700	$86,700	$79,000
15-33096	1730300057	White Oak Holding, LLC	622 Danielle, Republic, MO	$93,000	$93,000	$68,000
15-33097	1321123033	White Oak Holding, LLC	2920 W. Lincoln, Springfield, MO	$78,100	$78,100	$46,000

 

^[1] According to the record in these cases, Mr. Crawford also is a member/owner of each of the Complainant LLCs.

 

^[2] Appeal No. 15-33076 was included in the Joint Waiver of Evidentiary Hearing and subsequent order.

^[3] With regard to Appeal Nos. 15-33068, 15-33071, and 15-33077, Respondent filed Objections to Complainant’s Exhibits and Written Direct Testimony of Mr. Crawford and to Exhibit B even though no such WDT and no Exhibit B were filed with the STC in those particular cases.

^[4] The sale contracts Complainants submitted in Appeal Nos. 15-33069, 15-33076, 15-33078, 15-33079, 15-33080, 15-33082, 15-33083, 15-33086, 15-33088, 15-33089, 15-33091, 15-33095, and 15-33096 showed that Complainants purchased the properties through foreclosure sales, distressed sales, government sales, or bank sales.

^[5] Complainants’ proposed TMVs for the subject properties were reported by Complainants’ on their Complaints for Review of Assessment filed with the STC.  In several appeals, however, Complainants presented the WDT of Mr. Crawford stating that Complainants’ opinions of TMV actually were within a few thousand dollars of the BOE’s valuations. For example, in Appeal No. 15-33087, the BOE’s determination of TMV was $68,400.  In Mr. Crawford’s WDT related to Appeal No. 15-33087, Mr. Crawford stated that he believed the subject property to be valued at $64,000 and that White Oak Holding, LLC, had purchased the subject property for $37,800 in 2014.