HENRY & DOROTHEA HOENER,	)
	)
Complainants,	)
	)
v.	)		Appeal Number 03-10077
	)
PHILIP MUEHLHEAUSLER, ASSESSOR,	)
ST. LOUIS COUNTY, MISSOURI,	)
	)
Respondent.	)

Decision of the St. Louis County Board of Equalization sustaining the assessment made by the Assessor, AFFIRMED, true value in money for the subject property for tax years 2003 and 2004 set at $132,200, assessed value of $25,120.

Complainant, Henry Hoener, appeared pro se.

Respondent appeared by Counsel, Paula J. Lemerman, Associate County Counselor.

Case heard and decided by Hearing Officer, W. B. Tichenor.

The Commission takes this appeal to determine (1) the true value in money for the subject property on January 1, 2003; and (2) whether there was an intentional plan by assessing officials to assess the subject property at a ratio that is higher than the average assessment ratio for residential property in St. Louis County.

SUMMARY

Complainants appeal, on the ground of overvaluation and discrimination, 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 $132,200 (assessed value of $25,120, as residential property). Complainants proposed a value of $126,660 (assessed value of $24,060). A hearing was conducted on April 20, 2004, at the St. Louis County Government Center, Clayton, Missouri.

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

Mr. Hoener testified in his own behalf. He gave his opinion of value for the subject property to be $126,660. He arrived at this value by applying the percentage increase on his home owners insurance and applying it to the appraised value determined by the Assessor in the 2001 assessment cycle. Mr. Hoener also testified as to his complaints as to the system for assessing property in general in St. Louis County and the State of Missouri.

Respondent placed into evidence the testimony of Mr. Al. Lincoln, appraiser for St. Louis County. The appraiser testified as to his appraisal of the subject property. The Appraisal Report, Exhibit 1, of Mr. Lincoln was received into evidence. Mr. Lincoln arrived at an opinion of value for the subject property of $149,400 based upon a sales comparison approach to value. In performing his sales comparison analysis, the appraiser relied upon the sales of three properties which he deemed to be comparable to the subject property.

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 1412 Selma, Webster Groves, Missouri. The property is identified by locator number 24K120946. The property consists of .20 of an acre lot improved by a one-story brick single-family structure of average quality construction. The house was built in 1952 and appears to be in average condition. The residence has a total of seven rooms, which includes three bedrooms, one and a half baths, and contains 1,320 square feet of living area. There is a full basement and an attached one-car garage. There was no listing or sale of the property noted within three years prior to the tax date of January 1, 2003.

3. There was no evidence of new construction and improvement from January 1, 2003, to January 1, 2004.

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, 2003, to be $126,660, as proposed.

5. Complainants offered no evidence which addressed the claim of discrimination.

6. 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 properties were located within 2 blocks of the subject. Each sale property sold at a time relevant to the tax date of January 1, 2003. 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. Exhibit 1, pp. 5 & 6.

7. The comparables were described as follows:

Comparable 1 (1136 Lanvale - 1 block northwest of the subject) sold in June 2002 for $145,000. This property consists of a .17 of an acre lot improved by a one-story brick single- family structure of average quality construction. The house was built in 1951 and appears to be in average condition. The residence has a total of six rooms, which includes three bedrooms, one bath, and contains 1,299 square feet of living area. There is a full basement and an attached one- car garage.

Comparable 2 (1302 Selma - 1 block north of the subject) sold in July 2001 for $155,000. This property consists of a .21 of an acre lot improved by a one-story brick single-family structure of average quality construction. The house was built in 1952 and appears to be in average condition. The residence has a total of six rooms, which includes three bedrooms, one bath, and contains 1,248 square feet of living area. There is a full basement and an attached two- car garage.

Comparable 3 (1142 Eastbrook - 2 blocks northeast of the subject) sold in February 2002 for $146,000. This property consists of a .18 of an acre lot improved by a one-story brick single- family structure of average quality construction. The house was built in 1953 and appears to be in average condition. The residence has a total of six rooms, which includes two bedrooms, one and a half baths, and contains 1,336 square feet of living area. There is a full basement and an attached one-car garage.

8. The appraiser made various adjustments to the comparable properties for differences which existed between the subject and each comparable. All adjustments appear to be appropriate to bring the comparables in line with the subject for purposes of the appraisal problem.

9. The net adjustments for Comparable 1 amounted to +$1,500 or 1.03% of the sales price. The net adjustments for Comparable 2 amounted to -$1,000 or 0.65% of the sales price. The net adjustments for Comparable 3 amounted to +$2,500 or 1.71% of the sales price.

10. The adjusted sales prices for the comparables calculated to $146,500, $154,000 and $148,500, respectively. The appraiser concluded on a $149,400 value which calculated to a value per square foot of $113.18 compared with the sales prices per square foot of living area for the comparables of $111.62, $124.20 and $109.28.

11. Respondent=s evidence met the standard of clear and convincing to establish the value of the subject, as of January 1, 2003, to be at least $132,200 and to sustain the Assessor=s original value.

12. 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.

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.

There is a presumption of validity, good faith and correctness of assessment by the County Board of 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).

There is no presumption that the assessor=s valuation is correct. Section 138.431.3, RSMo.

Section 137.115, RSMo 1994, 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, Inc. v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978).

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 is 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 each 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, p. 3.

In order to investigate appeals filed with the Commission, the Hearing Officer has the duty to 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 its inquiry and any evidence presented by the parties, or based solely upon evidence presented by the parties. Section 138.430.2, RSMo.

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).

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 he may deem it entitled to when viewed in connection with all other circumstances. The Hearing Officer is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert=s testimony and accept it in part or reject it in part. St. Louis County v. Boatmen=s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).

If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto.

The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data need not be admissible in evidence. Section 490.065, RSMo; Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. E.D. 1992).

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 $132,200, 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. AFor 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).

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, 2003. Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, at 897. 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). 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).

The owner of property is generally held competent to testify to its reasonable market value. 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. Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965).

Missouri courts have approved the comparable sales or market approach, the cost approach (replacement or construction) 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).

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.

Discrimination

In order to obtain a reduction in assessed value based upon discrimination, the Complainants must (1) prove the true value in money of their property on January 1, 2003. Koplar v. State Tax Commission, 321 S.W.2d 686, 690 (Mo. 1959); and (2) show an intentional plan of discrimination by the assessing officials resulting in an assessment of that property at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction. Koplar, supra, at 695.

Complainants must first establish the market value of their property in order to determine the percentage of true value at which it is being assessed. Next, they must establish the true value of the other properties generally which they claim are assessed at a lower percentage of true value. Evidence of value and assessments of a few properties does not prove discrimination. Substantial evidence must show that all other property in the same class, generally, is actually undervalued. State ex rel. Plantz v. State Tax Commission, 384 S.W.2d 565, 568 (Mo. 1964). Then they must compare the ratio of assessed value to true value for both their property and the comparable properties to establish that their property is being assessed at a higher percentage of value. This difference in ratios must be shown to be grossly excessive. Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986). No other methodology is sufficient to establish discrimination. Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696 (Mo. 1958).

The methodology for arriving at the opinion of value presented by Mr. Hoener is not a recognized or established approach to the valuation of real property. It first presumes that the value established by the Assessor in the 2001 assessment cycle was truly reflective of the fair market value at that time. By statute, there is no such presumption. Therefore, the very first step in Complainant=s methodology is fatally flawed. Mr. Hoener attempted to rely upon a value which was not established to be the correct value as of January 1, 2001.

The second defect in the procedure which the Complainant utilized in his novel valuation procedure was to rely upon a percentage increase in the coverage of his homeowners insurance. There was nothing to show any correlation between such percentage increase and the percentage increase of home prices in the subject=s neighborhood. The proper, recognized and accepted method for arriving at the percentage increase in value in real property is by a paired sales analysis. This is an analysis in which the sale of a property and its subsequent resale is used to establish its annual percentage increase in value. In order to establish such a percentage, it is necessary to have a number of sales and resales in a time period that is relevant to the time for which such data would be used.

Complainant=s opinion of value was based totally upon a flawed starting point and a defective factor to arrive at a value. When the opinion of value offered by the owner is not based upon proper elements and a proper foundation, it has no probative value in a hearing before the Commission. When taxpayers elect to create their own unique procedures to arrive at a fair market value, they have the burden to demonstrate that such innovative methods do in fact reflect fair market value. In other words, such theories of value must be sufficiently tested in and against the market place to be relevant and probative on the issue of fair market value. Opinions of value unsupported by relevant documentary evidence from the market do not constitute substantial and persuasive evidence. The method advanced by Mr. Hoener was not demonstrated to in any form or fashion to be reflective of the fair market value of the subject property as of January 1, 2003. Accordingly, the Hearing Officer can give it no weight in the present appeal.

When a claim of discrimination is presented, Complainants have the burden to prove the level of assessment for the subject property. This is done by independently determining the market value of the subject property and dividing the market value into the assessed value of the property as determined by the assessor=s office.

The Complainants must then prove the average level of assessment for residential property in St. Louis County in 2003. This is done by (a) independently determining the market value of a representative sample of residential properties in St. Louis County for 2003; (b) determining the assessed value placed on the property the assessor=s office for 2003; (c) dividing the assessed value by the market value to determine the level of assessment for each property in the sample; and (d) determining the mean and median of the results.

The difference between the actual assessment level of the subject property and the average level of assessment for all residential property, taken from a sufficient representative sample in St. Louis County must demonstrate a disparity that is grossly excessive. Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986).

Complainants= discrimination claim fails because they failed to establish the market value of their property. Without establishing their market value, they cannot establish their assessment ratio. Without establishing their ratio, they cannot establish that they are being assessed at a higher percentage of market value that any other property.

However, even if Complainants had established their market value, their discrimination claim would still fail because they have not demonstrated that a statistically significant number of other residential properties within St. Louis County are being assessed at a lower ratio of market value than their property.

Because Complainants have failed to establish the market value of their property and have failed to establish that they are being assessed at a higher percentage of market value than a statistically significant number of other properties in St. Louis County, they have failed to establish discrimination.

The appraisal report prepared by Mr. Lincoln established by clear and convincing evidence that the fair market value of the subject property on January 1, 2003 was at least $132,200. The appraisal problem presented to Mr. Lincoln was made a great deal easier than many other case before the Commission due to the fact that he had three sales of properties that were in such close proximity to the subject in their location. Furthermore, for all intents and purposes related to the appraisal problem the three sale properties were virtually identical to the subject. A difference of only a half bath for two of the comparables, a difference of only one bedroom for another, a two-car garage for one comparable and adjustments to two comparables relative to patio, enclosed porch and deck, resulted in only a total of six adjustments being required in total for all three comparables.

The issue of whether the subject had six or seven rooms was totally irrelevant, as the room count, unless it is for bedrooms and bathrooms, which in this instances were properly adjusted for, is actually accounted for in the total square footage of living area. In this appraisal problem, the living area difference between the subject and the three comparables was simply too small to warrant any adjustment.

The Lincoln appraisal would just as clearly and convincingly establish the value of $149,400. However, due to statutory and Commission rule restrictions, it can only be offered and is only received for the purpose of sustaining the Assessor=s original assessment. This is clearly does.

Complainants failed to present substantial and persuasive evidence under a recognized methodology for valuing of real property to establish the fair market value of their property. They also failed to present any evidence upon which a claim of discrimination could be established. Respondent=s evidence was more than sufficient to sustain the value of $132,200.

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 years 2003 and 2004 is set at $25,120.

A party 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. Failure to state specific facts or law upon which the appeal is based will result in summary denial. Section 138.432, RSMo 1994.

If an application for review of this decision is made to the Commission, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the Commission. If no application for review is received by the Commission within thirty (30) days, this decision and order is deemed final and the Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal. If any or all protested taxes have been disbursed pursuant to Section 139.031(8), RSMo, either party may apply to the circuit court having jurisdiction of the cause for disposition of the protested taxes held by the taxing authority.

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, 2004.

STATE TAX COMMISSION OF MISSOURI

W. B. Tichenor

Hearing Officer