KENNETH G. OSIA,	)
	)
Complainant,	)
	)
v.	)		Appeal Number 03-20111
	)
ED BUSHMEYER, ASSESSOR,	)
ST. LOUIS CITY, MISSOURI,	)
	)
Respondent.	)

Decision of the St. Louis City Board of Equalization reducing the assessment made by the Assessor, SET ASIDE, Hearing Officer finds true value in money for the subject property for tax years 2003 and 2004 to be $49,000, assessed value of $11,000 ($4,170 commercial and $6,830 residential).

Complainant appeared pro se.

Respondent appeared by Counsel, Carl W. Yates, III, Assistant City Counselor.

Case heard by Hearing Officer Aimee L. Smashey.

Case decided by Hearing Officer W. B. Tichenor.

The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2003.

Complainant appeals, on the grounds of overvaluation and misclassification, the decision of the St. Louis City Board of Equalization, which reduced the valuation of the subject property and adjusted the classification allocation between residential and commercial property. The Assessor determined an appraised value of $49,000 (assessed value of $13,120 - $3,720, as residential and $9,400 as commercial). The Board determined an appraised value of $48,870 (assessed value of $11,440 - $6,140 as residential and $5,300 as commercial). Complainant proposed a value of $45,000. A hearing was conducted on July 26, 2004, at the St. Louis City Hall, St. Louis, 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 and offered into evidence the following exhibits:

Exhibit A - Statement of Complainant in response to Respondent’s Appraisal Report.

Exhibit B – Complainant’s Statement of Value.

Exhibit C - 2003 Change of Assessment Notice on Subject Property.

Exhibit D - St. Louis City 2003 Tax Rate.

Exhibit E - MLS CMA Report, May 7, 2004.

Exhibit F - Photographs of fourteen properties in the subject neighborhood.

Exhibit G - Copy of News Article from news@yourjournal.com.

Exhibit H - Copy of pages 3 and 9 of Respondent’s Appraisal Report, with Complainant’s handwritten notes.

Exhibit I - Three (3) pages of Complainant’s handwritten notes.

Exhibit J - Copy of letter to Assessor from Complainant, stamp dated April 14, 2003.

Exhibits A through F and I and J were received into evidence. Exhibit G was excluded from evidence.

Respondent placed into evidence the testimony of Ms. Melanie Woodward, appraiser for St. Louis City. The appraiser testified as to her appraisal of the subject property. The Appraisal Report, Exhibit 1, of Ms. Woodward was received into evidence. Ms. Woodward arrived at an opinion of value for the subject property of $51,500 based upon a sales comparison approach to value. The following exhibits were also offered into evidence.

Exhibit 2 - Written direct testimony of Ms. Woodward.

Exhibit 3 - Board Decisions on Commercial/Residential Valuation of the subject property.

Exhibit 4 - Comparable sales information.

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 5600 South Compton Avenue, St. Louis, Missouri. The property is identified by parcel number 28640000707. The property consists of a 3,663 square foot lot, improved by a two-story brick and wood storefront apartment building. The building was built in 1907. There are 2,575 square feet in the superstructure and 475 square feet of basement area (152 square feet finished and 323 unfinished). Exhibit 1, p. 3. There is a chiropractor’s office space occupying 683 square feet on the first floor. There is a 450 square foot guest room on the first floor and the second floor of 808 square feet is the owner’s primary residence. Exhibit 1, p. 11.

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

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, 2003, to be $45,000, as proposed on the Complaint for Review of Assessment.

5. The properties relied upon by Respondent’s appraiser in performing her 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 8 to 10 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, location, site size and other amenities of comparability.

6. The three comparable properties sold for per square foot values of $14.44, $26.24 and $36.15 respectively. The appraiser made various adjustments to the comparable properties for differences which existed between the subject and each comparable. Respondent’s appraised settled on a per square foot value for the subject of $20.00, after adjustments to each comparable.

7. Respondent’s evidence met the standard of substantial and persuasive to establish the value of the subject, as of January 1, 2003, to be $49,000, as originally valued by the Assessor. 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.

8. The portion of the subject property being utilized for a commercial use (office space) is 26.6% of the total building area (683/2575 = .266). Exhibit 1, page 11. Therefore, 26.6% of the appraised value is for commercial property and 73.4% is for residential property.

9. The commercial assessed portion of the subject property is $4,170 ($49,000 x .266 = $13,034 x .32 = $4,170). The residential assessed portion of the subject property is $6,830 ($49,000 - $13,034 = $35,966 x .19 = $6,833.54, rounded to $6,830).

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).

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 (which is not presumed to be correct), is accepted as true only until and so long as there is no substantial evidence to the contrary.

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

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, 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.

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).

Respondent, when advocating a value different from that determined by the original valuation or a valuation made 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.

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, 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). The owner may not support an opinion of value by reference to comparable sales unless the owner qualifies as an expert. State ex rel. Missouri Hwy. and Tr. Comm’n v. McDonald’s Corp., 872 S.W.2d 108, 113 (Mo. App. E.D. 1994); State ex rel. Missouri Hwy. and Tr. Comm’n v. Pracht, 801 S.W.2d 90, 94 (Mo. App. E.D. 1990).

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 City 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.

Where real property is used or held for use for more than one purpose and such uses result in different classification, an allocation to each classification shall be made based on the percentage of true value in money of the property devoted to each use. Section 137.016.4, RSMo.

Complainant testified as to an opinion of value of $45,000, based on that being the only offer that had been made on the property in over 20 years. Mr. Osia has never listed the property for sale, but was apparently offered $45,000 at some time in the past. No other evidence based upon a recognized approach to the appraisal of real property was offered by the Complainant to support this opinion of value. Complainant also testified as to the general condition of the subject neighborhood relating to allegations concerning prostitution and drug dealing. However, there was no basis provided in Complainant’s evidence to establish the extent to which such activity may have diminished the value of the subject property.

A brief review of Complainant’s exhibits demonstrates the lack of substantial and persuasive effect which they had for purposes of valuing the property under appeal.

Exhibit A has no relevance to the issue of fair market value or misclassification of the subject property. The problems and issues relative to allegations against a member of the Assessor’s staff does not constitute evidence of value.

Exhibit B while headed a statement of value does not give either an opinion of value or the basis for any opinion. The statement does address matters which the owner believes detracts from the value of his property. However, there is no basis upon which the Hearing Officer can utilize general statements of neighborhood condition to adjust sales prices of comparable properties to arrive at an indicated value. In point of fact, it is not the responsibility of the Hearing Officer to carry out such an exercise.

Exhibit C is the Change of Assessment Notice on the subject property, dated April 1, 2003. The only evidence of value which this document provides is a valuation of $49,000, which is divided 40% residential and 60% commercial. The document only has relevance to establish the Assessor’s original valuation, however, there was no dispute but that the Assessor had first valued the property at $49,000.

Exhibit D is an information sheet which provides a breakdown of the 2003 tax rate in the City of St. Louis. This document has no probative value on either the issue of fair market value of the classification of the subject property. The rate of taxes bear absolutely no relevance in an appeal before the State Tax Commission, unless the effective tax rate in the calculation of a capitalization rate is in dispute. Which was not the case in this appeal.

Exhibit E is a listing of raw sales data. It provides a listing of 48 sales of properties in the subject neighborhood presented by Karen J. Ratteree of RE/MAX Midwest Group. This CMA Report lists properties by addresses, map location, square footage, lot size, age, date of sale, sale price per square foot, original price, list price, sale price, and sale price as a percentage of list price. While this provides a great deal of data, there is no adjusting of individual sales to the subject property in a proper appraisal methodology. There is totally insufficient data from the exhibit to establish what, if any, properties would be considered as appropriate properties to utilize as comparable to the subject. While this exhibit might provide an appraiser information from which the initial process of appraisal could begin, it does not provide evidence of fair market value for the subject property in the form presented. Accordingly, it possesses no probative value in this appeal.

Exhibit F provides a series of photographs of properties and conditions in the subject neighborhood. Such photographs help demonstrate neighborhood conditions, but photographs do not translate to fair market value or how to adjust sales comparables to account for such factors. The photographs of alleged comparable properties are of no benefit, absent verification of sales prices and application of adjustments to account for differences between the sale property and the property being valued. In the absence of an owner establishing expertise in the field of appraisal, opinions based on alleged comparable sales are not permitted.

Exhibit H has no probative value. Simply marking out the opinion of value of Ms. Woodward and substituting the owner’s unsubstantiated and unsupported opinion and making other handwritten notes on the appraisal report proves nothing relative to fair market value.

Exhibit I has no probative value on fair market value. Notes as to make, model and license plate numbers of automobiles in the subject neighborhood and use by persons of crack pipes are simply not probative to establish the owner’s opinion of value. Such factors relate to the general neighborhood condition. However, this information does not translate into dollars for adjustments to sales of comparable properties which may not be in neighborhoods with the same conditions. It is not enough for the owner to bring such matters forward; there must be a correlation to an impact on fair market value which can be given a quantitative value. This was not done by Mr. Osia in this appeal.

Exhibit J, a letter to the Assessor’s Office, addressing the matter of the increased assessment and the need to make a change in a part of the classification does not establish either fair market value or the portion of the subject that should be classified as commercial and residential.

Complainant failed to present evidence to support his opinion of value based on a methodology that is recognized by the courts of this state and the Commission for the valuation of real property. The owner’s opinion possessed no probative value given this lack of substantiation. Therefore, Complainant failed to meet his burden of proof.

The appraisal presented by Respondent’s appraiser constituted substantial and persuasive evidence to establish a fair market value of $49,000 for the subject property. The opinion of value reached by Ms. Woodward was based upon a recognized approach for the valuation of real property. Ms. Woodward adjusted the comparable properties to account various differences which she deemed to be of importance and requiring adjustment to the sale prices. The only evidence of fair market value presented upon this record upon which a determination of value can be made is that presented by Respondent. Accordingly, the fair market value of the property as of January 1, 2003 is set at $49,000, as originally determined by the Assessor. In accordance, with Commission Rule 12 CSR 30-3.075, Ms. Woodward’s testimony and appraisal were only received for the purpose of sustaining the Assessor’s initial value, not to increase the value to $51,500.

According to Ms. Woodward’s appraisal and testimony, it was her position that the Board of Equalization had divided the assessment of the subject property as 34% commercial and 66% residential. This is not supported by the facts on this record. The Board established a total assessed value of $11,440. This was divided $5,300 as commercial classification and $6,140 as residential classification. Exhibit 3; Exhibit 1, p. 6. However, the simple division of the commercial assessment of $5,300 by the total assessment of $11,440 results in a percentage of commercial assessment of 46.4%.

However, the record does not establish that 46.4% of the subject building is devoted to a commercial use. Nor does the evidence establish that 34% of the building is used for a commercial use. The subject building according to Ms. Woodward’s appraisal has 2,575 square feet. The doctor’s office on the first floor occupies only 684 square feet. The remainder of the building is put to a residential use. The percentage of the building utilized as the doctor’s office only represents 26.6% of the total area (684/2,575 = .266). Therefore, the commercial classification of the subject property is 26.6%.

The assessed valuation for the subject property as determined by the Assessor and reduced by the Board of Equalization for St. Louis City for the subject tax day is SET ASIDE.

The assessed value for the subject property for tax years 2003 and 2004 is set at $11,000 ($4,170 commercial and $6,830 residential).

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 2000.

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 City, 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 November 16, 2004.

STATE TAX COMMISSION OF MISSOURI

W. B. Tichenor

Hearing Officer