RAYMOND T. & MARY L. WAGNER,	)
	)
Complainants,	)
	)
v.	)		Appeal Number 03-12150
	)
PHILIP MUEHLHEAUSLER, ASSESSOR,	)
ST. LOUIS COUNTY, MISSOURI,	)
	)
Respondent.	)

Decision of the St. Louis County Board of Equalization sustaining 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 $175,000, assessed value of $33,250.

Complainant appeared by Counsel, Raymond T. Wagner, Jr., St. Louis, Missouri.

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 the true value in money for the subject property on January 1, 2003. Counsel for Complainant raised discrimination issue at hearing.

Complainants appeal, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization which sustained the valuation of the subject property. The Assessor determined an appraised value of $176,900 (assessed value of $33,610, as residential property). Complainant proposed a value of $158,000 (assessed value of $30,020). A hearing was conducted on April 22, 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.

Counsel for Complainant, Raymond T. Wagner, Jr., opined an opinion of value for the subject property of $158,000. The opinion of value was based upon the various condition and deferred maintenance problems of the subject home. Mr. Wagner offered into evidence a document on valuation data. The document was identified as Exhibit A. The first four pages of Exhibit A were received into evidence. These four pages consisted of the following documents (1) comparable sales analysis report for tax year 2003 on the subject and (2) the property record card from the St. Louis County Assessor=s computer data base. Mr. Wagner pointed out that the subject property had experienced a 33% increase in land value and a 2% increase in improvement value from the 2001 assessment cycle.

The remaining thirty (30) pages of document offered as part of Exhibit A were objected to by Counsel for Respondent on the grounds of relevancy, lack of foundation and not being complete documents. Counsel for Complainants wished to use these documents to address the discriminatory treatment of different properties in the subject neighborhood as to decreases in improvement values and increases in land values. The objection was sustained. See, DECISION, infra.

Respondent placed into evidence the testimony of Mr. John D. Rebsamen, State Certified Residential Real Estate appraiser for St. Louis County. The appraiser testified as to his appraisal of the subject property. The Appraisal Report, Exhibit 1, of Mr. Rebsamen was received into evidence. Mr. Rebsamen arrived at an opinion of value for the subject property of $175,000 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 242 Ashbourne Drive, Ballwin, Missouri. The property is identified by locator number 22S610333. The property consists of .35 of an acre lot improved by a one-story masonry and frame single-family house of average quality construction. The house was built in 1967 and appears to be in below average physical condition. The residence has a total of eight rooms, which includes five bedrooms, two full baths, and contains 2,453 square feet of living area. There is a full basement and a two-car attached garage. There was no listing or sale of the property noted within three years prior to the tax date of January 1, 2003. The house suffers from deferred maintenance and lack of interior updates. The kitchen and baths are dated. Foundation cracks were noted on the basement walls and some have been filled with epoxy injection. Settlement and bowing was noted at the front frame wall and the wood flooring of the family room. The subject lot slopes downward and is considered below average of those found in the neighborhood. Exhibit 1, p. 5.

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 $158,000.

5. Counsel for Complainant raised the issue of a discriminatory or unequal assessment relative to land values in the subject neighborhood. The only ground for appeal given in the Complaint for Review of Assessment was Overvaluation. No ground relating to this claim was set forth in the Complaint (pleadings).

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 .22 of a mile 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. 6-8.

6. The comparables were described as follows:

Comparable 1 (217 Pleasant Grove - .22 of a mile southeast of the subject) sold in August, 2002 for $. This property consists of a .37 of an acre lot improved by a one-story masonry and frame single-family structure of average quality construction. The house was built in 1962 and appears to be in very good physical condition. The residence has a total of seven rooms, which includes two bedrooms, two full baths, and contains 2,036 square feet of living area. There is a full basement and an attached two-car garage.

Comparable 2 (232 Monroe Mill - .21 of a mile southeast of the subject) sold in February 2001 for $190,000. This property consists of a .27 of an acre lot improved by a one-story masonry single-family structure of average quality construction. The house was built in 1977 and appears to be in average physical condition. The residence has a total of seven rooms, which includes three bedrooms, two full baths, and contains 2,426 square feet of living area. There is a full basement and an attached two-car garage.

Comparable 3 (102 Sheffield - .04 of a mile southeast of the subject) sold in August 2001 for $201,500. This property consists of a .28 of an acre lot improved by a one-story masonry and frame single-family structure of average quality construction. The house was built in 1966 and appears to be in very good physical condition. The residence has a total of eight rooms, which includes four bedrooms, two full baths, and contains 1,991 square feet of living area. There is a full basement and an attached two-car garage.

7. 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. Significantly, the appraiser recognized the major condition problem with the subject and made appropriate adjustments to account for this factor to all three comparables as he deemed warranted. Exhibit 1, pp. 8-9.

8. The net adjustments for Comparable 1 amounted to -$24,700 or 12.05% of the sales price. The net adjustments for Comparable 2 amounted to -$15,200 or 8% of the sales price. The net adjustments for Comparable 3 amounted to -$21,800 or 10.82% of the sales price.

9. The adjusted sales prices for the comparables calculated to $180,300, $175,800 and $179,700, respectively. The appraiser concluded on a $175,000 value which calculated to a value per square foot of $71.34 compared with the sales prices per square foot of living area for the comparables of $100.69, $78.32 and $101.21.

10. Respondent did not have to meet a standard of clear, convincing and cogent evidence in this appeal, under the provisions of Section 137.115, RSMo, as he was not seeking to sustain the original valuation presumed to have been made by a computer, computer-assisted method or a computer program.

11. Respondent=s evidence met the standard of substantial and persuasive to establish the value of the subject, as of January 1, 2003, to be $175,000.

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 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).

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).

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.

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).

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 information testified to by Complainants= son (Counsel) relating to the general condition of the subject home provided verification of the issue of deferred maintenance which were considered, recognized and adjusted for by Respondent=s appraiser. In any appeal where condition and deferred maintenance is an issue information certainly needs to be presented on such matters. However, the presenting of such information either by testimony or through the use of pictures of the condition problems does not provide a basis upon which the Hearing Officer can make a reduction in value.

Generally, taxpayers want to take the value set by the Assessor (which is not presumed to be correct in the first place) and subtract the cost to repair the various condition problems. However, this is not a method that is appropriate, nor persuasive. The Hearing Officer, even if provided with repair bids and estimates cannot just arbitrarily subject amounts for the Assessor or Board fair market value.

If an appraiser fails to account for inferior condition issues in an appraisal, then evidence of the conditions would be important. However, as in this instances, where the appraiser has viewed the condition problems and has made what in his expert opinion is an adequate adjustment, there is nothing further for the Hearing Officer to do. It would be a matter of pure speculation and conjecture for the Hearing Officer to make an additional negative adjustment to the value determined by the appraiser in the present case to account for condition problems, when the appraiser has all ready made the adjustment. Furthermore, there is no substantive evidence upon which the Hearing Officer can conclude that any additional adjustment is warranted.

The testimony of Raymond Wagner, Jr., as to the condition problems only substantiated the information provided Mr. Rebsamen=s appraisal. No basis was provided to support an additional negative adjustment of $17,000 from the Rebsamen opinion of value. Accordingly, Complainants failed to meet their burden of proof to establish the fair market value of the subject property to be only $158,000.

The only ground stated in the pleading (Complaint for Review of Assessment) filed in this appeal was overvaluation. The introduction of the argument of unequal land values was an attempt to amend the grounds for appeal. Amendment of pleadings before the Commission is not permitted.

In Daly v. State Tax Commission, 120 S.W.3d 262 (Mo. App. E.D. 2003), the Court found that since the taxpayer=s Complaint for Review of Assessment did not specify Amisclassification@ for the relevant year, such issue Awas not properly before the Commission.@ Daly, at 271. Following the holding in the Daly decision, supra, the Commission is without authority to amend the grounds alleged in the Complaint to include an additional ground for appeal. Lewis and Clark State Bank, et al., v. Muehlheausler, STC Appeals No. 01-11402 et al., Order, dated 3/04/04.

Accordingly the thirty (30) pages of property record card documents on various properties in the subject subdivision offered to show various percentages of increases and decreases in land values in comparison to the subject could not be received into evidence. These documents did not address the issue of overvaluation, which was the only issue before the Commission. Since they sought to address the issue of discrimination or unequal land values, which could not be raised, they had no relevancy.

Furthermore, such documents are inadequate to establish a claim of discrimination. Where there is a claim of discrimination based upon a lack of valuation consistency, Complainants have the burden to prove the level of assessment for the property under appeal for 2003. 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.

Next Complainants must prove the average level of assessment for residential property in St. Louis County for 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 result.

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 for 2003 must demonstrate a disparity that is grossly excessive. Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986). Utilization of a few properties from the subject=s subdivision is not sufficient, as that is not a proper foundation as a representative sample of St. Louis County.

Even assuming, Complainants= discrimination claim had been raised initially on the Complaint for Review of Assessment, it 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. Complainants= claim of discrimination is based upon essentially a claim of unequal valuations of land values. The Hearing Officer is aware that taxpayers often look at the division as to value between land and improvements in their assessment. However, the issue before the Commission is the fair market value of the property as it existed on January 1, 2003. The fact that the Assessor has assigned land values which may appear to be unequal, or which may have increased at a greater percentage of value than other properties does not establish that the total fair market value on the property is in error. That is what has to be determined. It is on that issue that taxpayers must focus.

The evidence of fair market value presented by Respondent=s appraiser was substantial and persuasive to establish the fair market value of the subject property at $175,000. The major adjustments that was required was to account for the generally below average condition and the overall deferred maintenance of the subject. This Mr. Rebsamen properly addressed this There is no evidence to establish that a larger negative adjustment should be made.

Complainants failed to establish that a greater adjustment for the condition and deferred maintenance issues should be made to establish the proposed value of $158,000. Respondent=s appraisal relied upon a recognized and approved method of value and accounted for the condition problem. The fair market value of the subject property as of January 1, 2003 was demonstrated to be $175,000 by Respondent=s appraisal.

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 SET ASIDE.

The assessed value for the subject property for tax years 2003 and 2004 is set at $33,250.

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