State Tax Commission of
SHELDON J. COMBS, )
)
Complainant, )
)
v. ) Appeal No. 05-68501
)
GRACE THOMAS, ASSESSOR, )
)
Respondent. )
ORDER
AFFIRMING HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
On February 3, 2006, Senior Hearing Officer, W. B. Tichenor, entered his Decision and Order (Decision) setting aside the assessment by the Madison County Board of Equalization.
Complainant timely filed his Application for Review of the Decision.
CONCLUSIONS OF LAW
Standard Upon Review
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 (
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.
The Commission
will not lightly interfere with the Hearing Officer’s Decision and substitute
its judgment on the credibility of witnesses and weight to be given the
evidence for that of the Hearing Officer as the trier
of fact. Black v.
Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Lowe v. Lombardi, 957
S.W.2d 808 (Mo. App. W.D. 1997); Forms World, Inc. v. Labor and Industrial
Relations Com’n, 935 S.W.2d 680 (Mo. App. W.D.
1996); Evangelical Retirement Homes v. STC, 669 S.W.2d 548 (
DECISION
A review of the record
in the present appeal provides support for the determinations made by the
Hearing Officer. There is competent and
substantial evidence to establish a sufficient foundation for the Decision of
the Hearing Officer. A reasonable mind
could have conscientiously reached the same result based on a review of the
entire record. The Commission finds no basis to support a determination that
the Hearing Officer acted in an arbitrary or capricious manner or abused his
discretion as the trier of fact and concluder of law
in this appeal. Hermel,
Inc. v. STC, 564 S.W.2d 888 (
Complainant submitted with his letter setting forth his Application for Review the following documents (1) a letter from Daren Brown of Brown Construction Company for the purposes of verifying certain items in the Arnzen appraisal of the subject property; (2) six photographs of the front of the subject property taken February 20, 2006; (3) a photograph of the subject house taken in 9/04; (4) a UPS Package Tracking notice with a date of 2/20/06.
These documents are not part of the record in this appeal. The Hearing Officer could not have erred in not giving consideration to these documents since all were produced after the evidentiary hearing held on January 19, 2006. A party is not permitted to submit additional exhibits after the close of the evidentiary hearing. Therefore, these documents are given no consideration in this Order.
Complainant’s Application for Review is based upon his assertion that some of the information in the Arnzen appraisal was “false and inaccurate.” Specifically, Complainant asserts the appraisal is in error in the Description of Improvement given on page 4 of the appraisal, with reference to wood frame windows, painted drywall, electric baseboard heating and one full bath. The document from Mr. Brown was to be used to establish and support Complainant’s assertions on these points. Mr. Arnzen admitted no interior inspection had been
made. Exhibit 1, p. 1. The information on the various items apparently erroneously described was based on information obtained from the property record card.
When an appraiser is not permitted to make an interior inspection of a property, reliance on information obtained in the property record card or even listing data from real estate agents is appropriate to be relied upon. None of these apparently erroneous descriptions alter the basic and essential fact that Complainant failed to meet his burden of proof to establish the fair market value of the subject property. Furthermore, since none of these matters were presented to the Hearing Officer at the evidentiary hearing, he did not err in a failure to take into account what was never presented into the record.
It is also noted that with the exception of describing the property as having one full bath, the Hearing Officer did not make any finding of fact as to the other items of the description of the house, which Complainant now challenges. With reference to the bath, the Hearing Officer did not err given the fact that by Complainant’s own offered admission (letter from Brown Construction) the subject bathroom has a sink, commode and shower, three fixtures similar to a bathroom having a sink, commode and tub. Furthermore, no evidence was presented at the hearing to challenge the Arnzen description. The Commission determines these errors in description do not provide a basis upon which the Hearing Officer’s Decision can be reversed or modified.
The Complainant next takes exception to information in the appraisal report with reference to an offer to the owner for purchase of the property of $29,000 in 2003. The appraisal report provides the source for the appraiser’s information on this matter. There is nothing contained in the Hearing Officer’s Decision which even makes reference to this alleged offer of purchase. It is clear no weight was given to this information, irrespective of whether such an offer was made. The Commission finds no ground upon which to reverse or modify the Hearing Officer’s Decision based upon this assertion by the Complainant.
Finally, the Complainant raises an issue of whether Arnzen’s last visit to the subject property was on January 11, 2005, as set forth in his appraisal. This argument is based upon the fact that a 1 by 4 piece of wood that was placed in a position to block the front door appears in the photographs of the subject in the appraisal report. Complainant argues that since this board was placed there in December 2005, it could not have been there when Arnzen took the photographs on January 11, 2005, his last inspection of the property.
This argument is again totally lacking in demonstrating any error on the part of the Hearing Officer in weighing the evidence presented to him on the issue of fair market value. Nor does this argument render the Arnzen appraisal without sufficient weight and merit to support the conclusions and determination of the Hearing Officer. There are at least two very plausible explanations in response to this assertion. One is that Mr. Arnzen has a typographical error in this report; that is, he typed January 11, 2005, when he should have typed January 11, 2006, as the date of his last inspection. The second possible explanation is that the photographs were not taken on his exterior inspection, but a few days before he completed his appraisal report, apparently on January 18, 2006.
ORDER
The Commission upon review of the record and Decision in this appeal, finds no grounds upon which the Decision of the Hearing Officer should be reversed or modified. Accordingly, the Decision is affirmed.
Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of the date of the mailing of this Order.
SO ORDERED March 9, 2006.
STATE TAX COMMISSION OF
_____________________________________
Bruce E. Davis, Chairman
_____________________________________
Sam D. Leake, Commissioner
_____________________________________
Jennifer Tidwell, Commissioner
SHELDON J. COMBS, )
)
Complainant, )
)
v. ) Appeal Number 05-68501
)
GRACE THOMAS, ASSESSOR, )
)
Respondent. )
DECISION AND ORDER
HOLDING
Decision of the Madison 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 2005 and 2006 to be $24,100, assessed value of $4,580.
Complainant appeared pro se.
Respondent appeared in person and by Counsel, Dwight Robbins, Prosecuting Attorney
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
ISSUE
The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2005.
SUMMARY
Complainant
appeals, on the ground of overvaluation, the decision of the Madison County
Board of Equalization, which sustained the valuation of the subject
property. The Assessor determined an
appraised value of $21,200, assessed value of $4,030, as residential
property. Complainant proposed a value
of $16,000, assessed value of $3,040. A
hearing was conducted on January 19, 2006, 2005, at
the Madison County Courthouse,
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
Complainant’s Evidence
Complainant offered into evidence the following four exhibits.
Exhibit
A – Assessor’s Property Record Card on property at
Exhibit
B – Assessor’s Property Record Card on property at 1029
Exhibit
C – Assessor’s Property Record Card on property at
Exhibit D – Assessor’s Property Record Card on the subject property.
Objection was made to Exhibits A, B and C on the grounds of relevancy the objection was sustained. The exhibits were excluded from evidence and not considered in making a determination of fair market value in this appeal. The exhibits are retained in the Commission file only for the purpose of maintaining the documents offered by Complainant, for this appeal. See, Exclusion of Exhibits, Under Conclusions of Law and Decision, Complainant’s Burden of Proof, infra.
Complainant testified in his own behalf. Mr. Combs’ opinion of value was based on his purchase from his sister of the subject property for $16,000 in September 2004. At the time of this transaction the property had not been offered for public sale, it was not listed with a realtor or otherwise advertised and Mr. Combs and his sister jointly owned the property.
Respondent’s
Evidence
Respondent offered into evidence the appraisal report (Exhibit 1) of Roger Arnzen, state certified general real estate appraiser. Mr. Arnzen appraised the property using both the cost approach and the market or sales comparison approach. The cost approach provided an indicated value of $27,200. The market analysis supported a value of $24,100 based on sales of fiver properties deemed to be comparable to the subject. The appraiser settled on a fair market value of $24,100 giving most weight to the sales comparison approach. Exhibit 1 was received into evidence.
FINDINGS OF FACT
1. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Madison County Board of Equalization.
2. The subject property is located at
3. There was no evidence of new construction and improvement from January 1, 2005, to January 1, 2006.
4. The purchase in September 2004 by Complainant of the subject property was not an open market transaction. The property was not offered for public sale either by a listing with a realtor or by public advertisement. The sale was between related parties in which each party owned a half interest in the property. Therefore, the purchase price of $16,000 only represents the half interest value Complainant’s sister conveyed to Complainant and not fair market value for the fee simple interest in the property.
5. 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, 2005, to be $16,000.
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 five properties were located within approximately 1 to 15 blocks of the subject. Each sale property sold at a time relevant to the tax date of January 1, 2005. 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. The five properties used for comparison sold in a range from $12,000 to $35,000, which was a sale price per square foot of gross building area of $30 to $44.87. Exhibit 1.
7. The appraiser made various adjustments to the comparable properties for differences 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. The adjusted sales prices fell into a range from $17,875 to $31,350, with the adjusted sale prices per square foot of gross building area being from $33.51 to $44.69. The value concluded of $24,100 was equal to a per square foot value of $36.50 well within the range of original sale prices.
8. Respondent’s evidence met the standard of substantial and persuasive to rebut the presumptions of correct assessments and establish the value of the subject, as of January 1, 2005, to be $24,100.
CONCLUSIONS
OF LAW AND DECISION
Jurisdiction
The Commission has jurisdiction to hear this appeal and correct any assessment 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.
Board of Equalization Presumption
There is a
presumption of validity, good faith and correctness of assessment by the
The presumption in favor of the Board is not evidence. A presumption simply accepts something as true without any substantial proof to the contrary. In an evidentiary hearing before the Commission, the valuation determined by the Board, even if simply to sustain the value made by the Assessor, is accepted as true only until and so long as there is no substantial evidence to the contrary.
Presumption on Assessor’s Value
The Supreme Court
of Missouri has held, “A tax assessor’s valuation is presumed correct.” Donna Snider v. Casino Aztar/Aztar
Missouri Gaming Corp., SC86181, 3/01/2005.
Citing to Hermel, supra; and Cupples Hesse Corp. v.
State Tax Commission, 329 S.W.2d 696, 702 (
Rebutting
of Presumption of Correct Assessment
The
presumption of correct assessment is rebutted when the taxpayer presents
substantial and persuasive evidence to establish that the assessor’s or Board’s
valuation is erroneous and what the fair market value should have been placed
on the property. Snider,
Hermel & Cupples Hesse, supra.
Standard for Valuation
Section 137.115,
RSMo, requires that property be assessed based upon its true value in money
which is defined as the price a property would bring when offered for sale by
one willing or desirous to sell and bought by one who is willing or desirous to
purchase but who is not compelled to do so.
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 (
Market Value
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.
Complainant’s Burden of Proof
In order to prevail,
Complainant must present an opinion of market value and substantial and
persuasive evidence that the proposed value is indicative of the market value
of the subject property on January 1, 2005.
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 (
This standard has not been met in this case. Complainant failed to meet the burden of proof to rebut the presumptions of correct assessment and establish fair market value. Complainant’s opinion of value was based upon his purchase of the property in September 2004. The owner’s opinion under the facts of this case has no probative value.
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
Evidence of the actual sales price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time. The actual sale price is a method that may be considered for estimating true value. The actual sales price, between a willing seller who is not obligated to sell and a willing buyer who is not compelled to buy, establishes an outer limit on the value of real property. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526 (App. E.D. 1993).
The testimony of Mr. Combs does establish a sale between a willing buyer and seller. However, the sale does not meet the other necessary standards for an open market transaction. First the sale was not the result of the property having had adequate exposure to the market to test whether the $16,000 sales price did in fact represent the market for the property. Furthermore, the transaction was between related parties, a brother and sister, raises a serious question, as to this being an arm’s-length transaction. Most important and fatal to Complainant’s reliance on the 2004 transaction is the fact that Mr. Combs owned a half interest in the subject property when he paid his sister $16,000. Complainant was not paying the purchase price for the entire subject property. The price of $16,000 only represented the value for the sister’s half interest. This indicates a value of possibly as much as $32,000 for the property under appeal.
Complainant’s opinion of value of $16,000 is not supported by proper elements or a proper foundation therefore it can be given no probative weight in determining fair market value. The September 2004 sale likewise has not probative value in this appeal because it clearly was not an open market transaction for the purchase of the entire subject property, but only a half interest in the property.
Exhibits A, B and C have no relevance on the issue of fair market value. Although Mr. Combs testified the properties described in the three exhibits show sales of those properties, this does not establish that these sales are of comparable properties. 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). There is no evidence by which the Hearing Officer can conclude that Mr. Combs qualifies as an expert in the appraisal of real property.
Exhibit A does not describe a property which is comparable to the subject. The subject is an improved lot, having a house constructed thereon. The property in Exhibit A, which is reported to have sold in April 2001 for $2,500, is a vacant lot. Furthermore, the sale date of 2001 nearly four years prior to the tax date of January 1, 2005, is too remote in time to be used in this appraisal problem.
The property represented by Exhibit B is likewise not comparable. Although this property is reported to have sold in 2004 for $3,000, the document advises that the house and a shed on the property had been torn down. Therefore, it is reasonable to conclude that the purchase price only represents a value for the land.
The Exhibit C property is reported to have sold in 2001 for $5,000. There is insufficient information to conclude that this property is comparable to the subject for purposes of an appraisal. Like the property shown by Exhibit A the sale date in 2001 is too dated to be used for comparison purposes in this particular case for the subject property.
Property Record Cards may be utilized by appraisers in collecting certain data on properties to be used in an appraisal. However, an appraiser is not going to develop an appraisal based simply on property record cards. The indicated value on these property record cards does not equate to what the properties actually sold for at a time relevant to January 1, 2005. The indicated values are the combination of a land value and a cost for replacement of improvements less depreciation. In other words, the appraised values represent the values determined under the Assessor’s mass appraisal system as an indicated fair market value. The PRC values do not represent any actual sale price for the properties in an open market transaction. Finally, none of the information in Exhibits A, B or C provides any support for the September, 2004 sale price for a half interest in the subject property. Complainant’s opinion of value is based on that transaction. These exhibits have no relevance to either that transaction, or the issue of the fair market value of the subject property.
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. Respondent has met that burden in this appeal. The appraisal report by Mr. Arnzen was performed in accordance with generally accepted appraisal standards. Two recognized approaches to value were developed which yielded an indicated value well supported by market data from sales of five comparable properties. The presumptions of correct assessments by the Assessor and Board were rebutted and the value of $24,100 was established as the fair market value on January 1, 2005.
ORDER
The assessed
valuation for the subject property as determined by the Assessor and sustained by
the Board of Equalization for
The assessed value for the subject property for tax years 2005 and 2006 is set at $4,580.
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 Madison 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 February 3, 2006.
STATE TAX COMMISSION OF
_____________________________________
W. B. Tichenor
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 3rd day of February, 2006, to: Sheldon Combs, 502 Albert Street, Fredericktown, MO 63645, Complainant; Dwight Robbins, Prosecuting Attorney, 116 N. Mine La Motte, Fredericktown, MO 63645, Attorney for Respondent; Grace Thomas, Assessor, #1 Court Square, Fredericktown, MO 63645; Joan Whitener, Clerk, #1 Courthouse Square, Fredericktown, MO 63645; Danny Thompson, Collector, #1 Courthouse Square, Fredericktown, MO 63645.
___________________________
Barbara Heller
Legal Coordinator