State Tax Commission of Missouri

 

DOUG & CONNIE GILWORTH                   )

                                                                        )

                                    Complainants,               )

                                                                        )

            v.                                                         )  Appeal No. 05-80508

                                                                        )

PAUL ROUSE, ASSESSOR,                          )

PUTNAM COUNTY, MISSOURI                 )

                                                                        )

                                    Respondent.                 )

 

 

DECISION AND ORDER

 

HOLDING

          The decision of the Board of Equalization, lowering value to $509,690 (assessed value $96,840) is AFFIRMED.

ISSUE

            The issue in this case is the true market value of residential real property.

SUMMARY

            The subject property is a lakefront home which was originally valued by the assessor at $544,880 (assessed value $103,530).  Upon appeal, the Board of Equalization reduced value to $509,690 (assessed value $96,840).  Complainant asserts a value of $395,000 (assessed value $75,050).

            An evidentiary hearing was held on November 29, 2005 in the Putnam County Courthouse before senior hearing officer Luann Johnson.  Complainants appeared by counsel, Thomas Keedy.  Respondent appeared pro se.

EXHIBITS

            The following exhibits were entered into the record:

            Complainant’s Exhibit 1 – Appraisal report of  Margaret Minear

            Respondent’s Exhibit A – Property Record Cards, Certificates of Value

FINDINGS OF FACT

            1.         Jurisdiction is proper.  Complainants timely filed their appeal from the decision of the Putnam County Board of Equalization.

            2.         The subject property is a nine year old 3,738 square foot residence over a 2,134 square foot fully finished basement.  The home sits on a 47,870 square foot lot with 450 front feet on Lake Thunderhead.  The property is identified as “Prairie Rose-017” more commonly known as 32231 Brant Lane, Unionville, Missouri.  Ex. 1, Ex. A.

            3.         Valuing lakefront lots by front foot is a recognized method of determining value.  Property Assessment Valuation, International Association of Assessing Officials, 1977, pg. 84-85.  A land study conducted at Lake Thunderhead determined that lake front land sold for $600 per front foot.  Tr. 35-36, 42-43.  The subject property has 450 feet of actual front footage and 357.83 feet of effective front footage for an indicated land value of $214,700 under the cost approach.  Ex. A.

            4.         The subject house had a depreciated replacement cost new of $329,350 and other site improvements had a depreciated value of $820.  Ex. A.   Respondent calculated deprecation at 6% or .67% per year.

            5.         There are no comparable sales in the area.  Complainant’s appraiser was forced to rely on sales of much smaller dwellings (1,442 square feet, 2,026 square feet, 1,120 square feet) which she attempted to adjust at the rate of $45 per square foot.  No market evidence was presented in support of said $45 per square foot adjustment.  Ex. 1.  Gross adjustments on Ms. Minear’s comparables were 39.9%, 37.7% and 55.2% suggesting that said properties were not truly comparable.  Complainant’s value under the sales comparison approach was $395,000.

            6.         Under her cost approach, Complainant’s appraiser failed to give weight to front footage in determining her opinion of value of the subject lot and, therefore, said land value of $177,600 is understated.

            7.         Complainant’s appraiser estimated depreciated replacement cost new of improvements at $255,490.  She calculated depreciation at 2% per year.  Ex. 1.  Complainant’s value under the cost approach was $433,100.

            8.         Complainant’s evidence is not substantial and persuasive to establish that Respondent had overvalued Complainant’s property.

            9.         No evidence was presented which suggested that any new construction or property improvements occurred between January 1, 2005, and the hearing date.  Therefore the value determined for tax year 2005 shall also be the value determined for tax year 2006.

            10.       The true value in money for the subject property on January 1, 2005, and January 1, 2006, is $509,690 (assessed value $96,840).

CONCLUSIONS OF LAW

 

Highest and Best Use

 

            True value in money is the fair market value of the property on the valuation date, and is a function of its highest and best use, which is the use of the property which will produce the greatest return in the reasonably near future.  Aspenhof Corp. v. State Tax Commission, 789 S.W. 2d 867, 869 (Mo. App. 1990).

            It is true that property can only be valued according to a use to which the property is readily available.  But this does not mean that in order for a specific use to be the highest and best use for calculating the property’s true value in money, that particular use must be available to anyone deciding to purchase the property. . . .A determination of the true value in money cannot reject the property’s highest and best use and value the property at a lesser economic use of the property.  Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341, 348-349 (Mo. 2005).

True Value in Money

            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 purchased by one who is desiring 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).

Taxpayer has Burden of Proof

            In Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003), the court of appeals stated:

            There is no longer an automatic presumption regarding the correctness of an assessor's valuation. Section 138.431.3. This statutory change from the previous situation in which the assessor's valuation was presumed to be correct does not mean that there is now a presumption in favor of taxpayer. The taxpayer in a Commission tax appeal still bears the burden of proof and must show by a preponderance of the evidence that the property was improperly classified or valued. Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991).

            In Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003), the court of appeals described the taxpayer's burden as follows:

            Taxpayers were the moving parties seeking affirmative relief, and as such, they bore the burden of proving the vital elements of their case, i.e., the assessments were "unlawful, unfair, improper, arbitrary or capricious.” Cupples Hesse Corp. v. State Tax Comm'n, 329 S.W.2d 696, 702 (Mo.1959); Westwood P'ship v. Gogarty, 103 S.W.3d 152, 161[8] (Mo. App. 2003);84 C.J.S. Taxation §§710, 726. This is true regardless of the existence or non-existence of the challenged presumption. As the Supreme Court of Missouri explained, "even were we to hold that it [the presumption] has been overcome, the burden of proof on the facts and inferences would still remain on petitioner, for it is the moving party seeking affirmative relief.”  Cupples, 329 S.W.2d at 702[16]. See also 84 C.J.S. Taxation §710, which states: "Even where there is no presumption in favor of the assessor's ruling, if no evidence is offered in support of the complaint, the reviewing board is justified in fixing the valuation complained of in the amount assessed by the assessor."
            To prevail, Taxpayers had to "present an opinion of market value and then ... present substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on tax day." Daly v. P.D. George Co., 77 S.W.3d 645, 651 (Mo. App. 2002).

Substantial and Persuasive Evidence

            Substantial evidence is that evidence which, if true, has probative force upon the issues, i.e., evidence favoring facts which are such that reasonable men may differ as to whether it established them, and from which the Commission can reasonably decide an appeal on the factual issues.  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).

Cost Approach

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

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

            While reproduction cost is the best indicator of value for newer properties where the actual costs of construction are available, replacement cost may be more appropriate for older properties.  Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341, 347 (Mo. 2005).  (citations omitted).

Comparable Sales Approach

            The comparable sales approach uses prices paid for similar properties in arm’s-length transactions and adjusts those prices to account for differences between the properties.  Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character.  This approach is most appropriate when there is an active market for the type of property at issue such that sufficient data is available to make a comparative analysis.  Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341, 347-348 (Mo. 2005). (citations omitted).

Experts

            An expert’s opinion must be founded upon substantial information, not mere conjecture or speculation, and there must be a rational basis for the opinion.  Missouri Pipeline Co. v. Wilmes, 898 S.W.2d 682, 687 (Mo. App. E.D. 1995).  The state tax commission cannot ignore a lack of support in the evidence for adjustments made by the expert witnesses in the application of a particular valuation approach.  Drey v. State Tax Commission, 345 S.W.2d 228, 234-236 (Mo. 1961); Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341, 348 (Mo. 2005).

            The testimony of an expert is to be considered like any other testimony, is to be tried by the same test, and receives just so much weight and credit as the trier of fact may deem it entitled to when viewed in connection with all other circumstances.  The hearing officer, as the trier of fact, has the authority to weigh the evidence and 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 may accept it in part or reject it in part.  Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. 1981); Scanlon v. Kansas City, 28 S.W.2d 84, 95 (Mo. 1930).

DISCUSSION

            Complainants argue that Respondent has overvalued their home because people are not eager to buy high priced homes on Lake Thunderhead.  While Complainants made vague references to a few homes that had not sold for higher prices, they failed to establish that their property was not marketable at $509,000.  Rumors of properties that have not sold, without evidence of their similarity to the subject property, does not establish that a market does not exist.  Complainants have failed to meet their burden of proof.

ORDER

            The assessed value determined by the Assessor and approved by the Board of Equalization, is AFFIRMED. 

            A party may file with the Commission an application for review of a hearing officer decision within thirty (30) days of the mailing of such decision.  The application shall contain specific detailed 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.

            If an application for review of a hearing officer 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 Putnam 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 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 March 10, 2006.

STATE TAX COMMISSION OF MISSOURI

 

 

_____________________________________

Luann Johnson

Senior Hearing Officer

 

 

 

 

Certificate of Service

 

            I hereby certify that a copy of the foregoing has been mailed postage prepaid this 10th day of March, 2006, to:   Thomas Keedy, P.O. Box 205, Unionville, MO 63565, Attorney for Complainant; James Garrett, Prosecuting Attorney, 1702 W. Main, Unionville, MO 63565, Attorney for Respondent; Paul Rouse, Assessor, Putnam County Courthouse, Room 201, Unionville, MO 63565-1600; Sue Ann Varner, Clerk, Putnam County Courthouse, Unionville, MO 63565; Sharon Thompson Parks, Treasurer & ex officio Collector, Putnam County Courthouse, Room 200Unionville, MO 63565.

 

 

_______________________________

Barbara Heller

Legal Coordinator