State Tax Commission of Missouri

 

DALE & MARY LOU HART,                        )

                                                                        )

                                    Complainants,               )

                                                                        )

            v.                                                         )           Appeal Number 05-30004

                                                                        )

MICHAEL O’FLAHERTY,                             )

DIRECTOR OF ASSESSMENT,                    )

JACKSON COUNTY, MISSOURI                )

                                                                        )

                                    Respondent.                 )

 

DECISION AND ORDER

 

HOLDING

          The decision of the assessor, affirmed by the Board of Equalization, setting value at $380,400 (assessed value $72,280) is AFFIRMED. 

ISSUE

            The issues in this case are discrimination and the true market value of a lake front lot improved with a residential structure.

SUMMARY

The subject property is a lake front lot and home which was originally valued by the assessor at $380,400 (assessed value $72,280).  Upon appeal, the Board of Equalization affirmed said value.  Complainants appeal asserting a value of $225,000 (assessed value $42,750).  At hearing, Respondent presented an appraisal report which indicated a value of $420,000 (assessed value $79,800), submitted in support of the original valuation.  An evidentiary hearing was held on January 17, 2006, in the Jackson County Courthouse before senior hearing officer Luann Johnson.  Complainants appeared pro se.  Respondent appeared by counsel, William Snyder.  On March 1, 2006, Complainants filed a rebuttal letter addressing problems which they believed existed in Respondent’s appraisal report.  They also sought to introduce a newspaper article.  The newspaper article will not be considered because it is hearsay evidence and was submitted after the close of the record.

EXHIBITS

            The following exhibits were entered into the record:

Complainants’ Exhibits

            Exhibit A – 28 R Lake Shore Drive Information

Respondent’s Exhibits

            Exhibit 1 – Appraisal Report

FINDINGS OF FACT

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

            2.         The subject property is 7,500 square foot lake front lot improved with a 2905 square foot one and one-half story three bedroom, two and one half bath, home built in 2000.  The improvements are characterized as being in very good condition, based upon an exterior inspection.  The property is identified as parcel number 54-820-07-48-00-0-00.000, more commonly known as 28 R Lake Shore Drive, Lake Lotawana, Missouri.

            3.         Respondent’s appraiser found sales of three similar homes which sold for $307,700, $280,000 and $315,000.  These homes sold between August 2004 and September 2005 and were located within one-tenth of a mile from the subject property.  Respondent’s appraiser adjusted for time of sale, cove location, lot square footage, quality of construction, age of improvements, condition of improvements, square footage of improvements, garages and carports, decks and docks.  After adjustments, these properties indicated a range of value for the subject property between $420,764 and $428,361.  Based upon these sales, Respondent’s appraiser determined a market value for the subject property of $420,000 on January 1, 2005.   Respondent’s appraisal was submitted to support the value originally determined by the assessor and approved by the Board of Equalization.

            4.         Complainants testified that they purchased the lot with a cabin for $45,000 in 1991 and subsequently built the home for $165,000 in 2000.  Complainants presented no appraisal report in support of their opinion that the correct market value for the property was only $225,000 on January 1, 2005.  Complainants have failed to present substantial and persuasive evidence in support of their opinion of value.

5.         Complainants relied upon what they believed to be assessments of sale properties to support their opinion that their property was being valued at a higher percentage of market value that other residential properties in Lake Lotawana.  Complainants presented county records tending to indicate that that some properties which sold at Lake Lotawana during 2004 were selling for more than the appraised value shown by the county for January 1, 2005.  Likewise, Complainants presented county records which tended to show that some properties at Lake Lotawana had sold in 2005, after the assessor’s books had closed, for amounts greater than the appraised value shown by the county for January 1, 2005.   No evidence was presented which would allow us to ascertain how this sample related to entire pool of residential properties in Jackson County; the entire pool of residential properties at Lake Lotawana; or even the entire pool of properties which had sold at Lake Lotawana over the suggested time period.  The fact that a few properties in the county may be assessed at less than their actual sales prices does not demonstrate discrimination. 

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

            7.         The true value in money for the subject property on January 1, 2005, and

January 1, 2006, is $380,400 (assessed value $72,280) as originally determined by the assessor and approved by the Board of Equalization.

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).

Discrimination

            Where there is a claim of discrimination based upon a lack of valuation consistency, Complainants have the burden to prove:

            1.         The level of assessment for the subject property in 2005.  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.

            2.         The average level of assessment for residential property in Jackson County in 2005.  This is done by (a) independently determining the market value of a representative sample of residential properties in Jackson County; (b) determining the assessed value placed on the property the assessor’s office for the relevant year; (c) dividing the assessed value by the market value to determine the level of assessment for each property in the sample; and (d) determining the mean and median of the results.

            3.         That the disparity between (1) and (2) is grossly excessive.  Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986).

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).

Comparable Sales Approach

            The comparable sales approach uses prices paid for similar properties in arms-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

             In order to prevail on a claim of overvaluation, Complainants must present an opinion of value and then present substantial and persuasive evidence tending to demonstrate that their opinion of value is supported by market evidence.  Complainants have failed to meet this burden of proof. 

In order to prevail on a claim of discrimination, Complainants must first prove the value of their property and then prove that a statistically significant number of other residential properties in the County are being valued at a lower percentage of market value than the subject property.  Complainants have failed to meet this burden.

Complainants argued, in their letter dated February 25, 2006 and received March 1, 2006, that Respondent’s appraiser (1) misstated the basement finish; (2) indicated that she had done an interior inspection of the property; and (3) made excessive age adjustments on the comparable properties.  Issues concerning basement finish should have been raised at hearing where it could have been addressed by Respondent.  Respondent’s appraisal report indicates, on the page numbered as 1 of 6, “An interior inspection was not allowed.”  Respondent’s appraiser also testified that she made several requests to view the interior of the subject property but those requests were declined.  While it is true that the boilerplate on Respondent’s appraisal form indicated an interior inspection, typewritten language and sworn testimony are controlling over boilerplate on an appraisal form.  Finally, Complainants characterize Respondent’s adjustments to comparables as being merely adjustments for time.  However, a review of the adjustment grid indicates that the adjustments represent multiple areas of variance, not solely a time adjustment.  The evidence does not support Complainants’ post-hearing claims of blatant inaccuracies.

ORDER

            The assessed value determined 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 Jackson 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 29, 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 29th day of March, 2006, to:  Dale Hart, 28R Street, Lake Lotawana, MO 64086, Complainant; William Snyder, Deputy County Counselor, Jackson County Courthouse, 415 E. 12th Street, Room 200, Kansas City, MO 64106, Attorney for Respondent; Michael O’Flaherty, Director of Assessment; Mary Jo Spino, Clerk; Mike Pendergast, Director of Collections, Jackson County Courthouse, 415 E. 12th Street, Kansas City, MO 64106; and Bob Ensminger, Real Estate Records, City of Kansas City, 1st Floor, City Hall, 414 E. 12th Street, Kansas City, MO 64106.

 

 

 

_______________________________

Barbara Heller

Legal Coordinator