State Tax Commission of Missouri

CHARLES F. HAYDEN, )

)

Complainant, )

)

v. ) Appeal No. 05-73000

)

ROBERT RAINES, ASSESSOR, )

MORGAN COUNTY, MISSOURI, )

)

Respondent. )

ORDER

AFFIRMING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

On January 20, 2006, Senior Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) affirming the assessment by the Morgan 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 (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 or other witnesses who testify on the issue of reasonable value, but may believe all or none of the 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).

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 (Mo. 1984); Pulitzer Pub. Co. v. Labor and Indus. Relations Commission, 596 S.W.2d 413 (Mo. 1980); St. Louis County v. STC, 562 S.W.2d 334 (Mo. 1978); St. Louis County v. STC, 406 S.W.2d 644 (Mo. 1966).

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 (Mo. 1978); Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Holt v. Clarke, 965 S.W.2d 241 (Mo. App. W.D. 1998); Smith v. Morton, 890 S.W.2d 403 (Mo. App. E.D. 1995); Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).

Complainant’s letter setting forth his Application for Review was essentially an argument as to the conclusions reached by the Hearing Officer. Complainant failed to set forth any legal claim or basis as a ground to find the Hearing Officer had abused his discretion or acted in an arbitrary or capricious manner. Complainant simply had an opinion as to the fair market value of the property different from that determined by the Hearing Officer. In other words, Complainant failed to state specific grounds upon which it was claimed the decision was erroneous. In the absence of specific facts of error or specific errors in applying the law, the Application for Review must be summarily denied.

The Hearing Officer did not err in his determinations as challenged by Complainant.

Complainant submitted with his application for review six documents identified as Exhibits A through F. These documents were not part of the record in the appeal before the Hearing Officer, therefore, no error was committed in not giving consideration to them. Furthermore, when filing an application for review, neither party is entitled to offer additional evidence. Therefore, no consideration can be given to Exhibits A through F. The Commission notes nothing in the tendered documents provides evidence to support a finding of fair market value for the subject property as of January 1, 2005, of $66,400 as proposed by Complainant.

The Hearing Officer’s determination that Complainant failed to present substantial and persuasive evidence to establish a fair market value of $66,400 is well supported by the record in this appeal. Complainant’s challenges to the Assessor’s valuation (Exhibit 1) finding an indicated range of value for the subject property of $90,000 to $101,000 are irrelevant, because the Hearing Officer did not affirm the Board’s valuation based upon this evidence. The Board’s value was sustained because Complainant failed to meet his burden of proof to present substantial and persuasive evidence to establish fair market value. See, DECISION, Complainant’s Burden of Proof, pp. 5-7.

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 MISSOURI

_____________________________________

Bruce E. Davis, Chairman

_____________________________________

Sam D. Leake, Commissioner

_____________________________________

Jennifer Tidwell, Commissioner

CHARLES F. HAYDEN, )

)

Complainant, )

)

v. ) Appeal Number 05-73000

)

ROBERT RAINES, ASSESSOR, )

MORGAN COUNTY, MISSOURI, )

)

Respondent. )

DECISION AND ORDER

HOLDING

Decision of the Morgan County Board of Equalization reducing the assessment made by the Assessor, AFFIRMED, Hearing Officer finds true value in money for the subject property for tax years 2005 and 2006 to be $79,200, assessed value of $15,050.

Complainant appeared pro se.

Respondent appeared pro se.

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 Morgan County Board of Equalization, which reduced the valuation of the subject property. The Assessor determined an appraised value of $81,420 (assessed value of $15,470, as residential property). The Board reduced the value to $79,200 (assessed value of $15,050). Complainant proposed a value of $66,400 (assessed value of $12,610). A hearing was conducted on January 10, 2006, at the Morgan County Courthouse, Versailles, Missouri.

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 two exhibits. Exhibit A – a repair bid for repair of a water leak in the basement, with photo five photographs showing water damage to Complainant’s basement and other deferred maintenance of the subject house. Exhibit B – a letter from Complainant to Chief Counsel of the Commission advising that the insurance coverage on the subject house had been decreased. Exhibits A & B were received into evidence.

Complainant testified in his own behalf. He gave his opinion of value for the subject property to be $66,400. Complainant calculated this by subtracting the bid for repairs of $15,000 from the original value of $81,400 that the Assessor had placed on the property.

Respondent’s Evidence

Respondent offered into evidence Exhibit 1 – a valuation report on the subject property. Exhibit 1 consisted of a summary statement of Respondent’s valuation of the property under appeal, six photographs of the subject, the Property Record Card on the Subject and a sales comparison grid utilizing three sales deemed comparable to the subject, with supporting sales letters, property records cards, photos and a locator map for the comparable properties. Exhibit 1 was received into evidence.

Respondent testified as to his sales comparison analysis and his valuation of the property. Respondent’s evidence was offered to sustain the value determined by the Board of Equalization.

FINDINGS OF FACT

1. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Morgan County Board of Equalization.

2. The subject property is located at 34082 Ivy Bend Road, Stover, Missouri. The property is identified by locator number 18-70-25-300-005-024.00. The property consists of a 60 x 219 foot lot on the Lake of the Ozarks. The lot is improved by a house built in 1972 with 947 square feet of living area and 663 square feet of basement area. The house suffers from water leakage and damage in the basement. This is a curable condition, estimate to cost $15,000 to repair. Exhibits A & 1.

3. There was no evidence of new construction and improvement from January 1, 2005, to January 1, 2006.

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, 2005, to be $66,40.

5. The true value in money (fair market value) for the subject property is $79,200, assessed value of $15,050, as set by the Board.

CONCLUSIONS OF LAW AND DECISION

Jurisdiction

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.

Board of Equalization Presumption

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).

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 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 (Mo. banc 1993). It is the fair market value of the subject property on the valuation date. Hermel, supra..

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.

Methods of Valuation

Proper methods of valuation and assessment of property are delegated to the Commission. It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case. See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra; Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975).

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 (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).

Complainant failed to meet his burden of proof in this instance. The evidence of the cost for repairing the water leak problem does not establish fair market value. It only establishes the estimate to repair the problem. Likewise, the letter advising the Chief Counsel that the insurance coverage on the subject house had been reduced does not establish fair market 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 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965).

Complainant failed to offer an opinion of value based upon a proper foundation or proper elements. Mr. Hayden calculated an opinion of value by subtracting the cost of repairs for water damage of $15,000 from the Assessor’s original fair market value. He assumed that the value of $81,400 represented fair market value without any allowance or deduction for the issue of the water leakage and damage. This method of arriving at an opinion of fair market value is improper.

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). Mr. Hayden’s methodology is not recognized as an appropriate appraisal practice for arriving at true value in money for real property. Accordingly it can be given no probative weight or value in this appeal. Furthermore, Respondent’s sales comparison analysis demonstrated that the fair market value of the subject property fell within a range of $90,00 to $101,000 taking into account the cost for repair of the water problem. There is no evidence on the record to establish the fair market value of the subject property as of January 1, 2005, to have been $66,400. Therefore, the valuation made by the Board of equalization must be affirmed.

ORDER

The assessed valuation for the subject property as determined by the Board of Equalization for Morgan County for the subject tax day is AFFIRMED.

The assessed value for the subject property for tax years 2005 and 2006 is set at $15,050.

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 Morgan 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 January 20, 2006.

STATE TAX COMMISSION OF MISSOURI

_____________________________________

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 20^th day of January, 2006, to: Charles Hayden, 34082 Ivy Bend Rd., Stover, MO 65078, Complainant; Marvin Opie, Prosecuting Attorney, Morgan County Justice Center, 211 E. Newton, Versailles, MO 65084, Attorney for Respondent; Robert Raines, Assessor, 100 E. Newton, Versailles, MO 65084; Cathy Daniels, Clerk, 100 E. Newton, Versailles, MO 65084; Clark Hunter, Collector, P.O. Box 315, Versailles, MO 65084.

____________________________

Barbara Heller, Legal Coordinator