State Tax Commission of Missouri

KENNETH HENSLEY, )

)

Complainant, )

)

v. ) Appeal Number 05-54500

)

BETTY HARMISON, ASSESSOR, )

DAVIESS COUNTY, MISSOURI )

)

Respondent. )

DECISION AND ORDER

HOLDING

The decision of the assessor, affirmed by the Board of Equalization, setting value at $148,140 (assessed value $28,150) is SUSTAINED.

ISSUE

The issues in this case are the true market value of residential real property and discrimination.

SUMMARY

The subject property is a lakefront residence which was originally valued by the assessor at $148,140 (assessed value $28,150). Upon appeal, the Board of Equalization affirmed said value. Complainant appeals asserting a value of $110,000 (assessed value $20,900). An evidentiary hearing was held on December 20, 2005, in the Daviess County Courthouse before senior hearing officer Luann Johnson. The parties appeared pro se.

EXHIBITS

The following exhibits were entered into the record:

Complainant’s Exhibits

Exhibit A – Photograph

Exhibit B – Photograph

Exhibit C – Photograph

Exhibit D – Photograph

Respondent’s Exhibits

Exhibit 1 – Appraisal Report

Exhibit 2 – Property Record Card, Sales/Sales Letters/Locator Map

FINDINGS OF FACT

1. Jurisdiction is proper. Complainant timely filed his appeal from the decision of the Daviess County Board of Equalization.

2. The subject property is a 22,680 square foot irregularly shaped lake front lot improved with a 1,200 square foot earth contact home which is 15 years old and in average condition for its age. The home has two bedrooms and one bath. Site improvements include a patio and dock. The property is identified as parcel number 14-3.0-8-1-05-29, more commonly known as 1812 Lake Viking Terrace, Gallatin, Missouri. Ex. 1, Tr. 4.

3. Respondent’s appraiser found sales of three similar earth contact homes which sold for $204,000, 143,000 and $160,500. Respondent’s appraiser adjusted for size of lot, style of home, number of garages, special financing, and site improvements. After adjustments, these properties indicated a range of value for the subject property between $190,300 and $202,500. Based upon these sales, Respondent’s appraiser determined a market value for the subject property of $200,000 on January 1, 2005. Ex. 1.

4. Complainant presented no market sales to support his opinion of value but testified that he thought the increase in value was excessive. He testified that his home was merely a basement with a roof which he believed that he could rebuild for $32,000 but later indicated that this estimate did not include interior finish. Complainant further testified that his roof was original and needed replacing and that his lot suffered from drainage problems. Complainant’s evidence is not substantial and persuasive to support his opinion that the market value of his property on January 1, 2005, was $110,000.

5. Complainant’s claim of discrimination is based upon his belief that his market value may have increased more than everyone else’s property in the County. He testified that the Board of Equalization advised him that they did not raise property values in the City of Gallatin as much as they did at Lake Viking. Complainant presented no evidence indicating that a statistically significant number of residential properties in Daviess County were being assessed at lower percentage of market value than the subject property. Complainant’s evidence is not substantial and persuasive to establish discriminatory treatment.

6. Respondent testified that market sales indicated that some properties in the county were being undervalued and that the county was taking steps to get all properties on at market value. She further indicated that additional increases may be necessary. She testified that she believed that Complainant’s property was still undervalued.

7. 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.

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

January 1, 2006, is $148,140, as 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).

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).

Discrimination

Where there is a claim of discrimination based upon a lack of valuation consistency, Complainant has 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 Daviess County in 2005. This is done by (a) independently determining the market value of a representative sample of residential properties in Daviess 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).

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 Complainant had to (1) establish the market value of his property; (2) establish the market value of a representative sample of other residential properties in Daviess County; and (3) demonstrate that the difference between his assessment ratio and that of the representative sample was grossly disparate. Complainant has failed to meet his burden of proof of either overvaluation or discrimination.

The evidence suggests that at $148,140, Complainant’s property may still be under assessed and grounds exist to raise his property value to $200,000, as suggested by comparable sales. However, because no evidence concerning the average level of assessment in the county was presented and for the sake of maintaining uniformity, we affirm the Board of Equalization.

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 Daviess 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 23, 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 23^rd day of March, 2006, to: Kenneth Hensley, 3205 563 Road, Albany, MO 64402, Complainant; Julia Filley, Prosecuting Attorney, 102 N. Main, Gallatin, MO 64640, Attorney for Respondent; Betty Harmison, Assessor, 102 N. Main, Second Floor, Gallatin, MO 64640; Linda Steward, Clerk, 102 N. Main, Second Floor, Gallatin, MO 64640; Rita Rains, Treasurer and ex officio Collector, 102 N. Main, Gallatin, MO 64640.

_______________________________

Barbara Heller

Legal Coordinator