State Tax Commission of Missouri

 

RICHARD & MARY LEE HERNANDEZ,     )

                                                                        )

                                    Complainants,               )

                                                                        )

            v.                                                         )           Appeal Number 05-32010

                                                                        )

CATHY RINEHART, ASSESSOR,                )

CLAY COUNTY, MISSOURI                       )

                                                                        )

                                    Respondent.                 )

 

DECISION AND ORDER

 

HOLDING

          The decision of the assessor, affirmed by the Board of Equalization, setting value at $232,000 (assessed value $44,080) is SUSTAINED.

ISSUE

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

SUMMARY

The subject property is a residential property which was originally valued by the assessor at $232,000 (assessed value $44,080).  Upon appeal, the Board of Equalization affirmed said value.  Complainants appeal asserting a value of $215,000 (assessed value $40,850).  An evidentiary hearing was held on January 10, 2006, in the Clay County Administration before senior hearing officer Luann Johnson.  Complainants appeared pro se.  Respondent appeared by Patricia Hughes, Esq.

EXHIBITS

            The following exhibits were entered into the record:

Complainants’ Exhibits

            Exhibit 1 – Information on Subject Property

Respondent’s Exhibits

            Exhibit A – Appraisal Report

            Exhibit B – Credentials of Michelle Stryker

FINDINGS OF FACT

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

            2.         The subject property is .65 acre lot improved with a one and one half story 2,535 square foot home built in approximately 1940 with an effective age of 25 years.  The home is of very good quality construction and in very good condition.   The home has four bedrooms and two and one half baths with a partially finished basement, a one car garage, two fireplaces, a covered front porch, patio, wood deck, covered back porch and a pool.  The property is identified as parcel number 13910000900500, more commonly known as 5700 NE Wilson Blvd., Kansas City, Missouri.  

            3.         Respondent’s appraiser found sales of three similar properties within .37 miles of the subject property which sold for $220,000, $225,000, and $233,450.  Respondent’s appraiser adjusted for quality of construction, age, condition, square footage, basement finish, number of garages, porches decks and patios and other amenities.  After adjustments, these properties indicated a range of value for the subject property between $235,000 and $259,000.  Based upon these sales, Respondent’s appraiser determined a market value for the subject property of $245,000 on January 1, 2005.  Complainants testified that some improvements were made to a porch after the subject tax day, but those improvements were not included in Respondent’s estimate of value.

            4.         Complainants testified that there were a number of issues with their home and their neighborhood that made it less desirable that Respondent’s comparable sales:

            a.         The Village of Oakwood is a much more desirable neighborhood that the Village                                   of Oaks because:

 

                                    1.  The homes are generally larger;

                                    2.  The lots are generally larger;

                                    3.  The homes are better maintained;

                                    4.  Oakwood has sewers but Oaks has septic tanks;

                                    5.  Oakwood has better water pressure;

                                    6.  Oakwood has city police protection while Oaks has to rely on

                                          the Clay County Sheriff’s Office for police protection;

                                    7.  Oakwood has storm sewers while Oaks has ditches.

                        b.  Complainants’ testified that their home is less desirable because:

                                    1.  The thickness of the walls leaves less interior living space;

                                    2.  They have low water pressure in their upstairs bathroom;

                                    3.  The ceiling in the upstairs bathroom is only 5 foot six inches;

                                    4.  The bathroom in the basement is not functional;

                                    5.  The roof tiles require constant maintenance;

                                    6.  There is only one heating/air conditioning vent in the attic area.

            Respondent’s appraiser testified that it was very difficult to find a market impact between homes located in the Village of Oakwood and homes located in the Village of Oaks.  The market treats the two villages as the same neighborhood. 

            5.         Complainants presented information showing a diversity of sales prices in the area but did not present an appraisal report in support of their opinion of value or which would tend to demonstrate that Respondent’s value was incorrect.

            6.         Complainants’ evidence suggests that property improvements were made after January 1, 2005, which were not considered in Respondent’s estimate of value.  This may or may not have warranted an increase in value for tax year 2006.  Inasmuch as we have no evidence of possible market reaction to this improvement, we do not assign a higher value for tax year 2006.

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

January 1, 2006, is $232,000, 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).

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, 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.  The overwhelming evidence suggests that Complainants’ property would sell for at least $232,000 as determined by the assessor and affirmed by 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 Clay 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:  Richard Hernandez, 5700 N.E. Wilson Boulevard, Kansas City, MO 64118, Complainant; Patricia Hughes, Assistant County Counselor, 17 W. Kansas, Liberty, MO 64068, Attorney for Respondent; Cathy Rinehart, Assessor, Pamela Mason, Clerk, Sandra Reeves, Collector, Administration Building, 1 Courthouse Square, Liberty, MO 64068.

 

 

 

_______________________________

Barbara Heller

Legal Coordinator