State Tax Commission of Missouri
WILLIAM J. HILL, )
)
Complainant, )
)
v. ) Appeal Number 05-30219
)
MICHAEL O’FLAHERTY, )
DIRECTOR OF ASSESSMENT, )
JACKSON COUNTY, MISSOURI )
)
Respondent. )
DECISION AND ORDER
HOLDING
The decision of the Board of Equalization, setting value at $417,000 (assessed value $79,230) is SUSTAINED.
ISSUE
The issue in this case is the true market value of residential property.
SUMMARY
The subject property is a residential property which was originally valued by the assessor at $625,680 (assessed value $118,880). Upon appeal, the Board of Equalization lowered value to $417,000 (assessed value $79,230). Complainant appeals asserting a value of $350,000 (assessed value $66,500). At hearing, Respondent proposes a value of $440,000 (assessed value $83,600). An evidentiary hearing was held on January 25, 2006, in the Jackson County Courthouse before senior hearing officer Luann Johnson. Complainant appeared pro se. Respondent appeared by counsel, Randy Collins.
EXHIBITS
The following exhibits were entered into the record:
Complainant’s Exhibits
Exhibit A – Warranty Deed, June 4, 2002
Exhibit B – Jackson County Property Account Summary
Exhibit C – Rehab Cost Information
Exhibit D – Respondent’s Appraisal Report
Exhibit E – Jackson County Property Account Summary
Exhibit F – Historical Inventory of 711 Brush Creek
Respondent’s Exhibits
Exhibit 1 – Appraisal Report
FINDINGS OF FACT
1. Jurisdiction is proper. Complainant timely filed his appeal from the decision of the Jackson County Board of Equalization.
2. The subject property is an 11,300 square foot lot improved with a two-story traditional style home built in 1924. The subject home contains 3,476 square feet of above grade living area and 1,738 square feet of basement space. The home is of good to very good quality construction but is only in fair to average condition. The property is located in an upscale historical neighborhood in midtown Kansas City. It is identified as parcel number 30-510-06-06, more commonly known as 4545 Rockhill Terrace, Kansas City, Missouri.
3. Respondent’s appraiser found sales of three similar homes within one-third of a mile from the subject property which sold for $595,000, $365,000 and $650,000. These comparable properties sold in March and July of 2004. Respondent’s appraiser adjusted for lot size, quality of construction, condition, square footage, heating and cooling, and number of garages. He determined that all sales had functional utility similar to the subject property. After adjustments, these properties indicated a range of value for the subject property between $400,600 and $477,000. Based upon these sales, Respondent’s appraiser determined a market value for the subject property of $440,000 on January 1, 2005. Respondent’s appraiser testified that he had inspected the subject property and noted on his appraisal report the deficiencies pointed out by Complainant including lack of central air, no plumbing updates, damage to the concrete floor, water in the basement and the fact that the main bathroom was not operational. Values in this neighborhood are being driven in part because of the designation of the neighborhood on the national registry of historical places and its close proximity to the Nelson Art Gallery.
4. Complainant did not present an appraisal report or market sales in support of his opinion of value. Complainant determined his opinion of value based upon his knowledge of the property and by amortizing his original purchase price by the number of years he had held the property. Complainant’s evidence is not substantial and persuasive to demonstrate that his property has been overvalued.
5. 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.
6. Respondent’s appraisal report supports the Board of Equalization’s value. The true value in money for the subject property on January 1, 2005, and January 1, 2006, is $417,000, as determined 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, Complainant must present
an opinion of value and then present substantial and persuasive evidence
tending to demonstrate that his opinion of value is supported by market
evidence. Complainant has failed to meet
this burden of proof. The overwhelming
evidence suggests that Complainant’s property would sell for at least $417,000
as determined by the Board of Equalization.
ORDER
The assessed value determined by the Board of Equalization is AFFIRMED.
The clerk for
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 May 22, 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 22nd day of May, 2006, to: William Hill, 4545 Rock Hill Terrace, Kansas City, MO 64106, 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