State Tax Commission of Missouri

2. Description. The subject property is located at 609 South Central Avenue, Clayton, Missouri. The property is identified by locator number 19K611101. The property consists of .1791 of an acre lot (7,800 square feet) improved by a two-story brick, single-family residence with a three-car basement garage. The home has 3,992 square feet of living area with a full basement. There is a wine cellar and a small office in the basement. The home was built in 2003. The residence has a total of 10 rooms, including 4 bedrooms and 3 and a half baths. Exhibit 1; Exhibit A.

3. Cost of Construction. The subject home was constructed at a cost of $866,000 not including land value. Exhibit 1, p. 5; Exhibit 3.

4. Purchase of Site. The subject was built on land that was previously part of another parcel of land – 610 South Meramec Avenue – 16,800 square feet, on which a home existed. The 610 South Meramec Avenue tract extended to South Central Avenue. The South Meramec property was purchased in 2002 for $770,000. The purchasers then split the parcel and sold off the existing home with 9,000 square feet of land for $520,000, leaving 7,800 square feet of ground upon which the subject home was constructed.

5. Out of Pocket Cost. The out of pocket cost for land and construction was $1,116,000 ($250,000 + $866,000 = $1,116,000). This equates to a per square foot of living area value of $279.56 ($1,116,000 ÷ 3,992 = $279.56)

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

Indicated Values Under Cost Approaches

Land Value

7. Land Value by Complainant’s Appraiser. Mr. Demba calculated the land value for the subject lot by simply subtracting the sale price of $520,000 for the 9,000 square feet lot and existing home from the 2002 purchase price of $770,000 to arrive at his land value of $250,000.

8. Land Value by Respondent’s Appraiser. Ms. Wikoff determined land value by a sales comparison analysis relying on sales of four tracts of land which she deemed comparable to the subject. The indicated land value under this method was $393,000.

9. Recognized Methods of Land Value. There are six generally recognized methods for determination of land value. These are: sales comparison, extraction, allocation, subdivision development, land residual and ground rent capitalization. Of these techniques, the sales comparison is usually the most reliable. The Appraisal of Real Estate, 12^th Ed., Appraisal Institute, 2001, pp.61-62.

10. Definitions of Valuation Methods.

a. Extraction – method of estimating land value in which the depreciated cost of the improvements on the improved property is estimated and deducted from the total sale price to arrive at an estimated sale price for the land; most effective when the improvements contribute little to the total sale price of the property. Ibid., p. 335.

b. Allocation – method of estimating land value in which sales of improved properties are analyzed to establish a typical ratio of land value to total property value and this ratio is applied to the property being appraised or the comparable sale being analyzed. Ibid.

c. Subdivision Development – a method of estimating land value when subdivision and development are the highest and best use of the parcel of land being appraised. All direct and indirect costs and entrepreneurial profit are deducted from an estimate of the anticipated gross sales price of the finished lots; the resultant net sales proceeds are then discounted to present value at a market-derived rate over the development and absorption period to indicate the value of the raw land. The Dictionary of Real Estate Appraisal, 3^rd Ed. Appraisal Institute, 1993, p. 354.

d. land residual – a method of estimating land value in which the net operating income attributable to the land is isolated and capitalized to produce an indication of the land’s contribution to the total property. Ibid., p. 199.

e. ground rent capitalization – a method of estimating land value that is applicable when the ground rent corresponds to the owner’s interest in the land, leased fee interest, applied by capitalizing ground rent at a market-derived rate. This method is useful when comparable rents, rates, and factors can be developed from an analysis of sales of leased land. Ibid, p. 166.

11. Wikoff Method Persuasive. Mr. Demba did not utilize any of the recognized methods for valuation of land under a cost approach. His approach essentially relied on a sale of an improved land site of 16,800 square feet to value a vacant site with only 7,800 square feet. Even if Mr. Demba had done an extraction method, which would not have been proper, since the improvements to the original 16,800 square feet site obviously did add significant value to the site, he would have to adjust for the significantly larger size (215%) of the original site than the vacant site upon which the subject home was constructed. The only appropriate method for arriving at an indicated value for the subject land for a cost approach was the sales comparison methodology. Ms. Wikoff presented a sound sales comparison to arrive at the land value. The opinion of value derived from this recognized approach is substantial and persuasive evidence that the subject’s land value was $393,000 as of January 1, 2005.

Improvement Value

12. Actual Cost of Improvement. The cost for the home completed in 2004 was $866,000, not including land. Exhibit 3.

13. Improvement Value by Complainant’s Appraiser. Mr. Demba developed a replacement cost new less depreciation for improvements of $707,200, relying on Marshall and Swift. However, asserted that Mr. Demba elected to use the amount of $800,000 as the replacement cost new. “The appraisers are aware the owner spent over $800,000 (as shown on the building permit). Therefore, we will use the $800,000 for improvement costs.” Exhibit A, p. 55. However, the appraiser’s final indicated value of land and improvements, using the land value of $250,000, of $947,200 won’t calculate. Land value of $250,000 plus improvement value of $800,000 equals $1,050,000, not $947,200. It is clear that even though the appraiser knew over $800,000 had been spend on the improvements, Mr. Demba only allotted $697,200 for replacement cost new for improvements ( $947,200 - $250,000 = $697,200). This was before taking a 33% adjustment for “standard deviation.”

The opinion of value determined for replacement cost new by Complainant’s appraiser represents a depreciation, in less than one year from occupancy, of the actual cost to construct of 19.5% ($866,000 - $697,200 = $168,800 ÷ $866,000 = .195), even though Mr. Demba concedes a depreciation factor of only 1% for the subject house. Exhibit A, p. 55. There is no evidence to warrant such a level of depreciation. Furthermore, it goes beyond basic logic to conclude that a newly constructed home occupied in mid-2004 (Exhibit 3) would depreciate nearly 20%. If Mr. Demba had simply utilized the actual reported cost for the new home of $866,000, instead of taking a $66,000 or 7.63% deduction, and had applied his 1% for depreciation, he would have arrived at an indicated replacement cost new less depreciation for the home of $857,340 ($866,000 x .01 = $8,660; $866,000 - $8,660 = $857,340). This would have represented a reasonable and logical indicated value for the cost approach.

The conclusion of value under the cost approach for the improvements, by Mr. Demba of $947,200 (Exhibit A, p. 55) irrespective of whether the appraiser’s “standard deviation” was proper, is not well founded. It lacks any merit as substantial and persuasive evidence for establishing the value of the improvements under the cost approach.

14. Improvement Value by Respondent’s Appraiser. The calculation of the replacement cost new less depreciation calculated by Ms. Wikoff relying on the Marshall Swift Cost Handbook was appropriately performed. It presents substantial and persuasive evidence of value for the improvements. Furthermore, the indicated value of $832,095 for the home and yard improvements before depreciation is supported by the actual cost reported of $866,000. Exhibit 3.

Indicated Cost Approach Value

15. Respondent’s Value Given Probative Weight. The opinion of value under the cost approach provided by Ms. Wikoff of $1,211,400 as developed in Exhibit A has probative value and establishes the upper limit of the fair market value of the subject as of January 1, 2005. The value developed by the Demba cost approach cannot be given any probative value under Findings of Fact 11 and 13, supra.

Indicated Values Under Sales Comparison Approaches

16. Indicated Value by Complainant’s Appraiser. The three sale properties utilized by Mr. Demba for his sales comparison analysis were appropriate for the present appraisal problem. Exhibit A, pp. 37-39; pp. 41-43; pp.45-47. The adjustments made by Mr. Demba to arrive at his Adjusted Sales Price for each comparable were appropriate. Exhibit A, pp. 40, 44, 48. The Adjusted Sales Prices determined by the appraiser for the three properties were
$1,088,557, $1,032,280 and $1,122,175. From these indicated values a Value Estimated Rounded of $1,081,300 was determined. This represented a per square foot value of $270.87.

17. Indicated Value by Respondent’s Appraiser. The five sale properties utilized by Ms. Wikoff for her sales comparison analysis were appropriate for the present appraisal problem. Exhibit 1, pp. 15-16, 24-25, 29. The adjustments made by Ms. Wikoff to arrive at her Adjusted Sales Price for each comparable were appropriate. Exhibit 1, pp. 17-20. The Adjusted Sales Prices determined by the appraiser for the first five properties were: $1,062,200, $1,061,200, $1,067,300, $1,081,300, and $1,066,100. From these indicated values an Indicated Value of $1,065,000 was determined. This represented a per square foot value of $266.78.

Ms. Wikoff also presented a sixth sale property. The Adjusted Sales Price for the sixth property was $1,237,935. The appraiser placed no weight on this sale apparently because it sold in April 2005. The sale in April 2005 does not disqualify this sale from consideration. The sale of this property and the adjusted sale price is relevant evidence on the issue of fair market value for the subject as of January 1, 2005. The sale date (4 months after tax date) is relevant as a sale which occurred four months prior to tax date.

Conclusion of Value

18. Demba Standard Deviation Location Adjustment Not Proper. The additional location adjustment made by Complainant’s appraiser under his standard deviation analysis is not supported by any recognized text or treatise for adjusting for an alleged over-improvement. See, Standard Deviation Location Adjustment, infra.

19. Complainant’s Evidence Not Persuasive. 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 $724,500, as proposed.

20. Indicated Values Supported By Substantial and Persuasive Evidence. The indicated values for the subject property supported by substantial and persuasive evidence on the record fall in the following range: $1,237,935^e; $1,211,400^a; $1,122,175^c; $1,116,000^b; $1,088,557^c; $1,081,300^d; $1,081,300^f; $1,067,300^d; $1,066,100^d; $1,065,000^g; $1,062,200^d; $1,061,200^d; $1,032,280^c.
a – Respondent’s Cost Approach; b – Complainant’s Out of Pocket Cost; c- Complainant’s Sales Comparables; d – Respondent’s Sales Comparables; e – Respondent’s Comp 6; f – Demba Value Estimated; g – Wikoff Indicated Value.

21. Median and Mean of Indicated Values. The range of values produces a median value of $1,081,300. The range of values produces a mean of $1,099,443. Removing the indicated values under Respondent’s Comparable 6 (e) and Respondent’s Cost Approach (a) value as tendering a value greater than the Assessor’s original value of $1,094,000 (Section 138.060, RSMo; 12 CSR 30-3.075) provides a median of $1,067,300 and a mean of $1,076,674.

22. Indicated Values of Same Sales. Both appraisers relied upon the sales of property at 248 Gay and 200 Lancaster. Mr. Demba arrived at an indicated value of $1,088,557 for the subject based on the sale of 248 Gay. Ms. Wikoff concluded on an indicated value of $1,067,300 for the subject based upon the same sale. Mr. Demba concluded on $1,033,280 as the indicated value for the property on Lancaster. Ms. Wikoff found the subject to be valued at $1,062,200 utilizing this sale. These two sales produce a much closer range of values, with a median of $1,064,750 and a mean of $1,062,835.

23. Respondent’s Proposed Value Persuasive. The value proffered on behalf of Respondent by Ms. Wikoff of $1,065,000 is supported by substantial and persuasive evidence to rebut the presumption of correct assessment by the Board and/or the Assessor and establish the true value in money at that value.

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.

Presumptions in Appeals

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).

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).

Ms. Karandjeff tendered her opinion of fair market value on her Complaint for Review of Assessment as $724,500. This opinion of value was based upon an appraisal report prepared by Ernest A. Demba, State Certified Real Estate Appraiser, dated May 4, 2005, opinion the value of $724,500 as of January 1, 2005. In most instances, such evidence would be substantial and persuasive to establish value. However, the Demba opinion rises and, in this instance falls, on his assertion that an adjustment based upon a standard deviation analysis to account for the claim of the subject property as an over-improvement is appropriate. Without this adjustment the Demba appraisal by itself rebuts the presumption the Board correctly value the subject and would establish the fair market value as of January 1, 2005, to be $1,081,300. Exhibit A, p. 49.

Given that Mr. Demba’s opinion of value of only $724,500 is fatally flawed the owner’s opinion of value is based upon improper elements and an improper foundation and can be given no probative weight in this appeal. Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965).

Standard Deviation Location Adjustment

The opinion of value presented by Complainant as developed by Mr. Demba rests upon two issues. These two issues are: (1) whether Complainant’s home is an over-improvement for the subject’s subdivision; and (2) if Complainant’s home is an over-improvement is an adjustment based upon a calculation of the standard deviation of the mean value for 2003 the proper means to adjust for this factor.

The Hearing Officer’s analysis of these two issues is guided by a fundamental principle for appeals before the Commission. That principle is – a taxpayer does not meet her burden if evidence on any essential element of her case leaves the Commission “in the nebulous twilight of speculation, conjecture and surmise.” See, Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980). In other words, having raised these two issues, the taxpayer bears the burden of proof and persuasion on each issue. Raising the claim that the subject home is an over-improvement to the subdivision does not establish that claim. Asserting that a standard deviation analysis is the proper method to account for an over improvement does not make it so. There must be substantial and persuasive evidence on each of these propositions as both are essential elements to the case the Complainant has presented. The evidence to establish either of the issues is insufficient to remove the “nebulous twilight of speculation, conjecture and surmise,” from the Hearing Officer’s mind. Neither issue has been proved by the Demba appraisal.

Over-Improvement

The first issue asserts that the subject home is an over-improvement to Davis Place, the subdivision in which Ms. Karandjeff’s home has been built. Mr. Demba arrives at his conclusion of the property being an over-improvement based upon his conclusion that the subject improvements “being far outside the standard deviation of the mean in Davis Place.” Exhibit A, p. 50. This conclusion is further based upon an analysis of the average home value per assessment information for 2003 taken from the Assessor’s records.

It is important to first understand what an over-improvement is when addressing a real estate appraisal problem.

Overimprovement – an improvement which is not the most profitable for the site on which it is placed because of its excessive size or cost, and consequent inability to develop the maximum possible land value. May be temporary or permanent. On overimprovement typically reflects environmental obsolescence, although a substantial market may exist for such property among a group which takes personal pride in owning the most expensive home in the block and is willing to pay a price commensurate with cost. Real Estate Appraisal Terminology, Revised Edition, Society of Real Estate Appraisers, (1984), p. 180.

Overimprovement. An improvement that does not represent the most profitable use for the site on which it is placed because it is too large or costly and cannot develop the highest possible land value; may be temporary or permanent. The Dictionary of Real Estate Appraisal, 3^rd Ed. Appraisal Institute, (1993), p. 257.

“An existing improvement that is substantially larger than the ideal improvement might represent an overimprovement in a particular market, … .” The Appraisal of Real Estate, 12^th Ed., Appriasal Institute,( 2001), p. 317.

Mr. Demba asserts that based upon his analysis of the appraised values placed on properties in Davis Place by the Assessor in his 2003 assessment, the subject property is an overimprovement because its value, in excess of $1,000,000 is beyond the standard deviation of the mean. However, no analysis was done, or if it was, is not reported as to the relation of the subject’s size to other homes in Davis Place.

Size of Improvement Not An Overimprovement

The subject property has 3,992 square feet of living area. According to the data provided in Exhibit A, pp. 60-62, there are twenty-three (23) homes in Davis Place showing living area within 500 square feet of the subject (3,492 – 4,492). These homes were built in a time period from 1927 to 1986. There are four (4) homes in excess of 4,000 square feet of living area, not including the subject. These homes were built in 1940, 1937, 1947, and 1935. Therefore, over a period of nearly 60 years a significant number of homes comparable in size to the subject were constructed in Davis Place. The subject is not the first home in excess of 3,500 square feet to be built in Davis Place. Based upon the size of the subject home, it is not an overimprovement in Davis Place.

Mr. Demba apparently is suggesting that a smaller, as well as, less expensive home should have been constructed on the subject lot. However, the appraisal report is totally lacking in providing any explanation as to how a smaller, less expensive home, would have been the “ideal improvement” for the lot. Nor does the Demba appraisal demonstrate how the Complainant’s house is not the “most profitable use” for the site. There is no basis to conclude that the subject improvements reflect environmental obsolescence. The evidence will simply not support a rational conclusion that the construction of the home under appeal has created an inability to develop the maximum possible land value for the site.

No evidence was forthcoming to demonstrate any stark contrast between the subject house and other houses on the subject street or other streets in close proximity to South Central which would support a conclusion of the Karandjeff home being an overimprovement for Davis Place. The evidence certainly does not establish that this situation is like constructing a two-story all brick 4,000 square foot home with a basement in a subdivision of vinyl sided 1800 square foot homes on slabs and crawl spaces. The comparables presented by Respondent’s appraiser on Venetian (1 block West of the S. Central) clearly demonstrate that based on general view and curb appeal, the subject property fits well within similar homes in Davis Place.

In other words, the construction of the Complainant’s home in 2003-04 does not meet the accepted definitions of an overimprovement based upon the size of the home.

Value Does Not Establish Overimprovement

Mr. Demba argues that an informed buyer would not pay as much for a home in Davis Place if the value of the surrounding homes is so much lower. From this general statement, unsupported by any market data or analysis of market data, Mr. Demba proceeds to determine that since the average home value as per the Assessor’s 2003 assessment information is $462,816 and the subject is worth, by his own opinion, $1,081,300, that the subject does not conform to the standard deviation of the mean value. Then from this rather circular reasoning, Mr. Demba makes a downward adjustment of $356,800 for an “additional location adjustment.” Two critical defects in the Demba assertion on this issue results in a failure to prove the subject is an overimprovement.

Influence of Surrounding Homes

The assertion that a well informed buyer would not pay $1,081,300 for the Complainant’s home on January 1, 2005, because the value of surrounding homes is lower is not supported by any market data in this record. Mr. Demba did not establish that the “surrounding homes,” whatever that may encompass are substantially lower than the value of the subject home as of January 1, 2005 either on a gross value or a unit value (per square foot of living area). Since Mr. Demba has put forth his proposition, it was incumbent upon him to present substantial and persuasive evidence to establish his argument.

No reference is made to the other homes on the 600 block of South Central which would draw down the value of the subject home by 33.3%. No analysis was presented demonstrating that homes in the 600 block of Meramec (street running parallel to South Central, 1 block West) would project a negative influence on the subject of 33.3%. It is established that within a block west of the subject there are two homes which recently sold for $264.77 ($950,000) and $350,60 ($1,222,535) per square foot of living area respectively. There is no analysis of any actual sales of alleged over improved properties from which the conclusion of a deduction of 33.3% is warranted.

Erroneous Valuation Year

The appraiser totally failed to establish market values for 2005 for properties in Davis Place. He simply elected to rely upon 2003 assessment data. He did not use actual sales values for recent sales of homes in Complainant’s subdivision. Assuming for the sake of discussion, without agreeing that the Demba standard deviation would be a proper method to account for an overimprovement, the adjustment is in error. Without showing the average fair market value for homes in Davis Place, based upon actual sales data for at least the years 2002, 2003 and 2004 and establishing by good appraisal methods the average fair market value for the other homes in Davis Place which had not sold during the period from 2002 through 2004, the conclusion that the average home value is $462,816 is in error. Irrespective of whether standard deviation is right, wrong or indifferent, the underlying, basic and critical factor – average home value – was not established for 2005.

Additional Location Adjustment

Mr. Demba characterizes his standard deviation adjustment as an “additional location adjustment. However, all three of his sale comparable properties were adjusted for difference in location. No citation was provided that the adjustment for an overimprovement is a “location adjustment.” The Hearing Officer’s research of the relevant literature on the subject failed to disclose a single source which addressed any adjustment for an overimprovement to be a location adjustment.

Summary on Issue of Overimprovement

Complainant’s evidence (Exhibit A and Testimony of Mr. Demba) failed to satisfy the required standard of substantial and persuasive to establish that the home under appeal is an overimprovement for Davis Place. There is sufficient evidence to establish that although Complainant’s home is one of the larger in Davis Place, there are a significant number of other homes in excess of 3500 square feet of living area. Given the recent construction at 8050 Venetian, the subject improvement may have simply been the first in what may be a series of new and larger homes being built in the subdivision. Complainant’s evidence fails to demonstrate that a willing buyer would consider the subject home an overimprovement and offer a discounted price for this factor.

Standard Deviation Argument

Having failed to establish the subject to be an overimprovement, the issue of the Demba reliance on his standard deviation analysis becomes moot. Since the Karandjeff home is not an overimprovement there is no need to a “location” or any other adjustment to account for a factor which does not exist. However, the Hearing Officer will address the issue of use of a standard deviation so as to not leave any loose ends in the Decision.

At the evidentiary hearing the Hearing Officer inquired of Mr. Demba as to any authoritative source which he relied upon for his location adjustment based upon a standard deviation based upon value for his assertion of overimprovement. Mr. Demba did not provide any such source. Mr. Demba asserted that the Tax Commission uses standard deviation in its ratio analysis all the time.

The following day, Mr. Demba faxed to the Hearing Officer his letter in which he cited to two sources as authority for using his standard deviation analysis. The two sources provided were: Property Assessment Valuation, International Association of Assessing Officer (1977), pp. 286-287 and Improving Real Property Assessment, International Association of Assessing Officer (1978), 5.3 – 5.10, pp. 127-154. The Hearing Officer has reviewed both of these sources. Neither is on point, nor does either provide an authoritative source for utilization of the standard deviation analysis for an adjustment for an overimprovement.

The information cited from Property Assessment Valuation in contained in the chapter title – The Mass Appraisal Process. The present case is not a mass appraisal matter. If a review and analysis were being done of mass appraisal in the County of St. Louis then it appears that Mr. Demba’s statistical analysis to arrive at a standard deviation might have some importance. Although the Hearing Officer would have serious doubts of its use when the data was derived from 2003 assessment data and only for a very limited universe of properties, instead of 2005 assessment data on a universe of properties representative of all of St. Louis County. Furthermore, the entirety of the discussion relative to the statistical analysis to arrive at the standard deviation relates to mass appraisal and ratio study. There is nothing contained in this chapter that addresses using such statistical analysis to make an adjustment in a sales comparison or cost approach for any factor. Absent such a showing the information contained in Property Assessment Valuation fails to provide an authoritative basis upon which the Hearing Officer can conclude that use of the standard deviation based on valuation is appropriate for making adjustments in an appraisal or that it has been recognized as such by in the appraisal field.

In like manner, the citation to Improving Real Property Assessment fails to establish any authority on this point. Chapter 5, which is the chapter cited by Mr. Demba, is titled Assessment-Ratio Studies and the Measure of Assessment Performance. Again the Hearing Officer has reviewed this chapter. While the chapter provides detailed discussion on a variety of topics related to assessment ratio studies, there is nothing from which it can be concluded that the use of the standard deviation as developed by Mr. Demba in Exhibit A to adjust indicated value in an appraisal report is a recognized and accepted methodology in the real estate appraisal industry.

Mr. Demba in his letter finally cited to USPAP (Uniform Standards of Profession Appraisal Practice) SR 1-2e (i) and SR 1-3a that an appraiser is to “identify and analyze the effects …., economic supply and demand, .. and market area trends:” Nothing in this general instruction establishes that Mr. Demba’s theory of taking the concept of standard deviation for mass appraisal and ratio study supports any type of adjustment in a narrative appraisal.

Summary on Issue of Standard Deviation

Mr. Demba put forth his theory for adjustment based upon a standard deviation analysis. Regardless of whether the calculation of the standard deviation was correct or not, it was not established that this is recognized and accepted as a method for making adjustments when appraising a single property. Since Mr. Demba raised the issue, he bore the burden of proving the necessary elements on the issue. His failure to establish by any recognized texts or treatise that his theory has been accepted in a case like the present renders the adjustment made utilizing this method as improper and thereby lacking as substantial and persuasive evidence.

Conclusion

Complainant’s evidence failed to establish the subject property to be an overimprovement. Complainant’s evidence failed to establish that the standard deviation analysis employed by Mr. Demba would have been appropriate to adjust for the factor of an overimprovement, even if that point had been proven. Therefore, no probative weight can be given to the Complainant’s opinion of value of $724,500 based upon Exhibit A.

Respondent’s Proposed Value

The relevant evidence in this record which establish a sound range of indicated values provides substantial and persuasive evidence that the true value in money for the subject property, as of January 1, 2005, was $1,065,000, as proposed by Respondent’s appraiser and supported by her appraisal report. See Also, Findings of Fact 20, 21 & 22, supra.

ORDER

The assessed valuation for the subject property as determined by the Board of Equalization for St. Louis County for the subject tax day is SET ASIDE.

The assessed valuation for the subject property as determined by the Assessor for St. Louis County for the subject tax day is SET ASIDE.

The assessed value for the subject property for tax years 2005 and 2006 is set at $202,350.

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 St. Louis 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.