State Tax Commission of
RONALD & LOIS KEEVEN, )
)
Complainant, )
)
v. ) Appeal Number 05-57003
)
BILL OVERSCHMIDT, ASSESSOR, )
FRANKLIN COUNTY, MISSOURI, )
)
Respondent. )
ORDER
OVERRULING HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
On August 24, 2006, Senior Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) setting aside the assessments by the Franklin County Board of Equalization.
Complainants timely filed (9/22/06) their Application for Review of the Decision. Respondent timely filed (10/26/06) his Response.
CONCLUSIONS OF LAW
Admission of Written Reports of Expert
Witnesses
Written reports of an expert witness prepared for presentation at an evidentiary hearing before the Commission and having basic elements required of an expert’s report can be received into evidence, provided the expert witness is available for the purposes of cross-examination. Rule 803 – Missouri Evidence Restated. See Also, Courtroom Handbook on Evidence, etc.
Presumptions and Rebutting of Presumptions
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).
The Supreme Court of Missouri has held, “A tax assessor’s valuation is presumed correct.” Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341 (Mo. 2005). Citing to Hermel, supra; and Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the assessor’s or Board’s valuation is erroneous and what the fair market value should have been placed on the property. Snider, Hermel & Cupples Hesse, supra.
Complainants’ Burden of Proof
In order to prevail, Complainants 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).
DECISION
A review of the record in the present appeal provides support for the determination made by the Hearing Officer to exclude the appraisal report offered by Complainants, upon objection by Respondent’s Counsel. However, the Hearing Officer erred in not finding as a matter of law Complainants failed to meet their burden of proof and therefore, the Assessor’s and Board’s assessment should have been sustained.
Complainants’ Ground for Review
The critical point raised by Complainant’s Application for Review is the exclusion from evidence by Hearing Officer Tichenor of Complainants’ Exhibit A – Appraisal Report of Robert G. Student, State Certified General Real Estate Appraiser. Complainants request that the Commission allow the appraisal into evidence.
Procedural
History
1. By Order, dated November 9, 2005, the parties were order to file with the Commission and exchange exhibits and written direct testimony prior to the evidentiary hearing.
2. Among the five (5) exhibits filed by Complainants was Exhibit A – Appraisal Report of Robert G. Student, State Certified General Real Estate Appraiser.
3. At hearing, Counsel for Respondent objected to Exhibit A because Mr. Student was not present to be cross-examined. Tr. 5, Lines 17 – 24.
4. Hearing Officer Tichenor sustained the objection and excluded Exhibit A from evidence. Tr. 6, Lines 2-6; Tr. 13, Line 19 – Tr. 15, Line 5.
Discussion
Complainants were provided a copy of the Commission’s pamphlet – Property Tax Appeals Before The State Tax Commission of Missouri. It is specifically provided on pages 8 and 9 of that document that for an appraisal report to be received into evidence the appraiser must be present to be cross-examined. This was specifically pointed out by the Hearing Officer at the evidentiary hearing when ruling on the objection presented by Counsel for Respondent. Tr. 14, Line 20 – Tr. 15, Line 1. The Hearing Officer properly sustained the objection made against the admission of Respondent’s Counsel to Exhibit A. Complainant’s claim that they were unaware that objections could be made at the evidentiary hearing is without merit. Although the Commission exchange schedule makes specific provision for filing of objections, this has never served as foreclosing the making of objections arising at hearing which could not be made in accordance with the Commission Order due to unforeseen circumstances.
In this instance, even though no written direct testimony of Mr. Student was filed with the Commission and exchanged with Respondent’s Counsel, that did not establish that Mr. Student would not be presented to be cross-examined at the hearing. It was not until the hearing was held that Respondent’s Counsel was made aware that Mr. Student would not be available to be cross-examined. Therefore, the objection to the admission of Exhibit A was timely and proper.
The Hearing Officer properly ruled that the exhibit was to be excluded. The remaining evidence presented by Complainants did not in the opinion of the Hearing Officer establish fair market value of their property. The Commission concurs.
Presumptions Not Rebutted
Upon Complainant’s failure to meet their burden of proof, as a matter of law the presumptions of correct assessment were not rebutted. Therefore, the valuation set by the Assessor and sustained by the Board stood. The Hearing Officer did err in failing to sustain the Assessor’s and Board’s valuation in the absence of substantial and persuasive evidence being presented by Complainants to rebut the presumptions of correct assessment.
ORDER
The Commission upon review of the record and Decision in this appeal sustains the Hearing Officer’s exclusion of Exhibit A and overturns the Hearing Officer Decision in setting a new value based upon Respondent’s evidence. The Commission affirms the valuation set by the Assessor and sustained by the Board and finds true value in money for Complainant’s property as of January 1, 2005 to be $356,370, assessed value $88,238 ($34,077 – Residential; $1,492 – Agricultural; $52,669 – Commercial).
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.
If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts. If no judicial review is made within thirty (30) days, this decision and order is deemed final and the Collector of Franklin 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 9, 2007.
STATE TAX COMMISSION OF MISSOURI
Bruce E. Davis, Chairman
Jennifer Tidwell, Commissioner
Charles Nordwald, Commissioner
DECISION AND ORDER
HOLDING
Decision of the Franklin County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE. Hearing Officer finds true value in money for the subject property for tax years 2005 and 2006 to be $442,430, assessed value of $113,092 ($38,000 –Residential; $1,492 – Agricultural; $73,600 – Commercial).
Complainants appeared pro se.
Respondent
appeared by Counsel, Mark Vincent,
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
Complainants
appeal, on the ground of overvaluation and discrimination, the decision of the
Franklin County Board of Equalization, which sustained the valuation of the
subject property. The Assessor determined
an appraised value of $356,370, assessed value of $88,238 as residential,
agricultural and commercial property.
Complainants proposed a fair market value of $257,503 as a mixed use
property in the Complaint for Review of Assessment. A hearing was conducted on June 28, 2006, at
the Franklin County Annex,
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
Complainants’ Evidence
Complainant Ronald Keeven testified on behalf of Complainants. Complainants offered into evidence the following Exhibits.
Exhibit A – Appraisal Report of Robert G. Student, State Certified General Real Estate Appraiser.
Exhibit B – Copy of Proposal for 10,000 square foot pole barn building.
Exhibit C – Copy of Complaint for Review of Assessment.
Exhibit D – Written Direct Testimony of Ronald A. Keeven.
Exhibit E – Conditional Use Permit.
Exhibits B, D and E were received into evidence. Exhibit C was duplicative of the Complaint which constitutes the file in the appeal and was not received. Counsel for Respondent objected to Exhibit A being received into evidence on the ground there was no foundation for the appraisal report and the appraiser not being present to be cross-examined. The objections were sustained and Exhibit A was not received into evidence.
Mr. Keeven gave his opinion of value for the residential portion of his property to be $159,660 and for the commercial portion he opined a value of $90,000 relying on the indicated value in the Student appraisal. Complainants did not contest the agricultural valuation of their property.
Respondent’s Evidence
Respondent
placed into evidence the testimony of Mr. Donald D. Dodd, State Certified
General Real Estate Appraiser for
The Appraisal
Report, Exhibit 1, of Mr. Dodd was received into evidence. Mr. Dodd arrived at an opinion of value for
the commercial portion of the subject property of $230,000 based upon the cost
and sales comparison approaches to value.
The Appraisal Report, Exhibit 2, of Ms. Ruby was received into
evidence. Ms. Ruby arrived at an opinion
of value for the residential portion of the subject property of $200,000 based
upon the cost and sales comparison approaches to value. Exhibits 3 and 4, the
written direct testimony of Mr. Dodd and Ms. Ruby, respectively, were received
into evidence. Exhibit 5, a copy of the
Unified Land Use Regulations for
FINDINGS OF FACT
1. Jurisdiction over this appeal is proper. Complainants timely appealed to the State Tax Commission from the decision of the Franklin County Board of Equalization.
2. The subject property is located at 4852
Kiel-Lyon road,
The commercial tract is improved by a 10,016 square foot building. This building consists of essentially three structures which are joined into the single building. The original two-story barn structure was constructed in or around 1919, and was converted to office space in or around 1989. An addition measuring approximately 1,840 square feet was constructed in or around the same time period. In or around 2003, a warehouse are of approximately 7,000 square fee was constructed. The entire building is a painted steel building with a painted metal roof, with seven separate overhead doors, plumbing fixtures and concrete flooring. There is also approximately 1,200 square feet of concrete paving. Exhibits 1 & 3.
The residential tract is improved by a two-story, vinyl-sided frame single-family house of fair quality construction. The original two-story residence was built in 1887, with a living area of 922 square feet. There has been significant remodeling and addition to the home in 1994 with a total living area of 2,056 square feet added. The new addition appears to be in average condition. The residence has a total of five rooms, including 3 bedrooms, 2 baths and contains 2,978 gross square feet of living area. There is no basement, but there is an attached one-car garage. There is also a 745 square foot cabin. Exhibits 2 & 4.
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 presumptions of correct assessment and establish the true value in money as of January 1, 2005, to be $159,660 for the residential portion or $90,000 for the commercial portion.
5. The properties relied upon by
Respondent’s appraisers in performing their appraisals were comparable to the
subject property for the purpose of making a determination of value of the
subject property. The appraisers various
adjustments to the comparable properties for differences which existed between
the subject and each comparable were appropriate for the appraisal problems
presented.
6. Respondent’s evidence met the standard of substantial and persuasive to establish the value of the commercial portion of the subject, as of January 1, 2005, to be $230,000.
7. Respondent’s evidence met the standard of substantial and persuasive to establish the value of the residential portion of the subject, as of January 1, 2005, to be $200,000.
8. The fair market value of the subject property is $442,430 ($200,000 – Residential + $12,430 – Agricultural + $230,000 – Commercial = $442,430).
9. The assessed value of the subject property is $113,092 ($38,000 – Residential + $1,492 – Agricultural + $73,600 = $113,092).
10. Complainants presented no evidence which addressed the claim of discrimination, accordingly that ground for appeal is deemed abandoned.
11. At the conclusion of the presentation of all evidence, the Hearing Officer advised Complainants that their evidence did not meet the required standard to prevail and that Respondent’s evidence was substantial and persuasive to establish the values advocated by Respondent’s appraisers. Complainants were given the opportunity to advise the Hearing Officer in writing within ten (10) days of the evidentiary hearing if they wished to dismiss their appeal and let the assessment as set by the Assessor and sustained by the Board stand. Tr. 26, Line 7 – Tr. 31, Line 18. Complainants did not file a written dismissal of their appeal.
CONCLUSIONS
OF LAW
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
The Supreme
Court of Missouri has held, “A tax assessor’s valuation is presumed
correct.” Snider v. Casino
Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341, 348-349 (
The presumptions in favor of the Assessor or the Board are not evidence. A presumption simply accepts something as true without any substantial proof to the contrary. In an evidentiary hearing before the Commission, the valuation determined by the Assessor or the Board, is accepted as true only until and so long as there is no substantial evidence to the contrary.
The
presumptions of correct assessment are rebutted when substantial and persuasive
evidence is presented to establish that the assessor’s or Board’s valuation is erroneous
and what the fair market value should have been placed on the property. Snider, Hermel & Cupples Hesse, supra. The evidence presented by Respondent in this
appeal – Exhibits 1, 2, 3 & 4 – is substantial and persuasive evidence of
fair market value. It is sufficient to
rebut the presumptions of correct assessment and establish fair market value
for the residential and commercial portions of the subject property.
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 (
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 (
Opinion Testimony by Experts
If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto.
The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data need not be admissible in evidence. Section 490.065, RSMo; State Board of Registration for the Healing Arts v. McDonagh, 123 S.W.3d 146 (Mo. S.C. 2004); Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. E.D. 1992).
Complainants’ Burden of Proof
In order to
prevail, Complainants 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 (
Complainants
failed to meet their burden of proof in the present appeal on either the
residential or commercial property. 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
Mr. Keeven presented no testimony or documentary evidence to support his opinion of value of $159,660 on the residential portion of his property. An owner’s opinion standing alone has no real probative value. Without information and data that is generally relied upon to value property for ad valorem tax purposes, an unsubstantiated owner’s opinion does not rise to the level of substantial and persuasive evidence to rebut the presumptions of correct assessment and establish fair market value. This is the case in this instance. Complainants failed to meet their burden of proof on the issue of fair market value for the residential tract.
The opinion of value tendered by Mr. Keeven for the commercial tract was based upon the opinion of value of an appraiser. However, since the appraiser was not tendered as a witness subject to cross-examination, the appraisal report support the appraiser’s opinion could not be received into evidence. Therefore, Mr. Keeven’s opinion based upon excluded evidence cannot be given any probative weight. Complainants failed to meet their burden of proof on the issue of fair market value for the commercial tract.
Respondent’s Burden of Proof
Respondent, when advocating a value different from that determined by the original valuation or a valuation made by the Board of Equalization, must meet the same burden of proof to present substantial and persuasive evidence of the value advocated as required of the Complainant under the principles established by case law. Hermel, Cupples-Hesse, Brooks, supra. Respondent when presented with a contested case has the right to present evidence on the issues advanced by the taxpayer. When the taxpayer raises the issue of the fair market value of the property being appealed, it is the responsibility of the assessor to review the valuation of the property and if determined necessary to perform a narrative appraisal instead of simply relying on a valuation determined by a mass appraisal system. If the narrative appraisal results in an indicated value which exceeds the assessor’s original value or the value set by the Board, the Respondent is not precluded from offering such evidence. In a case such as this, when the appraisals are performed by state certified appraisers, those individuals are under a professional obligation to render their opinions of fair market value irrespective of what the valuation may have been originally or as determined by the Board.
The issue
presented by the taxpayers was true value in money for the residential and
commercial tracts of land. Respondent in
preparing for trial of this appeal determined it was necessary to have Mr. Dodd
and Ms. Ruby appraise the two portions of Complainants’ property. The appraisers’ opinions of value for the
commercial and residential tracts were supported by sound and adequate market
data. The issue for the Hearing Officer
to decide is fair market value based upon the evidence on this record. The evidentiary record provides a substantial
and persuasive basis that fair market value of the portions of taxpayers’
property being appealed is as advocated by Mr. Dodd and Ms. Ruby.
ORDER
The assessed
valuation for the subject property as determined by the Assessor and sustained
by the Board of Equalization for
The assessed value for the subject property for tax years 2005 and 2006 is set at $113,092 ($38,000 –Residential; $1,492 – Agricultural; $73,600 – Commercial).
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 Franklin 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 August 24, 2006.
STATE TAX COMMISSION OF
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 24th day of August, 2006, to: Ronald Keeven, 4852 Kiel-Lyon Rd., New Haven, MO 63068, Complainant; Mark Vincent, Franklin County Counselor, P.O. Box 439, Union, MO 63084, Attorney for Respondent; Bill Overschmidt, Assessor, 8 N. Church Street, Suite A, Union, MO 63084; Debbie Door, Clerk; Franklin County Courthouse, 300 East Main, Room 201, Union, MO 63084; Linda Emmons, Collector; Franklin County Courthouse, 301 East Main, Room 103, Union, MO 63084.
Barbara Heller
Legal Coordinator