State Tax Commission of Missouri

CORY & MICHELLE KELLER, )

)

Complainants, )

)

v. ) Appeal Number 06-32502

)

SCOTT SHIPMAN, ASSESSOR, )

ST. CHARLES COUNTY, MISSOURI, )

)

Respondent. )

DECISION AND ORDER

HOLDING

Decision of the St. Charles County Board of Equalization sustaining the assessment made by the Assessor is AFFIRMED. Hearing Officer finds presumptions of correct assessment not rebutted. True value in money for the subject property for tax year 2006 is set at $468,536, assessed value of $89,020.

Complainant Cory Keller appeared pro se.

Respondent appeared by Counsel, Charissa Mayes, Assistant County Counselor.

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 November 1, 2005.

SUMMARY

Complainant appeals, on the ground of overvaluation, the decision of the St. Charles County Board of Equalization, which sustained the valuation of the subject property. The Assessor determined an appraised value of $468,436, assessed value of $89,020, as residential property. Complainant proposed a value of $448,044, assessed value of $85,130. A hearing was conducted on December 6, 2006, at the St. Charles County Administration Building, St. Charles, Missouri.

The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

Complainant’s Evidence

Complainant testified in his own behalf. Exhibit A – Valuation Document was received into evidence. Complainant opinion of value was given as $448,044 based upon the subtraction of $20,492 from the sale price for items which were upgrades to the subject house. The upgrades consisted of wall insulation, attic insulation, high efficiency furnace, air-conditioning, and humidifier, dishwasher and custom paint colors. It was Mr. Keller’s position that the cost of these items would not be recovered in the sale of the subject.

Exhibit A consisted of (1) a letter prepared for hearing which set out Complainants’ theory of value, (2) a listing of eight other properties in the subject subdivision with purchase price and dates, (3) copy of Addendum to Sales Contract, (4) copy of Change Order Number 1 on subject, (5) copy of Change Order Number 2 on subject, and (6) copy of Change Order Number 3 on subject.

Respondent’s Evidence

Respondent placed into evidence the testimony of Mr. Steven D. Riney, Super visor of Residential Property and appraiser for St. Charles County. The appraiser testified as to his appraisal of the subject property. The Appraisal Report, Exhibit 1, of Mr. Riney was received into evidence. Mr. Riney arrived at an opinion of value for the subject property of $468,536 based upon a sales comparison approach to value. In performing his sales comparison analysis, the appraiser relied upon the sales of six properties which he deemed to be comparable to the subject property, including the actual sale of the subject property in October, 2005.

FINDINGS OF FACT

1. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the St. Charles County Board of Equalization.

2. The subject property is located at 517 Old Moray Place, St. Charles, Missouri. The property is identified by locator number T050700041. The property consists of .31of an acre lot improved by a two-story brick, brick and frame single-family structure of good quality construction. The house was built in 2005, completed and occupied in October. The residence has a total of ten rooms, which includes five bedrooms, four and a half baths, and 3,830 contains square feet of living area. There is an unfinished basement and an attached three-car garage, patio and open front porch. The property was purchased in October, 2005 for $468,536. Exhibit 1.

3. The valuation date for the subject property is November 1, 2005, first day of the month following occupancy, which value also applies to the tax year 2006. §137.082, RSMo. St. Charles County has adopted the provisions of §137.082, RSMo.

4. Complainant’s evidence was not substantial and persuasive to rebut the presumptions of correct assessment by the Assessor and the Board and establish the true value in money as of January 1, 2006, to be $448,044.

5. The fair market value of the subject property as of November 1, 2005, was 468,536, assessed value of $89,020.

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.

Assessment Upon Occupancy of New Residential Construction

Notwithstanding the provisions of Sections 137.075 and 137.080 to the contrary, a building or other structure classified as residential property pursuant to Section 137.016 newly constructed and occupied on any parcel of real property shall be assessed and taxed on such assessed valuation as of the first day of the month following the date of occupancy for the proportionate part of the remaining year at the tax rates established for that year, in all taxing jurisdictions located in the county adopting this section as provided in subsection 8 of this section. Newly constructed residential property which has never been occupied shall not be assessed as improved real property until such occupancy or the first day of January of the second year following the year in which construction of the improvements was completed. §137.082.1, 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).

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.

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 (Mo. banc 1993). It is the fair market value of the subject property on the valuation date. Hermel, supra.

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.

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).

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 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965). Mr. Keller’s opinion of value is based upon his assertion that the various upgraded items added to the subject home when constructed to make it more energy efficient would not be recovered in a subsequent sale of the property. This is apparently based upon the opinion of the Kellers’ agent for the purchase of the subject. The owner’s conclusion in this instance is simple conjecture. There is no way that it can be determined that in a subsequent sale how much of the cost for the upgraded energy saving items may or may not be recovered.

However, the issue for determination is what the property would bring in an open market transaction on November 1, 2005. In this instance the actual purchase of the subject in October, 2005 provides clear and convincing evidence of the property’s fair market value. Evidence of the actual sales price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time. The actual sale price is a method that may be considered for estimating true value. The actual sales price, between a willing seller who is not obligated to sell and a willing buyer who is not compelled to buy, establishes an outer limit on the value of real property. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526 (App. E.D. 1993).

The actual purchase price is not in dispute. It clearly demonstrates what a willing buyer and seller agreed to as the purchase price of the subject property at a time very close to November 1, 2005. The purchase price of $468,536 accurately reflects what a willing buyer would pay for the subject property with the house improved by various energy efficient items. In other words, the valuation of the home established by the purchase price is for the house as it actually existed on November 1, 2005, with the various upgraded amenities. The home must be valued on that basis. It cannot be valued as if those amenities did not exist. It is obvious, as agreed to by Mr. Keller, that upon any resale of the property that the seller and seller’s real estate broker would certain list the energy saving amenities. In other words, far being a detracting factor in a subsequent sale, these items would be selling points.

It is noted that the subject property’s October, 2005 purchase price on a per square foot basis ($122.33) falls in line with the other five homes utilized by Mr. Riney in his appraisal. Those homes had per square foot sales prices in a range from $118.05 to $149.75, with a median of $123.82, and an average of $130.77. It is not known if any of the other sale properties had upgraded energy efficient additions like the subject. The adjusted sales prices ranged from $117.12 to $152.57 per square foot. The median was $123.10, with an average of $129.38. Exhibit 1, p. 19. Therefore on both an unadjusted and adjusted basis the subject falls in close proximity to the median per square foot value of the other five sale properties and below the average, even though it apparently has approximately $20,500 in energy efficiency upgrades which the other homes do not have.

A taxpayer does not meet his burden if evidence on any essential element of his 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). Complainants’ theory of value is that $20,500 of energy efficient upgrades will not be recovered in a subsequent sale of the subject. Complainants bore the burden of presenting substantial and persuasive evidence to establish their theory. The evidence in this record is lacking and leaves the Hearing Officer with nothing but “speculation, conjecture and surmise” on this point. Accordingly, the lynchpin element of Complainants’ case was not proved. A taxpayer’s opinion, derived form the opinion of a real estate agent, does not demonstrate what the market would do with regard to the value of the subject property in this appeal. A willing buyer and seller agreed to a purchase price of $468,536 in October, 2005 for the subject property as it was improved by the subject house with all of its various amenities. That transaction was the clearest and most persuasive evidence of value as of November 1, 2005, which could possibly be derived from market data.

The Complainants having failed to meet their burden of proof, the presumptions of correct assessment by the Assessor and the Board are controlling.

ORDER

The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Charles County for the subject tax day is AFFIRMED.

The assessed value for the subject property as of November 1, 2005, and for tax year 2006 is set at $89,020.

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. Charles 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 December 19, 2006.

STATE TAX COMMISSION OF MISSOURI

_____________________________________

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 19^th day of December, 2006, to: Cory Keller, 517 Old Moray Place, St. Charles, MO 63301, Complainant; Charissa Mayes, Assistant County Counselor, 100 North Third Street, Room 216, St. Charles, MO 63301, Attorney for Respondent; Scott Shipman, Assessor, 201 North Second, Room 247, St. Charles, MO 63301-2870; Amy Gann, Registrar, 100 North Third Street, Suite 206, St. Charles, MO 63301; Barbara Walker, Collector, 201 North Second Street, Room 134, St. Charles, MO 63301.

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Barbara Heller, Legal Coordinator