State Tax Commission of Missouri

TIMOTHY J. KICKHAM, )

)

Complainant, )

)

v. ) Appeal No. 05-10104

)

PHILIP MUEHLHEAUSLER, ASSESSOR, )

ST. LOUIS COUNTY, MISSOURI, )

)

Respondent. )

ORDER

AFFIRMING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

On May 22, 2006, Senior Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) setting aside the assessment by the St. Louis County Board of Equalization and setting true value in money for the property under appeal at $55,800.

Complainant timely filed his Application for Review of the Decision. Respondent timely filed Suggestions in Opposition to the Application for Review.

CONCLUSIONS OF LAW

Standard Upon Review

The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled. The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515

S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).

The Hearing Officer as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances. The Hearing Officer 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 accept it in part or reject it in part. St. Louis County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).

The Commission will not lightly interfere with the Hearing Officer’s Decision and substitute its judgment on the credibility of witnesses and weight to be given the evidence for that of the Hearing Officer as the trier of fact. Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Lowe v. Lombardi, 957 S.W.2d 808 (Mo. App. W.D. 1997); Forms World, Inc. v. Labor and Industrial Relations Com’n, 935 S.W.2d 680 (Mo. App. W.D. 1996); Evangelical Retirement Homes v. STC, 669 S.W.2d 548 (Mo. 1984); Pulitzer Pub. Co. v. Labor and Indus. Relations Commission, 596 S.W.2d 413 (Mo. 1980); St. Louis County v. STC, 562 S.W.2d 334 (Mo. 1978); St. Louis County v. STC, 406 S.W.2d 644 (Mo. 1966).

DECISION

Complainant’s Application for Review is based upon the sole claim that the Assessor, Board of Equalization and State Tax Commission (Hearing Officer’s Decision) violated Section 137.115.10, RSMo by not conducting a physical inspection of his property. The only ground for appeal set forth in the Complaint for Review of Assessment was Overvaluation. No claim was made in the Complaint or at the evidentiary hearing as to an alleged violation of any provision of Section 137.115.10.

Section 137.115.10 reads as follows:

10. Before the assessor may increase the assessed valuation or any parcel of subclass (1) real property by more than fifteen percent since the last assessment, excluding increases due to new construction or improvements, the assessor shall conduct a physical inspection of such property.

Since Complainant did not allege a violation of subsection 10 of Section 137.115 either in his Complaint or in his testimony at the evidentiary hearing, the claim was not at issue in this case. Complainant presented no evidence to establish what the assessed valuation of his property had been in the 2003-04 assessment cycle. Therefore, the record fails to establish that in fact the increase in assessed value from 2003-04 to 2005-06 was more than fifteen percent.

Complainant’s assertion that no evidence was adduced as to a physical inspection is not well founded. Complainant did not raise the issue in his pleading (Complaint for Review of Assessment) or in the evidence he presented (testimony and proffered exhibit) therefore Respondent did not have notice that Complainant was asserting any violation of the statute. The taxpayer had the obligation to raise this issue in his pleadings in order that Respondent would be aware of the claim and have opportunity to respond.

Furthermore, Complainant’s claim of a violation of the statute by the Board of Equalization and the Commission (Hearing Officer) is not well founded as a matter of law. Subsection 10 specifically addresses an increase in value by the Assessor. There is nothing in the statute which places a prohibition on either the Board or a Hearing Officer of the Commission from increasing the value on a property which is appealed to the Board or the Commission. The requirement of a physical inspection when the assessed valuation is increased by more than fifteen percent from the last assessment applies only to the assessor and not to the Board or the Commission. However, in this instance a physical inspection of both the exterior and interior of the property, including the basement was conducted on July 20, 2005, while Complainant’s appeal was pending before the Board of Equalization. Exhibit 2, submitted by Respondent with Suggestions in Opposition. This fact was likewise established at the evidentiary hearing. Exhibit 1, p. 2. Complainant did not challenge this or raise any question relative to it at the evidentiary hearing.

The Commission notes that in the Order (dtd, 2/14/06) setting this case for evidentiary hearing, Complainant was specifically advised, “It is possible the assessment might remain the same, be lowered, or raised.” Complainant was on notice that the value might be increased if he proceeded to an evidentiary hearing.

Section 137.115.10 was not violated by the Hearing Officer in his Decision raising the appraised and assessed valuations on the subject property, given that the statute does not apply to the Commission, but only to the assessor in his initial assessment in an assessment cycle. There is no evidence on the record to establish the assessed value for the prior assessment cycle therefore, it was impossible for the Hearing Officer or the Commission at this stage to make any factual determination as to what percentage of increase was applied by the assessor for the 2005 assessment. Given that the taxpayer failed to assert the alleged violation of the statute until after the Decision had been rendered, the claim comes too late. Finally, the assertion of a violation of the statute by the assessor has essentially been rendered moot by the fact that a physical inspection, exterior and interior was performed on July 20, 2005, by an appraiser from the Respondent’s staff, ten months before the Hearing Officer heard issued his Decision.

A review of the record in the present appeal provides support for the determinations made by the Hearing Officer. There is competent and substantial evidence to establish a sufficient foundation for the Decision of the Hearing Officer. A reasonable mind could have conscientiously reached the same result based on a review of the entire record. The Commission finds no basis to support a determination that the Hearing Officer acted in an arbitrary or capricious manner or abused his discretion as the trier of fact and concluder of law in this appeal. Hermel, Inc. v. STC, 564 S.W.2d 888 (Mo. 1978); Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Holt v. Clarke, 965 S.W.2d 241 (Mo. App. W.D. 1998); Smith v. Morton, 890 S.W.2d 403 (Mo. App. E.D. 1995). Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).

The Hearing Officer did not err in his determination as challenged by Complainant. In particular the Hearing Officer did not violate the provisions of Section 137.115.10 in increasing the appraised value from $41,200 to $55,800.

ORDER

The Commission upon review of the record and Decision in this appeal, finds no grounds upon which the Decision of the Hearing Officer should be reversed or modified. Accordingly, the Decision is affirmed.

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 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.

SO ORDERED August 1, 2006.

STATE TAX COMMISSION OF MISSOURI

Bruce E. Davis, Chairman

Jennifer Tidwell, Commissioner

Charles Nordwald, Commissioner

DECISION AND ORDER

HOLDING

Decision of the St. Louis County Board of Equalization reducing the assessment made by the Assessor, SET ASIDE. Hearing Officer finds true value in money for the subject property for tax years 2005 and 2006 to be $55,800, assessed value of $10,600.

Complainant appeared pro se.

Respondent appeared by Counsel, Paula J. Lemerman, Associate 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 January 1, 2005.

SUMMARY

Complainant appeals, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which reduced the valuation of the subject property. The Assessor determined an appraised value of $61,700, assessed value of $11,720, as residential property. The Board of Equalization reduced the value to $41,200, assessed value of $7,830. Complainant proposed a value of $21,000, assessed value of $3,990. A hearing was conducted on May 11, 2006, at the St. Louis County Government Center, Clayton, 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. Mr. Kickham offered an opinion of the fair market value of the property under appeal of $21,000. His only basis for that opinion was his testimony “That what it is worth, that’s what the value is.” No supporting documentation or rational was provided as foundation or basis for the owner’s opinion.

Mr. Kicham offered into evidence Exhibit A, the copy of an Occupancy Inspection Report from the City of Bellefontaine Neighbors, Missouri, dated June 13, 1994. The Inspection Report form consists of three pages on which appear handwritten notes as to items of disrepair at 1254 Waldorf Dr. However, there is no reference to any specific code violations, nor is there any indication that the property cannot be occupied. There is no citation that any given items must be repaired by any given date.

Counsel for Respondent objected to Exhibit A on the grounds of relevancy, lack of foundation and hearsay. The objection was sustained and the Exhibit was excluded from evidence. None of the handwritten notes in Exhibit A provide any basis to establish or support the owner’s opinion of the fair market value of the property as of January 1, 2005, or any other value.

Respondent’s Evidence

Respondent placed into evidence the testimony of Mr. Barton G. Lane, State Certified Residential Real Estate Appraiser for St. Louis County. The appraiser testified as to his appraisal of the subject property. The Appraisal Report, Exhibit 1, of Mr. Lane was received into evidence. Mr. Lane arrived at an opinion of value for the subject property of $55,800 based upon a sales comparison approach to value. In performing his sales comparison analysis, the appraiser relied upon the sales of three properties which he deemed to be comparable to the subject property.

FINDINGS OF FACT

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

2. The subject property is located at 1254 Waldorf Dr., Bellefontaine Neighbors, Missouri. Locator number 12 F 221224 identifies the property. The property consists of .14 of an acre lot improved by a one-story brick, ranch, single-family home with full basement, one car attached garage, masonry front stoop, patio, paved walkway and paved driveway leading to the front entry garage. The home was built in 1950 and the quality of construction was average. The residence has a total of 982 square feet, 5 rooms, including 2 bedrooms, 1 full bath, with the basement being unfinished.

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 presumption of correct assessment by the Board and establish the true value in money as of January 1, 2005, to be $21,000, as proposed.

5. The properties relied upon by Respondent’s appraiser in performing his appraisal were comparable to the subject property for the purpose of making a determination of value of the subject property. The three properties were located within 3 blocks of the subject. Each sale property sold at a time relevant to the tax date of January 1, 2005. The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability. The appraiser properly accounted for the deferred maintenance on the property and placed a condition of poor on the property for purposes of performing the appraisal. The adjustments made by the appraiser were reasonable and appropriate to account for the differences between the subject and the comparables.

6. Respondent presented substantial and persuasive evidence to rebut the presumptions of corrects assessment by the Assessor and the Board and established the fair market value of the subject property to be $55,800, assessed value of $10,600.

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).

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 presumptions in favor of the Assessor and 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 Board, even if simply to sustain the value made by the Assessor, is accepted as true only until and so long as there is no substantial evidence to the contrary.

The presumption of correct assessment is 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.

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, 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).

Mr. Kickham failed to meet the burden of proof imposed upon a taxpayer in an appeal before the Commission. There is no viable evidence on this record to demonstrate the fair market value of the subject property on January 1, 2005 to be $21,000. 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 be based upon improper elements or an improper foundation. Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965).

Complainant provided no basis for his opinion of value. The unsubstantiated opinion of value by an owner provides no ground to establish the opinion is based upon proper elements or a proper foundation. In the absence of such supporting evidence, the owner’s opinion has no probative value. Such is the case in this instance. The owner’s declaration that the value of the property is $21,000, because that is what it is worth, leaves the Hearing Officer with nothing but conjecture and speculation. 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).

Respondent Proves Value

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. In the present appeal, Respondent presented an appraisal report which provided substantial and persuasive evidence to establish the fair market value of the property under appeal. The appraiser properly account for the overall poor condition of the subject property and adjusted the sales comparable to account for the subject’s inferior condition. The Hearing Officer is persuaded based upon the Lane Appraisal that the fair market value of Complainant’s property as of January 1, 2005, was $55,800.

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 value for the subject property for tax years 2005 and 2006 is set at $10,660.

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.

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

_____________________________________

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 22^nd day of May, 2006, to: Timothy Kickham, 1254 Waldorf Drive, Bellefontaine Neighbors, MO 63137-1227, Complainant; Paula Lemerman, Associate County Counselor, County Government Center, 41 South Central Avenue, Clayton, MO 63105, Attorney for Respondent; Philip A. Muehlheausler, Assessor, County Government Center, 41 South Central Avenue, Clayton, MO 63105; John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.

___________________________

Barbara Heller

Legal Coordinator