State Tax Commission of Missouri
DAVID SETH LANG, )
)
Complainant, )
)
v. ) Appeal Number 05-10373
)
PHILIP MUEHLHEAUSLER, ASSESSOR, )
)
Respondent. )
DECISION AND ORDER
HOLDING
Decision of the St. Louis County Board of Equalization reducing the assessment made by the Assessor, SET ASIDE, Hearing Officer AFFIRMS the value determined by the Assessor and finds true value in money for the subject property for tax years 2005 and 2006 to be $448,200, assessed value of $85,160.
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 whether there was an intentional plan by the
Assessor or Board of Equalization to assess the subject property at a value
greater than 19% of its true value in money (fair market value) or at a
value greater than the average residential assessment ratio for
SUMMARY
Complainant
appeals, on the ground of discrimination, 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 $448,200, assessed value of $85,160, as residential
property. The Board reduced the value to
$425,000, assessed value of $80,750.
Complainant proposed a value of $328,808, assessed value of
$62,470. A hearing was conducted on May
18, 2006, at the
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. Lang gave his opinion of the fair market value of the subject property to be $328,808, based on his calculation of an average per square foot appraised value derived from eight selected properties and the appraised value for these eight properties by the Assessor’s 2005 valuation.
Mr. Lang offered Exhibit A into evidence. Exhibit A consisted of three separate pages as follows (1) copy of Complainant’s Board of Equalization Appeal Form, dated received by the Board on June 17, 2005; (2) Exhibit A to the Board Appeal Form – Reason for Requesting a Revision of the Assessed Value; (3) Exhibit B to the Appeal Form – a chart arriving at the average square foot appraised value for 8 homes in the 2900 block of subject’s street
Counsel for Respondent had no objection to pages 1 and 2 of the Exhibit, but did object to page 3 on the ground of lack of foundation since the charge did not utilize all homes on the subject street and therefore, the alleged average per square foot market value was not representative of the subject street. Objection was sustained and the third page of Exhibit A was excluded. Pages 1 and 2 of Exhibit A were received into evidence.
Complainant also testified that the subject property had been purchased in July, 2003 for $470,00O, the property was listed with a real estate agent at the time of purchase and that offers below the purchase price were made but not accepted.
Mr. Lang also offered into evidence Exhibits B and C the property record cards on the properties at 7910 and 7906 Teasdale respectively. Objection was made on the ground of relevancy. Objection was sustained, neither exhibit was relevant to Complainant’s claim of discrimination in the assessment of the subject property, nor did the Exhibits provide relevant evidence of the fair market value of the subject on January 1, 2005.
Respondent’s Evidence
Respondent
placed into evidence the testimony of
Complainant objected to Exhibit 1 on the ground that his request for production of document in the case had been an ongoing request and the appraisal report was only provided to Mr. Lang just before the evidentiary hearing. The objection was overruled and Exhibit 1 was received into evidence. See, Ruling on Objection to Exhibit 1, infra.
Respondent also offered into evidence Exhibit 2, the copy of the Certificate of Value on the July 2003 purchase showing a purchase price of $470,000 and a certified copy of the General Warranty Deed whereby Complainant took title to the property as trustee of the David Seth Lang Living Trust. Exhibit 2 was received into evidence, with no objection.
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 7921
Teasdale,
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 by the Assessor and the Board and establish the true value in money as of January 1, 2005, to be $328,808, as proposed, or to establish an intentional plan to asses the subject property at a value greater than 19% of its true value in money or at a value greater than the average residential assessment ratio for St. Louis County.
5. The July 2003 sale was a market transaction between a willing buyer and seller at a time relevant to the tax date of January 1, 2005. Exhibit A, Testimony of Complainant, Exhibit 1, p. 4; Exhibit 2. It would have been appropriate for the Respondent’s appraiser to use that sale as a sale comparison in his appraisal of the subject property.
6. 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 properties were located within the same block of Teasdale
as 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. Exhibit 1, Testimony
of
7. The evidence on the record is clear and convincing to establish the true value in money for the subject property to be $448,200, as originally determined by the Assessor. Exhibit A, Testimony of Complainant, Exhibit 1, and Exhibit 2.
8. The actual site size for Comparable 1 (7920 Teasdale), as shown by the Assessor’s property record card, is 59 x 208 or 12,272 square feet of .28 of an acre as correctly shown on page 14 of Exhibit 1. The reference to .18 of an acre on page 13 of Exhibit 1 under the description for 7920 Teasdale was a typographical error. No adjustment was deemed necessary to either Comp 1 or Comp 3 which have a site size of .28 and .27 respectively by the appraiser. This was appropriate for this appraisal exercise.
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
The presumption in favor of the Board is 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 is accepted as true only until and so long as there is no substantial evidence to the contrary.
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 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 (
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.
Duty to Investigate
In order to investigate appeals filed with the Commission, the Hearing Officer has the duty to inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, subclassification or assessment of the property. The Hearing Officer’s decision regarding the assessment or valuation of the property may be based solely upon its inquiry and any evidence presented by the parties, or based solely upon evidence presented by the parties. Section 138.430.2, RSMo.
Mr. Lang
appealed the 2005 assessment of his property on the sole ground of
discrimination. There are two elements
the taxpayer must prove into order to establish a claim of discrimination. In order to obtain a reduction in assessed
value based upon discrimination, Mr. Lang was required to prove (1) the
assessment ratio on the subject property on January 1, 2005. and (2) the average residential assessment
ratio for
Mr. Lang failed to prove either element of his discrimination case. From the only exhibit tendered by Complainant and from his testimony the theory of his discrimination claim was that unless property is valued based upon the average square foot value determined by the Assessor’s valuation for general reassessment discrimination existed and the taxpayer should have his property valued at the average per square foot value of a group of properties specifically selected by the taxpayer. No case law or statutory reference was cited to support this theory of discrimination.
Failed
to Prove the Assessment Ratio of the Subject Property
In order to
establish the assessment ratio on the subject property, one of the two prongs
of a discrimination claim, 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. The assessed value place don the property for
January 1, 2005 is then divided by the fair market value to establish the
actual assessment ratio. 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 (
Mr. Lang failed to meet his burden of proof to present substantial and persuasive evidence to support his opinion of value of $328,808. Therefore, the assessment ratio could not be calculated since one of the two factors upon which the calculation depends was missing, i.e. fair market value.
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. Lang’s self-created method of calculating the average per square foot value of eight selected properties, based upon appraised values set by the Assessor for a general reassessment is not an approved approach for valuing property. It is on its face without logic or any sound appraisal justification. Applying the Lang method would mean that any taxpayer who wants to average the per square foot appraised value from the Assessor’s records of selected homes on his street or in his neighborhood should be given a reduction in his assessment, irrespective of the statutory mandate to assess property based upon fair market value. Section 137.115.1, RSMo.
Failed
to Prove the Average Assessment Ratio for
In like manner
the Lang averaging method totally fails to establish discrimination. The average per square foot appraised values
of eight properties on a single block in
Complainant failed to present substantial and persuasive evidence to satisfy either prong of the test to prove discrimination. He devised his own ill-logical methodology. The method of proving the average assessment ratio for the county and the assessment ratio for the property under appeal is the only recognized methodology to establish a discrimination case. There is no other. Cupples-Hesse, supra. When a taxpayer elects to ignore established case law and attempts to devise their own theory of discrimination they are placing themselves in a position to totally and completely fail to meet their burden of proof. Such was the case in this appeal.
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).
Respondent’s evidence of a fair market value of $446,000 or 99.5% of the value set by the Assessor is clear and convincing to affirm the Assessor’s original value. A variance of one half of 1% when valuing the subject property is of no consequence. In addition, the July, 2003 purchase of the subject property for nearly a half a million dollars by Complainant as established by Exhibit A, p. 1 and Complainant’s own testimony is further evidence that the value of $448,200 is at least the fair market value of the subject property, the value which is to be placed on property for assessment purposes. Section 137.115.1, RSMo.
Complainant’s claim before the Board that the
purchase price of $470,000 did not represent market value for the reason – “Agent
sold house at overinflated value” – is not established by any evidence in this
record. Exhibit A, page 1. The
home was listed with an agent, Complainant made offers at less than the
purchase price. These were not
accepted. The bank mortgage on the
property was for $420,000. Lang
Testimony. The amount of the
mortgage calculates to 90% of purchase price, which is certainly not unusual
for a home loan. Nothing in the
testimony of Complainant established an overinflated value on his purchase. Furthermore, a price agreed to between a
willing buyer and seller creates a presumption that the transaction was a
market transaction. Phoenix
Redevelopment Corporation v.
Even though Respondent’s appraiser elected to not use the July 2003 as a sales comparable it would have been appropriate. The Hearing Officer does give it consideration and along with the Lane appraisal (since it is within less than a percent of the Assessor’s value) determines the true value in money for the subject property as of January 1, 2005 is at least the value the Assessor had placed on the property of $448,200.
Mr. Lang objected to the receiving into evidence of Exhibit 1 on the ground that it had not been provided in response to his Request for Production of Documents.
On
February 6, 2006 Mr. Lang (a licensed attorney in
1. All Documents in Respondent’s care, custody, control and/or possession, relating to the Respondent’s valuation of the Property, including, but not limited to, appraisals, comparative property analysis records used for the comparable approach, and all assumptions made by the Respondent that are related to the valuation of the Property.
2. All Documents in Respondent’s care, custody, control and/or possession, relating to and/or analyzing the Complainant’s Appraisal of the Property, which was presented to the Board of Equalization at the hearing on June 30, 2005.
3. Any and all Documents, notes, memorandum, or the like of any kind or nature, not subject to any claim of privilege, that were used, produced or received in any manner, having to do with the subject of this appeal, including all such Documents submitted by Respondent at the Board of Equalization hearing on June 30, 2005.
By letter dated March 8, 2006, to Mr. Lang from Ms. Lemerman (copy received by the Commission on March 10, 2006), Respondent’s Counsel verified a conversation of March 7th with Mr. Lang “… in which you confirmed that you have received the documents responsive to your Request for Production of Documents, … .”
Mr.
Lang sought to exclude the appraisal report of
The
transmittal letter from
The continuing
nature of the Request notwithstanding, Request 1 covers documents “relating to
the Respondent’s valuation of the Property.”
This request can only relate to the Assessor’s original valuation of the
subject property. In fact the entire
tenor of Complainant’s Request goes to the original assessment and the
subsequent Board assessment. The
Respondent’s Valuation of the Property was the valuation resulting in a Change
of Assessment Notice being sent in early 2005.
Once an appeal is filed with the Commission the Assessor – Respondent no
longer has any authority with regard to valuation of the property. The Hearing Officer or the Commission, not by
the Respondent, will make the valuation of the property. Exhibit 1 was not a document “…relating to
the Respondent’s valuation of the Property, …”
Exhibit 1 was the valuation by an expert,
Request 2 does not cover Exhibit 1, since Mr. Lang was seeking documents relating to an appraisal Mr. Lang had done on his property not an appraisal to be performed by an expert in anticipation of litigation on the Complainant’s appeal.
Request 3 likewise could not cover Exhibit 1. The third Lang request was for documents “… of any kind or nature, not subject to any claim of privilege, that were used, produced or received in any manner, having to do with the subject of this appeal … .” However, Exhibit 1 is clearly the opinion of an appraisal expert developed in anticipation of litigation in this appeal before the Commission. It is not covered by the general catch-all provision of Request 3.
Missouri Rules
of Court specifically provide for the discovery process for expert opinions
developed in anticipation of litigation.
An expert’s opinion may be obtained only by interrogatories covering the
name, address, occupation, place of employment and qualifications and the
general nature of the subject matter on which the expert is expected to testify
and the expert’s hourly deposition fee.
ORDER
The assessed
valuation for the subject property as determined by the Board of Equalization
for
The assessed value for the subject property for tax years 2005 and 2006 is set at $85,160.
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 June 6, 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 6th day of June, 2006, to: David Lang, 7921 Teasdale Avenue, St. Louis, MO 63130, Complainant; Paula Lemerman, Associate County Counselor, Attorney for Respondent; Philip A. Muehlheausler, Assessor; John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.
___________________________
Barbara Heller
Legal Coordinator