State Tax Commission of Missouri

 

RICHARD & MARIA LEONARD,                 )

)

Complainants,               )

)

v.                                                         )           Appeal Number 05-20149

)                        

ED BUSHMEYER, ASSESSOR,                    )

ST. LOUIS CITY, MISSOURI,                      )

)

 Respondent.                )

 

 

DECISION AND ORDER

 

HOLDING

 

Decision of the St. Louis City Board of Equalization sustaining the assessment made by the Assessor, AFFIRMED, Hearing Officer finds true value in money for the subject property for tax years 2005 and 2006 to be $367,800, assessed value of $69,880.

Complainants appeared pro se.

Respondent appeared by Counsel, Carl W. Yates, III, Associate City 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 and whether a discriminatory assessment has been placed on the subject for the 2005-06 assessment cycle. 

SUMMARY

Complainants appeal, on the ground of overvaluation, the decision of the St. Louis City Board of Equalization, which sustained the valuation of the subject property.  The Assessor determined an appraised value of $367,800, assessed value of $69,880, as residential property.  Complainants proposed a value of $294,000, assessed value of $55,900 on their Complaint for Review of Assessment.  A hearing was conducted on March 7, 2006, at the City Hall, St. Louis, 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, Richard Leonard, testified on behalf of Complainants.  Mr. Leonard did not dispute the fair market value of $367,800 determined by the Assessor and sustained by the Board.  However, Mr. Leonard contended that to equalize the properties in the subject neighborhood (Lafayette Square), his home should be only valued at $294,000, or at approximately 80% of fair market value, because this represented the amount other properties were being undervalued in Lafayette Square.

The following exhibits were received into evidence on behalf of Complainants.

Exhibit A – a copy of a letter dated August 11, 2005, to the State Tax Commission of Missouri in which Mr. Leonard sets out his position and concerns relative to a lack of equalization of assessment in Lafayette Square.  Said letter was attached to the Complaint for Review of Assessment and constitutes part of the pleadings in this appeal.

Exhibit B – a copy of a letter dated October 13, 2004, to the St. Louis City Assessor from the State Tax Commissioners regarding St. Louis City residential assessments.

Exhibit C – an assessment data document prepared by Mr. Leonard.  The exhibit consisted of a chart showing the assessed values for 2003 and 2005 for the subject and nine other similar properties in the Lafayette Square neighborhood.  Mr. Leonard had calculated the assessment percentage of each of the properties versus the assessment for the subject and the percentage change from 2003 to 2005 for each of the nine properties.  The exhibit also contained photographs of the subject and the other nine properties, with information from the websites for two of the properties, which are bed and breakfast homes.

Objection to Exhibit C on the grounds of relevancy and hearsay was overruled.  The assessment data was taken from the assessor’s records and constitute a public record admissible in actions before the Commission.  The data was relevant to the Complainant’s claim of unequal assessment.

Respondent’s Evidence

Respondent placed into evidence the testimony of Mr. John Norton, appraiser for St. Louis City.  The appraiser testified as to his appraisal of the subject property.  The Appraisal Report, Exhibit 1, of Mr. Norton was received into evidence.  Mr. Norton arrived at an opinion of value for the subject property of $402,000 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 City Board of Equalization.

2.         Complainants’ Complaint for Review of Assessment only marked as ground for appeal Overvaluation.  However, the letter attached as part of the Complaint (Pleadings) raised the issue of equalization of assessment.  The issue of equalization of assessment is properly before the Hearing Officer.

3.         The subject property is located at 9 Benton Place, St. Louis, Missouri.  The property is identified by locator number 2279-04-0200-0.  The property consists of 52 by 190 foot lot (9,880 square feet, .23 of an acre) improved by a three-story brick, single-family structure of average quality construction.  The house was built in 1885 and appears to be in average condition for its age and upkeep. 

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 Assessor and the Board and establish an unequal assessment so as to assess the property at $55,860 (True Value in Money - $294,000 at 19%) 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 properties were located within 4 to 6 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 made various adjustments to the comparable properties for differences which existed between the subject and each comparable.  All adjustments were appropriate to bring the comparables in line with the subject for purposes of the appraisal problem.

6.         The three properties utilized by Respondent’s appraiser to value the subject have the following valuation and assessment characteristics.  Testimony of Complainant; Official Notice of Assessor’s Records on the Comparable Properties.

                                                                                                           

 

Address

Sale Price/Date

Appraised
Value

Assessed
Value

Assessment Ratio
to Sales Price

1811 Hickory

$347,900-6/15/04

$274,210

$52,100

14.98%

1818 LaSalle

$375,000-12/20/04

$227,895

$43,300

11.55%

2326 Albion

$377,900-5/20/04

$325,000

$61,750

16.35%

 

            7.         The fair market value of the subject property is $402,000.  It is assessed at $69,880 or 17.39% of its fair market value.

8.         Respondent’s appraisal was accepted only to sustain the original assessment made by the Assessor and not for the purpose of raising the assessment above that value.

9.         Exhibit B does not establish the average residential assessment ratio for St. Louis City for the 2005-06 assessment cycle.

CONCLUSIONS OF LAW

Jurisdiction

The Commission has jurisdiction to hear this appeal and correct the subject property’s  assessment if it 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 an unlawful, unfair, improper, arbitrary, or capricious assessment.  Section 138.431.4, RSMo.

Board of Equalization Presumption

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).


Presumption on Assessor’s Value

            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 (Mo. 2005).  Citing to Hermel, supra; and Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).

Rebutting of Presumption of Correct Assessment

            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.

Evidence of Increase in Value

In any case in St. Louis City where the assessor presents evidence which indicates a valuation higher than the value finally determined by the assessor or the value determined by the board of equalization, whichever is higher, for that assessment period, such evidence will only be received for the purpose of sustaining the assessor’s or board’s valuation, and not for increasing the valuation of the property under appeal.  Section 138.060, RSMo; 12 CSR 30-3.075.

                                                                  Discrimination

In order to rebut the presumptions of correct assessment by the Assessor and the Board and obtain a reduction in assessed value based upon discrimination or unequal assessment, the Complainants must prove by substantial and persuasive evidence (1) an intentional plan of discrimination by the assessing officials resulting in an assessment of their property at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction and (2) prove the true value in money of their property on January 1, 2005.  Koplar v. State Tax Commission, 321 S.W.2d 686, 690 (Mo. 1959).  Evidence of value and assessments of a few properties does not prove discrimination.  Substantial evidence must show that all other property in the same class, generally, is actually undervalued.  State ex rel. Plantz v. State Tax Commission, 384 S.W.2d 565, 568 (Mo. 1964).  The difference in the assessment ratio of the subject property and the average assessment ratio in the subject county must be shown to be grossly excessive.  Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986).  No other methodology is sufficient to establish discrimination.  Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696 (Mo. 1958). 

DECISION

The fair market value of the subject property was not contested in this appeal.  Complainants tendered no evidence on that issue, nor actually disputed the valuation presented by Mr. Norton’s appraisal.  The sole issue which formed the basis for Complainants’ appeal was equalization.  Essentially, Complainants assert homes in Lafayette Square and other St. Louis City neighborhoods are undervalued, thus resulting in a lack of equalization of assessments.

The methodology tendered by Mr. Leonard in Exhibit C fails to meet the criterion required by case law to establish unequal assessment – discrimination.  Mr. Leonard’s methodology was to calculate the percentage the assessed values of nine Lafayette Square properties were to his property.  For the 2003 assessment the neighboring properties ranged from 48.7% to 111.2% of the subject’s assessed value, with an average of 84.12%.  In other words the average of the nine properties was assessed at 84.12% of the subject’s assessment. The same calculations were made for the 2005 assessment cycle.  This resulted in a range from 40.5% to 93%, with an average of 77%. 

No documentation was provided to establish that this methodology is an appropriate approach to determining if properties in a taxing jurisdiction (county) are being assessed at the same level.  Therefore, because the Complainants’ methodology is not a recognized statistical analysis for discrimination or unequal assessment, the resulting opinion of the level of assessment for the subject property has no probative weight or value.

Complainants Fails To Prove Unequal Assessment

Where there is a claim of discrimination based upon a lack of valuation consistency, Complainants must first prove the average level of assessment for residential property in St. Louis City for 2005.  This is done by (a) independently determining the market value of a representative sample of residential properties in St. Louis City; (b) determining the assessed value placed on the property by the assessor’s office for the relevant year; (c) dividing the assessed value by the market value to determine the level of assessment for each property in the sample; and (d) determining the mean and median of the results.

Complainants then have the burden to prove the level of assessment for the subject property in 2005. This is done by independently determining the market value of the subject property and dividing the market value into the assessed value of the property as determined by the assessor’s office.

The difference between the actual assessment level of the subject property and the average level of assessment for all residential property, taken from a sufficient representative sample in St. Louis County must demonstrate a disparity that is grossly excessive.  Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986).

            In the present instance, the only evidence as to the market values and assessed values of properties in St. Louis City is found from the sales comparables use by Respondent’s appraiser.  That valuation and assessment data shows that the each of the three properties have a fair market value as of January 1, 2005, of $377,900, $375,000 and $347,900 respectively.  These appraised values of these properties by the Assessor for 2005 were $325,000, $227,895 and $275,210 respectively.  Therefore they were undervalued by $52,900, $147,105 and $72,690 respectively.

            The range of assessment ratios was from 11.55 to 16.35 percent of fair market value.  The median was 14.98 and the average was 14.29.  These properties are not being assessed at 19% of fair market value as required by Section 137.119.5(1), RSMo.  The subject is undervalued by $34,200 and therefore is only assessed at 17.39% of its fair market value ($69,880/402,000 = 17.39%).

            The Hearing Officer is without the authority to increase either the value on the subject property (12 CSR 30-3.075), the three sales comparables used in Exhibit 1 or any of the nine properties listed in Exhibit C.  The Exhibit 1 and Exhibit C properties are not before the Hearing Officer in this appeal.  The owners of those properties did not appeal to the Commission, so the Hearing Officer cannot simply issue an order increasing their values.

            There is no evidence in this record whereby the Hearing Officer can determine the fair market value of the nine properties listed in Exhibit C.  Therefore, it is not possible to determine if they are assessed at 19% of fair market value or at a percentage less than that set by statute. However, even if the fair market value of those nine properties had been established in this record, this would not have constituted a statistically significant number of properties, since they would have all been drawn from a single neighborhood and not from a cross section of residential properties in St. Louis City. The evidence fails to establish by a statistically significant number of properties what the average residential assessment ratio for St. Louis City is for the 2005-06 assessment cycle.  The data on only three properties is insufficient as a statistically viable sample to establish an average assessment ratio for the entire taxing jurisdiction.

Complainants’ equalization/discrimination claim fails because they failed to establish that a statistically significant number of other residential properties within St. Louis City are being assessed at a lower ratio of market value than their property.  Because Complainants have failed to establish that they are being assessed at a higher percentage of market value than a statistically significant number of other properties in St. Louis City, they have failed to establish discrimination or a lack of equalization.

Complainants’ claim that their property should be assessed at $55,860 (appraised or fair market value of $294,000) would result in an assessment ratio of only 13.9% ($55,860/$402,000 = .1390).  There is no substantial and persuasive evidence in this record upon which a finding can be made that the average residential assessment ratio for St. Louis City for 2005 is 13.9%.

The assessed value as determined by the Assessor and sustained by the Board for the Complainants’ home must be affirmed.

ORDER

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

The assessed value for the subject property for tax years 2005 and 2006 is set at $69,880.

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 City, 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 April 4, 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 4th day of April, 2006, to:    Richard Leonard, 9 Benton Place, St. Louis, MO 63104, Complainant; Carl W. Yates III, Associate City Counselor, 314 City Hall, St. Louis, MO 63103, Attorney for Respondent; Ed Bushmeyer, Assessor, 120 City Hall, St. Louis, MO 63103; Ronald Leggett, Collector, 110 City Hall, St. Louis, MO 63103.

 

____________________________

Barbara Heller, Legal Coordinator