State Tax Commission of Missouri
RAMAIAH MADDIPATI, )
)
Complainant, )
)
v. ) Appeal Number 05-10374
)
PHILIP MUEHLHEAUSLER, ASSESSOR, )
ST. LOUIS COUNTY, MISSOURI, )
)
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 finds true value in money for the subject property for tax years 2005 and 2006 to be $789,700, assessed value of $150,040.
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 and/or the Board of Equalization to assess the subject property for the 2005 – 2006 assessment cycle 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 St. Louis County.
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 $789,700, assessed value of $150,040, as residential property. The Board reduced the appraised value to $763,100, assessed value of $144,990. Complainant proposed a value of $664,700, assessed value of $126,290. A hearing was conducted on May 18, 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. Maddipati offered into evidence Exhibit A. Exhibit A was a three (3)page document prepared by the taxpayer and submitted to the Board of Equalization at the hearing on the subject property in 2005. The document consisted of a cover page setting out basic information as to the property being appealed and the basis for the appeal – Assessment Ratio and Equity.
The second page of the document consisted of two charts prepared by Mr. Maddipati. The first chart listed the five properties used by the Assessor to arrive at his original valuation of the subject property. The sale price and date for each property was given, the 2005 value by the Assessor for each property was given and the percentage of the Assessor’s appraised value to the actual sale price of each property was calculated. The second chart contained the same information on the only three properties that had recently sold on the subject street. One of the properties had also been listed in the first chart. The seven properties shown on the two charts had been given appraised values by the Assessor for 2005 that were .90, .94, .91, .79, .65, .86 and .84 respectively of the actual sale price of the individual properties.
Page 3 of Exhibit A was the narrative explanation of how Complainant arrived at a value of $664,700. Mr. Maddipati presented two basis for an indicated value. The first was to take the Assessor’s value for the subject property by .838, which represented the average for the under-valuation of the five properties used to value the subject property. The second method was to deduct $125,000 from the Assessor’s appraised value for the subject not having a swimming pool, it being the smallest house in the subject subdivision And not having a finished basement.
No objection was made to Exhibit A. It was received into evidence.
Respondent’s Evidence
Respondent placed into evidence the testimony of Mr. Bo Frumson, State Certified General 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. Frumson was received into evidence. Mr. Frumson arrived at an opinion of value for the subject property of $820,000 based upon a sales comparison approach to value. In performing his sales comparison analysis, the appraiser relied upon the sales of three properties he deemed to be comparable to the subject property. The appraiser also developed a cost approach. This approach yielded an opinion of value of $867,900. No weight was given to the value arrived at under the cost approach. It was used as a check on the reasonableness of the value derived from the sales comparison approach.
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 998 Delvin Drive, Town and Country, Missouri. The property is identified by locator number 20O430153. The property consists of a 1.03 acre lot improved by a frame and brick veneer, two-story single-family dwelling of very good quality construction. The home was built in 1987 and appears to be in good condition on the interior and average condition on the exterior. The residence has a total of 9 rooms, of which 4 are bedrooms, with 3 full and one half bathrooms. The home contains 4,182 square feet of living area. The full basement is unfinished and there is a four care attached garage. Exhibit 1, p. 5.
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 or the Board and establish the true value in money as of January 1, 2005, to be $664,700, as proposed.
5. Complainant’s evidence was not substantial and persuasive to rebut the presumptions of correct assessment by the Assessor or the Board and establish that the subject property was being assessed at a value greater than 19% of its true value in money (fair market value) or at an assessed value greater than the average residential assessment ratio for St. Louis County.
6. Complainant’s evidence was not substantial and persuasive to establish the assessment ratio for the subject property as of January 1, 2005.
7. Complainant’s evidence was not substantial and persuasive to establish the average assessment ratio for residential property in St. Louis County.
8. 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 a quarter of a mile to 2 doors North 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.
9. Respondent presented clear and convincing evidence to rebut the presumption of correct assessment by the Board and establish that the subject property is worth at least $789,700. Exhibit 1 was not offered to advocate a value higher than the value originally determined by the Assessor.
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 (
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.
A taxpayer
appealing on the ground of discrimination – inequality in assessment – must
prove two separate elements to establish that the assessment on his property
should be lowered. The two elements a
Complainant must prove are (1) the assessment ratio of the property under appeal
on January 1, 2005; and (2) the average assessment ratio in the taxing
jurisdiction for property in the same classification as the subject. Koplar
v. State Tax Commission, 321 S.W.2d 686, 690 & 695 (
Complainant
failed to present substantial and persuasive evidence of the fair market value
of the subject property so that the assessment ratio of the subject property could
be established. 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 (
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).
In the present appeal, the actual method which Mr. Maddipati used to calculate fair market value was to start with the Assessor’s original value of $789,700 and deduct $125,000 to account for the subject not having a swimming pool, it being the smallest house in the subdivision and not having a basement finish. This is not a recognized method for appraising property. It is not an approved approach to finding fair market value.
Missouri courts have approved the comparable sales or market approach, the cost approach (replacement or construction) and the income approach as recognized methods of arriving at fair market value. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STC, 789 S.W.2d 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm’n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. Div. 2 1974).
Therefore, since the opinion of fair market value proffered by the owner was not based upon proper elements and a proper foundation no weight can be given to it in this appeal. It has no probative merit. Since Mr. Maddipati failed to prove fair market value, the assessment ratio cannot be calculated. The assessment ratio is calculated by dividing the assessed value by the fair market value. When, as in this case, the taxpayer fails to prove fair market value by a methodology that is recognized by the Courts, this Commission and the appraisal industry, it is not possible to determine the assessment ratio for the property under appeal.
Failure
to Prove Average Assessment Ratio for St. Louis County
The evidence on this record presented by Complainant fails to establish the average residential assessment ratio for St. Louis County. The evidence only established that the average percentage of appraised value to last reported sales price for five properties in St. Louis County used to originally appraise the subject property was 83.8%. This is a totally insufficient sampling of residential sales in St. Louis County to establish the county wide average assessment ratio. It also did not establish the actual assessment ratio for any given property, even assuming the last reported sale price would have been the fair market value of the properties on January 1, 2005. The ratio of the assessor’s appraised value to last reported sales price does not establish the assessment ratio.
Summary
and Conclusion
Complainant failed to prove the assessment ratio on his own property and failed to prove the average residential assessment ratio for St. Louis County. Therefore, the claim of inequality – discrimination – fails.
Evidence of Increase in Value
In any case in St. Louis County 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.
The appraisal report of Mr. Frumson could only be received to sustain the higher of the Assessor’s or the Board’s Value. Exhibit 1 presented clear and convincing evidence that the fair market value of the subject property is at least $789,700, as the Assessor had originally determined. Section 137.115, RSMo. The value set by the Board was rebutted by Exhibit 1 and the Assessor’s original value was established by clear and convincing evidence.
Clear, cogent
and convincing evidence is that evidence which clearly convinces the trier of
fact of the affirmative proposition to be proved. It does not mean that there may not be
contrary evidence. Grissum v. Reesman,
505 S.W.2d 81, 85, 86 (Mo. Div. 2, 1974).
The quality of proof, to be clear and convincing must be more than a
mere preponderance but does not require beyond a reasonable doubt. 30 AmJur2d. 345-346, Evidence section
1167. “For evidence to be clear and
convincing, it must instantly tilt the scales in the affirmative when weighed
against the evidence in opposition and the fact finder’s mind is left with an
abiding conviction that the evidence is true.”
Matter of O’Brien, 600 S.W.2d 695, 697 (Mo. App. 1980).
Such is the case in this instance. Accordingly the Assessor’s original value is affirmed and the property is assessed at $150,040, which equals the statutory assessment ratio of 19% of $789,700, there being no evidence on this record to establish that the average residential assessment ratio for St. Louis County for the 2005-2006 assessment cycle is less than 19%.
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 valuation of the subject property as originally determined by the Assessor for the 2005-2006 assessment cycle is AFFIRMED.
The assessed value for the subject property for tax years 2005 and 2006 is set at $150,040.
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 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 6th day of June, 2006, to: Ramaiah Maddipati, 998 Delvin Drive, St. Louis, MO 63141, 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