State Tax Commission of
LUTHER McCLELLAN, )
)
Complainant, )
)
v. ) Appeal Number 05-66000
)
HAROLD CREECH, ASSESSOR, )
LINCOLN COUNTY, MISSOURI, )
)
Respondent. )
DECISION AND ORDER
HOLDING
Decision of the Lincoln County Board of Equalization sustaining the assessment made by the Assessor, SET ASIDE, the Hearing Officer finds true value in money for the subject property for tax year 2005 to be $185,860 ($181,600 – residential; $4,260 – agricultural), assessed value of $35,010 ($34,500 – residential; $510 – agricultural) and 2006 to be $276,660 ($272,400 – residential; $4,260 – agricultural) assessed value of $52,270 ($51,760 – residential; $510 – agricultural).
Complainant appeared pro se.
Respondent appeared pro se.
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 January 1, 2006.
SUMMARY
Complainant appeals, on the ground of overvaluation, the decision of the Lincoln County Board of Equalization, which sustained the valuation of the subject property. The Assessor determined an appraised value of $229,580 ($225,320 – residential; $4,260 – agricultural), assessed value of $43,320 ($42,810 –residential; $510 – agricultural). Complainant proposed a value of $161,000 for the subject house under construction as of January 1, 2005. A hearing was conducted on January 25, 2006, at the Lincoln County Courthouse, Troy 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 offered into evidence Exhibit A. Exhibit A consisted of forty-nine (49) pages of copies of bills and checks to support Mr. McClellan’s testimony that as of January 1, 2005 he had expended only $161,000 in construction costs for the subject house. Exhibit A was received into evidence.
Complainant offered into evidence Exhibit B. Exhibit B consisted of four (4) photographs depicting drywall which had been hung in the subject house. Mr. McClellan offered these photographs in support of his testimony that he had fired a drywall contractor and had to tear out the drywall which had been hung because of poor workmanship. Exhibit B was received into evidence.
Complainant offered into evidence Exhibit C. Exhibit C consisted of three (3) photographs of a portion of the interior of the subject house. The photographs show that as of January 2005 the interior of the home was in an unfinished condition, but ready for hanging of dry wall to commence and that as of May 2005 dry wall had been hung and was ready for the seams to be mudded. Complainant did not contest the valuation of the agricultural portion or the valuation of the residential land. The sole point of Complainant’s appeal was that the house being in an unfinished condition should only be valued at the amount which Complainant had spent out of pocket on building the house, i.e. $161,000.
Respondent’s Evidence
Respondent offered into evidence Exhibit 1. Exhibit 1 was the appraisal report of Thomas W. Castor, state certified residential appraiser. Exhibit 1 was received into evidence.
Respondent testified it was his practice on new home construction to put a house on at 75% of the cost calculation for the completed home when the home was ready for drywall to be hung. In valuing the subject property, Respondent followed this practice as with any other new homes under construction in Lincoln County.
FINDINGS OF FACT
1. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Lincoln County Board of Equalization.
2. The subject property is located at 166 Childs Road, Old Monroe, Missouri. The property is identified by locator number 21-3.0-05-000-000-010.00. The property consists of 14.22 acres, 13.97 acres are agricultural graded land and .25 of an acre is a residential home site. It is improved by one-story single-family residence. The house contains 3,440 square feet of living area. There is a full unfinished basement and an attached three-car garage. The home has four bedrooms and 2 and a half baths. Exhibit 1; Respondent’s Testimony..
3. There was evidence of new construction and improvement from January 1, 2005, to January 1, 2006. The house was not completed as of January 1, 2005, and there was still work remaining to be done on January 1, 2006. Testimony of Complainant; Exhibit 1.
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.
5. Respondent’s evidence was substantial and persuasive to rebut the presumption of correct assessment and provide the basis for a determination of fair market value for 2005 and 2006.
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.
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 (
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, 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.
Presumption on Assessor’s Value
The Supreme Court of Missouri has held, “A tax assessor’s valuation is presumed correct.” Donna Snider v. Casino Aztar/Aztar Missouri Gaming Corp., SC86181, 3/01/2005. 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.
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.
Complainant’s Burden of Proof
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 (
Owner’s Opinion of 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
Complainant has failed to meet his burden of proof to establish the fair market value of the subject property. Complainant desired to restrict the claim to only a valuing of the subject house and basing his valuation on actual out of pocket expenses. There is no statutory or case law authority that will support this methodology for valuation. The unfinished house has to be valued as it sat on January 1, 2005, and on January 1, 2006, because of the additional construction which took place during 2005. Section 137.115.1, RSMo. The property to be valued is the entirety of the real property, not just the cost of materials that went into the house. As the house was being constructed it took on a fair market value greater than the sum of its parts. That is the fair market value of the unfinished home as it existed on approximately a quarter of an acre of land would be more than just the out of pocket expenses.
Hearing Officer Finds Value
This appeal does present a somewhat unusual valuation problem because of the unfinished condition of the Complainant’s home both on January 1, 2005, and January 1, 2006. Respondent’s appraisal report (Exhibit 1) provides the opinion of value for the home on
October 22, 2005, as $465,278 under a cost approach and $454,000 under a sales comparison approach. The appraiser made no deduction or adjustments to the October 22, 2005, value for the still unfinished condition of the home. Exhibit 1 – Valuation Section. He did however recognize that the home had been in an uncompleted condition both on January 1, 2005, and still on October 22, 2005. Exhibit 1 – Addendum. Specifically, he concluded based upon his inspection of the home and his conversation with Mr. McClellan that the home was only 50% complete on 1/1/05 and only 75% complete on 10/22/05. There is no evidence by which the Hearing Officer can make a determination as to a percentage complete as of 1/1/06. Mr. McClellan testified it was still not finished as of the hearing date but failed to offer any specific information on this point.
The Hearing Officer concludes that the opinion of value proffered under Mr. Castor’s sales comparison analysis of $454,000 was a value for the home in a completed condition. However, that value would include $92,430 in value of the land or $6,500 per acre ($92,430 ÷14.22 = $6,500). The fair market value of the 13.97 acres of agricultural land ($6,500 x 13.97 = $90,805) must be deducted from the appraised value. This results in an appraised value for the home and home site in a completed condition of $363,195 ($454,000 - $90,805 = $363,195).
Valuation
for 2005
Applying the estimate of completeness concluded by Respondent’s appraiser of 50%, an indicated fair market value for the residential portion of the home site with the unfinished house on January 1, 2005, would be $181,600 ($363,195 x .50 = $181,597, rounded to $181,600), assessed value of $34,500 ($181,600 x .19 = $34,503.53, rounded to $34,500). To this is added the agricultural value which was not contested of $4,260, assessed value of $510. This results in a valuation for the subject property as of January 1, 2005, of $185,860 ($181,600 + $4,260 = $185,860), assessed value of $35,010 ($34,500 + $510 = $34).
Valuation
for 2006
For 2006 the house is considered 75% complete, therefore the home site with house is valued at $272,400 ($363,195 x .75 = $272,396, rounded to $272,400), assessed value of $51,760 ($272,400 x .19 = $51,756, rounded to $51,760). The total value for January 1, 2006 with the agricultural land added is $276,660 ($272,400 + $4,260 = $276,660), assessed value of $52,270 ($51,760 + $510 = $52,270).
ORDER
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Lincoln County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax year 2005 is set at $35,010.
The assessed value for the subject property for tax year 2006 is set at $52,270.
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 Lincoln 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 February 3, 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 3rd day of February 2006, to: Luther McClellan, 9601 Lilac Dr., St. Louis, MO 63137, Complainant; G. John Richards, Prosecuting Attorney, 460 Main Street, Troy, MO 63379, Attorney for Respondent; Harold Creech, Assessor, 201 Main Street, Troy, MO 63379; Elaine Luck, Clerk, 201 Main Street, Troy, MO 63379; Claude Cox, Collector, 201 Main Street, Troy, MO 63379.
___________________________
Barbara Heller
Legal Coordinator