State Tax Commission of Missouri

MERLE MURHRING, )

)

Complainant, )

)

v. ) Appeal No. 06-69501

)

CARL M. ZUPAN, ASSESSOR, )

MARION COUNTY, MISSOURI, )

)

Respondent. )

ORDER

AFFIRMING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

On December 19, 2006, Senior Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) affirming the assessment by the Marion County Board of Equalization and setting true value in money for Complainant’s real property at $92,900, assessed value at $17,650.

Complainant timely filed his Application for Review of the Decision.

CONCLUSIONS OF LAW

Standard Upon Review

A review of the record in the present appeal provides support for the determinations made by the Hearing Officer. Complainant failed to meet his burden of proof and rebut the presumption of correct assessment by the Assessor and the Board. 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).

Complainant’s letter setting forth his Application for Review was essentially arguing the conclusions reached by the Hearing Officer. Complainant failed to set forth any legal claim or basis as a ground to find the Hearing Officer had abused his discretion or acted in an arbitrary or capricious manner. Complainant simply had an opinion as to the fair market value of the property different from that determined by the Hearing Officer.

The Hearing Officer did not err in his determinations as challenged by Complainant.

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 Marion 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 January 30, 2007.

STATE TAX COMMISSION OF MISSOURI

Bruce E. Davis, Chairman

Jennifer Tidwell, Commissioner

Charles Nordwald, Commissioner

DECISION AND ORDER

HOLDING

Decision of the Marion County Board of Equalization sustaining the assessment made by the Assessor is AFFIRMED. Hearing Officer finds presumptions of correct assessment not rebutted. True value in money for the subject property for tax year 2006 is set at $92,900, assessed value of $17,650.

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.

SUMMARY

Complainant appeals, on the ground of overvaluation, the decision of the Marion County Board of Equalization, which sustained the valuation of the subject property. The Assessor determined an appraised value of $92,900, assessed value of $17,650 as residential property.

Complainant proposed a value of $38,990, assessed value of $7,410 in his Complaint for Review of Assessment.

A hearing was conducted on December 5, 2006, at the Marion County Courthouse, Hannibal, 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. He offered his opinion of value of his property to be $38,990, allowing for a 50% deduction for the subject being in close proximity (less than a half-mile) to a confined animal feeding operation (CAFO), in particular a hog feeding facility.

Complainant offered into evidence Exhibit A. Exhibit A was received into evidence. The exhibit consisted of the following documents:

1. University of Missouri – Columbia – Study – The Impacts of Animal Feeding Operations on Rural Land Values, May 1999, presented to the Saline County Study Steering Committee.

2. Purchase Agreement on subject mobile home, undated.

3. Purchase Agreement for Heat Pump, 3/11/99.

4. Lowe’s advertisement on gas fire log, similar to one in subject.

5. Advertisement on pole barn prices, July, 2000.

6. The Facts about CAFO’s, Local Control and Health Ordinances

7. Notes on phone conversation with Rob-Bilt on construction costs for pole barn buildings.

8. Newlin Construction bid, March 15, 1999.

9. Letter to from Art & Trudy Linaschke, dated 2/10/03, with aerial photo and drawing on proposed development of property behind subject.

10. Handwritten calculation of house and property cost of $85,212.85, with copy of adding machine tape and cancelled check.

11. Property Record Card on subject property.

Complainant offered the testimony of Richard H. Lawler, State Licensed REALTOR® and Broker. Mr. Lawler did not offer an opinion of value for the subject property. The testimony of Mr. Lawler related to a recent sale of 13 tracts of land in Ralls County which were in a similar location to a confined hog feeding operation as the subject. Exhibit B was received into evidence based upon the testimony of Mr. Lawler. Exhibit B consisted of (1) a Land Sale Bill, (2) a Plat Map of the tracts being offered for sale, and (3) a listing of the prior asking prices for the sale tracts and the sale prices paid at the public auction.

Respondent’s Evidence

Respondent testified he had valued the subject property under the Hunnicutt mass appraisal system which is used in Marion County for the biennial reassessment of all residential property. No deduction or adjustment had been made for the subject property being in close proximity to a hog feeding operation. The Assessor did not feel he had any basis upon which such an adjustment could be made.

FINDINGS OF FACT

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

2. The subject property is located at 6646 County Road 249, Palmyra, Missouri. The property is identified by parcel number 20-013.07.26.0.00.008.00. The property consists of 2.6 acre lot improved by 27 x 66 mobile home on a foundation, with porch and deck, and a 28 x 44 garage. The property is within approximately 2,000 feet of a hog confinement feeding facility.

3. 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 $38,990.

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 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. The evidence presented by Complainant did not rise to the level of substantial and persuasive to establish that the assessor’s valuation, sustained by the Board, was erroneous. Complainant’s evidence failed to meet the standard of substantial and persuasive to establish the fair market value of the property as of January 1, 2005. Without establishing fair market value the presumptions of correct assessment stand.

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).

Complainant’s valuation documents (Exhibit A) failed to provide any relevant evidence from which a conclusion of what a willing buyer and seller would agree to as a purchase price on January 1, 2005 could be made. Complainant’s calculation of House and Property Cost does not constitute an appropriate cost approach to value, nor was it shown to have been developed from adequate land sales data and replacement cost new derived from the market. There was no evidence of sales of comparable properties upon which a determination of value could be based.

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 this instance, Mr. Muehring offered an opinion of value of $38,990, based on a 50% deduction because of the hog feeding operation being within a half mile of his home. However, there was no paired sales analysis or other market data to support the claim of a 50% reduction in value to real property based on close proximity to a confined animal feeding operation. The 1999 Saline County study only concluded that the average loss in value was only $112 per acre.

Mr. Muehring’s calculation of a value for his property of $85,212 was unpersuasive, as noted above, to establish the value of the property on January 1, 2005, irrespective of attempting to make a determination of a negative adjustment for the location of the hog feeding operation. The owner’s opinion in this instance was not demonstrated to have been based upon proper elements or a proper foundation. Therefore it can be given no probative value.

Lawler Testimony

The evidence presented by Richard Lawler (testimony and Exhibit B) demonstrated that in a given situation the reduction between asking price and selling price at auction for a group of 15 tracts of land within a quarter to a half mile of a confined hog feeding operation was 46%. The CAFO in the Lawler transactions is not the CAFO near to the subject property. The Hearing Officer is not persuaded that the 46% factor can be applied to the valuation of the subject property as of January 1, 2005. This conclusion is based on several factors that must be taken into consideration.

First, the Lawler sales all took place on the same day. The transactions constituted the liquidation of an entire development (South River Estates Subdivision). The liquidation took place nearly 22 months after the tax date applicable to this appeal (January 1, 2005). The hypothetical sale of the subject would not be as part of a liquidation of a planned subdivision development. Therefore, attempting to attribute a 46% deduction in value derived from sales of multiple tracts to the sale of a single property involves high levels of speculation and conjecture. Accordingly, such a deduction cannot be applied to the value of the subject property.

Second, the Lawler properties sold when the hog feeding operation was already in existence. According to Mr. Muehring’s testimony the permit for the feeding operation impacting his property was not applied for until September of 2005 and was not issued until nearly the end of 2005. Therefore, as of January 1, 2005, there was no hog feeding operating which could have impacted the Muehring property, like the Lawler properties. Although Complainant asserted that the plan for putting in the hog feeding facility would have been known in January, 2005, there is no evidence which supports this belief of Complainant. It is only speculation that on January 1, 2005, a knowledgeable buyer of the Muehring property would have known about plans for a CAFO less than a half-mile away.

Third, the fact that the Lawler transactions were sales by a developer who was attempting to cut losses because the subdivision development originally planned had been abandoned made the seller other than a typically motivated seller of an individual property, as would be the case with the hypothetical sale on January 1, 2005, of the Muehring property. The Lawler transactions provide an indication of a negative impact of a CAFO on a residential subdivision development when a CAFO was already in existence. The sales are not definitive of the impact of the CAFO on the Muehring property, a single residential property, when no CAFO was in existence on the hypothetical sale date to impact value.

Summary & Conclusion

The Hearing Officer recognizes that it would clearly appear that the existence of a CAFO within a half mile of a residential property would lessen the fair market value of the residential property. However, the evidentiary record fails to demonstrate the existence of sufficient sales data from rural areas of Missouri to establish the actual market impact in such circumstances. In other words, it remains a matter of speculation and conjecture until such time as market data is sufficient to demonstrate the economic impact of a CAFO on nearby residential properties.

In the present case, the evidence failed to establish the fair market value of the subject property on January 1, 2005 irrespective of the existence of the CAFO. Furthermore, the evidence failed to establish that a well informed buyer would have known of the CAFO being planned for operation a year later. The CAFO was not in existence on January 1, 2005 and evidence fails to establish it was a matter which a prospective buyer would have known. The only issue was what a willing buyer and seller would have agreed to as the purchase price of the Muehring property on January 1, 2005. Complainant failed to present substantial and persuasive evidence on that issue.

Complainant failed to meet his burden of proof. The assessment made by the Assessor and sustained by the Board must therefore be affirmed.

ORDER

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

The assessed value for the subject property for tax year 2006 is set at $17,650.

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 Marion 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.