State Tax Commission of Missouri

LOUIS W. & BONNIE S. PFLECKL, )

)

Complainants, )

)

v. ) Appeal Number 05-32510

)

SCOTT SHIPMAN, ASSESSOR, )

ST. CHARLES COUNTY, MISSOURI, )

)

Respondent. )

DECISION AND ORDER

HOLDING

Decision of the St. Charles 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 $514,650, assessed value of $97,790, as originally determined by the Assessor.

Complainant Louis W. Pfleckl appeared pro se.

Respondent appeared by Counsel, Charissa Mayes, Assistant County 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.

SUMMARY

Complainant appeals, on the ground of overvaluation, the decision of the St. Charles County Board of Equalization, which reduced the valuation of the subject property. The Assessor determined an appraised value of $514,650, assessed value of $97,790, as residential property. The Board reduced the value to $499,147, assessed value of $94,840. Complainant proposed a value of $383,128, assessed value of $72,795. A hearing was conducted on

February 28, 2006, at the St. Charles County Administration Building, St. Charles, 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. Pfleckl offered his opinion of fair market value to be $383,128 based upon an analysis he had performed which was shown in Exhibit I.

The following exhibits were offered into evidence by Complainant.

Exhibit A – Letter dated 2/24/06 from Dana Gundaker-Devers Branch Manager for Coldwell Banker-Gundaker, detailing Mr. Pfleckel’s experience as a residential sales associate for 17 years. Objection on the grounds of hearsay and relevance sustained, exhibit not received.

Exhibit B – Copy of the Ground Floor Plan for the subject home showing marked in yellow (1) a section of four - 48” x 60” x 12” display cabinets which were called for by the plans, but not constructed as of January 1, 2005, or January 1, 2006; and (2) a section of wall, with cabinets and a walk in cedar lined closet or room (approximately 5’ 6” x 7’) which were called for by the plans, but not constructed as of January 1, 2005, or January 1, 2006. Exhibit received into evidence.

Exhibit C – six pages from an appraisal report by State Certified Real Estate Appraiser Michael J. Westmann, a dictionary definition of room, a page of MLS Guidelines and a copy of Time Line of activity on the appeal by Complainant. Objection as to the page of the timeline on the ground of hearsay, objection sustained page not received into evidence. Remainder of Exhibit C received into evidence.

Exhibit D – two photographs of the subject basement showing that the South wall (wall and walk in closet) called for in the original plans was not constructed. Exhibit received into evidence.

Exhibit E - - locator map showing location of sales identified as Comps 1 through 8 on Exhibits I, O and T. Objection on ground of hearsay, lack of foundation and relevance, taken under advisement to be ruled on in this Decision. See, Objections to Complainants’ Exhibits, infra.

Exhibit F – Photographs of properties in Kersting Farms Subdivision (Subject Subdivision). Objection on grounds of relevancy, hearsay and lack of foundation. Objection as to photographs overruled. Objection as to editorial statements in exhibit of Complainant sustained.

Exhibit G – Photographs of homes in Summit Estates. No objection, exhibit received.

Exhibit H – Time line document as contained in Exhibit C which was excluded upon objection. Exhibit excluded.

Exhibit I – Sales Comparison Grid prepared by Mr. Pfleckl on Comps designated as Comps 1 through 4. Objection on grounds of hearsay, relevance and lack of foundation taken under advisement to be ruled on in this Decision. Objection sustained exhibit not received. See, Objections to Complainants’ Exhibits, infra.

Exhibit J – Photographs of Subject with notes and comments by Complainant and Property Record Card of subject. Objection on grounds of hearsay, relevance and lack of foundation as to Complainant’s editorial comments taken under advisement to be ruled on in this Decision.. Objection sustained. Exhibit received only as to photographs and PRC.

Exhibit K – photographs and information on property at 114 Kersting Farms Drive, Comp 1 in Exhibit I. Objection on grounds of hearsay, relevance and lack of foundation taken under advisement to be ruled on in this Decision. See, Objections to Complainants’ Exhibits, infra.

Exhibit L – photographs and information on property at 104 Evergreen Point, Comp 2 in Exhibit I. Objection on grounds of hearsay, relevance and lack of foundation taken under advisement to be ruled on in this Decision. See, Objections to Complainants’ Exhibits, infra.

Exhibit M – photographs and information on property at 1519 Mammoth, Comp 3 in Exhibit I. Objection on grounds of hearsay, relevance and lack of foundation taken under advisement to be ruled on in this Decision. See, Objections to Complainants’ Exhibits, infra.

Exhibit N – photographs and information on property at 54 Hickory Hill, Comp 4 in Exhibit I. Objection on grounds of hearsay, relevance and lack of foundation taken under advisement to be ruled on in this Decision. See, Objections to Complainants’ Exhibits, infra.

Exhibit O – Sales Comparison Grid prepared by Mr. Pfleckl on Comps designated as Comps 1, 2 (same as in Exhibit I) 5, 6 and 7. Objection on grounds of hearsay, relevance and lack of foundation taken under advisement to be ruled on in this Decision. Objection sustained exhibit not received. See, Objections to Complainants’ Exhibits, infra.

Exhibit P – Copy of a sales grid on five properties, no adjustments or indicated values shown. Objection on grounds of hearsay, relevance and lack of foundation taken under advisement to be ruled on in this Decision. Objection sustained exhibit not received. See, Objections to Complainants’ Exhibits, infra.

Exhibit Q - photographs and information on property at 1836 Everest, Comp 5 in Exhibit O. Objection on grounds of hearsay, relevance and lack of foundation taken under advisement to be ruled on in this Decision. See, Objections to Complainants’ Exhibits, infra.

Exhibit R - photographs and information on property at 4 Matterhorn Court, Comp 6 in Exhibit O. Objection on grounds of hearsay, relevance and lack of foundation taken under advisement to be ruled on in this Decision. See, Objections to Complainants’ Exhibits, infra.

Exhibit S - photographs and information on property at 1433 Powder, Comp 7 in Exhibit O. Objection on grounds of hearsay, relevance and lack of foundation taken under advisement to be ruled on in this Decision. See, Objections to Complainants’ Exhibits, infra.

Exhibit T – Sales Comparison Grid prepared by Mr. Pfleckl on Comps designated as Comps 1, 3 (same as in Exhibit I) and 8. Objection on grounds of hearsay, relevance and lack of foundation taken under advisement to be ruled on in this Decision. Objection sustained exhibit not received. See, Objections to Complainants’ Exhibits, infra.

Exhibit U – Copy of Fax transmission to Steve Riney from Louis Pfleckl. Objection on ground of relevancy, sustained, exhibit not received.

Exhibit V - photographs and information on property at 135 Kersting Farms, Comp 8 in Exhibit T. Objection on grounds of hearsay, relevance and lack of foundation taken under advisement to be ruled on in this Decision. See, Objections to Complainants’ Exhibits, infra.

Exhibit W – Copy of two e-mails from Cheryl Siemer to Complainants, dated 2/22 and 2/23/06. Objection on grounds of hearsay and relevance, sustained, exhibit not received.

Exhibit X – Copy of memo dated 6/1/83 regarding a salary adjustment for Mr. Pfleckle, Quality Assurance Specialist. Objection on grounds of hearsay and relevance, sustained, exhibit not received.

Respondent’s Evidence

Respondent placed into evidence the testimony of Mr. Steven D. Riney , appraiser for St. Charles County. The appraiser testified as to his appraisal of the subject property. Exhibit 1. The Appraisal Report was received into evidence. Mr. Riney arrived at an opinion of value for the subject property of $514,680 based upon Marshall & Swift Cost Approach and an opinion of value of $580,000 based upon the sales comparison approach to value. In performing his sales comparison analysis, the appraiser relied upon the sales of four 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. Charles County Board of Equalization.

2. The subject property is located at 126 Kersting Farms Dr, O’Fallon, Missouri. The property is identified by locator number 2-0024-8797-00-12. The property consists of a 4.10 acre lot improved by a one-story atrium brick and vinyl, single-family structure of good quality construction. The house was built in 2003 and appears to be in average condition. The residence has a total of eight rooms, which includes four bedrooms, three and a half baths, and contains 3,393 square feet of living area. There is a full basement with finish and a three-car basement garage and a detached three-car garage. Exhibits 1, C & J.

3. There was no evidence of new construction and improvement from January 1, 2005, to January 1, 2006.

4. Complainant’s experience as a residential sales associate, as set forth in the proffered Exhibit A ,or Complainant’s own testimony did not establish that Mr. Pfleckl by education, training and experience was qualified as an appraiser of real property.

5. Complainant’s proffered sales analysis as demonstrated in Exhibits I, O and T are not properly performed sales comparison approaches to value for purposes of an appeal before the Commission and have no probative benefit or weight on the issue of fair market value.

6. The subject property was appraised at a value of $520,000 as of March 13, 2003 by State Certified Real Estate Appraiser, Micheal J. Westmann under the sales comparison approach and a value of $525,542 under the cost approach. The value estimate was predicated upon satisfactory completion of the improvements in accordance with plans and specifications obtained from the builder. Exhibit C.

7. The Westmann appraisal does not indicate what had not been completed in the subject home as of the date of his appraisal. The Westmann does not indicate that the detached three car garage had been constructed as of March 13, 2003, nor does it indicate this was a structure which was called for by the plans and specifications of the builder. Exhibit C.

8. The only part of the builder’s plans and specifications which were not completed as of January 1, 2005, and January 1, 2006 were (1) a section of four - 48” x 60” x 12” display cabinets and (2) a section of wall, with cabinets and a walk in cedar lined closet or room (approximately 5’ 6” x 7’). Exhibit B; Testimony of Complainant.

9. 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 $383,128.

10. 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 an appropriate distance to the subject, there being no other sales of other properties deemed comparable in closer proximity to 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.

11. 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 and to arrive at an indicated fair market value. The net adjustments fell in a range from 2.1 to 12.8 percent, which is acceptable for the present appraisal problem.

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.

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.

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, 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 (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).

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 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965). The owner may not support an opinion of value by reference to comparable sales unless the owner qualifies as an expert. State ex rel. Missouri Hwy. and Tr. Comm’n v. McDonald’s Corp., 872 S.W.2d 108, 113 (Mo. App. E.D. 1994); State ex rel. Missouri Hwy. and Tr. Comm’n v. Pracht, 801 S.W.2d 90, 94 (Mo. App. E.D. 1990).

Methods of Valuation

Missouri courts have approved the comparable sales or market approach, the cost approach 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).

Evidence of Increase in Value

In any case in St. Charles 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.

DECISION

Objections to Complainants’ Exhibits

Respondent’s objections to Exhibits I, K, L, M., N, O, Q, R S, T and V were all taken under advisement to be ruled on in this Decision. The objections are sustained and the exhibits are not received into evidence. Accordingly, the exhibits and testimony related thereto provided no basis to support the owner’s opinion of value.

The eleven collective exhibits constitute as a unit Mr. Pfleckl’s valuation of the subject property utilizing three different groups of eight properties. Group 1 (Exhibits I, K, L, M and N) is Complainant’s sales grid which produced an indicated value of $383,128 under his analysis. Group 2 (Exhibits O, K, L, Q, R and S) is Complainant’s sales grid which produced an indicated value of $44,333). Group 3 (Exhibits T, K, M and V) is the Complainant’s sales grid which produced an indicated value of $394,889.

Each of these attempts at a sales comparison approach to value and all of them taken together suffer from various fatal flaws rendering any opinion of value based upon the analysis reflected in Exhibits I, O and T as of no probative value. The initial flaw applicable to these attempts to “appraise” the property is that Mr. Pfleckl is not qualified by education, training or experience as an appraiser. Therefore, as an owner he is not permitted to support his opinion of value by reference to comparable sales. McDonald’s Corp. and Pracht, supra. Notwithstanding that four of the properties cited by Mr. Pfleckl were the properties relied upon by Respondent’s appraiser (104 Evergreen, 4 Matterhorn, 1433 Powder and 1836 Everest), the use of these properties by Complainant does not render his analysis as an acceptable sales comparison approach. In other words, simply borrowing the comparables determined by an expert does not elevate a valuation analysis to the level of an appraisal worthy of being given substantial and persuasive weight in a case before the Commission.

The attempt to “appraise” the subject by the owner is further flawed by the various adjustments attempted. Since Mr. Pfleckl is not an expert in appraisal, there is no foundation in education, training or experience for his various adjustments. Furthermore a review of his sales grids on their face and the explanation as to his adjustments on the back of Exhibit I quickly demonstrates the adjustments are erroneous and not well founded.

Complainant makes a ten percent of sales price adjustment to each of his eight comparables for what he identifies as % sub-division depreciation. This alleged depreciation is based upon various sub-division factors which Mr. Pfleckl discusses. Mr. Pfleckl asserts the 10% adjustment is from a “recent sale”. This sale is apparently 114 Kersting Farms. However, no explanation as to how 10% was derived for this adjustment from just this one sale.

Neither Mr. Riney, nor Mr. Westmann made any such adjustment for a subdivision depreciation factor. The Hearing Officer in over fifteen years of hearing appeals has never seen such an adjustment by any appraisal expert. Even assuming that this would fall under an adjustment for location, it is not persuasive. Mr. Riney and Mr. Westmann did not see the need to make any location adjustment in their appraisals. The sub-division depreciation adjustment is not warranted, nor well founded.

The adjustment for difference in gross living area made by Mr. Pfleckl is likewise a flaw in his methodology. This adjustment, according to Mr. Pfleckl was made by “taking difference from subject in percentage of Total Area and adding that percentage to the comparable’s actual house value found in the Assessor’s Office Residential Appraisal File. This is not established to be a recognized and accepted method for making the living area adjustment. As such, any valuation based on such an adjustment fails to qualify as a proper appraisal.

The opinion of value proffered by Mr. Pfleckl was not based upon proper elements and a proper foundation and provides neither substantial nor persuasive evidence of fair market value. It is not enough for an owner to borrow bits and pieces from other appraisers and interject his own method of adjustments to construct a sales grid. In the absence of evidence qualifying the owner as an appraiser such makeshift attempts at valuation provide no evidence which will rebut the presumption of correct assessment. Since the proffered exhibits were not establish to have a proper appraisal foundation they have no relevance on the issue of fair market value.

Complainants Fail to Prove Fair Market Value

The owner’s opinion, without substantial and persuasive evidence to support it provides no basis to determine fair market value. Exhibit C rebuts any assertion of fair market value for the subject of $383,128. Exhibit C opines a value of $520,000 to $525,000 for the subject property as of March 13, 2003. Although Mr. Pfleckl did not see fit to offer the entire exhibit into evidence the exhibit on the Supplemental Addendum identifies a Lender as The Missouri Bank, leading to the conclusion this appraisal was done for some type of loan purpose. Furthermore, the appraiser’s limiting the appraisal “subject to completion per plans and specifications,” does not demonstrate exactly what was left to be completed to support the $520 - $525,000 value.

Exhibit B and Complainant’s testimony establish that the only items not completed per plans and specifications were a small amount of basement finish. The completion of some walls, cabinets and a small closet or storage room hardly justifies a reduction from the Westmann appraisal of more than $130,000. However, Westmann did not actually appraised the Pfleckl home as having a completely finished basement, but only considered it to be 10% finished and appropriately adjusted his comparables relative to this factor.

Furthermore, there is no indication that the three car detached 28 x 31 garage was even part of the original plans and specifications. This would be an additional feature which would have a positive impact on the subject’s value over the indicated value of the Westmann appraisal. If the detached garage was part of the original plans and specifications, then the Westmann appraisal would still be valid.

The Westmann appraisal with Exhibit B and Mr. Pfleckl’s testimony provide support for a value well over and above the opinion offered by Complainants. Even allowing for an adjustment of $5,000 to $10,000 to account for the unfinished portion of the basement, the Westmann appraisal would support a value close to $515,000.

Complainants failed to meet their burden of proof and rebut the presumption of correct assessment by the Board.

Respondent’s Evidence Substantial and Persuasive to Rebut Presumption

Respondent’s evidence was substantial and persuasive to rebut the presumption of correct assessment by the Board. Under 12 CSR 30-3.075 Respondent’s evidence cannot be received to increase the value above the value established by the Assessor - $514,680, the higher of the value between the Assessor and the Board’s valuations. Exhibit 1 can only be received to sustain the higher of the Board or Assessor’s value. Accordingly, the fair market value for the subject property must be set at $514,680 as shown by the cost approach and supported by Mr. Riney’s sales comparison approach. Exhibit 1.

ORDER

The assessed valuation for the subject property as determined by the Board of Equalization for St. Charles County for the subject tax day is SET ASIDE.

The assessed valuation for the subject property as originally determined by the Assessor is AFFIRMED.

The assessed value for the subject property for tax years 2005 and 2006 is set at $97,790.

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. Charles 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.