State Tax Commission of Missouri

Complainants put forth five reasons in support of their assertion that the Hearing Officer Decision was in error. However, Complainants failed to set forth any legal claim or basis as a ground to find the Hearing Officer had abused her discretion or acted in an arbitrary or capricious manner. Complainants simply had an opinion as to the fair market value of the property different from that determined by the Hearing Officer.

A review of the record in the present appeal provides support for the determinations made by the Hearing Officer. There is competent and substantial evidence to establish a sufficient foundation for the Decision of the Hearing Officer. 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 her 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).

The Hearing Officer did not err in her 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 Putnam 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 August 1, 2006.

STATE TAX COMMISSION OF MISSOURI

Bruce E. Davis, Chairman

Jennifer Tidwell, Commissioner

Charles Nordwald, Commissioner

DECISION AND ORDER

HOLDING

The decision of the assessor, approved by the Board of Equalization, setting value at $117,700 (assessed value $22,360) is AFFIRMED.

ISSUE

The issue in this case is the true market value of residential real property.

SUMMARY

The subject property is a lakefront home which was originally valued by the assessor at $117,700 (assessed value $22,360). Upon appeal, the Board of Equalization sustained the assessor’s value. Complainants appeal asserting a value of $50,500 for the lot instead of the $66,150 value that the assessor had assigned to the lot. Complainants do not dispute the value of the improvements to the property.

An evidentiary hearing was held on November 29, 2005 in the Putnam County Courthouse before senior hearing officer Luann Johnson. Complainants appeared in person by William Phillips, Esq. Respondent appeared pro se.

EXHIBITS

The following exhibits were entered into the record:

Complainants’ Exhibits

Exhibit 1 – Appraisal report of Margaret Minear

Exhibit 2 – Property Record Card – Phillips

Exhibit 3 – Letter dated 9/15/04

Exhibit 4 – Sales Letters

Exhibit 5 – Property Record Card – Michel

Exhibit 6 – Property Record Card – Walbaum Trust

Respondent’s Exhibits

Exhibit A – Land Study Lakefront and Off Water

Exhibit B – Reference

Exhibit C – Letter of Transmittal Page 1

Exhibit D – Letter of Transmittal Page 2

Exhibit e – Property Record Card – Phillips

Exhibit F – Sales Letters

FINDINGS OF FACT

1. Jurisdiction is proper. Complainants timely filed their appeal from the decision of the Putnam County Board of Equalization.

2. The subject property is a 29,155 square foot lake front lot with an effective front footage of 110.25 front feet. Ex. 2. It is improved with a 936 square foot home with a 36 square foot concrete stoop and a 420 square foot concrete patio. The home was built in 1983. Ex. 2. The property is identified as parcel number 001+11051500400314 more commonly known as 13100 Linden Lane, Unionville, Missouri. Ex. 2. Only the value of the lot is under appeal.

3. Valuing lakefront lots by front foot is a recognized method of determining value. Property Assessment Valuation, International Association of Assessing Officials, 1977, pg. 84-85. A land study conducted at Lake Thunderhead determined that lake front land sold for $600 per front foot. Tr. 49. The subject property has 74.40 feet of actual front footage and 110.25 feet of effective front footage for an indicated land value of $66,150 under the cost approach. Ex. 2. Lots were examined by vehicle and also on foot to determine view and whether lots should be categorized as being in a cove requiring a lesser value. Tr. 49-50. Recommendations were made for adjustments for accessibility and topographical issues. Tr. 50.

4. Complainant’s appraiser looked at the sales of three lots to determine her opinion of value. Those lots required adjustments of 29.9%, 40.7% and 260.4% in order to make them comparable to the subject lot. Ex. 1. Complainant’s appraiser did not calculate the effective front footage of the lots. Complainant’s appraiser’s comparables are not sufficiently similar to the subject lot to support a value for the subject lot of $50,500.

5. Complainant’s real estate broker testified that she had sold the adjacent lot in October, 2003 for $38,000 and that the adjacent lot and the subject property were the most comparable lots that her firm had on the lake. Tr. 24. Said broker further testified that “In my opinion, you don’t have any two lots at the lake that are—that are very much alike.” Tr. 24. Indeed, Complainant’s appraiser determined that said lot, which was reportedly the most similar to the subject lot, required a 40.7% adjustment to make it comparable to the subject. Ex. 1. Complainant’s broker testified that she would place the value of the subject lot at $49,000 to $50,000 but also indicated that lake front lots were selling for $90,000 in 2004 and for $70,000 to $75,000 in 2005. Tr. 28, 30. She indicated that her firm had as many listings on the south end of the lake as the north end of the lake. Tr. 31. She further indicated that she believed the drop in lot value was due to the increase in property taxes. Tr. 32. Complainant’s broker’s testimony of actual sales prices of water front lots tends to support Respondent’s opinion of value.

6. Complainant’s evidence is not substantial and persuasive to establish that Respondent had overvalued Complainant’s property.

7. No evidence was presented which suggested that any new construction or property improvements occurred between January 1, 2005, and the hearing date. Therefore the value determined for tax year 2005 shall also be the value determined for tax year 2006.

8. The true value in money for the subject property on January 1, 2005, and

January 1, 2006, is $117,700, as determined by the assessor and approved by the Board of Equalization.

CONCLUSIONS OF LAW

Highest and Best Use

True value in money is the fair market value of the property on the valuation date, and is a function of its highest and best use, which is the use of the property which will produce the greatest return in the reasonably near future. Aspenhof Corp. v. State Tax Commission, 789 S.W.2d 867, 869 (Mo. App. 1990).

It is true that property can only be valued according to a use to which the property is readily available. But this does not mean that in order for a specific use to be the highest and best use for calculating the property’s true value in money, that particular use must be available to anyone deciding to purchase the property. . . .A determination of the true value in money cannot reject the property’s highest and best use and value the property at a lesser economic use of the property. Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d, 341, 348-349 (Mo. 2005).

True Value in Money

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 purchased by one who is desiring 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, Inc. v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978).

Taxpayer has Burden of Proof

In Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003), the court of appeals stated:

There is no longer an automatic presumption regarding the correctness of an assessor's valuation. Section 138.431.3. This statutory change from the previous situation in which the assessor's valuation was presumed to be correct does not mean that there is now a presumption in favor of taxpayer. The taxpayer in a Commission tax appeal still bears the burden of proof and must show by a preponderance of the evidence that the property was improperly classified or valued. Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991).

In Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003), the court of appeals described the taxpayer's burden as follows:

Taxpayers were the moving parties seeking affirmative relief, and as such, they bore the burden of proving the vital elements of their case, i.e., the assessments were "unlawful, unfair, improper, arbitrary or capricious.” Cupples Hesse Corp. v. State Tax Comm'n, 329 S.W.2d 696, 702 (Mo.1959); Westwood P'ship v. Gogarty, 103 S.W.3d 152, 161[8] (Mo. App. 2003); 84 C.J.S. Taxation §§710, 726. This is true regardless of the existence or non-existence of the challenged presumption. As the Supreme Court of Missouri explained, "even were we to hold that it [the presumption] has been overcome, the burden of proof on the facts and inferences would still remain on petitioner, for it is the moving party seeking affirmative relief.” Cupples, 329 S.W.2d at 702[16]. See also 84 C.J.S. Taxation §710, which states: "Even where there is no presumption in favor of the assessor's ruling, if no evidence is offered in support of the complaint, the reviewing board is justified in fixing the valuation complained of in the amount assessed by the assessor."
To prevail, Taxpayers had to "present an opinion of market value and then ... present substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on tax day." Daly v. P.D. George Co., 77 S.W.3d 645, 651 (Mo. App. 2002).

Substantial and Persuasive Evidence

Substantial evidence is that evidence which, if true, has probative force upon the issues, i.e., evidence favoring facts which are such that reasonable men may differ as to whether it established them, and from which the Commission can reasonably decide an appeal on the factual issues. 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).

Comparable Sales Approach

The comparable sales approach uses prices paid for similar properties in arms-length transactions and adjusts those prices to account for differences between the properties. Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character. This approach is most appropriate when there is an active market for the type of property at issue such that sufficient data is available to make a comparative analysis. Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d. 341, 347-348 (Mo. 2005). (citations omitted).

Experts

An expert’s opinion must be founded upon substantial information, not mere conjecture or speculation, and there must be a rational basis for the opinion. Missouri Pipeline Co. v. Wilmes, 898 S.W.2d 682, 687 (Mo. App. E.D. 1995). The state tax commission cannot ignore a lack of support in the evidence for adjustments made by the expert witnesses in the application of a particular valuation approach. Drey v. State Tax Commission, 345 S.W.2d 228, 234-236 (Mo. 1961), Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d, 341, 348 (Mo. 2005).

The testimony of an expert is to be considered like any other testimony, is to be tried by the same test, and receives just so much weight and credit as the trier of fact may deem it entitled to when viewed in connection with all other circumstances. The hearing officer, as the trier of fact, has the authority to weigh the evidence and is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert’s testimony and may accept it in part or reject it in part. Beardsley v. Beardsley, 819 S.W.2d. 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. 1981); Scanlon v. Kansas City, 28 S.W.2d 84, 95 (Mo. 1930).

DISCUSSION

Complainants assert that a fee appraisal is a more reliable method of determining value than mass appraisal. Such a generalization fails to address the ability of mass appraisals to be accurate and the ability of fee appraisals to be inaccurate. A mass appraisal can be accurate because it can look at a larger amount of objective data to determine factors such as the front foot selling price of lake lots in a particular area. Likewise, a fee appraisal which must use substantially dissimilar properties as comparables has a lower probability of accuracy. Complainants have failed to meet their burden of proof.

ORDER

The assessed value determined by the Assessor and approved by the Board of Equalization, is AFFIRMED.

A party may file with the Commission an application for review of a hearing officer decision within thirty (30) days of the mailing of such decision. The application shall contain specific detailed 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.

If an application for review of a hearing officer 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 Putnam 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 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 March 23, 2006.

STATE TAX COMMISSION OF MISSOURI

_____________________________________

Luann Johnson

Senior Hearing Officer

Certificate of Service

I hereby certify that a copy of the foregoing has been mailed postage prepaid this 23^rd day of March, 2006, to: N. William Phillips, 103 North Market, P.O. Box 69, Milan, MO 63556-0069, Attorney for Complainant; James Garrett, Prosecuting Attorney, 1702 W. Main, Unionville, MO 63565, Attorney for Respondent; Paul Rouse, Assessor, Putnam County Courthouse, Room 201, Unionville, MO 63565-1600; Sue Ann Varner, Clerk, Putnam County Courthouse, Unionville, MO 63565; Sharon Thompson Parks, Treasurer & ex officio Collector, Putnam County Courthouse, Room 200Unionville, MO 63565.

_______________________________

Barbara Heller

Legal Coordinator