State Tax Commission of Missouri

 

GARY L. POWELL,                                       )

)

Complainant,                )

)

v.                                                         )           Appeal Number 05-91007

)                        

WENDY NORDWALD, ASSESSOR,           )

WARREN COUNTY, MISSOURI,                )

)

 Respondent.                )

 

 

DECISION AND ORDER

 

HOLDING

 

Decision of the Warren County Board of Equalization reducing the assessment made by the Assessor, SET ASIDE, Hearing Officer AFFIRMS Assessor’s original true value in money for the subject property for tax years 2005 and 2006 at $260,430, assessed value of $49,480.

Complainant and wife appeared pro se.

Respondent appeared in person and by Counsel, James Whiteside, Assistant Prosecuting Attorney.

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 whether the Assessor or Board discriminated against the Complainant in the assessment of the subject property.

 

 

SUMMARY

Complainant appeals, on the ground of overvaluation and discrimination, the decision of the Warren County Board of Equalization, which reduced the valuation of the subject property.  The Assessor determined an appraised value of $260,430, assessed value of $49,480, as residential property.  The Board reduced the value to $223,060, assessed value of $42,380. Complainant proposed a value of $203,980, assessed value of $38,760.  Respondent proposed a value of $300,000, assessed value of $57,000.  A hearing was conducted on January 12, 2006, at the Warren County Courthouse, Warrenton, 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 was Complainant’s valuation document.  The exhibit consisted of a chart prepared by Mr. Powell on which he had listed the property under appeal along with eight other properties in the subject subdivision.  Each property was identified by lot number and data on lot size, 2003 assessment, adjusted square footage of house, 2003 assessed cost per adjusted square footage, ranking of properties based on cost per square footage for 2003, 2005 assessment, 2005 assessed cost per adjusted square footage, rant for 2005 and percentage increase in assessment from 2003 to 2005.  The amounts identified by Mr. Powell as the 2003 and 2005 assessments were the appraised values by the Assessor, not the assessed values.  The exhibit also contained a copy of a map of the subject subdivision showing the subject property and the other properties referenced in Mr. Powell’s valuation chart.  Exhibit A was received into evidence.

Mr. Powell testified in his own behalf.  The theory of Complainant’s case was that six of the nine properties had received only an 11% increase from 2003 to 2005.  Two of the other properties were increased 16% and 19% respectively and the subject was increased 21% from 2003 to 2005 in its appraised or fair market value.  Mr. Powell testified that based upon his discussions with a number of homeowners in the Village of Innsbrook that in his estimation 90% had only received an 11% increase in their values.  Therefore, Mr. Powell concluded that his 21% increase constituted discrimination and that his property should be valued with only an 11% increase or a value of $203,980.  Mr. Powell did testify that he would not expect to sell the property for less than what he paid for it in July 1999, which was $215,500.

Respondent’s Evidence

            Respondent offered into evidence two exhibits.  Exhibit 1 was the appraisal report of Donald D. Dodd, Missouri State Certified General Appraiser.  Exhibit 2 was two aerial maps for the Village of Innsbrook.  Both exhibits were received into evidence.

            Mr. Dodd testified as to his appraisal of the subject property.  The appraiser developed both the cost approach and sales comparison approach to arrive at a final value of $300,000 for the subject property.

            Ms. Nordwald and Chief Appraiser for Warren County, Carol LaGrand, both testified relative to the 2005 assessment of the subject property and the other properties in the subject subdivision and the village of Innsbrook.  Ms. LaGrand also testified in explanation of the difference in land values assigned to properties in Innsbrook.  Ms. LaGrand testified that there had been some calculation errors that had resulted in a difference in land values.  Such errors would need to be corrected in the 2007 assessment.

 

FINDINGS OF FACT

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

2.         The subject property is located at 529 Innsbrook Estates Dr., Innsbrook, Missouri.  The property is identified by locator number 11-9-6-42.  The property consists of a one acre lot improved by a single-family residence.  The house is a one-story, wood lap-sided residence, with brick veneer accent.  The house was constructed in or around 1989 and contains approximately 1,871 square feet of living space.  The house is of good quality construction and in average condition for a normal, sixteen year old house of the subject’s quality.  There are seven rooms at ground level, with three bedroom and three full bathrooms.  There is a full basement with approximately 699 square feet of finished living area.  There is an attached garage, a closed porch, wooden deck, and concrete patio.  There was no listing or sale of the property noted within three years prior to the tax date of January 1, 2005.  Mr. and Mrs. Powell purchased the property in July 1999 for $215,000.  Exhibit 1.

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 presumption of correct assessment by the Board and establish the true value in money as of January 1, 2005, to be $203,980, as proposed.

5.         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 less than a mile 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.  The sales comparables sold in a range from $320,000 to $324,900.  The per square foot of living area sales prices ranged from $175 to $204.  Exhibit A.

7.         The appraiser (Mr. Dodd) made various adjustments to the comparable properties for differences existing 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.  The gross adjustments ranged from 6.65% to 6.99%, with the net adjustments running from only .01 to 6.34%.  Exhibit A.

8.         The adjusted sales prices for the comparables were in a range from $304,300 to $324,370.  This calculates to a per square foot of living area value for the subject of $163 to $173, just at the lower end of the per square foot sale price of the sale comparables.  Exhibit A.

9.         Respondent’s evidence met the standard of substantial and persuasive to rebut the presumption of correct assessment by the Board and to affirm the value originally determined by the Assessor of $260,430, assessed value of $49,480. 

CONCLUSIONS OF LAW AND DECISION

Jurisdiction

The Commission has jurisdiction to hear this appeal and correct any assessment 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 (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 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.”  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 (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.

 

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 (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).

This standard has not been met in this instance.  Complainant failed to meet his burden of proof and establish fair market 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). 

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).  The Commission also recognizes these approaches for establishing fair market value in appeals.   These methodologies are also accepted and recognized by professional appraisers for the valuation of real property.

The methodology of Mr. Powell of simply applying a factor of 11% to the 2003 valuation of the subject property to arrive at a value for 2005 is not recognized by the Commission, Courts or appraisers of real property.  Therefore, Mr. Powell’s opinion of value can be given no probative weight in this case.  The opinion was not based upon proper elements or a proper foundation for arriving at an indication of fair market value for the subject property.

Respondent’s Burden of Proof

Respondent, when advocating a value different from that determined by the original valuation or a valuation made by the Board of Equalization, must meet the same burden of proof to present substantial and persuasive evidence of the value advocated as required of the Complainant under the principles established by case law.  Hermel, Cupples-Hesse, Brooks, supra.

            Respondent’s evidence in this case, the appraisal report of Mr. Dodd meets the standard of substantial and persuasive evidence to rebut the presumption of correct assessment by the Board.  The Commission by rule (12 CSR 30-3.075) has established the policy for first class charter counties when evidence of a value higher than the Assessor’s value is offered it will only be received for the purpose of sustaining the assessor’s value and not for increasing the valuation of the property under appeal.  Although Warren County is not a first class charter county, the Hearing Officer will apply the principle of the Commission rule in this appeal.  The Dodd appraisal is given weight only for the purpose of sustaining the assessor’s original valuation and not for increasing the value above that amount.

Complainant Fails To Prove Discrimination

Where there is a claim of discrimination based upon a lack of valuation consistency, Complainant has the burden to prove the level of assessment for the subject property in 2005. This is done by independently determining the market value of the subject property and dividing the market value into the assessed value of the property as determined by the assessor’s office.  Koplar v. State Tax Commission, 321 S.W.2d 686, 690 (Mo. 1959);

Complainant must then prove the average level of assessment for residential property in

Warren County for 2005.  This is done by (a) independently determining the market value of a representative sample of residential properties in Warren County; (b) determining the assessed value placed on the property by the assessor’s office for the relevant year; (c) dividing the assessed value by the market value to determine the level of assessment for each property in the sample; and (d) determining the mean and median of the results.

Evidence of value and assessments of a few properties does not prove discrimination.  Substantial evidence must show that all other property in the same class, generally, is actually undervalued.  State ex rel. Plantz v. State Tax Commission, 384 S.W.2d 565, 568 (Mo. 1964).  The difference between the actual assessment level of the subject property and the average level of assessment for all residential property, taken from a sufficient representative sample in Warren County must demonstrate a disparity that is grossly excessive.  Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986).  No other methodology is sufficient to establish discrimination.  Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696 (Mo. 1958). 


Mr. Powell’s discrimination claim fails because he failed to establish the market value of his property.  Without establishing market value, the assessment ratio cannot be established.  Without establishing the ratio, it cannot establish that the Powell property was assessed at a higher percentage of market value that any other property. 

However, even if Complainant had established the subject’s market value, the discrimination claim would still fail because it was not demonstrated that a statistically significant number of other residential properties within Warren County are being assessed at a lower ratio of market value than their property.  The claim of discrimination is based upon six properties being increased in value form 2003 to 2005 by 11%, while the subject property was increased in value by 21%.  A difference in the percentage of increase in value among properties from one assessment cycle to the next fails to establish discrimination.

Because Complainant failed to establish the market value of the property under appeal and failed to establish the property being assessed at a higher percentage of market value than a statistically significant number of other properties in Warren County, the claim of discrimination has no merit.

ORDER

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

The assessed value for the subject property for tax years 2005 and 2006 is set at $49,480.

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 Warren 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:    Gary Powell, 529 Innsbrook Estates Lane, Innsbrook, MO 63390, Complainant; James Whiteside, Assistant Prosecuting Attorney, 104 W. Main, Suite E, Warrenton, MO 63383, Attorney for Respondent; Wendy Nordwald, Assessor, 105 S. Market, Warrenton, MO 63383; Barbara Daly, Clerk, 104 W. Booneslick Rd., Suite B, Warrenton, MO 63383; Linda Stude, Collector, 105 S. Market, Warrenton, MO 63383.

 

 

___________________________

Barbara Heller

Legal Coordinator