State Tax Commission of Missouri

Complainants raise issues on appeal relating to the Hearing Officer’s determination of fair market value and his decision with regard to the claim of an illegal increase under Section 137.345.5, RSMo. The Commission frames the two points on appeal as follows: (1) the Hearing Officer erred in not finding the opinion of value as expressed by Complainants’ appraiser as substantial and persuasive evidence; and (2) the Hearing Officer erred in not concluding that the Assessor had violated the provisions of Section 137.345.5 and finding fair market value as advocated by Complainants. The Commission finds that neither point is well taken.

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 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).

Complainants’ letter setting forth their Application for Review was essentially an 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.

Valuation Issue

The Hearing Officer’s Decision addressed in detail each of the various points asserted by Complainants at the evidentiary hearing. A review of the Hearing Officer’s discussion on the various aspects of Complainants’ case at pages 12 through 15 and 18 through 22 that related to the valuation issue shows that the Hearing Officer addressed each issue in great detail. The Hearing Officer as trier of fact is responsible for weighing the evidence. In the present case, he did not find Complainants’ expert to be persuasive on the issue of fair market value. The fact that Complainants presented an appraisal by a state certified appraiser is noted. However, the Hearing Officer is not bound by the opinion of value offered by a state certified appraiser. See, Standard Upon Review, supra. The Commission cannot conclude that the Hearing Officer acted in an arbitrary or capricious manner in not adopting the opinion of value tendered by the appraiser on behalf of Complainants. The rejection of that opinion is supported by sound reasoning of the Hearing Officer as set forth in his Decision.

Illegal Increase

As to the Complainants’ claim that the value on their property should be reduced due to the alleged “illegal increase,” the Commission can find no basis to conclude that the Hearing Officer failed to properly apply the law in this instance. The Hearing Officer properly followed the most recent holding of the Commission on the application of Section 137.345.5. It would have been error for the Hearing Officer to have ignored the clear determination set forth by the Commission on this point in DNS Electronic Materials, Inc. v. Shipman, STC 03-32609 – 32612, 12/28/05. The Commission finds no basis upon which it can make a material distinction between the DNS case and the present case. The Hearing Officer’s analysis and conclusions on this point were in line with the position of Commission as articulated in DNS.

Conclusion

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 Dade 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.

Complainants appeal, on the ground of overvaluation and discrimination, the decision of the Dade County Board of Equalization, which reduced the valuation of the subject property. The Assessor determined an appraised value of $313,700, $287,000 – residential and $26,700 - agricultural. The Board reduced the value to $256,500, $240,400 – residential and $16,100 – agricultural. Complainants proposed a value of $230,000 for the entire property, residential and agricultural. A hearing was conducted on March 14, 2006, at the Dade County Courthouse, Greenfield, Missouri.

The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

Complainant’s Evidence

Complainants offered into evidence the following exhibits.

Exhibit A – copy of summary appraisal report of Jana Copeland, state certified appraiser, with an opinion of value of $230,000 for the subject property.

Exhibit B – copy of a summary appraisal report of Glennis Lynn, state certified appraiser, with an opinion of value of $225,700.

Exhibit C – copy of first page of STC Decision and Order in Strader v. Maxwell, STC 03-53500, 12/30/03.

Exhibit D – copy of information from Realton.com on property at 10154 N. Conifer, Walnut Grove, Missouri.

Exhibit E – copy of information from Century 21 Maddux Realty on property at 105 Cahoochie, Urbana, Missouri.

Exhibit F – copy of information from Re/Max House of Brokers on property at 20473 Lawrence, Ash Grove, Missouri.

Exhibit G – copies of miscellaneous documents to support Complainants’ Discrimination Claim.

Exhibit H – copies of miscellaneous documents to support Complainants’ Illegal Increase Claim.

Exhibit I – listing of Corrections to Previous Assessor Findings, with photo of flooded land and first page of Property Record Card on subject property.

Exhibit J – listing of Limiting Factors.

Exhibit K – listing of Additional BOE Limiting Factors, with a copy of a newspaper article with a date of 8/24/05 and a copy of an Addendum page from an appraisal report on the subject property performed by Pat Taylor in 2003 for the Respondent in STC Appeal 03-53500.

Jana Copeland testified as to her appraisal of the subject property.

Mr. Strader testified as to the basis for his claims of Overvaluation, Discrimination, Illegal Increase, Corrections to Previous Assessor Findings, Limiting Factors and Additional BOE Limiting Factors.

All the exhibits were received into evidence.

Respondent’s Evidence

Respondent offered into evidence the following exhibits.

Exhibit 1 – copy of Property Record Card on subject property.

Exhibit 5 – copy of listing of comparable sales and comparable properties.

Exhibit 6 – copies of PRC’s and sales letters on Comparable Sales listed in Exhibit 5.

Exhibit 7 – copy of calculations by Complainant on square footage of the subject home.

Exhibit 8 – copy of page from Assessor’s Manual on adjustments under Hunnicutt Mass Appraisal Cost System.

Exhibit 9 - copy of page from Assessor’s Manual on adjustments under Hunnicutt Mass Appraisal Cost System.

Exhibit 10 – copy of 2004-05 Condition Guideline Depreciation Chart from Assessor’s Manual for Hunnicutt Mass Appraisal Cost System.

Exhibit 11 – copy of for sale sign on the subject property.

Exhibit 12 – copy of STC index study.

Exhibit 13 – copy of STC Vacant Land Values Study.

Exhibit 14 – copy of STC Cost to Market Ratio Study with a 2.20 and 2.30 index.

Exhibit 15 – copy of PRC on Thomas Walters property – sample increase.

Exhibit 16 – copy of Lynn Appraisal, same as Exhibit B.

Jim Roseman, State Certified Appraiser who inspected the subject property on behalf of the Assessor and the Board testified in support of the Board’s valuation.

Doris Johnson, Deputy Assessor testified in support of the Board’s valuation.

Michael Hunt, County Surveyor, member of the Board of Equalization testified in support of the Board’s valuation.

Exhibits 1, and 5 through 16 were received into evidence. Exhibit 2 (copy of letter of clerk in Assessor’s office), Exhibit 3 (statement of County Clerk) and Exhibit 4 (copy of Complaint for Review of Assessment) were excluded from evidence upon sua sponte ruling of the Hearing Officer, as not relevant (Exhibits 2 and 3) and cumulative, as already part of the record (Exhibit 4).

FINDINGS OF FACT

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

Complainants did not challenge the agricultural assessment of the subject property, only the residential assessment. Testimony of Mr. Strader. The agricultural assessment is for agricultural land (41.6 acres) and agricultural improvement (a barn) with a total appraised value of $16,100, assessed value of $1,930. Exhibit 1. The only valuation issue is the value of the .6 of an acre home site and the residence.

2. The subject property is located at Route 4, Box 39-A, Walnut Grove, Missouri. The property is identified by locator number 11-07-25-09.01. The property consists of 41.2 acres. The .6 of an acre home site is improved by a two-story brick, single-family structure. Construction on the house was started in 2001, but not completed until 2004. It is in average condition. The residence has a total of nine rooms, which includes four bedrooms, four baths, and contains 6,035 square feet of living area. There is a full unfinished basement and a built in two-car garage. Exhibits A, B & 16. The subject home is an over improvement for the neighborhood. Exhibit A; Exhibit K – Taylor Comments.

3. There are no apparent physical deficiencies or conditions that would affect the soundness or structural integrity of the improvements or the livability of the property. Exhibits A, B & 16.

4. A portion of the subject 41.2 acres is in a flood zone, however, it was not established that the subject house actually is in the flood zone. The house has never flooded since it has been built. Neither Ms. Lynn nor Ms. Copeland made an adjustment for this factor. Exhibits A, B & 16.

5. The subject home suffers from some use of inferior buildings materials and poor or unprofessional workmanship resulting in a fair quality of construction. Exhibits A, B & 16. These factors were recognized by the Board of Equalization and the overall class was reduced to a D-, resulting in a lowering of the value for the subject house under the Hunnicutt Costing System. Corrections to reflect one fireplace, one outbuilding, unfinished basement, use of used and inferior building materials were made in the assessor’s records. Exhibit 1; Testimony of Doris Johnson.

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

7. 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 $230,000 for the entire subject property, as proposed.

8. Official notice is taken of the prior decision in Strader v. Maxwell, supra.

9. The Assessor valued the subject property under the Hunnicutt Mass Costing System in the same manner in which all other residential property in Dade County is valued under a mass appraisal for reassessment in an odd number year (reassessment year). The Board of Equalization made additional deductions and adjustments to account for various limiting factors to the indicated value under the Hunnicutt cost approach.

CONCLUSIONS OF LAW

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.

Official and Judicial Notice

Agencies shall take official notice of all matters of which the courts take judicial notice. Section 536.070(6), RSMo.

Courts will take judicial notice of their own records in the same cases. State ex rel. Horton v. Bourke, 129 S.W.2d 866, 869 (1939); Barth v. Kansas City Elevated Railway Company, 44 S.W. 788, 781 (1898). In addition, courts may take judicial notice of records in earlier cases when justice requires - Burton v. Moulder, 245 S.W.2d 844, 846 (Mo. 1952); Knorp v. Thompson, 175 S.W.2d 889, 894 (1943); Bushman v. Barlow, 15 S.W.2d 329, 332 (Mo. banc 1929) - or when it is necessary for a full understanding of the instant appeal. State ex rel St. Louis Public Service Company v. Public Service Commission, 291 S.W.2d 95, 97 (Mo. banc 1956). Courts may take judicial notice of their own records in prior proceedings involving the same parties and basically the same facts. In re Murphy, 732 S.W.2d 895, 902 (Mo. banc 1987); State v. Gilmore, 681 S.W.2d 934, 940 (Mo. banc 1984); State v. Keeble, 399 S.W.2d 118, 122 (Mo. 1966).

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).

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 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 obtain a reduction in assessed value based upon discrimination, the Complainants must (1) show an intentional plan of discrimination by the assessing officials resulting in an assessment of that property at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction. Koplar v. State Tax Commission, 321 S.W.2d 686, 690 (Mo. 1959). 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); and (2) prove the true value in money of their property on January 1, 2005. Koplar, supra, at 695. The difference in the assessment ratio of the subject property and the average assessment ratio in the subject county must be shown to be 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).

DECISION

Complainants’ Arguments for Reduction in Value

Complainants prosecuted their appeal under six different issues, as outlined in Mr. Strader’s opening statement. Those six areas for which Mr. Strader asserted the valuation of the subject property should be reduced were: Overvaluation, Discrimination, Illegal Increase, Corrections to Previous Assessor Findings, Limiting Factors and Additional BOE Limiting Factors. Individually or collectively these six areas do not establish the subject property to have been overvalued or illegally assessed. The Hearing Officer will address the last three areas first and in a collective manner.

Corrections and Limiting Factors

The items listed on Exhibits I, J & K all relate to factors which should be considered in valuing the subject property. The Hearing Officer considers the list of approximately 24 different items to be duplicative in several areas. For purposes of addressing this issue, the Hearing Officer has divided the Corrections and Limiting Factors into the categories of Poor Materials and Workmanship, Flood Plain, Location of Subject and Corrections.

Poor Materials and Workmanship

Essentially, Complainants are asserting that their home was constructed with lower grade, in some cases used materials and that the workmanship was not as professional as one should expect and would expect for a home such as the subject. Items such as lack of guttering, decks, driveway, used furnace, unfinished and un-insulated basement, unfinished garage, buckle in roof, bad materials, unprofessional workmanship, low grade materials, etc. all fall under the general category of a fair quality of construction. This was recognized both by Complainants’ appraisers and by the Board as per its reducing the grade on the subject home to a D- in Exhibit 1.

However, it is noted that Ms. Lynn made no specific adjustment for condition to any of her three comparables. Exhibit B. Ms. Copeland did make a condition adjustment to Comps 1 and 2 for superior condition. Ms. Copeland rated the quality of the subject house as only fair. Exhibit A.

Many, if not all of the limiting factors as characterized by Mr. Strader are not items for which a direct market comparison can be made. They are attributes which are difficult, if not impossible to quantify as far as direct monetary impact on the sale of a property. This is especially the case, with reference to the lower grade materials used in parts of the subject house.

The sub-flooring is constructed from used plywood, in some instances used sign board. The sub-flooring is, of course, covered by the carpet or other floor covering so that it is not readily observed. How this might impact what a potential buyer might give for the subject house, as compared to a home constructed of all new plywood sub-flooring is a matter of no small degree of conjecture, since it is highly improbable that an appraiser would be able to locate two paired sales in which one home was constructed using used plywood and the other new plywood.

The Hearing Officer concludes that the issue of poor materials and workmanship was addressed by the Board in its reduction of class for the Strader home to D-.

Flood Plain

The flood plain issue is a factor which could impact on what a willing buyer would be willing to pay for the subject property. However, it was only established that a portion of the subject land is in the flood plain. The house has never flooded. The flood plain map in Exhibits A, B & 16 appears to place the house on the very edge of the flood plain. This is a factor for which neither of Complainants’ appraisers saw fit to make an adjustment in their sales grids. The Assessor and Board cannot be faulted for not making a further adjustment for this factor given this background and evidence.

Location of Subject

The items listed as Everton Schools, Dirt Roads, Skeleton Police and Fire, Declining Neighborhood are all items which would normally be addressed under the category of location. Likewise the items of a sewage discharge across an access road to the subject and an unauthorized dump along another access road, testified to by Mr. Strader would be items to be addressed by an adjustment for location. Neither of Complainants’ appraisers deemed any need to make an adjustment for location. Both determined that the location of the subject was average for the neighborhood and the rural areas of the county in general. The factors noted impact not specifically upon a single property but impact generally upon all property in the general area of the subject. Factors such as those enumerated by Complainants would most directly be reflected in land values, as opposed to any direct impact on a given house. There is no evidence to warrant any further adjustment by the Board for the location factors.

Corrections

Complainants raised the issue of the subject having only one fireplace, only one outbuilding, an unfinished basement, unfinished garage and incomplete attic insulation, no guttering, no decks and no drive. These factors, in part, appear to relate back to the 2003 valuation by the Assessor, although some were items which were addressed by the Board in the 2005 appeal. The property is only being assessed for one agricultural outbuilding. The unfinished basement, unfinished garage and other factors were addressed by the Board by the change in class to a D-. The 2005 PRC does not show any decks and there is no valuation for a paved driveway. Accordingly, these items have been addressed and corrected by the Assessor and/or the Board in the 2005 assessment process prior to the case coming to the Commission. The Hearing officer finds nothing in these factors which warrants any further action by the Commission.

Conclusion

All of the Corrections and Limiting Factors dovetail into the overriding issue of the fair market value of the subject property. These are simply matters which come into play and are properly addressed under a valuation by means of a recognized appraisal methodology.

Illegal Increase

Complainant’s next argument is based upon Section 137.345.5, RSMo. This subsection reads as follows:

“In every instance where a taxpayer has appealed to the board of equalization or the state tax commission the assessment of the taxpayer’s property, real or personal, and that appeal has been successful, then in the next following and all subsequent years the basis upon which the assessor must base future assessments of the subject property shall be the basis established by the successful appeal and any increases must be established from that basis.”

The Commission recently had opportunity to address the application of Section 137.345.5 in the case of DNS Electronic Materials, Inc. v. Shipman, STC 03-32609 – 32612, 12/28/05. The Commission held as follows:

“… Complainant would read Section 137.345.5 to require the Assessor to use the same methodology used by the Tax Commission in the previous decision.

We cannot read Section 137.345.5 so restrictively. It is clear that the legislature wants the Assessors to give due regard to Tax Commission decisions. However, once the Assessor has considered the Tax Commission decision, nothing prohibits the Assessor from raising value if he or she determines that the prior Tax Commission decision does not represent market value for the tax day in question.

The Tax Commission strives to produce the best decision it can based upon the information provided. But where – as in our 2001 decision – one party fails to present evidence, we would be remiss in holding that our decision was infallible. When either party comes upon better evidence of market value, it is our duty to consider same. And, in the case of the Assessor, it is his duty to provide same to us.

Likewise, the methodology used in a prior decision is not necessarily binding upon the Assessor. There are three generally approved methods for determining value, all of which may be applicable in a given situation.”

The Hearing Officer is bound by this holding of the Commission and must likewise apply it in the present appeal. Furthermore, the 2003 decision in Strader v. Maxwell, supra, involved the subject house as it was in an uncompleted condition and the fact that it would not be completed until sometime in 2004. The fact that Complainants have an unfinished basement and garage, notwithstanding the subject home as it existed on January 1, 2003, is different as it existed on January 1, 2005, and that must be accounted for in the 2005 valuation.

The Hearing Officer does not find based upon the evidence in this record and relying on the Commission holding in DNS Electronic, supra, that the increase in the value of the subject property by the Assessor for the 2005 reassessment was an illegal increase in violation of Section 137.345.5. Complainants’ argument is not well taken and does not justify a reduction in the valuation as determined by the Board.

Discrimination

Complainants next assert as a ground for appeal discrimination. Complainants’ discrimination argument is not the generally recognized claim for discrimination. The ordinary discrimination claim requires the taxpayer to establish the average assessment ratio for the county, the assessment ratio for the subject property and that the difference between the two is so significant as to warrant a reduction in the assessed value for the taxpayer’s property. In other words, if there was substantial and persuasive evidence in this case to establish that the average residential assessment in Dade county was only 14% and not 19% as required by statute and that the Complainants’ property was in fact being assessed at 19%, then a reduction in the assessed value to 14% of fair market value would be warranted. See, CONCLUSIONS OF LAW, Discrimination, supra.

There is no evidence to establish that the average residential assessment ratio in Dade County is less than 19%. Therefore, Complainants’ claim of discrimination on this basis fails. Complainants, through the series of documents contained in Exhibit G, are essentially asserting that Dade County officials, specifically the Assessor and County Commissioners have acted in reprisal against Complainants because of the 2003 appeal to the Commission.

A five of the documents in Exhibit G are newspaper articles demonstrating an ongoing conflict between Mr. Strader and the County Commission. However, individually or collectively they do not rise to the level of substantial and persuasive evidence of an intentional plan by the Board of Equalization, or the Assessor to assess the Complainants’ property in a different manner than other property in Dade County. Copies of PRC’s on three other properties in Dade County are likewise insufficient to establish a claim of discrimination against the Straders. Nor do the copies of prior tax bills, notice of assessment change or a chart showing percentages of changes in nine other properties versus the changes in the Straders’ assessments establish that assessing officials discriminated against Complainants in the 2005 assessment.

The evidence on this record from the testimony of Assessor Maxwell and Deputy Assessor Johnson establish that the Complainants’ property was valued in accordance with the Hunnicutt Mass Appraisal System which is employed for assessment of property in Dade County in each reassessment year. The Board of Equalization upon being able to have an exterior and interior inspection of the subject home performed concluded that there were various corrections and factors which need to be addressed and thereby reduced the valuation of the subject property. All of this was appropriate and in no way discriminatory toward Complainants as regarding the valuation of the subject property.

Complainants’ discrimination argument is not well taken. The Hearing Officer cannot justify any reduction in the value determined by the Board based on this claim.

Overvaluation

The final and actually only relevant issue raised by Complainants is overvaluation. The fair market value of the subject property (residence and home site) as it existed on January 1, 2005 is the essential question to be addressed. The Hearing Officer has reviewed the 2003 Decision involving this property. That decision issued by this Hearing Officer, after review and concurrence by Hearing Officer Aimee L. Smashey, who presided at the 2003 evidentiary hearing, reached a conclusion of value based upon the appraisal reports of two appraisers.

Over Improvement of Subject for Neighborhood

The critical problem in the 2003 appraisals, as in the 2005 valuation, is that the subject home is an overbuilt residence for the subject area and in fact for Dade County. It is an over improvement simply because it has in excess of 6,000 square feet of living area – 6,035 above grade living area (Exhibit A) and total square footage including basement and garage of 9,203.

Neither the Copeland nor the Lynn appraisals were able to find a sale of a home which they deemed comparable in excess of 2,600 square feet. The Copeland comparables ranged from only 1,409 to 2,120 square feet of living area, with the average being only 1,767 or less than 30% of the living area of the subject. The Lynn comparables ranged from 1,300 to 2,600, with the average being only 1,833 or less than 31% of the living area of the subject.

Per Square Foot Sales Prices

The eight sale properties used in the Copeland and Lynn appraisals sold in a range from $90.36 to $150.46 per square foot of living area. The median was $97.59 and the average was $107.34. The indicated value for the subject property giving equal weight to both appraisals is $227,850 or only $37.76 per square foot. This equates to only 41.8% of the lowest per square foot sales price, 25.15% of the highest sales price, 38.7% of the median and 35.2% of the average sales price. If weight is only given to the Copeland estimate of value, the per square foot value is only $38.11 or only 34.3% of the average of the Copeland comparables.

Living Area Adjustment

Both Copeland and Lynn made an adjustment for living area based on $8.00 per square foot. This appears to be unusually low in light of the per square foot sales prices of the comparables. Based upon the Hearing Officer’s experience of the past fifteen years and testimony by numerous state certified appraisers, an adjustment of 25 to 30% of the average of the per square foot sales prices or approximately $25.00 per square foot would seem like an adjustment more in line with ordinary appraisal practice. However, this would result in this appraisal problem of dollar adjustments that would equate to 16 to 25% of the sales price of a given comparable because of the large living area of the subject. This would further compromise the validity of relying on a sales comparison methodology.

Conclusion

Appraisers do not always have the luxury of having sale properties to use as comparables that are excellent fits as comparable properties. In many instances due to factors such as living area, the comparables that must be used are less than what an appraiser would like to be able to use. However, appraisers cannot create sales where none exist. The Hearing Officer recognizes that Ms. Copeland and Ms. Lynn selected the best comparables which they could find for this appraisal assignment. Their conclusions of value might be sufficient for purposes of a home loan or refinancing, however, the Hearing Officer does not find them to be substantial and persuasive in this instance.

The review and analysis of the factors of over improvement, average per square foot sales prices and living area adjustment brings into serious question the probative weight that can be given to a sales comparison analysis for this appraisal problem. The properties selected by appraisers Copeland, Lynn and Thomas (2003 appeal) were sufficiently comparable in all respects except for the living areas. Upon this further review, using sales of homes which are only 22% to 41% of the size of the subject requires too great of an adjustment for this factor to present a reliable indicator of fair market value. The Hearing Officer is not persuaded based upon the evidence in this record that the sales comparison approach is appropriate to arrive at a determination of fair market value for the subject.

Utilization of a Cost Approach

None of the appraisers elected to perform a cost approach to value, although in point of fact the subject home is a fairly newly constructed home, having been started in 2001 and substantially finished by 2004, notwithstanding the garage and basement walls apparently need to be insulated and sheetrock hung. Therefore, a cost approach to arrive at value would have been appropriate. The only cost analysis in this record is the Hunnicutt Cost System utilized by the Assessor for her mass appraisal in reassessment, as modified and adjusted by the Board when the Complainants appealed their assessment.

The Hunnicutt method is useful and essentially valid for mass appraisal of property. Once a property is appealed to the Commission, it is generally a better course of action to develop a cost approach relying on an investigation of actual land sales and replacement cost based on actual cost data from Marshall – Swift or quotes from area builders. The Hearing Officer does not have sufficient data in this record to perform his own cost approach to value to check the validity of the value reached by the Board in its modification of the Hunnicutt value. In the absence of substantial and persuasive evidence presented by Complainants, the presumption of correct assessment by the Board stands, subject to the modification for land value which the Hearing Officer hereinafter makes.

Land Value Adjustment

The Hearing Officer does note that the value of $6,500 for Complainants’ .6 of an acre home site is not supported in this record. Since the subject residence is most likely to sell as part of the larger 41 acres or if part of it is sold off as part of more than simply a .6 of an acre lot with the house, a valuation for January 1, 2005, of the land value for the home site would be best arrived at from sales data on tracts of land in a range from 30 to 50 acres.

Respondent’s evidence (Exhibit 13) establishes that acreage in this range is selling in various parts of Dade County at per acre values of $800 to $2,090. Land sales of 38 and 40 acre tracts in the East Central area of the county (subject’s area) support per acre values of $1,000 to $1,658 per acre. Giving equal weight to each of these sales would provide an indicate land value for the subject home site of approximately $1300 per acre. The indicated home site value for the subject would calculate to $780 ($1300 x .6 = $780).

Conclusion of Value

The presumption of correct assessment as to the value for the residential improvements of $233,900 as determined by the Board has not been rebutted. The valuation of the Board is modified by placing a land value on the .6 of an acre home site of $780 and affirming the value for the residential improvement of $233,900. This results in a true value in money for the residential portion of Complainants’ property of $234,680 ($233,900 + $780 = $234,680).

Future Valuation of the Subject Property

Because of what has been an ongoing controversy and dispute between the parties involving the assessment of the Complainants’ residence, the Hearing Officer is persuaded that the best interest of all parties concerned would best be served by generally following an approach to valuing the Straders’ residence as follows.

It could be agreed that a cost approach be followed due to the large living area of the subject and the lack of any sales of homes that approach at least 4,500 square feet in Dade or the rural areas of adjoining counties. A land value for the .6 of an acre home site, derived from recent sales (within 2 years of the assessment date) of 30 – 50 acre tracts, so long as the total of the Strader farm consists of the 41+ acres of land. The land value would be calculated on a per acre basis as the unit for valuation. If acreage is sold off of the Strader farm, then sales generally within a range of 10 acres more or less could be utilized. In other words, if 25 acres is sold, leaving approximately 16 acres then land sales from 6 – 26 acres would be appropriate to consider for arriving at a per acre value.

A replacement cost new could be derived from contractors in the area providing a general estimate for the cost to build new the Strader home as it exists on each assessment date (January 1 of each odd-numbered year). If the basement and garage remain as unfinished, i.e. no insulation or sheet rock), then the estimate for replacement cost should so reflect. A depreciation factor for standard physical depreciation, derived from the State Tax Commission’s most recent Depreciation Chart, would be applied to the replacement cost new. The Strader home would be considered to have been constructed in 2001 (the year started) for purposes of this calculation. From the resulting Replacement Cost New Less Depreciation an additional factor to account for the actual condition taking into consideration lower quality materials and workmanship would need to be considered to arrive at a final indicated value. An analysis of replacement cost new compared to sales prices of homes constructed within 2 or 3 years of 2001 should provide some indication of overall depreciation which could be applied for this valuation. Once a final replacement cost new less depreciation from all factors was reached the land value would be added to arrive at a final value.

This methodology is offered by way of suggestion to the parties, so that it might be possible to avoid future conflicts over the assessment of the Complainants’ property. The parties are in no way required to follow the Hearing Officer’s suggestion for the 2007 reassessment.

ORDER

The assessed valuation for the subject property as determined by the Board of Equalization for Dade County for the subject tax day is AFFIRMED in part and MODIFIED in part.

The assessed value for the subject property for tax years 2005 and 2006 is set at $46,520 ($44,590 – residential; $1,930 – agricultural).

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 Dade 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.