State Tax Commission of Missouri

RICHARD TOLBERT, )

)

Complainant, )

)

v. ) Appeals Number 05-30309 and 05-30311

)

MICHAEL O’FLAHERTY, )

DIRECTOR OF ASSESSMENT, )

JACKSON COUNTY, MISSOURI )

)

Respondent. )

DECISION AND ORDER

HOLDING

The decisions of the Board of Equalization, are SET ASIDE. Market value in Appeal Number 05-30309 is set at $2,200 (assessed value $410). Market value in Appeal Number 05-30311 is set at $215 (assessed value $40).

ISSUE

The issue in these cases is the true market value of vacant lots subject to demolition liens.

SUMMARY

The subject property in Appeal 05-30309 is a vacant lot in Kansas City, Missouri originally valued by the assessor at $15,000 (assessed value $2,850). Upon appeal, the Board of Equalization lowered value to $9,000 (assessed value $1,710). Complainant appeals asserting a value of $100 (assessed value $19). No market sales were presented in support of said proposed value. Respondent provides market sales supporting a value of $2,200 (assessed value $410).

The subject property in Appeal Number 05-30311 is a vacant lot in Kansas City, Missouri originally valued by the assessor at $510 (assessed value $97). Upon appeal, the Board of Equalization affirmed said value. Complainant appeals asserting a value of $100 (assessed value $19). No market sales were presented in support of said proposed value. Respondent provides market sales supporting a value of $215 (assessed value $40).

A combined evidentiary hearing was held on April 11, 2006, in the Jackson County Courthouse before senior hearing officer Luann Johnson. Complainant appeared pro se. Respondent appeared by counsel, William Snyder.

EXHIBITS

The following exhibits were entered into the record:

Respondent’s Exhibits

Exhibit 1 – Appraisal Report for Appeal No. 05-30309

Exhibit 2 – Appraisal Report for Appeal No. 05-30311

FINDINGS OF FACT

1. Jurisdiction is proper. Complainant timely filed his appeals from the decisions of the Jackson County Board of Equalization.

As To Appeal No. 05-30309 (4154 Troost)

2. The subject property is a 2,880 square foot corner lot in the Troost Highlands subdivision. On the tax day, it was vacant. It is zoned for commercial use but prior use was for residential purposes. Said parcel is identified as census tract 0065.00 and map reference 30-240-15-19, more commonly known as 4154 Troost, Jackson County, Missouri.

3. Respondent’s appraiser found sales of three similar lots which sold for $3,000, $2,116, and $2,500. Respondent’s appraiser adjusted for date of sale, size of lot and when the comparable was an interior rather than corner lot. After adjustments, these properties indicated a range of value for the subject property between $1,706 and $2,820. Based upon these sales, Respondent’s appraiser determined a market value for the subject property of $2,200 on

January 1, 2005.

4. Complainant testified that the subject lot was subject to a demolition lien of approximately $5,000 to $7,000 which he indicated caused the property to have a negative value. Complainant presented no market data to support his opinion of value.

Complainant further argued that Respondent’s comparables, all within one half mile of the subject property, were not adequate because they did not reflect the neighborhood influences. Complainant failed to present any market data to support a finding that Respondent’s comparables were not adequate and accurate.

Complainant’s evidence is not substantial and persuasive to demonstrate that his property has been overvalued.

As To Appeal No. 30311 (2606 Woodland)

5. The subject property is a 6,550 square foot lot in the Davis Park subdivision. On the tax day, it was vacant. It is zoned for residential purposes. Said parcel is identified as census tract 0041.00 and map reference 29-630-28-44, more commonly known as 2606 Woodland, Jackson County, Missouri.

6. Respondent’s appraiser found sales of three similar lots which sold for $235, $275, and $225. Respondent’s appraiser adjusted for date of sale and front footage. After adjustments, these properties indicated a range of value for the subject property between $215 and $415. Based upon these sales, Respondent’s appraiser determined a market value for the subject property of $215 on January 1, 2005.

7. Complainant testified that the subject lot was subject to a demolition lien of approximately $8,000 which he indicated caused the property to have a negative value. Complainant presented no market data to support his opinion of value.

Complainant agreed that Respondent’s comparables were reasonable, if the property was to be valued without consideration of the demolition lien. Complainant’s evidence is not substantial and persuasive to demonstrate that his property has been overvalued.

Encumbrances

8. It is against public policy to allow a taxpayer to encumber his property in such a way as to cause said property to have no value. Nance v. State Tax Commission, 18 S.W.3d 611 (W.D. 2000).

New Construction

9. 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.

Market Value

10. The true value in money for the subject property in Appeal Number 05-30309 on January 1, 2005, and January 1, 2006, is $2,200 (assessed value $410). The value previous determined by the Board of Equalization is SET ASIDE.

11. The true value in money for the subject property in Appeal Number 05-30311 on January 1, 2005, and January 1, 2006 is $215 (assessed value $40). The value previous determined by the Assessor and approved by the Board of Equalization is SET ASIDE.

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).

ORDER

The assessed values determined by the Board of Equalization, are SET ASIDE. The Clerk is ordered to put the following new assessed values on the tax books for tax years 2005 and 2006:

Appeal Number	Assessed Value
05-30309	$410
05-30311	$ 40

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 these appeals 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 Jackson 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 these appeals. 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 August 9, 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 9^th day of August, 2006, to: Richard Tolbert, 1806 E. 36^th Street, Kansas City, MO 64109, Complainant; William Snyder, Deputy County Counselor, Jackson County Courthouse, 415 E. 12th Street, Room 200, Kansas City, MO 64106, Attorney for Respondent; Michael O’Flaherty, Director of Assessment; Mary Jo Spino, Clerk; Mike Pendergast, Director of Collections, Jackson County Courthouse, 415 E. 12th Street, Kansas City, MO 64106; and Bob Ensminger, Real Estate Records, City of Kansas City, 1st Floor, City Hall, 414 E. 12th Street, Kansas City, MO 64106.

_______________________________

Barbara Heller

Legal Coordinator