State Tax Commission of Missouri

MERLIN & ANNA MAE CHRISTISEN, )

)

Complainants, )

)

v. ) Appeals Number 06-77000

)

LARRY WHITE, ASSESSOR, )

PERRY COUNTY, MISSOURI, )

)

Respondent. )

ORDER

AFFIRMING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

On July 30, 2007, Hearing Officer, Maureen Monaghan, entered her Decision and Order (Decision) affirming the assessment by the Perry County Board of Equalization.

Complainants timely filed their Application for Review of the Decision.

Respondent filed his response on October 1, 2007.

On October 12, 2007, Complainants filed a Motion to Submit Additional Evidence. The record in the case is closed, no additional evidence will be allowed; Motion to Submit Additional Evidence is denied.

CONCLUSIONS OF LAW

Standard Upon Review

The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled. The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).

The Hearing Officer as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances. The Hearing Officer 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 accept it in part or reject it in part. St. Louis County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).

The Commission will not lightly interfere with the Hearing Officer’s Decision and substitute its judgment on the credibility of witnesses and weight to be given the evidence for that of the Hearing Officer as the trier of fact. Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Lowe v. Lombardi, 957 S.W.2d 808 (Mo. App. W.D. 1997); Forms World, Inc. v. Labor and Industrial Relations Com’n, 935 S.W.2d 680 (Mo. App. W.D. 1996); Evangelical Retirement Homes v. STC, 669 S.W.2d 548 (Mo. 1984); Pulitzer Pub. Co. v. Labor and Indus. Relations Commission, 596 S.W.2d 413 (Mo. 1980); St. Louis County v. STC, 562 S.W.2d 334 (Mo. 1978); St. Louis County v. STC, 406 S.W.2d 644 (Mo. 1966).

DECISION

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 argue that the evidence they presented did meet their burden of proof to rebut the presumption of correct assessment and establish true value in money. Their property suffered damage possibly from an earthquake and their appraiser’s testimony regarding its effect on the value of the property was sufficient to rebut the presumption of correct assessment.

Complainant presented the testimony and report of Robert Adams, State Certified General Real Estate Appraiser. Mr. Adams used the sales comparison approach to valuation. The value indicated by his sales comparison approach is $225,000 as of July 11, 2006. Mr. Adams opined that the cost to repair the residence would be between $180,000 and $200,000 (giving a market value of $25,000-$45,000) however, no repair estimates were presented nor was an itemized calculation for repairs. Mr. Adams testified that he did not calculate a value for the land (3 acres) and did not adjust the price for an effective date of January 1, 2006.

Complainant failed to meet its burden of proof to rebut the presumption of correct assessment and establish true value in money. Accordingly, the valuations as determined by the Board must be affirmed.

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 petition for judicial review is filed within thirty (30) days, this decision and order is deemed final and the Collector of Perry County, as well as the collectors of all affected political subdivisions therein, shall disburse to the appropriate taxing jurisdictions the protested taxes presently in an escrow account for this appeal.

SO ORDERED October 31, 2007.

STATE TAX COMMISSION OF MISSOURI

Bruce E. Davis, Chairman

Jennifer Tidwell, Commissioner

Charles Nordwald, Commissioner

DECISION AND ORDER

HOLDING

Decision of the Perry County Board of Equalization reducing the assessment made by the Assessor is AFFIRMED. Hearing Officer finds presumptions of correct assessment not rebutted. True value in money for the subject property for tax year 2006 is set at $98,683.00, assessed value of $18,749.77 residential value.

Complainants appeared in person and by counsel, Donald Rhodes.

Respondent appeared in person and by Counsel, Thomas Hoeh, Prosecuting Attorney.

Case heard and decided by Hearing Officer Maureen Monaghan.

ISSUE

The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2006.

SUMMARY

Complainant appeals, on the ground of overvaluation, the decision of the Perry County Board of Equalization. The Assessor determined an appraised value of $128,331.57, assessed value of $24,383, as residential property. The Board reduced the value to $98,683.00, assessed value of $18,749.77. Complainant proposed a value of $25,000, assessed value of $4,750. A hearing was conducted on July 25, 2007, at the Perry County Courthouse, Perryville, Missouri.

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

Complainant’s Evidence

The following exhibits were received into evidence on behalf of the Complainants.

Exhibit 1 – General Warranty Deed

Exhibit 2 - Earthquake Damage Report dated August 9, 1999

Exhibit 3 - 112 Photographs

Exhibit 4 - Appraisal of Subject Property dated July 11, 2006

All Exhibits were received into evidence.

Testimony of Merlin Christisen.

Testimony of David M. Stewart, Ph.D.

Testimony of Robert L. Adams.

Testimony of Anna Mae Christisen.

Respondent’s Evidence

The following exhibits were received into evidence on behalf of the Respondent.

Exhibit A – Appraisal of Subject Property dated August 17, 2001

Exhibit B - Appraisal of Subject Property dated April 4, 2007

All Exhibits were received into evidence.

FINDINGS OF FACT

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

2. The subject property is located at 405 Moon Lane, Perryville, Missouri. The property is identified by locator number 76-15-7-26-0-0-007. The property consists of a three acre lot improved by a one-story brick, single-family home structure of below average to average quality construction. The structure was built in 1987. The residence has a total of 8 rooms, which includes 3 bedrooms, 2 full baths, and contains 1,968 square feet of living area. The full basement is approximately 1968 square feet of unfinished area. There is a two car attached garage. There was no listing or sale of the property noted within three years prior to the tax date of January 1, 2006.

3. There was evidence regarding the quality and condition of the home. There are vertical cracks in the interior and exterior of the structure. There are cracks in the exterior brick and brick mortar joints, cracks in the garage and on the basement flooring. Windows and doors are skewed in their frames making them inoperable or unable to operate as designed. The interior has numerous cracks and popped joints. The beams are displaced. The chimney needed extensive repairs.

4. David M. Stewart, Ph.D., seismologist, testified and his report was admitted into evidence. Dr. Stewart testified as to an earthquake on September 26, 1990, that had an epicenter 44 miles from the Perryville city limits. It is his opinion that the condition of the home was due to an earthquake. In his report, Dr. Stewart refers to an inspection conducted by B. Neil Lewis, professional engineer, who opined that the damage was attributable to settlement, expansion and contraction.

5. Robert Adams, State Certified General Real Estate Appraiser, determined the value of the structure to be $25,000 as of July 11, 2006. Mr. Adams only used the sales comparison approach to valuation. Mr. Adams used three comparable sales with said sales having occurred from June 9, 2005, to January 31, 2006 for prices between $160,000 and $299,000. Mr. Adams made adjustments for site size, square footage, and finished basements. The value indicated by the sales comparison approach is $225,000. Mr. Adams opined that the cost to repair the structure would be between $180,000 and $200,000. No repair estimates were presented nor was an itemized calculation for repairs. Mr. Adams valued the improvement and did not value the three acres of land.

6. James Southard, State Certified Residential Real Estate Appraiser, determined the value of the structure to be $120,000 as of April 4, 2007. Mr. Southard used the sales comparison approach and the cost approach to valuation. The appraiser used three comparable sales with said sales having occurred from June 15, 2006, to January 31, 2007, for prices between $140,000 and $184,000. Mr. Southard made adjustments for condition, gross living area, finished basements, garages, porches/deck, fireplaces, and structural condition. The value indicated by the sales comparison approach is $120,000. The cost approach determined the cost new for the residence is $194,577. The depreciation is $97,732 and the “as-is” value of site improvements is $10,000. The value using the cost approach is $127,700. Mr. Southard placed the greatest weight on the sales comparison approach as it reflects the buyer/seller interaction in the marketplace.

7. Gerald E. Fallert, State Certified Residential Real Estate Appraiser, determined the value of the structure to be $135,000 as of August 17, 2001. Mr. Fallert used the sales comparison and cost approach to valuation. Mr. Fallert used three comparable sales with said sales having occurred from January to April, 2001 for prices between $171,000 and $201,000. Mr. Fallert made adjustments for site size, condition, gross living area, finished basements, sheds, and structural issues. The value indicated by the sales comparison approach was $135,000. The value indicated by the cost approach was $184,331. The depreciation in 2001 was $60,829 and the “as-is” value of site improvements was $5,000. The resulting value using the cost approach is $143,500. Mr. Fallert placed the greatest weight on the sales comparison approach as it reflects the buyer/seller interaction in the marketplace.

8. Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Assessor and the Board and establish the true value in money as of January 1, 2006, to be $25,000.

CONCLUSIONS OF LAW AND DECISION

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.

Presumptions in Appeals

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 presumptions of correct assessment are 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 v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341 (Mo. 2005). Citing to Hermel, supra; and Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).

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; Exhibit 1, p. 2.

Missouri courts have approved the comparable sales or market approach, the cost approach and the income approach as recognized methods of arriving at fair market value. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STC, 789 S.W.2d 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex rel. State Highway Comm’n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. Div. 2 1974). The sales comparison approach is generally the best suited approach for the appraisal of owner occupied residences. When there is adequate and sound market data, the sales comparison approach provides the best evidence of value for an appraisal problem of this nature.

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, 2006. 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).

The Complainant has failed to meet the burden of proof in the present appeal. 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 Complainant testified to the condition of his home and due to the condition the value of the property is only $25,000. The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation. Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965).

The complainant presented testimony of David M. Stewart, Ph.D., seismologist. Dr. Stewart testified that an earthquake occurred on September 26, 1990. The epicenter of the earthquake was 44 miles from the Perryville city limits. Dr. Stewart testified that the damage to the complainant residence was caused by the earthquake. In his report, Dr. Stewart refers to an inspection conducted by B. Neil Lewis, professional engineer, who opined that the damage was attributable to settlement, expansion and contraction. The damage to the residence must be accounted for when valuing the property. The cause of the damage is material as to its effect on the market value.

Complainant presented the testimony and report of Robert Adams, State Certified General Real Estate Appraiser. Mr. Adams determined the value of the improvement to be $25,000 as of July 11, 2006. Mr. Adams only used the sales comparison approach to valuation. The value indicated by the sales comparison approach is $225,000 as of July 11, 2006. Mr. Adams opined that the cost to repair the residence would be between $180,000 and $200,000 however, no repair estimates were presented nor was an itemized calculation for repairs. Mr. Adams also failed to calculate a value for the land and did not adjust the price for an effective date of January 1, 2006.

Complainant failed to meet its burden of proof to rebut the presumption of correct assessment and establish true value in money. Accordingly, the valuations as determined by the Board must be affirmed.

ORDER

The assessed valuation for the subject property as determined by the Board of Equalization for Perry County for the subject tax day is AFFIRMED.

The assessed value for the subject property for tax year 2006 is set at $98,683.00, assessed value of $18,749.77.

A party may file with the Commission an application for review of this decision within thirty (30) days of the mailing of such decision. The application shall contain specific grounds upon which it is claimed the decision is erroneous. Failure to state specific facts or law upon which the appeal is based will result in summary denial. Section 138.432, RSMo 2000.

If an application for review of this decision is made to the Commission, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the Commission. If no application for review is received by the Commission within thirty (30) days, this decision and order is deemed final and the Collector of St. Louis 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 August 8, 2007.

STATE TAX COMMISSION OF MISSOURI

Maureen Monaghan

Hearing Officer