State Tax Commission of Missouri

VICTOR WAYNE EVANS, )

)

Complainant, )

)

v. ) Appeal Number 07-43501

)

RODGER REEDY, ASSESSOR, )

BENTON COUNTY, MISSOURI, )

)

Respondent. )

ORDER

AFFIRMING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

On December 10, 2007, Senior Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) AFFIRMING the assessment by the Benton County Board of Equalization.

Complainant timely filed his Application for Review of the Decision. Respondent was given until February 7, 2008, to make any response; none was filed.

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).

Complainant’s Points on Appeal

Complainant raised three points for reversal of the Hearing Officer Decision in his Application for Review. None of the three grounds for overturning or modifying the Decision are meritorious. The points of alleged error are: (1) Hearing Officer erred in addressing the issue of “illegal search and trespassing”; (2) Hearing Officer turned off the recorder when taxpayer was comparing values of properties in Exhibits B, C and D; and (3) Exhibit D was used as a comparison, not to the subject, but to the properties shown in Exhibits B and C.

Allegation 1

Upon review of the Decision, the Commission finds no error in the Hearing Officer addressing the legal issue of an inspection of property under Section 137.130, RSMo. The analysis and discussion presented at pages 10 and 11 of the Decision provide a proper application of the cited statute. There is no evidence in the transcript of the recorder being turned off, as alleged by Mr. Evans, at any time during the hearing. This alleged error provides no basis upon which the Commission can reverse or modify the Decision. There is no showing of error by the Hearing Officer.

Allegation 2

Complainant’s claim that the Hearing Officer turned off the recorder when he was comparing values of properties shown in Exhibits B, C and D is unfounded. The Transcript establishes that the Hearing Officer questioned Complainant about his exhibits B, C, D, E and F and received them into the record. Tr. 8:14 – 9:12. Specifically, after having the taxpayer identify Exhibit B, C, D and E, the Hearing Officer asked Mr. Evans to explain in summary fashion his position on how the documents supported his claim on valuation and discrimination. Tr. 10:5 – 6. Complainant then proceeded to testify in response to the Hearing Officer’s request. Tr. 10:7 – 20. Finally, the Hearing Officer inquired of the taxpayer as follows:

Hearing Officer: “Mr. Evans, is there anything further that you wish to testify to before I recognize Ms. Woodley for cross-examination? Hearing Officer has not further questions of you. All right.”

Mr. Evans: “Not at this time, no.”

Tr. 13:1 – 4.

At no time during the hearing from when the hearing was opened was the recorder turned off until after both Complainant’s and Respondent’s cases had been presented.

Complainant’s allegation contains no basis upon which the Commission can reverse or modify the Decision. There is no showing of error by the Hearing Officer.

Allegation 3

The Hearing Officer, at pages 9 and 10 of the Decision properly set forth the case law relative to a claim of discrimination. The claim put forth by Mr. Evans’ third allegation totally fails, as explained in the Decision, to meet the standard of the law for a claim of discrimination. The Hearing Officer did not err in his finding that Complainant had failed to prove his claim of discrimination.

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 Benton 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.

SO ORDERED March 4, 2008.

STATE TAX COMMISSION OF MISSOURI

Bruce E. Davis, Chairman

Jennifer Tidwell, Commissioner

Charles Nordwald, Commissioner

DECISION AND ORDER

HOLDING

Decision of the Benton County Board of Equalization sustaining 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 2007 is set at $46,600, assessed value of $8,700, ($44,300, residential assessed value of $8,420; and $2,300, agricultural assessed value of $280).

True value in money for the subject property for tax year 2008 is set at $49,160, assessed value of $9,180, ($46,860, residential assessed value of $8,900; and $2,300, agricultural assessed value of $280).

Complainant appeared pro se.

Respondent appeared in person and by Counsel, Karen Woodley, Prosecuting Attorney

Case heard and decided by Senior Hearing Officer W. B. Tichenor.

ISSUES

The Commission takes this appeal to determine (1) the true value in money for the subject residential property on January 1, 2007 and 2008; and (2) if the subject residential property was assessed at a ratio greater than 19% of true value in money or at a ratio greater than the average assessment ratio for residential property in Benton County.

SUMMARY

Complainant appeals, on the ground of overvaluation and discrimination, the decision of the Benton County Board of Equalization, which sustained the valuation of the subject property. The Assessor determined an appraised value of $44,300, assessed value of $8,420, as residential property. The assessor also assessed a portion of the property at an agricultural value of $2,300, assessed value of $280. However, the Complainant did not challenge the agricultural valuation. Complainant proposed a value of $29,000 for the residential portion of the property under appeal, assessed value of $5,510. A hearing was conducted on November 29, 2007, at the Benton County Courthouse, Warsaw, 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 testified in his own behalf. Mr. Evans offered into evidence the following exhibits.

Exhibit A – three photographs of the subject property

Exhibit B – photographs of property at 25795 Highway T, Benton County

Exhibit C – photographs of property at 25388 Highway 52, Benton County

Exhibit D – photographs of property at 16460 Brockman Avenue, Cole Camp, Missouri

Exhibit E – Property Calculation Data Sheets on the subject, Highway T, Highway 52 and Brockman Avenue properties.

Exhibit F – Bill of Sale on subject manufactured home.

Counsel for Respondent objected to printed statements on Exhibit D. Objection was sustained, printed statement on Exhibit D stricken from record. Exhibits A through F received into evidence.

Complainant testified that during 2007 he had constructed a car port at an approximate cost of $2,700.

Respondent’s Evidence

Respondent placed into evidence valuation data on the subject property. The valuation documents were marked as Exhibit 1. Exhibit 1 consisted of the following documents (1) 2007 Assessment List on subject property and personal property of Complainant; (2) Informal Meeting notes; (3) Property Record Card on subject property; (4) Field Change Form; (5) Sales letter and property record card on Mackenberg property; (6) Sales letter and property record card on Hurlbert property; and (7) Sales letter and property record card on Gonzales property.

FINDINGS OF FACT

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

2. The subject property is located at 16842 Crest Avenue, Cole Camp, Missouri. The property is identified by parcel number 8-2.0-3-7.001. The property consists of 19 acres. There are 18 acres in agricultural grades 6 and 7 ($2,300/$280), which are not under appeal. One acre is improved, as of January 1, 2007, with a 2002 Clayton-Nova, 80 x 16 manufactured home. The home has a covered 20 x 12 front porch and a rear deck. The property is also improved by a 34 x 50 concrete floor metal sided garage, with electric and plumbing.

3. During 2007, Complainant added to the residential property a car port, which was enclosed on three sides, at an approximate cost of $2,700. Applying a 5% depreciation factor, the contributory value of this new construction and improvement for tax year 2008 would be $2,560. Evans Testimony; Property Record Card on Subject - Exhibit 1; Valuation Data - Exhibit E.

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 for the residential portion, as improved, as of January 1, 2007, to be $29,000.

5. The residential value for 2007 is $44,300. The residential value for 2008 is $46,860 adding the contributory value of the carport added in 2007.

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).

Notwithstanding the provision of section 138.431.3 RSMo – “There shall be no presumption that the assessor’s valuation is correct,” – the Supreme Court of Missouri has held, “A tax assessor’s valuation is presumed correct.” 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).

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. The presumption was not rebutted in this instance. As will be discussed below, the evidence presented by the taxpayer was not substantial and persuasive that as of January 1, 2007, the fair market value of the subject property (1 acre residential tract as improved) would have been only $29,000.

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 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.

Methods of Valuation

Proper methods of valuation and assessment of property are delegated to the Commission. It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case. See, Nance v. STC, 18 S.W.3d 611, at 615 (Mo. App. W.D. 2000); Hermel, supra; Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975).

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 method whereby Mr. Evans arrived at his opinion of value was to compare the Assessor’s valuation of the subject property to the Assessor’s valuation of three other properties (Exhibit E). Such a method of valuation is not recognized by either the Courts or the Commission. Such a comparison provides no evidence of the true value in money of the property under appeal.

Complainant’s Burden of Proof

Overvaluation

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).

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).

Mr. Evans offered his opinion of value to be $29,000 for the residential property. He had arrived at this amount by comparing the Assessor’s valuation on three properties to the valuation made on the Complainant’s property. The valuations of all four properties were under the Hunnicutt mass valuation system employed by the Assessor. The methodology used by Mr. Evans to arrive at his opinion is not a proper approach to arriving at value for the subject property. Such a method as employed by Mr. Evans is not a cost, sales comparison or income approach to value. Accordingly, no probative weight can be given to the opinion of value of $29,000.

To conclude that a 5 year old manufactured home, purchased in 2002 for $27,846 (Exhibit F), a new 35 x 50 concrete floor, metal garage, with an estimated value of $21,080, improvements of a porch and deck on the subject property plus the value of the one acre of land - $3,000 (Exhibit E, Exhibit 1) would have only demanded a price in the open market on January 1, 2007 of $29,000 flies in the face of common sense. There is simply no rational evidence in the record upon which the Hearing Officer could arrive at such a conclusion. To do so would be to place an arbitrary and capricious value upon Complainant’s property. Such a valuation would be illegal and improper under the law, not to mention illogical.

On the issue of overvaluation, Complainant failed to met his burden of proof and rebut the presumption of correct assessment and establish fair market value.

Discrimination

In order to obtain a reduction in assessed value based upon discrimination, the Complainant must show an intentional plan of discrimination by the assessing officials resulting in an assessment of the subject 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, nor a lack of uniformity. 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 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).

No evidence was presented which establish the average assessment ratio for Benton County for 2007. Assessments on four properties are not sufficient to establish the average assessment ratio. Furthermore, Exhibit E shows that each of the properties was assessed at 19% of the calculated appraised value under the Hunnicutt mass valuation system. Complainant’s evidence failed to establish that the average assessment level in Benton County for residential property was not 19% or that the subject property was being assessed at a ratio greater than 19% of fair market value.

Complainant’s discrimination claim fails because a statistically significant number of residential properties within Benton County were not shown to have been assessed at a grossly lower ratio of market value than 19%, the ratio applied to the property under appeal.

Assessment of New Construction

Under section 137.115.1 RSMo, the property value established for an odd-numbered year is to remain as the value on real property for the following even-numbered year, unless there is new construction and improvement made to the property during the odd-numbered year. In the present case, Complainant testified that during 2007 he had constructed a car port on the subject property and enclosed it on three sides at an approximate cost of $2,700. Therefore, it is required that the value for the subject property as improved on January 1, 2008 be established.

The Assessor applied a 5% depreciation factor to the construction of the 35 x 50 garage in 2006 for the 2007 assessment. Exhibit E; Exhibit 1. A 5% depreciation adjustment for the car port is also appropriate to establish the residential value for 2008. The depreciated value of $2,560 is added to the 2007 residential value to arrive at the 2008 assessment.

Inspection of Subject Property by Assessor’s Staff

Mr. Evans was very upset that the Assessor’s field staff had, apparently in order to measure the 35 x 50 garage that was constructed in 2006, entered upon the subject property without his permission. In the mind of the taxpayer, this action amounted to an unlawful search or a trespass on his land and a violation of his rights as a property owner. The Hearing Officer declined to take evidence relative to the details of the taxpayer’s claim since there is no authority for the Commission to address such a matter and alter an assessment based upon such a claim. Furthermore, the issue presented is a simple issue of law, not a question of fact.

Complainant drew the attention of the Hearing Officer to section 137.130 RSMo as the only basis upon which the Assessor could enter upon real property. The Hearing Officer agrees. The cited section provides the authority necessary for the Assessor or his staff to have entered upon the subject land in order to properly assess the Complainant’s property.

Section 137.130 provides in relevant part:

“… whenever the assessor has insufficient information to assess any real property, the assessor or an employee of the assessor shall assess the property based upon a physical inspection or the best information the assessor can obtain; and for that purpose the assessor or an employee of the assessor shall have lawful right to enter into any lands and make any examination and search which may be necessary to assess such real property only when the assessor is entering because the assessor has insufficient information to assess such real property … .” Emphasis Added.

In the present instance, the only information which the Assessor had relative to the new construction that had been done on the Complainant’s land was that it was a 35 x 50 Pole Barn. Such information was “insufficient” for the Assessor to value this new construction under the Hunnicutt costing system. The description of a “35 x 50 pole barn” would be “insufficient” to properly assess Complainant’s property. A knowledgeable and reasonable assessor would have concluded in this instance, as Mr. Reedy no doubt did, that a physical inspection and examination of the new construction (35 x 50 pole barn) was necessary to complete the valuation and assessment of the property under appeal for 2007. Therefore, as a matter of law (§137.130 RSMo) the Assessor had a “lawful right to enter” the property of Mr. Evans for the purpose of assessing the taxpayer’s property.

ORDER

The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Benton County for the subject tax day is AFFIRMED for 2007 and AFFIRMED in part and SET ASIDE in part for 2008.

The assessed value for the subject property for tax year 2007 is set at $8,700 ($8,420 – Residential; $280 – Agricultural).

The assessed value for the subject property for tax year 2008 is set at $9,180, ($8,900 – Residential; $280 – 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 detailed grounds upon which it is claimed the decision is erroneous. Failure to state specific facts and 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 and an order to the Collector to release and disburse the impounded taxes. §139.031.3 RSMo. 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 Benton 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.