State Tax Commission of Missouri

 

MICHAEL FRANZ,                                        )

)

Complainant,                )

)

v.                                                         )           Appeal Number 07-89501

)         

JAMES STRAHAN, ASSESSOR,                  )

TANEY COUNTY, MISSOURI,                    )

)

 Respondent.                )

 

 

DECISION AND ORDER

 

HOLDING

 

Decision of the Taney County Board of Equalization reducing the assessment made by the Assessor is AFFIRMED.  Hearing Officer finds presumption of correct assessment not rebutted. True value in money for the subject property for tax years 2007 and 2008 is set at $24,868, residential assessed value of $4,720.

Complainant appeared pro se.

Respondent appeared in person and by Counsel, Robert Paulson, County Counselor.

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

ISSUE

The Commission takes this appeal to determine (1) the true value in money for the subject property on January 1, 2007; and (2) whether a part of the property should be classified as agricultural land.

 

 

SUMMARY

Complainant appeals, on the ground of overvaluation and misclassification, the decision of the Taney County Board of Equalization, which reduced the valuation of the subject property.  The Assessor determined an appraised value of $27,580, assessed value of $5,240, as residential property.  The Board of Equalization reduced the value to $24,868, assessed value of $4,720 Complainant proposed a true value in money of $18,000, assessed value of $3,100.  A hearing was conducted on December 13, 2007, at the Taney County Courthouse Annex, Forsyth, 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 and offered into evidence Exhibit A.  Exhibit A was received into evidence without objection. 

Exhibit A contained the following documents:

(1) Notice of Change in Assessed Value, dated May 11, 2007;

(2) Application to Appeal Property Assessment to the Taney County Board of Equalization, dated June 14, 2007;

 

(3) Board of Equalization Decision, dated July 19, 2007;

(4) Board of Equalization Decision, dated August 13, 2007;

(5) Copy of 2007 Tax Bill;

(6) Four pages of information on subject property and three adjoining properties; (7) copy of 2006 tax bill on subject property; and

(8) copy of plat map showing subject and other properties.

Mr. Franz’s opinion of value for the subject property was $18,000 based on his belief that was what land like his was selling for.

Respondent’s Evidence

Respondent offered into evidence Exhibit 1, a copy of the property record card on the subject property, as of June 25, 2007, and as updated after the Board’s decision of August 13th.  Exhibit 1 was received into evidence without objection.

FINDINGS OF FACT

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

2.         The subject property is located at 5460 State Highway J, Kirbyville, Missouri.  The property is identified by parcel number 16-5-16-2.011.  The property consists of .and irregular shaped lot which fronts on Highway J.  The lot contains three (3) acres.  There is a house on the property with 776 square feet of living area.  The house is 57 years old and in only fair condition, suffering from various items of deferred maintenance.  The property was purchased in mid-2006 for $50,000.  The property was listed and publicly advertised for sale.  There was no agricultural use of the property in 2006 or 2007.  Exhibits A & 1; Complainant’s Testimony.   

3.         There was no evidence of new construction and improvement from January 1, 2007, to the date of hearing and no evidence of any new construction and improvement being completed prior to December 31, 2007.

4.         Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2007, to be $18,000.

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 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.  Hermel & 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 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 are 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 both 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).

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, 2007.  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).  The owner may not support an opinion of value by reference to comparable sales unless the owner qualifies as an expert.  State ex rel. Missouri Hwy. and Tr. Comm’n v. McDonald’s Corp., 872 S.W.2d 108, 113 (Mo. App. E.D. 1994); State ex rel. Missouri Hwy. and Tr. Comm’n v. Pracht, 801 S.W.2d 90, 94 (Mo. App. E.D. 1990).

Value Issue

Mr. Franz offered his opinion of value of $18,000 based upon what he believed land was selling for.  According to the Complainant the property adjoining the subject property on the west had sold in the spring of 2006 for $70,000.  The tract consists of 11.93 acres.   Because the house on the tract was torn down, Mr. Franz calculated the value of the property at 5.38 thousand per acre. Exhibit A.   The 11.93 acres actually sold for $5,867.56 dollars per acre ($70,000 ÷ 11.93 = $5,867.56).

The property to the southeast sold in the spring of 2007 for $37,000.  It is a tract of 6.7 acres, with no improvements.  Mr. Franz calculated the per acre value at 5.28 thousand per acre.  Exhibit A.  The per acre value of the tract would actually be $5,522.39 ($37,000 ÷ 6.7 = $5,522.39).  The Complainant also provided the assessed values for these two properties, $5,230 and $120 respectively, and the assessed value for a 3.18 acre tract which adjoins the property under appeal on the east, which was $3,180. 

None of this information constitutes a recognized methodology for valuation of the subject property.  Comparative assessments do not establish fair market value.  The sales prices for two larger tracts of land adjoining the subject provide some indication of fair market value.  However, the Complainant is not qualified as an expert.  The two sales would require an adjustment for the size difference with the subject in order to provide an appropriate indication of fair market value.  Therefore, the opinion of value of $18,000 as tendered by Mr. Franz is not shown to be based upon proper elements or a proper foundation so as to be given any probative weight.

There is a further problem in placing a value of $18,000 on the subject property.  That problem involves the sale of the subject in mid-2006 for $50,000.  Evidence of the actual sales price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time.  The actual sale price is a method that may be considered for estimating true value.  The actual sales price, between a willing seller who is not obligated to sell and a willing buyer who is not compelled to buy, establishes an outer limit on the value of real property. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526 (App. E.D. 1993).   

Mr. Franz testified that because of going through a recent divorce, he was required to buy the subject property and pay the $50,000 asking price.  It is improbable to the Hearing Officer that in all of Taney County, the Complainant could not find other housing than paying nearly 280% of what he now asserts is fair market value for the subject property.  A taxpayer does not meet his burden if evidence on any essential element of his case leaves the Commission “in the nebulous twilight of speculation, conjecture and surmise.”  See, Rossman v. G.G.C. Corp. Of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980).  On the issue of the fair market value of the subject property, Complainant has failed to meet his burden of proof.  To place a value of $18,000 on the property based upon Exhibit A and the taxpayer’s testimony would consist of nothing more or less than speculation, conjecture and surmise.  The Hearing Officer does not render decisions based on such elements.

Classification Issue

Turning to the claim that a portion of the subject property should be classified as agricultural land, the evidence on this point is clear.  It was not put to any agricultural use in 2006.  In point of fact, it has been some time since the subject, as part of a larger track was use as agricultural land.  The taxpayer’s intention, sometime in the future to have horses on his land does not qualify for agricultural classification.  The fact that portions of adjoining land is assessed as agricultural land is not sufficient to so classify the subject.  The adjoining land may or may not be properly classified, that is not an issue before the Hearing Officer.  It cannot be a basis for reclassifying the subject property.

Inequality in Assessment Issue

Complainant testified he only wanted his property to be assessed like the neighboring properties.  The Hearing Officer understands this claim to essentially be an assertion of inequity in assessments, although discrimination was not set out as a ground for appeal, and will so address that issue.  In order to obtain a reduction in assessed value based upon discrimination or inequality in assessment, a taxpayer must establish that the property being appealed is not be assessed at either the statutory ratio for property of its class or it is being assessed at a ratio of true value in money greater than the average ratio for the same class of property in the county.  Koplar v. State Tax Commission, 321 S.W.2d 686, 690 & 695 (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).  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). 

Complainant provided no evidence upon which the Hearing Officer could find that the assessment ratio on the property under appeal was grossly excessive in comparison to the average residential assessment for Taney County.  There is no evidence on this record whereby the Hearing Officer can reach any conclusion as to the average assessment ratio for residential property in Taney County.  Accordingly, there is no basis to find that Mr. Franz’s property is not being assessed in the same manner as other residential property in Taney County.

Summary

            Complainant failed to present substantial and persuasive evidence to establish the fair market value (true value in money), to establish an agricultural use or an inequality in assessment.  Therefore, the presumption of correct assessment by the Board was not rebutted.  The Board’s valuation must be affirmed.

ORDER

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

The assessed value for the subject property for tax years 2007 and 2008 is set at $4,720.

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 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 Taney 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 December 21, 2007.

STATE TAX COMMISSION OF MISSOURI

 

 

_____________________________________

W. B. Tichenor

Senior Hearing Officer

 

 

 

Certificate of Service

 

I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 21st  day of December, 2007, to:  Michael Franz, 5460 State Highway J, Kirbyville, MO 65679, Complainant; Ronald Paulson, County Counselor, P.O. Box 1086, Forsyth, MO 65653, Attorney for Respondent; James Strahan, Assessor, P.O. Box 612, Forsyth, MO 65653; Donna Neeley, Clerk, P.O. Box 156, Forsyth, MO 65653; Sheila Wyatt, Collector, P.O. Box 278, Forsyth, MO 65653.

 

 

___________________________

Barbara Heller

Legal Coordinator