State Tax Commission of Missouri

 

RICHARD & JANICE KITCHEN,                 )

)

Complainants,               )

)

v.                                                         )           Appeal Number 07-55507

)      

BRENDA BELL, ASSESSOR,                        )

DENT COUNTY, MISSOURI,                       )

)

 Respondent.                )

 

 

DECISION AND ORDER

 

HOLDING

 

Decision of the Dent County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE.  Hearing Officer finds presumptions of correct assessment not rebutted. True value in money for the subject property for tax years 2007 & 2008 is set at $177,744, assessed value, as mixed residential and agricultural, is set at $32,850.

Complainant, Richard Kitchen, appeared pro se.

Respondent appeared pro se.

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 residential property on January 1, 2007; and (2) whether the subject residential property was assessed at a ratio greater than 19% or the average assessment ratio for residential property in Dent County.

 

SUMMARY

Complainants appeal, on the ground of overvaluation and discrimination, the decision of the Dent County Board of Equalization, which sustained the valuation of the subject residential property (hereinafter subject property or property under appeal).  Complainants did not appeal the agricultural assessment of their property.  The Assessor determined an appraised value of $164,590, assessed value of $31,270, for the residential property.  Complainant proposed a value of $125,000 for the residential property at hearing, assessed value of $23,750.  A hearing was conducted on December 11, 2007, at the Dent County Courthouse, Salem, Missouri.

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

Complainant’s Evidence

Mr. Kitchen testified in his own behalf on the issue of overvaluation and discrimination.  Complainant did not appeal the agricultural valuation of his property.  He was only appealing the residential value and asserting discrimination as to the residential assessment on his property.  The taxpayer testified that in his opinion the fair market value of the residential property on January 1, 2007, would have been $125,000.  The basis for this opinion was Mr. Kitchen felt that was about what it would bring if sold.

Mr. Kitchen’s testimony on the issue of discrimination related to the taxes on his property compared to the taxes on the two farms adjoining the Kitchen farm on the North and East and on the South.  He also felt that the valuation of his home was excessive compared to the home of the Second District County Commissioner.

The following exhibits were offered into evidence on behalf of the taxpayer.

Exhibit A – A tax history on Complainants’ property, with copies of tax bills for years 2002 through 2007.

Exhibit B – The 2007 Tax Bill on Complainant’s property, with three photographs of the subject house, detached garage and a horse barn, and a locator map showing the Kitchen farm in marked in green.

Exhibit C – The 2007 Tax Bill on the Craig & Alma Duckworth property, with three photographs of the Duckworth house and two out buildings, and the locator map showing the Duckworth farm in marked purple.  This farm borders the Kitchen farm on the South.

Exhibit D – The 2007 Tax Bill on the Opal Butler property, with two photographs of the Butler house and an out building, and the locator map showing the Butler farm in marked red.  This farm borders the Kitchen farm on the North and East.

Exhibit E – A copy of the Property Record Card Worksheets on the Kitchen property and the John J. Tune and Jean V. Hofer property, with two photographs of the Kitchen house and two photographs of the Tune-Hofer house.

There were no objections to the Exhibits and they were received into evidence.

Respondent’s Evidence

Respondent placed into evidence the Property Record Card on the subject property.  Ms. Bell testified that Complainants property had been valued under the Hunnicutt Cost System, like all other property in the county.  The Assessor did not believe that the homes on the Duckworth, Butler or Tune-Hofer properties were comparable to the Kitchen home.

FINDINGS OF FACT

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

2.         The taxpayers’ property is located at Route 2, Box 2020, Salem, Missouri.  The property is identified by locator number 82-08-1.1-01-2.2.  The residential portion of the Kitchen property consists of an acre lot improved by single-family ranch style home, with an attached three-car garage, a detached garage, pool and concrete patio.  The house has a total of 9 rooms with 5 bedrooms, an adjusted living area of 3,324.  Exhibit E; Exhibit 1. 

3.         There was no evidence of new construction and improvement from January 1, 2007, to the date of hearing and no evidence that any new construction and improvements were planned for the remainder of 2007.

4.         Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment and establish the true value in money as of January 1, 2007, for the residential tract as improved to be $125,000.

5.         Complainant’s evidence was not substantial and persuasive to establish that the property under appeal was being assessed at a ratio greater than 19% or the average ratio for residential property in Dent County.

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.  As will be discussed below, the taxpayer in this appeal failed to present substantial and persuasive evidence to rebut the presumption of correct assessment.

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).


Complainants’ Fail to Meet Their Burden of Proof

Overvaluation Claim

In order to prevail, Complainants 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 based upon improper elements or an improper foundation.  Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965).  An examination of Complainants’ evidence fails to provide a proper foundation or the proper elements to establish that as of January 1, 2007, the residential tract of the Kitchen farm had a fair market value of $125,000.

Exhibit A only provides information as to the taxes on Complainants’ property since 2002.  The amount of taxes, the rate of increase from year to year or any other information relative to taxes on real property does not establish the true value in money for the property under appeal.  There is nothing in Exhibit A from which the Hearing Officer could conclude that on January 1, 2007, a willing buyer and seller would have agreed to a sale price for the Kitchens’ residence of only $125,000.  Therefore, Exhibit A provides no probative evidence of fair market value.

Exhibits B, C, D & E likewise provide no basis for a valuation of the residential property at $125,000.  The comparison of the Kitchen property to the Duckworth, Butler and Tune-Hofer properties does not constitute a valuation under any recognized methodology for appraising real property.  Furthermore, Mr. Kitchen’s opinion of value of $125,000 was simply based upon his unsupported belief that amount is probably what the property would have brought.  There was no demonstration as to how the subject property should be valued at $125,000 relying on the valuations made by the Assessor on the Duckworth, Butler or Tune-Hofer properties.

The evidence failed to establish that the other three properties were in any manner actually comparable to the Kitchen residence for appraisal purposes.  There was no evidence to establish that either the Duckworth or Butler properties had recently sold.  A reference to a purchase of the Tune-Hofer property was unsubstantiated by any documents to establish a value under an arms length open market transaction.  Comparisons of assessments between properties do not establish true value in money. 

Summary

Complainants’ evidence failed to meet the burden of proof as substantial and persuasive evidence of a fair market value of $125,000.  Mr. Kitchen’s opinion of $125,000 was unsupported by any recognized method of appraisal and therefore can be given no weight.  Accordingly, the presumptions that the Assessor/Board assessment was correct, having not been rebutted, must be affirmed.

                                                            Discrimination Claim

In order to obtain a reduction in assessed value based upon discrimination, the Complainants must prove that the assessing officials have assessed the property under appeal (Complainants’ residential property in this case) at a greater percentage of true value in money (fair market value) than other residential property generally within Dent 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 residential assessment ratio of the subject property and the average residential assessment ratio in Dent 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). 

A review of Complainant’s evidence on this issue also fails to meet the requisite evidentiary standard to establish discrimination.  None of the exhibits or the testimony of Mr. Kitchen provide any information upon which the Hearing Officer can conclude that the property under appeal was assessed at a ratio greater than 19% of its true value in money.  Indeed, the evidence on this record only will support the conclusion that the Kitchen residential property was in fact assessed at the statutory ratio of 19%.

Furthermore, Complainant’s evidence did not establish that any of the three cited properties – Duckworth, Butler or Tune-Hofer – had been residentially assessed at any ratio other than 19%.  These three properties are not sufficient to establish an average residential assessment ratio for Dent County in any case.  The Hearing Officer has no basis whatsoever to conclude that the average residential assessment ratio for Dent County is anything other than 19% as establish by statute.  Therefore, Complainant’s claim of discrimination fails.

ORDER

The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Dent County for the subject tax day is AFFIRMED.

The assessed value for the subject property for tax years 2007 and 2008 is set at $32,850.

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, the Collector of Dent County will be so notified, and 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 Dent 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:   Richard Kitchen, Rt. 2, Box 2020, Salem, MO 65560, Complainant; Jessica Sparks, Prosecuting Attorney, 112 E. Fifth Street, Salem, MO 65560, Attorney for Respondent; Brenda Bell, Assessor, Dent County Courthouse, 400 N. Main Street, Salem, MO 65560; Angie Curley, Clerk, Dent County Courthouse, 400 N. Main Street, Salem, MO 65560; Dennis Medlock, Collector, Dent County Courthouse, 400 N. Main Street, Salem, MO 65560.

 

 

___________________________

Barbara Heller

Legal Coordinator