State Tax Commission of Missouri

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 or lay 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 or an owner 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 Supported By The Record

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’ Points

Complainants raised three points in their Application for Review. The three points being:

(1) The Hearing Officer erred in failing to recognize the fair market value determined by the U. S. Government appraisal as recited in the Wetlands Reserve Program Warranty Easement Deed;

(2) The Board of Equalization relied improperly upon information presented as a valuation by Roger Arnzen when Arnzen admitted at hearing he did not appraise the subject property; and

(3) The Hearing Officer erred in failing to give weight to the owners’ opinion of value.

Value Paid by U. S. Government

Counsel for Complainants argues the Hearing Officer failed to recognize the fair market value determined by the U. S. Government appraisal in the Warranty Easement Deed. A review of the Deed (Exhibit A) fails to reveal any reference to an appraisal having been performed by the U. S. Government or any other entity or person to arrive at the price of $1,000 per acre for the Wetlands Easement. The exhibit certainly does not contain any terms which establishes how the Federal Government came to arrive at a value of $1,000 per care for the easement on the subject land. The Transcript of the evidentiary hearing fails to provide any testimony establishing an appraisal having been performed by the U. S. Government prior to its purchase of the easement on the subject property. The Deed does not constitute an appraisal establishing the fair market value of the fee simple interest in the subject property.

The Hearing Officer did not err in failing to accept Exhibit A as an appraisal of either the easement fair market value or the fee simple fair market value.

Board of Equalization Determination

The Board’s reliance on sales data presented by Mr. Arnzen was within the Board’s discretion to accept or reject. There is no statutory requirement that data on fair market value presented before a Board of Equalization can only be presented in the form of an appraisal. Nor is there any basis in statute or case law establishing that the presumption of correct assessment by the Board is rebutted when the Board relies upon sales data and not a complete summary or self contained appraisal.

Furthermore, Mr. Arnzen’s testimony and sales data was not presented for the purpose of rebutting the Board presumption. The data was presented to establish sales values of residuary interests on various wetlands in surrounding counties, given the lack of sufficient data on such transactions in Dunklin County.

The Hearing Officer did not err in failing to find that the Board presumption of correct assessment was rebutted by the Arnzen admission that he only presented sales data on sales of residuary interest in land subject to wetlands easements and did not perform an appraisal.

Weight to Owners’ Opinion

The final point asserted by Complainants goes to the lack of any weight given by the Hearing Officer to the Owners’ opinion of value. Complainants’ argument is that the U. S. Government had “paid full fair market value for the subject property” in obtaining the easement and the Hearing officer failed to recognize this. App. For Review, p. 2, paragraph 3. Contrary to Complainants’ assertion, the Hearing Officer in Finding of Fact 3, clearly recognizes the placing of the subject property into the Wetlands Reserve Program in 2002. He does not make a finding of fact that $1,000 per acre represented full fair market value for the subject property because there is not evidence to establish an appraisal on the property which would establish at that time of the granting of the easement that land such as the subject was selling for a $1,000 per acre – fee simple interest.

The testimony of Ms. Richardson to the effect that Complainants, in 2002 consider $1,000 per acre to be fair market value for the land (Tr. 6, Lines 1 – 8) does not establish that the property would have sold in fee simple for $1,000 per acre. The Hearing Officer is not required to give probative weight to an owner’s opinion of value, unsubstantiated by market data. The price of $1,000 per acre for the wetlands easement, does not equate to a market value of $1,000 per acre fee simple in 2002.

The Hearing Officer did not act in an arbitrary or capricious manner when he gave no weight to the unsubstantiated opinion of value by the owners.

Conclusion

The Hearing Officer did not err in his determination as challenged by Complainant.

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 Dunklin 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, unless said taxes have been disbursed pursuant to a circuit court order pursuant to Section 139.031(8), RSMo.

SO ORDERED April 19, 2007.

STATE TAX COMMISSION OF MISSOURI

Bruce E. Davis, Chairman

Jennifer Tidwell, Commissioner

Charles Nordwald, Commissioner

DECISION AND ORDER

HOLDING

Decision of the Dunklin County Board of Equalization reducing the assessment made by the Assessor is AFFIRMED. Hearing Officer finds the presumption of correct assessment was not rebutted.

True value in money for the subject property in Appeal 06-56500 for tax year 2006 is set at $64,000, assessed value of $7,689.

True value in money for the subject property in Appeal 06-56501 for tax year 2006 is set at $53,000, assessed value of $6,360.

Complainant appeared by Counsel, Mark A. Richardson, Jefferson City, Missouri.

Respondent appeared pro se.

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

ISSUE

The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2005, specifically, the value of the residual rights held by the landowner subject to an easement under the United States Government Wetlands Reserve Program.

SUMMARY

2. The subject properties are located at rural Hornersville, Missouri. The property in Appeal 06-56500 is identified by parcel number 18-6.2-14-1. The property consists of 160 acres, with no improvements. The property in Appeal 06-56501 is identified by parcel number 18-6.2-13-2. The property consists of 132.5 acres, with no improvements.

3. By Warranty Easement Deed (Easement), dated July 22, 2002, recorded in Book 329, pages 268 through 277, the subject properties were placed in the Wetlands Reserve Program of the United States Department of Agriculture, Commodity Credit Corporation. Exhibit A.

4. The rights reserved to the Landowners pursuant to the Easement are the following:

a. Record title, with right to convey, transfer and otherwise alienate title to the reserved rights;

b. The right of quiet enjoyment of the rights reserved on the easement area;

c. The right to prevent trespass and control access by the general public;

d. The right to undeveloped recreational uses, including hunting and fishing, and including leasing of such rights for economic gain;

e. The right to oil, gas, minerals, and geothermal resources underlying the easement area, provided that any drilling or mining activities are to be located outside the boundaries of the easement area.

Exhibit A, pp. 269-270

5. The rights to the following activities and uses have been acquired by the United States and are prohibited of the Landowner on the easement area (subject properties):

a. haying, mowing or seed harvesting for any reason;

b. altering of grassland, woodland, wildlife habitat or other natural features by burning, digging, plowing, disking, cutting or otherwise destroying the vegetative cover;

c. dumping refuse, wastes, sewage or other debris;

e. draining, dredging, channeling, filling, pumping, diking, impounding or related activities, as well as altering or tampering with water control structures or devices;

f. diverting or causing or permitting the diversion of surface or underground water into, within or out of the easement area by any means;

g. building or placing buildings or structures on the easement area;

h. planting or harvesting of any crop; and

i. grazing or allowing livestock on the easement area.

Exhibit A, p. 270

5. There was no evidence offered by Complainants to address the claim of misgraded agricultural land or evidence to establish Agricultural Land Productive Values pursuant to 12 CSR 30-4.010. The claim of misgraded agricultural land was abandoned.

6. The subject lands cannot be put to an agricultural use as defined by Section 137.016.1(2), therefore, the properties cannot be valued based upon agricultural land productive values. §137.017.1, RSMo; 12 CSR 30-4010.

7. The subject properties are vacant and unused agricultural land and the true value in money must be the fair market value of the land, as encumbered by the Wetlands Reserve Program Easement. §137.017.4, RSMo.

8. At some time after July, 2002, Complainants purchased the subject properties, from the Irma Richardson Trust for $50 per acre. Tr. 6, Line 20 – Tr. 7, Line 3; Tr. 12, Lines 12 - 22.

9. Complainants’ evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the fair market value as of

January 1, 2005, to be $100 per acre or $29,250 for the combined tracts of land, subject to the Easement.

CONCLUSIONS OF LAW

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.

Presumption 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 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 Board’s action in reducing the value of the subject properties rebuts any presumption that the assessor’s value was correct in the present proceeding. In the present appeals, 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. Snider, Hermel & Cupples Hesse, supra.

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 acting in what they consider their own best interests.

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).

The opinion of fair market value tendered on behalf of Complainant by the testimony of Mrs. Richardson is without substantiation. The opinion therefore does not have proper elements or a proper foundation to support it. It can have no probative value to resolve the issue in this appeal.

The purchase of the subject properties in 2002 from the Irma Richardson Trust, following the granting of the Easement, does not establish a market transaction to support a value of $50 per acre at that time. The purchase of the subject properties from the Trust was such that the land was not exposed to the open market. Although the parties involved may have been acting in what they perceived to be their own best interests, that alone does not establish an arms-length transaction. The sale being in conjunction with the settlement of the Irma Richardson Trust and a transaction between siblings is not typical of a market transaction. Therefore, Complainant’s purchase of the subject properties in 2002 does not provide a basis from which a value of $100 per acre three years later can be concluded.

The purchase of the subject properties by a hypothetical buyer on January 1, 2005, would involved the transfer of title to the entire 293.5 acres, more or less. However, the Easement controls and prohibits the use of the land for any purpose other than recreational uses, hunting and fishing. In practical terms, any sale of this land is a sale of nothing more than the right to walk upon and enjoy the land and to hunt and fish, if possible, on the land.

There is no evidence of a body of water which would provide recreational fishing. The testimony raises serious question as to the quality of possible hunting on the land. In other words, the right which Complainants have in the land and which they can convey is to simply hold the land essentially in trust for the Federal Government under the terms of the Wetlands Easement. Tr. 11, Line 18 – Tr. 12, Line 2.

However, the Hearing Officer has no evidence from which he can conclude that $100 per acre is what a willing buyer and seller would have agreed to as the purchase price for these 293 acres of land on January 1, 2005. A taxpayer does not meet their burden if evidence on any essential element of the 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). An owner’s unsupported opinion of value is an opinion resting on speculation, conjecture and surmise. The Hearing Officer has no alternative given the evidence presented by Complainants but to affirm the Board’s value, since the presumption of correct assessment has not been rebutted. Accordingly, there is no reason for an examination and analysis of the evidence presented on behalf of Respondent.

ORDER

The assessed valuations for the subject properties as determined by the Board of Equalization for Dunklin County for the subject tax day are AFFIRMED.

The assessed value for the subject property in Appeal 06-56500 for tax year 2006 is set at $7,680.

The assessed value for the subject property in Appeal 06-56501 for tax year 2006 is set at $6,360.

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 Dunklin 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.