State Tax Commission of Missouri

 

JOHN W. SAND,                                           )

)

Complainant,                )

)

v.                                                         )           Appeal Number 06-60000

)

KAY CHILTON, ASSESSOR,                       )

HICKORY COUNTY, MISSOURI,               )

)

 Respondent.                )

 

 

DECISION AND ORDER

 

HOLDING

 

Decision of the Hickory County Board of Equalization reducing the assessment made by the Assessor is AFFIRMED.  Hearing Officer finds presumption of correct assessment by the Board not rebutted. True value in money for the subject property for tax year 2006 is set at $93,400, assessed value of $17,750.

Complainant appeared by Counsel John A. Parks, Humansville, Missouri.

Respondent appeared by Counsel James Hackett, Prosecuting Attorney.

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, 2006, under the economic conditions as of January 1, 2005; and to determine if there was an intentional plan by the assessing officials to assess the subject property at a ratio greater than 19% of its fair market value or at a ratio greater than the average residential assessment ratio for Hickory County for the 2005-2006 assessment cycle.

SUMMARY

Complainant appeals, on the ground of overvaluation and discrimination, the decision of the Hickory County Board of Equalization, which reduced the valuation of the subject property.  The Assessor determined an appraised value of $102,020, assessed value of $19,380 as residential property.  The Board reduced the value to $93,400, assessed value of $17,750.  Complainant proposed on his Complaint for Review of Assessment a value of $80,000, assessed value of $15,200.  A hearing was conducted on February 21, 2007, at the Hickory County, Hermitage, 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 offered into evidence the following exhibits.

Exhibit A – Settlement Statement on purchase of subject property, dated April 30, 2004

Exhibit B – Plat Map of subject subdivision

Exhibit C – Photographs and Property Record Card on Hobson property in subject subdivision

Exhibit D – Photographs and Property Record Card on Portman property in subject subdivision

Exhibit E – Photographs and Property Record Card on Hammond property in subject subdivision

Exhibit F – Photographs and Property Record Card on Aldridge property in subject subdivision

Exhibit G – Photographs and Property Record Card on Erickson property in subject subdivision

Exhibit H – Photographs and Property Record Card on Complainant’s property

Exhibit I – Comparison Chart showing differences in assessment data between the subject and the other five subdivision properties

The exhibits were received into evidence, without objection.  Complainant testified in his own behalf.

Respondent’s Evidence

Respondent placed into evidence Exhibit 1, a sales comparison analysis on the subject property, with supporting documentation.  Exhibit 1 was received into evidence, without objection.  Respondent testified in support of the Board’s valuation.

FINDINGS OF FACT

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

2.         The subject property is located at Route 1, Box 1980, Urbana, Missouri in the Lindley Ridge subdivision.  The property is identified by locator number 09-8-28-2-01-005.  The property consists of a 240 x 88 lot, improved by a residence built in 1972 and remodeled in 2004.  There is a detached garage on the property.  The property is first tier lake view property on Pomme De Terre Lake.

3.         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, 2005, to be $80,000, as proposed.

4.         Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and establish an intentional plan to assess the subject property at greater than 19% of its fair market value.

5.         Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and establish that the average residential assessment ratio for Hickory County was less than 19%.

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.

Board of Equalization Presumption

            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 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.

 

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.

Complainant Failed to Prove True Value in Money

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 value presented by Complainant of $70,000 to $80,000 at the evidentiary hearing, or $80,000 given on the Complaint for Review of Assessment was not supported by any recognized methodology for the appraisal of real property.

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 evidence consisted of a comparison of the assessment on his property to the assessment on five neighboring properties.  This is not a methodology recognized to establish what a willing buyer and seller would have paid for the subject property as it sat on January 1, 2006.  The evidence as to the purchase price in 2004 is not persuasive on the issue of fair market value because the subject house had undergone remodeling so that the home that was purchased in 2004 was not the same as that which existed in 2006.

Complainant failed to support his opinion of value by a recognized method for the valuing of real property in an appeal before the Commission.  Therefore, the opinion was not demonstrated to be established upon proper factors or a proper foundation.  In the absence of such evidentiary support, an owner’s opinion can be given little, if any probative weight.  In this instance the unsupported owner’s opinion does not constitute substantial and persuasive evidence of the subject property’s fair market value.

 

 

                                          Complainant Failed to Prove Discrimination

In order to obtain a reduction in assessed value based upon discrimination, the Complainant must prove the true value in money of the property under appeal on January 1, 2005.  Koplar v. State Tax Commission, 321 S.W.2d 686, 690 (Mo. 1959); and show an intentional plan of discrimination by the assessing officials resulting in an assessment of that property at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction.  Koplar, supra, at 695.  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 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). 

Where there is a claim of discrimination based upon a lack of valuation consistency, Complainant had the burden to prove the level of assessment for the subject property in 2005. This would have been done by independently determining the market value of the subject property and dividing the market value into the assessed value of the property as determined by the assessor’s office.  This would provide the assessment ratio for the subject property.

Complainant must also prove the average level of assessment for residential property in Hickory County for 2005.  This is done by (a) independently determining the market value of a representative sample of residential properties in Hickory County; (b) determining the assessed value by the assessor’s office for 2005 for each property used in the sample; (c) dividing the assessed value by the market value to determine the level of assessment or ratio for each property in the sample; and (d) determining the mean and median of the results.

The difference between the actual assessment level (ratio) of the subject property and the average level of assessment for all residential property, taken from a sufficient representative sample in Hickory County must demonstrate a disparity that is grossly excessive.  Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986).

Complainant’s discrimination claim fails because he failed to establish the market value of his own property.  Without establishing the market value, Complainant cannot establish the assessment ratio.  Without establishing the ratio, Complainant cannot establish that he is being assessed at a higher percentage of market value that any other property or at a level in excess of 19%, the assessment ratio established by statute for residential property.  §137.115.5(1), RSMo. 

However, even if Complainant had established the market value for the subject property, the discrimination claim would still fail because he did not demonstrate that a statistically significant number of other residential properties within Hickory County are being assessed at a lower ratio of market value than the property under appeal.  Complainant’s claim of discrimination is based upon five other properties in the subject subdivision.

No evidence was tendered which would establish that any one of the other properties was not being assessed at 19% of its fair market value.  The only evidence of fair market value for the five properties was the evidence of value from the assessor’s property record card.  That evidence shows that the assessed value on each property is 19% of the appraised value set by the assessor.

Because Complainant failed to establish the market value of the subject property and failed to establish that the subject property was being assessed at a higher percentage of market value than a statistically significant number of other properties in Hickory County, the claim of discrimination was not proved.

Conclusion

            Complainant’s evidence of value failed to meet the standard of substantial and persuasive, therefore the presumption of correct assessment by the Board was not rebutted.  Complainant’s evidence with regard to the claim of discrimination failed to establish that the subject property was being assessed at a ratio in excess of 19% of true value in money or at a ratio greater than the average residential assessment ratio in Hickory County.

ORDER

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

The assessed value for the subject property for tax year 2006 is set at $17,750.

Complainant may file with the Commission an application for review of this decision within thirty (30) days of the mailing of the 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 Hickory 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, Complainant 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 February 28, 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 28th  day of February, 2007, to:  John A. Parks, P. O. Box 73, Humansville, MO 65674, Attorney for Complainant; James Hackett, Prosecuting Attorney, P.O. Box 154, Hermitage, MO 65668, Attorney for Respondent; Kay Chilton, Assessor, P.O. Box 97, Hermitage, MO 65668; Jeanne Lindsey, Clerk, P.O. Box 3, Hermitage, MO 65668-0003; George McCoy, Collector, P.O. Box 92, Hermitage, MO 65668.

 

 

___________________________

Barbara Heller

Legal Coordinator