State Tax Commission of Missouri

ALFRED ZIMMERMAN, JR., )

)

Complainant, )

)

v. ) Appeal Number 07-89508

)

JAMES STRAHAN, ASSESSOR, )

TANEY COUNTY, MISSOURI, )

)

Respondent. )

DECISION AND ORDER

HOLDING

Decision of the Taney 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 years 2007 and 2008 is set at $120,000, residential assessed value of $22,800.

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; (2) whether the property should be assessed as agricultural property; and (3) whether the property under appeal is the subject of discrimination or inequitable assessment by the assessing officials.

SUMMARY

Complainant appeals, on the ground of overvaluation and misclassification, the decision of the Taney County Board of Equalization, which sustained the valuation of the subject property. Testimony and Complainant’s evidence at hearing raised the issue of inequitable assessment. The Assessor determined an appraised value of $120,000, assessed value of $22,800, as residential property. Complainant proposed a value of $25,000, assessed value of $3,000. 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. No objection was made to Exhibit A and it was received into evidence. Exhibit A consisted of the following: (1) a three page typed statement of Complainant setting forth the basis for his appeal and (2) aerial photographs, photographs and assessment data sheets on the subject property and other properties referenced in Mr. Zimmerman’s typed statement.

Mr. Zimmerman contended his property should be value at $25,000 based upon the values placed on other properties by the Assessor. It was the position of the Complainant that fair market value was not the appropriate standard for valuation of his property, but it should be valued based on the other properties cited in his exhibit.

Respondent’s Evidence

Respondent’s testimony established Complainant’s property had been assessed (classified and valued) under the same standards and policies for all other property in Taney County. The following exhibits were received into evidence on behalf of Complainant.

Exhibit 1 – Property Record Card on Subject Property

Exhibit 2 – Property Record Card on Pinegar Property

Exhibit 3 – Property Record Card on Hall Property

Exhibit 4 – Aerial Map of the Highway 65 and Highway 465/Route F Interchange in Taney County

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 Northwest of the Highway 65 and Highway 465/Route F Interchange on the West Frontage Road of Highway 65 at Branson, Missouri. The property is identified by map parcel number 08-3-5-042. The property consists of a slightly irregular, unimproved rectangle lot measuring 330 feet on its North and South property lines, 621.52 feet along the gravel frontage road on the East property line and 618.51 feet along the west property line. Exhibits A:1 & A:1B; Exhibits 1 & 4.

3. There was no evidence of new construction and improvement from January 1, 2007, to the date of hearing and there was no evidence that any new construction or improvement would be made to the property prior to December 31, 2007.

4. Complainant did not present any evidence of fair market value for his property. Complainant’s evidence was not substantial and persuasive to rebut the presumptions of correct assessment and establish the true value in money for the subject property as of January 1, 2007, to be $25,000.

5. Complainant did not present any evidence of agricultural use for the subject property. Complainant’s evidence was not substantial and persuasive to rebut the presumptions of correct assessment and establish that as of January 1, 2007, the property under appeal should be classified and assessed as agricultural property.

6. Complainant’s evidence was not substantial and persuasive to rebut the presumptions of correct assessment and establish that the Complainant’s property had been the subject of discrimination or an inequitable assessment by the Taney County assessing officials for the 2007 – 2008 assessment cycle.

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. In like manner, the same principle established by the case law requires that when the taxpayer raises the issue of misclassification that substantial and persuasive evidence to establish that the classification placed on the property by the assessing officials was incorrect and what the correct classification should be. As will be developed below, Complainant failed to either establish the true value in money (fair market value) of his property and failed to establish that his property met the statutory standard to be classified as agricultural property.

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 a 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 failed to present any recognized method for the valuation of his property. Therefore, his opinion of value that he asserted should be applied to the property under appeal was not founded upon an approach acknowledged by the Courts or the Commission to be appropriate for an ad valorem property tax valuation.

Complainant’s Burden of Proof

Overvaluation Issue

In order to prevail on a claim of overvaluation, 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).

Mr. Zimmerman failed to present an opinion of market value. In point of fact, under questioning by the Hearing Officer, the Complainant refused to state what his asking price for the property was, although he admitted he had a For Sale by Owner sign that had been on the property for some time. When asked hypothetically, if he had been approached on January 1, 2007 to sell the property what his asking price would be? The taxpayer refused to state his asking price, based upon his assertion that was not the standard of value he wished to be applied to his property. Under cross-examination, Mr. Zimmerman did agree the property would sell for more than the value the Assessor had placed on the property. Complainant’s Testimony.

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 of $25,000 asserted by Complainant is by his own admission not its fair market value, since he conceded the property would sell for more than the $120,000 value placed on the property by the Assessor and sustained by the Board. The opinion of value tendered was not, as shown below, demonstrated to be base upon property elements or foundation. Accordingly, it can be given no probative weight. Therefore, Mr. Zimmerman fails as to the first part of the taxpayer’s burden of proof with regard to a claim of overvaluation.

The taxpayer also fails with regard to the second part of the burden. There is no sale data in Complainant’s evidence establishing tracts of unimproved land comparable to the subject selling for approximately $5,000 per acre ($25,000 ÷ 4.81 acres = $5,197.51) at a time relevant to the January 1, 2007, assessment date. The entirety of the Zimmerman evidence relies completely on assessment data and not market data derived from sales of property. This is not substantial and persuasive evidence for an overvaluation claim.

Summary

Mr. Zimmerman did not state an opinion of market value, nor did he provide any evidence which would establish that $25,000 was the market value of his property on January 1, 2007.

Classification Issue

Mr. Zimmerman’s next claim was that the property under appeal should be classified as agricultural property and therefore assessed at 12% instead of it’s 19% residential assessment. The evidence on this point likewise fails to meet the standard of substantial and persuasive. Sometime in the past the property was no doubt put to an agricultural use, and it was apparently assessed as agricultural land when purchased by Complainant in 1993. Exhibit A. However, there has been no recent agricultural use of the property.

Given the size and topography of the Zimmerman property (Exhibit A:1C; Exhibits 1 & 4) it is extremely unlikely that the property can be put to an agricultural use. There is clearly no evidence presented by Complainant whereby the Hearing Officer can conclude that the “immediate most suitable economic use,” of the property is agricultural. §137.016.5, RSMo. The evidence is completely insufficient – nonexistent – to establish that an analysis of the property under the statutory factors of subsection 5 of Section 137.016 would mandate a classification as agricultural property.

The claim for an agricultural classification for the property under appeal is actually based upon the fact that three properties located in the Northwest corner of the Interchange where the subject is located and one property locates in the Southeast corner of the Interchange are classified as agricultural land. A review of Exhibit A with reference to these properties reveals that each of the four agricultural properties are significantly different than the Zimmerman land. For purposes of identification the four properties will be identified as 2, 3, 9 and G. These numbers and letter correspond to the identification numbers and letters so assigned to the parcels by Mr. Zimmerman at pages 2 and 3 of Exhibit A.

The four tracts are of the following sizes, respectively, in acres: 12.76, 21.98, 39.21 and 25.53. On the basis of size alone these four properties are not sufficiently similar to the subject to be considered as like properties for either valuation or classification purposes. The Hearing Officer notes that in Exhibit A, Mr. Zimmerman represents that a portion of tract # 7 is mixed commercial and agricultural classification. However, page 22 of Exhibit A shows that this tract of 3.26 acres is a mixed classification of residential and commercial. There is no agricultural property on this tract.

This basis for classifying the subject property as agricultural is simply not supported by the statutory requirements for the classification of real property for assessment purposes. In order for the Hearing Officer to classify the Zimmerman property as agricultural, it would be necessary that the evidence establish an agricultural use (137.016.1(2)) or that the evidence establish that the property’s “immediate most suitable economic use” (137.016.5) is as property to be put to an agricultural use. Neither requirement has been satisfied by Complainant’s evidence.

It is not within the purview of the Hearing Officer’s duty in this appeal to determine if in fact tracts 2, 3, 9 and G were properly classified by the Assessor for 2007. There is certainly no evidence on this record whereby the Hearing Officer could logically conclude that these tracts were not correctly classified. Even if there was evidence to establish that one or more of these tracts should be classified as either residential or commercial, the Hearing Officer does not have the authority to order such a change, since none of these properties are under appeal before the Commission. Furthermore, it would be in appropriate for the Hearing Officer to arbitrarily classify Mr. Zimmerman’s property as agricultural when not mandated by law, simply because some other property is so classified.

Summary

Complainant failed to provide any evidence of an agricultural use or other basis recognized by the controlling statute to classify his land as agricultural

Inequitable or Discriminatory Assessment Issue

Overvaluation and Classification Not The Real Issues

The actual claim which Mr. Zimmerman asserted in his appeal was not a claim of overvaluation, since the evidence can only lead to the conclusion that the taxpayer believes that his property on the open and active market would bring more than the $120,000 placed on it by the Assessor. Nor was the ground for appeal in truth a claim of misclassification, given that the comparisons which Mr. Zimmerman made in Exhibit A related to fifteen different properties located to the Northwest and Southeast of the subject Intersection. It is noted that seven of the fifteen properties were classified as residential like the subject. Furthermore, the acreage of those seven properties ranges from 1 acre to 11.84 acres, with the average being 5.34 acres. In other words, the residential properties cited are in close size comparison to the subject, the 11.84 acres being the tract adjoining the subject on the West. The properties most comparable to the subject in size are classified residential like the subject, not as agricultural land.

Inequitable Assessment Claim

The real claim being made by Mr. Zimmerman in his appeal is that he does not feel in comparison to the fifteen properties referenced in Exhibit A that his property is being equitably assessed. The taxpayer wants his property to be valued based on the other properties located at the subject Interchange which he researched. The fatal flaw to a claim grounded on this basis is that it is not recognized as an appropriate method for ad valorem assessment of property. A taxpayer cannot simply choose a few properties and devise a valuation system based upon values assigned to those properties by the assessor. There is no statutory or case law foundation to such a method of valuation. Essentially, Complainant is claiming because his property has not been assessed in the way he believes the other properties have been assessed his property should only be valued at $25,000.

Case Law Standards for Inequitable Assessment

In order to obtain a reduction in assessed value based upon a claim of inequitable assessment, the Complainant must establish that his property has been assessed at a greater percentage of value than other property, generally, within the same class within the taxing jurisdiction (Taney County) for the 2007 assessment cycle. 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 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).

The evidence provided by Complainant simply does not establish that the average residential assessment ratio for Taney County for 2007 is less than 19%, the percentage applied to the true value in money determined for the subject property. Because the subject property is classified as residential property, the focus must be on the residential assessment ratio. The evidence provided by Mr. Zimmerman gives no independent determination of the market values for any of the residential properties shown in Exhibit A. Therefore, the documentation in Exhibit A only demonstrates an assessment ratio of 19% (the statutory ratio) on the residential properties.

Furthermore, assessment data on a handful of properties in a single location in Taney County simply does not provide a statistically significant sample from which anything of substance can be derived relative to the average residential assessment. The difference between the actual assessment level of the subject property and the average level of assessment for all residential property, taken from a sufficient representative sample in Taney 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). There is nothing on this record upon which the Hearing Officer can properly conclude that the appraised value ($120,000) placed on the Complainant’s property results in a grossly excessive disparity in the assessment.

Failure to Meet Burden on Inequitable Assessment

A taxpayer does not meet his burden if evidence on any essential element of his case leaves the Hearing Officer “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). Mr. Zimmerman’s evidence on this claim created nothing but the nebulous twilight of speculation, conjecture and surmise, as is always the case when taxpayers present a comparative assessment valuation argument. Arguing value from fifteen properties classified as residential, commercial and agricultural and ranging in size from 80% smaller than the subject to over 800% larger than the subject presents nothing of substance for this claim. In short, Complainant failed to present any evidence on any of the essential elements of a claim of discrimination.

Summary

Complainant failed to present the type and quality of evidence to make a claim of a discriminatory or inequitable assessment of his property. Therefore, the value of $25,000 proposed by the taxpayer as the appraised value to be placed on his property was not established under the claim of a discriminatory assessment.

Conclusion

The Complainant failed to establish overvaluation or misclassification of his property and failed to prove a discriminatory assessment of the property. Therefore, the valuation and classification determined by the Assessor and sustained by the Board of Equalization has not been rebutted and the property under appeal must be valued at $120,000 and assessed as residential property.

ORDER

The assessed valuation for the subject property as determined by the Assessor and sustained 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 $22,800.

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 St. Louis 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 21^st day of December, 2007, to: Alfred Zimmerman, 10309 N. Willow Avenue, Kansas City, MO 64157, 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