State Tax Commission of Missouri

JEROME C. ALLEN, TRUSTEE )

)

Complainant, )

)

v. ) Appeal Number 07-10475

)

PHILIP MUEHLHEAUSLER, ASSESSOR,)

ST. LOUIS COUNTY, MISSOURI, )

)

Respondent. )

DECISION AND ORDER

HOLDING

Decision of the St. Louis County Board of Equalization reducing the assessment made by the Assessor is SET ASIDE. Hearing Officer finds presumptions of correct assessment rebutted. True value in money for the subject property for tax year 2007 and 2008 is set at $288,000, residential, assessed value of $54,720.00.

Complainant appeared by counsel, Haskell Allen.

Respondent appeared by Assistant County Counselor, Paula Lemerman.

Case heard and decided by Hearing Officer Maureen Monaghan.

ISSUE

The Commission takes this appeal to determine the true value in money for the subject properties on January 1, 2007.

SUMMARY

Complainant appeals, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which reduced the valuation of the subject property. The Assessor determined an appraised value of $320,900, assessed value of $60,980, as residential property. The Board of Equalization reduced the value to $311,500, assessed value $59,190. Complainant proposed a value of $250,000, assessed value of $47,500, in the Complaint for Review of Assessment. A hearing was conducted on June 12, 2008, at the St. Louis County Government Center, Clayton, Missouri. At the hearing, the appraiser for the Assessor’s Office testified that the subject property’s value on January 1, 2007, was $345,000. The appraiser for the Complainant testified that the value was $276,000.

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

Complainant’s Evidence

Mr. Allen testified on behalf of Complainant. Mr. Allen is a Missouri State Certified General Real Estate Appraiser. (Exhibit B – Curriculum Vitae) He stated his opinion of value for the property to be $276,000 as of January 1, 2007, based on a sales comparable approach to value. Exhibit A, an appraisal report, was received into evidence on behalf of Complainant. The Exhibit contained a calculation of value, and supporting documents, based upon the sales comparison approach.

The appraiser used three comparables in his approach. The comparables were located within .25 miles and were within 577 square feet in size of the subject. The properties sold between February 2005 and July 2006. The gross adjustments ranged from 14.6% to 22% for a range of adjusted sales prices of $260,015 to $297,965.

Respondent’s Evidence

Respondent placed into evidence the testimony of Mr. Robert Koch, Missouri State Certified Residential Appraiser. The appraiser testified as to his appraisal of the subject property. The Appraisal Report, Exhibit 1, of Mr. Koch was received into evidence. Mr. Koch arrived at an opinion of value for the subject property of $345,000 based upon a sales comparison approach to value.

In performing his sales comparison analysis, the appraiser relied upon the sales of four properties which he deemed to be comparable to the subject property. The adjusted sales prices of the comparables fell in a range from $324,000 to $361,900. The percentage of gross adjustments ranged from 11.4% to 18.7%.

FINDINGS OF FACT

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

2. The subject property is located at 9010 Stonebridge Drive, Richmond Heights, Missouri. It is identified by parcel number 20K440013.

3. The property is a single-family, ranch-style home on a 12,062 square foot site. The site backs up to Highway 40 which is currently under construction. The highway is a major traffic artery for the St. Louis area.

4. The property is 54 year old brick home. The seven room, 1947 square foot improvement has three bedrooms, two baths, and a partially finished basement. The house is dated without the improvements expected in residential properties today. The residence suffered from settlement and has had repairs and piering to address the cracking in the foundation and walls. Some of the cracks in the foundation have been filled. There are cracks in the interior and exterior.

5. There was no evidence of new construction and improvement from January 1, 2007, to January 1, 2008.

6. The properties relied upon by Complainant’s appraiser were comparable to the subject property for the purpose of making a determination of value of the subject property. The three properties were located within .25 miles of the subject. All properties were located in the neighborhood area. Each sale property sold at a time relevant to the tax date of January 1, 2007, ranging from February 2005 to July, 2006. The sale properties were similar to the subject in style, quality of construction, age, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability.

7. The properties relied upon by Respondent’s appraiser were comparable to the subject property for the purpose of making a determination of value of the subject. The four properties were located within .15 miles of the subject. Each sale property sold at a time relevant to the tax date of January 1, 2007, ranging from February 2005 to May 2006 and a listing in March 2008. (The property sold in April 2008) The sale properties were similar to the subject in style, quality of construction, age, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability.

8. The true value in money of each property as of January 1, 2007, is set at $288,000, assessed value of $54,720. See, Hearing Officer Finds Value, infra.

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 in favor of the Board is not evidence. A presumption simply accepts something as true without any substantial proof to the contrary. In an evidentiary hearing before the Commission, the valuation determined by the Board, even if simply to sustain the value made by the Assessor, is accepted as true only until and so long as there is no substantial evidence to the contrary.

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 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 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, Exhibit 1, p. 4.

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).

Evidence of Increase in Value

In any case in St. Louis County where the assessor presents evidence which indicates a valuation higher than the value finally determined by the assessor or the value determined by the board of equalization, whichever is higher, for that assessment period, such evidence will only be received for the purpose of sustaining the assessor’s or board’s valuation, and not for increasing the valuation of the property under appeal. Section 138.060, RSMo; 12 CSR 30-3.075. Therefore, Exhibit 1, concluding a value of $345,000, was received only for the purpose of sustaining the value originally determined by the Assessor ($320,900) and not for an increase in the value to $345,000.

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. There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a Commission appeal still bears the burden of proof. The taxpayer is the moving party seeking affirmative relief. Therefore, the Complainant bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.” See, 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). Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991).

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).

In the present instance, the opinion of the Complainant’s appraiser, Mr. Allen, is based upon proper elements and a proper foundation. Mr. Allen testified that his adjustments were due to two primary issues: location of the property and condition of the property.

Mr. Allen stated that the improvement backs up to Highway 40. Highway 40 is currently under construction and large equipment is used in the project. Highway 40 is also a major traffic artery in St. Louis. Noise from the highway impacts the value of the subject property.

The other issue was the condition of the improvement. The appraiser for the Complainant categorized the subject property as fair to average; the appraiser for the Assessor categorized the subject property as average to good. The Complainant’s appraiser testified that the settlement of the home and the dated kitchen and bath led him to describe the subject as being in fair to average condition. The appraiser testified that piering was completed and the cracks were repaired. He testified that additional cracks in the interior and exterior have appeared and suspects additional piering will be needed. The appraiser testified that even when the problem is corrected, the selling price will be impacted due to the stigma of settlement issues.

The improvement also has an older kitchen and baths. The kitchen has older appliances, laminate countertops, and vinyl flooring. The baths are small with original tile. One of the baths has had the flooring replaced. The master bath only has a shower.

The appraiser did categorize an area in the rear of the house as a screened porch. The area is actually an enclosed porch. Although an enclosed porch does not add any additional living space, it is more valued by potential buyers.

The properties relied upon by Complainant’s appraiser were comparable to the subject property for the purpose of making a determination of value of the subject property. The three properties were located within .25 miles of the subject. All properties were located in the neighborhood area. Each sale property sold at a time relevant to the tax date of January 1, 2007, ranging from February 2005 to July, 2006. The sale properties were similar to the subject in style, quality of construction, age, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability. The gross adjustments ranged from 14.6% to 22% for a range of adjusted sales prices of $255,545 to $297,965. The appraiser weighted the comparables equally and determined an opinion of value for the subject property of $276,000. A correction to the adjustments for comparable 1 was necessary changing its adjusted sales price to $260,015. The average adjusted sales price was then corrected to $280,535.

Respondent’s Burden of Proof

Respondent, when advocating a value different from that determined by the valuation made by the Board of Equalization, must meet the same burden of proof to present substantial and persuasive evidence of the value advocated as required of the Complainant under the principles established by case law. Hermel, Cupples-Hesse, Brooks, supra. .

Mr. Koch located three comparable sales within .15 miles of the subject property. The sales occurred between February 2005 and May 2006. The properties were similar in quality of construction, style, age, and room count. The properties were within 275 square feet of the subject. The adjusted sales prices ranged from $324,000 to $361,900.

Although the subject property suffers from settlement issues and dated kitchen and baths, the appraiser concluded the condition of the home to be in average to good condition.

Hearing Officer Finds Value

Both appraisers used a comparable sale located at 9017 Stonebridge which sold in February 2005 for $325,000. The appraisers made the following adjustments:

	Complainant	Respondent
Location	-$15,000	-$10,000
Site	-$ 8,000	-$ 4,000
Condition	-$ 5,000	+$30,000
GLA	-$12,375	-$13,800
Basement fin	+$ 3,000	Equal
Fireplaces	-$ 4,000	-$ 3,000
Adj. Value	$283,625	$324,200

The condition adjustments show the difference in the resulting values of the two appraisers. The Complainant’s appraiser believes the piering and additional cracks in the subject property warrants a negative adjustment to the comparable property of $5,000. The Assessor’s appraiser believed that a positive adjustment of $30,000 was warranted as the comparable property has a dated interior in need of updating.

Each appraiser made persuasive argument for their remaining adjustments. The Hearing Officer averaged the adjustments for location, site, square footage, and fireplaces. The Hearing Officer made a positive adjustment to account for the finish in the subject basement. A negative adjustment was made for the condition of the property for the piering and settlement. The resulting adjusted sales price is $288,000.

The Assessor’s appraiser included a listing which is located next to the subject property. The property listed for $349,000. According to the Complainant’s appraiser, the property sold for $295,000. The comparable property’s description is similar to the subject property; it has a dated interior and backs up to Highway 40. There is no report that the property has had any piering or suffers from settlement issues.

ORDER

The assessed valuations for the subject properties as determined by the Board of Equalization for St. Louis County for the subject tax day are SET ASIDE.

The assessed value for the subject property for tax years 2007 and 2008 is set at $54,720.00.

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. Said application must be in writing addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.

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, unless said taxes have been disbursed pursuant an order of the circuit court under the provisions of Section 139.031.8, RSMo. §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.

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 June 24, 2008.

STATE TAX COMMISSION OF MISSOURI

_____________________________________

Maureen Monaghan

Hearing Officer

Certificate of Service

I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 24^th day of June, 2008, to: Haskell Allen, 1602 S. Big Bend Blvd., St. Louis, MO 63117, Attorney for Complainant; Paula Lemerman, Associate County Counselor, County Government Center, 41 South Central Avenue, Clayton, MO 63105, Attorney for Respondent; Philip A. Muehlheausler, Assessor, County Government Center, 41 South Central Avenue, Clayton, MO 63105; John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.

___________________________

Barbara Heller

Legal Coordinator