State Tax Commission of Missouri

JAMES & RITA CONNOLLEY, )

)

Complainants, )

)

v. ) Appeal Number 07-10009

)

PHILIP MUEHLHEAUSLER, ASSESSOR, )

ST. LOUIS COUNTY, MISSOURI, )

)

Respondent. )

DECISION AND ORDER

HOLDING

Decision of the St. Louis 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 $705,200, residential assessed value of $133,990.

Complainants appeared pro se.

Respondent appeared by Associate County Counselor, Paula J. Lemerman.

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, 2007.

SUMMARY

Complainants appeal, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property. The Assessor determined an appraised value of $705,200, assessed value of $133,990, as residential property. Complainant proposed a value of $635,260, assessed value of $120,700. A hearing was conducted on May 20, 2008, at the St. Louis County Government Center, Clayton, Missouri.

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

Complainants' Evidence

Complainants both testified in their own behalf. Exhibit A was received into evidence on behalf of Complainants. Exhibit A consisted of Complainants’ analysis of the five sale properties utilized in the Assessor’s mass valuation of the subject property. The Connolley’s felt that two of the properties were not appropriate comparables to value their property and offered two other properties. They then averaged sales prices for the new set of five properties to arrive at an indicated value of $626,680.

Mr. Connolley gave his opinion of value to be $635,260. This was based on a 15% increase of the 2005 assessor’s appraised value.

Respondent’s Evidence

Respondent placed into evidence the testimony of Mr. Arthur Froeckman, Missouri State Certified Residential Real Estate Appraiser. The appraiser testified as to his appraisal of the subject property. The Appraisal Report (Exhibit 1) of Mr. Froeckman was received into evidence. Mr. Froeckman arrived at an opinion of value for the subject property of $710,000 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 appraiser also performed a cost approach which provided an indicated value of $716,600.

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 2817 St. Albans Forest Court, Wildwood, Missouri. The property is identified by parcel number 24Y430242. The property consists of 3.38 acres improved by a story and a half, vinyl and brick, single-family structure of good quality construction. The house was built in 2000 and appears to be in good condition. The residence has a total of nine rooms, which includes four bedrooms, three full and one half-baths, and contains 4,797 square feet of living area. There is a 3,175 square foot unfinished basement and an attached three-car garage.

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

4. 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, 2007, to be $635,260.

5. The properties relied upon by Respondent’s appraiser were comparable to the subject property. The four properties were located within less than a half mile to just over 5 miles from the subject. Each sale property sold at a time relevant to the tax date of January 1, 2007 (in a range from February, 2005 to December, 2006). The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area (ranging from 4,196 to 4,930 square feet), location, site size and other amenities of comparability.

6. The appraiser made various adjustments to the comparable properties for differences which existed between the subject and each comparable. All adjustments were appropriate to bring the comparables in line with the subject for purposes of the appraisal problem. The net adjustments as a percentage of sale price ranged from -12.8% to +7.6%

The adjusted sales prices for the comparables ranged from $699,100 to $727,800, with a median of $712,070, and a mean of $712,760. The appraiser concluded on a $710,000 value which calculated to a value per square foot of $148.01 compared with the sales prices per square foot of living area for the comparables which ranged from $140.14 to $179.38.

7. Respondent’s appraisal constituted clear and convincing and cogent evidence to affirm the Assessor and Boards’ value. It was accepted only to sustain the original assessment made by the Assessor and sustained by the Board and not for the purpose of raising the assessment above that value.

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 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. As is discussed below, Complainants failed to meet the required standard 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 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.

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). The methodology utilized by Complainants, of either averaging unadjusted sale prices, or of adding an arbitrary percentage to a prior year’s appraised value by the assessor are not approaches to determine valued recognized by the courts of this state or by the Commission.

Complainants’ Burden of Proof

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, 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).

The owner of property is generally held competent to testify to its reasonable market value. Rigali v. Kensington Place Homeowners’ Ass’n, 103 S.W.3d 839, 846 (Mo. App. E.D. 2003); 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. Cohen v. Bushmeyer, --- S.W.3d ----, 2008 WL 820938 (Mo.App. E.D., March 25, 2008); Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992); State, ex rel. Missouri Hwy & Transp. Com’n v. Pracht, 801 S.W.2d 90, 94 (Mo. App. E.D. 1990); Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965). “Where the basis for a test as to the reliability of the testimony is not supported by a statement of facts on which it is based, or the basis of fact does not appear to be sufficient, the testimony should be rejected.” Carmel Energy at 783.

In this instance, the taxpayers arrived at their opinion of value by adding 15% to the 2005 appraised value determined by the Assessor. There is no supporting facts to establish that the value of the property as found by the Assessor’s mass valuation in 2005 was correct. Furthermore, assuming without finding the 2005 value did in fact represent fair market value on January 1, 2007, there is no evidence by which a conclusion can be reached that the property value increased by 15% from 2005 to 2007.

Complainants’ opinion of value is not based upon property elements or a proper foundation. It has no probative weight in arriving at a determination of fair market value. The burden of proof on Complainants has not been met. The presumption of correct assessment by the Board has not been rebutted.

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 was received only to support the value of $705,200 and not to increase the value to $710,000.

ORDER

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

The assessed value for the subject property for tax years 2007 and 2008 is set at $133,990.

Complainants 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. An Application for Review 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 response must be sent to the Attorney for Respondent, Assessor and Collector at the addresses listed below in the certificate of service.

If an application for review of this decision is made to the Commission, the 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 to the appropriate taxing jurisdictions, unless previously done under court order pursuant to section 139.031 RSMo.

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 5, 2008.

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 5^th day of June, 2008, to: James Connolley, 2817 St. Albans Forest Court, Glencoe, MO 63038, 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