State Tax Commission of Missouri

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).

Complainant, Richard Erckmann, set forth the basis for the Application for Review presented three grounds for the appeal of the Hearing Officer’s Decision. Complainant failed to set forth any legal claim or basis as a ground to find the Hearing Officer had abused her discretion or acted in an arbitrary or capricious manner. Complainant simply disagreed with the conclusions and determinations reached by the Hearing Officer and had an opinion as to the fair market value of the property different from that determined by the Hearing Officer. In other words, Complainant failed to state any specific legal grounds upon which it was claimed the decision was erroneous.

Points Raised

Mr. Erckmann raised the following points in his Application for Review:

1. Discrepancies in the Findings of Fact

2. Section 137.115.11 Inspection required with a 15% increase

3. Methodologies of Valuation

The Complainant’s first point is discrepancies in the Findings of Facts in the Decision dated February 5, 2008. In her opinion, the Hearing Office described the property as “a lot measuring 51 feet by 123 feet 9 inches. The lot is improved by a two-story brick, four-family structure. It was built in 1928 and was originally a six-family flat. It appears to be in fair condition. The structure consists of two section 8 townhouses and two one-bedroom units, one of which is being used for storage. The structure has a total of 6,311 square feet of living area and a full unfinished basement.” The first error alleged by the Complainant is the portion of the description “consists of two section 8 townhouses.” The finding was made based upon evidence in Exhibit 1, page 4, paragraph 1. The second error alleged by the Complainant is the portion of the description “total of 6,311 square feet of living area.” The description should have read total of 6,311 square feet of site area.

The Complainant also states that he presented three comparable properties. Exhibit B (a blue folder containing photographs of property on Meramec, Osage and California and assessment notices on properties on Meramec and Osage, and Police Reports) was admitted into evidence as to the documents from the Assessor’s Office and photographs. The Police Reports and any further information contained in Exhibit B was excluded as irrelevant and improper foundation. Exhibit C (Property Listing for property on California) was excluded for improper foundation, hearsay, and relevance. The assessment record and photographs do not prove market value of the property.

The Complainant’s second point is that “Section 137.115.11 RSMo., requires in those instances where a physical inspection is required under Section 137.115.10 (more than 15% increase in residential assessed value since last assessment), the assessor is required to (1) notify the property owner in writing of the fact of the physical inspection being required and (2) provide the owner with clear written notice of the owner’s rights relating to the physical inspection.” The Complainant did not raise this issue at the time of filing his Complaint for Review of Assessment or at the hearing. Since no evidence on this issue was presented at hearing, said issue is deemed waived.

The Complainant’s final points are that the Assessor’s Office employee was not qualified or experienced in appraisal work and that the Hearing Officer did not consider other “avenues” of determining market value. The Hearing Officer must use recognized methods of arriving at market value. 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 Complainant alleges that the Assessor’s employee was “inexperienced and capricious in his valuation techniques.” The employee has the education and training to perform an appraisal and testify at a hearing. He is a graduate of Mississippi State University majoring in real estate and mortgage finance. He worked two years for a commercial real estate appraiser in St. Louis and has worked at the St. Louis Assessor’s Office since 2004. He has taken additional courses including Principles of Real Estate Appraising, National USPAP, and Real Estate Appraisal Methods. Even if the appraiser did not have the qualifications to offer an opinion, the Complainant has the burden of proof. 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). Further, 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, 348-349 (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.

The Hearing Officer did not err in her determinations as challenged by Complainant. A review of the points now raised by Mr. Erckmann and the evidence presented in the record in this appeal presents no basis for overturning the Decision. The Commission finds nothing in the evidentiary record or in the points raised in the Application for Review which would support overturning or modifying the decision of the Hearing Officer.

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 St. Louis City, 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.

SO ORDERED April 29, 2008.

STATE TAX COMMISSION OF MISSOURI

Bruce E. Davis, Chairman

Jennifer Tidwell, Commissioner

Charles Nordwald, Commissioner

DECISION AND ORDER

HOLDING

Decision of the St. Louis City Board of Equalization reducing the assessment made by the Assessor, AFFIRMED. Hearing Officer finds true value in money for the subject property for tax years 2007 and 2008 to be $148,000, assessed value of $28,120.

Complainant appeared in person.

Respondent appeared by Counsel, Carl W. Yates, III, Associate County Counselor.

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 residential property on January 1, 2007.

SUMMARY

Complainant appeals, on the ground of overvaluation, the decision of the St. Louis City Board of Equalization, which reduced the valuation of the subject property. The Assessor determined an appraised value of $168,500, assessed value of $32,000, as residential property. The Board of Equalization reduced the true value to $148,000, assessed value $28,120. Complainant proposed a value of $40,000, assessed value of $7,600. A hearing was conducted on January 23, 2008, at the St. Louis City Hall, St. Louis, Missouri.

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

Complainant’s Evidence

The following exhibits were offered into evidence on behalf of the Complainant.

Exhibit A – Photographs of the Area of the Subject Property

Exhibit B - Comparable Property, Photos, Police Report

Exhibit C – Property Listing

Exhibit A was received into evidence as to the photographs. Exhibit B admitted into evidence as documents from the Assessor’s Office and photographs. Police Report and any further information contained is excluded. Exhibit C excluded for improper foundation, hearsay, and relevance.

Testimony of Richard Erckmann.

Respondent’s Evidence

The following exhibits were offered into evidence on behalf of the Respondent.

Exhibit 1 – Appraisal of Subject Property

All Exhibits were received into evidence.

Testimony of John Norton.

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 City Board of Equalization.

2. The subject property is located at 4341-45 California, St. Louis, Missouri. The property is identified by parcel number 2675-00-0240-0. The property consists of a lot measuring 51 feet by 123 feet 9 inches. The lot is improved by a two-story brick, four-family structure. It was built in 1928 and was originally a six-family flat. It appears to be in fair condition. The structure consists of two section 8 townhouses and two one-bedroom units, one of which is being used for storage. The structure has a total of 6,311 square feet of living area and a full unfinished basement.

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, for the residential tract as improved to be $40,000.

5. The properties relied upon by Respondent’s appraiser in performing his appraisal were comparable to the subject property for the purpose of making a determination of value of the subject property. The properties were located within three blocks of the subject. Each sale property sold at a time relevant to the tax date of January 1, 2007. The sale properties were similar to the subject. The appraiser properly adjusted for differences between the subject and each sale property. The adjustments made were appropriate for the present appraisal problem.

6. Respondent’s evidence met the standard of substantial and persuasive to establish the value of the subject, as of January 1, 2007, to be $148,000 and sustain the Assessor and the Board. Respondent’s appraisal was accepted only to sustain the original assessment made by the Assessor and not for the purpose of raising the assessment above that value.

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.

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).

Presumption on Assessor’s Value

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, 348-349 (Mo. 2005). Citing to Hermel, supra; and Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).

Rebutting of Presumption of Correct Assessment

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; Exhibit 1, pp. 3-4.

Opinion Testimony by Experts

If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto.

The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data need not be admissible in evidence. Section 490.065, RSMo; Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. E.D. 1992).

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. 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).

Owner’s Opinion of Value

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 Complainant purchased the property in 1992 for $40,000. The Complainant presented extensive evidence and testimony regarding the condition of the neighborhood but failed to present persuasive and substantial evidence as to market value. Exhibit A is a series of photographs which depict graffiti, trash and boarded up and abandoned buildings. The condition and crime levels in a neighborhood certainly impact the market values of property, however, evidence of the market values and the impact of the crime was not presented by the Complainant.

The Complainant did present photographs and change of assessment notice from two other properties. No evidence was presented as to their condition, square footage, garage space, basement, etc. It is not known if these properties have sold within a relevant time period. The taxpayer does not meet his burden if evidence on any essential element of his 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).

Methods of Valuation

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).

Assessor’s Opinion of Value

The Assessor presented the testimony of Tim Keller, a real property appraiser at the St. Louis Assessor’s Office. Mr. Keller presented an appraisal of the subject property. Mr. Keller used the sales comparison approach as it is the most indicative of buyers and sellers in the market place. Mr. Keller found three sales within three blocks of the subject property and their proximity means that all are affected by similar conditions of the area. The properties were in the same location, all brick, average quality of construction, approximately 80 years of age, 4 family units, had full basements with off street parking. The properties sold from between $129,650 and $143,000. Downward adjustments were made for condition as the comparable properties were in better condition than the subject property. Upward adjustments were made for square footage as the subject had over 1,000 more square feet. After all adjustments were made, a final value of $152,000 was determined.

The properties relied upon by Respondent’s appraiser in performing his appraisal were comparable to the subject property for the purpose of making a determination of value of the subject property. The appraiser properly adjusted for differences between the subject and each sale property. The adjustments made were appropriate for the present appraisal problem.

Evidence of Increase in Value

In any case in St. Louis City 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.

DECISION

Complainant failed to meet his burden of proof. There was no substantial and persuasive evidence provided to support the fair market value of $40,000 proffered by Complainant.

The owner failed to rebut the presumptions of correct assessment, therefore the assessment as made by the Assessor must be affirmed.

ORDER

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

The assessed value for the subject property for tax years 2007 and 2008 is set at $28,120.

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 St. Louis City, 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 February 5, 2008.

STATE TAX COMMISSION OF MISSOURI

Maureen Monaghan

Hearing Officer