State Tax Commission of Missouri

BRITT E. & SHARON L. HOLT, )

)

Complainants, )

)

v. ) Appeal No. 07-12421

)

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 presumption of correct assessment not rebutted. True value in money for the subject property for tax years 2007 and 2008 is set at $526,200, residential assessed value of $99,980.

Complainant, Britt E. Holt, appeared pro se.

Respondent appeared by Counsel, Paula J. Lemerman, Associate 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; and (2) whether there was an intentional plan by the assessing officials to assess the property under appeal at a ratio greater than 19% of true value in money, or at a ratio greater than the average 2007 residential assessment ratio for St. Louis County.

SUMMARY

Complainants appeal, on the ground of overvaluation and discrimination, 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 $526,200, assessed value of $99,980, as residential property. Complainant proposed a value of $425,000, assessed value of $80,750. A hearing was conducted on July 8, 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

Mr. Holt gave the owners’ opinion of value as of January 1, 2007 to be $425,000. The opinion of value was based upon the Assessor’s appraised values of seven homes on a list prepared by Complainant (Exhibit A). No detailed explanation was provided as to how the exact amount of $425,000 was derived from the various appraised values.

Counsel for Respondent objected to Exhibit A on the grounds of lack of foundation, relevancy and hearsay. The objection was sustained. Exhibit A is maintained in the case file, but is not received as part of the evidentiary record in this appeal. The day after the hearing Complainants mailed to the Commission the first page of the property record card for the six properties listed on Exhibit A. Documents received after the close of the hearing cannot be received into evidence. The late submission is likewise excluded from the evidentiary record in the appeal.

Respondent’s Evidence

Respondent placed into evidence the testimony of Mr. David F. Godar, Missouri State Certified Residential Real Estate Appraiser for St. Louis County. The appraiser testified as to the appraisal of the subject property performed by Robert A. Smith, which Mr. Godar certified as Supervisory Appraiser. The Appraisal Report (Exhibit 1) was received into evidence. Mr. Smith arrived at an opinion of value for the subject property of $565,000 based upon a sales comparison approach to value. In performing his sales comparison analysis, the appraiser relied upon the sales of four properties deemed comparable to the subject property.

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 1105 Courtwood Circle, St. Louis County, Missouri. The property is identified by parcel number 21Q420401. The property consists of a 22,057 square foot lot (.50 of an acre) improved by a two-story brick and frame, single-family structure of good quality construction. The house was built in 1989 and appears to be in average condition. The residence has a total of nine rooms, which includes four bedrooms, two full baths and one half bath, and contains 3,617 square feet of living area. There is a full basement with 900 square feet of finish and a full bath. The house has an attached three-car, side entry garage. Exhibit 1.

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

4. Complainants’ 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 $425,000, as proposed.

5. 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 property. The four properties were located within .30 of a mile 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 in style, quality of construction, age, condition, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability. Exhibit 1.

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 appraiser made a significant adjustment to account for the existence of high voltage power lines at the rear of the subject lot. The net adjustments ranged from -4.2% to 12.4% of the sales prices. Exhibit 1.

7. The adjusted sales prices for the comparables calculated to $564,500, $566,000, $566,700 and $574,700, respectively. The appraiser concluded on a $565,000 value which calculated to a value per square foot of $156.21compared with the sales prices per square foot of living area for the comparables of $165.40, $149.05, $184.38 and $180.78. Exhibit 1.

8. Respondent’s evidence met the standard of substantial and persuasive to establish the value of the subject, as of January 1, 2007, to be $565,000. However, Respondent’s appraisal 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. Respondent meet the standard of clear, convincing and cogent evidence in this appeal to sustain the original valuation of $526,200.

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.

Presumption 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. Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Mr. Holt failed to present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board. The methodology relied did not establish the true value in money of the subject property to be $425,000 as of January 1, 2007

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). Complainants did not present an opinion of value derived from any recognized appraisal methodology. Averaging of the Assessor’s appraised values for a limited number or any number of properties is not an approach to establishing value accepted by the Commission or the courts in addressing valuations for ad valorem tax purposes. Respondent presented an opinion of value arrived at from a sound appraisal method. Respondent’s appraiser developed an opinion of value relying upon an established and recognized approach for the valuation of real property, the sales comparison or market approach. The sales comparison approach is generally recognized to be the most reliable methodology to be utilized in the valuation of single-family residences.

Complainants Fail To Meet 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, 251 S.W.3d 345, (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). Mr. Holt’s opinion of value was derived in some fashion from the appraised values placed on seven other properties by the Assessor. This means to arrive at an opinion of value is not based upon proper elements or a proper foundation. As discussed above, this is not a methodology that is recognized and accepted for the appraisal of property. Therefore, it can be given no probative weight.

The evidence tendered by Complainants (Exhibit A), a simple listing of seven properties in their general neighborhood, with the appraised values set by the Assessor for 2007 totally fails to provide a representative sample for St. Louis County upon which the average assessment ratio can be determined. Further, Complainants’ tendered evidence only establishes that each of the seven properties were in fact assessed at 19% of the appraised value set by the Assessor, the same assessment ratio applied to Complainants’ property. Having failed to establish an average assessment ratio at any factor other than 19%, the claim of discrimination fails. Complainants failed to establish that their property was being assessed at a higher percentage of market value than a statistically significant number of other properties in St. Louis County. Therefore, they failed to establish discrimination.

Respondent Met Burden of Proof

The Respondent has imposed upon him by the provisions of Section 137.115.1, RSMo, the burden of proof to present clear, convincing and cogent evidence to sustain a valuation on residential property which is made by a computer, computer-assisted method or a computer program. There is a presumption in this appeal that the original valuation, which was sustained by the Board of Equalization, was made by a computer, computer-assisted method or a computer program. There was no evidence to rebut the presumption, therefore, in order to sustain the valuation of the subject property at $526,200, appraised value, Respondent’s evidence must come within the guidelines established by the legislature and must clearly and convincingly persuade the Hearing Officer as to the value sought to be sustained.

The statutory guidelines for evidence to meet the standard of clear, convincing and cogent include the following:

(1) The findings of the assessor based on an appraisal of the property by generally accepted appraisal techniques; and

(2) The purchase prices from sales of at least three comparable properties and the address or location thereof. As used in this paragraph, the word comparable means that:

(a) Such sale was closed at a date relevant to the property valuation; and

(b) Such properties are not more than one mile from the site of the disputed property, except where no similar properties exist within one mile of the disputed property, the nearest comparable property shall be used. Such property shall be within five hundred square feet in size of the disputed property, and resemble the disputed property in age, floor plan, number of rooms, and other relevant characteristics.

Section 137.115.1(1) & (2).

Clear, cogent and convincing evidence is that evidence which clearly convinces the trier of fact of the affirmative proposition to be proved. It does not mean that there may not be contrary evidence. Grissum v. Reesman, 505 S.W.2d 81, 85, 86 (Mo. Div. 2, 1974). The quality of proof, to be clear and convincing must be more than a mere preponderance but does not require beyond a reasonable doubt. 30 AmJur2d. 345-346, Evidence section 1167. “For evidence to be clear and convincing, it must instantly tilt the scales in the affirmative when weighed against the evidence in opposition and the fact finder’s mind is left with an abiding conviction that the evidence is true.” Matter of O’Brien, 600 S.W.2d 695, 697 (Mo. App. 1980).

The Smith/Godar appraisal constituted clear, cogent and convincing evidence that the true value in money of the Holt property was at least $526,200 on January 1, 2007. 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, while Respondent presented substantial and persuasive evidence to establish a fair market value as of January 1, 2007, to be $565,000, that evidence is only received to sustain the value of $526,200.

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 $99,980.

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. 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.

The Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending a filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of 139.031.8 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 August 4, 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 4^th day of August, 2008, to: Britt Holt, 1105 Courtwood Circle, Ballwin, MO 63011, Complainant; Paula Lemerman, Associate County Counselor, Attorney for Respondent; Philip A. Muehlheausler, Assessor; John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.

________________________________

W. B. Tichenor

Senior Hearing Officer