State Tax Commission of Missouri

DONALD R. & KELLY L. HOSKINS, )

)

Complainants, )

)

v. ) Appeal Number 07-10222

)

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 SET ASIDE. Hearing Officer finds presumption of correct assessment rebutted. True value in money for the subject property for tax years 2007 and 2008 is set at $337,000, residential assessed value of $64,030.

Complainant, Donald R. Hoskins, 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 reduced the valuation of the subject property. The Assessor determined an appraised value of $337,000, assessed value of $64,030, as residential property). Complainants proposed a value of $255,000, assessed value of $48,450. A hearing was conducted on June 5, 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. Hoskins testified on behalf of Complainants. He gave his opinion of the fair market value of the property under appeal for January 1, 2007, as $255,000. This opinion was based upon averaging the actual sale prices of four of the properties shown on the Change of Assessment Notice for 2007. Exhibits A, B and C were received into evidence. The document marked as Exhibit C was withdrawn during hearing by Complainant.

Exhibit A consisted of (1) Change of Assessment Notice; (2) BOE Decision Letter; and (3) BOE Decision, dated July 19, 2006.

Exhibit B was an aerial photograph of the area in which the subject is located, showing the subject, the railroad track behind the subject and the rock quarry located southwest of the subject.

Exhibit D was a copy of the tax history on the subject property and a computer printout of dwelling information for the Hoskins property.

Respondent’s Evidence

Respondent placed into evidence the testimony of Ms. Sarah Curran, Missouri State Certified Real Estate Appraiser. The appraiser testified as to her appraisal of the subject property. The Appraisal Report (Exhibit 1) of Ms. Curran was received into evidence. Ms. Curran arrived at an opinion of value for the subject property of $351,000 based upon a sales comparison approach to value. In performing her sales comparison analysis, the appraiser relied upon the sales of five properties she deemed comparable to the subject property. Ms. Curran also developed a cost approach to value which resulted in an indicated value of $356,000.

Exhibits 2, 3 and 5 were received into evidence. Exhibit 4 was marked for identification, but was not used in the hearing and was withdrawn by Counsel for Respondent. Exhibit 2 was a copy of the Health Consultation: Evaluation of Air Data from Baumgartner Industrial Complex, U. S. Department of Health and Human Services, 10/16/07. Exhibit 3 was the seller’s disclosure Statement signed by Complainants on May 31, 2003. Exhibit 5 consisted of copies of Agent Detail Reports on the listing for sale of 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 3860 Old Baumgartner Road, Unincorporated St. Louis County, Missouri. The property is identified by parcel number 32J420330. The property consists of .75 of an acre lot improved by a brick and vinyl-sided, atrium ranch, single-family structure of average quality construction. The house was built in 1994 and appears to be in good condition. The residence has a total of seven rooms, which includes two bedrooms, two full baths and a half bath above grade, and contains 2,0\506 square feet of living area above grade. There is a full basement with approximately 950 square fee to finished space. The basement has two bedrooms and one full bath, as well as a family room and rec room. There is an attached three-car garage.

3. The property back to railroad tracks which were in place when the house was built by the current owner. There is a quarry located approximately 1,500 to the Southwest of the property. The quarry was also in place when the house was built. It does not appear to be visible form the subject property.

4. There was a 12 x 14 foot deck added in 2007 at an approximate cost of $3,500. There was no evidence to establish what the fair market value of the home with this improvement, under the economic conditions of January 1, 2007, would have been. Therefore, the value set for 2007 will remain the value set for 2008.

5. The property under appeal was on the market, in 2003 and 2004 at listing prices of $390,000, $399,900, $525,000, $545,000,

6. 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 $255,000.

7. The properties relied upon by Respondent’s appraiser were comparable to the subject property for the purpose of the appraisal assignment. The five properties were located within less than a mile of the subject. Each sale property sold at a time relevant to the tax date of January 1, 2007, from April 2005 to June 2006. The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area (range of 1,704 to 2,233 square feet of living area), location, site size and other amenities of comparability.

8. 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 adjusted sales prices for the comparables calculated to $364,000, $348,800, $353,300, $354,600 and $347,800, respectively. The appraiser concluded on a $351,000 value which calculated to a value per square foot of $140.06 compared with the sales prices per square foot of living area for the comparables of $174.65, $149.84, $163.40, $204.96 and $178.99.

9. Respondent met the standard of clear, convincing and cogent evidence in this appeal, under the provisions of Section 137.115, RSMo, to sustain the original valuation presumed to have been made by a computer, computer-assisted method or a computer program.

Respondent’s appraisal was accepted only to sustain the original valuation made by the Assessor and not for the purpose of raising the value above that valuation.

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 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 is accepted as true only until and so long as there is no substantial evidence to the contrary. The presumption of correct assessment is rebutted when the taxpayer, or respondent when advocating a value different than that determined by the Board, 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. Complainant’s evidence failed to rebut the presumption of correct assessment. Respondent’s evidence was substantial and persuasive 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). Complainant did not support his opinion of fair market value by any methodology which is approved by the Commission and recognized by the courts for an ad valorem tax appeal. Respondent did establish fair market value by utilization of two approaches to value – cost and sales comparison – recognized by the Commission and the courts.

Complainants Fail to Prove Value

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.” The taxpayer must prove the fair market value asserted. 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).

The owner’s opinion of value was based on averaging unadjusted sales prices of four sale properties. It matters not that these were four of the five properties utilized by the assessor’s mass valuation of the subject property. In an appeal before the Commission averaging of sale prices is not an acceptable methodology to value property. Therefore, the owner’s opinion of value is based upon erroneous elements and an incorrect foundation. It can be given no probative weight. Complainants failed to met the burden of proof establish in the law.

Respondent Proved Value

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 reduced 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 original appraised value of the subject property at $337,000, 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 appraisal of Ms. Curran meets the clear, convincing and cogent standard. It establishes that the subject property’s fair market value as of January 1, 2007 was $351,000. However, 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, the conclusion of value presented in Exhibit 1 can only be relied on to sustain the Assessor’s original value of $337,000, and not to increase the value to $351,000.

ORDER

The assessed valuation for the subject property as determined by the by the Board of Equalization for St. Louis County for the subject tax day is SET ASIDE. The assessed valuation as originally set by the Assessor is AFFIRMED.

The assessed value for the subject property for tax years 2007 and 2008 is set at $64,030.

Complainant 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. If no Application for Review is filed, the Collector is ordered to disburse the disputed taxes in accordance with the assessment set by this Decision and Order.

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

_____________________________________

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 24^th day of June, 2008, to: Donald Hoskins, 3860 Old Baumgartner Road, St. Louis, MO 63129, Complainant; Paula Lemerman, Associate County Counselor, County Government Center, 41 South Central Avenue, Clayton, MO 63105, Attorney for Respondent; Philip 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