State Tax Commission of Missouri

 

MICHAEL & TRACY NICHOLS,                 )

)

Complainants,               )

)

v.                                                         )           Appeal Number 07-12191

)         

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 years 2007 and 2008 is set at $789,900, residential assessed value of $150,080.

Complainant Tracy Nichols appeared pro se.

Respondent appeared by Counsel, Paula J. Lemerman, 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 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 $892,500, assessed value of $169,580, as residential property.  The Board of Equalization reduced the value to $810,000, assessed value of $153,900.  Complainants proposed a value of $702,946, assessed value of $133,560. At the hearing, the Assessor proposed a value of $838,000.  A hearing was conducted on June 26, 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

Complainant Tracy Nichols testified at the hearing.  She testified that she purchased the property in July 2005 for $781,000.  Since purchasing the property, she has finished a portion of the basement and made updates to the deck. She testified that the property’s square footage is 3990.  She also testified that the property next door, 2607 Wynncrest Ridge Drive (Assessor’s Comparable Property 1), has the same floor plan as her house.  The property sold in June 2006 for $789,900. 

Respondent’s Evidence

Respondent placed into evidence the testimony of Mr. Froeckmann, Missouri State Certified Residential Appraiser for St. Louis County.  The appraiser testified as to his appraisal of the subject property.  The Appraisal Report, Exhibit 1, of Mr. Froeckmann was received into evidence.  Mr. Froeckmann arrived at an opinion of value for the subject property of $838,000 based upon a sales comparison approach to value.  In performing his sales comparison analysis, the appraiser relied upon the sales of three properties which he deemed to be comparable to the subject property. 

 

FINDINGS OF FACT

1.         Jurisdiction over this appeal is proper.  Complainants 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 16228 Wynncrest Ridge Court, Wildwood, Missouri.  The property is identified by locator number 21U240502.  The property consists of .36 acre lot improved by a 1.5 story frame and brick, single-family structure of very good quality construction.  The house was built in 2004 and appears to be in good condition.  The residence has a total of 9 rooms, which includes 4 bedrooms, 3.5 baths, and contains 3,990 square feet of living area.  There is a full, partially finished basement and an attached three-car garage. The property was purchased in 2005 for $781,000 and the property was listed for sale in 2007 at a price of $890,000.

3.         Since the property was purchased in 2005 for $781,000, the owners finished a portion of the basement and made repairs to the deck.

4.         The properties in the area have crown molding and higher quality countertop materials.  The subject property does not have crown molding and has laminate countertops.

5.         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 $702,496, as proposed.

6.         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 three properties were located within .17 miles 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.

7.         The comparables were described as follows:

Comparable 1 sold in June 2006 for $789,900.    This property consists of a .42 acre lot improved by a 1.5 story brick and frame single-family structure of very good quality construction.  The house was built in 2005 and appears to be in good condition.  The residence has a total of 10 rooms, which includes 4 bedrooms, 3.5 baths, and contains 4,130 square feet of living area.  There is a full unfinished basement and an attached three-car garage.

Comparable 2 sold in August 2006  for $835,000.  This property consists of a .39 acre lot improved by a 1.5 story brick and frame single-family structure of very good quality construction.  The house was built in 2004 and appears to be in good condition.  The residence has a total of 10 rooms, which includes 4 bedrooms, 3.5 baths, and contains 4,130 square feet of living area.  There is a full basement with 1,100 square feet of finish and an attached three-car garage.

Comparable 3 sold in January 2006  for $865,000.  This property consists of an 1.1 acre lot improved by a 1.5-story brick and frame single-family structure of very good quality construction.  The house was built in 2003 and appears to be in good condition.  The residence has a total of 10 rooms, which includes 4 bedrooms, 3.5 baths, and contains 3,826 square feet of living area.  There is a full basement, which has 700 square feet of finished space.  There is an attached three-car garage.

8.         The appraiser made various adjustments to the comparable properties for differences which existed between the subject and each comparable.  All adjustments appear to be appropriate to bring the comparables in line with the subject for purposes of the appraisal problem.

9.         The net adjustments for Comparable 1 amounted to $48,000 or 6.1% of the sales price.  The net adjustments for Comparable 2 amounted to $15,400 or 1.8% of the sales price.  The net adjustments for Comparable 3 amounted to -$29,300 or -3.4% of the sales price. The adjustments are from square footage, basement finish and porch/deck/patio differences.

10.       The adjusted sales prices for the comparables calculated to $837,000, $850,400, and $835,700, respectively.  The appraiser concluded on a $838,000 value.

11.       Respondent did not have to meet a standard of clear, convincing and cogent evidence in this appeal, under the provisions of Section 137.115, RSMo, as he was not seeking to sustain the original valuation presumed to have been made by a computer, computer-assisted method or a computer program.

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. 

            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 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)

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.

Weight to be Given Evidence

The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled.  The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide.  St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).

Trier of Fact

The Hearing Officer as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances.  The Hearing Officer is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert’s testimony and accept it in part or reject it in part.  St. Louis County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).

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).


Respondent’s Burden of Proof

Respondent, when advocating a value different from that determined by the original valuation or a 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.

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). 

Owner’s Opinion of Value

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. 

A 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).

Sale of Subject

Evidence of the actual sales price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time.  The actual sale price is a method that may be considered for estimating true value.  The actual sales price, between a willing seller who is not obligated to sell and a willing buyer who is not compelled to buy, establishes an outer limit on the value of real property.  St. Joe Minerals Corp. v. STC, 854 S.W.2d 526 (App. E.D. 1993).

Determination of Value

            The property was purchased by the Complainant for $781,000 in July 2005.  After the purchase of the property, the basement was finished at a cost of $75,000.  The decking was also repaired and updated.  Most properties in the area have higher quality finishes including crown molding and countertops of granite or other stone.  The subject property has laminate countertops and does not have crown molding.  The subject property measures 3,990 square feet, not 4,100 square feet as reported by the Assessor’s appraiser. 

            The Complainant testified that the property next door, 2605 Wynncrest Ridge Drive (Assessor’s Comparable 1), which sold for $789,000 in June 2006, is the exact floor plan as her residence.  The Comparable property does not have a finished basement but has the higher quality finish (better quality countertops, flooring and crown molding) in the above grade living area.  A valuation of $789,900 would reflect the lesser quality finish and the actual square footage of 3,990. 

ORDER

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

The assessed value for the subject property for tax years 2007 and 2008 is set at $150,080.

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.

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 Section 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 July 8, 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 8th  day of July, 2008, to:    Michael Nichols, 16228 Wynncrest Ridge Court, Wildwood, MO 63005, 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.

 

 

___________________________

Barbara Heller

Legal Coordinator