State Tax Commission of Missouri

GILBERT NORTH, )

)

Complainant, )

)

v. ) Appeal Number 07-10363

)

PHILIP MUEHLHEAUSLER, ASSESSOR, )

ST. LOUIS COUNTY, MISSOURI, )

)

Respondent. )

ORDER

AFFIRMING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

On June 5, 2008, Hearing Officer Maureen Monaghan entered her Decision and Order (Decision) affirming the assessment by the St. Louis County Board of Equalization.

Complainant timely filed his Application for Review of the Decision.

CONCLUSIONS OF LAW

Standard Upon Review

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.[1]

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.[2]

The Commission will not lightly interfere with the Hearing Officer’s Decision and substitute its judgment on the credibility of witnesses and weight to be given the evidence for that of the Hearing Officer as the trier of fact.[3]

DECISION

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.[4]

Complainant filed a document with additional information that was not presented at the evidentiary hearing. Neither party may submit additional documentation after the hearing has concluded. Therefore, the information contained in the document cannot be considered in addressing Complainant’s Application for Review.

Complainant alleged no error of fact or law in the Hearing Officer’s Decision. As stated in the Decision, at page 10, failure to state specific facts or law upon which the appeal is based will result in summary denial.[5] The Hearing Officer properly determined that Complainant had failed to meet his burden of proof and that the valuation set by the Board should be affirmed.

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.

The Collector of St. Louis County shall continue to hold the disputed taxes pending an Order from the Commission as to whether a Petition for Judicial Review of the Order has been filed.

SO ORDERED September 23, 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 County Board of Equalization reducing 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 $311,900, residential assessed value of $59,260.

Complainant appeared pro se.

Respondent appeared by Associate County Counselor, Robert Fox.

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

Complainant appeals, 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 $345,200, assessed value of $65,590, as residential property. The Board reduced the value to $311,900, assessed value of $59,260. Complainant proposed a value of $280,500, assessed value of $53,295. A hearing was conducted on May 29, 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.

Complainant’s Evidence

Complainant testified in his own behalf. He stated his opinion of value for the property under appeal to be $267,100; the same value used in the 2005-2006 cycle. Complainant offered into evidence Exhibit A.

Page 1 sets forth the property information and the 2005 value as set by the Assessor and the initial valuation of the Assessor of $352,000 and a statement that there was a 32% increase.

Page 2 summarizes the Complainant’s reasons for appealing his valuation:

· St. Louis County uses comparable sales method for valuation of residential properties; and

· Hancock Amendment sets tax rate ceilings.

Page 3 is a map of the subdivision in which the subject property is located.

Pages 4-8 are photographs of the subject property and comparable properties.

Page 9 is a summary of the Complainant’s argument at the appeal:

· The Assessor’s Office used non-comparable properties;

· The neighboring properties’ condition reduces the value of the subject property;

· Conditions in subject property decrease the value;

· Depressed housing market; and

· Intermediate assessments reduced the increase in the valuation from 32% to 12%.

Page 10 is a recommendation that the 2007-2008 valuation be set at the 2005-2006 valuation.

Appendix pages 1-6 is the Complainant’s presentation to the Board of Equalization setting forth his reasons for a lower valuation and photographs.

Counsel for Respondent objected to the exhibits on the grounds of Hearsay, Lack of Foundation and Relevancy. Hearing Officer overruled the objections and accepted the photographs as evidence, the other writings as a summary of his argument at the hearing.

Respondent’s Evidence

Respondent placed into evidence the testimony of Ms. Lela Tulley, Missouri State Certified Residential Real Estate Appraiser. The appraiser testified as to her appraisal of the subject property. The Appraisal Report (Exhibit 1) of Ms. Tulley was received into evidence. Ms. Tulley arrived at an opinion of value for the subject property of $368,000 based upon a sales comparison approach to value. In performing her sales comparison analysis, the appraiser relied upon the sales of three properties which she deemed to be comparable to the subject property and two additional properties to verify her analysis.

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 12956 Wallingshire Court, St. Louis, Missouri. The property is identified by locator number 17P230064. The property consists of 1.06 acre lot improved by a ranch, brick-vinyl, single-family structure of average quality construction. The house was built in 1965 and appears to be in fair condition. The residence has a total of seven rooms, which includes three bedrooms, two full baths, and contains 1,610 square feet of living area. There is a basement with 950 square feet of finished space with one full bath. The subject property has a three car attached garage; the garage doors do not match. The property suffers from cracked brick veneer, cracked sidewalks and patio. The home is dated in appearance with vinyl flooring and shag carpeting. The countertops are laminate. The windows are aluminum, single pane and original to the home.

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 $280,500.

5. The properties relied upon by Respondent’s appraiser in performing her appraisal were comparable to the subject property. The properties were located within .4 of a mile or less to the subject. Each sale property sold at a time relevant to the tax date of January 1, 2007, in a range from May 2004 to October 2007. The sale properties were similar to the subject in style, quality of construction, age, room, bedroom and bathroom count, 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 ranged from -23.5% to 0%. This level of adjustment as a percentage of the sales prices is acceptable given the adjustment for difference in condition which needed to be made.

7. The adjusted sales prices for the comparables ranged from $359,300 to $373,200. The appraiser concluded on a $368,000 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.

Presumption In Appeals

There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341 (Mo. 2005); 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, Complainant has failed to present substantial and persuasive evidence upon which the Hearing Officer can conclude the fair market value of the subject property to have been $280,000 on 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).

The Tulley appraisal follows an accepted approach to value, the sales comparison methodology. Therefore, the conclusion of value presented by the appraiser is based upon an approach that is followed by the Commission in making determinations of value in appeals. In point of fact, generally the sales comparison approach represents the strongest methodology for the valuation of an owner occupied home, provided there is sufficient relevant sales data. In this instance, Respondent’s sales data was clearly relevant and persuasive to establish value.

Complainant testified that his property is not within the Westland Estates Subdivision, however, Complainant’s property is an addition to that subdivision. Further, to get to the Complainant’s property you must drive through Westland Estates Subdivision. The Complainant testified that the subdivision was developed in the early 1960s. There are forty-nine homes in the Westland Estates Subdivision and 11 homes in the Westland Estates addition. Of the forty-nine homes in the main subdivision, twenty of have been recently constructed after the removal of the older home. Of the eleven homes in the subdivision addition, one home is new construction after a tear down.

The Assessor’s five comparables are all part of the Westland Estates Subdivision. The Complainant argues that the comparable property located at 31 Auburndale Drive, .2 miles from the subject property, is not an appropriate property to compare with his property. The improvement currently located at 31 Auburndale Drive appears to be a brand new home of superior quality construction and condition. However, the appraiser did not compare the current improvement to the subject property. The appraiser reviewed the sale in October 2005 of the land and a 40 year old improvement to support her conclusion of value. The property sold for $360,000 and the improvement was removed and the new residence was constructed. The appraiser used the sale to support her conclusion of value of $368,000.

Complainant Fails To Meet 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).

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). Mr. North’s opinion of fair market value is based upon a value of $267,100 which he asserts was the value placed on the subject property for the 2005-2006 cycle. The valuation placed on the property by the Assessor’s Office for the 2005-2006 cycle is not evidence of market value of the property on January 1, 2007.

The Complainant also states that the Hancock Amendment sets tax rate ceilings and allows for adjustments only based upon cost-of-living increases or increases provided by the voters and therefore his property valuation should not be increased. The only issue before the State Tax Commission and decided by the Hearing Officer is the valuation of the subject property. The levies set by the taxing jurisdictions are not reviewed by the Hearing Officer and are not subject of this appeal. The Hearing Officer’s authority is only to the valuation of the property as of January 1, 2007. Section 138.340 RSMo states that the State Tax Commission shall have no power to fix the rate of levy for the state or any political or municipal subdivision thereof, nor shall the commission have any power or authority to supervise the fixing of any tax levied or to be levied.

Complainant failed to meet his burden of proof to present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board and establish the true value in money for his property.

ORDER

The assessed valuation for the subject property as determined 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 $59,260.

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. Failure to state specific facts or law upon which the appeal is based will result in summary denial. Section 138.432, RSMo 2000.

Any application for review must be mailed to the Commission at: State Tax Commission, P. O. Box 146, Jefferson City, MO 65102-0146, and a copy mailed to the Attorney for Respondent, the Assessor and the Collector at the address given below in the Certificate of Service.

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 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 presently in an escrow account in accord with the decision on the underlying assessment in this appeal.

[1] 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).

[2] 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).

[3] Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Lowe v. Lombardi, 957 S.W.2d 808 (Mo. App. W.D. 1997); Forms World, Inc. v. Labor and Industrial Relations Com’n, 935 S.W.2d 680 (Mo. App. W.D. 1996); Evangelical Retirement Homes v. STC, 669 S.W.2d 548 (Mo. 1984); Pulitzer Pub. Co. v. Labor and Indus. Relations Commission, 596 S.W.2d 413 (Mo. 1980); St. Louis County v. STC, 562 S.W.2d 334 (Mo. 1978); St. Louis County v. STC, 406 S.W.2d 644 (Mo. 1966).

[4] Hermel, Inc. v. STC, 564 S.W.2d 888 (Mo. 1978); Black v. Lombardi, supra; 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).

[5] Section 138.432, RSMo.