State Tax Commission of Missouri

JAMES H. PRAPROTNIK, )

)

Complainant, )

)

v. ) Appeal Number 07-12868

)

PHILIP MUEHLHEAUSLER, ASSESSOR, )

ST. LOUIS COUNTY, MISSOURI, )

)

Respondent. )

ORDER

AFFIRMING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

On June 5, 2008, Senior Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) setting aside the assessment by the St. Louis County Assessor and setting the assessed value of the property under appeal at $69,350, as residential property, true value in money of $365,000.

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. 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).

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).

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. 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).

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. 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).

The Hearing Officer properly found that Complainant had failed to present substantial and persuasive evidence to establish a market value. The Commission notes Complainant testified at hearing to a fair market value in the range of $340,000 to $410,000. However, Complainant presented no evidence to establish a fair market value within that range. Respondent’s appraiser did present substantial and persuasive evidence to establish a fair market value of $365,000, or $10,000 below the average of Complainant’s range of value. The Hearing Officer was justified in finding value as proposed by Respondent’s appraisal, and within the range advocated by Complainant.

Complainant’s argument in his Application for Review regarding the percentages of increases for some other properties versus the percentage of increase for the subject is without merit. The Hearing Officer properly found that percentage increase on properties from one assessment cycle to the next has no relevance to proving the fair market value of any given property.

The Hearing Officer did not err in his determinations as challenged by Complainant.

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 August 12, 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 Assessor is SET ASIDE. Hearing Officer finds true value in money for the subject property for tax years 2007 and 2008 is set at $365,000, residential assessed value of $69,350.

Complainant 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

Complainant appeals, on the ground of overvaluation, the valuation set by the Assessor at an appraised value of $370,100, assessed value of $70,320, as residential property. Complainant proposed a value of $295,000 to $350,000, assessed value of $56,050 - $66,500 in his Complaint for Review of Assessment. A hearing was conducted on May 20, 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

Mr. Praprotnik testified in his own behalf. Exhibits A through D were received into evidence at hearing. Exhibits E through O were tendered into evidence to be ruled on as to relevance to the issue of the true value in money of the subject property as of January 1, 2007.

The Complainant gave his opinion of fair market value to be in a range of $340,000 to $410,000. However, the taxpayer presented no evidence under any recognized methodology for valuation of real property in an appeal before the Commission to support a value in that range.

Respondent’s Evidence

Respondent placed into evidence the testimony of Mr. Timothy Hannan, residential real estate appraiser for St. Louis County. The appraiser testified as to his appraisal of the subject property. The Appraisal Report (Exhibit 1) of Mr. Hannan was received into evidence. He arrived at an opinion of value for the subject property of $365,000 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.

Exhibit 2, the multi-listing data, on the subject was received into evidence.

FINDINGS OF FACT

1. Jurisdiction over this appeal is proper. Complainant appealed to the St. Louis County Board of Equalization, but his appeal was never acknowledged. Therefore, the Commission took the appeal.

2. The subject property is located at 12186 Bridle Trail Lane, Missouri. The property is identified by locator number 28M630412. The property consists of a 15,131 square foot lot improved by a custom built brick and frame, single-family structure of good quality construction. The house was built in 1987 and appears to be in good condition. The residence has a total of eight rooms, which includes four bedrooms, two full baths and one half bath on the mail level, and contains 2,646 square feet of living area. There is a full basement with 100 square feet of finished area and a full bath. The house has an attached two-car garage. The property suffers from some external obsolescence as the right side of the site backs to Interstate 270 and is bordered by a concrete sound wall. The property was on the market in March, 2006 with an asking price of $630,000. It was listed a second time in July, 2006 with an asking price of $599,000.

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 establish the true value in money as of January 1, 2007, to be $295,000.

5. The properties relied upon by Respondent’s appraiser were comparable to the subject property. The three properties were located within less than one and a half miles of the subject. Each sale property sold at a time relevant to the tax date of January 1, 2007, ranging from April 2004 to August 2005. The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area (ranging from 2,235 to 3,006 square feet), 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 -0.8 to -14.2 percent of sale price, with a median of -7.2% and an average of -7.4%. The adjusted sales prices for the comparables ranged from $357,300 to $386,000, with a median of $367,000, and an average of $370,100.

7. Respondent’s evidence met the standard of substantial and persuasive to establish the value of the subject, as of January 1, 2007, to be $365,000.

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.

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).

Respondent presented substantial and persuasive evidence to establish a fair market value as of January 1, 2007, to be $365,000 for Mr. Praprotnik’s property. 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. The conclusion of value determined by Mr. Hannan fell just below the average ($375,000) of the range for fair market value ($340,000 - $410,000) testified to by the Complainant.

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. 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, --- 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). 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).

The only opinion of value given at the evidentiary hearing by the taxpayer was a range from $340,000 - $410,000. There was no evidence presented under any recognized methodology for appraisal of property to establish a value of $295,000 - $350,000 as proposed in the Complaint for Review of Assessment. As previously noted, Mr. Praprotnik’s opinion of value at the hearing is consistent with the determination made by Respondent’s appraiser.

The taxpayer’s main point of contention with regard to value was that an increase of 26% from the previous assessment cycle was excessive. The percentage of increase from one assessment cycle to the next does not provide a basis for determining fair market value. The percentage increase has no relevance for proving fair market value.

The various documents which Mr. Praprotnik offered into evidence totally failed to establish fair market value as will be addressed below.

Exhibits Not Probative on Fair Market Value

Exhibit A

Exhibit A consisted of an aerial photo of the subject property and two other properties, which had been high-lighted in red by the Complainant, with notations as to the percentage of change fro the 2007 assessment cycle. The exhibit had relevance only as a foundational document to show the location of the subject property backing to Interstate 270. It provided no basis for finding the true value in money of the subject as of January 1, 2007.

Exhibit B

In like manner, Exhibit B, consisting of documents from 1997 regarding the proposed sound-wall location along I-270 was non-probative as to fair market value. Respondent did not contest that the subject property was burdened by the location of the sound-wall and I-270.

Exhibit C

Exhibit C consisted of photographs related to the sound-wall. Here again, these photographs only helped to demonstrate what was not at issue. There was no evidence that helped to establish what a willing buyer and seller would have agreed to as the sales price for the property on January 1, 2007.

Exhibit D

Exhibit D contained a plat survey of the subject property and photographs of the sound-wall. This like Exhibits A through C provided no evidence on the issue of fair market value.

Exhibits E through O

Exhibits E through O are listed below, with explanation as to why they are not relevant. These Exhibits therefore are not received into evidence, but only retained in the record to show the documents which were tendered by Complainant.

Exhibit E – Original 1986 Costs. The 1986 costs do not meet the standard for any recognized methodology for appraising property. They provide no basis to establish fair market value as of January 1, 2007. The exhibit is irrelevant and is excluded from evidence.

Exhibit F – 1994 - Listing on property at 12180 Bridle Trail. A 1994 newspaper listing on a neighboring property presents no evidence to establish fair market value in 2007 for the property under appeal.

Exhibit G – Photographs of property identified as 12156 Bridle Trail. The photograph and handwritten notes as to this property provide no evidence to establish fair market value in 2007 for the property under appeal.

Exhibit H - Photograph of property identified as 12180 Bridle Trail. The photograph provides no evidence to establish fair market value in 2007 for the property under appeal.

Exhibit I – Photographs and 2002 property record card of property identified as 12125 Bridle Trail. The photograph and property record card provides no evidence to establish fair market value in 2007 for the property under appeal.

Exhibit J – Real Estate Information on property at 5037 South Lindbergh Blvd. Listing information by itself is non-probative as to fair market value. This property was not used as a comparable by Respondent’s appraiser. The information is totally insufficient to provide a basis for a valuation of the subject property.

Exhibit K – Photographs, Tax History and Property Record Card on 9830 Bridle Trail Lane. Such documents do nothing to prove value for the Praprotnik property. The sale date is 2002, which is too dated to consider in a sale comparison approach to value.

Exhibit L – Photograph and Property Record Card on 10722 Leebor Drive. This property is over 840 square feet smaller than the Complainant’s home. The fact that it backs to I-270 does not provide sufficient basis to consider it a comparable property to the subject.

Exhibit M – Photographs of 9819 Hilltop Drive and 12121 Leebor Drive. Mr. Hannan used the Hilltop Drive property as a comparable and made proper adjustments to arrive at an indicated value for the subject of $367,000. Mr. Hannan accounted for the fact that this property did not back to I-270, by making a -$40,000 adjustment. This was an appropriate property to use as a comparable, with the adjustment for the factor of location. There is no information as to the Leebor Drive property upon which it can be concluded it is a comparable to the subject.

Exhibit N – Collection of Newspaper Articles. Newspaper articles are hearsay plain and simple. As such, they are not admissible into evidence. There is no relevant information contained in any of these clippings that addresses the fair market value of the subject property on January 1, 2007.

Exhibit O – Collection of Newspaper Real Estate Listings. These documents are hearsay and not admissible into evidence. Real Estate Listings are not probative of fair market value of the subject property.

Summary and Conclusion

Complainant failed to prove the true value in money of the subject property under any accepted approach to value. No evidence was presented by Mr. Praprotnik which was relevant to establishing fair market value. The only relevant evidence on the issue before the Hearing Officer was the appraisal report of Mr. Hannan. Exhibit 1 establish fair market value at $365,000.

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 $69,350.

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 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 June 5, 2008.

STATE TAX COMMISSION OF MISSOURI

W. B. Tichenor

Senior Hearing Officer