State Tax Commission of Missouri

STEPHEN AND KATHY PURDY, )

)

Complainant, )

)

v. ) Appeal Number 07-33028

)

RICK KESSINGER, ASSESSOR, )

GREENE COUNTY, MISSOURI, )

)

Respondent. )

DECISION AND ORDER

HOLDING

The decision of the Board of Equalization setting value at $391, 600 residential (assessed value $74,400) and $2500 agricultural (assessed value $300) is SUSTAINED.

ISSUES

1. The true market value of residential and agricultural real property;

2. Discrimination; and

3. Misgraded Agricultural Land

SUMMARY

The subject property is a residence on ten acres of land which was originally valued by the Assessor at $391, 600 residential (assessed value $74,400) for the house and one acre of land and $2500 agricultural (assessed value $300) for the remaining nine acres. Upon appeal, the Board of Equalization sustained the valuations by the Assessor. Complainant appealed. The evidentiary hearing began on February 6, 2008, in the Historic Greene County Courthouse, Springfield, Missouri. Stephen and Kathy Purdy appeared in person, without counsel. Assessor Rick Kessinger appeared in person and by counsel Nichole Lindsey. During the hearing on February 6, 2008, Complainants’ requested a continuance to determine if they wished to obtain counsel. Respondent agreed to allow them time to determine if they wished to be represented. Case was rescheduled for February 28, 2008 at 9:00 a.m. On February 28, 2008, the Complainants appeared in person without counsel and announced ready to proceed; Assessor appeared in person and by counsel and announced ready to proceed. Evidence was heard and the case was taken under advisement.

EXHIBITS

Complainant offered the following exhibits:

Exhibit A: Photographs of their agricultural property.

Exhibit B: Diagram, not to scale, of their property.

Exhibit C: Property record cards for nine properties in Greene County

All exhibits were admitted into evidence.

Respondent offered the following exhibits:

Exhibit 1: Narrative Appraisal for Subject Property.

Exhibit 2: Property Record Card for Subject Property.

All exhibits were admitted into evidence.

FINDINGS OF FACT

1. Jurisdiction is proper. Complainants timely filed their appeal from the decision of the Greene County Board of Equalization.

2. The subject property is ten acre site improved with a one and one-half story, four bedroom, three bath home containing 3,296 square feet of gross living area with a crawl space. The home has a two-car attached garage, a car portico, porch and patio, swimming pool, and fireplace. The home is 1 year old and in good condition. The property is identified as parcel number 88-18-30-200-025, more commonly known as 6182 South Farm Road 115, Brookline Station, Missouri.

3. Under the cost approach, the Respondent determined a value for the improvement of $368,600, the one acre with the improvement of $23,000, 4.52 acres at a soil grade 4 at $1800, and 4.480 acres at a soil grade 6 at $700, for a total of $394,100.

4. Respondent’s appraiser found sales of three similar homes which sold for $290,000; $359,900; and $409,000 in 2005. Respondent’s appraiser adjusted for date of sale, quality of construction, square footage, and swimming pool. After adjustments, these properties indicated a range of value for the subject property between $395,440 and $445,600. Based upon these sales, Respondent’s appraiser determined a market value for the subject property of $400,000 on January 1, 2007.

5. Complainants assert that the correct value of their home is somewhere between $250,000 and $371,800. (Transcript 3, 5, and 6) The Complainants testified that they built their home and acted as the general contractor. The home was built in 2005-2006. The ten acres were purchased for $65,000. They testified that they spent around $230,000 - $260,000 building the home (Transcript 7) and obtained a loan for $225,000 (Transcript 7) using $10,000 of the loan to purchase a truck.

6. Complainants presented no market sales in support of their opinion of value.

7. Complainants were not aware of how much of their property was classified as residential or agriculture. Complainants were concerned that the Assessor’s value might be incorrect due to classifying more than one acre as residential. Complainants were not familiar with grading agricultural property.

8. Complainants offered as an exhibit property information from the Greene County Assessor’s website for nine properties in Greene County.

CONCLUSIONS OF LAW

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.

Taxpayer has Burden of Proof

In Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003), the court of appeals stated:

There is no longer an automatic presumption regarding the correctness of an assessor's valuation. Section 138.431.3. This statutory change from the previous situation in which the assessor's valuation was presumed to be correct does not mean that there is now a presumption in favor of taxpayer. The taxpayer in a Commission tax appeal still bears the burden of proof. Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991).

In Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003), the court of appeals described the taxpayer's burden as follows:

Taxpayers were the moving parties seeking affirmative relief, and as such, they bore the burden of proving the vital elements of their case, i.e., the assessments were "unlawful, unfair, improper, arbitrary or capricious.” Cupples Hesse Corp. v. State Tax Comm'n, 329 S.W.2d 696, 702 (Mo.1959); Westwood P'ship v. Gogarty, 103 S.W.3d 152, 161[8] (Mo. App. 2003); 84 C.J.S. Taxation §§710, 726. This is true regardless of the existence or non-existence of the challenged presumption. As the Supreme Court of Missouri explained, "even were we to hold that it [the presumption] has been overcome, the burden of proof on the facts and inferences would still remain on petitioner, for it is the moving party seeking affirmative relief.” Cupples, 329 S.W.2d at 702[16]. See also 84 C.J.S. Taxation §710, which states: "Even where there is no presumption in favor of the assessor's ruling, if no evidence is offered in support of the complaint, the reviewing board is justified in fixing the valuation complained of in the amount assessed by the assessor."

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).

Misgraded Agricultural Land

Complainants, on their Complaint for Review of Assessment, specified Misgraded Agricultural Land as an issue for appeal. At the hearing, the Complainants acknowledged unfamiliarity with the assessment and valuation process including the amount of their land classified as agriculture and how it was valued.

In Missouri, all real property actively used for agricultural purposes is assessed at 12% of its productive value. Section 137.017, RSMo. Statutory guidance for determining such productive values is set out in section 137.021. In short, the process works as follows:

1. The University of Missouri provides the State Tax Commission with estimated values for each of the eight agricultural grades based upon ". . . soil surveys, soil productivity indexes, production costs, crop yields, appropriate capitalization rates, and any other pertinent factors . . ."

2. On or before December 31, of the odd-numbered year, the State Tax Commission promulgates a rule indicating the proper value for each of several grades of agricultural land.

3. If such rule is not disapproved by the general assembly, they shall take effect on January first of the next odd-numbered year.

The agricultural land productive values are contained in Title 12, Division 30, Chapter 4 of the Code of State Regulations.

John Steiber with the Greene County Assessor’s Office testified that the Assessor’s Office determined 4.52 acres were soil grade 4 and 4.48 acres were soil grade 6. The land productive values were then calculated to be $1,800 and $700 respectively, for a total assessed value of $300.

The Complainants indicated that they were satisfied with the Assessor’s calculations as to the agricultural values.

Discrimination

In order to obtain a reduction in assessed value based upon discrimination, the Complainants must (1) prove the true value in money of their property on January 1, 1997. Koplar v. State Tax Commission, 321 S.W.2d 686, 690 (Mo. 1959); and (2) show an intentional plan of discrimination by the assessing officials resulting in an assessment of that property at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction. Koplar, supra, at 695.

Under this theory, Complainant must first establish the market value of the subject property in order to determine the percentage of true value at which it is being assessed. Next, Complainant must establish the true value of the other properties generally which he claims are assessed at a lower percentage of true value. Evidence of value and assessments of a few properties does not prove discrimination. Substantial evidence must show that all other property in the same class, generally, is actually undervalued. State ex rel. Plantz v. State Tax Commission, 384 S.W.2d 565, 568 (Mo. 1964). Then Complainant must compare the ratio of assessed value to true value for both his property and the comparable properties to establish that his property is being assessed at a higher percentage of value. The difference in the residential assessment ratio of the subject property and the average residential assessment ratio in Randolph County must be shown to be grossly excessive. Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986). No other methodology is sufficient to establish discrimination. Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696 (Mo. 1958).

Complainants’ discrimination claim fails because of the failure to establish the market value of the property under appeal. Without establishing market value, Complainants cannot establish the assessment ratio for their property. Without establishing the ratio on the subject property, it cannot be establish that the subject property was being assessed at a higher percentage of market value that any other property.

However, even if Complainants had established market value for their property, the discrimination claim would still fail because they did not demonstrate that a statistically significant number of other residential properties within Greene County are being assessed at a lower ratio of market value than the property under appeal. The taxpayers’ claim of discrimination is based upon data from the Assessor’s website on nine properties. None of the data establishes that any of the properties were being assessed at a ratio less than 19%. Data on nine properties does not constitute a statistically significant sample for Greene County residential properties.

True Value in Money

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 purchased by one who is desiring 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, Inc. v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978).

To prevail, Taxpayers had to "present an opinion of market value and then ... present substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on tax day." Daly v. P.D. George Co., 77 S.W.3d 645, 651 (Mo. App. 2002).

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).

The comparable sales approach uses prices paid for similar properties in arms-length transactions and adjusts those prices to account for differences between the properties. Comparable sales consist of evidence of sales reasonably related in time and distance and involve land comparable in character. This approach is most appropriate when there is an active market for the type of property at issue such that sufficient data is available to make a comparative analysis. Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d. 341, 347-348 (Mo. 2005). (citations omitted).

The Complainants presented some evidence as to the cost approach to valuation by stating the amount paid for the property ($65,000) and the amount of the loan to build the residence ($225,000). However, no cost manual information or detailed evidence as to the actual cost of building a residence like the subject property was presented by the Complainants.

The Complainants failed to present any evidence as to the price the property would bring when offered for sale by one willing or desirous to sell and purchased by one who is desiring to purchase but who is not compelled to do so.

Complainants failed to present substantial and persuasive evidence tending to demonstrate that the subject property would sell for no more than $250,000 to $371,800 on January 1, 2007.

ORDER

The assessed value determined by the Board of Equalization, is SUSTAINED.

A party may file with the Commission an application for review of a hearing officer decision within thirty (30) days of the mailing of such decision. The application shall contain specific detailed 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.

If an application for review of a hearing officer 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. 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 Greene 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. If any protested taxes have been disbursed pursuant to Section 139.031(8), RSMo, either party may apply to the circuit court having jurisdiction of the cause for disposition of the protested taxes held by the taxing authority.

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 March 14, 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 this 14^th day of March, 2008, to: Stephen Purdy, 6182 S. Farm Rd. 115, Brookline Station, MO 65619, Complainant; Theodore Johnson, Greene County Counselor, 901 St. Louis Street, 20th Floor, Springfield, MO 65806, Attorney for Respondent; Rick Kessinger, Assessor; Richard Struckhoff, Clerk; Scott Payne, Collector, Greene County Courthouse, 940 Boonville, Springfield, MO 65806.

_______________________________

Barbara Heller

Legal Coordinator