State Tax Commission of Missouri

 

JOHN ROCKWELL &                                   )

SHERRY A. DUDA,                                       )

)

Complainants,               )

)

v.                                                         )           Appeal Number 07-10055

)        

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 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 $236,200, residential assessed value of $44,880.

Complainant, Sherry A. Duda, appeared pro se.

Respondent appeared by Associate County Counsel, 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 $245,400, assessed value of $46,630, as residential property.  The Board reduced the value to $236,200, assessed value of $44,880.  Complainant proposed a value of $164,700, assessed value of $31,290.  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

Complainant Sherry A. Duda testified on behalf of Complainants.  Ms. Duda gave the owners’ opinion of fair market value to be $164,700.  The opinion was based upon the 2005 appraised value made by the St. Louis County Assessor.

Complainant offered into evidence two exhibits.

Exhibit A consisted of a copy of the March 15, 2007 Change of Assessment Notice on the subject property and a copy of the Appeal Form to the BOE, with an attachment.

Exhibit B was a listing of High End properties with Assessed Value less than Sold Price.

Exhibit A was received into evidence.  Exhibit B was excluded from evidence upon Counsel for Respondent’s objection on the ground of relevancy and hearsay.

Respondent’s Evidence

Respondent placed into evidence the testimony of Ms. Sarah Curran, 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. Curran was received into evidence.  Ms. Curran arrived at an opinion of value for the subject property of $238,000 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. 

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 36 Villawood Lane, Webster Groves, Missouri.  The property is identified by locator number 24K520388.  The property consists of .22 of an acre lot improved by a one and a half story style, single-family brick structure of average quality construction.  The house was built in 1942 and appears to be in average condition.  The residence has a total of six rooms, which includes three bedrooms, two full baths, and contains 1,543 square feet of living area.  There is an unfinished basement and an attached one-car garage.  The home was purchased in 2003 for $221,000 and various upgrades had been made prior to

January 1, 2007, totaling in excess of $12,000.

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 rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2007, to be $164,700.

5.         The properties relied upon by Respondent’s appraiser were comparable to the subject property for the purpose of making the appraisal in this appeal. The properties were all located within less than a quarter mile of the subject.  Two comparables were on the subject street.  Each sale property sold at a time relevant to the tax date of January 1, 2007, in a range from April to September of 2005.  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.  The sale properties were within 75 to 249 square feet in living area to the subject. They were in an age range of 56 to 59 years.

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 gross adjustments were in a range from only 7.4 to 9.6 percent of the sale prices.  Net adjustments were in a range of -5.6 to +2.6%.  The adjusted sales prices were in a range from $236,000 to $241,400, with a median of $236,00, and an average of $237,800.  The indicated value on a per square foot of living area unit ranged from $152.95 to $156.45, as compared to the unadjusted sales range of $154.45 to $177.74.

7.         Respondent’s evidence was substantial and persuasive to confirm the value established by the Board of $236,200.  The less than one (1%) percent variance above the Board value was not a significant enough difference to warrant and increase to $238,000.

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.

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 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.  Complainant’s presented no evidence upon which a reasonable mind could conclude that the Board’s valuation was in error.

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 documents and testimony provided by Complainant Duda failed to qualify as a recognized and accepted approach to valuing real property for ad valorem tax purposes in an appeal before the Commission.

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).

Ms. Duda proposed to establish fair market value for the property under appeal by relying on the value placed on the property by the Assessor in the 2005-06 assessment cycle.  The value placed on a property in a prior assessment cycle is irrelevant.  There was no evidence to establish that a value of $164,700 set in 2005 was the market value of the property on January 1, 2007.  The testimony by Ms. Duda under cross-examination and the Appeal Form to the Board, provide a very reasonable basis to conclude that the Complainant’s home was undervalued in 2005 by possible as much as $68,000.  An opinion of value based on a prior year’s assessment is not based on proper elements or a proper foundation.  It has no probative value.

Complainants’ tendering of four sales in the subject neighborhood (p. 3, Exhibit A) is likewise not probative.  There is insufficient data regarding these properties and the sales for them to be relied upon as indicators of value.  Furthermore, there is no evidence to establish any expertise of Ms. Duda or Mr. Rockwell with regard to appraising property and therefore determining the appropriateness of any given sale to be comparable for appraisal purposes.

Complainants’ claim regarding deferred maintenance and condition problems (p. 3, Exhibit A) is not substantiated on the record.  Therefore, it is of no probative value in the appeal. “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.  In an appeal such as this where the taxpayer raises the matter of condition problems with their home, but will not permit an interior inspection by the appraiser, or provide documentation to support their claim of adverse conditions, no weight is given to such claims.  Respondent’s appraiser gave no consideration to the condition issues, because she was not permitted to verify them.  Exhibit 1, Addendum 1.  The Hearing Officer finds no fault in this determination by the appraiser.

Complainants offered into evidence a listing of what was described as High End Property with Assessed Value Less than Sold Price (Exhibit B).  The exhibit and testimony relating thereto was excluded as it was based upon hearsay and had no relevance to the issue of what the fair market value of the subject property was on January 1, 2007.  Given that this exhibit did nothing to move forward the inquiry as to what a willing buyer and seller would have agreed to as the purchase price of the subject property on January 1, 2007, there is no need to go into any analysis of the information set forth in the Exhibit.

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 $44,880.

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.

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, unless said taxes have been disbursed pursuant an order of the circuit court under the provisions of Section 139.031.8, RSMo.  §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.  If any or all 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 June 2, 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 2nd  day of June, 2008, to:     John Rockwell, 36 Villawood Lane, Webster Groves, MO 63119, Complainant; Paula Lemerman, Associate County Counselor, County Government Center, 41 South Central Avenue, Clayton, MO 63105, Attorney for Respondent; Philip A. 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