State Tax Commission of Missouri

BRADLEY & JACQUELINE ROSENTHAL, )

)

Complainants, )

)

v. ) Appeal Number 07-11508

)

PHILIP MUEHLHEAUSLER, ASSESSOR, )

ST. LOUIS COUNTY, MISSOURI, )

)

Respondent. )

DECISION AND ORDER

HOLDING

Decision of the St. Louis County Board of Equalization sustaining 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 $467,000, residential assessed value of $88,730.

Complainant appeared pro se.

Respondent appeared by Counsel, Robert Fox, 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

Complainant appeals, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property. The Assessor determined an appraised value of $467,000, assessed value of $88,730, as residential property. Complainant proposed a value of $325,000, assessed value of $61,500. A hearing was conducted on June 25, 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 Bradley Rosenthal testified at the hearing. His opinion of value of the house is $325,000 as he believes the house is a “tear down.” Complainant testified that he purchased the home in April 2000 for $427,000. After the purchase of the home, he discovered asbestos in the duct work which was a result of someone attempting to remove the asbestos insulation. Much of the encasing and asbestos insulation was removed but an amount remained. The Complainant presented Exhibit A which was admitted into evidence. Exhibit A consists of repair bids. The bids include removal of asbestos for $13,567.00, roof repairs of $14,871.00, replacement of HVAC for $20,925, and miscellaneous repairs of $10,000. The total of the repairs is $49,363.

Respondent’s Evidence

Respondent placed into evidence the testimony of Mr. Hackmann, appraiser for St. Louis County. The appraiser testified as to his appraisal of the subject property. The Appraisal Report, Exhibit 1, of Mr. Hackmann was received into evidence. Mr. Hackmann arrived at an opinion of value for the subject property of $520,000 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 6414 San Bonita Ave, Clayton, Missouri. The property is identified by locator number 19J320350. The property consists of a 5400 square foot lot improved by a two-story brick, single-family structure of good quality construction. The house is 82 years of age and appears to be in above average condition. The residence has a total of 10 rooms, which includes 4 bedrooms, three full baths, and contains 3,006 square feet of living area. There is a full basement and a detached two-car garage. There was no listing or sale of the property noted within three years prior to the tax date of January 1, 2007.

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 $325,000, as proposed.

5. The improvement is in need of repairs including the removal of asbestos, replacement of the roof and HVAC, and miscellaneous repairs. The total of the repairs is $49,363.

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 properties were located within .09 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 May, 2005 for $560,000. This property consists of a 6760 square foot lot improved by a two-story brick single-family structure of good quality construction. The house is 85 years of age and appears to be in good condition. The residence has a total of 10 rooms, which includes 4 bedrooms, 3 full baths, and contains 3,334 square feet of living area. There is a full basement and a detached three car garage.

Comparable 2 sold in December 2004 for $494,000. This property consists of a 5400 square foot lot improved by a two-story brick single-family structure of good quality construction. The house is 77 years of age and appears to be in good condition. The residence has a total of 7 rooms, which includes 3 bedrooms, 2 full baths and 1 half bath, and contains 2,396 square feet of living area. There is a full basement and a detached two-car garage.

Comparable 3 sold in August 2005 for $518,000. This property consists of a 5400 square foot lot improved by a two-story brick single-family structure of good quality construction. The house is 57 years of age and appears to be in good condition. The residence has a total of 8 rooms, which includes 4 bedrooms, 2 full baths and 1 half bath, and contains 2,288 square feet of living area. There is a full basement.

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 -$44,000 or -7.9% of the sales price. The net adjustments for Comparable 2 amounted to $15,600 or 3.2% of the sales price. The net adjustments for Comparable 3 amounted to $18,500 or 3.6% of the sales price.

10. The adjusted sales prices for the comparables calculated to $516,000, $509,600, and $536,500 respectively. The appraiser concluded on a $520,000 value which calculated to a value per square foot of $172.99 compared with the sales prices per square foot of living area for the comparables of $167.97, $206.18 and $226.40.

11. Respondent’s appraisal was accepted only to sustain the original assessment made by the Assessor and not for the purpose of raising the assessment above that 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.

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).

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).

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).

The residence is in need of repairs. The Complainant testified as to the repairs needed and the bids he obtained for those repairs. The bids include removal of asbestos for $13,567.00, roof repairs of $14,871.00, replacement of HVAC for $20,925, and miscellaneous repairs of $10,000. The total of the repairs is $49,363. Complainant testified that it is his opinion that even after the removal of asbestos, the true value of the home will suffer due to the stigma of having asbestos at one time. The Complainant provided no market evidence. Without evidence of the market effect, the Hearing Officer is left in the nebulous twilight of speculation, conjecture and surmise.

The appraiser for the Respondent concluded on a value of $520,000. The appraiser made an adjustment for the condition of the subject residence by making a negative adjustment of $20,000 to the comparable properties. Taking the value of $520,000 and deducting the total amount of repairs as provided by Complainant ($49,363.00) results in a value of $470,637. The valuation by the Board of Equalization is $467,000

ORDER

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

The assessed value for the subject property for tax years 2007 and 2008 is set at $88,730.

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 8^th day of July, 2008, to: Bradley Rosenthal, 6414 San Bonita Avenue, St. Louis, MO 63105, 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