State Tax Commission of Missouri

LEON STEINBACH, )

)

Complainant, )

)

v. ) Appeal No. 07-10165

)

PHILIP MUEHLHEAUSLER, ASSESSOR, )

ST. LOUIS COUNTY, MISSOURI, )

)

Respondent. )

ORDER

AFFIRMING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

On November 5, 2008, Senior Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) setting aside the assessment by the St. Louis County Board of Equalization.

Complainant filed his Application for Review of the Decision. Respondent filed his Response.

CONCLUSIONS OF LAW

And

DECISION

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 and non-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 or owners who testify on the issue of reasonable value, but may believe all or none of the expert’s or owner’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 Supported by Evidence

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’s Grounds for Appeal

Complainant set forth the following points as the basis for his appeal.

1. Rejection of factual information in paragraphs 3, 4 and 5 of Enclosure 3 of letter of September 2, 2008, providing justification and substantiates the information in Residential Appraisal Report dated July 14, 2007.

2. Rejection of Complainant’s October 3, 2008 letter (sic – letter is dated October 2, 2008) as Exhibit 3. The letter provides factual information that refuted the Respondent’s Objections to Complainant’s Exhibits.

3. Unsubstantiated and false statements contained in the Order Ruling on Objections to Exhibits.

4. The St. Louis County Appraiser’s inflated value of $90,000 for the subject 570 Coach Light Lane property.

5. Objection to the St. Louis County Appraiser Comments regarding the condition of the home at 519 Coach Light Lane (Sales Comp 1 on Appraisal Report).

6. Objection to the Subjective and Prejudicial Decisions made by the Hearing Officer during the October 22, 2008, evidentiary hearing and Order, dated

October 7, 2008.

7. Complainant has necessary skills, academic credentials and experience in real estate appraising, and market analysis of residential properties as a real estate broker.

The Commission does not find merit to any of the grounds asserted by Complainant. A review of the record shows that the Hearing Officer did not err in his determinations as challenged by Complainant.

Ruling on Objections to Exhibits – Points 1, 2 & 3

The points raised by Mr. Steinbach in items 1, 2 and 3 relate to the Hearing Officer’s Order Ruling on Objections to Exhibits, issued October 7, 2008. Complainant only states his claim but failed to provide any explanation as to how the Hearing Officer erred in his October 7^th Order. A review of that Order and the filings made by Complainant[5] and Respondent[6] establishes that the Hearing Officer properly sustained the objections raised by Respondent. There was no error in the exclusion of paragraphs 3, 4 and 5 of Complainant’s 9/2/08 letter and Enclosure 3. Nor was it error for the Hearing Officer to exclude the October 2, 2008, letter.

As to Mr. Steinbach’s assertion of “unsubstantiated and false statements in the Order Ruling on Objections to Exhibits,” he only presents this general claim. No details are provided in support of this argument. Complainant fails to point out what parts of the Order fall under his assertion. In the absence of Complainant presenting to the Commission details relative to this point, it is without merit. The Commission’s review of the Order provides nothing to support the Complainant’s claim of unsubstantiated and false statements.

The Hearing Officer provided a detailed explanation for his rulings. It would serve no purpose to restate the rulings and the basis for same. In response to Complainant’s point, the Order of October 7, 2008, is incorporated by reference as if set out in full herein.

Appraiser’s Value of $90,000 – Point 4

This argument is nothing more than a restatement and expansion of the argument Mr. Steinbach put forth in his October 2^nd letter. The Complainant’s attempt to appraise his property was completely in error as to his “adjustments” for both the subject’s pool and deck. The Hearing Officer addressed both of these matters in detail.[7] The discussion of the Hearing Officer properly pointed out the fatal deficiencies in the methodology used by Complainant and the appropriate treatment of these factors in the Armstrong appraisal. There is no basis to conclude error on the part of the Hearing Officer with regard to this point.

Condition of Comp 1

Mr. Steinbach next asserts his objection to the characterization by Mr. Armstrong in his appraisal relative to the condition of Comparison Sale 1. The review of the filings made by Complainant, as well as the transcript of the hearing, establishes that Mr. Steinbach never raised any question or issue relative to the conclusion of Mr. Armstrong that his Comp 1 was “inferred to have been in poor condition prior to rehab.”[8] The hearsay information contained in the Application for Review under this point was not evidence in the proceeding. It cannot now be received into the record. Therefore, the Hearing Officer could not have erred on this point. Accordingly there is no basis under this point to reverse the Decision.

Complainant Not An Expert In Real Estate Appraisal

The 6^th and 7^th points presented address the issue of the Complainant’s claim that he should be considered an expert in real estate appraisal for purposes of this hearing. Mr. Steinbach takes exception to the Hearing Officer’s finding that Complainant is not qualified as an expert witness on the appraisal of residential real estate in proceedings before the Commission.[9] Complainant argues that “Since there is no Missouri State Statute that forbids Mr. Steinbach from qualifying and testifying as an ‘expert witness’, Mr. Tichenor’s statement is false.”[10]

Complainant misunderstands the applicable law on this point. The controlling statute with regard to this matter is §490.065.1, RSMo.[11] The statute states: “In any civil action, if scientific, technical or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise.” This statute does not give an unqualified right to testify to any person who is a self-proclaimed expert. It is only a witness qualified by knowledge, skill, experience, training or education that may testify in the form of an opinion as an expert.

It is the responsibility of the Hearing Officer to determine whether a given witness is qualified as an expert on the subject on which a person desires to testify. The determination of whether Mr. Steinbach was qualified to testify as an expert on the matter of appraisal of his own property was within the discretion of the Hearing Officer.[12] The failure to satisfy the statutory foundation requirements[13] renders proffered expert testimony inadmissible.[14] Hearing Officer Tichenor’s finding that Mr. Steinbach is not qualified as an expert on the appraisal of residential real estate is well founded. The detailed examination of Exhibit A[15] gives sound support for the Hearing Officer’s finding.

The owner of property is always permitted to give an opinion of fair market value. The Hearing Officer properly received Mr. Steinbach’s testimony as the owner.[16] The appraisal form that the taxpayer had filled in as the basis for his opinion of value was also received into evidence.[17] However, neither the owner’s testimony, nor the valuation document were considered by the Hearing Officer to consist of expert testimony or an appraisal by an expert. This Hearing Officer did not err in this regard. Due to the numerous inconsistencies, flaws and defects detailed by the Hearing Officer, the owner’s opinion was without any probative value.

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. The Decision and Order of the hearing officer, including the findings of fact and conclusions of law therein, is incorporated by reference, as if set out in full, in this final decision of the Commission.

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 mailing date set forth in the Certificate of Service for this Order.

If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts unless disbursed pursuant to Section 139.031.8, RSMo.

If no judicial review is made within thirty 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.

SO ORDERED February 11, 2009.

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 sustaining the assessment made by the Assessor is SET ASIDE. Hearing Officer finds Respondent’s evidence rebutted the presumption of correct assessment by the Board. True value in money for the subject property for tax years 2007 and 2008 is set at $90,000, residential assessed value of $17,100.

Evidentiary hearing held on October 22, 2008, at the St. Louis County Government Center, Clayton, Missouri.

Complainant appeared pro se.

Respondent appeared by Assistant County Counselor, Robert Fox.

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

2. The subject property is located at 570 Coach Light Lane, Hazelwood, Missouri. The property is identified by Locator Number 08L320754. The property consists of 7,479 square foot lot improved by a split-foyer single-family structure of average quality (frame) construction. The house was built in 1963 and appears to be in poor condition. The residence has six rooms, which includes three bedrooms, one bath, and contains 1,026 square feet of above grade living area. There is a full basement with a half bath and approximately forty-five percent finished area. The house has an attached one-car garage.[18]

3. There was no evidence of new construction and improvement from January 1, 2007, to January 1, 2008.

4. Complainant is not qualified as an expert witness on the appraisal of residential real estate in proceedings before the Commission.[19]

5. 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 $51,000, as proposed.

6. The properties relied upon by Respondent’s appraiser were comparable to the subject property for the present appraisal problem. The properties were located within less than a mile (.15 - .87 of a mile) of the subject. Each sale property sold at a time relevant to the tax date of January 1, 2007 (9/05 – 4/06). The sale properties were similar to the subject in style, quality of construction (Average), age (43 – 44 years), condition (Poor – Average), room, bedroom (3) and bathroom count, living area (within 92 – 130 square feet), location, site size (within 423 – 1023 square feet) and other amenities of comparability.[20]

7. The appraiser made various adjustments to the comparable properties for differences existing 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 -6% to -13.8%. This range of adjustments is well within generally accepted appraisal standards. The adjusted sales prices for the comparables calculated to $84,600, $94,800 and $89,900, respectively. The appraiser concluded on a $90,000 value. That calculated to a value per square foot of $87.72 compared with the sales prices per square foot of living area for the comparables of $100.45, $118.53 and $91.23. The indicated value per square foot of living area is reflective of the subject’s generally poor condition. The comparison of the value per square foot provides a validation check for the appraisal, to demonstrate that the indicated value is consistent with the market for properties such as the subject.[21]

8. Respondent’s evidence met the standard of substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the value of the subject, as of January 1, 2007, to be $90,000.

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. 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.[22]

Presumption In Appeals

There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[23] 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.[24] In the present appeal, Complainant’s evidence fails to meet the required standard to rebut the presumption of correct assessment by the Board. Respondent presented substantial and persuasive evidence to establish that the Board’s valuation was in error. Respondent’s appraisal establish what the fair market value should have been for the property as of 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.[25] It is the fair market value of the subject property on the valuation date.[26]

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.

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.[30] 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.”[31]

Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[32] 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.[33]

As will be addressed below, Mr. Steinbach did not meet the required standard. His evidence was inadequate to establish a market value as of January 1, 2007 of $51,000. Therefore, Complainant failed to meet the burden of proof imposed upon a taxpayer in an appeal before the Commission.

Owner’s Opinion of Value

The owner of property is generally held competent to testify to its reasonable market value.[34] The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[35] Mr. Steinbach’s opinion of value is based upon Exhibit A. As has previously been determined Exhibit A does not constitute an appraisal of Complainant’s property.[36] A review of Exhibit A reveals such serious problems, fundamental to sound appraisal practice, and to a reliable indicator of fair market value, that it can be given no probative weight in this appeal.

Internally Inconsistent

Exhibit A is internally inconsistent. The document tenders one opinion of fair market value based upon data on three sale properties. That value is $51,000. Mr. Steinbach also puts forth what purports to be a cost approach to value. The value determined under this method is $108,511. This variance of over 50% immediately casts serious doubt on the reliability of either method.

A sales comparison approach and cost approach seldom result in identical indicated values. There will always be some degree of variance. However, when sound appraisal principles are applied to a given problem, if both approaches are being developed, the two indicated values should be within a reasonable range of each other. A range of indicated values separated by more than 50% is unacceptable. It is a clear indication that one or both of the methods were not properly developed. It may also indicate a fatal defect in one approach to value as compared to another. The extreme difference in the two values posited establishes that Mr. Steinbach does not possess the requisite education, training and experience to perform correctly either the cost or the sales comparison approach.

Valuation Date

The valuation date of Exhibit A is July 14, 2007.[37] This is an incorrect valuation date. The valuation date is January 1, 2007.[38] Mr. Steinbach did not make any adjustment relative to the time difference in his valuation date and the date required under the controlling statute. In the absence of market evidence showing the necessary adjustment or establishing that no adjustment was required, this error weighs against giving any probative benefit to Mr. Steinbach’s opinion of value.

Cost Methodology Defects

The cost approach, although not relied on by Mr. Steinbach, provides important information demonstrating that Complainant does not possess the training and experience required to perform this approach to value. A brief summary of the deficiencies presented illustrates the point.

Site Value

A site value of $19,000 is stated. There is no data to establish how this amount was determined. There are no sales of vacant land to establish that as of January 1, 2007 the market value of the subject land was $19,000. The initial requirement for performing the cost approach is to establish the value of the land. When there is no showing of the method and underlying data for arriving at the land value, the conclusion of value has no merit. Without substantiating market data a conclusion for land value is nothing but speculation and conjecture. A taxpayer does not meet his burden if evidence on any essential element of his case is found to be based upon speculation, conjecture or surmise.[39] That is exactly the situation with regard to establishing the site value for the cost approach.

Marshall – Swift Cost Manual

Mr. Steinbach developed his replacement cost new relying on the Marshall – Swift Cost Manual. This is a recognized cost manual. However, the cost figures are from June, 2005, eighteen months prior to the valuation date. This again is a flaw in the application of the cost approach. There is no indication that those figures were adjusted to bring them to the January 1, 2007 valuation date. Therefore, no weight can be given to the conclusions asserted by the owner in this respect. This is another indicator of the owner’s lack of expertise in appraisal of real estate.

Physical Depreciation

Physical depreciation is reported to have been “figured by the extraction method.” The problem in Exhibit A is that Mr. Steinbach provides no information as to what sales were employed in his development of the extraction method. No demonstration or narration is provided from which the Hearing Officer can ascertain the actual market basis for a depreciation factor of over 58%. As with the estimation of the site value, the physical depreciation appears to be derived from nothing more than Mr. Steinbach’s speculation. That is not an appropriate basis for developing an opinion of value in an appeal before the Commission.[40]

Summary of Cost Methodology Defects

The aforementioned defects illustrate Mr. Steinbach’s lack of expertise for appraising real property. Any reputable financial institution seeking to loan money on the property being valued would not accept the cost methodology as developed. The irregularities render the cost approach of no value in the present appeal.

Sales Comparison Methodology Defects

There are a significant variety of problems with the analysis of the three sales presented by Mr. Steinbach. A review of these defects, like the cost methodology defects, provides further indication that Mr. Steinbach’s does not possess the requisite appraisal knowledge and experience to qualify as an expert witness in a proceeding before the Commission. Furthermore, the shortcomings of the analysis tendered of three sales render the conclusion of value as of no evidentiary value.

Lack of Narrative

Exhibit A is substantially devoid of any detailed narrative that addresses the appraisal problem and critical items including: Assessment Information and Tax Data, Neighborhood Description, Description of Improvements – Subject Property, Description of Sales Comparables, Comments on Sales Comparison Approach – items of adjustment.[41] The limited narrative provided on the form comprising Exhibit A simply does not rise to the level of information that is expected for Commission appeals. A comparison between Mr. Armstrong’s Summary pages[42] and 1 and 2 of the taxpayer’s valuation form demonstrates the serious deficiencies in the owner’s attempt to “appraise” his property.

Freddie Mac & Fannie Mae Forms

Most licensed and certified appraisers, valuing property for loan purposes, utilize the Freddie Mac Form 70/Fannie Mae Form 1004. The Uniform Residential Appraisal Report is acceptable to lending institutions for financing or refinancing of a loan or for obtaining a home equity line of credit. However, the use of this standardized form before the Commission is not looked on with the same degree of favor that it enjoys with financial institutions.

All of the boiler-plate language in the form[43] is addressed toward an appraisal for loan purposes. The “Appraiser’s Certification” is directed, in part, to valuation for loan purposes and not valuation for assessment purposes.[44] The form does not track with an appraisal for ad valorem tax purposes.

One of the gross deficiencies with the form in relation to Commission appeals is its lack of detailed narrative discussion and explanations. Lending institutions do not consider the lack of detailed narrative to be a deficiency in an appraisal report. The Hearing Officer does. Nevertheless, the standard form is accepted in Commission proceedings when the state licensed or certified appraiser is present to lay the proper foundation for admission of the document and to be cross examined.

In the present case, the attempt by Mr. Steinbach to boot-strap his methodology up to the status of an “appraisal report” prepared by an expert fails. As has previously been addressed, the taxpayer is not an expert in real estate appraisal. The use of a standardized form does not and cannot make an expert out of one lacking the requisite training and experience to so qualify. The use of the form provides no additional relevant information that would otherwise give any probative merit to the owner’s opinion of fair market value.

Date of Sale/Time Adjustment

An adjustment for the time difference between the dates of sales and the valuation date (January 1^st, odd-numbered years) may not always be required. However, the appropriate methodology is for the appraiser to consider this factor and determine if there is sufficient market date upon which an adjustment can and should be made. Often appraisers will conclude that the market data does not warrant an adjustment for this factor.

The evidence in the record[45] supports an upward adjustment to each sale property for time of sale. Mr. Armstrong’s conclusion of a minor per annum time adjustment is consistent with generally accepted appraisal practice to account for the inflationary factor in valuations. This is especially true given the generally accepted understanding and knowledge of residential real estate market conditions during 2005 and 2006 in the St. Louis metropolitan area. Mr. Steinbach’s failure to make an adjustment for this factor results in an undervaluation in the adjusted sale prices for each of the comparables.

Mr. Steinbach reported that his sale 3 (644 Coach Light Lane) closed on 4/8/05 at a sale price of $110,000. Mr. Armstrong used this property in his appraisal (Comparable 2). He reported the sale price of $110,000, but a sale date of 11/18/05. The Hearing Officer under his statutory authority to investigate relative to the appeal[46] reviewed the data on this property in the Assessor’s records. Those records show that the April 2005 sale was for $85,000, the November 2005 sale was for $110,000. Mr. Steinbach cited to the wrong sale date for the sale price given.

Living Area & Basement Finish

Mr. Steinbach used the figure of 1,526 square feet as the living area of his house.[47] He did not provide a floor plan to establish that area. Mr. Armstrong shows the living area of the subject to be only 1,026 square feet. Mr. Armstrong then shows a full basement with approximately 45% finished area. The Armstrong appraisal contains a floor plan of the subject property. The house is 27 x 38 feet (1,026) square feet. This is the living area above grade. The full basement is likewise 1026. The area finished (below grade) is approximately 450 – 500 square feet.[48]

Mr. Steinbach added the finished basement (below grade) area to the above grade living area. This produced his 1526 area. This double counts the finished basement area, both as above and below grade area. The form used by the taxpayer specifically designates the area for adjustments for room count and living area as “Above Grade.” Complainant violated the adjustment designation specified by the form being used in placing finished basement area in the above grade living area. For each of the sale properties, Mr. Steinbach added the finished basement area to the above grade area and made his adjustment. No adjustment was made for difference in finished area in the basement.

This is an inappropriate means of addressing difference in living area and difference in basement finish. The proper methodology is to adjust for the above grade living area and make a separate adjustment for the below grade finished area.[49] It invalidates the adjustments Mr. Steinbach calculated for living area for each of his sale properties. The failure to apply correct appraisal analysis on this point further demonstrates the taxpayer’s lack of expertise in appraisal practice.

Condition Adjustment

Mr. Steinbach rated the condition of his home as poor, as did Mr. Armstrong. However, he then rated each of the sale properties as Good and made a downward adjustment of -$10,000. There is a significant problem with this adjustment. Mr. Steinbach provides no explanation of how he arrived at the condition he applied to the three sale properties.

519 Coach Light Lane – Armstrong Comp 1; Steinbach Sale 1

In stark contrast to the conclusion of condition asserted by the taxpayer, Respondent’s appraiser provided detailed information concerning the condition of the comparables used for the appraisal problem. Mr. Armstrong rated his Comparable 1 as poor condition. He provided a sufficient and valid basis for his conclusion on condition. The conclusion was based on his due diligent investigation of renovation permit details, the building inspector’s remarks and the sales agent’s comments at the time of the later resale in April 2007.[50] These are sound sources to arrive at a conclusion on the condition of a sale property. Therefore, this property was equivalent to the subject on its date of sale according to Mr. Armstrong. It was not in a superior condition to the subject. Exhibit 1 rebuts the taxpayer’s assertion that this property’s condition should have been rated as Good. Therefore, making a -$10,000 adjustment to the sale price was not warranted and was in error on the part of Mr. Steinbach.

644 Coach Light Lane – Armstrong Comp 2; Steinbach Sale 3

Mr. Armstrong determined the condition on this property to be Average and made a -$10,000 adjustment to the sale price. Here again, the appraiser provides a narrative basis concerning his determination of condition for this property.[51] Mr. Steinbach’s condition rating of Good has no explanation of how he arrived at this determination. While his adjustment amount was the same as Mr. Armstrong, it is deficient.

The general condition rankings utilized by St. Louis County are Unsound, Very Poor, Poor, Fair, Average, Good, Very Good and Excellent. There is no evidence to support the owner’s assertion that the condition of this property was Good. Furthermore, this conclusion is rebutted by Mr. Armstrong investigation of the sale and his determination that it sold in an “as is” condition. Based on the Armstrong appraisal the appropriate condition for this comparable was Average.

Porch/Patio/Deck Adjustment

The adjustment made by the owner for this category of amenities illustrates in a very definitive manner the lack of Mr. Steinbach’s appraisal expertise. The subject property has a patio, a deck and a front porch.[52] Mr. Steinbach in Exhibit A in the column for the subject inserted the words “Rotten Deck” for these amenities. He then typed in this category for each of the sale properties “None.” Mr. Armstrong described the amenities in this category for each of his comparables and then made appropriate adjustments for the differences. This was proper appraisal methodology.

Complainant on the other hand made a -$14,500 adjustment to each sale property because they did not have a “Rotten Deck” like the subject. This adjustment is an inappropriate adjustment. It further illustrates Mr. Steinbach is mistaken, misinformed or not sufficiently knowledgeable in appraisal practice to properly adjust for such a difference.

Mr. Armstrong deemed the deck on Complainant’s property as a detriment to the value of the property. He concluded the deck needed to be replaced and therefore had no contributory value to the property.[53] There was no dispute on this point, as Mr. Steinbach did not give the deck any contributory value either. Since none of Mr. Steinbach’s sale properties had a wooden deck and given that his deck needs to be replaced, adding no value to his home, there was no adjustment to be made to account for this factor. The -$14,000 adjustment understated the true value in money for each of the sale properties.

Pool Adjustment

Like the erroneous adjustment for the wooden deck, the taxpayer made a similar adjustment for the pool on his property. The pool on the subject property adds no contributory value to the home. It is unusable and needs to be broken up and buried or excavated and torn out.[54] None of the Complainant’s sale properties had a swimming pool. However, Mr. Steinbach made a -$19,500 deduction from each to account for what he estimated to be the cost of repair for his pool. This adjustment is incorrect. It is not an appropriate application of proper appraisal methodology. Since the subject swimming pool is not useable and adds no value to the property, no adjustment should have been made to any of the sale properties for this item. Here again, the taxpayer is undervaluing each of the sale properties by $19,500. This is further evidence of the lack of appraisal knowledge of the owner.

Net Percentage Adjustments

The net adjustments made by Mr. Steinbach as a percentage of sale prices for the three sale properties calculated to 64.2%, 43.5% and 56.4% respectively. Such extreme percentage adjustments fall so far outside accepted norms as to render the owner’s conclusion of value totally worthless. No probative weight can be given to a conclusion of value based upon a sales analysis that had such large adjustments.

Per Square Foot Indicated Value

Mr. Steinbach’s opinion of fair market value as of July 14, 2007 for his property was $51,000. As a per square foot value of above grade living area the amount of $51,000 falls so far below the market range as to render the owner’s opinion of no probative benefit. The above grade living area for the owner’s sale 1 is 896 square feet.[55] The above grade living area of Mr. Steinbach’s sale 3 is 928 square feet. [56] The above grade living area for sale 2 used by the Complainant is 896 square feet.[57]

Therefore, the unadjusted sale prices for the owner’s three sales were respectively, $100.45, $141.02 and $118.53, not $59.21, $75.93 and $61.87 as reported by Mr. Steinbach.[58] The value proffered by the owner of $51,000 calculates to only $49.71 per square foot of above grade living area. This is a significant variance not only from the erroneous per square foot values presented by Complainant, but it is such a great variance from the actual market range of $100.45 to $141.02 as to provide further validation of the lack of merit to the valuation methodology developed by Mr. Steinbach.

Summary of Sale Comparison Methodology Defects

The foregoing analysis of the methodology employed by the owner in attempting to construct a sales comparison approach to value further illustrates and establishes that Mr. Steinbach is not qualified as an expert in the appraisal of real property. The magnitude and number of errors in fundamental appraisal practice are such that the owner’s opinion has no substantive market evidence to validate a value of only $51,000 as proposed. The sales data on this record will simply not support such a value. The owner’s opinion is without any probative value as it was not founded upon proper elements and a proper foundation.[59]

Respondent Proves Value

Respondent, when advocating a value different from that determined by the original valuation or a valuation made by the Board of Equalization, must meet the same burden of proof to present substantial and persuasive evidence of the value advocated as required of the Complainant under the principles established by case law.[60] Respondent presented substantial and persuasive evidence to establish a fair market value as of January 1, 2007, to be $90,000 for the property under appeal.

As previously noted, Mr. Armstrong properly performed a sales comparison approach to value. He adjusted for differences between each sale property and the subject to arrive at a range of indicated values. The analysis employed by the appraiser was consistent with generally accepted appraisal practice. There is no reasonable basis upon which the Hearing Officer could reject the conclusion of value presented by Respondent’s appraiser.

Complainant’s Challenges

Complainant presented a number of challenges in his September 19, 2008 letter to Mr. Armstrong’s appraisal. These were addressed in detail in the Hearing Officer’s Order of October 7, 2008.[61] Furthermore, assertions relative to square footage of living area have been addressed above. Mr. Steinbach raised two of his assertions again at hearing. These two claims related to the calculation of the square footage of the lot for the property at 644 Coach Light Lane, and the distance the property at 822 Mary Jo Lane (Comparable 3) from the subject.

Assertions are not evidence. A claim made by one party does not establish the truthfulness of the matter asserted. There must be substantive evidence to establish a claimed error. As is discussed below, neither of the claims put forth by Mr. Steinbach are established by evidence in the record.

Area of Lot – 644 Coach Light Lane

Mr. Steinbach argues that the correct square footage of the lot is 9374.[62] Mr. Armstrong’s sales grid gives an area of 8465 square feet.[63] The lot in question is an irregular shaped lot. It is a similar to a trapezium.[64] However, the evidence at hearing established that one side of the lot (130’) is actually curved.[65] Therefore, the lot measures 53 feet at the back, 101 feet on one side and 106 feet on the other side and 130 feet in the front along a curve.[66]

Complainant calculated his area for the lot by using the following formula: 101 x 120 = 13,130 + 106 x 53 = 5,618 = 18,748 ÷ 2 = 9,374. However, Mr. Steinbach presented no authoritative source to establish that this is the proper method for calculating the area of a figure with four unequal sides, none parallel, three of which are straight lines and the fourth side being curved. Mr. Steinbach failed to establish the proper formula for the calculating of the irregular lot of this property.

Absent any such substantiating evidence, the Hearing Officer has no basis upon which to conclude that Mr. Armstrong erred on this point. Furthermore, there is no evidence from which it can be concluded that the final opinion of value by Mr. Armstrong would be materially altered, assuming that the actual area of the lot were different than what he used. The simple assertion of the owner does not rebut the area reported by Respondent’s appraiser, or his conclusion of value. The claim of Mr. Steinbach on this point is not well taken.

Distance of 822 Mary Jo Lane from Subject

The next claim raised by Mr. Steinbach against the Armstrong appraisal is that the third sale relied on was 1.49 miles from the property under appeal. Absolutely no evidence was presented to verify the owner’s claim. No explanation of how Mr. Steinbach arrived at his claimed distance was presented. He presented no documentation establishing the distance from the sale property to the subject. Absent any such supporting evidence, the assertion by Mr. Steinbach is nothing but mere conjecture.

Mr. Armstrong established by the Neighborhood Map contained in his Appraisal that the distance in a straight line from the subject to Comparable Sale 3 was approximately .87 miles. The map provided has a scale from which the simple measurement can be made. There is nothing upon which the Hearing Officer can conclude that the distance reported is in error. The taxpayer’s unverified assertion does not refute the conclusion on this matter presented by Respondent’s appraiser. This assertion of Mr. Steinbach is not well taken.

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 SET ASIDE.

The assessed value for the subject property for tax years 2007 and 2008 is set at $17,100.

Complainant may file with the Commission an application for review of this decision within thirty 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. [67]

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 November 5, 2008.

STATE TAX COMMISSION OF MISSOURI

W. B. Tichenor

Senior Hearing Officer

[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, 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).

[5] Complainant filed: Exhibit A – September 2, 2008 letter, with Enclosures 1, 2 & 3; September 18, 2008 letter – Exhibit 2 – Rebuttal Exhibit; October 2, 2008 letter – Exhibit 3, with Enclosures 1, 2 & 3.

[6] Respondent filed: Exhibit 1 – Appraisal Report of Kyle J. Armstrong, Residential Appraiser Senior; Objections to Complainant’s Exhibits, 9/18/08; Respondent’s Objections to Complainant’s Rebuttal Exhibit, 10/3/08; Exhibit 2 (surrebuttal) – Email from Kyle Armstrong, re: lot size calculations for Comp 2 and distance explanation for Comp 3 – points challenged by Complainant in letter of 9/18/08.

[7] DECISION, Porch/Patio/Deck Adjustment, pp. 15-16; Pool Adjustment, p. 16.

[8] Respondent’s Exhibit 1 – Addendum – Description of the Sales Comparables, p. 2-3.

[9] DECISION, Finding of Fact 4, p. 3, See, footnote to Finding of Fact 4, citing to prior Commission appeals in which this issue was addressed.

[10] Application for Review, Item 3.f, p. 3.

[11] Rule 702, Missouri Evidence Restated.

[12] Bynote v. National Super Markets, Inc., 891 S.W.2d 117, 125 (Mo. 1995).

[13] § 490.065.1 RSMo.

[14] Scott v. Blue Springs Ford Sales, Inc., 215 S.W.3d 145, 173 (Mo.App. W.D. 2006); McGuire v. Seltsam, 138 S.W.3d 718, 721 (Mo. Banc 2004).

[15] DECISION, Owner’s Opinion of Value, pp. 7-17.

[16] Tr. 3:25 – 7:19

[17] DECISION, Complainant’s Evidence, p. 2.

[18] Exhibit 1.

[19] Vandeven v. Muehlheausler, STC Appeal No. 07-13602, 10/30/08, See Also, Order Ruling on Objections to Exhibits, 10/7/08; Steinbach v. Muehlheausler, STC Appeal Nos. 05-10672, 05-10673 & 05-10674, 6/30/06.

[20] Exhibit 1.

[21] Ibid.

[22] Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.

[23] 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).

[24] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).

[25] 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).

[26] Hermel, supra.

[27] 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.

[28] 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).

[29] 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).

[30] Hermel, supra.

[31] 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).

[32] See, Cupples-Hesse, supra.

[33] Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).

[34] 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).

[35] Cohen v. Bushmeyer, 251 S.W.3d 345, (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).

[36] Order Ruling on Objections to Exhibits, 10/7/08.

[37] Exhibit A, p. 2.

[38] Section 137.115, RSMo.

[39] See, Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980).

[40] Ibid.

[41] See, Exhibit 1, Addendum, pp. 1-5, for illustration of proper narrative to be included in appraisal reports presented in appeals before the Commission; 12 CSR 30-3.065 (1) 2 – what should be included in the sales comparison approach.

[42] Exhibit 1, pp. 1 &2.

[43] Exhibit A, p. 4.

[44] Exhibit A, p. 5, Item 20, p. 6, Items 21, 22, & 23.

[45] Exhibit 1, p. 2; Addendum, p. 4 – Appreciation over time.

[46] Section 138.430.2 RSMo.

[47] Exhibit A, p. 2.

[48] Exhibit 1, Floor Plan.

[49] See, Exhibit 1, p. 2, for correct application of recognized appraisal methodology on this point.

[50] Exhibit 1, Addendum, page 2 – Description of Sale Comparable 1.

[51] Exhibit 1, Addendum, page 3 – Description of Sale Comparable 2.

[52] Exhibit 1, p. 2 – Summary; Addendum, p. 2 – Description of Improvements- Subject Property.

[53] Ibid.

[54] Ibid.

[55] Exhibit 1, p. 2 – Summary – Gross Living Area, Comp. 1.

[56] Exhibit 1, p. 2 – Summary – Gross Living Area, Comp. 2.

[57] Assessor Record (cited to in Exhibit A, p. 2); Section 138.430.2 RSMo. – Hearing Officer’s Authority to Investigate.

[58] Exhibit A, p. 2.

[59]Cohen; Carmel Energy; Pracht; Shelby County R-4 School District; supra.

[60] Hermel, Cupples-Hesse, Brooks, supra.

[61] Incorporated by Reference as if set out in its entirety.

[62] Exhibit A, p. 2.

[63] Exhibit 1, p. 2.

[64] As used in this decision a trapezium is a quadrilateral with no parallel sides.

[65] Testimony of Kyle Armstrong.

[66] Respondent’s Objections, ¶1B; Assessor’s Record – 644 Coach Light Lane.

[67] Section 138.432, RSMo.