State Tax Commission of Missouri

JERRY SWARTZ, )

)

Complainant, )

)

v. ) Appeal Number 07-81501

)

RICHARD TREGNAGO, ASSESSOR, )

RANDOLPH COUNTY, MISSOURI, )

)

Respondent. )

DECISION AND ORDER

HOLDING

Decision of the Randolph County Board of Equalization reducing the assessment made by the Assessor is SET ASIDE. Hearing Officer finds presumptions of correct assessment not rebutted. True value in money for the subject property for tax year 2007 is set at $438,000 assessed value of $83,220 residential value.

Complainant appeared in person.

Respondent appeared in person.

Case heard and decided by Hearing Officer Maureen Monaghan.

ISSUE

The Commission takes this appeal to determine (1) the true value in money for the subject residential property on January 1, 2007; and (2) whether the subject residential property was assessed at a ratio greater than 19% or the average assessment ratio for residential property in Randolph County.

SUMMARY

Complainant appeals, on the grounds of overvaluation and discrimination, the decision of the Randolph County Board of Equalization. The Assessor determined an appraised value of $592,073, assessed value of $112,490, as residential property. The Board reduced the value to $547,350, assessed value of $104,000. Complainant at the time of filing his appeal proposed a value of $400,000 to $450,000, assessed value of $76,000 to $85,500. A hearing was conducted on December 4, 2007, at the Randolph County Courthouse, Mexico, Missouri. At the hearing, the Complainant proposed a value of $438,000 and Respondent proposed a value of $590,000.

The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

Complainant’s Evidence

The following exhibits were received into evidence on behalf of the Complainant.

Exhibit A – Appraisal report of James K. Stone

Exhibit B – M.L.S. for property on Conestoga in Moberly, Missouri.

Exhibit C – Assessor’s record for Orscheln property

All Exhibits were received into evidence.

Testimony of Jerry Swartz

Testimony of James K Stone

Respondent’s Evidence

The following exhibits were received into evidence on behalf of the Respondent.

Exhibit 1 – Assessor’s Report

Exhibit 2 – Randolph County Sales Study

All Exhibits were received into evidence.

Testimony of Richard Tregnago

FINDINGS OF FACT

1. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Randolph County Board of Equalization.

2. The subject property is located at 1201 Epperson, Moberly, Missouri. The property is identified by parcel number: 10-1.0-11.0-0-000.037.000. The property consists of an eleven acre lot improved by a 1.5 story brick/stone/dryvit, single-family home structure of above average quality construction. The structure was built in 2000. The residence has a total of 9 rooms, which includes 4 bedrooms, 5 baths, and contains 4,061 square feet of living area. The full basement is approximately 1,201 of unfinished and partially finished area. There is a three car attached garage. Additional features include a swimming pool with an outbuilding, another outbuilding, a pond with dock. There was no listing or sale of the property within three years prior to the tax date of January 1, 2007. The only construction or improvements to the properties since January 1, 2007, is an outdoor fireplace.

3. Complainant’s evidence was 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 $438,000.

4. Complainant’s evidence was not substantial and persuasive to establish that the property under appeal was being assessed at a ratio greater than 19% or the average ratio for residential property in Randolph County.

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 presumptions of correct assessment are 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 v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341 (Mo. 2005). Citing to Hermel, supra; and Cupples Hesse Corp. 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

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 is 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 each 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, p. 2.

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 sales comparison approach is generally the best suited approach for the appraisal of owner occupied residences. When there is adequate and sound market data, the sales comparison approach provides the best evidence of value for an appraisal problem of this nature.

Complainant’s Burden of Proof

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).

The Complainant has met the burden of proof in the present appeal. The Complainant presented the testimony and appraisal report of James K. Stone, certified residential real estate appraiser. Mr. Stone used both the cost approach and the sales comparison approach to determine market value. Mr. Stone relied primarily upon the sale comparison approached believing it was the best indicator of market value. Although Mr. Stone used an effective date of January 30, 2007, the use of an incorrect effective date will go to the weight of the evidence and not to its admissibility.

Mr. Stone used three sales in his sales comparison approach. The sales occurred approximately 35 miles from the subject property. Mr. Stone reported that there were no comparables in the subject’s market due to the quality and nature of the construction of the subject property as well as the design and appeal of the property. Mr. Stone used sales in Columbia, Missouri. He felt the sale properties Columbia, Missouri were most similar to the subject property and were the closest comparable market.

The comparable properties were adjusted for the size of the lot, age, location, basement finish and/or garage space. The net adjustment to the sales price ranged from 3.9% to 8.4% with gross adjustments from 17.9% to 25.8%. The comparables were similar to the subject property in design, size, quality of construction, and condition. The adjusted sales prices ranged from $425,936 to $530,583. Using the two properties most similar to the subject property, the resulting value is $438,000.

The appraiser reviewed one sale property in Moberly, Missouri and developed a cost approach to confirm his final value. The sale property in Moberly was 4 miles from the subject property. The sale property had 900 less square footage, a finished basement, excellent quality of construction and was lake front property. The residence sold in 2006 for $305,000. The cost approach for the subject property determined a value of $446,950.

The Respondent used a sales comparable approach. The Respondent did not go out of the county to find a similar property which sold in 2006. The Respondent acknowledged having to make “extensive adjustments.” The sale involved an exchange of property and currency. The Respondent had to determine the value of the land used in the exchange. The sale property is located outside of the city of Moberly and is in a recreational area. The improvement on the sale property is 20 years old but did undergo renovations 13 years ago. After determining a value for the exchanged property and making adjustments, the Respondent concluded a value of $610,000. The Respondent also valued the property using the cost approach and determined a value of $589,935. Given the nature of the adjustments the Respondent needed to make on the comparable property, including determining the sales price from an exchange of property, the sales comparison evidence was not persuasive. The Respondent’s evidence was not substantial and persuasive to rebut the presumption of the Board.

When there is adequate and sound market data, the sales comparison approach provides the best evidence of value for an appraisal problem of this nature. Complainant’s evidence was 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 $438,000.

Discrimination Claim

In order to obtain a reduction in assessed value based upon discrimination, the Complainant must prove that the assessing officials have assessed the property under appeal (Complainant’s residential property in this case) at a greater percentage of true value in money (fair market value) than other residential property generally within Randolph County. Koplar v. State Tax Commission, 321 S.W.2d 686, 690 & 695 (Mo. 1959). 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). 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).

A review of Complainant’s evidence on this issue fails to meet the requisite evidentiary standard to establish discrimination. Complainant’s evidence did not establish that any of the other properties had been residentially assessed at any ratio other than 19%.

The Respondent presented a Randolph County Sales Study with sales from 2004 to 2006. The Hearing Officer has no basis whatsoever to conclude that the average residential assessment ratio for Randolph County is anything other than 19% as establish by statute. Therefore, Complainant’s claim of discrimination fails.

ORDER

The assessed valuation for the subject property as determined by the Board of Equalization for Randolph 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 $438,000, assessed value of $83,220.

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. 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. 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 Randolph 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 January 18, 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 18^th day of January, 2008, to: Jerry Swartz, P.O. Box 740, Moberly, MO 65270; Richard Tregnago, Assessor, 110 S. Main, Huntsville, MO 65259; Jim Sears, Clerk, 110 S. Main, Huntsville, MO 65259; Sheila Miller, Collector, 110 S. Main, Huntsville, MO 65259.

____________________________

Barbara Heller, Legal Coordinator