State Tax Commission of Missouri

 

MARK & KAREN TULPER,              )

)

Complainant,                )

)

v.                                                         )           Appeal Number 07-10029

)         

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 SET ASIDE.  Hearing Officer finds presumption of correct assessment rebutted. True value in money for the subject property for tax years 2007 and 2008 is set at $335,000, residential assessed value of $63,650.

Complainant, Mark Tulper, appeared pro se.

Respondent appeared by Counsel, Paula J. Lemerman, Associate County Counselor.

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 $386,100, assessed value of $73,360, as residential property.  The Board reduced the value to $356,000, assessed value of $67,640.  Complainants proposed, in their Complaint for Review of Assessment, a value of $326,350, assessed value of $62,010.  A hearing was conducted on June 24, 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

Mr. Tulper testified on behalf of Complainants.  The taxpayer gave his opinion of value as $326,350.  Exhibit A was received into evidence.  Exhibit A consisted of the following documents: (1) Valuation calculations by owner; (2) August 15, 2004, Board of Equalization Decision Letter on subject property; (3) March 15, 2007, Change of Assessment Notice on subject property; (4) photographs of properties used as comparables on the Change of Assessment Notice; (5) photographs of subject street; and (6) photographs of various deferred maintenance items on the subject house.

Mr. Tulper based his opinion of value on an average of values set by the Assessor for three properties on the subject street

Respondent’s Evidence

Respondent placed into evidence the testimony of Ms. Sarah Curran Missouri State Certified Residential Real Estate Appraiser and Supervisory Appraiser for Robert A. Smith, appraiser for St. Louis County.  Ms. Curran testified as to the appraisal of the subject property.  The Appraisal Report (Exhibit 1) of Mr. Smith was received into evidence.  Mr. Smith arrived at an opinion of value for the subject property of $335,000 based upon a sales comparison approach to value.  In performing the sales comparison analysis, the appraiser relied upon the sales of three properties 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 140254 Conway Road, Chesterfield, Missouri.  The property is identified by parcel number 19Q430210.  The property consists of a one (1) acre lot improved by a story and a half, frame, single-family structure of good quality construction.  The house was built in 1967 and appears to be in average condition.  The residence has a total of six rooms, which includes two bedrooms, and three full baths, and contains 2,306 square feet of living area.  There is a full partial finished basement and a built in three-car garage.

3.         There was evidence of new construction and improvement from January 1, 2007, to January 1, 2008.  This included refurbishing of the pool, replacement of two decks, replacement of the cedar shake roof with composition shingles and replacement of a railroad tie retaining wall with a rock retaining wall.  Complainant declined to present documentation for the cost of these updates.  The evidence was insufficient to establish the contributory value these improvements made to the property for 2008.  The valuation to be set for 2007 will remain the same for 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 $326,350.

5.         By letter dated June 26, 2008, Complainants sought to submit additional information for this appeal.  Part of that information related to an offer of settlement.  Offers of settlement are not admissible.  The hearing in this case was closed on June 25, 2008.  Parties are not permitted to submit additional evidence after the close of the hearing.  Complainants’ Letter of June 26th and attached material is not a part of the record in this appeal.

6.         The properties relied upon by Respondent’s appraiser were comparable to the subject property for the purpose of the appraisal problem. The properties were located within .11 of a mile to less than 2 miles of the subject.  Each sale property sold at a time relevant to the tax date of January 1, 2007, in a range from June, 2004 to October 2006.  The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area (ranging from 2,384 to 2,762 square feet), location, site size and other amenities of comparability.

7.         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.  In particular, adjustments were made to comparables 2 and 3 to account for their superior Quality of Construction, Condition and Location.  The net adjustments ranged from -22.6% to 13.5% of the sales price.  The higher than customary range of adjustments was due to accounting for the items of Quality of Construction, Condition and Location.

8.         The adjusted sales prices for the comparables calculated to $347,300, $335,900, and $331,200, respectively.  The appraiser concluded on a $335,000 value which calculated to a value per square foot of living area of $145.28 compared with the sales prices per square foot of living area ranging from $123.06 to $160.12.

9.         Respondent’s evidence met the standard of substantial and persuasive to establish the value of the subject, as of January 1, 2007, to be $335,000.

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, 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).  Complainants’ evidence did not reach the required standard of substantial and persuasive to rebut the presumption of correct assessment by the Board.  The evidence presented by Respondent (Exhibit 1) did constitute substantial and persuasive evidence to rebut the presumption and establish fair market value.

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).

            Respondent presented evidence of fair market value based upon a recognized approach to value, the sales comparison approach.  Complainants failed to present an approach to value which is accepted in appeals before the Commission or by the Courts for the valuation of real property in an ad valorem tax appeal.  The sales comparison approach, when sufficient market data is available, as it was in this instance, is generally the strongest methodology for establishing the indicated value of an owner occupied residential property.  This approach provides a sound indicator of what buyers and sellers are doing in the market.

Complainants Failed To Meet 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). 

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). 

The owner’s opinion in this instance was based upon a faulty methodology.  Averaging of the appraised values of three other properties, irrespective that they are located on the subject street, is not a methodology founded upon proper elements or a proper foundation.  It is not an approach to value accepted for the appraisal of real property.  Absent an opinion of value based on market derived data, Complainants failed to prove their case.  Therefore, the opinion of value of $326,350 has no probative weight in this appeal. 


Respondent’s Burden of Proof

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.  Hermel, Cupples-Hesse, Brooks, supra.  The Smith-Curran Appraisal (Exhibit 1) met the required burden of proof and establish the indicated fair market value as of January 1, 2007 for the property under appeal to be $335,000.

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 SET ASIDE.

The assessed value for the subject property for tax years 2007 and 2008 is set at $63.650.

Complainant 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 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

 

 

_____________________________________

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 8th  day of July, 2008, to:    Mark Tulper, 14024 Conway Rd., Chesterfield, MO 63017, 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