State Tax Commission of
CHARLES JOHNSON, )
)
Complainant, )
)
v. ) Appeal Number 09-10300
)
MICHAEL BROOKS, ACTING ASSESSOR, )
)
Respondent. )
DECISION
AND ORDER
HOLDING
Decision of the St. Louis County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE. True value in money for the subject property for tax years 2009 and 2010 is set at $675,000, residential assessed value of $128,250. Complainant appeared pro se. Respondent appeared by Associate County Counselor Paula J. Lemerman.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
ISSUE
Complainant appeals, on the ground of overvaluation and discrimination, the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property. The Commission takes this appeal to determine (1) the true value in money for the subject property on January 1, 2009; and (2) whether there was an intentional plan by the assessing officials to assess the property under appeal at a ratio greater than 19% of true value in money, or at a ratio greater than the average 2009 residential assessment ratio for St. Louis
County.[1] The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
1. Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax
Commission from the decision of the St. Louis County Board of Equalization. A hearing was conducted on October 12, 2010,
at the St. Louis
2. Assessment. The Assessor appraised the property under appeal at $728,700, a residential assessed value of $138,460. The Board sustained the assessment.[2]
3. Subject Property. The subject property is located at 12 Flynn Forest Lane, Glendale, Missouri. The property is identified by locator number 22L141005. The property consists of a 12,690 square foot lot. The lot is improved with a two-story colonial style, single-family residence that was built in 1996. The gross living area is 3,840 square feet. There is a full basement with 1,300 square feet of finish, including a fourth full bath. The exterior is brick veneer on three sides, with pre-painted siding on the back of the home. The home has a three car attached garage with one side and two rear-entry access. The residence has a total of ten rooms, four bedrooms, three full and one half bath above grade. The structure is in good condition, and the quality of the materials and the workmanship appear to be consistent with surrounding properties. No functional obsolescence exists and there is no significant deferred maintenance.[3]
4. Complainant’s Evidence. Mr. Johnson testified in his own behalf. He gave his opinion of value to be $633,000. This was based upon his conclusions and information contained in Exhibits A, B and G. The following exhibits were filed with the Commission and exchanged with Counsel for Respondent prior to the evidentiary hearing.[4]
|
EXHIBIT[5] |
DESCRIPTION |
DISPOSITION |
|
A |
Flynn Forest Subdivision Assessment Comparison |
Received |
|
B |
Flynn Forest Subdivision Assessment Analysis |
Received |
|
C |
Flynn Forest Subdivision Assessed Values v. Sales Price |
Obj. - Sustained |
|
D |
Flynn Forest Subdivision Sales Comps 2009 Assessment cycle |
Obj. - Sustained |
|
E |
Sales over $700,000 within 1 mile of 12 Flynn Forest |
Obj. - Sustained |
|
F |
Mass
Appraisal Comparable Sales – 613 Wyndham Crossing Cir. |
Withdrawn |
|
G |
2009 Appraisal Cycle – Brookhaven Court |
Received |
|
L |
Photograph 12 Flynn Forest |
Received |
|
M |
Photograph 12708 Wyndbush |
Withdrawn |
|
N |
Photograph 12 Gramercy Place |
Received |
|
O |
Photograph 624 Wyndham Crossing |
Withdrawn |
|
P |
Photograph 673 Wyndham Crossing |
Withdrawn |
There was no evidence of new construction and improvement from January 1, 2009, to January 1, 2010, therefore the assessed value for 2009 remains the assessed value for 2010.[6]
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, 2009, to be $633,000, as proposed.[7]
5. Respondent’s Evidence. The following exhibits were filed with the Commission and exchanged with Complainant prior to the evidentiary hearing.
|
EXHIBIT |
DESCRIPTION |
DISPOSITION |
|
1 |
Appraisal Report – Kyle J. Armstrong – Res. Appraiser Senior |
Received |
|
2 |
12 Exterior Photographs of Subject |
Received |
|
3 |
Comparable Sales Analysis Report – 2009 – Mass Appraisal |
Received |
Mr. Armstrong testified in support of his appraisal. The properties relied upon by Respondent’s appraiser were comparable to the subject property for the purpose of making a determination of value of the subject property. The properties were located within less than a mile of the subject. Each sale property sold at a time relevant to the tax date of January 1, 2009. The sale properties were similar to the subject in style, quality of construction, age, condition, room, bedroom and bathroom count, living area, location, site size and other amenities of comparability. The 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.
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, 2009, to be $675,000.
6. Assessed Value. The subject property being residential property must be assessed at 19% of its true value in money[8], or $128,250.
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.[9]
Basis of Assessment
The Constitution mandates that real property and tangible personal property be assessed at its value or such percentage of its value as may be fixed by law for each class and for each subclass.[10] The constitutional mandate is to find the true value in money for the property under appeal. By statute real and tangible personal property is assessed at set percentages of true value in money.[11] In an overvaluation appeal, true value in money for the property being appealed must be determined based upon the evidence on the record that is probative on the issue of the fair market value of the property under appeal.
Presumption In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[12] This presumption is a rebuttable rather than a conclusive presumption. It places the burden of going forward with some substantial evidence on the taxpayer - Complainant. The presumption of correct assessment is rebutted when the taxpayer, or Respondent when advocating a value different than the value set 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.[13] Complainant’s evidence failed to rebut the presumption of correct assessment by the Board. Respondent presented substantial and persuasive evidence that rebutted the presumption of correct assessment and established 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.[14] True value in money is defined in terms of value in exchange and not value in use.[15] It is the fair market value of the subject property on the valuation date.[16] 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.[17]
The conclusion of value made by Mr. Armstrong was based upon the Standard For Valuation.[18] Complainant’s evidence presented on the issue of value did not come under the required standard.
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.[19] 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.[20] Complainant failed to present an opinion of
the fair market value of his property based upon any of the accepted appraisal
methodologies. Respondent’s appraiser
concluded value relying on the sales comparison approach.
Complainant Failed To Prove Value of $633,000
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, 2009.[21] 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.”[22]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[23] 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.[24]
The owner of property is generally held competent to testify to its reasonable market value.[25] The owner’s opinion is without probative value however, where it is shown to have been based upon improper elements or an improper foundation.[26] As will be addressed below in the examination of Complainant’s exhibits, the owner’s opinion was not founded upon any accepted appraisal approach. The opinion was not based upon proper elements or a proper foundation to arrive at what a willing buyer and seller would have agreed to as the purchase price of the property on January 1, 2009. Accordingly, Complainant’s exhibits and testimony provided no probative evidence on the issue of overvaluation or the claim of discrimination.
Exhibits
Complainant’s exhibits failed to provide substantial and persuasive evidence to either prove the fair market value of the property on January 1, 2009, or to establish a claim of discrimination. The documents developed by Mr. Johnson were simply not relevant to the issues in the appeal.
Exhibits A, B
& G – Overvaluation Issue
Exhibits A, B and G were received into evidence in order to permit the owner to explain the basis for his opinion of value. However, they are not probative on the issue of true value in money on January 1, 2009, for the property under appeal. Likewise, as will be addressed below, these exhibits are not relevant to the claim of discrimination.
Exhibit A provided assessment information on the fourteen properties in the Flynn Forest Subdivision relative to the 2007 and 2009 appraisals by the Assessor’s office. Information was also provided on the changes to valuations to eleven properties after an appeal of the original assessment was made in 2009. The exhibit provides nothing that is recognized as a proper appraisal methodology for ad valorem tax purposes. Comparing assessments with neighboring properties is not accepted as a proper approach to appraise a property in an appeal before the Commission. The exhibit lacks any probative value on the issue of the true value in money for the subject property.
Exhibit B is simply a presentation of the same information in Exhibit A only in a different format. The fourteen Flynn Forest properties are sorted by their assessed[27] values for 2007 and 2009. As with Exhibit A making a comparison of the average valuations of the subdivision to the value of the subject proves nothing. It is not evidence of the fair market value of the property being appealed. There is no probative weight that can be given to this exhibit establishing the true value in money of the subject on January 1, 2009.
Exhibit G provides sale prices on two properties on Brookhaven Court in 2007 and two other properties which sold in 2008. The 2007 sales are not relevant given that evidence on the record[28] provides three sales closer in time to the valuation date. One of the 2008 sales was used by Mr. Armstrong as his first sale comparable. Adjusted to account for the various factors of difference between the subject and this sale, the property supports a value of $656,900, not a value of $633,000 as proposed by Complainant. As to the second sale, the evidence fails to establish this sale to be a proper comparable for valuing the subject. Furthermore, since this sale was not adjusted as is required in a proper sales comparison analysis, the sales price and per square foot sale price are not relevant to finding value for the subject.
Exhibits C, D
& E – Discrimination Claim
Exhibits C, D and E were offered to support Mr. Johnson’s claim of discrimination or equality with neighbors. Counsel for Respondent objected to the exhibits on grounds of lack of foundation to establish that the proposed methodology was recognized by the courts as the manner to establish a discrimination claim and lack of relevance to prove discrimination. The objections were sustained. The exhibits and testimony related thereto were received only as an offer of proof and are maintained in the Commission files on that basis, but not as evidence of overvaluation or discrimination.
Exhibit C provides information showing the sales and assessment data on four sales occurring in Flynn Forest Subdivision from 2002 through 2008. Mr. Johnson calculated that the four properties were given appraised values after the sales that were 11%, 21%, 19% and 10% below the sale price. From this he concluded that for these four properties they were appraised by the Assessor’s office on average a 15% below their sales prices. As will be discussed below this compilation of information has no relevancy since it does not meet the required case law standards to prove discrimination in the assessment of Complainant’s property.
Exhibit D provides the same type of information as set forth in Exhibit C for five different properties which sold in 2007 and 2008 and makes calculations as to the percentages that the 2009 Assessor’s office valuations fall below the various sales prices. As with Exhibit C the information provided is not relevant to establish that the average residential assessment ratio for St. Louis County for 2009 was not 19%. This being the ratio applied to the taxpayer’s property for assessment.
Exhibit E provides the same information as Exhibits C and D but this time from eight properties located within one mile of the subject property with sales prices exceeding $700,000. This compilation of information is no more relevant than the information provided in Exhibits C and D. The methodology is totally flawed as a technique to establish discrimination in the assessment of the Complainant’s property.
Complainant Failed To Prove Discrimination
In order to obtain a reduction in assessed value based upon discrimination, the Complainant must (1) prove the true value in money of their property on January 1, 2009; and (2) show an intentional plan of discrimination by the assessing officials resulting in an assessment of that property at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction.[29] 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.[30] The difference in the assessment ratio of the subject property the average assessment ratio in the subject county must be shown to be grossly excessive.[31] No other methodology is sufficient to establish discrimination.[32]
Mr. Johnson’s first burden was to prove the level of assessment for the subject property in 2009. This is done by independently determining the market value of the subject property and dividing the market value into the assessed value of the property as determined by the assessor’s office. As addressed above, the taxpayer failed to prove the market value of the property under appeal.
Complainant then was required to prove the average level of assessment for residential property in St. Louis County for 2009. This is done by (a) independently determining the market value of a representative sample of residential properties in St. Louis County; (b) determining the assessed value placed on the property by the assessor’s office for the relevant year; (c) dividing the assessed value by the market value to determine the level of assessment for each property in the sample; and (d) determining the mean and median of the results.
The difference between the actual assessment level of the subject
property and the average level of assessment for all residential property,
taken from a sufficient representative sample in
Complainant’s discrimination claim fails because he failed to establish the market value of his property. Without establishing the market value, the assessment ratio for the subject property cannot be calculated. Without establishing the ratio, it cannot be established that the property under appeal was being assessed at a higher percentage of market value that any other property.
However, even if Mr. Johnson had established the market value, the discrimination claim would still fail because he failed to demonstrate that a statistically significant number of other residential properties within St. Louis County are being assessed at a lower ratio of market value than the subject property. Complainant’s claim of discrimination is based upon a severely limited universe of properties located either within the subject subdivision or eight properties which sold for over $700,000 within only a mile of the subject. This limited field of sales is not representative of all residential property in St. Louis County. It does not account for residential properties in other strata of sale prices, location, type of construction, living area and various other factors addressing the vast differences in residential properties in the County. In other words, the restricted sample is not statistically representative of the entirety of St. Louis County residential properties.
Because Complainant failed to establish the market value of his property and failed to establish that he is being assessed at a higher percentage of market value than a statistically significant number of other properties in St. Louis County, he failed to establish discrimination.
Summary and Conclusion
The taxpayer failed to present substantial and persuasive evidence to establish that the assessment by the Board was in error, that the true value in money for the subject on January 1, 2009, was only $633,000, or that the property under appeal was not being assessed at the appropriate ratio.
Respondent Proves Value
Respondent, when advocating a value different from that determined 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.[34] Respondent presented substantial and persuasive evidence to rebut the presumption of correct assessment by the Board and to establish a fair market value as of January 1, 2009, to be $675,000 for the residential portion of the subject. Respondent’s appraiser developed an opinion of value relying upon an established and recognized approach for the valuation of real property, the sales comparison or market approach. The adjustments made the Mr. Armstrong were consistent with generally accepted guidelines for the appraisal of property of the subject’s type. The adjustments properly accounted for the various differences between the subject and each comparable. The sales comparison approach is generally recognized to be the most reliable methodology to be utilized in the valuation of single-family residences.
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 2009 and 2010 is set at $128,250.
Application for Review
A party may file with the Commission an application for review of this
decision within thirty days of the mailing date set forth in the Certificate of
Service for this Decision. The
application shall contain specific facts or law as grounds upon which it is
claimed the decision is erroneous. Said
application must be in writing addressed to the State Tax Commission of Missouri,
Failure to state specific facts or law upon which the application for review is based will result in summary denial. [35]
Disputed Taxes
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 the possible 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 24, 2010.
STATE TAX COMMISSION OF
_____________________________________
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 24th day of November, 2010, to: Charles Johnson, 12 Flynn Forest Lane, Kirkwood, MO 63122, Complainant; Paula Lemerman, Associate County Counselor, County Government Center, 41 South Central Avenue, Clayton, MO 63105, Attorney for Respondent; Michael Brooks, Acting Assessor, County Government Center, 41 South Central Avenue, Clayton, MO 63105; John Friganza, Collector, County Government Center, 41 South Central Avenue, Clayton, MO 63105.
___________________________
Barbara Heller
Legal Coordinator
Contact Information for State Tax
Commission:
Missouri State Tax Commission
301 W. High Street, Room 840
P.O. Box 146
Jefferson City, MO 65102-0146
573-751-2414
573-751-1341 Fax
[1] Discrimination was not marked as a ground for appeal on the Complaint for Review of Assessment. However, at the prehearing conference it was determined that Mr. Johnson wished to present his case claiming discrimination or lack of equality in assessment. The Hearing Officer permitted the additional ground for appeal to be presented.
[2] BOE Decision Letter, dated 9/17/09; Exhibit 1 – Assessment Information and Tax Data, Page 1 of 5
[3] Exhibit 1 – Description of the Improvements – Subject Property, Pages 1 and 2 of 5
[4]
See, Complainant Failed To Prove Value of $633,000 – Exhibits, infra, for ruling on exhibits
and discussion on probative value.
[5] No Exhibits H, I, J, or K were filed with the Commission or exchanged with Counsel for Respondent.
[6] Section 137.115.1, RSMo.
[7] See, Complainant
Failed To Prove Value of $633,000, infra
[8] Section 137.115.5, RSMo
[9] Article
X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.
[10] Article X, Sections 4(a) and 4(b), Mo. Const. of 1945
[11] Section 137.115.5, RSMo
[12] Hermel,
Inc. v. STC, 564 S.W.2d 888, 895 (
[13] Hermel,
supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d
696, 702 (
[14] St.
Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo.
App. E.D. 1993);
[15] Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 S.W.2d 376, 380 (Mo. App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).
[16] Hermel, supra.
[17] 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.
[18] Exhibit 1 – Certification and Signature Page
[19] See, Nance
v. STC, 18 S.W.3d 611, at 615 (
[20] 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).
[21] Hermel,
supra.
[22] See,
Westwood Partnership v. Gogarty,
103 S.W.3d 152 (
[23] See, Cupples-Hesse, supra.
[24] Brooks
v. General Motors Assembly Division, 527 S.W.2d 50, 53 (
[25] Rigali v.
[26] 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).
[27] Complainant used the term assessed value throughout his exhibits and testimony. He was actually referring to the appraised value of the various properties, or the value set by the mass appraisal system (or the BOE in some instances) as the true value in money or fair market value. The assessed value of residential real property is 19% of the property’s true value in money.
[28] Exhibit 1
[29] Koplar
v. State Tax Commission, 321 S.W.2d 686, 690, 695 (
[30] State
ex rel. Plantz v. State Tax Commission,
384 S.W.2d 565, 568 (
[31] Savage
v. State Tax Commission of Missouri,
722 S.W.2d 72, 79 (
[32] Cupples-Hesse,
supra.
[33] Savage,
supra.
[34] Hermel,
Cupples-Hesse, Brooks, supra.
[35] Section
138.432, RSMo.