ALUMAX FOILS, INC.,	)
	)
Complainant,	)
	)
v.	)		Appeal Number 99-20270
	)
GREGORY DALY, LICENSE COLLECTOR,	)
ST. LOUIS CITY, MISSOURI,	)
	)
Respondent.	)

 DECISION AND ORDER

HOLDING

Decision of the St. Louis City Merchants' and Manufacturers' Board of Equalization sustaining the assessment made by the License Collector, SET ASIDE, Commission finds true value in money for the subject property for tax year 1999 to be $5,290,125, assessed value of $1,761,612.

Complainant appeared by Counsel, Thomas L. Caradonna, St. Louis, Missouri.

Respondent appeared by Counsel, Mark J. O'Toole, Assistant City Counselor.

Case heard by Hearing Officer, Luann Johnson.

Decision rendered by the Commission.

ISSUE

The issue in this appeal is: What was the true value in money as of January 1, 1999, of Complainant's machinery, tools and appliances located in St. Louis City?

SUMMARY

Complainant appeals the decision of the St. Louis City Board of Merchants' and Manufacturers' Tax Equalization (Board) which sustained the valuation of the subject property (Account Number 99-AL4912550). The Respondent determined an appraised value of $17,113,821 (assessed value of $5,704,607, as machinery, tools and appliances). Complainant presented evidence to support its opinion of value of $5,540,125 as the fair market value of the subject property. A hearing was conducted on December 7, 2000, at the St. Louis City Hall, St. Louis, Missouri. Parties were permitted to file Proposed Findings of Fact and Conclusions of Law and Briefs on the issue of highest and best use.

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

Complainant's Evidence

Complainant prefiled and offered into evidence the following exhibits.

Exhibit A Appraisal Report of Allen D. Bealmear, ASA, CEA, President of MB Valuation Services.

Exhibit B Written Direct Testimony of Allen D. Bealmer.

Exhibit C Recapitulation of selected pages of Exhibit A.

Exhibit D Comparable Data Sheet.

Exhibit F Auction Monitoring Questionnaire Form.

Mr. Bealmer presented his opinion of value for the subject property of $5,540,125. The Hearing Officer received these exhibits into evidence.

Respondent's Evidence

Respondent pre-filed and offered into evidence the following exhibits:

Exhibit 1 Complainant's 1999 Manufacturer's Property Declaration;

Exhibit 2 Complainant's Manufacturer's Tax Bill;

Exhibit 3 Complainant's Letter Appealing to the Board;

Exhibit 4 Complainant's Protest Letter;

Exhibit 5 Complainant's Proposed Depreciation Schedule as Presented to the Board;

Exhibit 6 Board's Decision Letter;

Exhibit 7 Site Inspection Form and Book Audit Notes;

Exhibit 8 Letter from Deborah Dillinger to David Schmidt;

Exhibit 9 Facsimile transmission from Schmidt to Dillinger;

Exhibit 10 Facsimile transmission from Schmidt to Dillinger;

Exhibit 11 Notes of Schmidt;

Exhibit 12 Facsimile transmission from Schmidt to Douglas Parrish;

Exhibit 13 Letter from Dillinger to Schmidt;

Exhibit 14 Blank 1999 Manufacturers' Property Declaration Form;

Exhibit 15 Letter dated August 6, 1992 to License Collector Thomas R. Nash from R. Randall Turley, Counsel, State Tax Commission.

The following exhibit was prefiled and exchanged by Respondent, but was not received into evidence at the hearing. The Commission receives it and includes it as part of the record.

Exhibit 16 Written Direct Testimony of David G. F. Schmidt.

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 City Merchants' and Manufacturers' Tax Equalization Board.

2. The personal property which is the subject of Appeal No. 99-20270, Personal Property Account No. 99-AL4912550, consists of continuous casting machines, rolling mills, aluminum foil finishing equipment and related and supporting equipment used in the manufacturing of aluminum products. There are approximately 420 pieces of personal property. The items of property include but are not limited to: containers, pumps, tanks, cranes, mixers, welders, furnaces, conveyors, ovens, generators, presses, slitters, hoists, rolling mills and other miscellaneous items. Exhibit A, p. 19-59. The items of machinery and equipment are sold individually in the market place. They have various uses other than the uses in which they are currently being utilized. Exhibit B, p. 9.

3. A market value appraisal inherently requires a highest and best use analysis. A highest and best use analysis is the mechanism in an appraisal that zeroes in on (1) the use of the property that will produce the highest return in an exchange, and (2) whether there is sufficient demand to make such an exchange probable. This analysis shows the appraiser what to appraise it as, and therefore, how to approach the cost, sales comparison, and income approaches.

4. The subject equipment was predominantly standard metal fabricating machines and related machinery, tools and appliances.

5. Such equipment is regularly traded in the used machinery and equipment market.

6. Complainant's appraisal primarily relied upon the selling prices of comparable machinery and equipment from the used machinery and equipment market. Complainant's evidence provided the best indication of the worth of the subject property in the open market.

7. The cumulative market value of Complainant's machinery, tools and appliances located in St. Louis City was $5,290,125 as of January 1, 1999.

8. Complainant's evidence was sufficient to rebut the presumption of correct assessment by the Board.

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.

Board of Equalization Presumption

There is a presumption of validity, good faith and correctness of assessment by the St. Louis City Merchants' and Manufacturers' Tax Equalization Board. 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).

Standard for Valuation

Section 137.115, RSMo 1994, 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. Mo. Const. Art X, Section 4(b) (1945, amended 1982); 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, at 897.

Market Value

"Market value" is defined as "...[t]he most probable price which a property would bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

a. buyer and seller are typically motivated;

b. both parties are well informed or well advised, and acting in what they consider their best interests;

c. a reasonable time is allowed for exposure in the open market;

d. payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and

e. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."

Federal Register, vol. 55, no. 163, August 22, 1990, pages 34228 and 34229; also quoted in the Definitions section of the Uniform Standards of Professional Appraisal Practice, 1996 ed.

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, 1999. Hermel, supra, 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).

Market Value

In the present appeal, the parties dispute the specific market that would have sufficient demand and result in the highest value for the subject property. Complainant's appraisal presumes a typical sale of the property as individual pieces of machinery ready and available for sale. Respondent's value presumes continued use and estimates the depreciated value of the items of machinery, tools and equipment as installed and in operation.

Missouri law requires that property be valued at its market value for property tax assessment purposes. (See, Conclusions of Law, Standard for Value and Market Value). In light of the nature of the dispute between the parties it is worth reviewing terms other than market value which impact upon this appeal.

"Value in exchange" or "exchange value" is be defined as "[t]he value of a commodity in terms of money to persons generally, as distinguished from use value to a specific person." (The Dictionary of Real Estate Appraisal, Third Edition, Appraisal Institute, 1993, at 125.) "Value in use" or "use value" is defined as "the value a specific property has for a specific use" (Ibid, at 383) and "the value of property which reflects a value to a specific user, recognizing the extent to which the property contributes to the personal requirements of the owner." (The Appraisal of Personal Property, American Society of Appraisers, 1994 at 2).

Exchange & Use Values

An exchange value is an objective value determined by transactions between buyers and sellers in the open market. A use value is a subjective value of an owner, user, or potential owner based solely upon his or her personal needs for the property. By definition then, market value is the value determined by the exchange of property between an informed seller and an informed buyer after exposure in the open market. It is not a subjective opinion of some individual or entity. However, there is a distinction between a value in use to a specific user and a value recognized by a group of informed potential buyers that a property has for a specific use. The latter should be fully considered under a market value appraisal. Further, if there is sufficient demand for the property for the use to which it is being put by the owner, exchange value can be equivalent to the use value to the owner. The market value standard does not require appraisers to discard transactions or market demand for assembled machinery and equipment just because the market finds the property valuable for the same use that it is being put to by the owner. Such evidence should be fully considered in a market value appraisal.

Highest and Best Use

Inherent in a market value standard is the necessity for a highest and best use analysis because the standard requires a well-informed potential buyer and a well-informed seller each acting in his or her best interests. While there may be several markets for the property, a well-informed seller looking out for his or her best interests will chose to sell in the market that produces the highest value. In contrast, there may be few markets for the property and a well-informed buyer will not pay more for the property than the amount it will command in a market with sufficient demand. A highest and best use analysis is the mechanism in an appraisal that zeroes in on (1) the use of the property that will produce the highest return in an exchange; and (2) whether there is sufficient demand to make such an exchange probable. This analysis shows the appraiser what to appraise the property as, and therefore, how to approach the cost, sales comparison, and income approaches.

Complainant's appraiser was questioned on cross-examination about making inquiries to see if plants like this sell as entire units. His response was that inquiries were made, not limited just to St. Louis, but on a national basis. He went on to testify that in appraising the subject property he attempted to find a sale of any type that would be valid and of similar or the same type of equipment. He did not find a sale of a plant similar to the subject where all the equipment sold in-place. He was sure that if there had been such a sale he would have known about it. Tr. pp. 8-9.

Mr. Bealmear's inquiry as to the sale of assembled machinery, tools and equipment demonstrates his attempt to utilize such market data in his appraisal. The result of his inquiry illustrates that he has not ignored relevant market data that should have been considered in his adjustments for valuing the subject property. The fact that he was unable to discover any such sale provides explanation that for the appraiser to arbitrarily add or subtract value based on the subject machines, tools and equipment being in place would not be reflective of, or have a basis in, market data.

Complainant valued the individual items of property on the basis that their highest and best use was what each item was designed by the manufacturer to do. The sales utilized by Mr. Bealmear are sales which indicate that each of the sold items would continue to be put to the designed use of the manufacturer, and that use would indicate the use that will produce the highest return in an exchange. Furthermore, the fact that the appraiser was able to find sales of so many of the various items being appraised clearly supports the conclusion that there is a sufficient demand to make the exchanges not just probable, but actual.

The fact that Respondent's Counsel did not in any way, shape or form attempt to rebut or repudiate Complainant's expert on the issue of there being sales of assembled, in-place machinery similar to the subject only adds credence and credibility to the Bealmear methodology of valuation. Had Respondent demonstrated during cross-examination or in rebuttal that Bealmear had overlooked various sales of assembled, in-place machinery and equipment then the Bealmear appraisal would have been brought into serious question. Furthermore, had Respondent relied upon such sales, making proper adjustments, an indicated value could have been put forth based on this type of sales comparison approach. However, Respondent's auditor admitted he made no such attempt to determine that the highest and best use of the subject machinery and equipment can be supported by the assembled, in-place sale theory. On this record, as well as numerous other records in which, Respondent has had more than ample opportunity to prove his assemble, in-place highest and best use theory, he has failed to do so. See, P. D. George v. Daly, STC No. 97-20316 (August 10, 2000); Warner-Jenkinson v. Daly, STC No. 97-20314 & 97-20315; St. Louis Post-Dispatch v. Daly, STC No. 99-20261; Nordyne, Inc. v. Daly, STC No. 99-20263; Lincoln Industrial v. Daly, STC No. 99-20264; Boxes, Inc. v. Daly, STC No. 99-20265 (January 29, 2001); P. D. George v. Daly, STC No. 99-20262 (February 2, 2001).

Counsel for Respondent asserts that the highest and best use, and consequently the value for the individual items of machinery, tools and equipment, will change and in fact increase due to hundreds of individual items being configured into Complainant's facility as an assembly or production line. Respondent's Post-Hearing Brief, pp. 2-4. The serious and fatal flaw with Respondent's argument is that, upon this record, it is based simply upon conjecture, speculation and unproven and unsubstantiated theory. There is no hard market data which demonstrates the validity and soundness of Respondent's contention. Said assertion, unsupported from the market leaves the Commission in the nebulous twilight of speculation, conjecture and surmise on this specific point. Rossman v. G.F.C. Corp. of Missouri, 596 S.W.2d 469, 472 (Mo.App. 1980). Valuation of the subject property cannot be founded upon speculation, conjecture and surmise.

Complainant's Approach to Value

Complainant offered the appraisal report and testimony of Mr. Allen D. Bealmear, a certified machinery and equipment appraiser. Mr. Bealmear's appraisal and testimony indicates a fair market value of $5,290,125 for the subject machinery and equipment as of January 1, 1999.

In conducting his appraisal and arriving at an opinion of value, Complainant's appraiser did the following:

1. Personally inspected each and every item of machinery and equipment being valued. Exhibit B, p. 7, Tr. 12-13.

2. Valued each individual piece of property. Exhibit B, p. 9.

3. Found market data on which he based his opinion of value for the overwhelming majority of the individual items of machinery and equipment. Exhibit B, p. 12.

4. Provided specific illustrations of how market data of comparable items of machinery and equipment were utilized and made adjustments to arrive at his opinion of value for each item of property. Tr. 11-17; Exhibits C, D & F.

5. Established a market for what the individual items of machinery and equipment sell for in the market place and attempted to find sales that occurred that might possibly be used to make adjustments to market value, sales that would have been of a plant similar to the subject where all the equipment was sold as an in-place sale. Tr. 8-9, 24.

6. Found no market evidence for assemblage value, or sales of complete lines of property working together similar to the subject property. Exhibit B, p. 15; Tr. 8-9, 24.

7. Properly considered each recognized approach to value and properly utilized market data of transactions involving comparable property to arrive at his opinion of value. Exhibit B, pp. 11-15.

8. Utilized data sources generally accepted by the appraisal community as reliable. Exhibit B, p. 15.

9. Used the value concept of fair market value. Exhibit B, pp. 7-8.

Mr. Bealmear defines "fair market value" as "[t]he estimated amount expressed in terms of money that may reasonably be expected for an item of property between a willing buyer and a willing seller with equity to both, neither under compulsion to buy or sell and both fully aware of all relevant facts." Complainant's Exhibit A at 9. He further clarified his concept of value by indicating that it is synonymous with a value in exchange and varies from other concepts of value as follows:

Q: How does fair market value in exchange differ from other concepts of value?

A: Other concepts of value could include liquidation value, which is forced sales with the buyer buying at his own risk and expense with no warranties or guarantees. It also is different from market value in-place or installed where equipment is valued given consideration to the installation cost. And it also differs from replacement cost new and insurance value in that those concepts don't recognize the functional and economic obsolescence inherent in much personal property, many times personal property.

Q: Can the subject property be sold individually in the market?

A: Yes.

Q: And does the subject property have various uses other than the uses to which it is currently being put?

A: Yes.

Exhibit B, pp. 8-9.

His appraisal sets forth the procedures used in estimating the value.

1. We performed a field examination to physically inspect the subject personal property (FFM&E) commencing on or about July 17, 2000. As an adjunct to that inspection, an in-depth analysis was conducted to determine the Fair Market Value as of January 1, 1999 of any previously inspected assets as well as acquisitions since that time. Additionally, any transfers that occurred after the inspection date have been identified and relocated within the appraisal report code structure. Both the field examination and in-depth analysis was performed by Certified Appraiser(s) knowledgeable in the valuation of personal property (FFM&E).

2. We identified market adjustments to arrive at Fair Market Value, including but not limited to: comparable sales when available and an evaluation of potential purchasers.

3. We conducted a comprehensive analysis of the subject personal property (FFM&E) composition, including an analysis of all pertinent factors pertaining to the values as of the valuation date of January 1, 1999.

Exhibit A, pp. 7-8.

Complainant's appraiser judged that the subject property was, on the whole, standard metal fabricating machinery and related machinery, tools and appliances. It was the type of machinery that is regularly traded in the used equipment market. On that basis he appraised it as if it were individual pieces of machinery and equipment available for sale and, relying primarily on the sales comparison approach, concluded a market value of $5,290,125.

Counsel for Respondent takes exception to Bealmear's use of his data base due to the fact that the data base contains sales at auctions and forced liquidation sales and argues that reliance cannot be placed on the Bealmear appraisal because of this factor. There are various flaws in Respondent's contention. Respondent apparently is attempting to draw an analogy between sales of machinery and equipment at auction and sales of real property under tax sale or mortgage foreclosure. Such an analogy is not appropriate or valid.

Tax sales (auctions on the courthouse steps) are not used as comparable sales in real estate appraisals. However, this does not mean that an auction sale of personal property is not a valid sale for purposes of conducting a market valuation approach. Auction sales of both real and personal property occur throughout the State of Missouri and other states on a weekly basis. The record in this appeal and other related cases, which have come before the Commission (See, P.D. George, et al., case cites, supra. p. 10), clearly and convincingly establishes that vast amounts of various machinery, tools and equipment used in a multitude of manufacturing operations and facilities are bought and sold on a continuing basis throughout the nation through auction sales. From this and other records, a very active and well utilized market for used machinery and equipment is the auction sale. Mr. Bealmear established in this appeal that the information in his data base is supported by an auction monitoring system, although not every auction is specifically monitored by MB Valuation Services due to the fact it is impossible to monitor each and every sale. Exhibit F; Tr. 14, Line 19 - Tr. 17, Line 23.

Mortgage foreclosure sales in real estate are not generally relied upon in a sales comparison approach, although under given circumstances it may well be established that sufficient exposure to the market and sufficient bidders were present. However, there is nothing to indicate that any forced liquidations under a mortgage foreclosure were in fact relied upon by Mr. Bealmear in his analysis. To the extent that some of the auction sales in the MB Valuation data base may be from bankruptcy sales, this does not result in a disallowance of the use of such a sale or sales. The trustee in bankruptcy is under an obligation to protect creditors by obtaining the best price possible when assets are sold. If machinery, tools and equipment are being sold from a bankrupt company as individual pieces of machinery, tools and equipment, instead of as an assembled unit, this only provides support for Mr. Bealmear's method of valuation. Furthermore it is counter to and rebuts Respondent's contention that the highest and best use analysis and level of trade for assembled machinery is a sale assembled and as configured.

The Commission also recognizes that simply because there are auction and forced liquidation sales contained within the data base, this does not established that Mr. Bealmear relied solely upon such transactions. Nor does it establish that he did not appropriately adjust for auction sales. In point of fact, Respondent's contention on this point is without support that the valuation of the subject property is based upon forced liquidation sales.

Respondent's Approach to Value

Respondent's staff auditor prepared his valuation of the subject property by examining the Complainant's 1999 Property Declaration and accompanying property lists, reviewing the field notes of staff persons who performed site inspections, and comparing declarations from previous years. Mr. Schmidt then used the original cost less depreciation at a rate of 10% per year down to a floor of 30% for property acquired 7 years prior to the tax date.

Mr. Schmidt did not prepare any detailed inventory of the property being valued. Tr. 30. He made no independent judgment of the condition of the individual pieces of machinery, tools and equipment being valued. Tr. 30. No independent judgment of the condition of the assembled machinery, tools and equipment was made by Mr. Schmidt. Tr. 30-31. He did not analyze or research the cost to replace each and every piece of the subject machinery, tools and equipment, nor did he analyze or research the cost to replace the assembled machinery, tools and equipment. Tr. 31. He did not research what the property sells for in the market, either on an individual piece of machinery basis or on the basis of the assembled machinery, tools and equipment. Tr. 32-33; 35-36. Mr. Schmidt did not value the property under any of the approaches to value recognized by The Appraisal Institute, nor did he do a valid cost approach to determine market value. Tr. 41-45. He presented no evidence to establish that the depreciation schedule used to arrive at value was reflective of the market, nor did he conduct a highest and best use analysis for the property. Tr. 45-47.

Conclusion

The Commission has the duty to evaluate the evidence presented to determine the sufficiency and persuasiveness of the evidence in establishing market value. Both parties need to present better substantiation for their conclusions about whether the subject personal property would likely sell as assembled at the subject location or as individual pieces of machinery and equipment in the used equipment market. If the research reveals that there is no market, then the appraisal should reflect the extent of the investigation and the results.

Having reviewed the evidence, the Commission concludes that Complainant's evidence was sufficient to rebut the presumption in favor of the St. Louis City Merchants' and Manufacturers' Tax Equalization Board. While it certainly could have been stronger with a more complete highest and best use analysis, Complainant's evidence was the most persuasive evidence on the record. It was persuasive because:

1. The equipment on the whole was standard aluminum fabricating machines and related and supporting machinery, tools and equipment.

2. Such equipment is regularly traded in the used machinery and equipment market;

3. Complainant's appraisal primarily relied upon the selling prices of comparable machinery and equipment from the used machinery and equipment market.

On the whole, Complainant's evidence provided the best indication of the worth of the subject property in the open market. Respondent relied on a mass cost methodology without showing how or why this methodology provides a good indication of market value. The more marketplace indicators are used in a cost methodology, the better the methodology is at projecting a market value. An effective way to use market data in a cost methodology is by using market-based depreciation studies as support for the depreciation calculation. Thorough and timely depreciation studies analyzing used equipment sales would give good indications of all forms of depreciation and obsolescence in addition to analyzing the length of time it takes operators to write-off such equipment as scrap.

Deficiencies of Appraisals

The quality of evidence presented by both parties suffered from various deficiencies. Appraisal reports for personal property should contain AA narrative explanation of the approach(es) to value used which is sufficiently specific for all other parties to reconstruct the approach(es) used and which includes the reasons for its (their) use. 12 CSR 30-3.065(2). Both parties would be well served to remember that a party does not meet its burden of proof if evidence on any essential element of its case leaves the Commission in the nebulous twilight of speculation, conjecture and surmise. Rossman v. G.F.C. Corp. of Missouri, 596 S.W.2d 469, 472 (Mo. App. 1980).

Complainant's Appraiser

The evidence presented by Complainant's Counsel and Appraiser was superior to, and an improvement over, presentations of evidence in previous appeals where complainants were represented by Mr. Caradonna and Mr. Bealmear. Complainant presented by way of Exhibit D an illustration of the market data upon which valuation is made for a piece of equipment by its appraiser. This provided a concrete example of how value was supported and determined under the sales comparison analysis for an item of machinery used for the illustration. A few more examples to address valuations made relying upon auction sales would have been helpful and would provide further detail as to the appraiser's methodology. Exhibit F, the auction monitoring questionnaire, also helped to establish the procedure and methodology used by the appraiser in researching sales from an auction source.

With regard to the discounted cost analysis, here again, by way of example, the methodology needs to be better illustrated. The appraiser would have strengthened his presentation by providing basic data to demonstrate how he arrived at the cost new (source) and the depreciation for the machinery on some of the items of property under appeal. In this manner, the Commission (or Hearing Officer hearing the appeal) would have a complete understanding of the underlying methodology.

The highest and best use analysis utilized by Complainant's appraiser can be significantly improved by showing what efforts he had made relative to researching the market as to sales of assembled lines of machinery, tools and appliances. The appraiser would then be in a position to bring before the Commission information relating to the extent of such a market and whether a determination of value can reasonably be made from such sources. This would provide a basis upon which the Commission could determine with a greater degree of certainty that the market for resale supports a highest and best use sale as presented by Complainant's appraiser.

Respondent's Valuation

It is not prudent for Respondent to continue to limit his evidence to the production of depreciation schedules. The presumption in favor of the Board is not sufficient to overcome market data demonstrating that the value for items of property is different than that suggested by depreciation tables. Such is the case in the appeal. Complainant's market data rebuts the indicated value determined under the depreciation table. Furthermore, Respondent's evidence demonstrates that the Board presumption is based simply upon the depreciation methodology employed by Respondent. (See, Exhibit 11, Testimony of David G. F. Schmidt, Q & A, 34 - 42.)

Depreciation tables are only good indicators of market behavior when they are periodically checked against actual market behavior and when this test demonstrates that, as a whole, the tables reflect market reaction.

It would also be error for Respondent to assert his valuations are correct because he values and depreciates all manufacturing property at the same rate. Nothing within the concept of uniformity contemplates that overvaluation or undervaluation can be excused because all taxpayers within the class are treated equally. Where law requires that property be valued based upon its market value, any standard other than market value will not survive a well documented challenge.

Additionally, it would be an error for any assessing officer to assert that depreciation schedules are proof of value, merely because he or she has documentation from the State Tax Commission which approves the form that taxpayers use to report personal/manufacturing property. Each assessing officer has the burden to periodically examine his or her depreciation schedules to insure that those schedules continue to adequately represent market value.

Finally, Respondent's reliance on a depreciation table completely ignores any development of a highest and best use analysis, supported by market data, to demonstrate that a sale of the subject property as assembled is a reasonable sale and how that value, in fact, would support a depreciation table. Respondent's witness provided no highest and best use analysis.

Respondent's Post-Hearing Arguments

In Respondent's Post-Hearing Brief several lines of argument are advanced. The Commission has made response throughout, and in various parts of this decision to certain of these arguments. There are some points of Respondent's arguments that need to be briefly addressed in order to give the parties and other assessors and taxpayers further direction in other appeals.

Spruce Goose Argument

Respondent's Counsel contends that even though Respondent failed to present market data by way of comparable sales to support his value premise, it does not mean that the subject manufacturing facility should be valued on a piecemeal basis. Respondent's Post-Hearing Brief, pp. 5-6. Respondent admitted he presented no market data to support his premise that the facility would likely change hands as an entire process or production line. His Counsel then asserts that the subject facility is so unique that no comparable sales and market data can be found for valuation purposes. Counsel advances the Spruce Goose argument. Just as the Spruce Goose (Howard Hughes' infamous giant, spruce, amphibious airplane, which was only flown once) was not deemed worthy of use in the U. S. Military, Respondent's argument won't fly in the context of this appeal.

Respondent's argument is that simply because you can't find another Spruce Goose that doesn't mean that you would value it based on the sum of the comparable sales of its component parts, nuts, bolts, propellers, etc. Counsel for Respondent asserts, without any supporting data, that the Spruce Goose would bring a greater price if sold as assembled. The assertion ignores a significant intangible factor of the fact that it was built by Howard Hughes and it is the only spruce airplane of its size that was ever or most likely will ever be constructed.

There is no Spruce Goose evidence in this record to establish anything relative to what a prospective purchaser might be willing to pay for the airplane or what its current owner might sell it for, either as assembled or if cut up and sold as individual items. Counsel's argument rests on nothing more than speculation. One could just as easily make the Boston Garden argument that the basketball floor of the Boston Garden was worth more on a piecemeal basis rather than selling it as a whole. In that case, there is clear evidence to support that argument, because that is the way the floor was sold. In the present appeal the evidence demonstrates that the machinery, tools and equipment which comprise the subject facility sell individually and therefore a value can be established for the totality of the individual pieces.

The record fails to establish that the subject facility (which would include the land and real property improvements) is in any way unique, simply because hundreds of items of machinery, tools and equipment have been assembled at 6100 Broadway, St. Louis, Missouri to produce tin and lead foil. Respondent presented no evidence that the 6100 Broadway facility is the only one of its kind in all the world. Respondent failed to establish that there is anything unique about how the facility is constructed and laid out to produce tin and lead foil. The evidence (Complainant's) clearly establishes that the machinery, tools and equipment which have been assembled in Complainant's facility are not unique. They are routinely traded in a very active market. Simply because Complainant's appraiser put forth the time and effort to assemble good market date on hundreds, if not thousands, of transactions on individual items of machinery, tools and equipment and determine a value for each of them, does not equate to a piecemeal valuation of the collective subject property. Furthermore, Complainant's evidence established that the subject facility does not have any type of unique processing or assembly line. Rather the facility consists of a collection of stand alone machines, tools and equipment that are used to produce tin and lead foil. Tr. 19, Line 19 - Tr. 20, Line 18.

The evidence brought forth by Complainant establishes the total value for all of the various items. Respondent presented no data from the market which would in any manner establish that some additional value must attach to each item of machinery and equipment simply because it is assembled and producing tin and lead foil at 6100 Broadway. For the Commission to place an additional value of $11,573,696 [$17,113,821 (Respondent's Value) - $5,540,125 [Complainant's Value] = $11,573,696) on the Complainant's machinery, tools and equipment would be an exercise in complete and total speculation and conjecture. Complainant's evidence establishes the collective value for the subject machinery and equipment which the market has established. The well-informed buyer will not pay more for the property than the amount it will command in a market with sufficient demand. Nordyne, supra, p. 8 - Highest and Best Use, See, also Lincoln, Boxes, Post-Dispatch, supra, on same point. The Bealmear valuation demonstrates a market with sufficient demand for the various items of manufacturing property being valued in this appeal. If there is some additional value which the assembled manufacturing property would command, there is no factual basis in this record to determine what that value would be. Respondent has failed to produce any evidence that a 208.9% increase in value can be sustained. (5,540,125/11573,696 = 208.9%).

Burden of Proof Argument

Counsel for Respondent argues that Complainant had the burden of proof on the issue of whether there is sufficient demand to make an exchange of the subject facility as an entire process or production line probable. At the outset of his argument, Counsel claims that neither party performed an inquiry into whether there is sufficient demand to make an exchange of the subject facility as an entire process or production line probable.

The argument wrongly assumes that the subject facility is a process or production line in which each item of machinery and equipment is interdependent on each other item of equipment. The only testimony on this point (Complainant's appraiser) is that this is not a processing or production line. Tr. 8, Lines 3-4; Tr. 16, Line 19 - Tr. 17, Line 4; Tr. 19, Line 22 - Tr. 20, Line 18.

The argument also erroneously asserts that Complainant's appraiser did not make inquiry as to demand for the probability of the sale of the entire subject property. Mr. Bealmear's testimony was that he had made inquiries to see if plants like the subject sell as entire units and he would have known about any such sales of an entire collection of equipment sold in an in-place sale. Tr. 7, Line 25 - Tr. 9, Line 7.

Complainant presented evidence which met the burden of proof relative to proving value in exchange for the subject property from extensive market data for the various items of machinery and equipment. Complainant presented evidence (Bealmear testimony) to establish that the appraiser was unable to find sales of assembled groups of machinery and equipment similar to the subject from which an opinion of value could be concluded. Therefore, Complainant met the burden of proof to establish that there is no market data to establish a sufficient demand to make an exchange of the subject facility as an entire process or production line probable. Complainant clearly and convincingly rebutted the procedural presumption of correct assessment by the Board and established the facts to make its case. Cupples-Hesse, supra.

Respondent, as discussed above, was either unable or unwilling in either his direct case or cross-examination to present evidence which would establish that Mr. Bealmear had ignored or not discovered sales of assembled machinery and equipment. Respondent presented no sales data of assembled machinery and equipment to rebut the Bealmear testimony. Counsel for Respondent appears to be arguing that since Complainant failed to discover sales of assembled property, that Respondent is relieved of presenting any such market evidence of such sales and that its value must be accepted by default. Respondent is in error on this matter.

Respondent cannot establish its value by its own default. Respondent's evidence clearly shows that no market analysis was made by the License Collector's staff, nor the Board. The testimony of David G. F. Schmidt shows that the Board had no market data which reflected sales of assembled machinery and equipment upon which to base its valuation, nor did the License Collector/Board Staff have any market data as to sales of new or used machinery and equipment such as the subject property. This establishes from Respondent that the Board presumption can be given no credence or weight, since the Board valuation has no basis or foundation in market data. When the Board's valuation is not based on and supported by market data, it is not a correct valuation, since the standard for valuation is market based. Quite simply, the Board presumption requires the Complainant as the moving party to step up to the plate with substantial and persuasive evidence of value. Once that is done, the presumption is voided and of no effect, for it has been proven that the valuation was an incorrect valuation. Unless Respondent then comes forward with evidence to rebut Complainant's evidence, or market data to establish value no theory of value will carry the day.

If Respondent desires to continue to advance its value in place/in use theory, then it bears the burden of proof to come forward with substantial and persuasive market data as evidence. This is especially true in light of Complainant's evidence that no sales of assembled machinery and equipment were found by Mr. Bealmear in his valuation process. In this appeal, as in the other cases previously decided by the Commission and cited above, Respondent's theory is not supported by the market. In the absence of market support, the theory has no probative value whatsoever.

ORDER

The assessed valuation for the subject property as determined by the License Collector and affirmed by the Merchants' and Manufacturers' Board of Equalization Board for St. Louis City for the subject tax day is SET ASIDE.

The assessed valuation for the subject machinery, tools and appliances for the 1999 tax year is hereby set at $1,761,612.

Judicial review of this Order may be had in the manner provided in Sections 138.470 and 536.100 to 536.140, RSMo within thirty days of the date of the mailing of this Order.

If no petition for judicial review of this Order is filed within thirty (30) days of the mailing of this order, this decision and order is deemed final and the License Collector of St. Louis City 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 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 April 30, 2001.

STATE TAX COMMISSION OF MISSOURI

Bruce E. Davis, Commissioner

Sam D. Leake, Commissioner