HOSPITALITY PROPERTIES TRUST,	)
	)
Complainant,	)
	)
v.	)		Appeal Number  00-79020
	)
CHRISTINE MCQUITTY, ASSESSOR,	)
PLATTE COUNTY, MISSOURI,	)
	)
Respondent.	)

DECISION AND ORDER

Holding: The value determined by the Assessor and approved by the Board of Equalization is SET ASIDE. The correct value for the property on January 1, 2000, was $7,389,180 (assessed value $2,364,540).

SUMMARY

A hearing was conducted on October 2, 2001, before Hearing Officer Luann Johnson, at the Platte County Administration Building, Platte City, Missouri. Complainant appeared by its appraiser, Kenneth Voss, and by its attorney, Wayne A. Tenenbaum. Respondent appeared by her appraisers, Brian Everly and Steven Hendrix, and by counsel, John R. Shank. Pursuant to Tax Commission Order, both parties prefiled their appraisal reports and written direct testimony.

The subject property is a 4.039 acre tract improved with a 149 room limited service motel built in 1989, and currently operated as a "Marriott Courtyard." The property is identified as parcel number 17-70-36-000-010-004-000, more commonly known as 7901 N.W. Tiffany Springs Parkway, Kansas City, Platte County, Missouri 64153.

Respondent originally valued the subject property at $8,145,000 (assessed value $2,606,400) for tax year 2000. The Board of Equalization affirmed Respondent's original valuation. Complainant appealed asserting a market value of $5,200,000 (assessed value $1,644,000). At hearing, Complainant amended its market value estimate to $5,835,000 (assessed value $1,867,200). Respondent asserted a market value of $8,261,700 (assessed value $2,643,740). Neither party utilized hotel valuation techniques previously approved by this Commission. The value determined by the Assessor and approved by the Board of Equalization is SET ASIDE. The correct value for the property on January 1, 2000, was $7,389,180 (assessed value $2,364,540).

ISSUE

The issue raised on appeal is: What was the true value in money of Complainant's property on January 1, 2000? However, within the issue of real property value is also the issue of valuing any intangible associated with the Marriott flag and determining the contributory value of business personal property.

FINDINGS OF FACT

1. Jurisdiction. Jurisdiction over this appeal for tax year 2000 is proper. Complainant timely appealed to the State Tax Commission from the decision of the Platte County Board of Equalization.

2. Subject Property. The subject property is a 4.039 acre tract improved with a 149 room limited service motel built in 1989, and currently operated as a "Marriott Courtyard." The improvements consist of a single three-story building containing 85,299 square feet with open perimeter parking. Other amenities included a 50 seat restaurant, a 20 seat lounge, various meeting rooms, and an indoor pool, spa and exercise room. Guest rooms are a combination of rooms and suites (Ex. A, p. 22). In August, 1995, the subject property sold for a total price of $7,179,027, or $48,181 per room (Tr. 11). The sale price included any business value and personal property (Tr. 12).

Exterior walls are wood frame with painted stucco exterior, accents and trim. The building has paned aluminum frame windows leading out to a patio or balcony. There are interior stairwells, located at each corner of the building. The hotel also includes two 2,500 pound Montgomery passenger elevators (Ex. A, p. 23). HVAC, lighting, fire protection and security are all consistent with a motel of this type (Ex. A, p. 24).

Guest rooms are finished with carpeted floors and ceramic tile in the bathrooms; painted or papered walls and textured ceilings. Furnishings include king, queen of full size bedding; dresser, television, desk and chair, end tables, coffee table, lamps, pictures and mirrors. Larger suites also include sofas. Guest suites feature built-in hair dryers, iron and ironing board, telephone and a coffee maker (Ex. A, p. 25).

Parking is adequate and landscaping is good. The overall quality of property is considered to be average for the neighborhood and age. The design characteristics of the property are functional and meet modern standards. The mix of room floor plans is functional and there is no excess demand for any particular floor plan or location. The property is handicap accessible (Ex. A, p. 26). There are no known factors that could be considered adverse to impact the marketability of the property (Ex. A, p. 27).

3. Deferred Maintenance. The improvements are due for a new roof at an estimated cost of $25,000. Additional items of deferred maintenance have an estimated cost of $20,000 (Ex. A, p. 27).

4. Age and Depreciation. The actual age of the property is 11 years; effective age is 12 years; remaining economic life is 34 years. Accrued physical incurable deprecation is 20% (Ex. A, p. 27).

5. Furniture Fixtures and Equipment have a depreciated value of $175,848, or $1,180 per room, and were taxed based on this market value. The assessed value, as reported by Complainant, was $58,610 (Ex. A, p. 29).

6. Highest and Best Use. The highest and best use of the property is as improved (Ex. A, pgs. 31-32).

7. Neighborhood. The subject property is located along the east side of the I-29 corridor between Kansas City International Airport and downtown Kansas City, within Platte County, and inside the city limits of Kansas City, Missouri. Interstate 29 is the primary north-south thoroughfare linking the immediate neighborhood with Kansas City. Access is provided at Tiffany Springs Road, which is a two-lane roadway extending in an east-west direction providing access to I-29 and various local commercial activities (Ex. A, p. 13). The area is the "hotel hub" for the north Kansas City metropolitan statistical area (Ex. A, p. 14). Population within the subject neighborhood has shown steady growth over the past five years and has a strong demographic profile. The outlook for the neighborhood is for relatively stable performance with only moderate improvement over the next several years. Demand for existing development is expected to be good and the neighborhood is expected to maintain a relatively stable growth pattern in the foreseeable future (Ex. A, p. 14).

8. Demand. Approximately 90% of the demand for room nights at the subject property is generated from business travelers, with secondary demand generated from area events and area sporting events. Tertiary demand comes from leisure travelers visiting families and relatives located within neighboring communities (Ex. A. p. 13).

9. Supply and Occupancy. Over the past five years, a number of business hotels have been developed around the I-29/Tiffany Springs corridor. Typically, these properties consist of limited-service facilities, catering almost entirely to corporate and commercial demand segments. Occupancy rates in limited-service motels in the subject neighborhood typically range from 53.6% to 68.5% with an average occupancy of 62.4%. However, the subject property reported an occupancy rate of 71.3% in 1999, the year preceding the valuation date (Ex. A, p. 16-17). During the year 2000, occupancy increased to 84.5% (Ex. 1, p. 12).

10. Rental rates. Average daily room rates for limited service properties in the subject neighborhood range from $61.80 to $78.96. The subject property has the highest average daily rate, $78.96, of all competitive motels in the area. Comparable limited service properties considered include Chase Suites, Homewood Suites, Drury Inn & Suites, Fairfield Inn, Hampton Inn, Wyndham Gardens and Amerisuites (Ex. A, p. 17). During tax year 2000, when occupancy increased, the subject property's average daily room rate decreased to $67.98 (Ex. 1, p. 12).

11. Income Approach Most Reliable. The income approach, when done correctly, is the most reliable way to value the subject property. The sales comparison approach is not a reliable mechanism for valuing properties which have business value and personal property components because of the inability to adjust the comparable sales for these variances. Because of the age of the improvements and their good condition, the cost approach gives some indication of the value of the subject real property and supports the value determined under the income approach.

12. Total Annual Stabilized Revenue. The correct total revenue of the property is $3,569,045 as proposed by Complainant (Ex. A, p. 65). Recent operating history shows that the motel is operating in a plateau with annual income ranging from $3,440,452 to $3,673,484 (Ex. A, p. 52, Ex. 1, p. 11).

13. Total Annual Stabilized Expenses. The correct stabilized expenses for the property are $2,568,890 as proposed by Complainant (Ex. A, p. 65). These expenses properly include management fees, franchise fees, and reserves for replacing structural components and reserves for replacing furniture, fixtures and equipment. The stabilized expenses properly do not include a sum for real property taxes.

14. Net Operating Income. The correct net operating income is $1,000,155 as proposed by Complainant (Ex. A, p. 65).

15. Capitalization Rate. Market capitalization rates for similar properties indicate a range between 9% and 15.50% (Ex. A, p. 64). Respondent's capitalization rate of 11.5% does not consider reserves for replacement, which Respondent's appraiser had previously deducted from expenses, and relies on the taxes being treated as an expense rather than as a part of the capitalization rate. Consequently, because Complainant addresses reserves for replacement in its expense calculation and includes the effective tax rate in its capitalization rate, Complainant's capitalization rate of 13.50% is adopted.

16. Value Before Deduction of Intangible or Personal Property Values. The correct value for the subject property, before the deduction of any intangible business values or value attributable to personal property, is $7,408,552 (Ex. A, p. 65).

17. No Additional Deferred Maintenance Deduction. No additional value reduction is required for deferred maintenance inasmuch as Complainant has created and included a "structural reserve for replacement" in its expense calculations (Ex. A. p. 61). The amount allocated to this reserve for replacement account, $71,381 per year, exceeds the existing $45,000 deferred maintenance and is more than adequate to rectify existing problems and accommodate future repairs. Complainant's deduction of deferred maintenance, after having already set up a reserve for replacement account, would result in understating the value of the real property.

18. No Additional Business Value Deduction. Complainant's expenses, which we have accepted, include a deduction for management fees and a deduction for franchise fees. No additional business value remains to be deducted from the value of the real property. Workforce in place is not a deductible intangible. In order to be deductible, a proposed intangible asset must be capable of being bought and sold separate and apart from the real property. Owners cannot sell employees. Property valuation presupposes effective management and effective management includes training employees. The fact that the subject property is a motel does not entitle it to a greater deduction for management that any other efficiently run enterprise.

19. No Additional Return of Personal Property Required. Complainant's expenses, which we have accepted, include a deduction for the periodic replacement of furniture, fixtures and equipment. No additional return of personal property is required to be deducted from the value of the real property.

20. Return on Personal Property. Complainant is entitled to a return on personal property to recognize the contributory affect of personal property on the income producing capacity of the subject property. However, the contributory affect of the personal property on the income stream is not the depreciated value of that personal property. Only the income generated by the personal property can be deducted from the income stream. Return on personal property is calculated by multiplying the value of the personal property by a reasonable rate of return.

Neither party actually prepared an appraisal of Complainant's personal property and no evidence of the book value of the personal property was presented. Consequently, we find that the value of the personal property is $175,848, as determined by the assessor for the purposes of personal property taxation. If Complainant's personal property does, in fact, have a market value of $655,000, as proposed by Complainant's appraiser, this is something that was not recognized by the assessor for tax year 2000 and is a correction that should be made to the assessor's tax rolls for subsequent years. But, for the purposes of our calculation, and since Complainant has already reaped the benefits of a reduction in value through the understatement of personal property values, we will follow the formula previously approved in other motel and hotel cases set forth below, and adopt the value shown on the assessment rolls.

The capitalization for the subject real property, before effective tax rate, is 10.98%, say 11%. Although the proper way to determine the return on personal property is to add the effective tax rate for that personal property to the capitalization rate for the real property and multiply (See Endnote 1) that by the value of the property, in this instance, both parties chose to include personal property taxes as an expense. Consequently, we apply the real property capitalization rate, before the effective tax rate, (11%) to the value of the personal property as determined by the assessor, $175,848 (say $175,850), for a resulting return on personal property of $19,340 (See Endnote 2). This calculation is somewhat distorted, because the property taxes were included in expenses and the correct personal property tax rate is not known. However, inasmuch as the taxes were deducted as an expense prior to the capitalization of income, the distortion is not significant enough to preclude the use of this valuation technique.

21. True Value in Money of Real Property. The true value in money of the real property is hereby set at $7,389,180 ($7,408,552 - $19,340 = $7,389,182).

CONCLUSIONS OF LAW

1. 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, Missouri Constitution of 1945; Sections 138.430, 138.460(2), RSMo.

2. True Value in Money. 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 purchase but who is not compelled to do so. St. Joseph 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, Inc. v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978). Valuation is expressed in terms of cash or its equivalent.

3. Substantial and Persuasive Evidence. In order to prevail, Complainant must present substantial and persuasive evidence that the true value in money for this property on January 1, 2000, was $5,835,000. Substantial evidence is evidence favoring facts which are such that reasonable men may differ as to whether it establishes them, and from which the Commission can reasonably decide an appeal on the factual issues. Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is evidence that has sufficient weight and probative value to convince the trier of fact. Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).

4. No Presumption in Favor of Respondent. There is a presumption of validity, good faith, and correctness of assessments made by the Board of Equalization. Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, 895 (Mo. banc 1978). However, there is no such presumption in favor of the Assessor. Section 138.431.1, RSMo. When Respondent advocates a value different from that set by the Board of Equalization, he or she is under the same burden as Complainant to present substantial and persuasive evidence in favor of his or her value.

5. Fee Simple. A value assessment of the fee simple of real estate includes every interest or estate therein. Dorman v. Minnich, 336 S.W.2d 500, 505 (Mo. banc 1960).

6. Expert Testimony. The rules governing expert testimony are well settled. The testimony of an expert is to be considered like any other testimony, is to be tried by the same test, and receives just so much weight and credit as the trier of fact may deem it entitled to when viewed in connection with all other circumstances. The Hearing Officer, as the trier of fact, has the authority to weigh the evidence and is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert's testimony and accept it in part or reject it in part. Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981); Scanlon v. Kansas City, 28 S.W.2d 84, 95 (Mo. banc 1930).

7. Intangibles. In Missouri, intangible personal property is not subject to property taxation. Intangible property has no physical substance but, rather, is a right of action such as easements, good will or trade secrets and which may be evidenced by documents which have no intrinsic value, such as stocks, bonds, notes, judgments or franchises. Webster's Third New International Dictionary, unabridged, 1976. John Hancock, supra, p. 408.

Some properties have both a "market value" and a "going concern value." The later is value enhanced by, among other things, the intangible value of an operating business enterprise.

"Going concern" has both a tangible and intangible component. That portion of the going concern value which is the result of assemblage is tangible and taxable; while the portion of going concern value which is attributable to a saleable business asset based upon reputation rather than physical assets is intangible and not taxable. Boise Cascade Corporation v. Department of Revenue, 12 Or. Tax 263 (1991); John Hancock, supra, p. 408.

Similar to assemblage value, the concept that one buying the real estate necessarily gets the business is called "transmissible value." Courts have long held that transmissible value constitutes taxable real estate, even when intertwined with a business. Public Service Company of New Hampshire v. Hew Hampton, 136 A. 2d 591 (N.H. 1957); John Hancock, supra, p. 408.

As articulated in State ex rel. N/S Associates v. Board of Review of the Village of Greendale, 473 N.W.2d 554 (Wisc. App. 1991), the test for isolating intangible business value is as simple as asking whether the disputed value is appended to the property and, thus transferrable with the property or is it independent of the property so that it either stays with the seller or dissipates upon sale. John Hancock, supra, p. 408.

The presence of intangibles is determined using the following test:

(1) The intangible asset must be identifiable, i.e., legally recognized;

(2) It must be capable of private ownership;

(3) It must be marketable, i.e., capable of being financed and/or sold separate and apart from the tangible property; and

(4) Practically, it must possess value, i.e., have the potential to earn income, or its existence is of no consequence.

Simon Property Group v. Boley, 51 Proceedings and Decisions of the State Tax Commission, 1996, p. 483.

Competent management is not a basis for reducing property value under an "intangible" theory. Any correct market value appraisal must presuppose competent management. The Appraisal of Real Estate, 10th Edition, Appraisal Institute, 1992, p. 439. It is only extraordinary management, evidenced by extremely high rents, occupancy, and sales volume that suggests value added because of an intangible. Simon, supra, p. 495. The burden to prove the existence of an intangible asset lies with the party claiming that existence.

STC Approved Hotel Valuation Guidelines.

Valuing Hotel or Motel Property. In the real estate appraisal industry, the market value of a hotel is considered to consist of four components (1) value of the land; (2) value of the improvements; (3) value of the business or going concern and franchise affiliation; and (4) value of the furniture, fixtures and equipment (i.e. personal property). John Hancock Mutual Life v. Stanton, 51 STC Proceedings and Decisions, 1996, p. 394. Lesser and Rubin, Understanding the Unique Aspects of Hotel Property Tax Valuation, The Appraisal Journal, January, 1993, p. 17. For appraisal purposes, fixtures such as bathtubs and sinks are valued as part of the real property. Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, p. 76.

Stabilized Income. Hotels and motels are almost always valued by an income capitalization approach that takes the property's stabilized net income and capitalizes it into an estimate of market value. The stabilized net income is intended to reflect the anticipated operating results of the hotel over its remaining economic life, given any or all applicable stages of buildup, plateau, and decline in the life cycle. Therefore such stabilized net income excludes from consideration any abnormal relation of supply and demand and any transitory or nonrecurring conditions that may result in unusual revenues or expenses of the property. The process of deriving the stabilized net income for a lodging facility requires the appraiser to look into the future and estimate operating revenues and expenses. This is accomplished by forecasting or predicting trends in historical performance based on the hotel's current position in an economic life cycle. Most types of real estate exhibit a pattern or life cycle in their ability to generate income over a period of time. Usually a property's net income will start low and rise quickly, reaching a plateau before slowly declining. By determining a hotel's position in its life cycle the appraiser is able to forecast future income based on historical operating results.

New hotels show a normal upward growth in occupancy which results in a stabilized occupancy level, income and expense, higher than actually demonstrated by historical performance.

An older hotel which shows declining performance over several years is in the downward phase of its life cycle and a stabilized occupancy level, income and expense, somewhat lower than actually demonstrated by historical performance would be appropriate.

Finally a hotel which shows an historical operating performance which oscillates up and down is considered to be at the peak or plateau portion of its life cycle. With hotels which are in such a plateau, the historic net income does not significantly understate what can be considered a stabilized level of income. In hotels with oscillating income, the stabilized income will fall into a range between the highest income reported and the lowest income reported. These divergences cannot be considered unacceptable, particularly over a period of time where the smoothing impact of averaging tends to minimize the differences. Rushmore and Rubin, The Valuation of Hotels and Motels for Assessment Purposes, The Appraisal Journal, April 1984, p. 275-277. Crown Center Hotel Complex, Inc. v. Robert Boley, 49 Proceedings and Decisions, State Tax Commission, 423-435-436.

Operating Expenses. Allowable operating expenses are ordinary and typical expenses that are necessary to keep the property functional and rented competitively with other properties in the area but do not include interest and principal payments that amortize a mortgage loan, depreciation, income tax, capital improvements, owner's business expenses, or property taxes. Property taxes are treated as part of the capitalization rate. Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, p. 256-259. Property Assessment Valuation, International Association of Assessing Officers, 1977, p. 215-221. Diamond Savings Association v. A. Roy Pearson, State Tax Commission Appeal No. 92-41024. John Hancock Mutual Life v. Stanton, 51 STC Proceedings and Decisions, 1996, p. 394.

Return on Personal Property. The return on personal property to be deducted from a hotel's income and expense statements can be calculated by (1) using the market value of the personal property as shown on the assessment rolls; (2) actual appraisal of the personal property; or (3) using the depreciated book value of the personal property. Because of the rapidity with which short-lived items are depreciated, the depreciated book value can be considered a "floor" on the value of the personal property. Its use in the return on personalty calculation thus results in the most conservative (i.e., lowest) estimate possible for a return on personal property, given any benefit of the doubt to the value of the hotel's real estate component. Chattel mortgages for hotel furniture, fixtures and equipment are generally not available in the marketplace. Therefore, interest rates on hotel mortgages establish a minimum required rate of return on personalty. Return on personalty is determined by adding the capitalization rate for the real property to the tax load or effective tax rate per $100 of the personal property and multiplying same by the assessed value of the personal property. In attempting to segregate personal property from real estate, the primary consideration in valuing the personal property is its actual contributory value, not its hypothetical replacement cost new less depreciation. Lesser and Rubin, Understanding the Unique Aspects of Hotel Property Tax Valuation, The Appraisal Journal, January 1993, P. 33, Crown Center, supra, p. 439, John Hancock, supra, p. 396.

Return of Personal Property. Periodic replacement of furniture, fixtures and equipment is essential to maintain the quality, image, and income potential of a lodging facility. An appraisal should reflect these expenses in the form of an appropriate reserve for replacement. Industry experience indicates that a reserve for replacement of 3% to 5% of total revenue generally is sufficient to provide for timely replacement of furniture, fixtures and equipment. The deduction of a reserve for replacement from the stabilized statement of income and expense can therefore be used to account for the return of personal property. Lesser and Rubin, Understanding the Unique Aspects of Hotel Property Tax Valuation, The Appraisal Journal. January, 1993, p. 21, 22. Crown Center, supra, p. 440.

Hotel Management and Business Value. Management companies generally offer their brand names, corporate identities, and reservation systems solely in conjunction with their management expertise. The process of isolating the value of a hotel's business is based on the premise that by employing a professional management agent to handle the day-to-day operation of the property, an owner maintains only a passive interest, while income attributed to the business has been taken by the managing agent in the form of a management fee. Therefore, deduction of a management fee from the stabilized net income removes a portion of the business component from the stabilized income stream. Hotel management contracts are routinely structured with fees payable in two parts. The first part is the base management fee. This portion of the fee is usually based on a percentage of gross revenue and as such may be considered payment to the management company for the portion of its services that include building the hotel's gross revenues. The second part of a typical management fee is called the incentive management fee and is usually based on a percentage of some level of net income. As such, this portion of the fee may be deemed payment to the management company for the portion of its services that include monitoring the hotel's expenses and implementing the required control systems. Additionally, lodging facilities operated with a franchise affiliation provided by a third party are subject to the payment of franchise fees. Deducting the franchise fees from the stabilized net income removes the remaining business component from the income stream. Lesser and Rubin, Understanding the Unique Aspects of Hotel Property Tax Valuation, The Appraisal Journal, April 1984, p. 280-291; Crown Center, supra at p. 438. John Hancock, supra at p. 397. The business value component of a hotel is accounted for through the franchise fee and the management fee. If these two items are calculated as expense items, no additional calculation is necessary to remove their impact from net operating income. John Hancock, supra. p. 397. Going concern value can be treated in one of two ways: The appraisers can leave the management and franchise fees in the expenses calculations, in which case no further calculation is necessary. Or, alternatively, the may remove those fees from the expenses and treat them separately. John Hancock supra p. 405. Leaving management and franchise fees in the expense calculations and then making further adjustments for business value results in stating business value twice and understating the value of the real property.

Reserve for Replacement. Items such as carpeting, roofs, water heaters, heating and air conditioning systems, elevators, floor coverings, stoves, dishwashers and refrigerators are properly included in reserves for replacement. Property Assessment Valuation, International Association of Assessing Officers, 1977, p. 219. Crown Center, supra p. 449; John Hancock, supra p. 397. The annual allowance for each component is usually estimated as the anticipated cost of its replacement pro-rated over its anticipated remaining economic life, provided that it does not exceed the remaining economic life of the structure. The Appraisal of Real Estate, 10th Edition, Appraisal Institute, 1992, p. 449. John Hancock, supra p. 397. The most likely result of a failure to prorate is that expenses would be overstated. John Hancock, supra p. 405.

Maintenance and Repairs. Day to day repairs and maintenance are those expenses necessitated by the physical use of the property and are handled as expenses for the property. Property Assessment Valuation, International Association of Assessing Officers, 1977, p. 218; Crown Center, supra p. 448-449; John Hancock, supra p. 398. Maintenance and repair expenses may cover roof repair, window caulking, tuckpointing, exterior painting and the repair of heating, lighting and plumbing equipment. The Appraisal of Real Estate, 10th Ed., Appraisal Institute, 1992, p. 448; John Hancock, supra p. 398.

Complainant's Cost Approach. Complainant's indicated value for the property under the cost approach was $7,630,000 (Ex. A, p. 44). This approach assumes FF&E of $596,000 (See Endnote 3), a sum substantially above the market value demonstrated by the Assessor's assessment. That number also represents a double deduction for depreciation in that a 20% deduction is made for physical depreciation and then a subsequent $45,000 deduction is made for deferred maintenance. The value under the cost approach should be:

Complainant's Sales Approach. Complainant put the least reliance on the sales approach because of the difficulty in isolating the business value and personal property on the comparable sales (Ex. A, p. 33; but see Ex. A p. 71).

Comparable sales in Overland Park (135 room Hampton Inn built in 1991; 190 room Radisson Hotel constructed in 1973 with an addition in 1988) and Olathe (148 room Holiday Inn built in 1984), a somewhat similar area, occurring between January, 1997, and August, 1997, indicate a value per room of $49,182, $49, 467 and $56,324 (Ex. A, p. 49). Two of Complainant's comparables are full service lodging facilities containing full service restaurants. Complainant's more remote sales in Omaha (131 Candlewood Suites built in 1996) and Dallas (116 room Hampton Inn built in 1986) indicate a room value for the subject property of $50,998 and $45,696. The subject property sold in 1995 for $7,179,027, or $48,181 per room. The sales price included personal property and business value.

Complainant suggested a sales price of $49,182 to $50,996 per room, or on the low end of the comparable sales, for a range of value between $7,328,1108 to $7,598,404, and a concluded value under the sale approach of $7,400,000, before the deduction of personal property or any value enhancement due to management or franchise. Complainant's appraiser also deducted for deferred maintenance to lower his estimate of value. A separate deferred maintenance adjustment is not an appropriate deduction from a sales comparison approach in as much as it is handled in the condition adjustments made to the comparable sales.

Complainant's Income approach. Complainant analyzed the subject property's income and expense statements for the preceding three years. From this analysis, he estimated that the Net operating income would be $1,000,155. The calculation of net operating income included a deduction for management fees and franchise fees. Expenses also included reserves for replacement and personal property taxes. Although the subject property's actual expenses over a three year period ranged from 60.74% to $67.59% of total revenue; Complainant's appraiser estimated total operating expenses to be 71.98% of projected revenue. Total revenue for tax year 2000 was projected to be higher than for the three previous years (Ex. A, p. 52, 65).

Net operating income of $1,000,155 was capitalized at 13.50% for an indicated value of $7,407,552. From this amount Complainant deducted deferred maintenance of $45,000, notwithstanding the fact that reserve for replacement was an expense item and probably also included in the capitalization rate. After capitalization, Complainant reported an indicated value of $7,364,000 for the subject property.

Thereafter, Complainant estimated the depreciated value of the furniture, fixtures and equipment to be $655,000 and deducted this whole sum from the estimated value of $7,364,000, notwithstanding the fact that, in an income approach to value, only the income derived from the personal property (return on) and return of personal property, is acceptable. Deducting the depreciated value of the personal property overstates the contribution that the personal property makes to the income stream (Ex. A, p. 67).

Finally, Complainant's appraiser deducted an additional 5.5% of net income, or $196,297, for the intangible business value of the property. He estimated an incentive management fee of 1%, a corporate or business start-up fee of 4%, and additional marketing of 0.5%. All of these calculations are made notwithstanding the fact that the management fees and franchise fees were clearly known and had already been expensed to reach his net operating income. Additionally, Complainant's adjustment for corporate or start-up charges were completely unsubstantiated and work force training or work force in place is not a deductible item. Notwithstanding, after asserting that these additional intangibles account for $196,297 of net operating income, Complainant's appraiser capitalized this deduction at 21.50% for an additional deduction from value of $910,000. Complainant's appraiser stated that the "estimate of value for the business interest component of the going concern value is considerably more subjective than the personal property value estimate. This is due to the intangible nature of the business interest." (Tr. 14). Complainant's appraiser also testified that he based his business interest deduction on "breaking down some management that exceeds . . .the national norm. It also has the training of employees when they come in or having a capable staff when they first arrive so when they open the doors everybody knows that are supposed to be doing . .[and] . . .other types of things to get into a workable type thing." (Tr. 28).

With the deduction for the depreciated value of the personal property ($655,000) and the deduction for the hypothetical business interest ($910,000), Complainant's appraiser concluded a value for the subject property of $5,835,000.

There is no evidence which supports the methodology Complainant's appraiser used to arrive at his deduction of $655,000 for the contributory value of the personal property or $910,000 for business interest.

Complainant's Capitalization Rate. Complainant's comparable sales indicated a capitalization rate of 10.5% to 15.5%, excluding the effective tax rate. The National Investor Survey indicated a capitalization rate of 11.00 to 11.5%, excluding the effective tax rate. The Korpacz Investor Survey for the 3rd quarter of 1999 indicated a capitalization rate of 9.00% to 13.00%, excluding the effective tax rate. The effective tax rate for the subject real property was 2.527% (Ex. A, p. 64).

Respondent's Cost Approach. Respondent's appraisers did not prepare a cost approach analysis for the subject property on the premise that this type of property is bought and sold for investment purposes and the sales comparison approach and the income approach were better indicators of value (Ex. 1, p. 9). Subsequent testimony by Respondent's appraiser was that the subject property was in very good condition (Tr. 59) which theoretically should have made a cost approach at least possible.

Respondent's Sales Approach. Respondent's appraisers selected 10 comparable sales of motel properties. Of those 10 sales, nine were also "Courtyard by Marriott" properties. However, all of the "Courtyard by Marriott" properties were located in other states. Respondent's 10th sale was of a Hampton Inn located in Overland Park, Kansas.

Respondent's appraisers chose two sales as being the most reliable indicator of value for the subject property. The first sale, a Courtyard by Marriott located in Irving, Texas, sold in October of 1998 for $86,601 per room. It was a nearly new facility, having been built in 1997. It was similar in size to the subject property and enjoyed an average daily room rate of $114.00. The overall capitalization rate on that sale, without reserve for replacement, of 11.34% The vacancy rate of that property is not known.

The second property that Respondent's appraisers relied on, a Hampton Inn in Overland Park, Kansas, was built in 1991 and sold in April, 1997, for $52,593 per room. It had an average daily room rate of $60.43. The overall capitalization rate on that sale, without reserve for replacement, of 11.49%. The vacancy rate of that property is not known.

Respondent's appraisers made no adjustments to comparable sale #2, the Hampton Inn property. They adjusted comparable sale #1, the Irving, Texas sale downward 15% for a superior location and downward 5% for a superior age.

After adjustments, Respondent's comparable sales #1 and #2 indicate a range of value for the subject property of $52,593 per room to $69,280 per room. Respondent's appraisers chose a value of $61,000 per range, for an indicated value of $9,089,000, before deduction for business value or the contributory value of the personal property.

Most of Respondent's remaining eight sales were built during the late eighties or early nineties and were of similar size and age to the subject property. Most sales occurred in 1995 and 1996, with one sale in 1998. Sales prices ranged from $50,436 per room for a 160 room facility built in 1990 and sold in 1995 located in Dallas Texas; to $108,443 per room for a facility built in 1992 and sold in 1996 located in Arlington, Virginia. Most sales prices on these other sales were above $75,000 per room (Ex. 1, p. 13 - 14).

Respondent's Income Approach. Respondent analyzed the subject property's income and expense statements for 1997, 1998, 1999 and 2000. In 1997, the subject property had an occupancy rate of 74.5% with an average daily room rate of $79.19. In 1998, the subject property had an occupancy rate of 73.6% with an average daily room rate of $81.27. In 1999, the subject property had an occupancy rate of 71.3% with an average daily room rate of $78.96. In 2000, the subject property had an occupancy rate of 84.5% with an average daily room rate of $67.98.

Respondent's appraisers chose to use the year 2000 figures (occupancy, average daily room rate, income and expenses) to prepare their income approach, rather than utilizing stabilized income and expenses. Using these figures, and estimating expenses at 69% of total revenue, they estimated that the net operating before reserves would be $1,084,221 (Ex. 1, p. 12).

The subject property's actual expenses over a three year period ranged from 60.74% to $67.59% of total revenue. Respondent's appraisers deducted franchise fees, and reserves for replacement from the 2000 expense listing, but left personal property tax and real estate taxes in the expense calculations. The franchise fees were recalculated in the form of "business value" and the reserves supposedly moved to the capitalization rate (Ex. 1, p. 11), however later testimony indicated that the capitalization rate did not include any reserve for replacement.

Net operating income of $1,084,221 was capitalized at 11.50% for an indicated value of $9,428,000.

Thereafter, Respondent's appraisers estimated the contributory value of the furniture, fixtures and equipment to be $223,500 (or $1,500 per room). This deduction was based on standards that "most appraisers have in their minds." (Tr. 80).

Finally, Respondent's appraisers determined that the business value associated with the Marriott flag was 10% of market value, or $942,800. This deduction was based on some "standard in the industry" gleaned from talking to someone else (Tr. 80-81).

With the deduction for the contributory value of the personal property ($223,500) and the deduction for the hypothetical business interest ($942,800), Respondent's appraisers concluded a value for the subject property of $8,261,700.

Respondent's Capitalization Rate. Respondent's appraisers selected a cap rate of 11.50%, with no provision for reserves (Ex. 1, p. 12). The capitalization rate did not include an effective tax rate and no effort was made to prepare a mortgage-equity (band of investment) model to support the capitalization rate chosen.

DISCUSSION

When appearing before the State Tax Commission, each party has the responsibility to present substantial and persuasive evidence in support of their opinion of value. 12 CSR 30-3.065 discusses the need for a "complete narrative appraisal report" and sets out the elements that we consider important in an appraisal report. In this era of prefiled appraisal reports and prefiled direct testimony, it is incumbent upon an appraiser to commit his or her thought processes to paper in such a way as to leave no questions looming in our minds about those thought processes or the underlying market data which supports those thought processes. Prudence dictates that, whenever possible, market studies and other reports which support calculations should be included within the appraisal reports. The Commission will not look behind the prefiled exhibits and speculate about supporting documents that may or may not exist at an appraiser's office.

It is also useful for appraisers to consider previous decisions of the State Tax Commission when attempting to calculate market value on less routine types of properties. Appraisers for both parties were frequently caught in the trap of vague "standards in the industry" or standards that "most appraisers have in their minds" (Tr. 28-30; 80-81) when attempting to justify their business value and personal property deductions. While we recognize that all property valuation is, to some degree, subjective, we find such vague references to "industry standards" to be wholly unreliable and particularly troubling when we have clearly articulated the methodology that will remove much of the guesswork from those calculations; that will deal with treatment of the contributory impact of personal property; and that will identify and account for those intangibles which are, in fact, deductible.

We have applied our previously articulated income techniques to this property and conclude that the correct market value for the real property on January 1, 2000, was $7,389,180, a value not unlike Complainant's corrected cost approach value of $7,138,369 previously discussed.

ORDER

The assessed value for the subject property for tax year 2000, as determined by the Assessor and affirmed by the Board of Equalization, is SET ASIDE. The Clerk is HEREBY ORDERED to place a new assessed value of $2,364,540 on the books for tax year 2000.

A party may file with the Commission an application for review of a hearing officer decision within thirty (30) days of the mailing of such decision. The application shall contain specific detailed 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.

If an application for review of a hearing officer 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 Platte 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 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 November 28, 2001.

STATE TAX COMMISSION OF MISSOURI

Luann Johnson

Hearing Officer

END NOTES

1. In this calculation, we do not capitalization the value of the personal property. Because the return of personal property has already been calculated and included as part of the reserve for replacement, we are only looking for a return on and not a return of the property, hence the value of the personal property is multiplied by a reasonable rate of return, here 11%.

2. Appraisers for both parties based their personal property deduction to their estimate of the market value of the personal property. However, in this calculation, our focus must be on the "contributory value" of the personal property, not on its market value. Where the value of the personal property is included within the reserve for replacement, the only remaining calculation is a determination of return on personal property.

3. It is unclear why Complainant used a different value for the personal property under the cost and income approaches.

OF HEARING OFFICER DECISION

On December 26, 2001, Complainant filed its appeal requesting review of the hearing officer decision entered on November 28, 2001. Briefs in support and in opposition of the Application for Review were filed.

Respondent originally valued the subject property at $8,145,000 (assessed value $2,606,400) for tax year 2000. The Board of Equalization affirmed Respondent's original valuation. Complainant appealed asserting a market value of $5,200,000 (assessed value $1,644,000). Prior to hearing, Complainant amended its market value estimate to $5,835,000 (assessed value $1,867,200). Respondent asserted a market value of $8,261,700 (assessed value $2,643,740). Neither party utilized hotel valuation techniques previously approved by this Commission in Crown Center Hotel Complex, Inc. v. Robert Boley, 49 STC Proceedings and Decisions, 1994, p. 423 aff'd 49 STC Proceedings and Decisions, 1994, p. 447; and John Hancock Mutual Life v. Stanton, 51 STC Proceedings and Decisions, 1996, p. 394. While adopting most of the evidence proposed by Complainant in its income approach, the hearing officer disagreed about the correct treatment of business personal property and found that Complainant's approach deducted for business personal property twice and overstated the deduction attributable to the personal property. The hearing officer found that the correct value for the property on January 1, 2000, was $7,389,180 (assessed value $2,364,540) and ordered the clerk of the county change the tax books to reflect this new and reduced value. Complainant, in its application for review, is now requesting a value change to $6,753,552.

Alleged Errors

Complainant alleges the following errors:

1. The hearing officer may not determine a value or utilize a methodology different than that proposed by the parties.

Complainant states: the hearing officer is entitled to choose a value which is within the "range of evidence" presented (See Endnote 1). However, Complainant argues that the decision on valuation methodology should not be a choice given to hearing officers and that, referring to Felcor Suites Limited Partnership v. King, State Tax Commission Appeal Number 99-20205, (Tichenor, 1-29-01), "The Commission has ruled that, where both appraisers, as in this case, used the same method for determining the contributory value of the personal property, there is no need for the hearing officer to substitute his (or her) judgment for a different method which might have been used (See Endnote 2). Complainant asserts that it was error for the hearing officer to utilize the personal property value ($175,848), as shown on the county's books, in making her calculation of return on personal property inasmuch as neither Complainant nor Respondent utilized this methodology.

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Commission Response

Complainant's reliance on this quote from Felcor is misplaced. In Felcor, the hearing officer stated:

In a case such as this where both appraisers elected to use the exact same method to make the personal property adjustment, the Hearing Officer has no need to substitute his judgment for a different method which might have been used.

These comments by the hearing officer do not stand for the principle that a hearing officer is in any way bound by methodologies proposed by appraisers for the parties. Counsel's suggestion that:

The Commission has ruled that, where both appraisers, as in this case, used the same method for determining the contributory value of the personal property, there is no need for the Hearing Officer to substitute his (or her) judgment for a different method which might have been used.

is assigning a significance to the hearing officer's comments which they were never intended to carry. To the extent that such a reading of his comments can be made, it is unsanctioned and is hereby specifically rejected. The authority of the Commission, and its hearing officers, is not conditioned upon, or restricted by, the appraisers' opinions or their choice of appraisal methodologies. The hearing officer is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert's testimony and accept it in part or reject it in part. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968). St. Louis County v. Boatmen's Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).

Notwithstanding any other possible reading of the language in Felcor, a Tax Commission hearing officer stands in the shoes of the Commission and it is the hearing officer's responsibility to apply his or her expertise to the facts, to determine value, and to correct assessments. Section 138.431.4, RSMo. That responsibility, subject to Commission review, encompasses the ability to reject valuation methodologies which do not present a correct market value for the property under appeal.

2. The hearing officer misunderstood or misapplied the concept of "contributory value." In order to stay within the "range of evidence" the hearing officer would have had to find that the personal property had a "contributory value" of (i) $175,438 (sic) (See Endnote 3) or (ii) $223,500 or (iii) $655,000 (See Endnote 4).

The hearing officer neither misunderstood nor misapplied the concept of "contributory value." The hearing officer utilized an income approach to value the subject property. Under an income approach to value, only the income attributable to the personal property is deducted from the income stream. Following the methodology established in Crown Center and John Hancock, the hearing officer provided for a "return on" and a "return of" personal property.

Complainant's expenses, which the hearing officer accepted, included an item for the periodic replacement of furniture, fixtures and equipment. This amount was 5% of projected total revenue, or $178,452. This negative adjustment was made prior to the capitalization of the income for the real property. This is the "return of" personal property (See Crown Center, Supra at 412). If this deduction had not been made, and the $178,452 had been capitalized at Complainant's proposed real property capitalization rate of 13.5% - which this hearing officer also adopted - the indicated value of the real property would have increased by $1,321,870. This deduction in value - which the hearing officer allowed - is a sum significantly in excess of the $655,000 "contributory value" that Complainant's counsel attempts to articulate. We also note that the sum the hearing officer allowed for "return of" personal property exceeds the estimated replacement cost new of the subject personal property ($1,192,000) which was calculated by Complainant's appraiser under his cost approach (Ex. A, p. 67) (See Endnote 5). The value determined by the hearing officer is the value the real property would sell for without any furniture, fixtures and equipment in place.

In addition to allowing Complainant a $1,321,870 adjustment for "return of" personal property, the hearing officer also allowed Complainant a $19,340 "return on" personal property following the methodology set forth in Crown Center. A "return on" personal property requires a finding of "market value" of the personal property. Under Crown Center, the hearing officer had the option of using (i) the market value of the personal property as show on the assessment rolls; (ii) the actual appraised value of the personal property; or (iii) the depreciated book value of the personal property (See Crown Center, supra at 411). Given the fact that neither appraiser actually prepared what could be considered a personal property appraisal and the further fact that the hearing officer was not privy to the depreciated book value which Complainant carried for this personal property, the hearing officer's only option was to use the market value as shown on the assessment rolls. Allowing Complainant a reasonable 11% return on value, the sum of $19,340 was deducted from the indicated value of the real property (See Endnote 6). In short, the hearing officer allowed Complainant $1,341,210 as the contributory value of the personal property, not $19,430 as Complainant's counsel mistakenly suggests.

3. The hearing officer's decision was not based upon competent and substantial evidence on the whole record.

While it is true that the amount of the hearing officer's contributory value for personal property was in excess of the contributory values proposed by Complainant and Respondent, it was nevertheless correct. The hearing officer's allocation of contributory value is based upon the evidence in the record, is consistent with sound appraisal methodology, and gives Complainant a greater contributory value on personal property than Complainant requested.

The hearing officer utilized every piece of Complainant's evidence that she could possibly use. However, as she noted, and we affirm, the Complainant's appraisal report includes errors which represent inappropriate deductions, or result in double deductions, in contravention to sound appraisal practices (See Decision and Order, pp. 20-21). In other words, Complainant's appraisal report was not "substantial and persuasive" evidence to indicate the contributory value of the subject real property.

Substantial evidence is evidence favoring facts which are such that reasonable men may differ as to whether it establishes them, and from which the Commission can reasonably decide an appeal on the factual issues. Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is evidence that has sufficient weight and probative value to convince the trier of fact. Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975). To the extent that the hearing officer's decision failed to make a specific "finding" of a lack of substantial and persuasive evidence on the issue of the contributory value of the personal property, we hereby make that finding. Likewise, we find that

Respondent's appraisal report is not substantial and persuasive evidence upon which we can base a determination of the contributory value of the personal property.

The hearing officer is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert's testimony and may accept it in part or reject it in part. The hearing officer is a trained expert in property valuation, and may apply her expertise to the facts to reach the correct opinion of value. It would be error for the hearing officer to ignore obvious appraisal mistakes.

As noted in Felcor, the Crown Center methodology - which this hearing officer applied - is the "textbook" methodology that we have fashioned to properly account for the contributory value of personal property and intangibles in hotel and motel properties. Since 1994, we have repeatedly published this methodology so that it will be available to taxpayers and taxing officials. There was sufficient evidence on the record for the hearing officer to utilize this methodology and the hearing officer's choice to use this approved methodology was appropriate and consistent with our previous directives. In utilizing this methodology, the hearing officer recognized all possible "contributory value" of the personal property.

4. The hearing officer "suggests bias and prejudice against the Complainant by stating . . .that the Complainant has understated its personal property values" and the hearing officer's decision "infers that Complainant's integrity in dealing with the Respondent is suspect." (See Endnote 7).

Complainant asserts in its Application for Review that the hearing officer may be biased against the Complainant and/or that a negative inference can be drawn concerning Complainant's integrity in reporting the value of its personal property to the taxing authority.

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Commission Response

As discussed above, not only did this hearing officer adopt most of Complainant's income and expense figures and its proposed capitalization rate, but the hearing officer also assigned a greater contributory value to the personal property than requested by the taxpayer. Further, when discussing her choice to utilize the market value shown on the assessment rolls for her calculation of "return on" personal property, in keeping with our directive in Crown Center, the hearing officer stated:

Neither party actually prepared an appraisal of Complainant's personal property and no evidence of the book value of the personal property was presented. Consequently, we find that the value of the personal property is $175,848, as determined by the assessor for the purposes of personal property taxation. If Complainant's personal property does, in fact, have a market value of $655,000, as proposed by Complainant's appraiser, this is something that was not recognized by the assessor for tax year 2000 and is a correction that should be made to the assessor's tax rolls for subsequent years. But, for the purposes of our calculation, and since Complainant has already reaped the benefits of a reduction in value through the understatement of personal property values, we will follow the formula previously approved in other motel and hotel cases set forth below and adopt the value shown on the assessment rolls.

Counsel for Complainant argues that this statement reveals bias on the hearing officer's part and brings the taxpayer's integrity into question. Counsel also suggests that the hearing's officer's characterization of the $655,000 proposed deduction as the "market value" of the personal property was inappropriate and demonstrates the hearing officer's lack of understanding concerning valuation. Counsel states:

. . .references to the value of personal property (f, f & e) in Complainant"s Exhibit A (See pages 66 and 67 therein) are to "contributory value, "cost estimate" and "depreciated cost estimate". Complainant's expert witness made no attempt to determine the "fair market value" of Complainant's personal property, as suggested by the Hearing Officer.

It is clear from a reading of the hearing officer's comments that she recognized that Complainant's appraiser had failed to prepare a proper personal property appraisal. However, it is also clear from the appraisal report that the appraiser was attempting to assign a market value to the personal property. He states:

. . .Several methods are used to determine the market value of the furniture, fixtures and equipment. A recommended approach is to use the depreciated replacement cost. . . . (emphasis supplied).

The appraiser then goes on to determine that "depreciated replacement cost" which turns out to be $655,000. (Ex. A, p. 66-67). If market value is depreciated replacement cost and depreciated replacement cost is $655,000; then market value is $655,000.

Although it may be possible, as counsel now suggests, that the appraiser was utilizing several different labels for different values (See Endnote 8), it is clear that the hearing officer did not misstate the words contained in Complainant's appraisal report on this point.

Nor do the hearing officer's comments concerning the need to change the tax rolls, if the market value of the personal property is $655,000, suggest "that Complainant did not follow the requested procedures in reporting its personal property to Respondent" as counsel argues. At no point does the hearing officer reach the question of whether or not Complainant followed the requisite procedures for reporting personal property. The hearing officer's statement concerning any understatement of personal property values must be read in conjunction with the preceding hypothetical sentence.

The hearing officer did not specifically find that the assessment rolls should be changed nor did she assign any "fault" as suggested by counsel for Complainant. To the contrary, she specifically found that the market value of the personal property was $175,848, in keeping with our directive in Crown Center (See Decision and Order, p. 4).

Commission Order

The Commission, upon review of the record and Decision in this appeal, finds no grounds upon which the Decision of the Hearing Officer should be reversed or modified. Accordingly, the Decision is affirmed.

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.

SO ORDERED April 29, 2002.

STATE TAX COMMISSION OF MISSOURI

Sam D. Leake, Chairman

Bruce E. Davis, Commissioner

Jennifer Tidwell, Commissioner

8. Complainant's appraisal report actually asserts several different values for the personal property, including $955,000 and $910,000. However, we expect that these values were meant to represent the "business value" of the property rather than the value of the personal property. Ex. A, p. 69-70.