Pohlman v. Zimmerman

POHLMAN, INC., )

)

Complainant, )

)

v. ) Appeal Number 00-33006

)

EUGENE ZIMMERMAN, ASSESSOR, )

ST. LOUIS COUNTY, MISSOURI, )

)

Respondent. )

DECISION AND ORDER

HOLDING

Decision of the St. Charles County Board of Equalization sustaining the assessment made by the Assessor, SET ASIDE, Hearing Officer finds true value in money for the subject property for tax year 2000 to be $2,625,640, assessed value of $875,213.

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

Respondent appeared by Counsel, Lisa Leslie, Assistant County Counselor.

Case heard and decided by Chief Hearing Officer, W. B. Tichenor.

ISSUES

The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2000.

SUMMARY

Complainant appeals the decision of the St. Charles County Board of Equalization (Board) which sustained the valuation of the subject property. The Respondent determined an appraised value of $7,569,984 (assessed value of $2,520,805, as personal property - furniture, machinery, tools, manufacturing and office equipment).

A hearing was conducted on August 28, 2001, at the St. Charles County Administration Building, St. Charles, Missouri.

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

Complainant's Evidence

Complainant offered into evidence the appraisal report (Exhibit A) and written direct testimony (Exhibit B) of Allen D. Bealmear, ASA, CEA, President of MB Valuation Services. Exhibit C, a cost and sales comparison illustration of valuation referenced in the written direct testimony of Mr. Bealmear, was prefiled with Exhibit B. All exhibits were receive into evidence. Mr. Bealmear was cross-examined by Respondent's Counsel, and that testimony, as well as testimony in response to questions by the Hearing Officer, in redirect examination and in rebuttal constitute part of the record in this appeal.

Mr. Bealmer presented his opinion of value for the property to be $2,625,640.

Respondent's Evidence

Respondent offered into evidence the following exhibits:

Exhibit 1 Appraisal Report of Matt Brown, Special Assessments Manager for St. Charles County.

Exhibit 2 Copy of depreciation schedules for various classes of personal property.

Exhibit 3 Copy of Personal Property Original Cost Multipliers Draft Report to the Michigan State Tax Commission, April 30, 1999.

Exhibit 4 Copy of Measuring the Value of Computers Using Market Derived Depreciation Rates, Nacomex, USA.

Exhibit 5 Copy of asset list.

Exhibit 6 Photographs.

Exhibit 7 Life Expectancy Guidelines, Section 97, Page 15, August 1997 of Marshall Valuation Service.

Exhibit 8 Written Direct Testimony of Mr. Brown.

All the exhibits were received into evidence. Mr. Brown was cross-examined by Complainant's Counsel and his testimony under cross-examination, testimony in response to questions by the Hearing Officer and in redirect examination constitute part of the record in this appeal.

Mr. Brown offered his opinion of value for the property to be $6,539,829.

FINDINGS OF FACT

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

2. The subject property consists of approximately 1,416 individual items of furniture, office machines and equipment, machinery, tools and manufacturing equipment, identified in 541 entries in Complainant's appraisal report. The property is identified by the Respondent's account number P9507985 for tax year 2000. The property is located at 1 Missouri Research Park Dr., St. Charles, Missouri. These individual items of property make up and constitute the manufacturing operation of Complainant. A complete listing of the items of property under appeal is found in Exhibit A, pp. 18-66.

3. Complainant's appraiser valued approximately 1,413 of the items of property relying on comparative sales data, and 3 of the items (Items 1156, 1186 & 1241 - Total appraised value of $29,250) relying on a discounted cost analysis or replacement cost new, less depreciation method. Exhibit A, pp. 10-11, pp. 18-66; Exhibit C.

4. Complainant's appraiser valued the items of property based on the concept of fair market value - the 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. Exhibit A, p. 2, 7. Exhibit B, p. 7, Line 21 - p. 8, Line 22. This is the appropriate concept of value to be applied in the valuation of the property. Respondent's appraiser also used this standard of value. Exhibit 1, p. 3.

5. Personal property is valued based upon its true value in money. True value in money is value in exchange, not value in use or value installed. Value in use/installed may be, in a given case, the value in exchange if there is market data to so establish. There was no such market data presented in this appeal from which it could be established that value in use/installed was value in exchange.

6. Complainant's appraiser conducted a personal inspection and inventory of the items of property being valued and confirmed that all of the items valued were at the particular facilities as of January 1, 2000. Exhibit A, p. 6; Exhibit B, p. 6, Line 22 - p. 7, Line 7; Tr. 8, Lines 20-25; Tr. 17, Lines 15-17. Respondent's appraiser performed an inspection of the facility, but did not make an asset inventory of the property being valued, as is the appropriate manner in which an appraisal of machinery and equipment should be prepared. Valuing Machinery and Equipment, Machinery and Technical Specialities Committee of the American Society of Appraisers, 2000, p. 215.

7. Complainant's appraiser performed his appraisal in conformity with the Principles of Appraisal Practice and Code of Ethics of the American Society of Appraisers, and in conformity with the applicable standards of the Uniform Standards of Professional Appraisal Practice (USPAP). Exhibit A, p. 4; Exhibit B, p. 21, Line 24 - p. 22, Line 5; Tr. 16, Lines 16-20.

8. The concept of highest and best use was considered by Complainant's appraiser in his valuation of the subject property in accordance with Standard 7, Subsection 3(a) of USPAP. The subject items of furniture, machinery, tools and equipment were being utilized for the purpose designed by the manufacturer, and therefore were being utilized in the reasonably probable and legal use that is physically possible, appropriately supported and financially feasible, and resulted in the highest value in the appropriate marketplace. Exhibit A, pp. 4, 5, & 7; Exhibit B, p. 11, Line 3 - p. 12, Line 3. None of the items of machinery, tools and equipment have any special or unique characteristics which would require that they be valued as a unit or whole rather than individually. Exhibit B, p. 8, Line 23 - p. 9, Line 4.

9. The principle of substitution is that a prudent buyer will not pay more for a property than the cost of acquiring a substitute property of equivalent utility. The principle can be applied to either an individual asset or to an entire facility. The principle applies in either a cost, sales comparison or income approach. Valuing Machinery and Equipment, pp. 45, 115, supra; Appraising Machinery and Equipment, Machinery and Equipment Textbook Committee of the American Society of Appraisers, John Alico, Editor, 1989, p. 81; Exhibit 1, p. 6.

10. Complainant's appraiser relied upon the MB Data Base in his appraisal. The MB Data Base is made up of a multitude of research data sources, including purchase price new from a manufacturer, dealers' asking and selling prices, auction sales and any other type of transaction which can be gathered. This data base is a large data resource computer program which has sales information posted to it daily of all kinds of equipment from the various sources. The database has the condition of items of sale machinery and equipment when it is known. The database identifies the type of sale, equipment being sold, date of sale, location of sale, and auctioneer from sale brochures on the various auctions. Information from the database can be sorted by categories of equipment type and model. Each equipment category has data posted which can then be retrieved for use in appraising such individual items of machinery and equipment. The sources utilized in the MB Data Base are sources that the appraiser is familiar with and that he has found to be reliable over his years of appraisal practice. The sources used in the data base are sources that are generally accepted by the appraisal community as reliable. Other appraisers use the MB Data Base as a resource in performing their appraisals. Exhibit A, p. 15; Exhibit B, p. 18, Line 19 - p. 20, Line 3; Tr. 22, Lines 1-17;

11. Complainant's appraiser also utilized recognized pricing guides, sources and catalogues as research data sources. Contacts were made to manufacturers of various items of machinery and equipment being appraised. Exhibit A, p. 15.

12. Complainant's evidence was substantial and persuasive to rebut the presumption of correct assessment by the Board and to establish the true value in money of the subject property under appeal as of January 1, 2000, to be $2,625,640.

13. Respondent's evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and to establish the true value in money of the subject property under appeal as of January 1, 2000, to be as proposed.

CONCLUSIONS OF LAW

Jurisdiction

The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious. Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, RSMo. The hearing officer shall issue a decision and order affirming, modifying or reversing the determination of the board of equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious. Section 138.431.4, RSMo.

Board Presumption

There is a presumption of validity, good faith and correctness of assessment by the 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. 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, Inc. v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978). True value in money is defined in terms of value in exchange and not value in use. Stephen & Stephen Properties, Inc. v. STC, 499 S. W.2d 798, 801-802 (Mo. 1973); Equitable Life Assurance v. Morton, 852 S.W.2d 376 (380) (Mo. 1993).

Complainant's Burden of Proof

In order to prevail, Complainant must present an opinion of market value and substantial and persuasive evidence the proposed value is indicative of the market value of the subject property on January 1, 2000. Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, at 897. Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See, Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact. The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief. Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).

Respondent's Burden of Proof

In an appeal where Respondent presents an opinion of value different from that determined by the Board, substantial and persuasive evidence must be presented to rebut the Board presumption and establish the value proposed. Hermel, supra.

Weight to be Given Evidence

The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled. The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide. 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).

Trier of Fact

The Hearing Officer as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as she may deem it entitled to when viewed in connection with all other circumstances. 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. 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).

Opinion Testimony by Experts

If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto.

The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data need not be admissible in evidence. Section 490.065, RSMo; Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. E.D., 1992).

DECISION

Complainant Proved Value

Complainant's evidence presented an opinion of value based on the concept of fair market value or value in exchange. This concept of value as employed by Complainant's appraiser presents a methodology which is proper, fair, not arbitrary, not capricious and is lawful under Missouri statutes, Commission regulations and case law. This is the recognized standard under Missouri case law. Section 138.430, RSMo. A listing of recent cases following this standard can be found at the end of this decision (End Note - hereinafter cited as P. D. George et al).

Valuing what a knowledgeable buyer and seller would give in exchange for the individual items of property and totaling the values avoids conjecture and speculation. Complainant's appraisal clearly demonstrated that there is reliable sales data available on virtually all of the subject items ( 1,413 out of 1,416 total items of property - .9979%). The sales data establishes the prices at which the various individual items of property are selling in the market. From such data, a clear indication of the value for the various pieces of machinery, tools and equipment can be developed.

Mr. Bealmear's opinion of value is based upon reliable and appropriate data. He correctly valued the property relying upon the value in exchange concept recognized under Missouri case law, statutes, Commission regulations and decisions. His appraisal methodology and resulting final opinion are based upon a reasonable degree of appraisal standards certainty. Therefore, Complainant has rebutted the presumption of correct assessment by the Board of Equalization and met its burden of proof to establish the true value in money for the subject property.

Sales Data

The data relied upon by Mr. Bealmear demonstrates that the market for the hundreds of pieces of machinery, tools and equipment that comprise the subject property consists of all types of sales transactions, direct and indirect (direct sale - sale to ultimate end user; indirect sale - sale to used equipment dealer). The fact that some sales, or even a large number of the sales relied upon, are auction sales, either consignment, orderly liquidation or forced liquidation, does not render such sales invalid for developing an opinion of value. Such sales are not the same as forced sales for taxes or mortgage foreclosures in real property cases. The market world for items of machinery, tools and equipment consists of new equipment sales, reconditioned equipment sales, orderly liquidations, forced (bankruptcy) sales, excess equipment sales and auctions.

This diversity of types of transactions does not render use of data derived from such sales invalid or inappropriate. This market arena, with its mixed information base, is where real transactions occur each day. It is the responsibility of the appraiser when faced with an appraisal problem such as the present one, to explore and analyze this market arena to extract the most reliable data to utilize in his appraisal. It is the responsibility of the appraiser to make the appropriate upward or downward adjustments to such sales data to arrive at an opinion of value for the particular item of property being valued. Such adjustments are made in large part based on the experience which the individual appraiser is able to bring to bear in a given appraisal assignment.

Complainant's appraiser made appropriate adjustments for the various types of sales which were utilized in the appraisal relying upon his education, training and experience. Mr. Bealmear is a well trained and experienced appraiser having more than 28 years of experience in valuing machinery, tools and equipment. Furthermore, his firm is able to rely upon the vast experience of other appraisers (Karen Miles Milan, ASA, 15 years appraisal experience) and their education, training and experience, as well as a trained research staff which provides assistance in data collection and analysis. Exhibit A, pp. 66 & 67; Exhibit B, p. 17, Lines 20-24.

The staff of MB Valuation Services monitors sales of machinery and equipment by on-site attendance at the sale. Questionnaires are filled out regarding information relating to the number of attendants, number of active bidders, type of bidders (end users or used equipment dealers), conduct of auctioneers, handling of the crowd, and the weather. These are all factors which could affect the results of the sale. The information for sales is entered into the databank in order that relevant factors can be considered when adjustments are made to comparables. Tr. 18, Line 21 - Tr. 19, Line 14; Exhibit B, p. 19, Lines 1-19.

If there is another market arena where sales of the multitude of individual items which comprise the subject property in this appeal sell together in an assembled manner, then it would, of course, be appropriate for the appraiser to explore, investigate and analyze the sales which occur in that market. It would, in fact, be his responsibility to do so in order to arrive at an appropriate opinion of value. However, there is no evidence in this record of such a market.

In the absence of such evidence, it would amount to pure speculation and conjecture for either the appraiser or this Hearing Officer to attempt to arrive at a valuation of the subject property under such a hypothetical market condition. Accordingly, the evidence of sales brought forward by Mr. Bealmear is substantial and persuasive evidence as to what the hundreds of items of machinery, tools and equipment which make up the subject property are selling for in the only market for which evidence was presented.

The experience and record of the Commission in addressing valuation of machinery, tools and equipment in more than twenty separate appeals (P. D. George, et al, infra) has clearly shown, without any contradictory evidence, that the auction market is a major component of the arena in which used machinery, tools and equipment are bought and sold throughout the United States. Nothing was presented in the present appeal which demonstrates in any way, shape or form that there is another market arena, level of trade for used machinery and equipment, from which Mr. Bealmear should have drawn sales data. The data base which is utilized by Mr. Bealmear in addition to information received from transactions at auctions also includes used equipment dealer's asking and selling prices.

Willing Seller/Willing Buyer and Machinery and Equipment Auctions

The definition of fair market value (true value in money - Section 137.115, RSMo) utilized by the experts for both parties in this appeal is the 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. In other words, in attempting to value a given item of machinery, or even an assembled group of machinery and equipment, a hypothetical sale between a willing buyer and seller of the property being valued is assumed. In some minds, this translates to a prohibition against the use of any sales data which does not also involve a willing seller and a willing buyer, or, that per se any auction sale is inappropriate and cannot be used. Such a conclusion is in error.

In the field of real estate appraisal, appraisers do not rely upon tax sales as a comparable sale. In most instances, a mortgage foreclosure sale of real estate would not be utilized as a comparable sale. In both cases the seller is not considered to be a willing seller. In addition, however, there are other factors which weigh against using a tax or foreclosure sale in real estate appraisals. In a tax sale, all that is being sought is recovery of taxes owed, and the expenses of the sale. In a foreclosure sale, recovery of the outstanding debt and expenses of sale is what is being sought. In tax and foreclosure real estate sales, the exposure to the market is greatly limited, consisting of generally a legal notice in the local newspaper and posted at the courthouse. Furthermore, in real estate appraisal there is generally sufficient market data outside of tax and foreclosure sales from which sales data can be extracted.

In the realm of machinery and equipment auctions there are significant differences from real estate tax or foreclosure auctions. If a machinery and equipment auction involves a bankruptcy, the bankrupt owner is, of course, being forced to sell. However, the trustee in bankruptcy is under an obligation to protect creditors by obtaining the best price possible when assets are sold. The record in this appeal and in other similar cases (P. D. George, infra) which have come before the Commission, 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 in auction sales. This is a recognized level of trade for used machinery and equipment which can be utilized in valuing machinery and equipment. Valuing Machinery and Equipment, Chapter 4 - Sales Comparison Approach, pp. 115-155; Tr. 18, Line 5-20.

The very nature of a machinery and equipment auction is for the entity conducting the auction to expose the items to be sold to as large a group of buyers as possible through the advertising of the sale. The auctioneer is motivated to obtain the highest sale price possible, since compensation to the auctioneer is based upon a percentage of sale price. This is the case whether the sale involves a forced liquidation or not. In other words, the auctioneer does not seek to get a lower price for sale items simply because there may be a forced liquidation.

In many states, there is a Deceptive Trade Practice Act which prohibits public offerings of machinery and equipment for sale without disclosing everything the seller knows about the property. For the most part, auctioneers and sellers know the equipment being sold and they are aware if there is anything wrong with it. Sellers at auctions disclose if a machine is only a partial machine, without certain components or whether it was considered scrap or in poor condition. Bidders are also aware of such conditions. They do not buy out of ignorance.

There is no evidence to even suggest that buyers at an auction will bid lower if it is a bankruptcy sale as opposed to a sale of excess machinery or a sale simply due to a plant closing. Basic reasoning establishes that bidding by potential buyers is not tied in any logical fashion to the seller's motivation or circumstances which brought about the sale. Buyers at an auction, like buyers in any other sales arena, seek to buy at the lowest price. Auctioneers, as the agent for the seller, are seeking the highest price. Competing buyers increase the sale price by bidding against each other.

Any sale, auction or otherwise, of a given piece of machinery is valid to use as a comparable sale for a like piece of machinery if proper adjustments are made. Adjustments to comparable sales, whether in real property or personal property appraisals, are what brings the comparable to reflect market value and make the appropriate comparison to the subject. There is no set formula for each type of adjustment which might be made to a sale price for a given piece of machinery. Tr. 21, Lines 6-16. It is not possible nor practical to set up a sales grid for each item of machinery and equipment in which the subject item of machinery or equipment would be compared to 4, 6, 8 or a dozen like items of property and each one adjusted on the various possible points of comparability for machinery and equipment. (See, Valuing Machinery and Equipment, Elements of Comparability, pp. 120-122).

The adjustments which are required to be made are a product of the appraiser's training and experience. Mr. Bealmear made adjustments to bring the sales data to the fair market value standard. Exhibit B, p. 17, Lines 13-24; Tr. 18, Lines 21-24. Exhibit C provides an illustration as to the sales data which would be utilized by the appraiser in conducting his sales comparison valuation. The Bealmear appraisal would be strengthened if some sample illustrations as to the kinds of adjustments which are made during his valuation process were also provided for various items of machinery and equipment. However, the failure to include such sample illustrations is not defective to the appraisal possessing the requisite weight of substantial and persuasive evidence to establish value.

The credentials, testimony and other evidence on this record demonstrate that Mr. Bealmear is quite knowledgeable and experienced in the various elements of comparability which would need to be considered for making adjustments and conducting a proper appraisal. His testimony substantiated that in performing his appraisal he made relevant inquiries related to the subject items of machinery and equipment that are ordinarily and properly made. He had available, through his own research or that of his staff, essential and appropriate information relative to the sales used for comparison in the appraisal. In summary, it is reasonable to conclude that the Bealmear appraisal was conducted in such a manner as to be in accordance with the general frame work and guidelines one would expect for such an appraisal. Valuing Machinery and Equipment, supra, Chapter 4.

Principle of Substitution

Sales Comparison Approach

The valuation of the subject property by Complainant's expert is in accordance with the principle of substitution for these particular assets. A well informed buyer will not pay more for items of property than the amount such property will command in a market with sufficient demand. Mr. Bealmear found sufficient sales to value nearly every single piece of machinery and equipment by the sales comparison approach. His appraisal demonstrates a market with sufficient demand for the various items of manufacturing property being valued in this appeal. The Bealmear illustrations and supporting data (Exhibit C) show that he generally had four or more sales of items of machinery and equipment to use to arrive at an indicated value for each of the more than 3,000 items of machinery and equipment valued under the sales comparison approach in the two combined appeals. The Hearing Officer concludes from the testimony of the expert that there were in all likelihood a larger number than 4 to 6 sales for many of the individual items, however, the appraiser selected those sales which were most like the subject item being valued. Exhibit B, p. 16, Lines 4-20.

The sales information (manufacturer of equipment, used dealers' asking and selling prices, auction sale results, catalogs, tabloids, newspapers and other sources) utilized by Mr. Bealmear demonstrates what informed buyers are paying for the various items of machinery and equipment. Exhibit B, p. 16, Line 21 - p. 17, Line 12. One of the strengths of drawing from such sales data is that the appraiser is dealing with actual transactions for the purchase of like machinery, whether by an end user or a used equipment dealer for resale. Actual sales data provides a firm foundation from which the trained and experienced appraiser can make appropriate adjustments to arrive at an opinion of what price the item of property being valued would demand in an open and active market.

Cost Approach

In only three instances in this appeal, where Complainant's expert was unable to find adequate sales of machinery and equipment, he arrived at an opinion of value using the cost approach. In developing his cost approach, Mr. Bealmear obtained the replacement cost new as of the effective date for the appraisal (valuation date - January 1, 2000) from the manufacturer of the particular item of machinery or equipment. If the appraiser was unable to obtain a replacement cost new from the manufacturer, he would attempt to determine the date of acquisition and purchase price and make appropriate adjustments for the difference in time between its original purchase and the valuation date. From the replacement cost new, either obtained from the manufacturer or calculated from original acquisition costs, deductions were made for physical, functional and economic obsolescence. Exhibit A, p. 10; Exhibit B, p. 14, Line 5 - p. 16, Line 3.

The adjustment for physical depreciation is made based upon the actual inspection of each item of machinery and equipment and discussions with plant personnel, if necessary, regarding the physical condition. Functional depreciation can be anything such as a different model from which would be purchased new, difference in speed, capacity, type of controls, energy consumption, technological changes or any other factor which might be considered an obsolescence factor when compared to a new piece of equipment. Economic obsolescence is a deduction that is made for factors which affect the value of an item of machinery outside of the specific piece of property. It could include style of machine, demand for specific equipment or demand for the product which the machine produces, or other factors outside the given machine. The appraiser can contact the manufacturer to investigate demand for a given piece of equipment to determine economic obsolescence. It can also be calculated by looking at equipment of a similar type and comparing the market price for such equipment to the cost new to calculate economic obsolescence where physical and functional obsolescence are known. Information available to Mr. Bealmear through his data sources provides information from the market to assist in adjusting for the three types of obsolescence in performing his cost approach. Exhibit A, p. 10; Exhibit B, p. 14, Line 5 - p. 16, Line 3; The cost methodology employed by Mr. Bealmear for the three items valued under this approach is within the parameters and guidelines for developing a cost approach as applicable in this appraisal problem generally recognized by the machinery and equipment appraisal community. Valuing Machinery and Equipment, supra, Chapter 3, pp. 45-113.

Respondent's Valuation Not Persuasive
Appraisal Methodology

Mass Valuation Appraisal

Respondent's appraiser, Matt Brown, elected to perform a mass valuation of the subject property relying on a set of depreciation tables for various categories of the subject property. Exhibits 1, 2, 3 & 4; Exhibit 8, Q & A 27; Tr. 53, Lines 6-10. The methodology employed is exactly the same as is utilized generally by assessors for the mass valuation of similar personal property. The basic methodology was the same as the appraiser would have used for any taxpayer in St. Charles County under the County's mass appraisal system.

In performing his valuation, Mr. Brown relied upon the asset list shown by Exhibit 5 to value the property under appeal. Mr. Brown totaled the acquisition costs for the various categories of property (Machinery and Equipment, Furniture, Office Machines and Computer Peripheral) by year of acquisition and then multiplied each total acquisition cost by a depreciation percentage based upon the year of acquisition. Exhibit 1, p. 9. He utilized the depreciation factors set forth on the county's 2001 depreciation schedule, as taken from the draft Michigan report, for all items except computer peripheral equipment, and for those items used depreciation factors from a study performed by the NACOMEX company. Exhibit 1, pp. 6-7; Exhibit 2; Exhibit 3, pp. 34, 36 & 37; Exhibit 4, p. 8; Tr. 39, Line 12 - Tr. 42, Line 6; Tr. 52, Line 23 - Tr. 53, Line 10.

In conducting his valuation of the subject property, Mr. Brown did not determine what it would cost to replace each individual item of personal property new as of January 1, 2000, nor what it would cost to replace the assembled furniture, fixtures, office machines, computers, computer peripheral equipment, manufacturing equipment, etc. He did not make a specific analysis and determination of physical, functional or economic depreciation or obsolescence for each item of property or for the assembled items of property, but simply relied upon the cost multipliers contained in Exhibits 3 and 4. Exhibit 7, Q & A 28. The appraiser did not make an itemized listing of the various items of property for each category and for each year based upon an inspection and inventory of the Complainant's facility. Tr.38, Line 7 - Tr. 40, Line 11.

Proper Cost Methodology

The proper methodology for developing an estimate of value relying on the cost approach starts with a determination of replacement cost new for an item of property as of the date of valuation. The next step is to address the issue of physical depreciation for the item of property and make an appropriate deduction. Functional obsolescence for the property must then be analyzed and an adjustment made for this factor. Finally, the matter of economic obsolescence must be considered and investigated so that a proper adjustment can be made. Valuing Machinery and Equipment, supra, Chapter 3, p. 45.

This is not the methodology utilized by Respondent's appraiser. The cost approach relied upon by Respondent starts with original costs and allegedly trends the cost to estimate current replacement cost and then makes deductions for the elements of physical, functional and economic depreciation. All of this is supposed to be contained in the composite factor which is the combination of a trending factor used to develop a reproduction cost new and the remaining economic life, commonly referred to as the percent good after the deduction for depreciation. The composite factors are also called the original cost multipliers.

These original cost multipliers are a tool commonly used by assessors in mass valuations of personal property. The original cost multipliers are the percentage factors in the individual depreciation tables used by Mr. Brown in Exhibits 1. Exhibit 1, pp. 6-7; Exhibit 3, p. 1. It is not clear from reading the NACOMEX report (Exhibit 4) whether there is a trending factor included with the depreciation rate, although the report discusses the results as a depreciation trend schedule. Exhibit 4, pp. 8-9.

Under this trending/depreciation of original costs all machinery and equipment purchased in a given year is trended and depreciated at exactly the same rate. This is true irrespective of whether the item of machinery and equipment is a ladder, grinder, parts washer, crane, punch press or metal chip separation system (all items of machinery and equipment included in the subject property). Neither the appraisal of Mr. Brown, nor his testimony establishes the trending factor for any given year or the basis, analysis or research to develop the unknown trending factors. Nor does Respondent's evidence establish the basis, analysis or research to develop the unknown depreciation factors for each year. All of this weighs in on the side of unpersuasive when considering Respondent's valuation. To the extent that the Michigan and Nacomex reports appear to address these matters they will be discussed below. (See, Michigan Draft Report and NACOMEX Report, infra).

Trending in Cost Approach

Respondent's methodology is further unpersuasive due to its variance from accepted appraisal practice. The trending factor (whatever it may be for a given year) has been applied by Mr. Brown and by Respondent in the original mass valuation to original cost. Trending is applied not to the original cost but to the historical cost. Historical cost is the cost of a property when first placed in service by its first owner. Original cost is the actual cost of a property when acquired by the present owner. In some instances historical and original cost may, of course, be the same. Valuing Machinery and Equipment, supra, Chapter 3, p. 62. The evidence in this appeal does not establish that for each item of property being valued that the acquisition cost listed in Exhibit 5 is the historical or original cost, or both.

Trending can easily lead to errors in valuation. Trending does not give replacement cost new. It does not provide a means to measure the difference between reproduction cost new and replacement cost new. Trending is to only be applied to historical cost. The appraiser must establish that the cost being trended is the actual historical cost and not a cost resulting from a prior allocation of purchase price or used cost. Historical cost to be trended may not be the typical cost, but may include or exclude cost factors that must be considered and accounted for in a given appraisal problem. Trending of used cost is improper. Trending factors are based on averages, but the specific property being valued may differ from the average. Trending for periods in excess of ten years should not be employed unless confirmation can be made by other methods of estimating cost new. The appraiser should know the basics of how the trending index was developed. Valuing Machinery and Equipment, supra, Chapter 3, pp. 62-64. The record in this appeal provides nothing to demonstrate that any of these concerns are addressed in any manner by the trending/depreciation schedules employed by Respondent and Respondent's appraiser. This results in the methodology as applied being unsubstantial and non-persuasive to establish the value proposed.

Depreciation Factors

In like manner, the unknown depreciation factors which are contained in the cost multipliers relied upon by Mr. Brown lack in persuasive content for the purpose for which they are employed. The most obvious deficiency is that the factors do not separately identify physical, functional and economic obsolescence, but all are simply lumped together for each individual year. This results in all individual items of office furniture and equipment for a given year being depreciated at the same rate for physical, functional and economic factors, irrespective of actual physical condition, functional utility or economic circumstances. The same would be true for each item of manufacturing machinery and equipment.

The appraiser had conducted no market studies to support the depreciation schedules which he relied upon. He had no knowledge of any market studies having been performed by the Assessor's office to support the depreciation factors employed in his appraisal. Mr. Brown did not independently arrive at the depreciation schedules used to value the subject property. He simply adopted and relied upon the Michigan and NACOMEX depreciation factors. Exhibit 7, Q & A 28; Exhibit 1, pp. 6-7; Tr. 54, Lines 18-21.

Un-persuasiveness of Mass Valuation Methodology in Contested Cases

Mass valuation of personal property under a standard set of depreciation schedules is used for purposes of reassessment throughout the state, especially when dealing with the machinery and equipment which makes up a manufacturing facility. Due to the multitude of items of personal property and the individual personal property accounts in any given county it is not possible, nor practical for the assessor to perform an individual appraisal on each manufacturing facility for purposes of his annual personal property assessment. Therefore, the methodology whereby the assessor multiplies the total acquisition costs for a given year times a set original cost multiplier amount (trended original cost and percent good factor) for each year to arrive at an indicated true value in money is an appropriate tool to use for valuing office furniture, computer equipment and manufacturing machinery and equipment for purposes of a mass valuation. However, once the issue of valuation has moved to an appeal before the Commission, the mass valuation approach, absent market derived supporting evidence, will generally lack the qualities of substantial and persuasive evidence to establish value. This is especially true in the face of an appraisal based upon market data in the development of sales comparison and cost approaches.

The mass valuation technique has been presented in various contested cases before the Commission (See, P. D. George, et al, infra). It has failed to reach the level of substantial and persuasive evidence in each instance. The reason the method is not persuasive in a contested case is quite simple. There is no hard market data to demonstrate and support the validity and soundness of the underlying figures used in the mathematical calculations. As has been discussed above (See, Proper Cost Methodology, Trending in Cost Approach, Depreciation Factors, supra), the critical factors which go into the math equation are unsupported by the market. This especially true in light of the market data presented by Complainant's expert which clearly provides abundant information to establish that the overwhelming majority of the individual items of machinery and equipment are bought and sold in an active market.

The formula for any given year is very basic. The formula is A x B = market value. In the formula A represents acquisition costs. This apparently includes the purchase price for the item of property by Complainant and might include the original sales tax, if applicable, the original freight expenses and all original installation costs for each given year of acquisition. The factor B represents the combination trending and depreciation factors for each given year of acquisition. Exhibit 1, p. 6. The process of calculation is quite simple. All of the acquisition costs for a given year from an asset ledger are totaled to arrive at the A factor for the year. The factor A is then multiplied times B which represents the amount trended up for the given year and the amount of depreciation deducted to produce a percent good.

Relying on this elementary formula in a contested case is fatally flawed in the absence of market data to establish the proper foundation for this methodology and in light of actual sales data as demonstrated by Complainant's appraisal. Respondent's exhibits, taken individually or collectively do not provide any indication or supporting documentation which will demonstrate that acquisition costs (A) represents the replacement cost new as of January 1, 2000. There is nothing within Respondent's exhibits that establish that the various trending and depreciation factors (B), which were used for furniture and office machines, computers and peripherals, manufacturing equipment and tooling, are appropriate for any of the given items of property or the entire group of items of property which were acquired in a single year to which one trending/depreciation (percent good) factor would apply. The two elements A and B must be supported by market data if Respondent desires to rely upon these figures.

The entire exercise of using a combined factor for trending and depreciation is unnecessary in the vast majority of appeals, since it has been demonstrated time and time again that there is an active user to user (direct), and user to dealer (indirect) market for the vast majority of machinery and equipment that is found in virtually every type of manufacturing facility. (See, P. D. George, et al, infra). Sales from this market can be adjusted to arrive at a market based indication of value. Furthermore, the appropriate and proper methodology, if a party seeks to rely upon the cost approach, is to obtain replacement cost new from the market and then adjust for physical depreciation based upon actual observation of each item of property and adjusted for functional and economic obsolescence derived from appropriate market data and investigation.

Reliance upon acquisition costs, whether historical or original, as the starting point of a valuation exercise in a contested case, and a table of trending and depreciation factors in the face of actual sales data does not reach the level of substantial and persuasive evidence to establish value. It matters little what was paid for an item of equipment five or six years prior to the tax date when one can go to the market and find a sufficient number of actual sales for the item to demonstrate the present value. This procedure (inventory of the property and investigation and research of the present market) eliminates any level of speculation and conjecture as to whether the trended and then depreciated acquisition cost is reflective of market value for individual items of machinery and equipment.

Michigan Draft Report

Respondent's valuation, except for computer equipment, is based upon the original cost multipliers taken from the Draft Report to the Michigan State Tax Commission, April 30, 1999 (Exhibit 3). The valuation approach for tangible personal property in Michigan is a mass appraisal methodology, similar, if not identical to what Mr. Brown did in his valuation. Market value is estimated as a result of multiplying the acquisition cost (stated as original historical cost in Exhibit 3, p. 1), including sales tax, freight and installation by a composite factor.

The composite factor is a combination of a trending factor to produce a reproduction cost new and the remaining economic life percentage, or percent good after the deduction for depreciation. This mathematical calculation is designed to calculate an estimate of true cash value under Michigan law. The valuation standard in Michigan is a value in place or in use for personal property such as the subject property, since sales tax, freight and installation are to be included. Accordingly the study which formed the basis of the Michigan Report was grounded in a value in place or in use, not in value in exchange.

It is unclear from the testimony of Mr. Brown as to whether amounts for tax, freight and installation were, in fact included in the acquisition cost figures shown in Exhibit 5. Mr. Brown was not aware that the original costs as reported by the Complainant included freight, installation and sales tax. Tr. 42, Lines 11-13. It was his belief that where the Complainant had identified these costs they had been removed from the asset list. Tr. 42, Line 14 - Tr. 43, Line 21. He did admit that it was possible that some of the original cost as reported did include freight, installation and sales tax. Tr. 43, Line 22 - Tr. 44, Line 1. Although he did not intentionally include such cost, nor was Mr. Brown of the opinion that such costs should be included to arrive at fair market value, the record does not establish that the costs of sales tax, freight and installation were actually excluded from the amounts shown in the asset list (Exhibit 5) from which the original costs were extracted. Tr. 44, Line 19 - Tr. 45, Line 7.

The Michigan Report does not elaborate as to whether the cost multipliers are constructed in some fashion as to allow for or include a factor for sales tax, freight and installation in each given multiplier. There is no way to determine this from Exhibit 3. It is clear that the cost multipliers are designed to be applied to these costs along with the original cost of items of personal property. Accordingly, it would be reasonable to assume that the cost multipliers in some fashion address or account for a sales tax, freight and installation factor. The Michigan Report does not provide any detail or discussion as to how the market value for sales tax, freight and installation were determined in the study.

In other words, the Michigan Report provides no information to establish that a study was made of current taxes, freight and installation costs for given items of machinery and equipment to establish that the market would recognize any additional value for these items. For example, if a given item of machinery was purchased in 1990 for $10,000 and sales tax freight and installation for the machine in 1990 was $800, the Michigan multiplier of 44% would be applied to arrive at an indicated value installed or in use of $4,752. Of that indicated value, $352 would apparently represent the present worth of having the machine installed and not any value of the machine itself. The Michigan Report does not elaborate as to how it was determined that the market would actually pay 44% of the original sales tax, freight and installation for having the machine installed.

The Michigan Report simply trended and applied a percent good to these original costs, just like an item of tangible personal property. The Michigan Report produced cost multipliers to establish a reproduction cost, not replacement cost, installed or in use, less depreciation. Replacement cost, not reproduction cost, is generally the proper starting point for developing an opinion of value using the cost approach. Replacement cost is often, but not always, less than reproduction cost. Valuing Machinery and Equipment, pp. 46, 51, supra.

The purpose of the Michigan Report was to review, study and analyze the original cost multipliers then being used by the Michigan Tax Commission as recommended guidelines for assessors in Michigan for performing a mass valuation. The Report was prepared for this purpose and this purpose alone. Exhibit 3, p. 41. The purpose was not to develop a tool or methodology for use in an individual appraisal of machinery and equipment in a contested case on the valuation of personal property. The evidence does not establish that either the original cost multiplier mass valuation methodology or the multipliers used from the Michigan Report are a type of methodology or information reasonably relied upon by machinery and equipment experts in forming opinions or inferences for the valuation of such property in a contested appeal to determine fair market value in exchange in an ad valorem tax case.

A valuation performed relying upon the Michigan cost multipliers is not substantial and persuasive evidence to establish fair market value in the face of an appraisal conducted in accordance with the standards and methodology recognized and utilized by machinery and equipment appraisers. The Michigan Report provides a basis upon which an individual assessor may elect to utilize the cost multipliers developed through the Michigan study. For purposes of the assessor's mass valuation in Missouri, an assessor could, of course, elect to rely upon these cost multipliers. Such a use would assume that adequate inquiry and investigation were made to insure that the multipliers were only being applied to the actual cost for the various items of machinery and equipment.

In other words, if the assessor were going to rely simply upon reported acquisition costs, it would be incumbent upon the assessor to extract from such costs all sales tax, freight and installation to insure that he was not valuing the property in use, instead of in exchange. In the absence of an assessor conducting appropriate market investigation to establish that valuation for sales tax, freight and installation actually add value to individual items of personal property which are installed, the multipliers should not be applied to these original costs. To do so would result in arriving at a value installed or in use, which demands adequate market data to establish that such valuation equates to fair market value in exchange.

NACOMEX Report

The NACOMEX Report (Exhibit 4) is a study similar to the Michigan Report only it focused on developing depreciation rates for computers and computer related equipment. This Report, like the Michigan Report, was intended to provide assessors with a tool for conducting a mass valuation where an asset by asset valuation is not practical, i.e. annual county wide assessment of personal property.

The underlying study for the NACOMEX Report was done in 1997. Data relating to computers was drawn from 1996 property tax returns. The schedule to be developed was to be applicable to computer assets as of January 1, 1998. The depreciation schedule developed was for a specific, but unidentified, taxing authority. The schedule set out a percentage good for 11 years or for computer assets acquired in year 1997 back to 1987. The only sales utilized were secondary sales to end-users that were compared with the original new price of the equipment for the year of purchase. The schedule was used by the taxing authority which commissioned the study for purposes of its mass ad valorem assessment of computer assets as of January 1, 1998.

The study was not conducted for purpose of performing a valuation on individual computers in a contested case for property tax valuation. The depreciation table developed was for mass valuation purposes, not an asset by asset appraisal. At the outset of the report, the study confirmed that an asset by asset appraisal will normally result in the more accurate estimate of value and that such an approach is preferred when the number of computer assets are manageable. It substantiated that only in those instances where an asset by asset appraisal would not be possible or cost effective (as in county wide assessment) is the mass valuation depreciation schedule warranted.

The Report was not shown to be the type of methodology or information reasonably relied upon by machinery and equipment experts in forming opinions or inferences for the valuation of such property in a contested appeal to determine fair market value in exchange in an ad valorem tax case. The value of the NACOMEX depreciation schedule relates to a mass valuation. Its value is lost in a contested case when set off by actual sales data developed as was done by Complainant's expert.

Expert Testimony

A determination of value in a personal property case involving items of machinery and equipment rests to a very large extent on evidence presented by the expert witnesses. Where specialized knowledge will assist the hearing officer to understand evidence or to determine a fact in issue, a witness with necessary knowledge, skill, experience, training and education may testify as an expert. Section 490.065, RSMo. The issue of valuation of machinery and equipment calls for expert testimony in the form of an appraisal and direct and cross-examinations. In the present appeal a witness for each side was tendered as an expert in valuation of the property under appeal.

Complainant's Expert

Complainant's expert, Allen D. Bealmear, brings extensive education, training and experience to the performance of his appraisal assignment. He has in excess of twenty-eight years of appraisal experience. He has performed appraisal and research assignments relating to machinery and equipment in industrial plants in a variety of different industries. Mr. Bealmear has testified as an expert witness in Federal Bankruptcy Courts and tax courts in various states and before the State Tax Commission of Missouri on approximately twenty occasions. Exhibit A, p. 75 & Exhibit B, p. 5, Line 9 - p. 6, Line 13.

Mr. Bealmear was assisted in his appraisal of the subject property by Karen Miles Milan, ASA and CEA. Her experience in appraisal of machinery and equipment in industrial plants is similar to that of Mr. Bealmear. Exhibit A, p. 76.

Weight Accorded Evidence

The Hearing Officer as trier of the facts is responsible for the weighing of the evidence presented. The Hearing Officer has the duty to evaluate the evidence presented to determine the sufficiency and persuasiveness of the evidence in establishing market value. One of the critical factors in weighing and evaluating evidence is the education, training and experience of the experts who testify on the issue of value.

The Hearing Officer cannot simply turn a blind eye and a deaf ear to the Complainant's evidence as developed and presented by a recognized expert in the field of machinery and equipment valuation. The Bealmear appraisal comes within the standards of both the Commission rule (12 CSR 30-3.065(2) and American Society of Appraisers guidelines (Valuing Machinery and Equipment, supra) for rendering a persuasive opinion of value. The evidence on this record which is possessed of both substantial and persuasive weight is the opinion of value developed by the Bealmear appraisal. This is so because of the following factors:

1. Mr. Bealmear possesses the necessary credentials to establish his expert status for performing both a proper cost approach and a proper market approach to arrive at an opinion of value.

2. The various items of furniture, computer and manufacturing equipment are regularly traded in the used machinery and equipment market as evidenced by the fact that comparable sales data was available on 99.79% of the total items being valued in this appeal (1413/1416 = .9979%).

3. Complainant's appraisal valued the items of machinery and equipment on the basis that they will continue to be utilized for the specific purpose or function for which each is designed. The property was not valued on a salvage or scrap basis. The appraiser recognized that the machinery and equipment will continue to be used in a manufacturing process, as evidence by the reliance on sales of comparable machinery and equipment that is bought and sold to be used in an on going manufacturing operation.

4. Complainant's valuation was based upon generally accepted appraisal methodology and practice for furniture, computers, machinery and equipment such as comprise the personal property under appeal, relying upon appropriately developed sales and cost data.

5. No evidence was presented, derived from and/or supported by market transactions, which would establish that the subject property would sell for a value greater than that determined under Complainant's cost and sales comparison approaches.

6. Respondent's mass cost methodology failed to demonstrate or establish that such a methodology provides a reliable and persuasive indication of market value and was for all practical purposes countered by Complainant's evidence of value.

ORDER

The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Charles County for the subject tax day is SET ASIDE.

The assessed value for the subject property for tax year 2000 is set at $875,213.

A party may file with the Commission an application for review of this decision within thirty (30) days of the mailing of such decision. The application shall contain specific grounds upon which it is claimed the decision is erroneous. Failure to state specific facts or law upon which the appeal is based will result in summary denial. Section 138.432, RSMo 1994.

If an application for review of this decision is made to the Commission, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the Commission. If no application for review is received by the Commission within thirty (30) days, this decision and order is deemed final and the Collector of St. Charles County shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal. If any or all protested taxes have been disbursed pursuant to Section 139.031(8), RSMo, Complainant 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 6, 2001.

STATE TAX COMMISSION OF MISSOURI

W. B. Tichenor

Chief Hearing Officer

END NOTE

The following is a list of recent appeals which have addressed the issue of valuing of machinery, tools and equipment in various manufacturing facilities in various counties:

P. D. George v. Daly, STC Appeal 97-20316, March 21, 2000, Order Granting Application for Review, August 10, 2000, (Daly v. P. D. George Co., Cause No. 004-2046, Circuit Court City of St. Louis, April 24, 2001);

St. Clair Die Casting v. Overschmidt, STC Appeal 99-57024, 5/3/00;

Rexam v. Overschmidt, STC Appeal 99-57025, 5/3/00;

Bull Moose Tube Co. v Overschmidt, STC Appeals 99-57027 & 99-57028, 5/3/00;

Angeles Group, Inc. v. Overschmidt, STC Appeal 99-57029, 5/3/00;

Ducoa v. Tunnell, STC Appeal 99-65000, 5/5/00;

St. Louis Post-Dispatch v. Daly, STC Appeal 99-20261, 1/29/01;

Nordyne, Inc. v. Daly, STC Appeal 99-20263 (1/29/01);

Lincoln Industrial v. Daly, STC Appeal 99-20264, 1/29/01;

Boxes, Inc. v. Daly, STC Appeal 99-20265, 1/29/01;

P. D. George v. Daly, STC Appeal No. 99-20262, 2/2/01;

Sunline Brands v. Daly, STC Appeal 99-20269, 4/30/01;

Alumax Foils, Inc. v. Daly, STC Appeal 99-20270; 4/30/01;

St. Clair Die Casting Company v. Overschmidt, STC Appeal 00-57002, 5/16/01;

Rexam Containers v. Overschmidt, STC Appeal No. 00-57003, 5/16/01;

Bull Moose Tube Company v. Overschmidt, STC Appeals No. 00-57004 & 00-57005, 5/16/01;

Lowell Manufacturing Co. v. Overschmidt, STC Appeal 00-57006, 5/16/01.

Warner-Jenkinson v. Daly, STC Appeal 99-20267, 8/8/01.

Watlow Industries v. Ruhl, STC Appeal 00-81000, 8/8/01.

VonWeise Gear v. Overschmidt, STC Appeal 00-57001, 8/8/01.

Pohlman, Inc. v. Gogarty, STC Appeal 00-10023, 9/6/01.

ORDER

DENYING APPLICATION FOR REVIEW

OF HEARING OFFICER DECISION

On November 6, 2001, Chief Hearing Officer, W. B. Tichenor, entered his Decision and Order (Decision) setting aside the assessment by the St. Charles County Board of Equalization and finding value for the subject personal property.

Respondent's Grounds for Review

Respondent timely filed his Application for Review of the Decision on the grounds that the Hearing Officer should not have considered the Complainant's appraisal report in making his decision and that the Hearing Officer should have considered Respondent's evidence as substantial and persuasive.

Standard Upon Review

The Hearing Officer as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances. 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. 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).

The Commission will not lightly interfere with the Hearing Officer's Decision and substitute its judgment on the credibility of witnesses and weight to be given the evidence for that of the Hearing Officer as the trier of fact. Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Lowe v. Lombardi, 957 S.W.2d 808 (Mo. App. W.D. 1997); Forms World, Inc. v. Labor and Industrial Relations Com'n, 935 S.W.2d 680 (Mo. App. W.D. 1996); Evangelical Retirement Homes v. STC, 669 S.W.2d 548 (Mo. 1984); Pulitzer Pub. Co. v. Labor and Indus. Relations Commission, 596 S.W.2d 413 (Mo. 1980); St. Louis County v. STC, 562 S.W.2d 334 (Mo. 1978); St. Louis County v. STC, 406 S.W.2d 644 (Mo. 1966).

Opinion Testimony by Experts

DECISION

A review of the record in the present appeal provides more than ample support for the determinations made by the Hearing Officer. Quite simply, Complainant's expert persuade the trier of fact. Respondent's expert failed to persuade the trier of fact. A reasonable mind could have conscientiously reached the result which the Hearing Officer reached on each of these points. There is competent and substantial evidence to establish a sufficient foundation for the Finding that Respondent did not present substantial and persuasive evidence to establish value. It is not necessary for the Commission to review this matter at length. The Hearing Officer's Decision (See, pp. 11-36) addresses in complete and exacting detail the strengths and persuasiveness of Complainant's valuation approach and in like manner, the weaknesses and shortcomings in Respondent's valuation methodology. The Commission finds no basis to support a determination that the Hearing Officer acted in an arbitrary or capricious manner or abused his discretion as the trier of fact and concluder of law in this appeal. Hermel, Inc. v. STC, 564 S.W.2d 888 (Mo. 1978); Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Holt v. Clarke, 965 S.W.2d 241 (Mo. App. W.D. 1998); Smith v. Morton, 890 S.W.2d 403 (Mo. App. E.D. 1995). The facts found by the Hearing Officer are supported by substantial evidence upon the whole record. A reasonable mind could have conscientiously reached the same result based on a review of the entire record. Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).

The Hearing Officer did not err in his determinations as challenged by Respondent. The Respondent's point is not well taken.

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 16, 2002.

STATE TAX COMMISSION OF MISSOURI

Sam D. Leake, Chairman

Bruce E. Davis, Commissioner

Jennifer Tidwell, Commissioner

POHLMAN, INC.,	)
	)
Complainant,	)
	)
v.	)	Appeal Number 00-33006
	)
EUGENE ZIMMERMAN, ASSESSOR,	)
ST. LOUIS COUNTY, MISSOURI,	)
	)
Respondent.	)