WATLOW INDUSTRIES, ) ) Complainant, ) ) v. ) Appeal Number 00-81000 ) THOMAS E. RUHL, ASSESSOR, ) RALLS COUNTY, MISSOURI, ) ) Respondent. )
DECISION AND ORDER
HOLDING
Decision of the Ralls 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 $1,973,158, assessed value of $657,719.
Complainant appeared by Counsel, Thomas Caradonna, St. Louis, Missouri.
Respondent appeared by Counsel, Rodney J. Rodenbaugh, Assistant Prosecuting Attorney.
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 personal property on January 1, 2000.
SUMMARY
Complainant appeals the decision of the Ralls County Board of Equalization which sustained the valuation of the subject property. The Assessor determined an appraised value of $3,557,790 (assessed value of $1,185,930, as personal property). A hearing was conducted on July 11, 2001, at the Ralls County Courthouse, New London, 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 prefiled the following exhibits:
Exhibit A - Appraisal Report of Alan D. Bealmear, ASA, CEA.
Exhibit B - Written Direct Testimony of Mr. Bealmear.
Exhibit C - Cost and Sales Comparison Approach Demonstrations.
Mr. Bealmear testified under cross-examination, redirect examination and questioning by the Hearing Officer. Mr. Bealmear offered his opinion of fair market value for the subject property of $1,973,158.
Respondent's Evidence
Respondent prefiled the following exhibits:
Exhibit 1 - Complainant's 2000 Business Assessment List.
Exhibit 2 - Copy of Complainant's 2000 Tax Bill.
Exhibit 3 - Personal Property Depreciation Tables for year 2000.
Exhibit 4 - Corrected Depreciation Chart for Furniture and Fixtures.
Exhibit 5 - Corrected Depreciation Chart for Machinery and Equipment.
Exhibit 6 - Corrected Depreciation Chart for Computers.
Exhibit 7 - Summary page for Valuation of Complainant's Personal Property.
Exhibit 8 - Written Direct Testimony of Marilyn Oglesby, Deputy Assessor of Ralls County.
Ms. Oglesby testified under cross-examination. The proposed fair market value for the
subject property was $3,480,973 under Respondent's method of valuation.
FINDINGS OF FACT
1. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Ralls County Board of Equalization. The subject property is located at 6 Industrial Loop Drive, Hannibal, Missouri. The property is identified by Assessor's Account Number 110411263. The property consists of approximately 3,366 items of machinery, tools and equipment. A detailed listing of the individual items of property is found at pages 1 through 97 of Exhibit A.
2. Complainant's appraiser valued 3,345 of the items of property relying on comparative sales data and 21 of the items relying on a discounted cost analysis or replacement cost new, less depreciation. Exhibit A, pp. x -xi; Exhibit B, p. 11, Line 20 - p. 12, Line 25.
3. 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 an both fully aware of all relevant facts. Exhibit A, p. iii, ix. Exhibit B, P. 7, Line 18 - p. 8, Line 13. This is the appropriate concept of value to be applied in the valuation of the subject property.
4. Complainant's appraiser conducted a personal inspection of the items of property being valued. Exhibit A, pp. vii - viii; Exhibit B, p. 6, Line 23 - p. 10, Line 10.
5. 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. Exhibit A, p. iv - v; Exhibit B, p. 24, Lines 13-18.
6. The concept of highest and best use was considered by the appraiser in his valuation of the subject property. The subject items of 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, p. viii . 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 19 - p. 9, Line 7.
7. 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. This data base is a large data resource program which has sales information posted to it daily of all kinds of equipment from the various sources. 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. xvii, Exhibit B, p. 20, Line 21 - p. 22, Line 23.
8. 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 as of January 1, 2000, to be $1,973,158.
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, 1999. 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).
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 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).
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 of 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 opinion 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.
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 hundreds of the subject items. 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.
Complainant's appraiser testified that a significant amount of the data in his data base of sales comes from auctions, comprising both orderly and forced liquidations. However, the appraiser made appropriate adjustments for these types of sales. He likewise made adjustments to sales data when the sales information being relied upon came from used equipment dealers. 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. The fact that some sales are auction, either orderly liquidation or forced liquidation, does not render such sales invalid for developing an opinion of values. 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, recondition equipment sales, orderly liquidations and forced (bankruptcy) sales.
This diversity of types of transactions does not render use of data derived from such sales invalid, questionable or inappropriate. This market arena, with its mixed information base, is where real sales 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 for his appraisal.
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.
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 met its burden of proof to establish the true value in money for the subject property to be $1,973,158.
Respondent's Valuation
The valuation presented by the Respondent represents what is generally known as a mass appraisal for personal property. The mass appraisal method takes the total cost for all machinery, tools and equipment for any given year and multiplies that amount times a depreciation factor which represents the percent good. This procedure is a useful tool when assessing all machinery, tools and equipment in the county. It is certainly appropriate for the Assessor to utilize this method to arrive at a value for assessment purposes when performing a general assessment. However, in an appeal before the Commission, when evidence of actual sales is presented, as in this case, the mass appraisal approach will not always be sufficient to rebut actual market data or depreciation developed from market transactions.
ORDER
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Ralls County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax year 2000 is set at $657,719.
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 2000.
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 Ralls 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 August 8, 2001.
STATE TAX COMMISSION OF MISSOURI
W. B. Tichenor
Chief Hearing Officer
END NOTE
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.