CHARLESWOOD CORPORATION	)
(currently d/b/a Ameriwood Industries),	)
	)
Complainant,	)
	)
v.	)		Appeals Number 02-91001 and 02-91002
	)
ALLAN DREYER, ASSESSOR,	)
WARREN COUNTY, MISSOURI,	)
	)
Respondent.	)

The decision of the Warren County Board of Equalization setting market value for the commercial parcel which is the subject of appeal 02-91001 at $3,198,970 is hereby SET ASIDE. The correct market value for the subject property on January 1, 2002, was $2,599,990 (assessed value $832,000).

The decision of the Warren County Board of Equalization setting market value for the parcel which is the subject of appeal 02-91002 at $3,061,260 - commercial (assessed value $979,600) and $41,170 - agricultural (assessed value $4,940) is hereby SET ASIDE. The correct market value for the commercial portion of said parcel on January 1, 2002, was $3,229,650 (assessed value $1,055,890). The agricultural value of this parcel, as determined by the Board of Equalization, is AFFIRMED at $41,170 (assessed value $4,940).

SUMMARY

The subject property consists of two parcels containing 52.27 acres and improved with five industrial/manufacturing buildings of various sizes. The two appeals have been consolidated for the purpose of hearing.

A hearing was conducted on July 8, 2003, before Hearing Officer W.B. Tichenor, at the Warren County Extension Office, Warrenton, Missouri. Complainant appeared by its attorney, Brian T. Howes. Respondent appeared in person and by his attorney, Michael Wright. Complainant presented testimony through its appraiser, Thomas McReynolds, MAI. Respondent presented evidence through his appraiser, and the former assessor of the county, Michael Sutherland. Both parties were given an opportunity to file post-hearing briefs.

Pursuant to Section 138.431.4, RSMo, this case has been transferred to Hearing Officer Luann Johnson for decision.

The proposed values are as follows:

The issue in these cases is true value in money. The 2001 cases were subsequently settled. The issue concerning the proper value of the subject property for tax year 2002 is the subject of this appeal. Under the two-year assessment cycle, the value on January 1, 2002, is calculated by looking at market conditions on January 1, 2001.

The following exhibits were introduced into evidence:

Exhibit A Appraisal Report of Thomas R. McReynolds

Exhibit B Written Direct Testimony of Mr. McReynolds

Exhibit 1 Appraisal Report of Michael Sutherland, former Assessor of Warren County - subject to objections

Exhibit 2 Property Record Cards for subject property - subject to objections

Exhibit 3 Tax Commission Order dismissing 2001 appeals

Exhibit 4 Written Direct Testimony of Mr. Sutherland

Complainant=s objection to the introduction of Respondent=s appraisal report (Ex. 1) and property record card (Ex. 2), on the basis that they were untimely exchanged, is overruled. The failure to initially provide a copy of the appraisal report and property record card to Complainant, pursuant to the scheduling order, was an inadvertent mistake made because Respondent was new to the office and not familiar with the State Tax Commission procedures. The date for the exchange of the appraisal report and exhibits was April 23, 2003. Complainant received the appraisal report on May 13, 2003. Complainant was not prejudiced by the 20 day delay in receiving the appraisal report. It had adequate time to prepare for the hearing scheduled on July 8, 2003.

However, Complainant=s objection to the receipt of certain portions of Respondent=s appraisal report is sustained. The record indicates that when Respondent did provide an appraisal report to Complainant, he failed to provide the complete appraisal report, as filed with the State Tax Commission. The error was not discovered until the day of hearing and the failure to discover the error was not due to any action or inaction on the part of Complainant=s attorney. The omission of certain pages of the appraisal report could not be discovered until the copy provided to Complainant had been compared with the copy provided to the State Tax Commission. This error occurred because Respondent failed to retain a copy of the appraisal, as sent to the State Tax Commission. Consequently, Respondent was required to try and recreate the appraisal report. In the process or recreating the appraisal report, certain important information was omitted. While this omission was not made maliciously or in an attempt to prejudice Complainant=s case, it nevertheless resulted in great prejudice to Complainant inasmuch as Complainant was denied an opportunity to fully prepare for and defend against Respondent=s appraisal report. Because the purpose of the rule requiring the exchange of appraisal reports is to allow for a full and fair hearing of the evidence, and because Respondent=s actions prevented Complainant from fully preparing for the hearing, it is appropriate to sustain Complainant=s request that certain portions of Respondent=s appraisal report be excluded from the evidence and from consideration. The portions of Respondent=s appraisal report which are properly excluded are:

(1) transmittal letter (Ex. 1, pg. 1);

(2) appraisal process - narrative (Ex. 1, pg. 7, 8);

(3) description of cost approach - narrative (Ex. 1, pg. 24);

(4) cost approach applied to subject (Ex. 1, pg. 27);

(5) reconciliation of land value (Ex. 1, pg. 28);

(6) land sales comparison (Ex. 1, pg. 29);

(7) comparable land sales (Ex. 1, pg. 30, 31, 32, 33);

(8) sales comparison and reconciliation - narrative (Ex. 1, pg. 34); and

(9) sales comparison for buildings A, B and C (Ex. 1, pg. 35, 36, 37).

1. Jurisdiction over this appeal is proper. Complainant timely filed its appeal with the State Tax Commission from the Board of Equalization decision.

2. At Respondent=s request, judicial notice is taken of the previous State Tax Commission decisions (Appeals Number 97-91005 and 97-91006) concerning these appeals. In the 1997 appeals, an exhaustive 40 page decision was written addressing the value of these parcels and the deficiencies in Complainant=s appraisal report. The taxpayer appealed that decision to the full Commission and the Commission wrote a 14 page response affirming the hearing officer decision. The hearing officer decision and the Commission order in appeals 97-91005 and 97-91006 are made a part of this order as fully as if incorporated herein. The full text of that decision may be found at www.dor.state.mo.us/stc. Relevant findings in those previous appeals are:

(a) The railroad lease in not a depreciating factor in valuation;

(b) The market value of building A, on January 1, 1997, was $377,261 or $5.50 per square foot;

(c) The market value of building B, on January 1, 1997, was $2,768,995, or $11.47 per square foot;

(d) The market value of building C, on January 1, 1997, was $2,192,684, or $11.47 per square foot;

(e) The market value of building D, on January 1, 1997, was $0.00;

(f) The market value of building E, on January 1, 1997, was $276,527;

(g) Fixtures and site improvements had a value of $2,165,733 but were deliberately not included in the value of the property in 1997 because it was unclear from the evidence whether or not these site improvements were included in the value of the other site improvements;

(h) Unimproved land was valued at $0.25 per square foot or $10,890 per acre;

(i) The market value for parcel 04-22.0-2-00-001.001.000 was $2,599,990 (commercial assessed value $832,000);

(j) The market value for parcel 04-22.0-2-00-006.000.000 was $3,229,650 (commercial assessed value $1,055,890) and the market value of the agricultural property was $12,400 (assessed value $1,490).

(k) The 1994 Aldi sale (buildings C, D, E) was an arm=s-length transaction not affected by undue duress;

(l) The Aldi purchase is a good indicator of value;

(m) The only reasonable way to market or value this property is to divide it into its component parts. When the property is valued according to individual building size, the range of comparable sales increase and the need for fictional adjustments diminish; McReynolds= methodology of valuing the property as a single building is inappropriate and necessarily results in bad adjustments for size; treats all square footage as equal; and assumes that common ownership drives value;

(n) Weight should not be given to sales to or from governmental agencies because such purchases/sales are made to foster development, improve the local economy, and provide employment opportunities. Financing is usually made possible by the community through industrial revenue bonds and, once in government hands, those properties are exempt from ad valorem taxation;

(o) Without evidence to substantiate Acontributory land value@ deductions, square foot values for proposed industrial improved sales may be skewed and the Commission has no assurance that the value assigned to the improvement square footage is accurate;

3. The full Commission found that the hearing officer=s findings of fact and conclusions of law were supported by the evidence on upon the whole record.

4. Complainant=s appraiser, Thomas McReynolds, was also an appraiser in the previous hearing. Mr. McReynolds was aware of the Tax Commission holdings as set out in paragraph 2 above but, with the exception of adding more sales, Mr. McReynolds has presented essentially the same appraisal report as he presented in the 1997 hearings (Tr. 34, 35). He has not cured the defects in methodology and credibility listed in paragraph 2(k) through 2(o) above and continues to assert that the sale of the subject property in 1994 was not an arm=s-length transaction.

5. Appeal number 02-91001 (parcel number 04-22.0-2-00-001.001.000) containing 12.01 acres improved with a warehouse building (Abuilding C@), a truck maintenance garage (Abuilding D@), and an office building (Abuilding E@) was valued by the assessor at $3,198,970 (assessed value $1,023,670). Said value was approved by the Board of Equalization. Respondent is now alleging a lower value of $2,869,000. We adopt our 1997 value of $2,559,990.

6. Appeal number 02-91002 (parcel number 04-22.0-2-00-006.000.000) containing 40.26 acres improved with an industrial building (Abuilding A@) and a fabrication/warehouse (Abuilding B@) was valued at $3,061,260 commercial (assessed value $979,600) and $41,170 agricultural (assessed value $4,940). Said value was approved by the Board of Equalization. Respondent is now alleging a higher commercial value of $3,348,000. We adopt our 1997 commercial value of $3,229,650. Agricultural value is not challenged.

7. The subject property is located in Wright City, Warren County, Missouri. Wright City is about 50 miles west of downtown St. Louis and immediately west of St. Charles County, the fastest growing county in the state (Ex. A, p. 13, 16). Wright City is only 7 or 8 miles west of the western extent of metropolitan development (Ex. A, p. 18) and is in the path of St. Louis historical growth and expansion (Tr. 23). Warren County is considered part of the St. Louis Metropolitan Statistical area (Tr. 22).

Access to the subject property from the east or west is excellent, via Interstate 70, a four lane, limited access, federally maintained, transcontinental highway that connects St. Louis and Kansas City (Ex. A, p. 14). With a few exceptions, industrial development in Warren County is situated within a couple of miles of I-70, which affords good access to industrial users. There are several truck carriers in the area, and the Norfolk and Southern Railroad, paralleling I-70 on the south, serves a large portion of the industrial development. St. Louis Lambert International Airport is less than 45 miles east of Warrenton, the county seat of Warren County and only 25 miles east of Wright City (Ex. A, p. 15, 18).

In addition to a central location with good access, the county also offers tax incentives to companies locating in the area; adequate and reasonably priced utility service; AAA rated public schools; and a labor force that is both motivated and skilled (Ex. A, p. 16).

A broad variety of affordable housing is available in several areas within the county. Locations that are an hour or so away from St. Louis are in high demand, and interstate accessibility is a prime consideration (Ex. A, p. 15).

It is reasonable to expect knowledgeable parties to be buying properties throughout Warren County both for immediate use and for long-term investment. Both land and improved property values should continue their moderate upward trends well into the foreseeable future (Ex. A, p. 17).

8. The subject property consists of two adjacent parcels of land containing a total of 52.27 acres, improved with five buildings and various site improvements. Access to the property is available from East South First Street, a public right-of-way that bisects the property from west to east. The property has extensive frontage on both the north and south sides of this street and there are several driveway entrances to the land to the north and south of the street (Ex. A, p. 19).

9. The subject property is about 3 blocks east of South Elm Street which has a partial interchange with Interstate 70 about five blocks northwest of the subject property. Westbound Interstate 70 traffic can exit from this interchange and eastbound traffic can enter the highway. However, to re-enter the westbound lanes of Interstate 70, it is necessary to travel about a mile west on the frontage roads to the west Wright City interchange. Similarly, eastbound Interstate 70 traffic must exit at the west Wright City interchange in order to reach the town and the subject property (Ex. A, p. 19).

10. The subject property is bounded on the north by the right-of-way of the Norfolk and Southern Railroad and parts of three of the buildings at the subject are located on two parcels of land that are leased from the railroad. These parcels contain approximately 1.09 acres and 1.38 acres (Ex. A, p. 19, 20).

11. Prior to January, 1994, Complainant owned only the parcel designated as Appeal No. 02-91002 which contained 40.26 acres and buildings A and B. In January, 1994, Complainant purchased the parcel designated as Appeal No. 02-91001 from Aldi for $2,600,000 and added $2,000,000 in improvements (Tr. 25, 26).

12. Prior to purchasing the Aldi property, which is the subject of Appeal No. 02-91001, Complainant had been looking for properties to purchase for over a year in order to expand its capacity (Tr. 28, 50-51). Additionally, Complainant owned 40 acres upon which it could have expanded (Tr. 28, 50-51). At some later date, a major client insisted that Complainant expand it=s capacity within six or seven months from said unknown date (Tr. 51). The fact that Complainant was being encouraged to expand it=s capacity does not destroy the arms-length nature of the transaction between Complainant and Aldi, the prior owner of the subject property. This issue was explored fully in the 1997 case. No new or additional evidence was presented here which would suggest that the purchase price of the subject property was excessive or that Complainant did not have an adequate time to negotiate a favorable purchase price. The purchase of the Aldi property was an arm=s-length transaction. The prior sale of this parcel is the best evidence of the market value of this parcel and its sister parcel.

13. Building A is a 68,593 square foot industrial building. The first section of this building was constructed in 1959 with additions constructed in 1961, 1962 and 1984. The building is located on the north side of East South First Street at the west end of the property. Part of the building and all of an adjacent rail dock are located within the railroad right-of-way. This building has concrete foundations and floor slabs and is long and narrow. About half of the building has mill style, wood framing and the remainder is lightweight, pre-engineered steel frame with steel panel exterior walls or concrete block, load bearing walls. The ceiling height in this building varies from as low as about 10 feet to about 14 feet. Due to the configuration of the building, the column spacing in the original structure, and the low ceiling height, this structure can best be used for dead storage of material. About half of the building is heated with ceiling mounted heaters. The remainder is unheated. The entire building is protected by a wet sprinkler system. The overall quality of this building is poor and the structure is only in fair condition, even considering its age (Ex. A, p. 21).

14. Building B is across East South First Street from Building A and functions as one of the two primary fabrication and warehouses for the current operation. This structure contains 241,412 square feet. It has poured reinforced concrete perimeter foundations and footings, concrete floors, lightweight pre-engineered steel frame, and steel panel walls and roof cover. The first section of this building was constructed in 1968 and subsequent sections were added in 1978 and 1986. Due to the topography of the site, the floors of the various sections are at different levels, with total differences in floor elevations varying by as much as 12 to 15 feet. The second section of the building is about 6 or 7 feet below the original section and the third section appears to be 6 to 8 feet below the second section. This causes significant problems with the internal movement of raw materials and finished goods. The different sections are connected by two or three concrete ramps, but there is one spot where the only way to move goods from one section to another is with a forklift. In addition, since the building was constructed in phases, there are interior structural walls that add to the functional problems of the building. The manufacturing and storage sections of the building have 18 foot to 24 foot ceiling height and are heated with ceiling hung unit heaters. The entire building is protected by a wet sprinkler system.

In the front of Building B is an office area containing 7,360 square feet. This area has tile floors, plywood panel partitions, and acoustic panel ceilings with recessed and flush mounted fluorescent lighting. The office finish appears to be original to the first section of the building and is of fair to below average quality and is in similar condition.

Overall, building B is of below average quality and is in below average to fair condition. The floors are pitted and worn and appear to be only 5 inch thick monolithic slabs, rather than six inch reinforced concrete usually found in modern manufacturing buildings. In addition, there was evidence of significant roof leaks and the estimate to repair the roof was about $150,000. This building suffers from extensive incurable functional obsolescence caused by the significant differences in floor heights (Ex. A, p. 22, 23).

15. Building C is located on the north side of East South First Street, immediately east of Building A. This building was constructed in 1970 and contains 191,301 square feet. The building has concrete perimeter foundations and column footings and a poured concrete floor. Structural support is from a lightweight, pre-engineered, steel frame and the exterior walls and roof cover are steel panels. The building is heated by ceiling hung unit heaters and it is protected by a wet sprinkler system. There are about 2,325 square feet of finished area consisting of an employee break room and two small floor manager offices. There are 22 truck bed high loading docks along the east end of the building and a rail dock along the north side. There is one truck dock on the west end of the building and a large drive-in door served by a rather steep ramp. In addition, the driveway leading to this building is very steep and is difficult to navigate during inclement weather. Finally, the north 45 feet of this building are located on land leased from the Norfolk and Southern Railroad.

This building is of average to below average construction quality and is in average to below average condition. The floors are worn, cracked and pitted, indicating that they are probably not reinforced concrete. The building has received only minimal maintenance and the roof has not been replaced (Ex. A, p. 23). This building was purchased, along with buildings D and E, as part of the $2,600,000 transaction between Aldi and Complainant in 1994.

16. Building D is located east of Building C, near the northeast corner of the property. This structure was built as a truck maintenance garage for use by the previous owner. It has concrete perimeter foundations and floor slab, lightweight, pre-engineered steel structural frame, and steel walls and roof. The building contains 3,760 square feet and was built in 1981. It is divided into a two bay truck service area and a small office area. The building has not been used, except for miscellaneous storage, for many years and the interior finish has deteriorated completely. Building D makes no contribution to the value of the subject property (Ex. A, p. 24)

17. Building E is located on the south side of East South First Street, opposite building D, but about 200 yards removed from any of the other structures on the subject site. It was built in 1981 and consists of a one-story, brick veneer office building contain 6,750 square feet plus a partial basement containing 2,345 square feet. It has concrete perimeter foundations and footing, concrete floors, and structural steel frame with brick veneer exterior walls. The interior of the building consists of a large open office area, six or seven perimeter offices, an employee break room, and two rest rooms. Office finish consists of commercial grade carpeting, painted and paneled plasterboard partitions, and acoustic panel ceilings with recessed fluorescent lighting. This building is of average quality construction and is in average condition (Ex. A, p. 24). Building E was part of the $2,600,000 transaction between Aldi and Complainant in 1994.

18. The site is also improved by a large, paved parking area to the east of building C and a smaller paved parking area on the north side of building E. There are gravel parking areas to the east of building B and to the west of building A. There is a large water tower on the site that was originally needed to service the sprinkler systems in the buildings (Ex. A, p. 26).

19. Demand for industrial properties appears to remain stable, with no significant recognition or downward adjustment for normal depreciation or upward adjustment for passage of time; or, in the alternative, the appreciation due to the passage of time offsets normal depreciation. A paired sales analysis indicates that a property which sold in 1994 sold for almost exactly the same price it was purchased for in 1983 (Ex. A, p. 37, 57). If this is the case, then the choice to make no upward adjustment to the comparable sales for appreciation should have a corresponding choice to make no downward adjustment for physical and functional obsolescence. This would also suggest that the parcel known as the AAldi@ property should have approximately the same value on January 1, 2001, and January 1, 2002, as it had on January 1, 1994, to wit, $2,600,000. This premise is also supported by the 1997 State Tax Commission decision finding the value of the Aldi property to be $2,559,990.

20. The income approach is not a reliable indicator of value for the subject properties inasmuch as improvements of this size are typically owner occupied and market rental information is not available.

21. The cost approach is not a reliable indicator of value for the subject properties due to the age of some of the improvements.

22. Complainant=s appraiser chose to lump all of the square footage of the subject property together, find large sales, and adjust those sales as if all of the square footage of Complainant=s buildings had similar age, condition, utility and quality. Thus, although the age of the buildings ranged from 14 to 40 years, Complainant=s appraiser assigned an age to all improvements of 28 years. The quality and condition of all square footage was determined to be Abelow average.@ The manner in which the Autility@ of the buildings were arrived at is unexplained. The creation of a fictional 500,000 square foot building, and the adjustment of the comparable sales to this fictional building, is meaningless. While Complainant=s appraiser suggests that it would not be feasible to sell each building by itself, he never considers the possibility of valuing and marketing the property the way the exist - as two distinct parcels (Ex. A, p. 28-30).

23. In spite of his assertion that industrial or manufacturing property values are remaining stable, Complainant=s appraiser chose to recognize the accrued depreciation to the subject improvements without a corresponding upward adjustment to the sales prices of the comparables - some of which date back to 1990 - to recognize appreciation in value to the comparable sales due to the passage of time. This is internally inconsistent and resulted in an understatement of value for the subject properties because quality, age/condition and utility adjustments are wrong (See Finding of Fact 19).

24. Complainant=s appraiser suggested that the most similar comparable sales were those located in Arural@ areas with small populations and less Arobust@ economies. Thus, he suggested that comparable sales in Harrisonville, Hannibal, Mexico and Poplar Bluff, Missouri and Lincoln, Illinois were comparable in spite of the fact that they were not in the St. Louis Metropolitan area, were not on I-70 in the development corridor for St. Louis and may not have had similar rail and airport access. On the other hand, Complainant=s appraiser suggested that comparable sales in Cape Girardeau, Rolla, Moberly and Farmington, Missouri were superior locations because these towns had a more Arobust@ economy than Wright City. Failure to look beyond the city limits of Wright City, when he was aware that Wright City was only 8 miles from the fastest growing and most Arobust@ county in the state, was a significant error on the part of Complainant=s appraiser resulting in an undervaluation of the subject property because locational adjustments were wrong.

25. Complainant=s appraiser failed to use the actual sale of the subject property as a comparable sale. Complainant=s appraiser was aware that the State Tax Commission had previously ruled that said sale was an arms length transaction. And, even assuming, arguendo, that said sale was to a motivated buyer, Complainant=s appraiser did not allow the existence of a motivated buyer to prevent him from using other sales such as sale 13 which was purchased by the building tenant, or sales to or from municipalities or economic development corporations (Comparable sales 4, 14, 15 and 16). The choice to ignore the prior sale of the subject property was not credibly justified.

26. Complainant=s appraiser failed to explain how he determined the contributory value of the land in all of the various different sales. Contributory value of land ranged from $2,500 per acre (Comparable sale #11) to $30,000 per acre (Comparable sale #13) yet no comparable vacant land sales were presented to support any of his adjustments for the contributory value of land to all of his comparable sales. Because Complainant=s appraiser has failed to support his contributory land sales deductions, he has failed to present persuasive evidence of the square foot value of all of his comparable sales. And, because Complainant=s appraiser has failed to present reliable evidence of the square foot values of his comparable sales, he has also failed to present substantial and persuasive evidence of the value of the subject improvements.

27. Respondent=s adjustment grids under his sales comparison approach have been excluded from evidence, leaving only raw sales data. Therefore, Respondent has failed to present substantial and persuasive evidence supporting his opinion of value.

28. The most relevant comparable sales are those which, like the subject property, are located in the St. Louis Metropolitan area and have good airport and highway access and, possibly rail access. Comparable sales in the St. Louis Metropolitan area are:

(a) Complainant=s sale 12, Respondent=s sale 3 (Wright City, Missouri);

(b) Complainant=s sale 1, Respondent=s sale 1 (Union, Missouri);

(c) Complainant=s sale 18 (Washington, Missouri);

(d) Respondent=s sale 2 (Pevely, Missouri); and

(e) Respondent=s sale 4 (subject property - Wright City).

Unfortunately, because of the errors in Complainant=s methodology and the exclusion of a portion of Respondent=s appraisal report, it is impossible for the Commission to draw any reliable conclusions from the suggested adjustments to these comparable sales. Only Respondent=s comparable sale 4 -- the subject property -- can give any indication of value for the property.

29. The previous sale of the subject property is a comparable sale for the subject property. Although the sale of the subject property is remote in time, Complainant=s own testimony was that values of industrial properties remained stable and trending for time (market condition) adjustments were not necessary to his comparable sales (Ex. A, p. 59-62, Finding of Fact 19). For his sales comparison approach, Complainant=s appraiser used sales that were as old as 1990.

After deducting Complainant=s land or site value of $6,000 per acre (Ex. A, p. 66, 67), and Complainant=s proposed $337,500 the value of the office building designated as building E (Ex. A, p. 65), and assigning no value to building D, the sale of the subject property indicates a value of $11.46 per square foot for the improvements on this parcel [$2,600,000 less $72,000 land value [$6,000/acre x 12 acres = $72,000], less $337,500 value of office building equals $2,191,000 divided by 191,301 square feet contained in building C equals $11.46 per square foot.]. This calculation would include site improvements made prior to January, 1994 when Complainant purchased the property but assigns no value to the $2,000,000 (Tr. 26) in improvements that Complainant made to this parcel after it was purchased. This is the same square foot value that we found in the 1997 appeal and is lower than the vale proposed by the Board of Equalization and Respondent for the Aldi property for 2002.

In our 1997 decision, we found that Building B and Building C (part of the Aldi sale) had the same square foot value of $11.47 per square foot while Building A=s square foot value was $5.50. Under this analysis, our determination of value for the second parcel should be same as it was in the 1997 decision, i.e., $3,229,650. This is less than 10% higher than the valued assigned by the Board of Equalization but lower than the value asserted by Respondent for 2002.

Section 137.115, RSMo requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so. 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).

The burden of proof is on the taxpayer. In order to prevail, a taxpayer must present an opinion of market value and then must present substantial and persuasive evidence that its proposed value is indicative of the market value of the subject property on January 1, 2002, in order to have that value accepted. 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).

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).

The Hearing Officer as the trier of fact may consider the testimony of any 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 opinion 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).

A party does not meet his burden of proof if evidence on any essential element of his case leaves the Commission Ain the nebulous twilight of speculation, conjecture or surmise.@ Rossman v. G.F.C. Corporation of Missouri, 596 S.W.2d 469, 472 (Mo. App. 1980).

Commission Rule 12 CSR 30-3.060 Exchange of Exhibits, Prefiled Direct Testimony and Objections state A. . .The purpose of this rule is to allow for full an fair cross-examination at the evidentiary hearing. Any exhibit or written direct testimony which has not previously been exchanged in accordance with this rule will be excluded from admission into evidence at the evidentiary hearing. . . .@

A previous market sale is strong evidence of the value of a property - particularly where the taxpayer=s appraiser is asserting that market values for properties of this type are not changing significantly.

We acknowledge Complainant=s assertion that the prior sale was not an arm=s-length transaction but, the evidence simply does not support this conclusion. In the 1997 case, the evidence was that Complainant had been fairly active in looking at various expansion prospects prior to the nudge from Wal Mart. Complainant knew it was at capacity and was looking for someplace to expand well before Wal Mart encouraged expansion. This was not a situation where Complainant had to take the first available property. Complainant=s appraiser asserts that, simply because Complainant needed to expand, the purchase of the subject property could not be an arm=s-length transaction. We disagree. Expansion to increase capacity is not a tainted or atypical motivation for a buyer to purchase a property. Complainant had adequate time to explore the market and negotiate with potential sellers and ultimately decided to purchase the subject property.

We have visited this issue twice and our conclusion remains the same. Complainant had the burden to present substantial and persuasive evidence that the sale of the subject property was not an arm=s-length transaction and has twice failed to meet its burden of proof.

Respondent=s evidence was excluded because of failure to follow Commission orders and rules on the exchange of evidence. Respondent met his burden of proof only because he had a prior Tax Commission decision. Being unaware of Commission rules and procedures can pose significant risks of preclusion for either party.

In reaching our decision of value, we had only two supportable options: (1) we could use the presumption in favor of the Board of Equalization and affirm their decisions -- values that neither party agreed with; or (2) we could revisit our 1997 evidence based decision in light of any additional evidence presented by Complainant for 2002. We chose the later course and found no substantial and persuasive evidence that would support a change in value for the commercial property. The Board=s agricultural value was not challenged, so it is affirmed.

The assessed valuations for the subject properties for tax year 2002, as determined by the Assessor and affirmed by the Board of Equalization, are SET ASIDE. The Clerk is HEREBY ORDERED to place the following new assessed values on the tax books for tax year 2002:

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 Warren 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 December 10, 2003.

STATE TAX COMMISSION OF MISSOURI

Luann Johnson

Hearing Officer

A hearing was held in the above appeals on July 8, 2003, before Hearing Officer W.B. Tichenor. Thereafter, pursuant to Section 138.432.4, RSMo, the appeal was transferred to Hearing Officer Luann Johnson for decision.

Complainant was represented by counsel, Brian T. Howes. Respondent was represented by counsel, Michael Wright. Complainant presented the appraisal report and testimony of Thomas McReynolds, MAI. Respondent presented testimony through his appraiser, Michael Sutherland. Both parties were given an opportunity to file post-hearing briefs.

On December 10, 2003, Hearing Officer Luann Johnson issued her decision and order setting value in Appeal No. 02-91001 at $2,599,990 (commercial); and setting value in Appeal No. 02-91002 at $3,229,650 (commercial) and $41,170 (agricultural).

Complainant timely filed its Application for Review on January 8, 2004. Respondent filed his Response to Application for Review on February 13, 2004.

The Commission, after considering the evidence on the record and the briefs of both of the parties, affirms the decision of the Hearing Officer.

The Decision and Order is fundamentally flawed because the Hearing Officer mistakenly decided based on the evidence and decision in Charleswood I without considering new evidence and changed circumstances that alter the determination of value.

The Hearing Officer considered all of the evidence on the record, including - but not limited to - the previous Charleswood decision. In Findings of Fact 4 through 10, and 13 the Hearing Officer considers the Complainant=s current appraisal and finds the appraiser’s sales comparison approach not to be persuasive. Additional discussion is contained on pages 21 and 22 of the Decision and Order.

The Hearing Officer did consider the previous decision on this property; but not without also considering the evidence presented in the current case.

Complainant asserts that the Hearing Officer failed to consider the effect of the passage of time on the quality and condition of the improvements and the value of the property. However, the Hearing Officer pointed to Complainant=s appraisal report and sales which demonstrate the property sold in 1983 and sold again for almost the exactly the same amount in 1994 (Ex. A, pg. 57) indicating that appreciation and depreciation should offset each other.

The Hearing Officer considered the potential impact that time and depreciation might have on the subject improvements.

Complainant asserts that demand for industrial property has dropped, but cites no evidence on the record to support this contention. Complainant=s appraiser stated: AIt is reasonable to expect knowledgeable parties to be buying properties throughout Warren County both for immediate use and for long-term investment. Both land and improved property values should continue their moderate upward trends well into the foreseeable future (Ex. A, pg. 17). D&O p. 9.

4. The Hearing Officer failed to recognize the corrections that the appraiser made in his appraisal report to correct the defects in methodology cited in the original Charleswood decision.

The Hearing Officer noted, in Finding of Fact 4, that there were a number of items in Complainant’s first appraisal report, which were found to be unpersuasive in the prior decision. Many of these items were included again in the instant appeal. (Tr. 34, 35). Under cross-examination, the Complainant’s appraiser indicated these items were included because he disagreed with the previous findings of the Commission. (Tr. 37)

Because the Hearing Officer did not find Complainant’s evidence, including that repeated from the first appraisal, to be persuasive to establish a value different from that of the Board of Equalization, this point is not well taken.

The Hearing Officer erred in exclusively relying on the 1994 Aldi sale to establish the value of the Charleswood property as of January 1, 2002.

Complainant asserts that the sale of a portion of the subject property (the Aldi sale) should be ignored because it was not an arms length transaction. We found in the first Charleswood case that the Aldi sale was an arm's-length transaction. We still find that the Aldi sale was an arm's-length transaction. The facts were precisely the same facts (Finding of Fact 12) presented in the previous case.

The Aldi sale was used because the Hearing Officer was not persuaded by adjustments made to other sales by the appraiser. On the other hand, the sale of the subject property was reliable because it needed no adjustments. That sale represented the property as it existed at the time of the sale.

Finally, Complainant asserts that it is improper to use the Aldi sale because it was too remote in time. In fact, Complainant=s appraiser was using sales which were older than the sale of the subject property with no apparent reservation as to their ages. This argument also goes against the paired sales evidence presented by Complainant=s appraiser, which tended to demonstrate that property values were remaining stable.

The Hearing Officer erred in valuing the other buildings based on the Aldi sale without proper analysis of these buildings.

The Hearing Officer found that Building A was of poor quality and fair condition. (Finding of Fact 13). Building B was below average quality and below average to fair condition. (Finding of Fact 14). Building C was average to below average quality and condition. (Finding of Fact 15). Building D made no contribution to the value of the property. (Finding of Fact 16) And, Building E was an office building in average condition and of average quality. (Finding of Fact 17).

The values utilized by the Hearing Officer were extrapolated from the Aldi sale. The Aldi sale included buildings C, D and E. The values determined by the Hearing Officer conform to the values placed on the property in the 1997 and closely mirror the values determined by the Board of Equalization for tax year 2002. Complainant=s own paired sales analysis testimony supports a conclusion that any deterioration in quality is offset by appreciation realized because of the passage of time. Given the evidence of stable values, it is not unreasonable for the Hearing Officer to determine that the values were, in fact, stable.

The Hearing Officer erred in finding that Charleswood=s appraiser did not analyze the subject property as separate buildings.

This point was specifically addressed at length in the Decision and Order. The Commission defers to the Hearing Officer as the trier of fact regarding this point. There is substantial and persuasive evidence to support the Hearing Officer’s finding.

The Hearing Officer erred in failing to decide based on the substantial and persuasive evidence developed by Charleswood after sustaining Complainant=s objections and finding that Respondent failed to present substantial and persuasive evidence.

Complainant argues that once the Hearing Officer excluded Respondent=s evidence, she erred in rejecting Complainant=s evidence, and AThe primary reason for the Hearing Officer=s conclusion that Charleswood=s value is inaccurate is the alleged improper exclusion of the Aldi sale for the value analysis." The Hearing Officer considered Complainant’s evidence but for reasons stated in the Hearing Officer Decision and Order, did not find it to be persuasive. Findings of Fact 4, 22 through 26. This point is not well taken.

The Decision and Order is erroneous based on the specific detailed grounds for review in the Application for Review of Hearing Officer Decision and Order in Charleswood I.

Issues concerning the prior appeal were addressed and found not to be persuasive in our response to Application for Review filed in the 1997 case. We will not revisit those issues here.

The Decision and Order of Hearing Officer Luann Johnson was based upon the facts and testimony on the record; is not arbitrary, capricious or an abuse of discretion; and is AFFIRMED.

AIn determining a tax assessment the commission is not bound by any single formula, rule or method, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled to.@ St. Louis County v. State Tax Commission of Missouri, 515 SW 2d 446 (Mo. 1974).

The Commission is not bound to adopt an opinion of value presented by an appraiser when the appraiser=s opinion of value is based upon improper methodology or facts. We find that Complainant’s conclusion of value of value was not persuasive for reasons articulated by the Hearing Officer.

Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of the date of the mailing of this Order.

SO ORDERED May 4, 2004.

STATE TAX COMMISSION OF MISSOURI

Sam D. Leake, Chairman

Bruce E. Davis, Commissioner

Jennifer Tidwell, Commissioner