State Tax
Commission of Missouri
DNS
ELECTONIC MATERIALS, INC., )
)
Complainant, )
)
v. ) Appeal Numbers 03-32609 thru 03-32612
)
SCOTT SHIPMAN, ASSESSOR, )
ST. CHARLES COUNTY, MISSOURI )
)
Respondent. )
ORDER SETTING ASIDE HEARING OFFICER
DECISION,
AFFIRMING BOARD OF EQUALIZATION,
AND CAUTIONING COUNSEL
HOLDING
Upon review of
the entire record, the Commission sets aside the Hearing Officer Decision
entered on August 4, 2005,
and sustains the value determined by the Assessor and approved by the Board of
Equalization.
HISTORY
The subject
property was originally valued by the Assessor at $12,034,890.[i] Complainant appealed to the St. Charles County
Board of Equalization, which Board sustained the value determined by the
Assessor.
On August 4, 2005, the Hearing
Officer entered his Decision and Order (Decision) setting aside the assessments
by the St. Charles County Board of Equalization. The Hearing Officer found value for the four
parcels, for tax years 2003 and 2004, to be $3,868,080 (assessed value
$1,236,550 -- $1,235,800 commercial and $750 agricultural). Respondent
timely filed his application for review of the Hearing Officer Decision. Complainant timely filed its response.
ISSUES
Complainant
appealed asserting overvaluation and discriminatory treatment. No evidence of discriminatory treatment was
presented at hearing and said issue is deemed waived. Additionally, the issues of adequacy of
evidence, application of Sections 138.060 and 137.345.5 RSMo., and attorney
civility have arisen through the course of the proceeding and pleadings.
I. AS TO VALUE
Findings of Fact
1. Jurisdiction over these appeals is
proper. Complainant timely appealed to
the State Tax Commission from the decisions of the St. Charles County Board of
Equalization.
2. The subject properties were appealed in
tax year 2001. The Hearing Officer ruled
in favor of the taxpayer finding value to be $3,906,595. Subsequently, the assessor raised value to $12,034,890
for tax year 2003. In a deposition dated
April 8, 2004, the assessor testified that, pursuant to Section 137.345.5, RSMo,[ii]
he had used the 2001 State Tax Commission decision as his base value but, after
reviewing similar properties and market sales, he determined that the 2001 Tax
Commission value was far below what was uniform, standard, and typical from a
sales standpoint in St. Charles County. On
April 14, 2004,
Complainant filed its motion for Summary Judgment arguing that Respondent had violated
the provisions of Section 137.345.5, RSMo.
Said motion was denied on the basis that there still remained genuine
issues of material fact.
For this appeal,
Complainant asserted a value of $5,440,000, based upon the appraisal of Thomas
McReynolds. Respondent hired an
appraiser, Charles Argianas, who suggested a value of $38,000,000. On October 19, 2004, Complainant filed objections to
Respondent’s appraisal and pre-filed testimony on the basis that same violated
Section 138.060.1 RSMo.[iii] Counsel for Respondent stated at hearing that
the Argianas appraisal was being offered to support the value determined by the
Assessor and affirmed by the Board of Equalization. Complainant’s objections were overruled but
Complainant was allowed to have a continuing objection on this point.
Complainant’s
objections under Sections 137.345.5 and 138.060, RSMo are not well taken. See
Discussion in Sections II and III Below.
3. That subject properties are located at 501 Pearl Drive, St.
Peters, Missouri. The Complainant’s properties are collectively
known as the MEMC property.
Complainant’s property consists of both commercial and agricultural
parcels. Only the parcels containing
commercial improvements have been appealed.
Those parcels are identified as parcel number 2-0051-S022-00-5 (Appeal
No. 03-32609); parcel number 2-106B-0731-00-8 (Appeal No. 03-32610); parcel number
2-0052-S023-00-8 (Appeal No. 03-32611) and 2-0056-S027-00-1 (Appeal No.
03-32612). The Hearing Officer included
the non-appealed parcels in his decision in order to apportion value. Further, both appraisers found values
different than the value set by the Board of Equalization, requiring that they
apportion value between privately held improvements and improvements owned by
the City of O’Fallon. Inasmuch as we find that the value determined
by the Board of Equalization is correct, such apportionments are not required
in our decision.
4. The MEMC property consists of 188.195
acres improved by a complex of buildings containing a total of 743,931 square
feet. The site is utilized to
manufacture 150 and 200 millimeter diameter silicon wafers. The facility includes corporate offices,
hi-tech industrial buildings, warehouse and maintenance buildings, and
ancillary buildings used to house equipment and utility services. More than 85% of the subject space is properly
classified as “research and development” space.[iv] The buildings were constructed over a period
from 1960 to 1999. In 1994 the subject
facility won the “Missouri Quality Award.”
In 1995 the subject facility was ranked as one of the top ten
manufacturing facilities in the United
States by Industry Week Magazine. On the tax day, the property was in average
condition.
5. The market for silicon wafers is
cyclical. Argainas’ research suggests
that after a boom year in 2000 the semiconductor market dropped in 2001 and
2002 and experienced a rebound in 2003.
The Asia/Pacific area showed a growth of 52% between April 2003 and
April 2004 while the U.S.
growth during that period was 30.4%. The
utilization rate of the world’s chip factories hit a three year high in the
first quarter of 2004 due to robust demand for digital electronics and personal
computers. The utilization rate hit
93.4% in January-March 2004, posting quarter-on-quarter growth for the fifth
straight quarter. Utilization rates
above 90% usually prompt chipmakers to start building new factories. The testimony of Mr. Kauffman, Senior Vice
President of Sales and Marketing, confirms Argainas’ assessment of the cyclical
nature of the silicon industry. Tr. 131-132.
6. There was no evidence of new
construction and property improvement between January 1, 2003, and January 1, 2004. In the absence of new construction during tax
year 2003, the values set for tax year 2003 will carry over to tax year 2004 in
accordance with Section 137.115.1, RSMo.
7. The highest and best use of the subject
property is for continued industrial use.
8. The income approach is not a reliable
indicator of value for the subject property.
There is no market data suggesting that large industrial buildings are
rented. Neither appraiser presented an
income approach to value.
9. The sales comparison approach is not a
reliable indicator of value for the subject property. Both appraisers presented a sales comparison
approach to value. Respondent’s
appraiser gave little weight to his sales comparison approach. Complainant’s appraiser placed great reliance
upon his sales approach to value. However,
we find that the sales used by Complainant’s appraiser were too remote in time
and location to provide persuasive evidence of value. Four of the five sales
occurred between 1995 and 1998. Of
these, some had been vacant since 1987.
Some were purchased with the goal of partial demolition. One had confirmed environmental
contamination. None of the sales were in
Missouri or even the Midwest. McReynolds could recall very little about who
confirmed the sales.
10. Respondent’s cost approach supports the
Assessor’s and Board’s opinion of value.
The methodology which Mr. Argianas used was described in sufficient
detail to allow us to find that it was correctly applied.
For his land
sales, Argianas found four sales occurring in 2000, indicating a range of value
for the subject land of $47,500 per acre to $100,098 per acre. Argianas prepared an adjustment grid showing
adjustments for market conditions, location and physical characteristics. After adjustments, the comparable land sales
showed a range of value between $42,974 per acre and $64,014 per acre. Argianas concluded a value of the subject
land at $50,000 per acre. The sale with
the fewest number of adjustments indicated a value of $43,391 per acre. Argianas concluded that the land alone
(188.19 acres) had a value of $9,410,000.
He assigned a value of $60,000 per acre for the 2.46 acres owned by the
City of O’Fallon ($148,000).
Argianas then used
Marshall Valuation to determine the replacement cost new of the subject
improvements. He calculated the base
cost of each structure by determining the nature of the structure, i.e.
research and development, warehouse, operations, etc., and applying the
applicable Marshall Valuation cost for a structure of that nature. Argianas applied physical depreciation (44%)
to all buildings. He concluded that most
forms of functional obsolescence due to age and design were accounted for by
using replacement rather than reproduction cost. He found no basis in the market to conclude
that the subject property suffered from external obsolescence. He concluded a depreciated value for the
improvements of $55,456,156. The total
value under the cost approach was $64,900,000.
Using this same
methodology, Argianas then calculated the depreciated replacement cost new of
the buildings owned by the City of O’Fallon
to be $26,707,787, for a total value of $26,900,000. He deducted this amount from the overall
amount to determine the value of the property owned by the taxpayer to be
$38,000,000.
11. Complainant placed little reliance upon
the cost approach and Complainant’s cost approach is not a reliable indicator
of value for the subject property.
12. Complainant has the burden to present
substantial and persuasive evidence tending to demonstrate that the value
placed upon its property was excessive, unlawful, unfair, arbitrary or capricious. Complainant has failed to meet that burden of
proof. The only obviously correct methodology and
calculations presented at hearing suggests that the value of the subject
property is at least $12,034,890. Based
upon the evidence presented at hearing, we find that the value determined by
the Assessor and affirmed by the Board of Equalization should be sustained.
III. SECTION
138.060, RSMO
Article
X, Section 3 of our Constitution provides that taxes shall be uniform upon the
same class or subclass of subjects within the territorial limits of the
authority levying the tax. Article X, Section 4(b) of our Constitution
provides that taxes shall be based on value.
Section 137.115.1, RSMo requires the Assessor to assess all real
property at a percentage of its true value in money. Our courts define true value in money as
market value. The Commission’s
obligation is to investigate appeals and correct any assessment or valuation
which is show to be unlawful, unfair, improper, arbitrary or capricious. Article X, Section 14, Missouri Constitution, Section 138.430, RSMo,
Section 138.431, RSMo.
On the other hand, Section 138.060.1,
RSMo provides, in part:
At any
hearing before the state tax commission or a court of competent jurisdiction of
an appeal of assessment from a first class charter county or a city not within
a county, the assessor shall not advocate nor present evidence advocating a
value higher than the value finally determined by the assessor or the value
determine by the board of equalization, whichever is higher, for that
assessment period.
In this case, the Assessor and the
Board determined that value was $12,034,890.
Upon Complainant’s appeal to the State Tax Commission, the County hired
an independent certified appraiser to prepare an appraisal. That appraiser proposed a value of
$38,000,000.
Appraisers are licensed by the State of Missouri based upon qualifications and
experience determined by Missouri
Real Estate Appraisers Commission.
Sections 339.500 to 339.546, RSMo. Appraisers are required to comply with the
Uniform Standards of Professional Appraisal Practice (USPAP). Section
339.535, RSMo. Failure to so comply
with USPAP can result in the loss of an appraisal license. Section
339.532.2(7), RSMo. USPAP requires
many things, among which is the requirement that the appraiser provide an
objective opinion of market value, using methodology approved by the
jurisdiction, when the assignment is determination of market value.[v] In other words, an appraiser cannot opine a
market value of $12,000,000 when his research and analysis and the
jurisdictionally approved methodology suggests a market value of $38,000,000. While USPAP does allow for a jurisdictional
exception,[vi]
which would allow an appraiser to consider Section both 138.060 and Section
137.345.5, RSMo, said exception does not allow an assessor to violate his
ethical responsibility and create an appraisal finding a predetermined value to
be market value.
In the instant case, we have
numerous constitutional and statutory provisions that would appear to be at
odds with each other. What happens to
the constitutional standard of uniformity and the statutory standard of true
value/market value in those instances where the Assessor and Board of Equalization
have failed to accurately value property?
What is the significance of the fact that the legislature has only made
this clause of Section 138.060.1, RSMo applicable to first class charter
counties and cities not within counties?
Does this clause in Section 138.060.1, RSMo bind the Tax Commission? How can these various provisions be read
together so that all provisions retain some meaning?
We do not presume to take on the
role of the courts for the purpose of statutory construction and
interpretation, but we can glean some understanding of this provision of
Section 138.060.1, RSMo from our courts’ treatment of same. In Zimmerman
v. State Tax Commission, et al., 916 S.W.2d 208 (Mo. 1996), addressing the issue of whether
or not this clause of Section 138.060.1 was unconstitutional as a special law,
our Supreme Court determined that Section 138.060.1 had a rational relation to
a legitimate legislate purpose holding “The General Assembly could rationally
relate the method of choosing the assessor to the valuation advocated or the evidence
presented in tax appeals, and draft Section 138.060.1 accordingly.” In that case, the Attorney General argued
that charter counties and the city of St.
Louis had appointed rather than elected
assessors. To the best of our knowledge,
the courts have not yet reached the issue of how this clause of Section 138.060.1, RSMo
should be interpreted in light of the aforementioned constitutional and
statutory provisions dealing with uniformity, market value, and appraiser
licensing.
In our attempt to reconcile all of
these considerations, we enacted 12 CSR 30-3.075 in 2001. That rule provides as follows:
In any case
in a first class charter county or a city not within a county, where the
assessor presents evidence which indicates a valuation higher than the value
finally determined by the assessor or the value determined by the board of
equalization, whichever is higher, for the assessment period, such evidence
will only be received for the purpose of sustaining the assessor’s or board’s
valuation, and not for increasing the valuation of the property under appeal.
Thus, Assessors who are not
accountable to the voters are still restrained from unfettered increases in
valuation. The legislative goal of
giving unelected officials only two opportunities to properly value property in
each assessment cycle has been maintained. At
the same time, appraisers are not called upon to violate the ethical standards
of USPAP mandated by the legislature.
The Commission has routinely
enforced its rule since 2001. Complainant
now argues that this clause of Section 138.060.1 dictates that the State Tax
Commission must exclude any appraisal reports which return an opinion of value
higher than the value established by the assessor or board of equalization. Complainant argues that Section 138.060
“states in unmistakable terms that the assessor cannot ‘present evidence’
advocating a higher valuation than that determined by the BOE” and that the
language of the statute is so unambiguous as to preclude any other
interpretation.
We disagree with Complainant’s
reading of the statute. Non-technical
words and phrases in statutes are to be given their plain an ordinary
meaning. The verb “advocate” means “to
speak, plead, or argue in favor of.” The American Heritage Dictionary of the
English Language, 4th
Edition, 2000. “Advocacy” is the
act of pleading for or actively supporting a cause or proposal.” Black’s
Law Dictionary, 8th Edition, 2004. Counsel for Respondent clearly stated at
hearing that “we’re only offering the testimony and report of Mr. Argianas in
support of the assessor’s value of just over $12,000,000.” Tr.
10. If Respondent is only presenting evidence to support a
value of $12,000,000 can he then also be charged with presenting evidence
advocating a higher value?
Complainant’s argument is that there is something intrinsic in the appraisal
report itself which violates the statute.
We disagree. The creation does not have greater authority than the
creator. We know from USPAP that an appraiser is prohibited from acting as an
advocate. fn. v. His opinion of value
is merely that – an opinion of value. And,
an appraisal report is only a record of an appraiser’s thought processes in reaching
his opinion of value. An appraisal
report cannot “advocate” anything. In a
Section 138.060.1 situation, Respondent uses the appraisal report to support
the Assessor or Board’s opinion of value, not to advocate (to speak, plead, or
argue in favor of) a higher value.
Finally we note that nothing contained in Section 138.060.1, RSMo indicates
that the Tax Commission has an affirmative duty to exclude any of the
Assessors’ evidence – even if same would happen to advocate a higher
value. Nonetheless, under the procedures
set forth in Chapter 536 of the Revised Statutes, we promulgated 12 CSR
30-3.075 evidencing our intention to enforce Section 138.060.1, RSMo.
IV. SECTION 137.345.5, RSMO
Complainant next argues that The
County violated the provisions of Section 137.345.5, RSMo which provides:
In every
instance where a taxpayer has appealed to the board of equalization or the
state tax commission the assessment of the taxpayer’s property, real or
personal, and that appeal has been successful, then in the next following and
all subsequent years the basis upon which the assessor must base future
assessments of the subject property shall be the basis established by the
successful appeal and any increases must be established from that basis.
The record indicates that this
property was appealed for tax year 2001.
Respondent presented no evidence in support of his opinion of value.
Complainant presented an appraisal report.
The Hearing Officer determined a value of $3,906,595.
Under the mandate of Section
137.345.5, RSMo, Respondent was compelled to consider the 2001 State Tax Commission
in arriving at his opinion of value for 2003.
For tax year 2003, Respondent raised Complainant’s value to
$12,034,890. Complainant appealed to the
Board of Equalization, which sustained the Assessor’s value. Subsequently, Complainant appealed to the
State Tax Commission.
On April 8, 2004, Counsel for Complainant took
Respondent’s deposition where Respondent was questioned extensively concerning
his decision to raise Complainant’s value.
A copy of Respondent’s deposition was submitted as an attachment to
Complainant’s Motion for Summary Judgment.
In his deposition, Respondent testified repeatedly that he has used the
2001 State Tax Commission decision as the basis for his value for tax year 2003
but that a multitude of factors, including sales, pointed to the fact that the
2001 decision understated the value of the subject property.
In Complainant’s post trial brief,
it concedes that the 2001 decision does not freeze the market but Complainant
would read Section 137.345.5 to require the Assessor to use the same
methodology used by the Tax Commission in the previous decision.
We cannot read Section 137.345.5 so
restrictively. It is clear that the
legislature wants the Assessors to give due regard to Tax Commission
decisions. However, once the Assessor
has considered the Tax Commission decision, nothing prohibits the Assessor from
raising value if he or she determines that the prior Tax Commission decision
does not represent market value for the tax day in question.
The Tax Commission strives to produce
the best decision it can based upon the information provided. But where – as in our 2001 decision – one
party fails to present evidence, we would be remiss in holding that our
decision was infallible. When either
party comes upon better evidence of market value, it is our duty to consider
same. And, in the case of the Assessor,
it is his duty to provide same to us.
Likewise, the methodology used in a
prior decision is not necessarily binding upon the Assessor. There are three generally approved methods
for determining value, all of which may be applicable in a given
situation.
V. ATTORNEY CIVILITY
In the course of
post-hearing pleadings, counsel for Respondent used Respondent’s appeal as a
platform to castigate the Hearing Officer on a personal level suggesting, among
other things: that the Hearing Officer is so biased against Respondent as to
deprive the Assessor of the benefit of a fair hearing; that the Hearing Officer
has an abiding disdain for and prejudice against the County; and that where the
legislature has failed to provide the Hearing Officer with the means to
patently inflict punishment upon the County, the Hearing Officer has gone out
of his way to do so under the guise of reason and sound judgment.
Lawyers
should not labor under the misimpression that the requirement of zealous
advocacy excuses incivility. The
attorney’s function in the appeal process is to present evidence and argument
so that the cause may be decided according to law, not to personally attack
those weighing such evidence and argument.
These comments by Counsel for Respondent are wholly inappropriate.[vii]
CONCLUSIONS OF
LAW
Highest
and Best Use
True
value in money is the fair market value of the property on the valuation date,
and is a function of its highest and best use, which is the use of the property
which will produce the greatest return in the reasonably near future. Aspenhof Corp. v. State Tax Commission,
789 S.W.2d 867, 869 (Mo.
App. 1990).
It
is true that property can only be valued according to a use to which the
property is readily available. But this
does not mean that in order for a specific use to be the highest and best use
for calculating the property’s true value in money, that particular use must be
available to anyone deciding to purchase the property. . . .A determination of
the true value in money cannot reject the property’s highest and best use and
value the property at a lesser economic use of the property. Snider v. Casino Aztar/Aztar Missouri
Gaming Corp., 156 S.W.3d 341, 348-349 (Mo. 2005).
True Value in Money
Section
137.115, RSMo requires that property be assessed based upon its true value in
money which is defined as the price a property would bring when offered for
sale by one willing or desirous to sell and purchased by one who is desiring 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).
Taxpayer has Burden of Proof
Under
Mo. Const.,
Article X, Section 14, the state tax commission corrects “any assessment which
is shown to be unlawful, unfair, arbitrary or capricious.” Thus, in order to prevail, the taxpayer must
establish that the decision of the board of equalization falls into one of the
above four categories. If a taxpayer
fails to make the required showing, it will not prevail, regardless of the
amount of evidence -- or lack of evidence -- presented by the county.
In Westwood
Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003), the court of
appeals stated:
There is no longer an automatic
presumption regarding the correctness of an assessor's valuation. Section
138.431.3. This statutory change from the previous situation in which the
assessor's valuation was presumed to be correct does not mean that there is now
a presumption in favor of taxpayer. The taxpayer in a Commission tax appeal
still bears the burden of proof and must show by a preponderance of the
evidence that the property was improperly classified or valued. Industrial
Development Authority of Kansas City v. State
Tax Commission of Missouri, 804 S.W.2d
387, 392 (Mo.
App.1991).
In
Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003), the court of
appeals described the taxpayer's burden as follows:
Taxpayers were the moving parties
seeking affirmative relief, and as such, they bore the burden of proving the
vital elements of their case, i.e., the assessments were "unlawful,
unfair, improper, arbitrary or capricious.” Cupples Hesse Corp. v. State Tax
Comm'n, 329 S.W.2d 696, 702 (Mo.1959); Westwood P'ship v. Gogarty,
103 S.W.3d 152, 161[8] (Mo.
App. 2003); 84 C.J.S. Taxation §§710, 726. This is true regardless of the
existence or non-existence of the challenged presumption. As the Supreme Court
of Missouri explained, "even were we to hold that it [the presumption] has
been overcome, the burden of proof on the facts and inferences would still
remain on petitioner, for it is the moving party seeking affirmative
relief.” Cupples, 329 S.W.2d at
702[16]. See also 84 C.J.S. Taxation §710, which states: "Even
where there is no presumption
in favor of the assessor's ruling, if no evidence is offered in support of the
complaint, the reviewing board is justified in fixing the valuation complained
of in the amount assessed by the assessor."
To prevail, Taxpayers had to
"present an opinion of market value and then ... present substantial and
persuasive evidence that the proposed value is indicative of the market value
of the subject property on tax day." Daly v. P.D. George Co., 77
S.W.3d 645, 651 (Mo.
App. 2002).
Substantial and Persuasive Evidence
Substantial
evidence is that evidence which, if true, has probative force upon the issues,
i.e., evidence favoring facts which are such that reasonable men may differ as
to whether it established them, and from which the Commission can reasonably
decide an appeal on the factual issues. Cupples-Hesse
Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
Persuasive
evidence is 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).
Cost Approach
The
cost approach may be based on either reproduction cost or replacement
cost. The reproduction cost, or cost of
construction, is a determination of the cost of constructing an exact duplicate
of an improved property using the same materials and construction
standards. The replacement cost is an
estimate of the cost of constructing a building with the same utility as the
building being appraised but with modern materials and according to current
standards, design and layout.
The
cost approach is most appropriate when the property being valued has been
recently improved with structures that conform to the highest and best use of
the property or when the property has unique or specialized improvements for
which there are no comparables in the market.
While
reproduction cost is the best indicator of value for newer properties where the
actual costs of construction are available, replacement cost may be more
appropriate for older properties. Snider
v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341, 347 (Mo. 2005) (citations
omitted).
Income Approach
The
income approach determines value by estimating the present worth of what an
owner will likely receive in the future as income from the property. The income approach is based on an evaluation
of what a willing buyer would pay to realize the income stream that could be
obtained from the property when devoted to its highest and best use.
When
applying the income approach to valuing business property for tax purposes, it
is not proper to consider income derived from the business and personal
property; only income derived from the land and improvements should be
considered. This approach is most
appropriate in valuing investment-type properties and is reliable when rental
income, operating expenses and capitalization rates can reasonably be estimated
from existing market conditions. The initial step in applying the income
approach is to find comparable rentals and make adjustments for any
differences. Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156
S.W.3d, 341, 347 (Mo.
2005) (citations omitted).
Comparable Sales Approach
The
comparable sales approach uses prices paid for similar properties in arm’s-length
transactions and adjusts those prices to account for differences between the
properties. Comparable sales consist of
evidence of sales reasonably related in time and distance and involve land
comparable in character. This approach
is most appropriate when there is an active market for the type of property at
issue such that sufficient data is available to make a comparative
analysis. Thus application of this
approach to special use property is not appropriate. Snider v. Casino Aztar/Aztar Missouri
Gaming Corp., 156 S.W.3d 341, 347-348 (Mo. 2005) (citations omitted).
Experts
An
expert’s opinion must be founded upon substantial information, not mere
conjecture or speculation, and there must be a rational basis for the
opinion. Missouri Pipeline Co. v.
Wilmes, 898 S.W.2d 682, 687 (Mo. App. E.D. 1995). The state tax commission cannot ignore a
lack of support in the evidence for adjustments made by the expert witnesses in
the application of a particular valuation approach. Drey v. State Tax Commission, 345
S.W.2d 228, 234-236 (Mo. 1961), Snider v.
Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341, 348 (Mo. 2005).
The
testimony of an expert is to be considered like any other testimony, is to be
tried by the same test, and receives just so much weight and credit as the
trier of fact may deem it entitled to when viewed in connection with all other
circumstances. The hearing officer, as
the trier of fact, has the authority to weigh the evidence and is not bound by
the opinions of experts who testify on the issue of reasonable value, but may
believe all or none of the expert’s testimony and may 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. 1981); Scanlon
v. Kansas City, 28 S.W.2d 84, 95 (Mo. 1930).
ORDER
The
Decision of the Hearing Officer is SET ASIDE.
The assessed values approved by the Board of Equalization, are
AFFIRMED.
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.
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 December
28, 2005.
STATE TAX COMMISSION OF MISSOURI
_____________________________________
Bruce E. Davis, Chairman
_____________________________________
Sam D. Leake, Commissioner
_____________________________________
Jennifer Tidwell, Commissioner
Certificate of Service
I hereby
certify that a copy of the foregoing has been mailed postage prepaid this 28th
day of December, 2005, to: David Dempsey, 4611 Maryland Ave., Suite 200, St. Louis,
MO 63108, Attorney for Complainant; Charissa Mayes, Assistant County Counselor,
100 North Third Street, Room 216, St. Charles, MO 63301, Attorney for Respondent;
Scott Shipman, Assessor, 201 North Second, Room 247, St. Charles, MO 63301-2870; Amy Gann, Registrar, 100 North
Third Street, Suite 206, St. Charles, MO 63301; Barbara Walker, Collector, 201
North Second Street, Room 134, St. Charles, MO 63301.
_______________________________
Barbara Heller
Legal Coordinator
[i] Appeal No.
03-32609 - $1,384,800 commercial and $6,260 agricultural
Appeal No. 03-32610 - $10,093,010 commercial
Appeal No. 03-32611 - $316,900 commercial
Appeal No. 03-32612 - $233,920 commercial
[ii] Section
137.345.5, RSMo provides: In every
instance where a taxpayer has appealed to the board of equalization or the
state tax commission the assessment of the taxpayer’s property, real or personal,
and that appeal has been successful, then in the next following and all
subsequent years the basis upon which the assessor must base future assessments
of the subject property shall be the basis established by the successful appeal
and any increases must be established from that basis.
[iii] Section 138.060.0, RSMo provides, in part: At any hearing before the state tax
commission or a court of competent jurisdiction of an appeal of assessment from
a first class charter county or a city not within a county, the assessor shall
not advocate nor present evidence advocating a valuation higher than that value
finally determined by the assessor or the value determined by the board of
equalization, whichever is higher, for that assessment period.
[iv] The Hearing Officer determined that the subject
property had only about 20% research and development space based upon the
testimony of Mr. Kauffman. This is a
misunderstanding of the evidence. Both
appraisers testified that R&D space included much more than merely the
clean rooms and Mr. Kauffman testified that he did not know exactly what the
appraisers meant to designate as R&D.
[v] USPAP, 2005, Conduct (ETHICS RULE)
An appraiser
must perform assignments ethically and competently, in accordance with USPAP
and any supplemental standards agreed to by the appraiser in accepting the
assignment. An appraiser must not engage in criminal conduct. An appraiser must
perform assignments with impartiality, objectivity, and independence, and
without accommodation of personal interests.
In appraisal practice,
an appraiser must not perform as an advocate for any party or issue.
Comment: An appraiser may be an
advocate only in support of his or her assignment results. Advocacy in any
other form in appraisal practice is a violation of the ETHICS RULE.
An appraiser must not accept an assignment that
includes the reporting of predetermined opinions and conclusions.
An appraiser must not communicate
assignment results in a misleading or fraudulent manner. An appraiser must not
use or communicate a misleading or fraudulent report or knowingly permit an
employee or other person to communicate a misleading or fraudulent report.
An
appraiser must not use or rely on unsupported conclusions relating to
characteristics such as race, color, religion, national origin, gender, marital
status, familial status, age, receipt of public assistance income, handicap, or
an unsupported conclusion that homogeneity of such characteristics is necessary
to maximize value.
Comment: An individual appraiser
employed by a group or organization that conducts itself in a manner that does
not conform to these Standards should take steps that are appropriate under the
circumstances to ensure compliance with the Standards.
[vi] USPAP, 2005, JURISDICTIONAL EXCEPTION RULE
If any part of these Standards is
contrary to the law or public policy of any jurisdiction, only that part shall
be void and of no force or effect in that jurisdiction.
Comment: The purpose of the
JURISDICTIONAL EXCEPTION RULE is strictly limited to providing a saving or
severability clause intended to preserve the balance of USPAP if one or more of
its parts are determined to be contrary to law or public policy of a
jurisdiction. By logical extension, there can be no violation of USPAP by an appraiser
disregarding, with proper disclosure, only the part or parts of USPAP that are
void and of no force and effect in a particular assignment by operation of
legal authority. It is misleading for an appraiser to disregard a part or parts
of USPAP as void and of no force and effect in a particular assignment without
identifying in the appraiser’s report the part or parts disregarded and the
legal authority justifying this action.
As used in the
JURISDICTIONAL EXCEPTION RULE, law means a body of rules with binding legal
force established by controlling governmental authority. This broad meaning
includes, without limitation, the federal and state constitutions; legislative
and court-made law; and administrative rules, regulations, and ordinances.
Public policy refers to more or less well-defined moral and ethical standards
of conduct, currently and generally accepted by the community as a whole, and
recognized by the courts with the aid of statutes, judicial precedents, and
other similar available evidence. Jurisdiction refers to the legal authority to
legislate, apply, or interpret law in any form at the federal, state, and local
levels of government.
@
Copyright 2005 The Appraisal Foundation
[vii] S.Ct. Rule 4
. . .A lawyer should demonstrate respect for the legal
system and for those who serve it, including judges, other lawyers and public
officials. (Preamble).
.. . .A lawyer shall not make a statement that the lawyer
knows to be false or with reckless disregard as to its truth or falsity
concerning the qualifications or integrity of a judge, adjudicatory officer or
public legal officer, or of a candidate for election or appointment to judicial
or legal office. (Rule 4-8.2(a)).
. . .It is professional misconduct for a lawyer to: engage in conduct that is prejudicial to the
administration of justice; (Rule 4-8.4(d)).
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DNS ELECTRONIC MATERIALS, INC.,
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Complainant,
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v.
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Appeals Number 03-32609 thru
03-32612
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SCOTT SHIPMAN, ASSESSOR,
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ST. CHARLES
COUNTY, MISSOURI,
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Respondent.
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DECISION AND ORDER
HOLDING
Decisions of the St. Charles County Board of Equalization sustaining the assessments
made by the Assessor, SET ASIDE, Hearing Officer finds true value in money for
the subject property (four (4) parcels combined) for tax years 2003 and
2004 to be $3,868,080, assessed value of $1,236,550 ($1,235,800, commercial and
$750, agricultural).
Complainant appeared by Counsel, David Dempsey, St. Louis, Missouri.
Respondent appeared by Counsel, Charissa Mayes, Assistant County Counselor.
Case heard and decided by Hearing Officer, W. B. Tichenor.
ISSUE
The Commission takes this appeal to determine the true value in money for
the subject property on January 1, 2003.
SUMMARY
Complainant appeals, on the ground of overvaluation and discrimination, the
decision of the St. Charles County Board of Equalization, which sustained the
valuations of the subject properties. The Assessor determined a combined
appraised value for the four properties of $12,034,890 (assessed value of
$3,849,910, as commercial property, with one parcel having some agricultural
graded land). A hearing was conducted on January 19, 2005, at the St. Charles County
Administration Building,
St. Charles, Missouri. Briefs and Reply Briefs were
filed. Complainant’s Brief received by the Commission on April 18, 2005.
Respondent’s Brief received by the Commission on April 19, 2005. Complainant’s
Reply Brief received on May 3, 2005. Respondent’s Reply Brief received on May
4, 2005.
The Hearing Officer, having considered all of the competent evidence upon
the whole record and arguments and responses made in Briefs and Reply Briefs,
enters the following Decision and Order.
Complainant’s Evidence
The following exhibits were received into evidence on behalf of Complainant.
Exhibit A – Appraisal Report of Thomas R. McReynolds, MAI, Missouri State
Certified General Real Estate appraiser.
Exhibit B – Written Direct Testimony of Mr. McReynolds.
At the evidentiary hearing, Counsel for Respondent made reference to the
exhibits being subject to objections previously lodged and the Hearing Officer
received the exhibits subject to objections previously ruled on. Tr. 111,
Lines 5 – 16. However, upon review of the record, Respondent did not file
any objections to Exhibits A and B prior to the evidentiary hearing, nor were
any objections made on the record at the evidentiary hearing as to these exhibits
being received into evidence. The Hearing Officer’s reference to objections by
Respondent previously ruled on addressed objections to rebuttal testimony and
not Exhibits A or B.
Rebuttal Evidence
Complainant offered as rebuttal evidence testimony of Mr. McReynolds and
John Kauffman. Counsel for Respondent had filed objections to rebuttal
testimony by John Kauffman. An Order Ruling on Respondent’s Objections was
issued November 30, 2004. The Order of November 30, 2004 is incorporated by
reference as if set out in full in this Decision.
At the evidentiary hearing, Counsel for Respondent objected to the rebuttal
testimony of Mr. McReynolds. Objections were taken under advisement to be ruled
on in this Decision. See, Ruling On Objections to Rebuttal Evidence,
infra.
Respondent’s Evidence
The following exhibits were received into evidence on behalf of Respondent.
Exhibit 1 – Appraisal Report of Charles G. Argianas, MAI, Missouri State
Certified General Real Estate appraiser.
Exhibit 2 – Written Direct Testimony of Mr. Argianas.
Counsel for Complainant had filed objection to Exhibits 1 and 2 on October
19, 2004. The Hearing Officer issued his ruling on Complainant’s Objections on
November 30, 2004, overruling same and providing that the objections would be
continuing for purposes of the evidentiary hearing and the objections were not
deemed waived by cross-examination of Respondent’s witness. At the evidentiary
hearing Counsel renewed the objections previously made. Tr. 9, Line 9 – Tr.
11, Line. 20. Counsel also raise additional objection based upon Section
135.345.5, RSMo and the objection was taken under advisement to be ruled on in
this Decision. Tr. 12, Line 7 – Tr. 14, Line 9. Counsel for Complainant
again raised the issue of the admissibility of Exhibits 1 and 2 in his Brief. Argument,
Point II, pp. 30 – 32. Likewise, Counsel renewed the objection under
135.354.5 in his Brief. Argument, Point III, pp. 32 – 33.
The Hearing Officer’s ruling on the objections and points raised is found at
Ruling on Complainant’s Objections, infra.
Commission Exhibit
The following exhibit was received into evidence, upon Hearing Officer’s
Order, dated 1/12/05.
Exhibit C-1 – copies of property record cards on six properties that
comprise Complainant’s St. Peters
facility. The individual properties are identified by Appeal, PIN and Map
numbers as follows:
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Tract
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Appeal No.
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PIN #
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Map#
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1.
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03-32609
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357510A000
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2-0051-S022-00-5
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2.
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03-32610
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365401A000
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2-106B-0731-00-8
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3.
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03-32611
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365401B000
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2-0052-S023-00-8
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4.
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03-32612
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363390A000
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2-0056-S027-00-1
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5
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None
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365880A000
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2-106B0749-00-7
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6.
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None
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365130A000
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2-0104-0063-00-1
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Counsel for Respondent objected to the ordering of the production of
the documents, by the Hearing Officer. Tr. 3, Lines 11-15. Exhibit was
received subject to the objection. Objection is overruled and Exhibit is part
of the record in this appeal. See, Ruling on Objection to Exhibit C-1, infra.
FINDINGS OF FACT
1. Jurisdiction over this appeal is proper. Complainant timely
appealed to the State Tax Commission from the decisions of the St. Charles
County Board of Equalization.
2. The subject properties are located at 501 Pearl Drive, St. Peters, Missouri. The
Complainant’s properties collectively are known as the MEMC property. The
following parcel numbers identify the MEMC property: 2-0051-S022-00-5 (03-32609);
2-106B-0731-00-8 (03-32610); 2-0052-S023-00-8 (03-32611);
2-0056-S027-00-1 (03-32612); 2-106B0749-00-7 and 2-0104-0063-00-1.
3. The MEMC property was the subject of an appeal before the
Commission for the 2001 – 2002 assessment cycle. Official notice is taken of
said Decision and Order. The 2001 Decision established the fair market value of
the MEMC property to be $3,906,595 ($3,859,425 – commercial; $47,170 –
agricultural); assessed value of $1,240,660. DNS Electronic Materials, Inc. v.
Zimmerman, Appeal 01-32620, October 8, 2002.
4. The MEMC property consists of 188.195 acres. Complainant did not
appeal the value for the agricultural land portions of its property. There are
72.46 acres of land that are agriculturally valued. Tract 1 (so identified
under Commission Exhibit, supra) contains 12.49 agricultural acres,
valued at $6,260, assessed value of $750 ($6,260 x .12 = $751.20, rounded to
$750). Tract 5 contains 26.26 agricultural acres. Tract 6 contains 33.71
agricultural acres. The remaining 115.735 acres contained in Tracts 1, 2, 3 and
4 are commercial land. The combined agricultural market value for the
agricultural land is $46,110, assessed value of $5,530. Exhibit C-1.
5. There was no evidence of new construction and improvement from
January 1, 2003, to January 1, 2004. In the absence of new construction and
improvement during tax year 2003, the values determined as true value in money
and resulting assessed values as of January 1, 2003 remain the respective
values for January 1, 2004 in accordance with section 137.115.1 RSMo.
6. Complainant’s land is improved by a complex of buildings, with a
total area of 743,931 square feet. The site is utilized to manufacture 150 and
200 millimeter diameter silicon wafers. The facility includes corporate
offices, hi-tech industrial buildings, warehouse and maintenance buildings, and
ancillary buildings used to house equipment and utility services. The buildings
were constructed over a period from 1960 to 1999. Exhibit A, pp. 6, 53-66;
Exhibit 1, p. 36. The subject facility is not a state of the art silicon
wafer plant. It would not be constructed at the present time. It is an antiquated
facility. Tr. 136, Line 16 – Tr. 137, Line 15.
7. The subject property consists of a total of approximately 188.195
acres. Exhibit A, p. 6 – 188.195 acres; Exhibit 1, pp. 48, 53 – 188.19 acres.
Both appraisers valued the entire 188.195 acres as commercial land. The value
of the 72.46 acres of agricultural graded land must be deducted from the final
conclusion of value, and the agricultural grade value of $6,260, assessed value
$750 (Appeal 03-32609) must be added back to properly assess the subject
property. Assessed values for the agricultural graded land in Tracts 5 and 6
are not changed.
8. The value of the 188.195 acres of Complainant’s land is $.50 per
square foot, or $21,780 per acre (43,560 x .50 = $21,780). Exhibit A,
pp. 79-85. The value of the 72.46 acres that must be deducted from the
final opinion of fair market value is $1,578,180 ($21,780 x 72.46 =
$1,578,178,80, rounded to $1,578,180). DNS Electronic Materials, Inc. v.
Zimmerman, Appeal 01-32620, October 8, 2002, Finding of Fact 7, pp. 4-5.
9. Complainant presented substantial and persuasive evidence to
establish the fair market value of the subject properties combined was
$7,440,000, including the contributory value of the City of O’Fallon ownership. Exhibit A, pp. 68-97.
10. Complainant presented substantial and persuasive evidence to
establish the fair market value of the Contributory value of the City of O’Fallon ownership to be
$2,000,000. Exhibit A, pp. 68-97; DNS Electronic Materials, Inc. v.
Zimmerman, Appeal 01-32620, October 8, 2002; Finding of Fact 8, p. 5..
11. The true value in money of the subject properties combined less
the contributory value of the City of O’Fallon
ownership and the fair market value of the agricultural graded land is
$3,861,820. ($7,440,000 - $2,000,000 = $5,440,000 - $1,578,180 = $3,861,820).
This is an assessed value of $1,235,800 ($3,861,820 x .32 = $1,235,782, rounded
to $1,235,800) for the commercial property.
12. The total assessed value for the subject properties is $1,236,550 ($1,235,800
+ $750 = $1,236,550).
13. Commercial assessed values will be allocated among the four
properties based on the percentage each is to the total assessed value for the
four properties taken from Respondent’s Property Record Cards. Exhibit C-1.
This was the same allocation method utilized in Appeal 01-32620. DNS Electronic
Materials, Inc. v. Zimmerman, Appeal 01-32620, October 8, 2002; Finding of
Fact 4 & 12, pp. 4, 5 & 6.
Assessed values have been rounded to hundreds to arrive at the total
of $1,235,800
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Appeal Number
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Parcel Number
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Percentage
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Assessed Value
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03-32609
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2-0051-S022-00-5
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11.5%
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$ 142,100
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03-32610
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2-106B-0731-00-8
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84%
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$1,038,100
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03-32611
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2-0052-S023-00-8
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2.5%
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$ 30,900
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03-32612
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2-0056-S027-00-1
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2%
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$ 24,700
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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.
Official and Judicial Notice
Agencies shall take official notice of all matters of which the courts
take judicial notice. Section 536.070(6), RSMo.
Courts will take judicial notice of their own records in the same
cases. State ex rel. Horton v. Bourke, 129 S.W.2d 866, 869 (1939); Barth
v. Kansas City Elevated Railway Company, 44 S.W. 788, 781 (1898). In
addition, courts may take judicial notice of records in earlier cases when
justice requires - Burton v. Moulder, 245 S.W.2d 844, 846 (Mo. 1952); Knorp
v. Thompson, 175 S.W.2d 889, 894 (1943); Bushman v. Barlow, 15
S.W.2d 329, 332 (Mo. banc 1929) - or when it is necessary for a full
understanding of the instant appeal. State ex rel St. Louis Public Service
Company v. Public Service Commission, 291 S.W.2d 95, 97 (Mo. banc 1956).
Courts may take judicial notice of their own records in prior proceedings
involving the same parties and basically the same facts. In re Murphy,
732 S.W.2d 895, 902 (Mo. banc 1987); State
v. Gilmore, 681 S.W.2d 934, 940 (Mo. banc
1984); State v. Keeble, 399 S.W.2d 118, 122 (Mo. 1966).
Board of Equalization
Presumption
There is a presumption of validity, good faith and correctness of
assessment by the County
Board of Equalization. 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).
The presumption in favor of the Board is not evidence. A presumption
simply accepts something as true without any substantial proof to the contrary.
In an evidentiary hearing before the Commission, the valuation determined by
the Board, even if simply to sustain the value made by the Assessor (which
is not presumed to be correct, under Section 138.431.3, RSMo), is accepted
as true only until and so long as there is no substantial evidence to the
contrary.
Presumption on Assessor’s Value
There is no presumption that the assessor’s valuation is correct. Section
138.431.3, RSMo. Notwithstanding the statutory provision of Section
138.431.1, enacted by the legislature in 1992 (SB 630), the Supreme
Court of Missouri
has held, "A tax assessor’s valuation is presumed correct." Donna
Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341 (Mo. banc 2005). Citing
to Hermel, supra; and Cupples Hesse Corp. v. State Tax Commission,
329 S.W.2d 696, 702 (Mo.
1959), pre-SB 630 decisions.
Rebutting of Presumption of
Correct Assessment
The presumption of correct assessment is rebutted when the taxpayer
presents substantial and persuasive evidence to establish that the assessor’s
or Board’s valuation is erroneous and what the fair market value should have
been placed on the property. Snider, Hermel & Cupples Hesse, supra.
Standard for Valuation
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, supra..
Market Value
Market value is the most probable price in terms of money which a
property should bring in competitive and open market under all conditions
requisite to a fair sale, the buyer and seller, each acting prudently,
knowledgeable and assuming the price is not affected by undue stimulus.
Implicit in this definition is the consummation of a sale as of a
specific date and the passing of title from seller to buyer under conditions
whereby:
1. Buyer and seller are typically motivated.
2. Both parties are well informed and well advised, and each acting in
what they consider their own best interests.
3. A reasonable time is allowed for exposure in the open market.
4. Payment is made in cash or its equivalent.
5. Financing, if any, is on terms generally available in the Community
at the specified date and typical for the property type in its locale.
6. The price represents a normal consideration for the property sold
unaffected by special financing amounts and/or terms, services, fees, costs, or
credits incurred in the transaction.
Real Estate Appraisal Terminology, Society of Real
Estate Appraisers, Revised Edition, 1984; See also, Real Estate
Valuation in Litigation, J. D. Eaton, M.A.I., American Institute of Real
Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment
Administration, International Association of Assessing Officers, 1990, pp.
79-80; Uniform Standards of Professional Appraisal Practice, Glossary; Exhibit
A, p. 8; Exhibit 1, pp. 4-5.
Duty to Investigate
In order to investigate appeals filed with the Commission, the Hearing
Officer has the duty to inquire of the owner of the property or of any other party
to the appeal regarding any matter or issue relevant to the valuation,
subclassification or assessment of the property. The Hearing Officer’s decision
regarding the assessment or valuation of the property may be based solely upon
its inquiry and any evidence presented by the parties, or based solely upon
evidence presented by the parties. Section 138.430.2, RSMo.
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).
Methods of Valuation
Proper methods of valuation and assessment of property are delegated
to the Commission. It is within the purview of the Hearing Officer to determine
the method of valuation to be adopted in a given case. See, Nance v. STC,
18 S.W.3d 611, at 615 (Mo. App. W.D., 2000); Hermel,
supra; Xerox Corp. v. STC, 529 S.W.2d 413 (Mo. banc 1975).
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).
Respondent’s Burden of Proof
Respondent, when advocating a value different from that determined by
the original valuation or a valuation made by the Board of Equalization, must
meet the same burden of proof to present substantial and persuasive evidence of
the value advocated as required of the Complainant under the principles
established by case law. Hermel, Cupples-Hesse, Brooks, supra.
Complainant’s Burden of Proof
In order to prevail, Complainant must present an opinion of market
value and substantial and persuasive evidence that the proposed value is
indicative of the market value of the subject property on January 1, 2003. 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). See also, Westwood
Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003); Daly v. P.
D. George Co., 77 S.W.3d 645 (Mo. App.
E.D. 2002); Reeves v. Snider, 115 S.W.3d 375 (Mo.
App. S.D.
2003).
Methods of Valuation
Missouri courts have approved the comparable sales or market approach,
the cost approach (replacement or construction) and the income approach as
recognized methods of arriving at fair market value. St. Joe Minerals Corp.
v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STC, 789 S.W.2d
867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773
S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v.
Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987); and State ex
rel. State Highway Comm’n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. Div. 2
1974).
Evidence of Increase in Value
In any case in St. Charles County where the assessor presents evidence
which indicates a valuation higher than the value finally determined by the
assessor or the value determined by the board of equalization, whichever is
higher, for that assessment period, such evidence will only be received for the
purpose of sustaining the assessor’s or board’s valuation, and not for
increasing the valuation of the property under appeal. Section 138.060,
RSMo; 12 CSR 30-3.075.
DECISION
Ruling On Respondent’s
Objections to Rebuttal Evidence
Counsel for Respondent objected to testimony given by Mr. McReynolds
as rebuttal testimony on several grounds. The grounds included: (1) improper
for one witness to testify as to the veracity of the testimony of another
witness (Tr. 114, Lines 20-21); (2) McReynolds was testifying as a
review appraiser (Tr. 114, Line 23 – Tr. 115, Line 3); (3) McReynolds
was testifying as to hearsay (Tr. 118, Lines 19-25); and (4) McReynolds
testimony on data related to sales used by Respondent’s appraiser not relevant
because the appraiser did not rely upon sales comparison approach (Tr. 119,
Lines 1-4). Counsel for Respondent raised in her post-hearing Brief the
claim that it was error to allow "contradiction of the Assessor’s expert
witness on collateral matters." This claim was not asserted at the time of
the rebuttal testimony. However, it will be addressed under the claim of lack
of relevancy raised by Respondent at hearing.
Testimony on Veracity
The case law on a witness testifying as to the veracity or credibility
of another witness is quite clear, as set forth by the Missouri Court of
Appeals, Western District, in McGuire v. Seltsam, 2004 WL 502308.
"As a general rule, ‘expert testimony is inadmissible it if
relates to the credibility of witnesses because it invades the province of the
jury.’" [Citations omitted] Expert testimony that comments directly
on a particular witness’ credibility, as well as expert testimony that
expresses an opinion with respect to the credibility or truthfulness of
witnesses of the same type under consideration invests ‘scientific cachet’ on
the central issue of credibility and should not be admitted. [Citations
omitted] Expert testimony presents the danger that jurors may be over-awed
by the evidence, or may defer too quickly to the expert’s opinion." [Citation
omitted].
In the present case, Mr. McReynolds offered no testimony as to the
veracity of Respondent’s expert, Mr. Argianas. See, Tr. 112, Line 20 – Tr.
126, Line 23. The extent of the McReynolds testimony dealt with his
investigation of relevant facts concerning the sales of the properties utilized
by Mr. Argianas. At no time did Mr. McReynolds express any opinion with respect
to the credibility or truthfulness of Respondent’s witness. The Hearing Officer
did not take the McReynolds rebuttal testimony in the vein of criticism related
to Mr. Argianas’ truthfulness. Since Mr. McReynolds was not offering his
opinion as to the credibility of the opposing expert, there was no danger that
the Hearing Officer, as the trier of fact, would be "over-awed" by
his opinion.
Mr. McReynolds was able through his investigation to come across very
relevant information on the comparable sales utilized by Respondent’s
appraiser. He testified as to information Mr. Argianas had been unable to
discover. The Hearing Officer did not take this information in any way, shape
or form, as an attack on the truthfulness of Mr. Argianas. Indeed, the Hearing
Officer found the appraiser to be truthful and forthcoming in his testimony.
The fact that he was not able to locate the same information which Mr.
McReynolds uncovered, does not mean that Respondent’s witness was being
untruthful.
The holding in Stone v. City of Columbia, 885 S.W.2d 744, 747 (Mo.
App. W.D. 1994) on this point is controlling, "So, although ‘it would
obviously be improper to place [a] witness on the stand to testify that in his
opinion [another witness] was not telling the truth [,] … this is far different
from permitting testimony with reference to facts which if believed by the jury
would have the effect of discrediting the witness before the jury.’" [Citation
omitted]
Respondent’s objection is overruled. The McReynolds rebuttal testimony
was not his opinion on the voracity of Mr. Argianas, and therefore, is not
objectionable or excludable on this ground.
Testifying as a Review
Appraiser
Respondent’s objection that the McReynolds’ testimony constitutes
testimony, as a review appraiser is not well taken. An appraisal review is
defined under the Uniform Standards of Professional Appraisal Practice. Mr.
McReynolds did not prepare an appraisal review. The rebuttal testimony was not
a review of Exhibit 1. The testimony was limited to information on fives sales
which were utilized by Respondent’s appraiser. Objection is overruled.
Testifying as to Hearsay
Respondent’s next objection relates to the information on the other
sales provided by Mr. McReynolds constituted hearsay. It is well understood
that nearly all expert testimony relating to appraisal of property before the
Commission constitutes hearsay. At the same time, experts are permitted to rely
upon hearsay in forming opinions and inferences. See, Opinion Testimony by
Experts, supra. The research by Mr. McReynolds of the sales set forth in
Exhibit 1 established facts or data meeting the standard of Section 490.065,
RSMo. He contacted brokers who were involv