STL 400 N. 4th v. Bushmeyer

Decisions of the St. Louis City Board of Equalization sustaining the assessments made by the Assessor, SET ASIDE, Hearing Officer finds true value in money for the subject properties for tax years 2001 and 2003 to be as follows: Appeal 02-20028 - $8,807,220, assessed value -$1,673,400; Appeal 02-20029 - $655,780, assessed value - $209,800; Appeal 03-20000 - $8,661,640, assessed value - $1,645,700; Appeal 03-20001 - $644,360, assessed value - $206,200.

The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2001, and January 1, 2003.

Complainant appeals, on the ground of overvaluation and misclassification (improper allocation of value between residential and commercial uses), the decision of the St. Louis City Board of Equalization, which sustained the valuations of the subject properties. The Assessor determined an appraised value combined of $10,926,010 (assessed value of $2,537,320, as part residential and part commercial property) for tax year 2001. The Assessor determined an appraised value combined of $10,932,200 (assessed value of $2,539,310, as part residential and part commercial property) for tax year 2003.

A hearing was conducted on February 15, 2005, at the St. Louis City Hall, St. Louis, Missouri. Pursuant to an Order dated March 14, 2005, parties were given dates certain to file Responses to Jurisdictional Question. The final date for response, was April 25, 2005 – Complainant’s Response to Respondent’s Reply.

As a result of Hearing Officer Smashey having left the employment of the Commission, this case has been assigned to Hearing Officer Tichenor for rendering of this Decision and Order. The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

Complainant’s Exhibit 1, Appraisal Report of Thomas M. Slack, MAI, Missouri State Certified General Real Estate Appraiser.

Complainant’s Exhibit 2, Copy of four (4) pages of A HUD Handbook, June 1973.

Complainant’s Exhibit 4, Written Direct Testimony of Peter H. McCann, joint owner with wife of Integrity Real Estate.

Complainant’s Exhibit 5, Copy of letter dated April 8, 2004, to John Gilbert of Respondent’s Office from Thomas L. Caradonna, Counsel for Complainant.

Complainant proposed a value combined for tax year 2001 of $9,000,000. Complainant proposed a value combined for tax year 2003 of $8,850,000. Complainant proposed a mixed use classification of the subject properties split at ninety percent (90%) residential use and ten percent (10%) commercial use for the leased fee portion and a ninety-four percent (94%) residential use and six percent (6%) commercial use for the leasehold interest. CP’s Exhibits 1, 2, 3 & 4.

Respondent’s Exhibit 2, Written Direct Testimony of Martin Hilgeman, Real Property Appraiser II for City of St. Louis Assessor’s Office.

Respondent had filed and exchanged an appraisal report which was marked by the Commission prior to hearing as Respondent’s Exhibit 1; however, the written direct testimony of Mr. Hilgeman clearly references and identifies the appraisal report marked as Respondent’s Exhibit 3, although the witness referred to his appraisal as Exhibit 1 in his written direct testimony. Respondent’s Exhibit 1 was not moved for admission into evidence at the evidentiary hearing and is therefore not part of the record in these appeals.

Respondent’s appraisal opined a value as of January 1, 2001, for the subject properties combined of $12,651,000 and a value as of January 1, 2003 of $12,801,000. Respondent’s Exhibit 2, Q & A 38; Respondent’s Exhibit 3, pp. 1 & 50.

1. Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the St. Louis City Board of Equalization for tax years 2002 and 2003. Complaint for Review of Assessment, 2002 & 2003. Assessor did not send notice for 2001 increase to taxpayer; said omission by the Assessor was set forth in Complainant’s Attachment to Complaint for Review of Assessment. Complaint for Review of Assessment, 2002. The Appeal filed on August 14, 2002, was for both the 2001 and 2002 tax years. Commission has jurisdiction to determined value for 2001. See, Jurisdiction Over 2001 Valuation, infra p. 14.

2. Land Area & Ground Lease. The total land area in the two parcels under appeal is 84,499 or 1.94 acres. There is no division or allocation of land established in the record between the two parcels. The land is subject to a ground lease which commenced April 21, 1964, and expires April 20, 2040. As of January 1, 2001, the lease had a remaining term of 39 years, 4 months. As of January 1, 2003, the lease had a remaining term of 37 years, 4 months. The ground lease requires a demolition fund, which contemplates the demolition of the improvements after 2040. At the end of the term, the demolition fund is to be paid to the Landlord if it elects to demolish the improvements, otherwise, the fund is payable to the Tenant in equal installments over a five year period. Complainant’s Exhibit 1, pp. 11, 13 & 16; Respondent’s Exhibit 4 – Lease, p. 20, Article XIV.

3. Ground Lease Negative Factor. The existence of the long term ground lease is a negative factor which a knowledgeable and prudent investor would take into consideration in arriving at a purchase price for the property. The existence of the ground lease must be taken into consideration and accounted for in arriving at any final estimate of fair market value. Complainant’s Exhibit 1, p. 16; Complainant’s Exhibit 3, p. 17, Line 19 – p. 20, Line 14; Complainant’s Exhibit 4, p. 10, Line 12 – p. 12, Line 23.

4. Appeals 02-20028 & 03-20000. The subject property in Appeal Numbers 02-20028 and 03-20000 is located at 400 North 4^th Street, St. Louis, Missouri. The property is identified by parcel number 64900000406. The property is improved with a 28-story apartment building which contains 411 units. The net rentable area is 269,075. Apartments range from studio to two-bedroom, 2-bath room. The size of the apartments ranges from 500 to 1,075 square feet. There are a limited number of furnished apartments. Complainant’s Exhibit 1, pp. 5, 11, 21a & 22. This property is hereinafter identified as the apartment property.

5. Appeals 02-20029 & 03-20001. The subject property in Appeal Numbers 02-20029 and 03-20001 is located at 440 North 4^th Street, St. Louis, Missouri. The property is identified by parcel number 64900000407. The property is improved with a 3-story retail and office structure containing approximately 60,000 square feet. Complainant’s Exhibit 1, pp. 5, 11, 21a & 22. This property is hereinafter identified as the commercial property.

6. Parking Garage. Both properties are served by a parking garage. The total parking garage serves two additional properties, which are not part of this appeal. The portion of the parking garage allocated for service to the subject properties consists of approximately 30% of the total garage space or 470 spaces. The portion of the parking garage allocated to serve the subject properties has various items of deferred maintenance that have been estimated to cost $978.326 to repair. Complainant’s Exhibit 1, p. 11 & Addendum D; Complainant’s Exhibit 4, p. 12, Line 24 – p. 18, Line 15.

7. Assessment Data. Complainants for Review of Assessment; Board Decision.

Appeal No.	Assessed Value	True Value in Money	Classification
02-20028	$1,401,620	$7,376,900	Residential
02-20029	$1,135,700	$3,549,100	Commercial
03-20000	$1,401,610	$7,376,900	Residential
03-20001	$1,137,700	$3,555,300	Commercial

The properties under appeal are generally known as the Gentry’s Landing property.

8. No New Construction and Improvement. There was no evidence of new construction and improvement from January 1, 2001, to January 1, 2002, or from January 1, 2003, to January 1, 2004, accordingly the value determined for January 1 of each odd-numbered year will remain the value for the following even-numbered year. Section 137.115.1, RSMo.

9. Cost Approach Not Appropriate. The cost approach is not appropriate to use in the present appraisal problem. The potential well-informed investment buyer of the subject properties would not rely upon the cost approach. Complainant’s Exhibit 3, p. 9, Lines 1 – 16.

10. Sales Comparison Approach Not Persuasive. The sales comparison approach as developed in these appeals was not persuasive as an indicator of fair market value. This was due to the negative components impacting the subject property, specifically, the improvements (apartment and office/retail buildings) being owned by one entity and the land subject to ground lease. The sales comparables presented were not subject to similar factors. Neither appraiser placed primary importance and weight on their sales comparison approach. See, Sales Comparison Not Persuasive, infra, p. 25.

11. Income Approach Proper Approach for Valuation of Subject Properties. The income approach was the primary approach relied upon by both appraisers. The most weight was given to the income approach by both appraisers. A potential investor in the subject property would give most weight to the income stream of the subject properties. Complainant’s Exhibit 1, p. 26; Complainant’s Exhibit 3, p. 9, Lines 19 – 22; Respondent’s Exhibit 2, Q & A 32, 35 – 38; Respondent’s Exhibit 3, pp. 49 – 50; Tr. 102, Lines 22 – 24.

12. Complainant’s Valuation Under Income Approach Persuasive. The income approach developed and utilized by Complainant’s appraiser provided a sound basis for the valuation of the subject property. Complainant’s evidence was substantial and persuasive to rebut the presumption of correct assessment by the Assessor and/or the Board and establish the true value in money for the subject properties. Complainant’s Exhibit 1, pp. 21a – 26; Complainant’s Exhibit 3, p. 11, Line 12 – p. 16, Line 6; p. 16, Line 22 – p. 17, Line 18; p. 20, Line 19 – p. 19.

13. Respondent’s Valuation Under Income Approach Not Persuasive. The income approach developed and utilized by Respondent’s appraiser did not provide an appropriate basis for the valuation of the subject property. It did not constitute substantial and persuasive evidence to support the original value established by the Assessor, and sustained by the Board. See, Respondent’s Income Approach Not Persuasive, infra, p. 27.

14. Value Allocation. The appropriate allocation of value for the leasehold interest is 94% residential and 6% as determined by the Value Allocation analysis developed by Complainant’s appraiser. The appropriate allocation of value for the leased fee component is 90% residential and 10% as determined by the Value Allocation analysis developed by Complainant’s appraiser. Complainant’s Exhibit 1, p. 27; Complainant’s Exhibit 3, p. 22, Line 8 – p. 24, Line 4; Complainant’s Exhibit 4, p. 7, Line 22 – p. 10, Line 11.15. Value of Leased Fee. The value of the leased fee as of January 1, 2001 is $2,200,000. The value of the leased fee as of January 1, 2003 is $2,150,000. See, Valuation of the Leased Fee, infra, p. 17.

16. Value of Leasehold Interest. The value of the leasehold interest as of January 1, 2001 is $7,263,000. The value of the leasehold interest as of January 1, 2003, is $7,156,000. See, Valuation of the Leasehold Interest, infra, p. 19.

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.

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), is accepted as true only until and so long as there is no substantial evidence to the contrary.

By statutory enactment, here 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." Snider v. Casino Aztar/Aztar Missouri Gaming Corp., SC86181, 3/01/2005. Citing to Hermel, supra; and Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).

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.

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 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:

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.

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.

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 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).

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, 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.

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).

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).

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).

In any case in St. Louis City 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.

Complainant’s Complaints for Review of Assessment received by the Commission August 14, 2002, in Appeals 02-2008 and 02-20029, had attached to each the following:

"Taxpayer received no notice of its assessment for the 2001 tax year, which assessor has acknowledged. Taxpayer, therefore, seeks redress for the 2001 and 2002 tax years."

The declaration of the failure of the Assessor to provide notice as required by 137.180 RSMo was never challenged by Respondent. Counsel for Respondent wrote to the Hearing Officer on February 24, 2005, asserting that there had not been issued "… an Order of consolidation combining the 2001 with the 2002 STC appeals. There may be an exhaustion of remedies, and thus a jurisdictional problem." Letter, dtd 2/24/05, Yates to Smashey & Caradonna.

The letter of Respondent’s Counsel asserted he was writing for two reasons, one of which was that, "… the Hearing Officer asked a jurisdictional question regarding the 2001 appeal." At the conclusion of the evidentiary hearing, before going off the record, the following exchange occurred, at Line, 22, page 167 – Line 3, page 168 of the Transcript:

"HEARING OFFICER SMASHEY: Thank you. I noted –I’ve—I—I’ve heard evidence about valuation as of 1/1/2001, 1/1/2003. Are the parties in agreement that I have jurisdiction to look at the 2001 assessment?

The Yates letter of February 24^th does not address the question of or challenge the position of Complainant that the Assessor did not provide the statutory notice to Complainant in 2001. Section 137.180 requires a notice by the Assessor when an increase in valuation has occurred. The purpose of the notice is to advise the taxpayer that the value of its property has been increased and also to notify of the right to be heard before the board of equalization. When no notice is sent, the taxpayer has been denied fundamental due process. The taxpayer cannot be denied the right to be heard before the Commission because of the Assessor’s failure to carry out the statutory duty to provide notice.

On June 26, 2003, Counsel for Complainant filed Motion to Consolidate Appeals. Said Motion read in relevant part:

At the time of filing the Motion, the Complaints for Review of Assessment for tax year 2003 had been filed with the Commission (June 19, 2003), but the Commission’s acknowledgement letter was not issued until July 18, 2003. However, by Order dated June 27, 2003, Complainant’s Motion to Consolidate Appeals was granted and the 2002 appeals (which included tax year 2001) were consolidated with the 2003 appeals.

The pleadings (Complaints for Review of Assessment) filed August 14, 2002, appealed the 2002 year assessment which had been appealed to the Board of Equalization. Said pleadings also appealed the 2001 year assessment, which had not been appealed to the Board, on the ground that the Assessor had not provided the statutorily required notice, and had acknowledged said failure of notice. This assertion in the pleadings was never denied or challenged by Respondent. It was in fact admitted when Respondent joined in the Complainant’s Motion to Consolidate. No evidence was presented at hearing, or by way of Counsel for Respondent’s letter raising this issue to establish any facts contrary to what was pleaded by Complainant in this regard.

The Supreme Court of Missouri has provided guidance with regard to the pending jurisdictional issue in the case of Lake St. Louis Community Association v. STC, 759 S.W.2d 843, at 846 (Mo. banc 1988), when it stated:

Accordingly, the Commission does have jurisdiction to hear the appeal for the 2001 assessment due to the failure of the Assessor to provide notice as required by statute, thereby denying Complainant of the opportunity to appeal its valuation for 2001 to the Board of Equalization.

The determination of value in these appeals requires value to be found for the leased fee portion of the properties and the leasehold estate. Both appraisers addressed the appraisal problem in this fashion. See, Complainant’s Exhibit 1, pp. 16 – 18; Respondent’s Exhibit 3, p. 49. The Hearing Officer first considers the matter of valuation of the leased fee portion before moving to the valuation of the leasehold estate.

Leased fee interest is an ownership interest held by a landlord with the rights of use and occupancy conveyed by lease to others. The rights of the lessor (the leased fee owner) and the lessee are specified by contract terms contained in the lease. Appraisal Institute, The Dictionary of Real Estate Appraisal, 4^th Ed. (Chicago 2002, p. 161), cited in Complainant’s Exhibit 1, Addendum E – Definitions, p. 2.

The subject land is leased under a lease which expires in 2040. Ground rent paid by Complainant, Integrity Real Estate, as of January 1, 2001 and 2003 was $189,643 per year. In 2004, the rental rate may potentially be adjusted upward. There may be potential upward adjustments in 2016 and 2028 also.

Complainant’s appraiser performed his valuation analysis of the leased fee by utilization of a discounted cash flow (DCF) analysis. Although there have been instances in the past when the Commission has not found a DCF methodology to be appropriate or persuasive, the present appeals are appropriate for the utilization of this form of the income approach. The Hearing Officer is persuaded that because of the specific term of the lease and the ability to forecast with a great degree of certainty the annual rental until end of the term, a well-informed investor would place great, if not sole reliance, on a DCF calculation to value the leased fee. Accordingly, the DCF methodology as developed by Mr. Slack for valuation of the leased fee is deemed proper and substantial and persuasive evidence of fair market value of the leased fee.

Mr. Slack estimated contributory site value at the expiration of the lease by analysis and adjustment of sales data of four unimproved land tracts zone for central business district types of development in the City of St. Louis. From the data collected and the analysis performed, the appraiser determined a forecasted land value in 2040 and discounted it to present value. The present value of the cash flow was then calculated to be added to the present value of the reversion. In calculating the present worth of the case flow out to the year 2040, Mr. Slack performed an analysis under three possible interpretations of the ground lease contract.

These three interpretations were (1) potential rental adjustments in 2004, 2016 and 2028 could be based on value of the fee simple interest in the underlying land as if vacant, without consideration of demolition costs or reserves for demolition that would accumulate; (2) adjustments could be based on the value of the land, as if vacant, less the cost of demolition, plus the accumulated reserves for demolition; or (3) adjustments could be based on the value of the fee simple interest in the vacant land minus the leased fee interest.

After giving consideration to each of these three possible scenarios, the appraiser concluded on an opinion as to the most probable price an investor would pay for the leased fee interest. That opinion of value was $2,200,000 for 2001 and $2,150,000 for 2003. See, Complainant’s Exhibit 1, pp 15a – 18; and Addendum B.

The Hearing Officer finds the opinions proffered by Mr. Slack to be based upon substantial and persuasive evidence and accordingly are adopted as the appropriate values for these appeals.

Respondent’s appraiser also made a separate valuation of the leased fee interest. Mr. Hilgeman considered four land sales, but concluded on the methodology of capitalization of ground rent to determine value. The calculation utilized for the 2001 value multiplied the annual rent by 99% and then divided it by 7.36% to arrive at an indicated value of $2,551,000. The 7.36% factor was derived by dividing the sales price of $8,000,000 in 1996 by $588,345, apparently the total ground rent for the entire parcel which includes additional parcels not the subject of this appeal. A similar calculation was made to determine a value for 2003, although the annual rent was adjusted upward for time, although it is know that for 2001 and 2003 the ground rent payment remained the same. See, Respondent’s Exhibit 3, pp. 17 – 18.

The Hearing Officer is not persuaded that this methodology provides substantial and persuasive evidence of the fair market value of the leased fee interest on the two tax dates. Accordingly, it was given no weight in this decision.

It is now necessary to address the matter of the valuation of the leasehold interest.

Leasehold Interest is the interest held by the lessee (the tenant or renter) through the a lease transferring the rights of use and occupancy for a state term under certain conditions. Appraisal Institute, The Dictionary of Real Estate Appraisal, 4^th Ed. (Chicago 2002, p. 162), cited in Complainant’s Exhibit 1, Addendum E – Definitions, p. 2.

Mr. Slack employed direct capitalization to arrived at an indicated fee simple value for the property. This method gave an indicated value of $8,100,00. He also utilized a discounted cash flow analysis and arrived at a fee simple value of $9,200,000. He then concluded on a fee simple value of $9,000,000 as of January 1, 2001 and 2003. However, due to the actual circumstances affecting the property of the long term ground lease, the appraiser performed an income valuation of the leasehold interest. This is consistent and appropriate with appraising the property under the circumstances which exist as of a given tax date. Consideration must be given to the factors which actually impact upon the property being valued. See, Missouri Baptist, supra, (long-term, below market lease). Mr. Slack analyzed historical income and expenses as a basis for his valuation under both the direct capitalization and the DCF methods.

The appraiser relied upon various sources in establishing his capitalization rates, under both his hypothetical fee simple analysis and his discounted cash flow method. The cap rate developed for the discounted cash flow reflected the greater risk that an investor would be exposed to, given that the property under appeal is subject to the long term ground lease. A high cap rate is required to account for this factor.

The appraiser made an adjustment to account for the estimated $978,326 in deferred maintenance to the subject parking garage. This amount was supported by an actual detailed bid for needed repairs. See, Complainant’s Exhibit 1, Addendum D. This was an appropriate adjustment. Any prudent investor would recognize this expense item. Irrespective of whether the repairs and maintenance were immediately performed upon purchase, the purchase price would reflect this cost, and would be reduced from what a buyer might give in the absence of such needed repairs.

An adjustment to account for personal property was also made. It is appropriate, when valuing the real property interests, to make a deduction for the contributory value to the income stream for items of personal property. The point of dispute on this matter between what was reported by Complainant to the Assessor, for what was apparently office personal property, and the amount allocated by Mr. Slack at $1,000 per apartment, does not alter the fact that this was an appropriate adjustment.

The appraiser testified that he did not make this adjustment based upon what the owner had reported as to value on personal property. From the testimony on this point, it appears that what was reported as value of personal property only related to essentially furniture, fixtures and equipment in Complainant’s office and not to the other items of furniture, fixture and equipment in the apartments, rental office and retail space and the supporting hallways, pool area, etc. The adjustment was based upon Mr. Slack’s estimation of essentially a cost to replace all of the various items of personal property throughout the apartment and office buildings and what the present value of those items might actually be. Tr. 51, Line 5 – Tr. 65, Line 2. It would have strengthened the Slack appraisal had the appraiser demonstrated his methodology for arriving at the $1,000 per apartment allocation for this deduction in greater detail. Irrespective of that weakness, absent evidence to the contrary, the appraiser’s conclusion on this point based upon his experience provides the essential weight to utilize the deduction as set forth in the appraisal.

Mr. Slack made a final deduction to account for contributory value of leases in force. This was based upon a factor of 6% of total property value. Essentially this deduction is to account for what a prospective purchaser would give for the property if it did not have any leases in force verses a purchase price that is reflective of having leases in force for the actual occupancy of a property. The appraiser considers the leases in force to be contributory value from a non-real estate component and since what is being valued is only the real estate, the intangible value of the leases in force must be accounted for.

It is understood that in point of fact the purchase price of a vacant apartment or office building would most likely be at less than the same building with tenants. It only stands to reason that the same property would command more in a sale where it has leases in force, than if it were totally vacant. However, there are several points which present problems with this deduction.

First, as testified to by Mr. Slack, "… if I were to sell just the real property, which doesn’t happen because you don’t have a vacant apartment complex sell, …" Tr. 50, Lines 6 – 10. Since, this is a hypothetical that doesn’t happen, it’s application to ad valorem tax valuations is extremely limited, if not non-existence. Second, under the holding in Missouri Baptist Children’s Home, supra, the existence of a lease or leases is a matter which can and must be taken into account. We take the property as it exists in appeals before the Commission because that is the condition which the prospective hypothetical investor will take the property. Third, if the market does not provide a basis for the adjustment, then it cannot be supported, and it is not warranted. See, Daly v. P. D. George Co., supra (no market evidence of contributory value of freight, installation and taxes, or market evidence of value in use/place, cannot value based upon those hypothetical elements). Finally, the allocation of a 6% of total property value is not demonstrated and supported by market data. At least any that was provided either in the appraisal report or in the testimony of the appraiser.

Accordingly, for the forgoing reasons, the adjustment for leases in force was not appropriate. The adjustment made by Mr. Slack for the 2003 valuation amounted to a dollar amount of $456,144. This amount, rounded to $456,000, is to be added back to the final conclusion of value by the appraiser for 2003. An exact figure as to the amount of this deduction for 2001 was not provided by the charts or tables in the appraisal report. However, the Hearing Officer calculates the amount to be $462,957, rounded to $463,000. This amount will be added back to the final conclusion of value determined by Mr. Slack for 2001.

The final opinion of value for the leasehold interest for January 1, 2001, was $6,800,000 and for January 1, 2003, was $6,700,000. Adding back $463,000 to the 2001 value for the deduction for leases in place, produces a value for the leasehold of $7,263,000 ($6,800,000 + $463,000 = $7,263,000). Adding back $456,000 to the 2003 value provides an indicated value for the leasehold of $7,156,000 ($6,700,000 + $456,100 = $7,156,000).

The value of the combined leased fee interest and the leasehold interest for 2001 is $9,463,000 ($2,200,000 + $7,263,000 = $9,463,000). The value of the combined leased fee interest and the leasehold interest for 2003 is $9,306,000 ($2,150,000 + $7,156,000 = $9,306,000).

The value of the leased fee interest for 2001 is allocated ninety percent (90%) residential or $1,980,000 ($2,200,000 x .90 = $1,980,000) and ten percent (10%) commercial or $220,000 ($2,200,000 x .10 = $220,000).

The value of the leasehold interest for 2001 is allocated ninety-four percent (94%) residential or $6,827,220 ($7,263,000 x .94 = $6,827,220) and six percent (6%) commercial or $435,780 ($7,263,000 x .06 = $435,780).

The value of the leased fee interest for 2003 is allocated ninety percent (90%) residential or $1,935,000 ($2,150,000 x .90 = $1,935,000) and ten percent (10%) commercial or $215,000 ($2,150,000 x .10 = $215,000).

The value of the leasehold interest for 2003 is allocated ninety-four percent (94%) residential or $6,726,640 ($7,156,000 x .94 = $6,726,640) and six percent (6%) commercial or $429,360 ($7,156,000 x .06 = $429,360).

The assessed value for the residential portion of the subject property for 2001 is $1,673,400 ($1,980,000 + $6,827,220 = $8,807,220 x .19 = $1,673,371.80, rounded to $1,673,400).

The assessed value for the commercial portion of the subject property for 2001 is $209,800 ($220,000 + $435,780 = $655,780 x . 32 = $209,849.60, rounded to $209,800).

The assessed value for the residential portion of the subject property for 2003 is $1,645,700 ($1,935,000 + $6,726,640 = $8,661,640 x .19 = $1,645,711.60, rounded to $1,645,700).

The assessed value for the commercial portion of the subject property for 2003 is $206,200 ($215,000 + $429,360 = $644,360 x . 32 = $206,195.20, rounded to $206,200).

The residential assessment will be assessed against the property in Appeals 02- 20028 & 03-20000, parcel number 64900000406.

The commercial assessment will be assessed against the property in Appeals 02-20029 & 03-20001, parcel number 64900000407.

The Hearing Officer was not persuaded by the sales comparison approaches developed by either Mr. Slack or Mr. Hilgeman. Of the two approaches, Mr. Slack’s was the most persuasive. This was due to the fact that he identified six comparable apartment buildings two of which Mr. Hilgeman also relied upon. Mr. Slack made appropriate adjustments, which were reflected in the body of his report (See, Complainant’s Exhibit 1, pp. 19 – 21), to account for the differences in various factors, characteristics and amenities between the subject and each comparable. Based upon his analysis and adjustments, Mr. Slack arrived at an indicated per unit value for the subject apartment building.

Mr. Hilgeman identified four sales of office buildings, four sales of parking garages and three sales of apartment buildings. He then arrived at a per parking space value for the subject parking garage of $9,000 to $10,000 per space. He calculated the value of the commercial office space to be $25.00 to $30.00 per square foot. Finally, he determined the per unit value of the apartment building to be $25,000 to $30,000.

No information was provided within the body of the Hilgeman appraisal from which the Hearing Officer can determine how adjustments for each group of sales were applied. Nor did the written direct testimony, cross-examination, or re-direct examination of Mr. Hilgeman provide any additional information from which an analysis of his adjustments could be made.

The per parking space sales prices used by Mr. Hilgeman were $12,723, $18,568, $4,578 and $15,513. There is no explanation as to how it was determined based upon these sales prices to apply a value of $9,000 and $10,000 per parking space to value the subject. The sales prices per square foot for the office sales were $40.81, $42.03, $41.89 and $46.38. Like the parking garage valuation, there is no data provided to demonstrate how the appraiser concluded on the $25 to $30 per square foot value for the subject. Finally, the per unit sales prices for the apartment buildings were $46,930, $50,915 and $38,462. A determination as to why the subject apartment building is valued at only $25,000 to $30,000 per unit, is left to the speculation and conjecture of the Hearing Officer’s mind.

It is obvious that Mr. Hilgeman considered all of the office, apartment and three of the parking garage comparables to be superior to the subject. However, the methodology by specific adjustments as to how he made what he considered to be appropriate downward adjustments is not established by either the appraisal report or the testimony of the appraiser. Accordingly, the Hearing Officer could give no probative weight to the opinion of value derived from the Hilgeman market analysis under any circumstances.

There is a very simple factor which is of such critical importance that it negates any probative benefit of the sales comparison or market approach developed by either Mr. Hilgeman or Mr. Slack. This critical factor is the fact that because of the existence of the ground lease, what is attempted to be valued under the market analysis is the value of the leasehold.

Mr. Slack recognized this factor. He recognized that "… the Sales Comparison Approach has limited applicability in analyzing the value of the leasehold component." The appraiser clearly understood that the sales comparison approach as applied in this appraisal problem would reflect a fee simply value and not fair market value of the leasehold interest. Complainant’s Exhibit 1, pp. 19 – 20. Due to the fact that sales of leasehold interests are relatively rare and that neither appraiser was able to obtain any sales data with regard to leasehold interests on property comparable to the subject the sales comparison approach is not appropriate in these appeals. The approach, as developed in the appraisals, is not probative on the issue of fair market value of the subject leasehold interest.

The income approach developed by Mr. Hilgeman produced a net operating income (NOI) for 2001 of $1,107,036 and for 2003 of $1,074,795. Both figures are very close to the NOI calculated by Mr. Slack in his direct capitalization analysis. The critical difference between the direct capitalization approaches employed by the two appraisers lies in the capitalization rate each used. The Hilgeman appraisal relied upon the capitalization rates derived from sales of four apartment properties to arrive at a rate to be applied to the apartment portion of the subject property.

The four apartment sales provided capitalization rates of 9.69%, 9.59%, 9.76% and 9.57%. From this market data, the appraiser concluded an overall rate (exclusive of an effective tax rate) of only 9%. The median of the market cap rates was 9.64% and the average was 9.65%. None of the apartment sales from which these cap rates were drawn were the subject of a long term ground lease. This factor alone would cause any prudent investor to look for a greater return on his investment than the market return on properties not burdened by such a lease. The risk of investing in the subject property is greater than investing in properties like the sale properties. Accordingly, a larger cap rate is required.

The rate of 9% is neither supported by the market, nor is it reasonable given the facts concerning the subject property and the existence of the long term ground lease. The higher risk of investing in the subject property must be accounted for in the capitalization rate. See, Missouri Baptist Children’s Home, supra. Respondent’s appraisal fails to provide the rational whereby it can reasonably be concluded that a higher risk property would warrant a lower cap rate than what the market supports for lower risk properties.

Mr. Hilgeman arrived at a cap rate of 11.75% for the commercial (office and retail space) portion of the subject property and a 9.6% rate for the garage. These rates were prior to the addition of an effective tax rate. According to the appraisal (Respondent’s Exhibit 3, p. 29) these rates were derived from "Sales of garages have ranged from 9% to 9.62%. … based on recent sales of office space, and a conversation with Tom McReynolds, … ." None of the Hilgeman sales of office space report any cap rates (See, Respondent’s Exhibit 3, pp. 38 – 41). Only two of the sales of garages report cap rates (9.27% and 3.28%). (See, Respondent’s Exhibit 3, pp. 42 & 45).

The 9% capitalization rate applied by Respondent’s appraiser for the apartment income was not appropriate for this appraisal problem. It understated the risk which a potential buyer would recognize. Although the rate applied for the commercial portion of the subject property appears to be more in line for the risk associated with the subject property, it is also understated to the extent that it was based on recent sales, none of which were shown to be the subjects of the type of ground lease that burdens the property under appeal. In like manner, the rate applied to the garage income by Mr. Hilgeman in his income analysis is not established to reflect the rate of return that would be expected on a property with the associated risk of the subject.

Respondent’s proposed value also failed to account for the contributory value of personal property (furniture, fixtures and equipment). An adjustment to the indicated value derived from the capitalization of the income stream for this factor was appropriate and warranted. In like manner, the subject parking garage suffers from a significant amount of deferred maintenance. No adjustment was made to the indicated value for this element of the appraisal problem. As discussed above, any knowledgeable investor is going to allow for this in the amount that one would be willing to pay for the subject property. The failure to account for this is a deficiency in the conclusion of value which renders it unpersuasive.

As between Complainant’s income analysis and that developed by Respondent’s appraiser, the Slack approach presents substantial and persuasive evidence upon which a determination of value can be made. Absent the Slack appraisal, Respondent’s approach could have provided the basis upon which the Hearing Officer might have been able to make various adjustments to arrive at an indicated fair market value. However, such an exercise was unnecessary, given that Complainant’s appraiser developed and presented an appropriate analysis to address the present valuation problem.

Finally, it is necessary to address the argument advanced by Respondent in his post-hearing memorandum (Respondent’s Reply) concerning the classification issue. Counsel for Respondent argues a contamination of the residential designation of the subject property. The argument, as set forth in Respondent’s Reply, was stated by Counsel, as follows:

Counsel’s argument is not well taken. Shipman addresses a specific portion of the statute relating to residential classification of real property under the assessment law of Missouri. Specifically, Section 137.016.1(1) RSMo, which states in relevant part, the following:

There are a number of problems with attempting to apply the cited statute and the holding in Shipman to the present case. First and foremost, the taxpayer is not seeking a residential classification of the property based upon the language of the statute relating to "transient housing." The property under appeal is not a hotel or motel used for transient housing.

The property in Shipman was a hotel, it had a number of rooms that had been used for stays in excess of one month. The underlying facts in Shipman are in no manner in agreement with, or consistent with the fact situation in the present appeal. Based upon the facts alone, Shipman is neither applicable, nor controlling on the issue of allocation of value based on classification.

The Hearing Officer can only surmise that Respondent’s argument is based on the fact the there is a hotel down the street from the subject property that also is subject to the same long term ground lease as the subject apartment/office building and that the parking garage that services the subject, is available for use by guests of the hotel. The argument simply is not applicable to the actual use to which the subject parking facility is put, based upon the evidence presented by Complainant. Complainant’s Exhibit 1, Addendum D; Complainant’s Exhibit 3, p. 22, Line 8 – p. 24, Line 4; Complainant’s Exhibit 4, p. 12, Line 24 – p. 19, Line 15; Tr. 74, Line 5 – Tr. 82, Line 25.

Secondly, there is no evidence in the record which even remotely addresses whether any of the subject apartments fall under the purview of Section 144.020.1(6). Respondent’s "belief" on this point is "based on the evidence at the hearing." However, it is left to the hearing officer’s surmise, conjecture and speculation what "evidence at the hearing" forms the foundation of Respondent’s "belief."

The Hearing Officer was directed to no evidence which would establish that the subject apartments and the supporting parking spaces provided for residents of the apartment building service "primarily … transient housing." A review of the evidence shows there is nothing to establish the tenants in the apartment building are "primarily … transient." In point of fact, there is no evidence to establish that tenants utilizing the apartment building are "primarily" staying only a few nights in the limited number of furnished apartments that exist in the subject. The only evidence on this point is totally contrary to any assertion that tenants in the furnished apartments are essentially "hotel" guests.

Since Respondent has raised this issue, it is Respondent’s point to prove. Respondent did not meet his burden on the point, because the evidence leaves the Hearing Officer "in the nebulous twilight of speculation, conjecture and surmise." See, Rossman v. G.G.C. Corp. Of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980). It is not sufficient for one party to raise some point in an appeal by the way of essentially a "what if" or "it might be possible" argument. The argument put forth by Respondent’s Counsel requires at least some basic and underlying evidence that Gentry’s Landing is a "transient housing" facility under the applicable statute. Even Respondent’s appraiser is in agreement that Gentry’s Landing is a residential apartment tower. No claim was ever made at hearing, and no evidence was presented to establish it is a hotel or motel, subject to Section 144.020.

Finally, mixed use classification is authorized and mandated by state statute. "Where real property is used or held for use for more then one purpose and such uses result in different classifications, the county assessor shall allocate to each classification the percentage of the true value in money of the property devoted to each use; …" Section 137.016.4, RSMo. Complainant sought a mixed used classification for the subject property. The Assessor had already applied a mixed use classification. Respondent’s appraiser recognized that Gentry’s Landing was to be classified as a mixed use property. This matter was at no time in dispute. The only point of dispute was the proper percentage to be allocated to the residential use and to the commercial use.

As addressed above, Complainant properly allocated the mixed used, based upon evidence of the actual use of the parking garage attributable to Gentry’s Landing. Respondent present no evidence upon which a finding contrary to the conclusion reached by Complainant’s appraiser could be validated. The only persuasive evidence on this point was that provided the Complainant. Accordingly, the allocation as to mixed use was as has been previously determined and set forth in this Decision.

Complainant’s income approach provided substantial and persuasive evidence of the fair market value of the subject property for the valuation of both the leased fee and leasehold components. The analysis, opinions and conclusions expressed by Mr. Slack in his appraisal and testimony are in conformity with uniform standards of professional appraisal practice. The opinions of value expressed by the appraiser were developed based upon a reasonable degree of appraisal standard certainty. Complainant’s Exhibit 3, p. 24, Lines 5 – 19. Presumptions as to the correctness of the value established by the Assessor and sustained by the Board were rebutted. The allocation as to commercial and residential use presented on behalf of Complainant was supported by substantial and persuasive evidence. Accordingly, the true values in money and assessed values as set forth in Finding of Fact 17, supra, p. 8, are concluded for these appeals.

The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Louis City for the subject tax days are SET ASIDE.

The assessed value for the subject property in appeal number 02-20028 for tax years 2001 and 2002 is set at $1,673,400.

The assessed value for the subject property in appeal number 02-20029 for tax years 2001 and 2002 is set at $209,800.

The assessed value for the subject property in appeal number 03-20000 for tax years 2003 and 2004 is set at $1,645,700.

The assessed value for the subject property in appeal number 03-20001 for tax years 2003 and 2004 is set at $206,200.

A party may file with the Commission an application for review of this decision within thirty (30) days of the mailing of such decision. The application shall contain specific grounds upon which it is claimed the decision is erroneous. Failure to state specific facts or law upon which the appeal is based will result in summary denial. Section 138.432, RSMo 2000.

If an application for review of this decision is made to the Commission, any protested taxes presently in an escrow account in accordance with these appeals shall be held pending the final decision of the Commission. If no application for review is received by the Commission within thirty (30) days, this decision and order is deemed final and the Collector of St. Louis City, 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 these appeals. If any or all 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.

On May 11, 2005, Hearing Officer W. B. Tichenor entered his Decision and Order (Decision) setting aside the assessments by the County Board of Equalization and finding value for the subject properties for the 2001-02 and 2003-04 assessment cycle.

Respondent timely filed his Application for Review of the Decision (June 13, 2005 - received). Complainant timely filed his Response (July 8, 2005 - received).

The Hearing Officer as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances. The Hearing Officer is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert’s testimony and accept it in part or reject it in part. St. Louis County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).

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

Respondent sets forth four grounds upon which it is claimed the Decision is in error. These grounds are summarized as follows:

1. Decision exceeds the jurisdiction of the Commission as to finding value for 2001 because Complainant did not appeal the 2001 assessment to the Board of Equalization.

2. Complainant failed to exhaust its administrative remedies with regard to the 2001 assessment.

3. Decision is in error in stating that the assessor did not provide the statutorily required notice with regard to the 2001 assessment.

4. Decision is in error because it failed to properly apply burden of proof standards and to affirm the opinion of value of the Board of Equalization.

The first three points raised by Respondent will be addressed together, as they all relate to the same issue. The Commission notes that the Hearing Officer discussed in detail the issue of Complainant’s not having appealed to the Board of Equalization for the 2001 assessment cycle. See, DECISION, Jurisdiction Over 2001 Valuation, p. 14. The Commission has reviewed the Hearing Officer’s holding on this point and finds no basis upon which it should be reversed.

There is no dispute that Complainant did not appeal to the Board for the 2001 assessment cycle. Likewise there is no dispute that attached to the Complaint for Review of Assessment filed herein that there was the following statement: "Taxpayer received no notice of its assessment for the 2001 tax year, which assessor has acknowledged. Taxpayer, therefore, seeks redress for the 2001 and 2002 tax years."

Respondent did not challenge this assertion during the course of this proceeding. At no time did Respondent offer evidence refuting taxpayer’s claim. Respondent now asserts the existence of a copy of Notice of Change of Assessment for 2001 in the database of the City of St. Louis. Assuming that such notice exists, it is not a part of this record.

The Hearing Officer could not have erred in his finding that the Assessor had not provided the statutorily required notice, when there was no evidence on the record to establish that notice had been given. The record in this case has been closed since the conclusion of the evidentiary hearing (2/15/05). The Commission’s review of the Hearing Officer’s Decision is of the evidence on the record. There is no evidence on this record which establishes that the 2001 Notice of Increased Assessment was sent to Complainant.

The only real question raised by Respondent on this point was whether there was an Order of Consolidation "combining the 2001 with 2002 STC appeals" (sic). Letter of Respondent’s Counsel to Hearing Officer Smashey and Complainant’s Counsel, 2/24/05. As the Hearing Officer properly determined the appeals for 2001, 2002 and 2003 were consolidated as a result of the Motion to Consolidate Appeals, dated June 26, 2003, to which Respondent consented. See, DECISION, p. 15.

The failure of Complainant to appeal the 2001 assessment and thereby pursue and exhaust its administrative remedy before the Board was properly found by the Hearing Officer, based upon the evidentiary record, to have occurred due to the failure of the Assessor to provide notice as required by statute. The Hearing Officer properly applied the holding in Lake St. Louis Community Association v. STC, 759 S.W.2d 843, 846 (Mo. banc 1988) to the present appeal and concluded that the taxpayer was "... entitled to a meaningful review on the merits." The Commission had jurisdiction to hear the appeal for 2001.

The fourth point which Respondent brings before the Commission is in two parts. Respondent agues that the Hearing Officer erred by failing (1) to properly apply the burden of proof standards, and (2) to affirm the opinion of value of the Board. Respondent presents no specific factual challenge as to exactly how and in what instances the Hearing Officer failed to properly apply the burden of proof, or on what basis the Hearing Officer should have affirmed the determination of value of the Board. No case law is cited in support of either claim. The Commission is left to nothing but speculation and conjecture as to which portions of the Hearing Officer’s thirty-five page Decision Respondent is referring.

The Commission notes that the Hearing Officer made specific Findings of Fact, citing to the various exhibits which were the basis for each finding, to establish the foundation for his determination of value. Among the Findings of Fact was number 12, which specifically found "Complainant’s evidence was substantial and persuasive to rebut the presumption of correct assessment by the Assessor and/or the Board and establish the true value in money for the subject properties."

Specific Conclusions of Law addressing Board of Equalization Presumption, Presumption on Assessor’s Value, Rebutting of Presumption of Correct Assessment, Standard for Valuation, Market Value, Weight to be Given Evidence, Opinion Testimony by Experts, Respondent’s Burden of Proof and Complainant’s Burden of Proof. The Hearing Officer went on to make his determination of value and provided an analysis of the evidence on the record for the Valuation of the Leased Fee and the Leasehold Interest under the applicable Conclusions of Law. A discussion as to the relative merits of the methodology and conclusions reached by both Complainant’s and Respondent’s appraisers was provided. The conclusions of value and the allocation of same is supported by the evidence and the reasoning employed by the Hearing Officer. The Hearing Officer’s Decision properly applied the appropriate law to the facts in this record.

Respondent’s Application for Review on this point is summarily denied for failure to state specific facts or law upon which the claim of failure to properly apply burden of proof standards or to affirm the opinion of value of the Board could be supported. Section 138.432 RSMo, See also, DECISION, p. 34.

A review of the record in the present appeal provides support for the determinations made by the Hearing Officer. There is competent and substantial evidence to establish a sufficient foundation for the Decision of the Hearing Officer. A reasonable mind could have conscientiously reached the same result based on a review of the entire record. The Commission finds no basis to support a determination that the Hearing Officer acted in an arbitrary or capricious manner or abused his discretion as the trier of fact and concluder of law in this appeal. Hermel, Inc. v. STC, 564 S.W.2d 888 (Mo. 1978); Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Holt v. Clarke, 965 S.W.2d 241 (Mo. App. W.D. 1998); Smith v. Morton, 890 S.W.2d 403 (Mo. App. E.D. 1995). Phelps v. Metropolitan St. Louis Sewer Dist., 598 S.W.2d 163 (Mo. App. E.D. 1980).

The Hearing Officer did not err in his determinations as challenged by Complainant.

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

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

STL 400 N. 4^th LLC /INTEGRITY REAL ESTATE,	)
	)
Complainant,	)
	)
v.	)	Appeal Nos. 02-20028 & 02-20029
	)	and 03-20000 & 03-20001
	)
ED BUSHMEYER, ASSESSOR,	)
ST. LOUIS CITY, MISSOURI,	)
	)
Respondent.	)