UNITED VAN LINES/UNIGROUP, INC.,	)
	)
Complainant,	)
	)
v.	)		Appeal Number 03-10097
	)
	)
PHILIP A. MUEHLHEAUSLER, ASSESSOR,	)
ST. LOUIS COUNTY, MISSOURI,	)
	)
Respondent.	)

The assessment determined by the St. Louis County Board of Equalization is hereby set aside. The Commission finds the market value for the subject personal property for the 2003 tax year to be $3,045,982 ($1,015,330 assessed).

The issue in this appeal is: What was the true value in money as of January 1, 2003, of Complainant’s tangible personal property, more specifically, what was the reasonably probable and highest price that could be commanded for the subject property in an open-market, competitive exchange with buyer and seller both acting knowledgeably and prudently?

Complainant appeals the assessment of its personal property equipment, with the exception of its vehicles (assessed value of $68,350).

The evidentiary hearing in the above-styled appeal was held on Thursday, January 6, 2005, before State Tax Commission Hearing Officer Aimee L. Smashey, in the Assessor’s Conference Room at the County Government Building in Clayton, Missouri. Mr. Thomas Caradonna, Attorney, represented Complainant. Ms. Paula Lemerman, Associate County Counselor, represented Respondent.

Pursuant to Section 138.431, RSMo, the appeal has been assigned to Chief Counsel R. Randall Turley, Acting as Hearing Officer, for rendering of this Decision and Order. The Hearing Officer having considered all of the evidence upon the record enters the following Decision and Order.

The subject property is located at 1 United Drive, Fenton, Missouri. The property is identified by Assessor’s Account Number: B0031744A. The assessment history and proposed values for the portion of the assessment in dispute are:

Complainant submitted the following exhibits in support of its proposed valuation:

Exhibit A, Appraisal Report of Allen D. Bealmear, ASA, CEA.

Exhibit B, Cost Approach and Comparable Sales Demonstrations.

Exhibit C, Written Direct Testimony of Mr. Bealmear

Respondent submitted the following exhibits in support of his proposed valuation:

Exhibit 1, Appraisal Report of Martina Ragain, Revenue Field Auditor.

Exhibit 2, Written Direct Testimony of Ms. Ragain.

Exhibit 3, page 310, 2003 Orion Winter-1^st Quarter Computer Blue Book and page 42 Computer Price Guide.

Objection was made to Exhibit 3. The objection was taken under advisement at the evidentiary hearing. The exhibit should have been included as a part of Exhibit 1 to demonstrate the valuation data relied upon by Respondent’s appraiser, or filed as a separate exhibit instead of being offered to bolster the appraiser’s methodology and research when challenged at the evidentiary hearing. In accordance with the Commission rule on exchange of exhibits, the exhibit was offered out of time and the objection is sustained on that basis. The document, as presented, provides nothing upon which a determination of fair market value for any of the items of equipment can be based. Therefore, it has no probative value in the present appeal.

1. The Assessor determined an assessed value of $1,530,100 for the business personal property of Complainant.

2. Complainant appealed the assessment to the St. Louis County Board of Equalization. The Board affirmed the assessed values as determined by the Assessor.

3. Jurisdiction over this appeal is proper. Complainant timely filed its Complaint for Review of Assessment with the State Tax Commission, challenging the assessment on the ground of overvaluation.

4. Complainant is a holding company for several operating companies. Respondent’s Exhibit 1, p. 6. The personal property under review includes office furniture and computer hardware utilized in Complainant’s business. A complete detailed listing of the items of personal property under appeal was set out at pages 18 through 302 of Exhibit A.

5. Complainant’s appraiser valued the items of property based on the concept of fair market value in exchange. Complainant’s Exhibit C pp. 6 - 8. This is the appropriate concept of value to be applied in the valuation of the subject property. Daly v. P.D. George Co., 77 S.W.3d 645 (Mo. App. E.D. 2002).

6. Complainant’s appraiser performed the subject appraisal in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP), and the Principles of Appraisal Practice and Code Ethics of the American Society of Appraisers. Complainant’s Exhibits C, p. 24, and A, p. 4.

7. A market value appraisal inherently requires a highest and best use analysis. A highest and best use analysis is the mechanism in an appraisal that zeros in on (1) the lawful, feasible use of the property that will produce the highest return in an exchange, and (2) whether there is sufficient demand to make such an exchange probable. This analysis shows the appraiser what to appraise the property as, and therefore, how to approach the cost, sales comparison, and income approaches. Complainant’s appraiser valued the property under an appropriate highest and best use analysis. Exhibit A, p. 8; Exhibit C, pp. 10 – 11.

8. There was no market data presented that would indicate a demand for the machinery and equipment as assembled and in place at the subject site.

9. The principle of substitution is that a prudent buyer will not pay more for a property than the cost of acquiring a substitute property of equivalent utility. This can be applied to either an individual asset or to an entire facility. The principle applies in the cost, sales comparison, and income approach. Valuing Machinery and Equipment, Machinery and Technical Specialties Committee of the American Society of Appraisers, 2000, pp. 45, 115; Appraising Machinery and Equipment, Machinery and Equipment Textbook Committee of the American Society of Appraisers, John Alico, Editor, 1989, p. 81.

10. Complainant’s appraiser identified the subject property by performing an inventory and inspection. Complainant’s Exhibit C, p. 7, and A, p. 7. He made inquiries to account for new acquisitions and transfers of equipment between the tax date and the inspection date. Complainant’s Exhibit A, p. 8. As part of his inventory, he observed and evaluated the condition of each item of property. Complainant’s Exhibit C, p. 9.

11. Complainant’s appraisal primarily relied upon sales and sales offerings of personal property that were the same or comparable to the subject property. The data was obtained by contacting buyers and sellers, monitoring auction sales, and contacting manufacturers and used equipment dealers. Complainant’s appraiser has a library of resource materials, which provide information about market sales of personal property, and his firm keeps a database of personal property sales, which catalogs sales by description, type of sale, location, and date. Id., pp. 13 – 14; see also, p. 20 – 21. After the data was gathered, Complainant’s appraiser evaluated and compared the data and made adjustments when judged necessary. Id., p. 15. Complainant’s appraiser was able to find sales data for all the items of personal property to be valued. The data sources utilized in Complainant’s appraisal were those generally accepted by the appraisal community as being reliable. Id., pp. 20, 21. Complainant’s evidence produced a persuasive indication of the value of the subject property in the open market.

13. The cumulative market value of Complainant’s personal property was $3,045,982 (assessed value of $1,015,330) as of January 1, 2003.

14. The methodology utilized and rely upon by Respondent’s appraiser was not demonstrated to be a methodology or approach to value that is generally recognized and accepted by appraisers in the field of machinery and equipment appraisal.

The Commission has jurisdiction to hear timely appeals 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 St. Louis 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).

Market Value Standard

Section 137.115, RSMo 1994, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so. Mo. Const. Art X, Section 4(b) (1945, amended 1982); 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, at 897.

"True value in money is defined in terms of value in exchange and not value in use." Daly v. P.D. George Co., 77 S.W.3d 645, 649 (Mo. App. E.D. 2002).

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, 2002. Hermel, supra, at 897. Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See, Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact. The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief. Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).

The trier of fact has the duty to evaluate the evidence presented to determine its sufficiency and persuasiveness in establishing market value. Complainant offered the appraisal report and testimony of Mr. Allen Bealmear, a machinery and equipment appraiser. Respondent offered the appraisal report and testimony of Ms. Martina Ragain, Revenue Field Auditor for the St. Louis County Assessor’s Office.

Mr. Bealmear identified the subject property by performing an inventory and inspection. He indicated in his appraisal that he made inquiries to account for new acquisitions and transfers of equipment between the tax dates and the inspection date. During the inspection, he observed and evaluated the condition of each item of property. Complainant’s appraiser used the sales comparison approach to provide an indication of value for the individual pieces of equipment. He testified that his firm makes efforts to insure the reliability of the sources and data. His firm attempts to confirm data reliability by actual contact with the source along with utilizing sources that perform their own screening and confirmation.

Ms. Ragain conducted a site inspection but did not provide an inventory, which she had developed, as a part of her appraisal. Her valuation of various computer related equipment was based on values obtained from either Orion Computer Blue Book or Computer Price Guide. No adjustments were made to the indicated price guide values to arrive at a value for any of the subject items being appraised. There were in total only 28 different types of computer equipment, consisting of 1,438 separate items, which Ms. Ragain valued under her market analysis.

Complainant’s appraisal had approximately 4,260 separate entries in the itemized listing of property. Many of the individual entries consisted of multiple numbers of the same property. Entry 1 – 45 office systems, p. 18; Entry 2 – 1456 chairs, p. 18; Entry 56 – 301 desks. There were numerous individual entries for identical items of property. Entries 6906 – 6922 – Hewlett-Packard Deskjet 340 printers, p. 186; Entries 6923 – 6933 – Hewlett-Packard Laserjet 6P printers, p. 187; Entries 7042 – 7562 – IBM E74M Monitors, p. 195-224; Entries 7563 – 7618 – IBM E74 Monitors, p. 224-227. In total there are thousands of individual pieces of office and computer equipment that are the subject of this appeal.

The only real dispute in value relates to 28 different types of computer equipment valued at $814,180 in the Bealmear appraisal. Ms. Ragain valued these same items at $1,499,893. In order to arrive at a final conclusion of value, Ms. Ragain adopted the value determined by Mr. Bealmear on approximately 67% of the entries in his appraisal (estimated to be in excess of 90% of the total number of items of individual property). She deducted the Bealmear value on the 28 types of computer equipment from the total appraised value offered by Complainant and then added back the value she obtained from the two price guides she utilized for these items of property.

Essentially, Ms. Ragain did not perform any valuation on the thousands of individual items of office equipment (Entries 1 through 6482) found on pages 18 through 157. On hundreds of other items of office or computer equipment found on pages 157 through 302, Ms. Ragain valued some items, but did not disagree with the values presented by Mr. Bealmear on other very similar pieces of property. For example, Mr. Bealmear placed a value of $750 each on 87 Hewlett-Packard Laserjet 4100TN printers (pp. 174-180). Ms. Ragain valued these at $1,260 each. However, on 31 Hewlett-Packard Laserjet 2200D printers (Entries 6826-6855, pp. 180-182) Ms. Ragain adopted the Bealmear value of $700 each for these items. While Ms. Ragain arrived at here own value on 16 Hewlett-Packard Laserjet 5 printers (Entries 6862-6877, pp. 182-183), she concurred in the value Mr. Bealmear determined for 107 Hewlett-Packard Laserjet printers of various models listed at pages 184-191.

On some of the items which Respondent’s appraiser did value the difference in value was minimal. For example on Entry 6905 a deskjet printer, the Bealmear appraisal placed a value of $55 on this item. Ms. Ragain concluded $66. Ms. Ragain valued entry 7023, a computer monitor, at $497, Bealmear valued it at $475. Even on some of the large groups of equipment the per item difference was not large. Items 7042-7562, IBM computer monitors were valued at $90 each By Mr. Bealmear and $111 by Ms. Ragain. On other items there was a greater difference in value. Entry 6734, an IBM printer, was valued by Bealmear at $40, and by Ragain at $448; Item 6715 a Lexmark printer was valued at $25 by Bealmear, and $117 by Ragain.

Upon review of the testimony and evidence submitted, the opinion evidence offered by Complainant’s appraiser persuades this Hearing Officer. Complainant’s evidence evaluates the marketplace, market supply and demand elements, sales of like or similar equipment, and calculates the equipment values based upon the most comparable market data. Complainant’s evidence provides a persuasive indication of how and at what price the subject machinery and equipment would sell. Accordingly, this Hearing Officer concludes that Complainant’s evidence is sufficient to rebut the presumption in favor of the assessment determined by the St. Louis County Board of Equalization and is substantial and persuasive in support of Complainant’s proposed market value.

The assessed valuation for the subject property as determined by the St. Louis County Board of Equalization for the subject tax day is SET ASIDE. The assessed valuation for the subject personal property for the 2003 tax year is hereby set at $1,015,330 (assessed value of $68,350 for vehicles is not included in this amount).

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 County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in 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.

SO ORDERED May 25, 2005.

STATE TAX COMMISSION OF MISSOURI

R. Randall Turley

Chief Counsel