State Tax Commission of Missouri

FARMER’S GRAIN TERMINAL, LLC, )

)

Complainant, )

)

v. ) Appeal No. 04-85000

)

MARGARET POND, ASSESSOR, )

SALINE COUNTY, MISSOURI, )

)

Respondent. )

ORDER

SETTING ASIDE THE HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW AND FINDING VALUE

On March 10, 2006, Senior Hearing Officer Luann Johnson entered her Decision and Order (Decision) affirming the assessment by the Saline County Board of Equalization.

Complainant timely filed its Application for Review of the Decision. Respondent filed her Response. Complainant’s Application for Review argued the Decision to be (1) contrary to the weight of the evidence on the whole record; (2) unsupported by competent and substantial evidence on the whole record; (3) contrary to the law applicable to such appeals; and (4) the result of an abuse of discretion by the Hearing Officer.

The Commission upon review of the record concludes that the Decision should be SET ASIDE and value set as per the Findings of Fact and Conclusions of Law and Decision hereinafter set forth.

FINDINGS OF FACT

1. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Saline County Board of Equalization and timely filed Application for Review of the Hearing Officer’s Decision.

2. The subject property is identified as parcel 2000-11-10-11-03-001-004. It is located at Slater, Missouri. The property consists of a 150.244 acre tract. The land is improved with a slip form concrete grain elevator built new in 1999 with a total licensed capacity including pack of 1,307,000 bushels in upright concrete storage on owned land with a 110 car siding serviced by the KCS railroad. In addition to the elevator and rail siding there are supporting improvements including a dryer system, office, scale, warehouse gravel and paved drive and parking. Exhibit A-85; Exhibit 1. For photographs and detailed descriptions of subject improvements: See, Exhibit A-85, pp.4, 19-25, 46-48; Exhibit 1, pp.1-3; 33-40.

3. Evidence contained in Exhibit A-85 and Exhibit 1 was substantial and persuasive to rebut the presumptions of correct assessment and establish the fair market value of the subject property.

4. The cost, sales comparison and income approaches are all appropriate methodologies for valuation of the subject property. Exhibit A-84; Exhibit 1; See, Appraising Industrial Properties, Appraisal Institute, 2005, p. 299.

5. The indicated values for the subject property under the sales comparison approach using licensed capacity are $3,560,000 (Exhibit A-84, p. 89 – licensed capacity @ $2.50 per bushel), and $3,921,000 (Exhibit 1, p.29 – licensed capacity @ $3.00 per bushel).

6. The indicated value for the subject property under the Income Approach is $3,953,600. See, Indicated Value by Income Approach, infra.

7. The calculation of an indicated value based upon a factor identified as shuttle train terminal price per unit is not a methodology recognized for the valuation of grain elevators. Appraising Industrial Properties, ibid; Tr. 110, Line 9 – Tr. 111, Line 9; Tr. 117, Lines 12 – 18 (Testimony of Respondent’s Appraiser).

8. The true value in money of the subject property as of January 1, 2004 is $3,953,600, assessed value of $1,265,150.

CONCLUSIONS OF LAW AND DECISION

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 Commission may affirm, modify, reverse or set aside the decision and order of the hearing officer on the basis of the evidence previously submitted in the case. Section 138.432, RSMo.

Standard Upon Review

The Commission 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 Commission 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 Commission as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as the Commission may deem it entitled to when viewed in connection with all other circumstances. The Commission 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).

Presumptions in Appeals

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 Supreme Court of Missouri has held, “A tax assessor’s valuation is presumed correct.” Snider v. Casino Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341 (Mo. 2005). Citing to Hermel, supra; and Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).

The presumption in favor of the Board or the Assessor 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, is accepted as true only until and so long as there is no substantial evidence to the contrary.

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.

Complainant’s Appraisal Report (Exhibit A-84) constituted substantial and persuasive evidence to rebut the presumption of correct assessment. Had it been the only evidence of value in the record, it would have been sufficient to establish value. However, in an appeal such as this when both parties come forward with valuation evidence, it is incumbent upon the Commission to consider and weight the evidence on the entire record to arrive at the true value in money for the property.

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 a 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-85, p.12; Exhibit 1, p. 10.

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; State Board of Registration for the Healing Arts v. McDonagh, 123 S.W.3d 146 (Mo. SC. 2004); 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).

Methods of Valuation

Missouri courts have approved the comparable sales or market approach, the cost approach 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 Commission 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).

The determination of value in the present case hinges on the appropriate method of valuation to be utilized. Both appraisers developed the three recognized and accepted approaches to valuation. The only treatise or text referenced in the evidentiary hearing (Tr. 110, Lines 9-21) on the appraisal of grain elevators endorses the development of the cost, sales comparison and income approaches. Appraising Industrial Properties, Appraisal Institute, 2005, Chapter 10 – Grain Elevators, pp. 281-309. Contrary to the opinion of Respondent’s Appraiser (Mr. Schmook) that Chapter 10 “deals with the valuation of grain elevators on a very generic basis,” the Commission finds Chapter 10 is specific and detailed in addressing valuation under each of the three approaches. It provides important guidance in performing each of the approaches to value with regard to grain elevators.

The Commission is persuaded that although all three approaches were developed in Exhibit A-84 and Exhibit 1 the income approach provides the preferred method for valuing the subject property. The Hearing Officer Decision relied upon the valuation developed by Respondent’s appraiser utilizing what he termed Shuttle Train Terminal Price Per Unit. The Commission concludes this is not a method of valuation “reasonably relied upon by experts in the field in forming opinions or inferences” and it is not “otherwise reliable.” Opinion Testimony by Experts, supra.

When questioned concerning his methodology, the appraiser admitted the Appraisal Institute’s book did not mention the shuttle train terminal price per unit. He also conceded he did not know of its use by other appraisers and couldn’t recall have ever seen it in another appraisal report. In addressing the use of the sales comparison approach to value grain elevators, the Appraisal Institute notes the following:

“The two major units of comparison applicable to grain elevators are price per bushel of storage capacity and price per bushel of thruput. Which unit of comparison is most applicable will depend on the type of elevator being appraised. A country elevator with a low turning ratio may best be analyzed on a price-per-bushel of storage basis. On the other hand, terminal elevators are often best analyzed on a price-per bushel-of thruput basis. Nevertheless, exceptions do exist and judgment should be used. In some cases, it is best to analyze the property using both units of comparison.” Appraising Industrial Properties, ibid, pp. 304-305.

The appraiser’s testimony on redirect examination (Tr. 126, Lines 8 – 17) that he used judgment and both units of comparison in coming to a conclusion of value is not persuasive. Mr. Schmook arrived at an indicated value under the sales comparison approach by making four different calculations. These were (1) Overall Price Per Unit; (2) Concrete Storage (Upright) price per Unit; (3) Shuttle Train Terminal Price Per Unit; (4) Thur-Put. Overall price per unit does not account for various storage types. Concrete storage or upright values is based upon the capacity of this type of storage. The subject is a concrete or upright storage facility. Therefore, it is most appropriate to utilize this type of the sales comparison approach. Thur-Put values are based upon the volume of gain handled. These three methods comprise the two units of comparison recognized for the appraisal of a grain elevator under the sales comparison approach.

The four indicated sale comparison values developed by Mr. Schmook were:

Overall Price Per Unit	$2,300,320
Concrete Storage Price Per Unit	$3,921,000
Thur-Put Multiplier	$2,789,250
Shuttle Train:	$5,881,500

The great variance between the generally recognized and accept units of comparison and the Shuttle Train method raise serious questions as to what if any weight can and should be given to the opinion of value relying on this analysis. Mr. Schmook concluded on a value under his sales comparison approach of $5,495,000. This results in an upward adjustment to the Concrete Storage and Thur-Put methods of $1,574,000 and $2,705,750 respectively to arrive at that value or percentage adjustments of 40% and 97%. Such large dollar and percentage adjustments provide sound indication that the Shuttle Train methodology is not appropriate for this valuation.

Indicated Value by Income Approach

The Commission concludes, based upon all of the evidence in the record, that the income approach is the most direct and the best supported approach to be employed in this instance. The Commission also notes that use of the income capitalization approach is endorsed the Appraisal Institute. Appraising Industrial Properties, ibid, pp. 306-309. Upon review of the income data and approaches developed by the two appraisers (Exhibit A-85, pp. 52-57; Exhibit 1, pp. 82-86), the Commission calculates the indicated value from the income approach as follows:

Stabilized Operating Income: $680,340

Less Non-Reoccurring Income: -$132,480

$547,860

Plus Real Estate Taxes: +$101,325

NOI: $649,185

Overall Rate: 14.50

Effective Tax Rate: 1.92

Combined Rate: 16.42

Indicated Value: $649,185 ÷ .1642 = $3,953,623, rounded to $$3,953,600

The sales data calculating value based on capacity and Thru-Put both provide support for the valued derived under the income analysis. The Commission concludes on a fair market value of the subject property of $3,953,600.

ORDER

The Commission upon review of the record and Decision in this appeal, finds the Decision of the Hearing Officer should be SET ASIDE. Accordingly, the Decision is set aside and the assessed value of the subject property for tax year 2004 is set at $1,265,150.

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.

If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts. If no judicial review is made within thirty (30) days, this decision and order is deemed final and the Collector of Saline County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal. If any 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.

SO ORDERED September 7,, 2006.

STATE TAX COMMISSION OF MISSOURI

Bruce E. Davis, Chairman

Jennifer Tidwell, Commissioner

DECISION AND ORDER

HOLDING

The true value in money of the subject commercial property on January 1, 2004, as determined by the assessor and approved by the Board of Equalization, is AFFIRMED.

ISSUE

The issue in this case is the true value in money of a grain elevator and agribusiness improvements. The portion of the subject land currently being used for agricultural purposes was not appealed.

SUMMARY

On November 1, 2005, an evidentiary hearing was held before senior hearing officer Luann Johnson in the Saline County Courthouse, Marshall, Missouri. For convenience of hearing and because of some similarity in evidence, said appeal was combined with Appeals No. 04-82000 through 04-82005, Ray-Carroll County Grain Growers v. Kent Wollard, Assessor, Ray County, Missouri, and Appeal No. 04-48000, Ray-Carroll County Grain Growers v. Wanda Witthar, Assessor, Carroll County, Missouri. Complainant appeared by counsel, Wayne Tenenbaum. Respondents Pond and Witthar appeared by counsel, Cathy Dean. Respondent Wollard appeared by counsel, Jim Thompson. A combined transcript was created. However, because each grain elevator is different and is located in a different county, separate decisions are written.

The subject property is classified as “commercial” real property and is assessed at 32% of its fair market value, or true value in money. The subject property, with agricultural land, was initialed valued by the Assessor at $5,054,300 (assessed value $1,606,350). Complainant proposes a value of $3,380,000 (assessed value $1,081,600). Respondent proposes a value of $5,495,000 (assessed value $1,758,400). The hearing officer finds that Respondent’s sales approach to value is the best indicator of market value and supports the value originally determined by the assessor and approved by the Board of Equalization.

EXHIBITS

The following Exhibits were introduced into evidence:

Complainant’s Exhibits

Exhibit A-48, Appraisal Report, Dennis E. Vogan (Carroll County)

Exhibit B-48, Written Direct Testimony, Dennis E. Vogan (Carroll County)

Exhibit A-82, Appraisal Report, Dennis E. Vogan (Ray County)

Exhibit B-82, Written Direct Testimony, Dennis E. Vogan (Ray County)

Exhibit A-85, Appraisal Report, Dennis E. Vogan (Saline County)

Exhibit B-85, Written Direct Testimony, Dennis E. Vogan (Saline County)

Respondents’ Exhibits

Exhibit 1, Appraisal Report of Alan Schmook (Saline County)

Exhibit 2, Appraisal Report of Alan Schmook (Carroll County)

Exhibit 3, Appraisal Report of Alan Schmook (Ray County)

Exhibit 4, Audited Financial Statements of Farmers Grain Terminal, LLC (1999, 2000)

Exhibit 5, Audited Financial Statements of Farmers Grain Terminal, LLC (2000, 2001)

Exhibit 6, Audited Financial Statements of Farmers Grain Terminal, LLC (2001, 2002)

Exhibit 7, Audited Financial Statements of Farmers Grain Terminal, LLC (2002, 2003)

Exhibit 8, Audited Financial Statements of Farmers Grain Terminal, LLC (2003, 2004)

Exhibit 9, Ray-Carroll County Grain Consolidated Year-to-Date Area Boxscore 1999

Exhibit 10, Ray-Carroll County Grain Consolidated Year-to-Date Area Boxscore 2000

Exhibit 11, Ray-Carroll County Grain Consolidated Year-to-Date Area Boxscore 2001

Exhibit 12, Ray-Carroll County Grain Consolidated Year-to-Date Area Boxscore 2002

Exhibit 13, Ray-Carroll County Grain Consolidated Year-to-Date Area Boxscore 2003

Exhibit 14, Ray-Carroll County Grain Consolidated Year-to-Date Area Boxscore 2004

Exhibit 15, Farmers Grain Terminal, LLC, Request for Financing

Exhibit 16, Operating Agreement of Farmers Grain Terminal LLC 2003

Exhibit 17, Closing Documents, Loan request 2004, obtained 2005

Exhibit 18, Farmers Grain Terminal LLC, Minutes of 12/17/04 & Farmers Grain

Terminal Grain Storage Addition Economics

Exhibit 19, Farmers Grain Terminal, LLC, Resolution to Borrow

Exhibit 20, Ray-Carroll County Grain Growers, Inc. Property, Plant &

Equipment Summary, 9-1-03 through 8-31-04

Exhibit 21, Bin Chart Ray-Carroll Elevator, Richmond, MO

Exhibit 22, Ray-Carroll Elevator Warehouse Diagram, Corner of Main and E. Lincoln St.

Exhibit 23, Ray-Carroll Elevator Warehouse Diagram, Lane and Front Streets

Exhibit 24, Ray-Carroll Elevator Warehouse Diagram, E. Main and E. Third Streets

Exhibit 25, Ray-Carroll Elevator Warehouse Diagram, Approximately One Mile East

of Carrollton on Highway 24

Exhibit 26, Farmers Grain Terminal Warehouse Diagram and Bin Chart for Slater,

Kansas City Southern Railroad and Highway 240

Exhibit 27, Warranty Deed and Construction Information, Ray-Carroll Grain

Growers, Carrollton, MO

Exhibit 28, Hardin 110 Shuttle Train Loader Economics

Exhibit 29, 1-16-98 Scope of Work & Specifications for Facility Expansion,

Ray-Carroll Grain Growers, Hardin, MO, First Expansion

Exhibit 30, 3-21-01 Scope of Work & Specifications for Facility Expansion,

Ray-Carroll Grain Growers, Hardin, MO, Second Expansion

Exhibit 31, Various Quitclaim Deeds and Other Conveyances to Ray-Carroll Grain

Growers, Inc.

Exhibit 32, Mike Nordwald E-Mail Regarding Patronage Payments

Exhibit 33, Farm Credit Services Documents

Exhibit 34, Written Direct Testimony of Alan Schmook (Carroll County)

Exhibit 35, Written Direct Testimony of Alan Schmook (Saline County)

Exhibit 36, Written Direct Testimony of Alan Schmook (Ray County)

FINDINGS OF FACT

1. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Saline County Board of Equalization.

2. The subject property, identified as parcel 2000-11-10-11-03-001-004, is a 150.244 acre tract improved with a 1,307,000 bushel slip form upright concrete grain elevator built in 1999; a cardtol fuel station and anhydrous ammonia facility installed in 2001; two elevator legs, and office building, a shop building and a 110 car railroad spur.

3. The existence of the shuttle train capability on the property has a significant impact on value. Large grain terminals with shuttle trains are able to accommodate larger and faster shipments due to the ability to load unit trains. This increases the value of each bushel through the reduction of overhead expense from the handling and shipping of grain. Ex.1, pgs. 26-28.

4. The physical characteristics of the storage capability also impacts value because it impacts the speed at which the shuttle trains can be loaded. The best grain elevators can load 100-110 rail cars in under 15 hours. Tr. 9-11. It takes between 360,000 and 370,000 bushels to load a 100-car unit. Tr. 14. Upright concrete elevators are more efficient and better suited for storage and movement of grain than flat storage units or ground piles. Tr. 11, 13,16.

5. Volume, commonly referred to as thru-put, also impacts value. The largest source of income to a terminal is the income per bushel of grain sold or the total grain margin. Tr. 41. The subject property has a thru-put ratio of 5.22 while other similar facilities have ratios of 10.00, 3.92, 4.08 and 5.03. Ex. 1, pg. 80.

Cost Approach

6. The cost approach is not considered to be the more reliable indicator of value for the subject property inasmuch as it is not capable of adequately measuring the impact of thru-put on value.

Income Approach

7. Both appraisers calculated value under the income approach. However, no market rent exists for grain elevators, thus, an income approach is not a reliable indicator of the market value for subject property.

Sales Approach

8. No similar sales were found in Missouri, but sales of similar grain elevators were found in neighbouring states. Based upon the sales, Complainant’s appraiser determined a value of the subject property of $3,560,000. Ex. A-85, pg. 89. On the other hand, Respondent’s appraiser determined a value under the sales comparison approach of $5,495,000 based upon determination of (1) overall value per bushel; (2) value per bushel for upright concrete elevators; (3) value per bushel for elevators with shuttle train access; and (4) value calculated based upon put-thru. Ex. 1, pgs.78-81. Respondent’s concise treatment supports the accuracy of the value and supports value originally determined by the assessor and approved by the Board of Equalization.

Market Value

9. The sales approach represents the best indicator of value for the subject property. The market value determined by the assessor and approved by the Board of Equalization is affirmed.

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

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 arms-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. 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 assessed value determined by the Assessor and approved by the Board of Equalization, is AFFIRMED.

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

If an application for review of a hearing officer decision is made to the Commission, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the Commission. If no application for review is received by the Commission within thirty (30) days, this decision and order is deemed final and the Collector of Saline County as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal. If any protested taxes have been disbursed pursuant to Section 139.031(8), RSMo, either party may apply to the circuit court having jurisdiction of the cause for disposition of the protested taxes held by the taxing authority.

Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed. Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.

SO ORDERED March 10, 2006.

STATE TAX COMMISSION OF MISSOURI

Luann Johnson

Senior Hearing Officer