State Tax Commission of Missouri

NESTLE PURINA PETCARE COMPANY, )

)

Complainant, )

)

v. ) Appeal Nos. 03-20047 through 03-20098

) and 04-20004

)

ED BUSHMEYER, ASSESSOR, )

ST. LOUIS CITY, MISSOURI, )

)

Respondent. )

ORDER

MODIFYING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

On January 20, 2006, Senior Hearing Officer Luann Johnson entered her Decision and Order (Decision) setting aside the assessment by the St. Louis City Board of Equalization and setting value for the property under appeal.

Respondent timely filed his Application for Review of the Decision. Respondent’s Points on Appeal are not persuasive but, after a careful review of the evidence, we find that the Hearing Officer’s decision should be affirmed in part and modified in part.

COMMISSION FINDINGS

There is a presumption that the value determined by the Board of Equalization is correct. In the instant appeals, the Board of Equalization determined that the correct value for all parcels for tax year 2003 was $47,095,440 (assessed value $15,070,540). Under the two-year assessment cycle, value determined for the odd-numbered year shall be applied to the even-numbered year unless there is evidence of new construction and property improvements. During tax year 2004, the Energizer Building was remodeled and renovated. The Board of Equalization determined that the correct value for this building for tax year 2004 was $5,273,438 (assessed value $2,687,500).

In order to overcome the presumption in favor of the Board of Equalization, the taxpayer must present substantial and persuasive evidence tending to demonstrate that the Board’s decision was unlawful, unfair, improper, arbitrary or capricious. Substantial evidence is that evidence which, if true, has probative force upon the issues. Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact.

Although the Hearing Officer weighed the evidence as between the two appraisers, there is no indication that the Hearing Officer properly applied the first portion of the test and weighed Complainant’s evidence against the presumption in favor of the Board of Equalization. We find that Complainant’s evidence, in vast part, was not sufficient to overcome the presumption in favor of the Board. Flaws include: using sales that are admittedly not highly comparable. Ex. A, pg 85; failing to use a paired sales analysis to make locational adjustments for comparable sales; failure to present market data for vacancy and collection loss or operating expenses in the income approach. Ex. A, p. 112-114; and failure to support capitalization rates. Ex. A, pg. 114-115. All of these flaws are potentially fatal when Complainant bears the burden of proof.

The improvements in the area South of Highway 40, North of Lafayette, and East of Jefferson are predominantly low-rise, industrial, retail and residential (Tr. 201-202) like most of the buildings that are the subject of this appeal. The Board of Equalization could easily have had the experience, expertise and comparable sales to determine appropriate market value for the low

rise office buildings and industrial buildings. Complainant’s flawed evidence does not support a finding that the Board improperly valued these buildings.

However, since approximately 1960, the only building over 10 stories tall which has been built in this area is the Nestle’ Tower Building. (Tr. 200). The fact that there are no sales – and can be no sales - of similar buildings in the subject area which could support the Board of Equalization’s value, supports a finding that Complainant has overcome the presumption in favor of the Board of Equalization as to the Tower Building.

Having overcome the presumption in favor of the Board of Equalization on the issue of Tower value, Complainant’s evidence must now be more substantial and persuasive than Respondent’s evidence in order for Complainant to prevail.

Respondent’s appraiser relied upon sales of four office towers which sold between June of 1998 and February of 2004. Respondent’s appraiser made adjustments to those sales but said adjustments were not supported by market data. None of said towers were located South of Highway 40 like the subject tower. Ex. 1, pp. 190-105. We do not find Respondent’s evidence to be persuasive as to the value of the Nestle’ Tower Building.

We are, however, persuaded that the lack of construction of mid sized office buildings in the subject area in the last 40-odd years indicates a lack of market demand. Further, the evidence indicates that the heating and cooling systems for this building are provided by boilers and chillers located in another building which make selling this building as a stand alone structure very difficult. Finally, the building does not meet current code because it is not protected by sprinkler systems and said systems would be difficult to install because of the building’s all concrete construction. Ex. A, pg. 54-55.

In view of all the foregoing, we find that Complainant can only prevail on the issue of the Tower value. On the remainder of the property, Complainant has failed to overcome the presumption in favor of the Board of Equalization.

COMMISSION SETS VALUES

The Commission sets the following values for each parcel:

Appeal Number	Parcel Number	Building	Original value	Respondent’s value	Complainant’s value	STC value
03-20047	0212-00-00100	CBC/Zappi	$1,593,750	$418,600	$259,270	$1,593,750
20048	0212-00-00200	CBC/Zappi	$695,625	$279,100	$109,530	$695,625
20049	0212-00-00300	CBC/Zappi	$763,125	$602,300	$470,170	$763,125
20050	0420-00-00100	Administration	$264,063	$474,300	$287,690	$264,063
20051	0421-00-00100	R. Nor./Solvent	$5,340,938	$5,266,000	$1,923,950	$5,340,938
20052	0421-00-00110	R. Nor./Solvent	$9,063	$183,000	$11,100	$9,063
20053	0421-00-00120	R. Nor./Solvent	$4,063	$8,800	$3,960	$4,063
20054	0421-00-00130	R. Nor./Solvent	$65,625	$163,800	$73,690	$65,625
20055	0421-00-00150	R. Nor./Solvent	$19,063	$47,900	$21,560	$19,063
20056	0421-00-00200	Research South Administration	$7,948,438	$2,877,700 $4,881,600	$2,331,410	$7,948,438
20057	0422-00-00500	Administration	$39,063	$139,400	$62,710	$39,063
20058	0422-00-00600	Administration	$92,813	$204,700	$124,170	$92,813
20059	0429-00-00400	Tower	$100,313	$233,500	$135,530	$135,530
20060	0429-00-00450	Tower	$3,438	$15,300	$6,866	$6,866
20061	0429-00-00500	Tower	$58,750	$129,800	$78,710	$78,710
20062	0429-00-00600	Tower	$39,063	$86,300	$52,330	$52,330
20063	0430-00-00100	Tower	$302,188	$596,300	$241,670	$241,670
20064	0430-00-00200	Tower	$184,688	$360,400	$220,860	$220,860
20065	0430-00-00300	Tower	$11,585,000	$10,196,800	$3,256,280	$3,256,280
20066	0430-00-00400	Tower	$24,063	$47,500	$28,800	$28,800
20067	0430-00-00500	Tower	$89,688	$175,100	$106,200	$106,200
20068	0430-00-00600	Tower	$128,125	$246,600	$149,530	$149,530
20069	0431-05-00100	Solae	$9,880,625	$5,690,700	$2,556,170	$9,880,625
20070	0431-05-00200	Solae	$498,750	$981,800	$595,480	$498,750
20071	0431-05-00400	Solae	$175,000	$358,900	$217,690	$175,000
20072	0431-06-00100	Solae	$440,313	$868,600	$526,790	$440,313
20073	0431-06-00200	Tower	$101,250	$199,500	$120,990	$120,990
20074	0431-06-00300	Tower	$68,438	$137,500	$82,160	$82,160
20075	0431-06-00400	Tower	$61,250	$121,100	$73,440	$73,440
20076	0431-06-00600	Tower	$53,125	$121,500	$73,710	$73,710
20077	0431-06-00700	Purina Credit	$200,000	STIP	STIP	STIP
20078	0432-00-00400	Tower	$41,250	$81,000	$49,125	$49,125
20079	0432-00-00500	Tower	$40,313	$79,700	$48,305	$48,305
20080	0439-00-00100	Tower	$31,000	$190,800	$115,710	$115,710
20081	0440-00-00100	Research South	$615,000	$1,222,300	$381,630	$615,000
20082	0443-00-01000	Tower	$214,400	$1,391,300