State Tax Commission of Missouri

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).

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).

The Complainant purchased the subject property and three other parcels in 2001 for $14,000,000. The subject parcel represents 48% of the total improved square footage and 61% of the land area of the complex. The subject property, when purchased, had five buildings. Building 1 is a 650,989 square feet building that contains office space. The other improvements on the subject property included a 10,487 square foot auto service garage (Building #4), a 7,222 square foot chemical storage facility (Building #6) and a 944 square foot pump house (Building #10) and a fuel systems lab (Building #5).

The Complainant made $5,000,000 in renovations to Building #1 on the subject property immediately after purchasing the property. The subject property underwent $7.45 million in renovations and construction on Building 5 to convert it to a steam plant and $3.2 million for an addition of an electrical substation in 2005. The steam and electricity were being obtained from the adjacent landowner however actions by the adjacent landowner were threatening the availability of steam and power to the subject property.

The appraiser opined the value of the subject property, land and five buildings, on January 1, 2003, was $6,000,000 (Exhibit B), The appraiser opined the value of Building #1 on January 1, 2005 and January 1, 2006, was $6,000,000 (Exhibit D).

Although the Complainant’s appraiser did not include the new steam plant in his valuation, the appraiser did not find that the renovations and new construction on the subject property enhanced the marketability or value of the subject.

There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization 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.

Complainants’ evidence did not rise to the level of substantial and persuasive on the issue of fair market value. The presumptions were not rebutted.

DECISION

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).

ORDER

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.

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 petition for judicial review is filed 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 to the appropriate taxing jurisdictions the protested taxes presently in an escrow account for this appeal.

SO ORDERED October 31, 2007.

STATE TAX COMMISSION OF MISSOURI

Bruce E. Davis, Chairman

Jennifer Tidwell, Commissioner

Charles Nordwald, Commissioner

DECISION AND ORDER

HOLDING

Decision of the St. Louis County Board of Equalization sustaining the assessment made by the Assessor is AFFIRMED. Hearing Officer finds presumptions of correct assessment not rebutted. True value in money for the subject property for tax years 2005 and 2006 to be $17,595,100, assessed value of $5,630,430.

Complainant appeared by Counsel, Cathy Steele, St. Louis, Missouri.

Respondent appeared by Counsel, Paula Lemerman, Associate County Counselor.

Case heard by Senior Hearing Officer W. B. Tichenor. Pursuant to §138.431.4, RSMo, the appeal was transferred to Hearing Officer Maureen Monaghan for rendering of the Decision and Order.

ISSUE

The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2005, and January 1, 2006.

SUMMARY

Complainant appeals, on the ground of overvaluation, the decision of the St. Louis County Board of Equalization. The Assessor determined an appraised value of $17,595,100, assessed value of $5,630,430, as commercial property. The Board affirmed the value. Complainant proposed a value of $6,000,000, assessed value of $1,920,000. Respondent waived filing of exhibits and written direct testimony. Evidentiary hearing was conducted on June 5, 2007, at the St. Louis County Government Center, Clayton, Missouri by Senior Hearing Officer W. B. Tichenor.

Transcript of hearing filed with the Commission on June 26, 2007.

The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

Complainant’s Evidence

Exhibit A – Appraisal Report of Shaner Appraisals, Inc. with an effective date of valuation of January 1, 2006. Exhibit A is received as evidence on this record.

Exhibit B - Appraisal Report of Shaner Appraisals, Inc. with an effective date of valuation of January 1, 2003. Exhibit B is received as evidence on this record.

Exhibit C – Written Direct Examination of H. Laird Goldsborough. Exhibit C was not offered by Complainant.

Exhibit C-1 – Amended Written Direct Examination of H. Laird Goldsborough. Exhibit C-1 is received as evidence on this record.

Exhibit D – Letter from H. Laird Goldsborough to Mr. Charles Young. Exhibit D is received as evidence on this record.

Complainant’s Witness was H. Laird Goldsborough.

Respondent’s Rebuttal Evidence

Rebuttal Exhibit 1 A thru D – Photographs. Exhibit 1 A thru D is received as evidence on this record.

Rebuttal Exhibit 2 – Facilities Capital Forecast. Exhibit 2 is received as evidence on this record.

Respondent’s Rebuttal Witness was John Kiene.

FINDINGS OF FACT

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

2. The subject property is located at 5290 Bashee, Hazelwood, Missouri. The property is identified by locator number 10L310031. The subject property consists of five buildings on 42.88 acres and include:

Building #1	182,281 sq. ft. Manufacturing Facility
Building #4	10,487 sq. ft. Auto Service Garage
Building #5	8,488 sq ft. Steam Plant prior Fuel Systems Lab
Building #6	7,222 sq. ft. Chemical Storage
Building #10	944 sq. ft. Pump House

3. There was evidence of new construction and improvement in 2005 including an electrical substation at a cost of $3.2 million and a steam boiler capacity plant (Building #5) was constructed by expanding an existing building at a cost of $7.45 million.

4. Complainant’s evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2005.

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 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.

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 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.

Complainants’ evidence did not rise to the level of substantial and persuasive on the issue of fair market value. The presumptions were not rebutted. The evidence failed to establish an erroneous assessment.

Standard for Valuation

Section 137.115, RSMo, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so. St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993); Missouri Baptist Children’s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993). It is the fair market value of the subject property on the valuation date. Hermel, supra.

Market Value

Market value is the most probable price in terms of money which a property should bring in competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price is not affected by undue stimulus.

Implicit in this definition is the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby:

1. Buyer and seller are typically motivated.

2. Both parties are well informed and well advised, and each acting in what they consider their own best interests.

3. A reasonable time is allowed for exposure in the open market.

4. Payment is made in cash or its equivalent.

5. Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.

6. The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction.

Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; See also, Real Estate Valuation in Litigation, J. D. Eaton, M.A.I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80; Uniform Standards of Professional Appraisal Practice, Glossary.

Weight to be Given Evidence

Trier of Fact

The Hearing Officer as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as she 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).

Complainant’s Burden of Proof

In order to prevail, Complainant must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2005. 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). However, a taxpayer does not meet his burden if evidence on any essential element of his case leaves the Commission “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).

The Complainant introduced into evidence two appraisal reports, Exhibits A and B. Exhibit A was an appraisal with an effective date of January 1, 2006. The appraisal provided an opinion as to market value for the subject property and three other parcels including seven buildings on 70.19 acres on parcels 10L310031, 10L220921, 10L220930 and 10L220912. The final estimate of value, according to Exhibit A, was $9,000,000 for all of the properties on January 1, 2006.

The appraisal valued the property using the cost approach and the sales comparison approach. Using the cost approach the appraiser determined the value of the property of all four parcels to be $14,000,000. The land was valued at $8,400,000 and the improvements after adjustments were valued at $5,645,582. The appraiser valued the improvements on the subject parcel as follows: Building #1 at $7,743,280, Building #4 at $96,994, Building #5 at $305,999, Building 6 at $39,636, and Building #10 at $5,062.

The appraiser also used the sales comparison approach to value the property. By comparing the property with other six other industrial properties that sold in Illinois, Ohio, Maryland and Michigan, the appraiser concluded that the value of all the properties on January 1, 2006, was $8,900,000.

The appraiser did not use the income approach. The appraiser stated that the income approach was not appropriate as the subject property is a specialized land use, it is not typically marketed, purchased or sold on the basis of anticipated lease income.

In reconciling the values, the appraiser placed more weight on the cost approach due to the subject’s age and segmented history of construction.

The second appraisal report submitted by Complainant, Exhibit B, was an appraisal with an effective date of January 1, 2003, which was dated February 4, 2005. The appraisal report details opinion of value for Parcel 10L310031 only. The appraiser once again found the cost and the sales comparison approaches the only appropriate approaches and believed the sales comparison approach to be the most reliable. The appraiser concluded a value of $6,000,000 for the subject property on January 1, 2003.

Using the cost approach, the appraiser determined the land, building and site improvements for the subject property to be $6,600,000. The appraiser valued the properties as follows: $5,566,104 for Building 1, $34,314 for Building 5, $4,468 for Building 10, $86,059 for Building 4, and $35,643 for Building 6. After determining the value of the buildings at $5,726,587 the appraiser deducted $4,200,000 for deferred maintenance. The appraiser determined the land value using a sales comparison approach to be $5,100,000.

Using the sales comparison approach, the appraiser determined the building and site improvements had a value of $5,900,000.

The appraiser reconciled the value under the two approaches and concluded that the value of the property on January 1, 2003, was $6,000,000.

The appraiser’s third documentation of value was a letter which was submitted as Exhibit D. The purpose of the letter was to set forth a value for Building #1, 10L310031 on January 1, 2005, and January 1, 2006. In the letter, the appraiser states the property is valued at $6,000,000 on January 1, 2005, and $6,000,000 on January 1, 2006. He further states that support of his values may be found in Exhibits A and B.

The appraiser did not find that the construction of the new steam plant and new power substation and network enhance the marketability or value of the subject. Steam had been purchased from the adjacent landowner however the adjacent landowner was phasing out the operation threatening the availability of steam to the subject property.

The appraiser, H. Laird Goldsmith, the preparer of exhibits A, B, and D, testified. He testified the value of Building #1 was $6,000,000 on January 1, 2005, and $6,000,000 on

January 1, 2006. The support for his valuation, according to the appraiser, could be found in Exhibits A and B. The appraiser did not testify as to the specific adjustments made for time value for Exhibit B or as to his specific findings when valuing one item from the valuation of four parcels – land and improvements- in Exhibit A. The testimony of Mr. Goldsmith as to his opinion of fair market value, without demonstrating the manner in which the opinion of value was concluded is not sufficient to provide a proper foundation to constitute substantial and persuasive evidence.

The additional factor that Complainant purchased the subject property in an open market transaction in 2001 for $14,000,000 and spent $5,000,000 shortly thereafter for maintenance or improvements cannot be ignored. Evidence of the actual sales price of property is admissible to establish value at the time of an assessment, provided that such evidence involves a voluntary purchase not too remote in time. The actual sale price is a method that may be considered for estimating true value. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526 (App. E.D. 1993).

Evidence of recent improvements to the property should also be considered. A steam boiler capacity plant (Building #5) was constructed by expanding an existing building at a cost of $7.45 million. The steam plant is necessary for the viability of the property. An electrical substation was constructed in 2005 at a cost of $3.2 million.

The Complainant’s opinion of a fair market value of only $6,000,000 was not supported by substantial and persuasive evidence. The evidence presented did not provide Hearing Officer with sufficient information to determine market value. The presumptions of correct assessment were not rebutted.

ORDER

The assessed valuation for the subject property as determined by the Board of Equalization for St. Louis County for the subject tax day is AFFIRMED.

The assessed value for the subject property for tax years 2005 and 2006 is set at $5,630,430.

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 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 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 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.

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 July 10, 2007.

STATE TAX COMMISSION OF MISSOURI

Maureen Monaghan

Hearing Officer