State Tax Commission of Missouri
CHRYSLER LLC, )
)
Complainant, )
)
v. ) Appeal No. 10-10001 & 10-10002
)
JAKE ZIMMERMAN, ASSESSOR, )
ST. LOUIS COUNTY, MISSOURI, )
)
Respondent. )
ORDER
AFFIRMING HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
On December 19, 2012, Hearing Officer Maureen Monaghan entered her Decision and Order (Decision) setting aside the assessment by the St. Louis County Board of Equalization
Respondent filed an Application for Review of the Decision on January 18, 2013. Complainant filed its Response on February 22, 2013. Respondent Replied on March 15, 2013. Complainant requested to be allowed to respond and filed their reply on March 29, 2013. Respondent filed the last Reply on April 12, 2013.
CONCLUSIONS OF LAW
Standard Upon Review
A party subject to a Decision and Order of a hearing officer with the State Tax Commission may file an application requesting the case be reviewed by the Commission. The Commission may then summarily allow or deny their request. The Commission may affirm, modify, reverse or set aside the decision. The Commission may take any additional evidence and conduct further hearings.[1]
Respondent’s Claims of Error
Respondent puts forth the following alleged errors in the Decision:
1. The Hearing Officer in finding the Complainant’s evidence was substantial and persuasive in that:
a. The asset transfer lists were vague;
b. The appraisal report did not contain sufficient information or documentation of the opinion of value;
c. The Complainant failed to value property under Section 137.122 RSMo.
2. The Hearing Officer erred in denying Respondent’s Motion to File his Exhibits out of time.
Discussion and Rulings
The Commission will address each of the points raised by Respondent.
Asset Transfer
Respondent argues that the asset list used for the appraisal was inaccurate due to the format of the list. The circumstances in this case are unusual. It involves the personal property of a large manufacturing plant. The plant closed the prior year and the personal property at the location was being disposed. The disposition of the property included transfer for use at other plants, auction and demolition. The Complainant reviewed the records of the personal property of the plant prior to its shut down. An extensive search of approximately 3,000 pages of data was made to ascertain what assets had been removed to other plants prior to January 1, 2010. The Complainant also reviewed the list to determine what property was sold at auction in 2010. Finally, Complainant determined what property was abandoned and ultimately demolished with the buildings.
The Complainant filed personal property lists with the Assessor in 2010. The Complainant certified that the list was true and correct. The Assessor relied upon the sworn, certified list to set value for the personal property even though they toured the property in early 2010. However, the business personal property list filed by Complainant, even though certified by the Complainant as being true and correct, was not accurate. The Assessor’s assessment under Section 137.122, RSMo, was based upon the property tax declarations submitted by the Complainant therefore the Assessor assessed property that was not present on site at the North Plant as of January 1, 2010. Due to the Complainant not acting with due diligence and providing a list to which the Complainant swore was accurate, the county’s initial valuation of the property was inaccurate.
The evidence presented by the Complainant as to the number and type of assets and the accounting of those assets was reasonable and a type the Hearing Officer may rely. 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.[2]
Complainant’s Appraisal
Respondent argues that the Complainant failed to present substantial and persuasive evidence in that the Hearing Officer set forth some weaknesses in the appraisal report. The Complainant presented an appraisal complying with the Uniform Standards of Appraisal Practice and Missouri Statutes and Code of Regulations. The trier of fact has the duty to evaluate the evidence presented to determine its sufficiency and persuasiveness in establishing market value.
The Hearing Officer made a thorough evaluation of the report. The Hearing Officer noted that the Complainant made an accurate list of property at the site on January 1. The Hearing Officer noted that the appraiser then removed any items on the list that were not tangible personal property, i.e., labor, freight, installation, real estate, and corrected the inventory to include all items, and only those personal property items, that were located on the subject property as of the tax date. The appraiser used the market approach to value the property. The market approach is a recognized approach to value. The appraiser set forth in his report the actions he took in reaching an opinion of value for each item. The Hearing Officer noted that the Complainant’s appraisal report is lacking in specificity in communicating the appraiser’s analysis in reaching his opinion of value as to each asset.
The Hearing Officer found that the methodology set forth by the appraiser was appropriate methodology for valuing the assets. It is within the purview of the Hearing Officer to determine the method of valuation to be adopted in a given case.[3] 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.[4] It has also been established that 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.[5]
The concluded values presented by the Complainant were based upon the development of the market approach and the actual sale of the majority of the subject property. No controverting evidence established true value in money different than that concluded by Complainant’s expert was presented for the Hearing Officer to weigh. The evidence presented by the Complainant was determined to be sufficient to provide the foundation for the determinations of values as proposed.
Section 137.122, RSMo.
Section 137.122, RSMo,[6] establishes the methodology to be used in the assessment of depreciable tangible personal property. Under Section 137.122, RSMo, the assessor values depreciable tangible personal property by applying the class life and recovery period to the original cost of the property according to the depreciation schedule set forth in the statute.
The estimate of value determined under this section is presumed to be correct for the purpose of determining the true value in money of the depreciable tangible personal property, but such estimation may be disproved by substantial and persuasive evidence of the true value in money under any method determined by the State Tax Commission to be correct, including, but not limited to, an appraisal of the tangible personal property specifically utilizing generally accepted appraisal techniques, and contained in a narrative appraisal report in accordance with the Uniform Standards of Professional Appraisal Practice or by proof of economic or functional obsolescence or evidence of excessive physical deterioration.
The Complainant disproved the estimation of value determined under Section 137.122, RSMo by substantial and persuasive evidence using a methodology determined by the State Tax Commission to be correct.
Respondent’s Motion for Leave to Hire an Appraiser
Respondent argues that the Hearing Officer erred in denying his request to submit an appraisal. The case was filed on September 29, 2010. On November 3, 2011, the Commission issued an Exchange Schedule. The schedule set forth a deadline of February 3, 2012, for the parties to exchange the exhibits and testimony that would be filed at the scheduled hearing set for April 12, 2012. The hearing was continued to June 14, 2012, after a request by Respondent.
The Respondent filed his Motion for Leave to Hire and Appraiser on April 26, 2012 – over two months after any evidence and exhibits were to be filed in the case. The Respondent did not set forth why the Respondent had not sought to hire an appraiser until after the exhibit deadline had passed.
The Respondent argues that Complainant would not have been prejudiced by allowing them to hire an appraiser and file an appraisal out of time. However, the Complainant would have been prejudiced. In ad valorem hearings, the parties submit their evidence in advance so that the Hearing Officer may an opportunity to review appraisal reports and other exhibits that are quite voluminous and complex. The case in chief is handled through the filings of exhibits and written direct testimony. The hearings are not an opportunity to present direct evidence; the hearings provide an opportunity for opposing counsel to challenge the exhibits and witnesses through cross examination. By granting the Respondent’s request, the Hearing Officer, in essence, would be allowing the Respondent “a second bite of the apple” in presentation of their evidence.
DECISION
3. Subject Properties. The subject property in Appeal 10-10001 was identified by Assessor’s Account No. M0005386A, it was located at 1001 N. Highway Drive, Fenton, Missouri and was otherwise known as the South Assembly Plant. The subject property in Appeal 10-10002 was identified by Assessor’s Account No. M0081228A, it was located at 1060 Dodge Drive, Fenton, Missouri and was otherwise known as the North Assembly Plant. The property in each appeal consists of items of machinery, tools and equipment formerly utilized in the two Chrysler plants.[8]
4. Assessment.[9] In Appeal 10-10001, the Assessor appraised the property at $6,164,700, an assessed value of $2,054,900. The Board of Equalization sustained the
assessment.[10] In Appeal 10-10002, the Assessor appraised the property at $41,456,610, an assessed value of $13,818,870. The Board of Equalization sustained the assessment.[11]
5. Complainant’s Evidence. Complainant presented the following exhibits:
|
EXHIBIT
|
DESCRIPTION
|
|
A
|
Retrospective Summary Appraisal – Allen D. Bealmear
|
|
B
|
Written Direct Testimony – Allen D. Bealmear
|
|
C
|
Written Direct Testimony – George J. Nemeth
|
|
D
|
Sale Notice – Chrysler – St. Louis Assembly North & South
|
|
E
|
St. Louis Assembly Plant – Strip Out Project Costs
|
|
F
|
Photograph – Demolition South Plant
|
|
G
|
Photograph – Land on which the North & South Assembly Plants existed
|
|
H
|
Photograph – Land on which the North & South Assembly Plants existed
|
|
Rebuttal A
|
Assessor’s Field Report – M0005386A – South Plant – 1/12/10
|
|
Rebuttal B
|
Assessor’s Field Report – M0081228A – North Plant – 1/12/10
|
|
S[12]-A
|
Surrebuttal Testimony of Allen D. Bealmear
|
|
S-B
|
Bealmear Work File Notes – North Plant
|
|
S-C
|
Bealmear Work File Notes – South Plant
|
|
S-D
|
Sales Data – Bealmear Appraisal Database – Assembly Robots
|
|
S-E
|
Sales Data – Bealmear Appraisal Database – Welding Robots
|
|
S-F
|
Appraisal Publication – Rosen Report – Winter 2012
|
Respondent filed objections to Exhibits A through H. Objections were ruled on by Order dated 4/11/12. Objections were overruled, Motions to Exclude were denied, and the exhibits were received into the record. The rulings in said Order were incorporated by reference at the evidentiary hearing as if set out in full in the transcript of the hearing.[13] Said rulings are hereby incorporated by reference in this Decision as if set out in full herein. No objections were made to Rebuttal Exhibits A & B or Surrebuttal Exhibits A – F, those exhibits were received into the record.[14]
6. Disposition of Complainant’s Property. The circumstances and events related to the disposition of Complainant’s property at the North and South Assembly Plants are as follows:
A. All production operations ceased at the North and South Assembly Plants in July, 2009.[15]
B. Prior to January 1, 2010, Complainant transferred personal property from the North and South Assembly Plants to other facilities outside the State of Missouri.[16]
C. As of January 1, 2010, some personal property was still located at the North and South Plant buildings, which later in 2010 was transferred to other facilities outside of Missouri.[17]
D. An extensive search of approximately 3,000 pages of data was made to ascertain what assets had been removed to other plants prior to 1/1/10, and what assets remained at the North and South Plants as of 1/1/10.[18]
E. Some personal property that was at the North Plant building as of
January 1, 2010, was sold at auction by Hilco Industrial Auction Company on July 29, 2010. Complainant’s appraiser did an item by item review and determined that the sale was commercially reasonable and represented fair market value.[19]
F. The North and South Plant buildings were sold on December 17, 2010, and July 2, 2010, respectively, to a demolition company that was given demolition rights to the buildings and their contents.[20]
G. Complainant abandoned certain personal property inside the North and South buildings which was ultimately demolished with the buildings. The abandoned personal property consisted of installed conveyors, overhead structural components, retaining walls, paint booths, and other similar items.[21]
H. All of the abandoned items were left inside the buildings for demolition because they were either old, unusable obsolete, and were determined to be too expensive to remove for scrap purposes.[22]
I. Complainant performed an analysis of the cost to strip out the remaining personal property from the South Plant so that it could potentially be sold for scrap. The analysis concluded that the cost to remove would exceed what the scrap would bring in revenue if removed and sold.[23]
J. The analysis showed that the cost to strip out the personal property at the South Plant would have been $11,200,000. The projected scrap revenue was $4,464,285.71. The record does not provide the original costs for these scrap items. The net strip out cost was $6,735,714.29.[24] Based upon this cost analysis, Complainant determined that the remaining personal property in the South Plant building should be abandoned with the buildings and demolished. The North and South Plant buildings and the abandoned personal property inside them were completed demolished.[25]
K. As of January 1, 2010, none of the personal property in either the North and South Plant buildings was in use.[26]
L. As of January 1, 2010, the total original cost of the assets in the North Plant that had been transferred prior to January 1, 2010, and those assets remaining on site that would be transferred in 2010 was $67,785,574. The total original cost of the assets in good operative condition that were transferred after January 1, 2010, was $929,537. The total original cost of assets judged to be worn out/scrap which was transferred after January 1, 2010, was $742,300. As of January 1, 2010, the assets on site to be valued represented only $1,671, 837 of the original cost of the total North Plant transfer assets, or less than .025% of the total.[27]
M. The Complainant submitted personal property declarations each tax year.
N. The Assessor’s assessment under Section 137.122, RSMo, was based upon the property tax declarations submitted by the Complainant therefore the Assessor assessed property that was not present on site at the North Plant as of January 1, 2010.
O. As of January 1, 2010, there remained on site at the North Plant miscellaneous items of furniture, machinery, appliances, tools and equipment that would be sold in 1063 separate lots in 2010.[28] The record does not provide the original costs for these items.
P. As of January 1, 2010, the total original cost of the assets in the South Plant that had been transferred prior to January 1, 2010, and those assets remaining on site that would be transferred in 2010 was $92,340,676. The total original cost of the assets in good operative condition that were transferred after January 1, 2010, was $680,224. The total original cost of assets judged to be worn out/scrap was $6,111. As of January 1, 2010, the assets on site to be valued represented only $686,335 of the original total South Plant transfer assets, or only .007% of the total.
Q. The Assessor’s assessment under Section 137.122, RSMo, was based upon the property tax declarations submitted by the Complainant therefore Complainant’s declaration included property that was not present on site at the South Plant as of January 1, 2010.
7. Conclusion of Value. Exhibit A provides an accurate accounting of business personal property. Although lacking in specificity as to its analysis and valuation, it reported to use generally accepted appraisal techniques and was in a narrative appraisal report format. It provides substantial and persuasive to rebut the presumption of correct assessment the Assessor and by the Board and establish the true value in money for the property as of January 1, 2010.
The true value in money of the property in Appeal 10-10001 as of January 1, 2010, was $146,000, an assessed value of $48,670.
The true value in money of the property in Appeal 10-10002 as of January 1, 2010, was $841,920, an assessed value of $280,640.
11. Respondent’s Evidence. Respondent offered the following exhibits into evidence.
Appeal 10-10001:
|
EXHIBIT
|
DESCRIPTION
|
|
01-1
|
2010 – Chrysler – Personal Property Declaration
|
|
01-2
|
2009 – Chrysler – Personal Property Declaration
|
|
01-3
|
2008 – Chrysler – Personal Property Declaration
|
|
01-4
|
2007 – Chrysler – Personal Property Declaration
|
|
01-5
|
2010 – Chrysler – Personal Property Tax Bill
|
|
01-6
|
2009 – Chrysler – Personal Property Tax Bill
|
|
01-7
|
2008 – Chrysler – Personal Property Tax Bill
|
|
01-8
|
2007 – Chrysler – Personal Property Tax Bill
|
|
01-9
|
Written Direct Testimony – Linda Edison
|
|
Rebuttal -2
|
BOE – Property Assessment Appeal Form
|
Appeal 10-10002:
|
EXHIBIT
|
DESCRIPTION
|
|
02-1
|
2010 – Chrysler – Personal Property Declaration
|
|
02-2
|
Email dated 3/3/10 – Capstone Advisory Group
|
|
02-3
|
Letter dated 3/30/10 – Nemeh
|
|
02-4
|
Letter dated 5/7/10 – Fox
|
|
02-5
|
Letter dated 7/6/10 – Nemeh
|
|
02-6
|
2009 – Chrysler – Personal Property Declaration
|
|
02-7
|
2009 – Chrysler – Personal Property Statement – Corrected Schedule A
|
|
02-8
|
2007 – Chrysler – Personal Property Statement – Schedule A
|
|
02-9
|
Email dated 3/16/09 – Chrysler
|
|
02-10
|
2008 – Chrysler – Personal Property Declaration
|
|
02-11
|
2007 – Chrysler – Personal Property Declaration
|
|
02-12
|
2010 – Chrysler – Personal Property Tax Bill
|
|
02-13
|
2009 – Chrysler – Personal Property Tax Bill
|
|
02-14
|
2008 – Chrysler – Personal Property Tax Bill
|
|
02-15
|
2007 – Chrysler – Personal Property Tax Bill
|
|
02-16
|
Complaint for Review of Assessment, with attachments
|
|
02-17
|
Written Direct Testimony – Linda Edison
|
|
Rebuttal-1
|
BOE – Property Assessment Appeal Form
|
Objections were made to Exhibits 01-1 through 01-09, Exhibits 02-1, 01-2 and 02-4 through 02-17, Rebuttal Exhibit 1 and Rebuttal Exhibit 2. Objections were ruled on in an Order dated April 11, 2012. Objections were sustained and the exhibits were excluded from the record. The rulings in said Order were incorporated by reference at the evidentiary hearing as if set out in full in the transcript of the hearing.[29] Said rulings are hereby incorporated by reference in this Decision as if set out in full herein.
CONCLUSIONS OF LAW AND DECISION
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.[30] The presumption is not evidence of value. This presumption is a rebuttable rather than a conclusive presumption. It places the burden of going forward with substantial evidence on the taxpayer – Complainant. The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the Board’s valuation is erroneous and what the fair market value should have been placed on the property.[31]
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, 2010.[32] There is no presumption that the taxpayer’s opinion is correct. The taxpayer is the moving party seeking affirmative relief. The taxpayer in a Commission appeal still bears the burden of proof. Therefore, the Complainant bears the burden of proving the vital elements of the case.
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[33] 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.[34]
In the valuation of personal property, there is a statutory presumption on behalf of the Assessor. An estimate of value determined under the mandates set by statute is presumed to be correct for the purpose of determining the true value of depreciable tangible personal property. The Assessor’s estimation may be disproved by substantial and persuasive evidence of the true value in money under any method determined by the State Tax Commission to be correct, including, but not limited to, an appraisal of the tangible personal property specifically utilizing generally accepted appraisal techniques, and contained in a narrative appraisal report in accordance with the Uniform Standards of Professional Appraisal Practice.[35]
There is no presumption of correct assessment by the assessor for business personal property placed in service before January 2, 2006.[36] Some of the assets that were on site at the North or South Plants on January 1, 2010, as well as assets that had been transferred prior to January 1, 2010, had been acquired in years prior to 2006.[37]
Presumptions Rebutted
Owners are required to declare their personal property annually. The declarations are required to “true and correct”. The statement of personal property is either affirmed or sworn.[38] The purpose of these requirements is so that the assessor will have an accurate listing of property for which to determine market value for ad valorem purposes.
The Complainant filed personal property lists with the Assessor. The Complainant certified that the list was true and correct. The Assessor relied upon the sworn, certified list to set value for the personal property. However, the business personal property list filed by Complainant, even though certified by the Complainant as being true and correct, was not accurate. Due to the Complainant not acting with due diligence and providing a list to which the Complainant swore was accurate, the county was unable to correctly value the personal property. The Complainant’s business personal property list filed as part of their appraisal report, was an accurate listing of the property as of January 1, 2010. An accurate listing as the one provided with the appraisal report should have been filed by the Complainants originally. Since the basis of the assessment was an inaccurate listing of personal property, the Commission concludes that the presumption of correct assessment is rebutted.
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.[39] True value in money is defined in terms of value in exchange and not value in use.[40] It is the fair market value of the subject property on the valuation date.[41] 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 are 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 both 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.[42]
Complainant’s appraiser concluded true value in money under the Standard For Valuation.[43]
Weight to be Given Evidence
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.[44]
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.[45]
Personal Property Appraisal and Reports
Section 137.122, RSMo,[46] establishes the methodology to be used in the assessment of depreciable tangible personal property. Under Section 137.122, RSMo, the assessor values depreciable tangible personal property by applying the class life and recovery period to the original cost of the property according to the depreciation schedule set forth in the statute.
The estimate of value determined under this section is presumed to be correct for the purpose of determining the true value in money of the depreciable tangible personal property, but such estimation may be disproved by substantial and persuasive evidence of the true value in money under any method determined by the State Tax Commission to be correct, including, but not limited to, an appraisal of the tangible personal property specifically utilizing generally accepted appraisal techniques, and contained in a narrative appraisal report in accordance with the Uniform Standards of Professional Appraisal Practice or by proof of economic or functional obsolescence or evidence of excessive physical deterioration.
Uniform Standards of Professional Practice sets forth the standards for developing an opinion of value and the minimum content of a report of value. The Standards do not dictate the style of the report and therefore appraisals may be a “form” report. The Missouri Statutes[47] and the Code of State Regulations[48] set forth the requirement that the report be in narrative form. In other words, the appraisals must be presented in a written format setting forth the information in expository (descriptive) writing approach that discloses details of an act, event or phenomenon.
Weaknesses In Personal Property Appraisal Reports
In addition to a Complainant presenting an appraisal complying with the Uniform Standards of Appraisal Practice and Missouri Statutes and Code of Regulations, it should also be substantial and persuasive. The trier of fact has the duty to evaluate the evidence presented to determine its sufficiency and persuasiveness in establishing market value. Personal property appraisals are often lacking in information needed by a hearing officer to find the appraisal as substantial and persuasive. Some of the weaknesses of the appraisals include identification of the property, lack of adjustments under the sales comparison approach or the adjustments not being fully explained or supported by market data, and sales not being investigated.
In this situation, the appraiser used a list of inventory provided by the Complainant. The appraiser then removed any items on the list that were not tangible personal property, i.e., labor, freight, installation, real estate, and corrected the inventory to include all items, and only those personal property items, that were located on the subject property as of the tax date.
After removing the property that was not at either site on January 1, 2010, the appraiser established an accurate inventory of property as of the tax date. The appraiser, in his narrative report, states that he used the market approach to value the property. The appraiser states the following:
“True Value in Money was derived considering the property type, original costs, date acquired, probably age, net book value, comparisons to similar property from prior appraisals performed by the appraiser and the appraiser’s experience, education and training. Further, contemporaneous comparable sales of like or similar property were considered when appropriate and available….The data used from the Market approach includes, if available, direct and indirect comparable sales from dealers selling and asking prices, user purchase and selling prices, non-governmental/non-forced public auction sales, manufacturers who repurchase and sell their own used equipment, public price guides, the Internet, trade journals, catalogs, and any other recognized sources of comparable data.”
The information set forth above is the only information provided by the appraiser as to how he valued the property under the market approach. It is unknown what comparables were located, if a comparable was located if it was a direct match or if the comparables were properties the appraiser deemed to be similar. The appraiser did not provide information regarding any sales data such as the number of units involved in the sales, the condition of the property sold, the date of the sales, location of sales, or types of sales, environmental compliance, safety compliance, condition, capacity, size, effective age, date of sale, circumstances of sale, or type of sale. The appraiser failed to provide the “recognized sources of comparable data” or what data was available.
The sales comparison approach is only reliable if there is an active market providing sufficient number of sales of comparable property that can be independently verified through reliable sources. The appraiser must identify the elements of comparison and investigate the sales for accurate adjustments.[49] Without supportive documentation, or without investigation into the sales, an appraisal is not substantial and persuasive.
USPAP Standard 8 requires that the “appraiser must communicate each analysis, opinion, and conclusion in a manner that is not misleading.” It also requires the report “contain sufficient information to enable the intended users of the appraisal to understand the report properly”. USPAP Standard 8 Comment further states that in a summary appraisal report, the appraiser, when reporting an opinion of market value should provide a summary of the result of the analysis of the subject sales, offers, options and listing in accordance with Standards Rule 7-5.
The Complainant’s appraisal report is lacking in specificity in communicating the appraiser’s analysis in reaching his opinion of value. Typically appraisal reports without sufficient detail and support would be determined not to be substantial and persuasive. The case at hand is an atypical situation involving subject properties that no longer exist and may not have existed on the effective date. Even though the appraisal report lacks the details preferred by the State Tax Commission and the description of the methods for valuing the property was broad, the methods used by the appraiser were appropriate.
Methods of Valuation
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.[50] 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.[51] It has also been established that 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.[52]
The concluded values presented by the Complainant were based upon the development of the market approach and the actual sale of the majority of the subject property. No countervailing evidence to establish true value in money different than that concluded by Complainant’s expert is present for the Hearing Officer to weigh. The evidence presented by the Complainant is sufficient to provide the foundation for the determinations of values as proposed by Exhibit A.
Respondent’s Position at Hearing – Appeal 10-10002
Respondent’s position at hearing was that due to the fact that a value of $12,545,090 had been presented by Complainant’s Tax Specialist, with regard to Appeal 10-10002 (North Plant Assets) this was a statement against interest and in effect would rebut the conclusions of value made by the Complainant’s appraisal.[53] At hearing, Complainant’s objection on the ground of relevance to the line of questioning concerning the presentation of an opinion of $12,545,090 before the Board was sustained. The Hearing Officer did take under advisement the claim of “statement against interest” to be addressed in this Decision.[54]
The Respondent’s claim of an exception to the hearsay rule as a statement against interest is overruled.
The document in which the declaration was recorded was the St. Louis County Board of Equalization – DECISION, for the property in Appeal 10-10002, dated September 15, 2012, in which the document stated the following:
“The Property Owner presented evidence relating to the Assessor’s assessment of the property in question as follows: Appearance Waiver
“The following exhibits were presented on behalf of the Property Owner: Asset List and Letter of Explanation.
“All exhibits, if any, offered by the Property Owner were received.
“The Property Owner did offer an opinion as to the value of the property. $12,545,090.”
The claim of a statement against interest comes into play when an objection on the grounds of hearsay is made. An exception to the hearsay rule is a statement against interest. A statement against interest is not excluded under the objection of hearsay if the following conditions are satisfied: (1) the declarant is unavailable as a witness; (2) the declaration when made related to a fact against the declarant’s pecuniary interest; (3) the declaration concerned a fact personally known to the declarant; and (4) the declaration was made under circumstances that render it improbable that a motive to falsify existed.[55]
The statement is excluded as (1) the statement was made by the Board of Equalization; and (2) if the declarant was Mr. Nemeh, Mr. Nemeh was available as a witness.[56]
Conclusion
As of the valuation date the machinery and equipment in the two subject plants was no longer being used. Significant amounts of machinery and equipment from both the North and South plants had been removed and relocated to other Chrysler plants between the July 2009 shutdown of the plants and January 1, 2010. The assets that had not been disposed of prior to January 1, 2010 were ascertained and identified. As of January 1, 2010, there existed the following groups of property on Complainant’s assembly plant sites: (1) South Plant assets that would be transferred during 2010; (2) North Plant assets that would be transferred during 2010; (3) North Plant Assets that would be sold during 2010 for $526,920; and (4) scrap assets, abandoned in place with a negative true value in money of $6,735,714.29.
The assets on site at the North Plant had an original cost of $1,671,837. The assets on site at the South Plant had an original cost of $686,335. The assets were originally placed in to service before and after 2006. The Complainant’s appraiser determined the true value in money for the North Plant assets was $315,000 and for the South Plant $146,000. The County did not present evidence regarding the valuation of the property after an accurate listing of the personal property was provided.
For the North Plant assets sold at auction by HILCO on July 29, 2010, the appraiser reviewed the sales results on a line item basis to confirm that the sale was commercially reasonable and represented true value in money. Mr. Bealmear concluded that the sale prices obtained through the auction represented the true value in money for the individual assets as of January 1, 2010, in the amount of $526,920.
The true value in money of the property in Appeal 10-10001 as of January 1, 2010, was $146,000, an assessed value of $48,670.
The true value in money of the property (transferred assets and assets sold at auction) in Appeal 10-10002 as of January 1, 2010, was $841,920, an assessed value of $280,640.
ORDER
The assessed valuations for the subject properties as determined by the Assessor and sustained by the Board of Equalization for St. Louis County for the subject tax day are SET ASIDE.
The assessed value for the subject property in Appeal 10-10001 for tax years 2010 is set at $48,670.
The assessed value for the subject property in Appeal 10-10002 for tax years 2010 is set at $280,640.
Application for Review
A party may file with the Commission an application for review of this decision within thirty days of the mailing date set forth in the Certificate of Service for this Decision. The application shall contain specific facts or law as grounds upon which it is claimed the decision is erroneous. Said application must be in writing addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.
Failure to state specific facts or law upon which the application for review is based will result in summary denial. [57]
Disputed Taxes
The Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 139.031.8, RSMo.
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 December 19, 2012.
STATE TAX COMMISSION OF MISSOURI
Maureen Monaghan
Hearing Officer
[1] Section 138.432, RSMo
[2] 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).
[3] 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).
[4] 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).
[5] St. Joe Minerals Corp., supra.
[6] This section shall not apply to business personal property placed in service before January 2, 2006. Nothing in this section shall create a presumption as to the proper method of determining the assessed valuation of business personal property placed in service before January 2, 2006.
[7] 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).
[8] A detailed description of the property is provided in the Addenda to Exhibit A, as well as notes on the property in Surrebuttal Exhibits S-B and S-C.
[9] The appeal involves the assessment of personal property. Personal property is to be assessed at one-third of its appraised value (true value in money, fair market value) – Section 137.115, RSMo.
[10] BOE Decision Letter dated 9/15/10
[11] BOE Decision Letter dated 9/15/10
[12] Surrebuttal Exhibits
[14] Tr. 63:13 – 16; Tr. 25:25 – 26:5
[19] Exhibit C: Q & A 13 & 14; Exhibit B: Q & A 17
[20] Exhibit C: Q & A 15 – 17
[21] Exhibit C: Q & A 18 & 19; Rebuttal Exhibits A & B
[23] Exhibit C: Q & A 21 – 25; Exhibit E
[24] For purposes of appeal of the provisions of this section, the salvage or scrap value of depreciable tangible personal property may only be considered if the property is not in use as of the assessment date.
[25] Exhibit C: Q & A 25 – 31; Exhibits E, F, G & H
[26] Exhibit C: Q & A 32; Rebuttal Exhibits A & B; Salvage or scrap value of depreciable tangible personal property may be considered when the property is not in use as of the assessment date. Section 137.122.4 RSMo
[27] Exhibit A: Addenda – St. Louis North Transferred Assets
[28] Exhibit A: Addenda – HILCO Industrial Auction Lot Catalog (North Plant Assets)
[29] Tr. 3:23 – 4:2; 4:7 – 11
[30] 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)
[31] Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
[33] See, Cupples-Hesse, supra.
[34] Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).
[35] Section 137.122.4, RSMo.
[36] Section 137.122.5, RSMo, an asset is in service when ready and available for its specific use, irrespective of whether it is in use – 137.122.1
[37] Exhibit A: Addenda – North & South Plant Transferred Assets
[38] Section 137.115 and 137.340, RSMo.
[39] 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).
[40] Daly v. P. D. George Company, et al, 77 S.W.3d 645, 649 (Mo. App E.D. 2002), citing, Equitable Life Assurance Society v. STC, 852 S.W.2d 376, 380 (Mo. App. 1993); citing, Stephen & Stephen Properties, Inc. v. STC, 499 S.W.2d 798, 801-803 (Mo. 1973).
[42] 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.
[43] Exhibit A: General Information and Definition – Value Concept, p. 4; Summary of the Appraisal Process, p. 7
[44] 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).
[45] 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).
[46] This section shall not apply to business personal property placed in service before January 2, 2006. Nothing in this section shall create a presumption as to the proper method of determining the assessed valuation of business personal property placed in service before January 2, 2006.
[47] Section 137.122, RSMo
[49] Valuing Machinery and Equipment, American Society of Appraisers
[50] 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).
[51] 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).
[52] St. Joe Minerals Corp., supra.
[55] See, Courtroom Handbook on Missouri Evidence – 2012, Wm. A. Schroeder, Principle 804 (3). Statements Against Interest, pp. 669 – 670, citations omitted.
[57] Section 138.432, RSMo
