3M Company v. Schauwecker (Boone)

April 12th, 2007

State Tax Commission of Missouri


(Minnesota Mining & Manufacturing Company))




v.)Appeal Number 04-44502










The decision of the Boone County Board of Equalization approving the assessment made by the Assessor, is SET ASIDE.The Commission finds the true value of the commercial property in question is $7,250,000 (assessed value $2,320,000) for tax year 2004.The value of the agricultural land in the parcel is not contested and remains at $138,100 (assessed value $16,572).

This appeal was heard and this decision is rendered by Senior Hearing Officer Luann Johnson.An evidentiary hearing was held on January 9, 2007, in the Boone County Government Center, Columbia, Missouri.Complainant appeared by Counsel, Thomas Campbell and Kenneth Newman, St. Louis, Missouri.Respondent appeared by Counsel, John Patton, Columbia, Missouri.


The issue in this appeal is the true value in money, also called the market value, of a 371,426 square foot manufacturing property on January 1, 2004.The subject parcel also contains agricultural land having a value of $138,100.The assessment for the agricultural land is not under appeal.


The Assessor originally valued the commercial property at $12,516,700 (assessed value $4,005,344) for tax year 2004.Said value was approved by the Boone County Board of Equalization.Complainant asserts a value for the subject property of $3,770,000 (assessed value $1,206,400).Respondent now asserts a value for the subject commercial property of $7,250,000 (assessed value $2,320,000).The Commission finds that the true value in money of the subject commercial property was $7,250,000 on January 1, 2004.

Complainant’s Evidence

Complainant offered the following exhibits:

Exhibit A – Appraisal Report of Thomas McReynolds

Exhibit B – Written Direct Testimony of Todd Corbo

Exhibit C — Written Direct Testimony of Thomas McReynolds

Respondent’s Evidence

Respondent offered the following exhibits:

Exhibit 1 – Appraisal Report of Allan J. Moore

Exhibit 2 – Written Direct Testimony of Allan J. Moore


1.Jurisdiction is proper.Complainant timely filed its appeal from the decision of the Boone County Board of Equalization.

2.The property under appeal consists of commercial and agricultural property identified as parcel number 12-503-00-10-001.00 01, more commonly known as 5400 Paris Road (Route B), Columbia, Boone County, Missouri.

3.The value of the 13.81 acre agricultural portion of the parcel has not been contested and, therefore, the Board value of $138,100 (assessed value $16,572) is approved.Ex. 1, p. 22.

4.The commercial portion of the parcel consists of a 39.88 acre tract improved with a one-story 371,426 square foot manufacturing facility, a 40,000 square foot mezzanine, a 4,144 square foot wastewater treatment building, parking and other miscellaneous site improvements.The improvements were built in 1970 with additions in 1980, 1994, 1996 and 1997.Ex. A, p. 6, Ex. 1, p. 5, 22, 28.

5.The improvements have an effective age of between 20 and 22 years with a remaining economic life of between 30 and 38 years.Ex. A , pp. 7, 22, Ex. C, p. 10, Ex. 1, p. 28.

6.The improvements are average to good quality steel frame and masonry construction and are considered to be in good condition for their age.Ex. A, p. 24, Ex. 1, p. 28.Marketing time is estimated to be between 18 and 30 months.Ex. A, p. 6, Ex. 1, p. 5.

7.The market for industrial space in Columbia, Missouri is good with few unsold properties.Tr.34.Properties in Columbia, Missouri sell for twice as much as properties in Lawrence, Kansas and almost three times as much as properties in other smaller Missouri cities.Ex. 1, pp. 63, 66.Shell industrial buildings are frequently bought and sold in the market.Tr. 15.Purchasers anticipate making some changes to a facility to suit their individual needs.Ex. 1, p. 19.

8.The highest and best use of the property is for continued use as an office and manufacturing facility.Ex. A, p. 30, Ex. 1, p. 36.

9.The income approach to value is not a reliable indicator of value for an owner occupied manufacturing facility such as the subject property.And, while it is possible to value such a property using the cost approach, the age of the improvements and the super adequate improvements make determination of obsolescence difficult.The most reliable indicator of value for the subject property is the market or sales comparison approach which uses market derived evidence to determine what buyers are willing to pay for similar properties.

10.Approximately 25% of the available floor space is currently finished for office and support use.Ex. A, p. 22.These areas have dropped ceilings with heights of 10 to 12 feet.Ex. 1, p. 19.However, because of the nature of the dropped ceilings in the subject, any of the ceilings could be raised to at least 16 feet with minimal cost.Tr.29-31.Facilities with eave heights below 14 feet are not functional for most manufacturing and/or industrial uses and are difficult to market.Ex. 1, pp. 19-20.The subject property has eave heights between 22 and 30 feet with clear ceiling heights ranging from 16 to 22 feet.Ex. 1, p. 64.Complainant presented no market data, in the form of a paired sales analysis, which would suggest that the subject property’s ceiling heights would be perceived by buyers as creating a loss in utility (functional obsolescence).

11.Likewise, while the amount of office space is more than that typically found in general manufacturing facilities, it is comparable to that found in research and development facilities.Ex. 1, p. 19.Complainant presented no market data, in the form of a paired sales analysis, which would suggest that the subject property’s office space would be perceived by buyers as creating a loss in utility (functional obsolescence).

12.Approximately 40% of the floor space is currently devoted to H-4 production and clean rooms.H-4 areas are required to have six hour fire rated walls which are usually built of concrete block.Tr. 22.These areas are designed for hazardous manufacturing.Tr. 28.H-4 , clean rooms and waste treatment facilities, represent highly specialized finishes that do not add substantial value, if any, upon sale to other parties.Ex. 1, p. 20.However, H-4 areas are not limited to only H-4 use.Tr. 38.These areas may be developed in a super-adequate manner, but no market data, in the form of a paired sales analysis, was presented which tended to demonstrate that the designation of an area as H-4, in and of itself, creates a perception of unsuitability for any use at all.Assigning no additional value to the specialized improvements is adequate to account for any superadequacy.

13.The existence of multiple load bearing walls within a structure may limit its appeal for some single users as suggested by Complainant.However, there is also significant evidence of a market for similar buildings which have been divided into smaller units.Tr.29, 32, 35-38.Ex. 1, p. 20, 65. [Respondent’s comparable sales 4, 5, 7, 8 and 10].The demand for buildings with multiple load bearing walls refutes Complainant’s claim of functional obsolescence.

14.The H-4 areas also have some trench drains which Complainant’s appraiser asserted, at hearing, would be impossible to repair. Tr. 13, 22, but Complainant’s appraiser makes no mention of trench drains as a factor within his appraisal report.Further, Complainant’s appraiser made no attempt to quantify the amount or impact of those trench drains and, consequently, we cannot find that those drains impact value.

15.Because of the H-4 use, Complainant asserts that there may be a stigma associated with its property which would detract from the value of the property.No paired sales analysis was presented which would identify or quantify such a stigma.

16.Complainant asserts that the existence of only five loading docks limits the value of the subject property.There is no reference to adjustments for loading docks in Complainant’s comparable sales and Complainant has failed to quantify an appropriate adjustment.

17.Complainant’s appraiser asserts that, because most of manufacturing similar to that done by Complainant has moved off shore, there is significant external obsolescence in the subject property.Ex. A, p. 26.Respondent’s appraiser also reports a downturn in the electronics market.Ex. 1, p. 19.One method to account for said external obsolescence, if the market is severely restricted, is to assign no value to the super adequate features of the subject property and consider the property as being available for alternate uses.Respondent’s appraiser used this methodology.Complainant’s appraiser, on the other hand, opines that it would be virtually impossible, on an economic basis, to convert the subject property to any sort of traditional manufacturing or other industrial use.Ex. A, p. 24, Tr. 14.The market evidence presented does not support Complainant’s conclusion.

18.Complainant’s appraiser presents three sales in support of his opinion of value.Two of those sales are located in Lawrence, Kansas and sold for $9.47 per square foot and $9.05 per square foot.The remaining sale is located in Findlay, Ohio and sold for $3.71 per square foot.Based upon these sales, Complainant’s appraiser determined that the proper value for the subject property was $10.00 per square foot, or $3,770,000.

Complainant’s appraiser testified that he had appraised no more than four or five properties in Columbia, Missouri in the last 20 years.Tr. 12.Nonetheless, Complainant’s appraiser asserts that the Columbia and Lawrence locations are similar.Ex. A, 37. Consequently, Complainant’s appraiser made no location adjustments to the Lawrence comparables. However, Respondent’s appraiser testified and presented market evidence tending to show that comparable properties in Columbia, Missouri were selling for twice as much as properties in Lawrence, Kansas.Ex. 1, p. 63, 66.

In addition, Respondent demonstrated that Complainant’s comparable sale number one, which had originally sold in 2003 for $2,000,000 with a three year lease back, had resold for $3,110,000 in June, 2005, indicating an unadjusted value for the subject property of at least $14.72 per square foot.

We cannot comment on the comparability of the sale in Findley, Ohio because no market data was provided which would support a finding that the Findley, Ohio property should be adjusted 35% for location.

Complainant has failed to present substantial and persuasive evidence tending to show that the subject property would sell for no more than $3,770,000 on the tax day.

19.Respondent presented fifteen sales of similar properties; thirteen of which were in Missouri and two were in Kansas.Respondent’s appraiser analyzed ten of these sales to reach an opinion of value for the subject property of $19.50 per square foot or $7,250,000.Respondent’s appraiser adjusted the sales for location, gross building area, percentage of finished space, construction quality, effective age, eave height, functional utility, and sprinkler and air conditioning.A number of these sales had multiple load bearing walls.After adjustments, the comparable sales indicated a range of value between $8.91 per square foot and $31.94 per square foot.The highest value of the “inferior” sales was $14.46.The lowest value of the “superior” sales was $20.59.Therefore, Respondent’s appraiser determined that the value of the subject property was between $14.46 per square foot and $20.59 per square foot.

Respondent’s appraiser determined that the overall superior quality of the subject property as opposed to the comparable properties, the extent of the load bearing walls, and the larger amount of office finish made the subject property more desirable and thus determined that the market value for the subject property should be between $19 and $20 per square foot.

Respondent’s analysis is complete, well reasoned and supported by market data.Therefore, we find that Respondent’s opinion of value is substantial and persuasive.


lang=EN-CA style=’mso-ansi-language:EN-CA’><span
style=’mso-spacerun:yes’> SEQ CHAPTER \h \r 1<span
lang=EN-CA style=’mso-ansi-language:EN-CA’>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

Under Mo. Const., Article X, Section 14, the state tax commission corrects “any assessment which is shown to be unlawful, unfair, arbitrary or capricious.”Thus, in order to prevail, the taxpayer must establish that the decision of the board of equalization falls into one of the above four categories.If a taxpayer fails to make the required showing, it will not prevail, regardless of the amount of evidence – or lack of evidence — presented by the county.

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).


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).


Complainant’s appraiser assumed that certain perceived flaws may have impacted value but he was not able to present reliable market data which would tend to demonstrate that the market shared his belief.Therefore, Complainant’s opinion of value does not rise to the level of substantial and persuasive.

Respondent produced evidence tending to show that a market existed for similar properties with multiple load bearing walls.Respondent also demonstrated that the current low ceilings could be remedied with minimal cost.Finally, Respondent presented undisputed testimony that H-4 space had alternate uses.Respondent’s evidence was substantial and persuasive.


The Decision of the Board of Equalization is SET ASIDE.The Commission sets value for the subject commercial property at $7,250,000 (assessed value $2,320,000).The value of the agricultural property remains unchanged at $138,100 (assessed value $16,572).

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 1994.

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 ofBoone 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 April 12, 2007.



Luann Johnson

Senior Hearing Officer

Certificate of Service


I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 12th day of April, 2007, to:Thomas Campbell, 101 S. Hanley Rd., Suite 1600, St. Louis, MO63105, Attorney for Complainant; John Patton, County Counselor, 601 East Walnut, Room 207, Columbia, MO 65201, Attorney for Respondent; Tom Schauwecker, Assessor, 801 E. Walnut, Room 143, Columbia, MO 65201; Wendy Noren, Clerk, 801 E. Walnut, Room 236, Columbia, MO 65201; Pat Lensmeyer, Collector, Boone County Government Center, 801 E. Walnut, Room 118, Columbia, MO 65201.


Barbara Heller

Legal Coordinator