State Tax Commission of Missouri
COBALT INDUSTRIAL REIT II,)
v.) Appeal No.10-10432
ST. LOUIS COUNTY, MISSOURI,)
SETTING ASIDE HEARING OFFICER DECISION
UPON APPLICATION FOR REVIEW
On April 11, 2013, Senior Hearing Officer W. B. Tichenor entered his 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.Complainant filed a Response.Respondent replied.
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.
CONCLUSIONS OF LAW & DECISION
Points Raised Upon Application for Review
Respondent raised the following grounds in its Application for Review.
1. The Hearing Officer erred in his application of the presumption of correct assessment;
2. The Hearing Officer erred in his application of burden of proof; and
3. The Hearing Officer erred in his determination that the Complainant’s evidence was substantial and persuasive and weighting of the evidence of the sale of the subject property
Presumption of Correct Assessment and the Complainant’s Burden of Proof
The presumption in favor of the Board is not evidence.A presumption simply accepts something as true without any substantial proof to the contrary.In an evidentiary hearing before the Commission, the valuation determined by the Board, even if simply to sustain the value made by the Assessor, is accepted as true only until and so long as there is no substantial evidence to the contrary.
The presumption of correct assessment is rebutted when the taxpayer, or respondent when advocating a value different than that determined by the Board, 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.
The Hearing Officer found that the Complainant met its dual burden of overcoming the presumption in favor of the Board of Equalization and in establishing the true value of the subject property.
Substantial and Persuasive Evidence
In order to prevail, Complainants 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.There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a Commission appeal still bears the burden of proof.The taxpayer is the moving party seeking affirmative relief.Therefore, the Complainant bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.”
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.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.
The Hearing Officer held the taxpayer to the burden of producing substantial and persuasive evidence and detailed the evidence that he found to be substantial and persuasive in reaching his conclusions that not only was the County’s valuation incorrect but also in the Complainant’s determination of true value of the subject property.
The Complainant’s appraiser relied on the income approach as properties such as the subject would be purchased as an income producing property.The appraiser used data from leases entered into within six months of the valuation date.The appraiser reviewed the types of leases and the vacancy and credit loss of the market.The appraiser reviewed the market and considered several sources for development of the capitalization rate.
After review of all the evidence, the Commission finds the actual rental figure of $4.03 per square foot most persuasive.The use of the rental income of $4.03, with the remaining findings of the hearing officer unchanged, would result in valuation of $10,685,100.
The Respondent argues that the sale of the subject property in July 2008 proves that the Hearing Officer’s decision was arbitrary. The sale of the subject property alone does not establish value. One property sale does not establish a market.First, a sale of the subject property must be reviewed just as any sale in a sales comparison approach.Second, a sale of the subject property should be considered in addition to any other relevant sale and adjustments made to the sales where necessary.In this case, a sale of the subject property does not establish any grounds for modification of the Decision by the hearing officer
The Commission, upon review of the record and Decision in this appeal, modifies the decision of the hearing officer and finds a market value of $10,685,100, a commercial assessed value of $3,419,230.The Decision and Order of the Hearing Officer, including the findings of fact and conclusions of law therein, is incorporated by reference, as if set out in full, in this final decision of the Commission.
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 mailing date set forth in the Certificate of Service for 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 unless disbursed pursuant to Section 139.031.8, RSMo.
If no judicial review is made within thirty 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.
SO ORDERED September 23, 2013.
STATE TAX COMMISSION OF MISSOURI
Bruce E. Davis, Chairman
Randy B. Holman, Commissioner
Victor Callahan, Commissioner
DECISION AND ORDER
Decision of the St. Louis County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE.Complainant presented substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization.
True value in money for the subject property for tax year 2010 is set at $9,650,000, commercial assessed value of $3,088,000.
Complainant appeared by Counsel Thomas W. Rynard, Blitz, Bardgett & Deutsch, LC, Jefferson City, Missouri
Respondent appeared by Associate County Counselor, Edward W. Corrigan.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
Complainant appealed, on the ground of overvaluation and discrimination, the decision of the St. Louis County Board of Equalization, which sustained the valuation of the subject property.The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2009.The Hearing Officer, having considered all of the competent evidence upon the whole record and the briefs filed by the parties, enters the following Decision and Order.
FINDINGS OF FACT
1.Jurisdiction.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.Discrimination Claim Abandoned.No evidence was filed addressing the claim of discrimination, accordingly, that ground for appeal is deemed to have been abandoned.The case is decided only on the issue of overvaluation.
3.Evidentiary Hearing.The Evidentiary Hearing was held on July 10, 2012, at the St. Louis County Government Center, 41 South Central Avenue, Clayton, Missouri.Transcript certified under date of 9/11/12.
5.Identification of the Subject Property.The subject property is identified by Locator Number 08O120122.It is located at 20 Corporate Woods Drive, Bridgeton, Missouri.It is otherwise identified and known as the Trane Warehouse.
6.Description of the Subject Property.Detailed descriptions of the property were provided in Exhibit B and Exhibit 1. The site consists of 18 acres.The site is improved by a 278,300 or 278,750 square foot warehouse building, with approximately 12 – 12.5% office space.The subject property on the valuation date was leased one-hundred percent to a single tenant under a triple net lease.The existing lease had commenced on 1/1/08, with an expiration date of 12/31/17.The lease rate as of 1/1/09 was $4.03 per square foot per year.There were two five year extensions on mutually agreeable market rental rates.The rental rate was scheduled to increase every two years to a final rate of $4.51.
8.Complainant’s Evidence.Complainant offered into evidence the following exhibits which were received into the record:
Appraisal Report, dated 1/1/09 – Mr. McDonald
Written Direct Testimony – Mr. McDonald
Cushman & Wakefield MarketBeat St. Louis Industrial Report – 4th Quarter 2008
9.No Construction and Improvement.There was no evidence of new construction and improvement from January 1, 2009, to January 1, 2010, therefore the assessed value for 2009 remains the assessed value for 2010.
10.Respondent’s Evidence.Respondent offered into evidence the following exhibits which were received into the record:
Special Warranty Deed, dated 7/27/08
Certificate of Value, datd 6/26/08
Written Direct Testimony – Mr. Lincoln
11.Conclusion of Value.The appraisal presented by Complainant constituted substantial and persuasive evidence to rebut the presumption of correct assessment by the Board and to establish the true value in money at $9,650,000, a commercial assessed value of $3,088,000.Respondent’s conclusion of value was not persuasive to rebut the presumption of correct assessment by the Board and establish value.See, Presumption in Appeal, Methods of Valuation, Complainant Proves Value of $9,650,000, & Respondent’s Evidence Not Persuasive, infra.
CONCLUSIONS OF LAW AND DECISION
The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious.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.
Basis of Assessment
The Constitution mandates that real property and tangible personal property be assessed at its value or such percentage of its value as may be fixed by law for each class and for each subclass.The constitutional mandate is to find the true value in money for the property under appeal.By statute real and tangible personal property is assessed at set percentages of true value in money.
Presumption In Appeal
There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.This presumption is a rebuttable rather than a conclusive presumption.It places the burden of going forward with some substantial evidence on the taxpayer – Complainant.When some substantial evidence is produced by the Complainant, “however slight”, the presumption disappears and the Hearing Officer, as trier of facts, receives the issue free of the presumption.The presumption is not evidence of value.The burden, of course, is discharged by simply establishing the fair market value of the property as of the valuation date, since once fair market value is established it, a fortiori, proves that the Board’s value was in error.
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.Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.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.
Upon presentation of the Complainants’ evidence the presumption in this appeal was rebutted.The submission of the Complainant’s appraisal report established prima facie that the Board’s value was in error.The appraisal established what the fair market value that should have been placed on the property.See, Complainant Proves Value of $9,650,000, infra.As will be addressed below, the conclusion of value made by Respondent’s appraiser was not
substantial and persuasive to rebut the presumption and establish the value advocated.See, Respondent’s Evidence Not Persuasive, infra.
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.True value in money is defined in terms of value in exchange and not value in use.It is the fair market value of the subject property on the valuation date.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.
Investigation by Hearing Officer
In order to investigate appeals filed with the Commission, the Hearing Officer may inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, subclassification or assessment of the property.The Hearing Officer’s decision regarding the assessment or valuation of the property may be based solely upon his inquiry and any evidence presented by the parties, or based solely upon evidence presented by the parties.The Hearing Office at the evidentiary hearing made inquiries of both Complainant’s and Respondent’s appraisers.
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.
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.
McDonald Conclusion of Value
The Hearing Officer reviewed and analyzed both the McDonald and Lincoln appraisals and testimony.All pertinent facts and estimates were carefully considered and weighed.Viewing the entirety of the valuation evidence under all relevant circumstances presented, the Hearing Officer finds that the conclusion of value proposed by Mr. McDonald constituted substantial and persuasive evidence on the issue of the fair market value of Complainant’s property.The methodology employed to ascertain the opinion of value established a sound basis and foundation for the value proposed.See, Complainant Proves Value of $9,650,000, infra.
Lincoln Conclusion of Value
The Lincoln appraisal was not persuasive to the Hearing Officer.The basis upon which the conclusion of value was reached was not founded upon what constitutes in the Hearing Officer view substantial and persuasive evidence.Accordingly, no probative weight could be given to the opinion of value tendered by Mr. Lincoln.See, Respondent’s Evidence Not Persuasive, infra.
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.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. Both appraisers considered each of the three recognized appraisal methods, however, both developed only the comparable sales and income approaches and concluded value based on those two methodologies.In this particular case, the income capitalization approach is the most reliable to provide an indicated value for an investor owned property.
Complainant Proves Value of $9,650,000
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, 2009.There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a Commission appeal still bears the burden of proof.The taxpayer is the moving party seeking affirmative relief.Therefore, the Complainant bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.”A valuation which does not reflect the fair market value (true value in money) of the property under appeal is an unlawful, unfair and improper assessment.Complainant met its burden of proof in this instance.
Applying his knowledge and experience in the valuation of industrial warehouse distribution properties in the St. Louis area, Mr. McDonald determined the value of the subject property on 1/1/09 to be $9,650,000. In coming to this value he relied on the income and sales comparison approaches to value.He considered the cost approach but did not apply it because a property such as the subject would normally be bought and sold as an income producing property.Buyer and seller would give the cost approach minimum weight in establishing value.
McDonald Income Approach
As between the income approach and the sales comparison approach, greater weight was given to the income approach because it is the most reliable method for valuing an income producing property and would be the method of valuation on which buyer and seller would place greatest reliance.Mr. McDonald determined that the income approach indicated a value of $9,650,000 for the property, while the sales comparison approach indicated a value of $9,750,000. The sales comparison approach supported the final reconciled value but it was given less weight in that reconciliation because it did not directly consider the income producing characteristics of the property.
In his income approach, Mr. McDonald used five rent comparables of warehouse properties within the subject’s market area with lease start dates ranging from June 2008 to January 2009.As he explained with respect to the two 1/1/09 leases, they were executed in 2008 and were considered appropriate to use in determining market rents.Consideration was given to the differences in conditions between the comparables and the subject.His conclusion of an indicated market rent of $3.50 was between the average of the three most similar rent comparables and the average of all rent comparables.
Additional income was added to the potential gross income with the result that the effective potential gross income rate was $5.06 per square foot.This additional income reflects tax reimbursements the owner would have received under the triple net lease and was added as addition income because the capitalization rate was loaded to reflect the real estate taxes.The appraiser utilized a 10% for vacancy and credit loss based on the vacancy in the market for the subject’s subclass of property and the potential vacancy downtime for a large single-tenant property.These were standard deductions for this type of property.Because properties such as the subject are normally leased on a triple net basis, expenses deducted from income were limited to a deduction for structural maintenance and a 3% management fee.
The capitalization rate for the subject was determined to be 8.5% before loading for real estate taxes, and 12.45% after the inclusion of the effective tax rate.Mr. McDonald considered capitalization rates reported for industrial sale comparables, national investor surveys and the band of investment method.He took the different rates from these sources into consideration, in addition to the subject’s size, second tier market status, and marketability.He concluded that 8.5% was the appropriate capitalization rate.
This figure was within the range of capitalization rates for the comparable sales (7.9% – 9.0%).The range of averages for the first tier properties reported in the national surveys was 6.73% – 7.99%.The 8.5% applied to the subject, given its second tier status, is consistent with these rates for first tier properties.The band of investment method produced an indicated capitalization rate of 8.55% or 8.6% rounded, again consistent with the 8.5% overall rate applied to the subject.Mr. McDonald did base his real estate taxes loading factor on the 2009 taxes and tax rate, not the 2008 figures.Had the 2008 figures been used, the loading factor would have been 4.01%, his loaded capitalization rate would have been 12.51%, and the indicated value by the income approach would have been reduced to $9,606,530, or $9,600,000 rounded.
Mr. McDonald’s income approach indicated a value of $9,650,000.The rent comparables he used, the adjustments he made, and the capitalization rate he derived followed appropriate methodology, reflected relevant market date and considerations and were reasonable as to amount.His opinion of value by the income approach is well-supported by his methodology and the market based data on which he relied.
McDonald Sales Comparison Approach
Complainant’s appraiser also performed a sales comparison approach to value for the subject.He used five comparable sales of similar industrial warehouse properties with sales dated between February 2007 and October of 2008.These properties were similar to the subject and properly used as comparable sales.Adjustments were made to the unit values of the comparables based on differences between the properties.These adjustments were explained in the report.
Mr. McDonald’s adjustments market conditions correctly took into account the economic downturn not only in the real estate market but as it wouldhave affected the market for warehouses given the decreasing demand for warehouse space and the excess leasable warehouse space that would have been anticipate by someone valuing a property on 1/1/09.Respondent’s appraiser agreed with this conclusion.After adjustments to the comparable sale, the adjusted values ranged from $28.40 to $38.16, with an average of $34.52 per square foot.Mr. McDonald gave greatest weight to Comparables 2 and 3 because of their similar age, larger size and minimal overall adjustment.However, he also factored in the other three comparable sales.He concluded an indicated unit value for the subject of $35.00 per square foot or $9,750,000 (rounded).
The data upon which Complainant’s expert based his opinion were of a type reasonably relied upon by appraisal experts in forming a conclusion of value for the subject property.The data was deemed to be otherwise reliable by the appraiser.Accordingly, Complainant’s appraisal evidence was substantial and persuasive to establish the value of the subject property as of 1/1/09 to be $9,650,000.
Evidence of Increase in Value
In any case in St. Louis County where the assessor presents evidence which indicates a valuation higher than the value finally determined by the assessor or the value determined by the board of equalization, whichever is higher, for that assessment period, such evidence will only be received for the purpose of sustaining the assessor’s or board’s valuation, and not for increasing the valuation of the property under appeal.The evidence presented by the Respondent to establish the fair market value as of January 1, 2009, to be $12,370,000, under the Commission rule just cited and Supreme Court decisioncannot be considered to increase the assessed value above $3,522,140 in this particular appeal.
Respondent’s Evidence Not Persuasive
As has been determined above, Complainant’s evidence on its own is sufficient to meet the required standard of proof and establish true value in money as of 1/1/09 for the subject property.However, given that there is additional evidence presented by Respondent on the issue of value, it is necessary for the Hearing Officer to review and analyze that evidence.
A Respondent initially carries no burden of proof in an appeal before the Commission.The Assessor may always simply rest upon the Board presumption and present no evidence on the issue of fair market value.However, once the Respondent tenders an appraisal advocating a value, either in support of the Board value or a different value, the same rules of evidence come to bear on Respondent’s case in chief, as on that of a taxpayer.The Respondent, when advocating a value different from that determined by the original valuation or a valuation made by the Board of Equalization, must meet the same burden of proof to present substantial and persuasive evidence of the value advocated as required of the Complainant under the principles established by case law.Although, Respondent’s evidence was not received to increase the assessed value of the subject above $3,522,140, the appraisal presented puts forth the value of $12,370,000, or an increase in value over that set by the Assessor and sustained by the Board of $1,363,300.Therefore, in assessing the Respondent’s evidence, the issue becomes whether the Lincoln appraisal constitutes substantial and persuasive evidence to rebut the presumption of correct assessment by the Board and establish the value of $12,370,000?
Respondent’s valuation evidence was lacking in several aspects.The evidence is not deemed to be a good indicator of the fair market value of the property as of 1/1/09.Therefore, the appraisal neither rebutted the presumption of correct assessment by the Board, nor did it establish the value of $12,370,000.Furthermore, the evidence was insufficient to overcome the substantial and persuasive evidence of the McDonald valuation.
Lincoln Income Approach
In performing an income approach to value, Respondent’s appraiser relied on five rent comparables to develop a market rent for the subject.One of the leases used had expired prior to the date of valuation, and another was from 1999.No leases from 2007 or 2008 were used by Mr. Lincoln.The latest rent comparable he used bore a start date of December, 2006.The concluded per square foot rent which was used, based on the five rent comparables was $6.00. Complainant’s evidence established there were rent comparables more recent to the date of valuation available.This evidence effectively rebutted the viability and veracity of using the five rent comparables that were presented in the Lincoln appraisal to arrive at the $6.00 rental amount.
Mr. Lincoln’s source for his rent comparables was from a system that Respondent maintains.He obtained a list of rentals in spreadsheet form from the property analyst section of the Assessor’s office.That information is taken from mail surveys the County send outs and from surveys that field personnel collect.However, less than a quarter of the surveys are actually returned.
The appraiser had not seen the leases or the surveys and did not verify the information from anyone with personal knowledge of the transactions.He simply relied on the information contained in the spreadsheet and did no further investigation of the information.He could not testify as to whether the information was verified by the analyst.He admitted it was possible
Mr. Lincoln’s comparables represented modified gross rents.He did not adjust them to triple net amounts even though properties of the subject’s type were typically rented on a triple net basis.The explanation in cross-examination, relative to what expenses were being reimburse or not under the modified gross rents, was not persuasive.The appraiser’s reliance on the Cushman and Wakefield Report (Exhibit D) was erroneous. The report had been misread and the wrong figure was applied from the report.The correct figure from the report was $4.52 per square foot.This was the reported asking, not actual rents.Mr. Lincoln admitted asking rents are higher than actual rents.No explanation of how the rent comparables were adjusted to arrive at the final $6.00 figure was provided.
The capitalization rate concluded by Mr. Lincoln was 7.8% based on the weighted band of investment method.The appraisal report stated the figures used in computing the capitalization rate by this method were taken from a survey of local lenders.The appraiser did not personally conduct any such survey.To his personal knowledge, no such survey was ever done.His source was conversations with other appraisers in the Assessor’s Office.
The final factor which weighs heaviest against given the Respondent’s income approach any probative benefit is that it would appear that if Mr. Lincoln had the actual income and expense data on the subject, his income approach would have been developed relying at least in part, if not in whole, on those facts.If the vacancy, expense and capitalization rate factors remain the same (there is no logic as to why they would not), and the potential gross income is simply calculated using the median ($4.32) or mean ($4.29) actual rents under the subject’s lease
as it existed on 1/1/09, the indicated values would have fallen well below the value concluded by both Mr. Lincoln and the Assessor/Board.
Specifically, the potential gross income would have been $1,195,840 or $1,204,200.Applying the vacancy and expense factors concluded by the appraiser would result in a net operating income of $914,820 or $921,210.When each of these NOI’s is capitalized by the real estate tax loaded capitalization rate used by Mr. Lincoln of .118, the indicated values via the income approach are $7,752,710 and $7,806,860.Therefore, relying on the actual income under the existing lease as of 1/1/09 and adopting the vacancy and expense percentages used by Mr. Lincoln, the revised income approach would rebut the presumption of correct assessment by the Board and establish the true value in money to be no more than $7,806,860.
For all of the reasons just addressed, the conclusion of value presented under the Respondent’s income approach is neither substantial, nor persuasive to establish the value of $11,024,000 proposed by Exhibit 1, or to sustain the Assessor/Board value of $11,006,700.
Lincoln Sales Comparison Approach
Mr. Lincoln’s sales comparison approach was premised upon the sales of four properties which he deemed to be comparable to the subject.As has previously been noted above, the appraiser admitted to the downturn in the market for warehouse properties.However, in adjusting his sales for market conditions, he applied by rote a time trending study that had been prepared in the Assessor’s office and simply provided to him for his use.
Mr. Lincoln did not prepare the study.Neither did he actually review the study and its underlying data.He was simply provided a one or two page summary of the study.He had no knowledge of the kind of sales used in the study.He was unaware of whether the study consisted of only commercial properties, or included residential properties.He could not testify as to whether any paired sales used included warehouses or other industrial properties.He was unaware of exactly how many paired sales of any classification of property were used in the study.Mr. Lincoln conceded that a two-page summary without a single citation to the back-up data, or any attachment of back-up data is not the type of information that an appraiser would ordinarily rely upon.
The appraiser went back into 2006 for his comparables 3 and 4, when there were more recent sales as shown by Complainant’s sales comparison approach.The unadjusted per square foot sale prices for his four comparables were $44.37, $40.99, $47.93, and $34.26 respectively.The income valuation data has established that the market would not support a value in excess of $35.00 per square foot.Therefore, at the outset, the simple conclusion would be that these properties had sold under economic conditions significantly superior to those existing in January 2009.Notwithstanding the appraiser’s agreement that in January 2009 there was an economic downturn not only in the general real estate market but specifically for warehouses, the adjusted values for the four comparables all increased, with the two oldest sales (Comps 3 & 4) being increased by the greatest amount.Specifically, the adjusted values on the four comparables increased to $44.47, $47.55, $55.96 and $48.82.
Given that the indicated values under the median/mean rental for the subject’s existing ten year lease on 1/1/09, based on Mr. Lincoln’s vacancy and expense allowances and his capitalization rate, would only be in the range of $7,752,710 and $7,806,860, the adjusted sales values overstate the subject’s value by at least $4,589,150 to $7,791,990.Mr. Lincoln’s concluded per square foot value of $49.20, being the average of the four adjusted values,
produced a value of $13,715,000, or $5,908,140 more than the revised income approach, set out above, or $4,065,000 in excess of the value the McDonald income approach concluded.
Based on the foregoing, the Hearing Officer can place no probative weight on the Respondent’s sales comparison methodology.In addition, the review and analysis of the Respondent’s income approach resulting in the revised income approach previously presented, rebuts the conclusion of value tendered under the sales comparison approach and renders it of no probative merit.
Summary and Conclusion
Complainant met the burden of proof by presenting substantial and persuasive evidence rebutting the presumption of correct assessment by the Board and establishing the true value in money as of 1/1/09 to be $9,650,000.Respondent’s evidence was unpersuasive and therefore can be given no weight in the face of Complainant’s evidence.
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Louis County for the subject tax day is SET ASIDE.
The assessed value for the subject property for tax year 2010 is set at $3,088,000.
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, MO65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.
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 April 11, 2013.
STATE TAX COMMISSION OFMISSOURI
W. B. Tichenor
Senior Hearing Officer
 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).
 See, 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); Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991).
 The true value in money (fair market value) concluded for 1/1/09 remains the true value in money for 1/1/10 in the absence of any new construction and improvements to the property under appeal.Section 137.115.1, RSMo
Exhibit 1 – Transmittal Letter; Summary ofImportant Data and Conclusions, p. 6; Description of the Site, pp. 17 – 23;Description of the Improvements, pp. 24 – 27
 Complainant’s appraiser concluded a gross building area of 278,300, with 12% office space.Respondent’s appraiser concluded a gross building area of 278,750, with 12.5% office space.The variance is so slight as to lack any significance.
 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)
Substantial and persuasive evidence is not an extremely high standard of evidentiary proof.It is the lowest of the three standards for evidence (substantial & persuasive, clear and convincing, and beyond a reasonable doubt).It requires a small amount of evidence to cross the threshold to rebut the presumption of correct assessment by the Board.The definitions, relevant to substantial evidence, do not support a position that substantial and persuasive evidence is an extremely or very high standard.
“Substantial evidence: Evidence that a reasonable mind would accept as adequate to support a conclusion; evidence beyond a scintilla.”Black’s Law Dictionary, Seventh Edition, p. 580.
The word scintilla is defined as “1. a spark,2. a particle; the least trace.” Webster’s New World Dictionary, Second College Edition.Black’s definition at 1347 is “A spark or trace <the standard is that there must be more than a scintilla of evidence>.”There must be more than a spark or trace for evidence to have attained the standard of substantial.Once there is something more than a spark or trace the evidence has reached the level of substantial.Substantial evidence and the term preponderance of the evidence are essentially the same.“Preponderance of the evidence.The greater weight of the evidence; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”Black’s at 1201.Substantial evidence is that a reasonable mind would accept as adequate to support the conclusion.Preponderance is sufficient to incline a fair and impartial mind to one side of the issue rather than the other, i.e. support the proposed conclusion.
 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).
 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.
 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).
 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).
 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).
 Exhibit B, Sales Comparison Approach, pp. 36 – 44; Income Capitalization Approach, pp. 43 – 51; Exhibit C, Q & A 30, 32; Exhibit 1 – Income Approach, pp. 33 – 36; Sales Comparison Approach, pp. 37 – 57; Exhibit 4, Q & A 30 & 31
 See, 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).Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991).
 Section 490.065, RSMo; State Board of Registration for the Healing Arts v. McDonagh, 123 S.W.3d 146 (Mo. SC. 2004); Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. E.D. 1992).
“Section 138.060 prohibits an assessor from advocating for or presenting evidence advocating for a higher ‘valuation’ than the ‘value’ finally determined by the assessor. … . Because the legislature uses the singular terms ‘valuation’ and ‘value’ in the statute, however, it clearly was not referring to both true market value and assessed value.While the assessor establishes both true market value and assessed value, which are necessary components of a taxpayer’s assessment, as noted previously, the assessed value is the figure that is multiplied against the actual tax rate to determine the amount of tax a property owner is required to pay.The assessed value is the ‘value that is finally determined’ by the assessor for the assessment period and is the value that limits the assessor’s advocacy and evidence.Section 138.060.By restricting the assessor from advocating for a higher assessed valuation than that finally determined by the assessor for the relevant assessment period, the legislature prevents an assessor from putting a taxpayer at risk of being penalized with a higher assessment for challenging an assessor’s prior determination of the value of the taxpayer’s property.”State ex rel. Ashby Road Partners, LLC et al v. STC and Muehlheausler, 297 S.W.3d 80, 87-88 (Mo 8/4/09)
$1,204,200 x .235% = $282,987, rounded to $282,990; $1,204,200 – 282,990 = $921,210
$12,396,010 – $7,806,860, =$4,589,150; $15,598,850 – $7,806,860 = $7,791,990