GlaxoSmithKline v. McMillan (SLCY License Collector)

August 8th, 2012

State Tax Commission of Missouri






v.                                                                            )Appeal Number 10-20128

)2009 and 2010 Tax Years









Decision of the St. Louis City Merchants’ and Manufacturers’ Tax Equalization Board.

sustaining the assessment made by the License Collector, SET ASIDE, Hearing Officer finds true value in money for the subject property for tax year 2009 to be $6,782,500 and for tax year January 1, 2010, to be $5,698,500.

Complainant appeared by Counsel, Thomas Campbell, St. Louis,Missouri.

Respondent appeared by Counsel, Donald Dylewski, Associate City Counselor.

Case heard by Hearing Officer Maureen Monaghan.


The issue in this appeal is: What was the true value in money as of January 1, 2009, and January 1, 2010, of Complainant’s machinery and equipment?


Complainant appeals the subject machinery and equipment value set by the License Collector and sustained by the St. Louis City Board of Merchants’ and Manufacturers’ Tax Equalization (Board).The value set by the License Collector was $30,308,528 for 2009 and $20,303,510 for 2010.The Board sustained the License Collector’s value.

The evidentiary hearing was held on July 19, 2012, at the St. Louis City Hall, St. Louis, Missouri.

Complainant’s Evidence

Complainant offered into evidence the following exhibits:

Exhibit A

Appraisal Report of Chantal for 2009

Exhibit B

Appraisal Report of Chantal for 2010

Exhibit C

Written Direct Testimony of Chantal

Exhibit D

Written Direct Testimony of Moeller

Exhibit E

2009 Property Declaration


All exhibits were received into evidence.


1.Jurisdiction over this appeal is proper.

2.The machinery and equipment, which is the subject of this appeal, consists of a variety of machinery, tools, and appliances utilized by Complainant in its facility at 320 South Broadway, St. Louis, Missouri.An itemized listing of the various items of personal property can be found at pages 15 through 38, Exhibit A and pages 15 through 40 of Exhibit B. The property is identified by the account number 9635500-232875710.

3.Complainant’s appraiser valued the items of property in each appeal based on the concept of fair market value in exchange.This is the appropriate concept of value to be applied in the valuation of the subject property.[1]

4.Complainant’s appraiser performed the subject appraisals using the sales comparison approach and the cost approach.Complainant’s appraiser testified that as a cross check for his 2009 valuation, he used the methodology set forth in Section 137.122, RSMo.

5.Complainant’s appraiser performed an inspection of all the personal property present at the subject location.He inquired whether there had been any equipment present on the tax date that had since been removed.Where there had been property removed since the tax date, he made inquiries to determine the type and condition of such equipment and included it in the appraisal.He reviewed to determine if property had been declared or remained on the inventory list that was not at the subject location on January 1, 2009.He determined whether the inventory list included non-taxable items such as real estate, labor, freight and installation.A detail inventory of the property to be appraised was developed.

6.The subject property consists of machinery, tools and equipment.

7.Complainant’s appraisals primarily relied upon the selling prices of matching or comparable machinery and equipment from the used machinery and equipment market.Where such data was unavailable, Complainant’s appraiser relied on the indicated value under the cost approach.

8.Complainant’s appraiser adjusted construction-in-progress property by 50%.The City of St. Louis does not adjust construction-in-progress property.



The Commission has jurisdiction to hear this appeal and correct any assessment shown to be unlawful, unfair, arbitrary or capricious.[2]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.[3]

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.[4]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.[5]

Opinion Testimony by Experts

If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto.The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data need not be admissible in evidence.[6]


There is a presumption of validity, good faith and correctness of assessment by the St. Louis City Merchants’ and Manufacturers’ Tax Equalization Board.[7]The presumption in favor of the Board is not evidence.A presumption simply accepts something as true without any substantial proof to the contrary

Rebutting of Presumption of Correct Assessment

The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the License Collector’s or Board’s valuation is erroneous and what the fair market value should have been placed on the property.[8]

Section 137.122, RSMo

Section 137.122 RSMo[9] establishes the methodology to be used in the assessment of depreciable tangible personal property.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.

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.


Weaknesses In Personal Property Appraisals

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 establishing an accurate inventory of property as of the tax date, the appraiser did a cursory review of the property by walking the subject property.He then developed a sales comparison approach on all property in which he could find what he deemed to be a comparable sale.The information provided by the appraiser in his report is lacking as to the exact model or serial number of the property.It is unknown if the comparables were a direct match or if the comparables were properties the appraiser deemed to be similar.The appraiser did not provide information regarding the sales 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 testified that he did not verify the sales as he relied on databases and could not provide details about the comparable sales.

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.[10] Without supportive documentation, or without investigation into the sales, an appraisal is not substantial and persuasive.

The appraiser also made an adjustment to the property listed as construction in progress.The appraiser states that “percent good for CIP is not statutorily defined, and varies across the State of Missouri.”The appraiser states that he used “50% in [his] report, as it is midpoint between 100% and 0%….In [his] opinion, the 100% good proposed by the City of St. Louis is not logical, and is in fact punitive.”The appraiser, however, does not establish what would be logical or persuasive but simply uses 50%.The City’s use of 100% good or lack of adjustment for new property is based upon the fact that the property is new.The appraiser does not establish, through market data, that a 50% adjustment results in true value of the property.


The Complainant presented evidence sufficient to rebut the presumption in favor of the assessment affirmed by the Board.The Complainant’s appraiser reviewed the personal property list of the Complainant, removed items 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 did develop a value under the methodology presumed to be correct under Section 137.122, RSMo to arrive at a true value determination of $5,794,000 as of January 1, 2009.The appraiser’s conclusion included a reduced valuation for construction in progress of where in the appraiser reduced the “taxable cost” by 50%.As the appraiser did not establish through market data that a 50% adjustment is appropriate, the reduction shall be removed from the valuation ($656,200 and $332,300) for a final true value of $6,782,500.

The appraiser did not conduct a cross check using MACRs for tax year 2010.However, the difference between his methodology in 2009 and the MACRs valuation was 2.8%.Therefore, his valuation for January 1, 2010, of $4,710,000 is substantial and persuasive as to the true value of the property for that tax year with the exception of his adjustment for construction in progress.After elimination of that adjustment, the true value of the property on January 1, 2010, is found to be $5,698,500.


The assessed valuation for the subject property as determined by the Merchants’ and Manufacturers’ Tax Equalization Board forSt. LouisCityfor the subject tax day is SET ASIDE.

The true value for the subject property for tax year 2009 is set at $6,782,500.The true value for the subject property for tax year 2010 is set at $5,698,500

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 License Collector of St. Louis City, 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:August 8, 2012.



Maureen Monaghan

Hearing Officer


Certificate of Service


I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 8th day of August, 2012, to:Thomas Campbell, 100 South Fourth Street, Suite 1000, St. Louis, MO 63102; Donald G. Dylewski, Associate City Counselor, 314 City Hall, St. Louis, MO 63101, Attorney for Respondent; Michael McMillan, License Collector, 102 City Hall, St. Louis, MO 63103.


Barbara Heller

Legal Coordinator

Contact Information for State Tax Commission:

Missouri State Tax Commission

301 W. High Street, Room 840

P.O. Box 146

Jefferson City, MO 65102-0146


573-751-1341 Fax


[1] Daly v. P.D. George Co., 77 S.W.3d 645, 649 (Mo. App. E.D. 2002).


[2] Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, RSMo.


[3] Section 138.431.4, RSMo.

[4] 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).


[5] 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).


[6] Section 490.065, RSMo; 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)


[7] 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).


[8] Snider, Hermel & Cupples Hesse, supra.

[9] 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.

[10] Valuing Machinery and Equipment, American Society of Appraisers