State Tax Commission of Missouri
|v.||)||Appeal Number 13-59501|
|HENRY COUNTY, MISSOURI,||)|
DECISION AND ORDER
Decision of the Henry County Board of Equalization sustaining the assessment made by the Assessor is AFFIRMED . The parties did not present substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization.
Complainant represented by Cathy Steele, Attorney at Law.
Respondent represented by Richard Shields, Attorney at Law.
Case heard and decided by Senior Hearing Officer Luann Johnson.
Complainant appeals, on the grounds of overvaluation, the decision of the Henry County Board of Equalization, which sustained the Assessor’s valuation of the subject property. The Commission takes this appeal to determine the true value in money for the subject property on January 1, 2013. The value as of January 1 of the odd numbered year remains the value as of January 1 of the following even numbered year unless there is new construction and improvement to the property. Section 137.115.1 RSMo
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
The following exhibits were introduced into the record without objection.
Ex. A Complainant’s Appraisal Report
Ex. B. Complainant’s Written Direct Testimony
Ex. C Corrections to Complainant’s Appraisal Report
Ex. 1 Respondent’s Appraisal Report
Ex. 2 Respondent’s Written Direct Testimony
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Henry County Board of Equalization.
- Evidentiary Hearing. The Evidentiary Hearing in this appeal was held on Wednesday, October 15, 2014, at the Henry County Courthouse, Clinton, Missouri.
- Identification of Subject Property. The subject property is identified by map parcel number 18-1.0-02-003-017-007.000. It is further identified as 102 North Second Street, Clinton, Henry County, Missouri.
- Description of Subject Property. The subject property is a 3.26 acre tract improved with two bank branch buildings; the main branch containing 6,350 square feet built in 2007 and the former bank branch containing 4,508 square feet, for a combined square footage of 10,858 square feet. The main branch building is considered to be in good condition. The former bank branch, built in 1972, is in fair condition. (Ex. A, p. 1)
The former bank building has been on the market since 2006. It has a current asking price of $395,000, or $87.62 per square foot. There have been no interested potential purchasers. (Ex. A, p. 5).
The subject property is located in Clinton, Missouri. Clinton is approximately 55 miles southeast of the Kansas City metropolitan area at the intersection of Highway 7 and Highway 13. Population was reported as 9,008 in 2010. Population was estimated to be 9,120 in 2013 and is anticipated to be 9,177 in 2018. (Ex. A, pg. 7)
The subject neighborhood has a mix of commercial, industrial and residential uses. The predominate age of improvements in the area is 20 to 40 years. Predominant age, quality and condition of improvements is average. It is not likely that speculative development of any type will occur in the foreseeable future. (Ex. A, pg. 9)
Clinton residents have five options for full service retail banking. Banking competition is represented by two larger banks, a regional bank (UMB) and a national bank (U.S. Bank), along with several smaller regional banks including Hawthorn Bank, First Community Bank and First National Bank of Clinton. First National Bank of Clinton and Hawthorn Bank both have two locations within Clinton. (Ex. A, pg. 13)
The subject neighborhood is in the second stage of its life cycle, a period of stability. The area has good highway access, located at the intersection of Highway 7 and Highway 13. The neighborhood has a stable population base. Overall, the outlook for the local area is average with no foreseeable changes in the future. (Ex. A, p. 9).
- Highest and Best Use. The highest and best use of the property is for continued bank branch use. (Ex. A, p. 1, 28). The most probable buyer of the subject property is an owner/user and the most probable user would be a bank. (Ex. A, p. 31).
- Assessment. The Assessor appraised the property at $1,818,100, an assessed commercial value of $581,800. The Board of Equalization sustained the assessment. (Complaint for Review.) Complainant asserts a value of $1,190,000. Respondent asserts a value of $2,030,000. The Board’s value of $1,818,100 is affirmed.
- Complainant’s Evidence. Complainant presented an appraisal report which was marked as Exhibit A. Additionally, Complainant produced Written Direct Testimony of T.J. Hawks, a certified general real estate appraiser.
Clinton is a peripheral market to the Kansas City metropolitan area. Peripheral locations such as Clinton would be more vulnerable to lower rental rates and high vacancy, given the rural nature of the markets. Most of the failed bank branches located in growing areas of Kansas City are likely to be acquired by another bank and continue to operate as banking facilities. Banks located in aging areas of the metropolitan area or low demand areas are being shuttered and the real estate sold to another user. (Ex. A, pg. 15).
Complainant’s evidence suggests that retail banking locations are typically owner occupied. However, there are a handful of free standing retail bank branch leases. These indicate rental rates from $12 to $25 per square foot and are typically written on a triple net lease basis . Operating expenses on these triple net leases are near typical office operating expenses of $9 to $10 per square foot.
A former bank branch can be converted to general office use or medical office use. Areas of obsolescence include the vault and the drive through service bays. Second generation users typically purchase branch buildings at a discount. (Ex. A, p. 15)
Complainant’s appraiser presented 16 leases of former bank buildings, including multi-tenant and multi-story buildings. These leases show a rental rate of $10.50 per square foot to $25.00 per square foot with an average rental rate of $17.97 per square foot and a median lease rate of $20.00 per square foot. Older buildings and/or inferior locations show a triple net rate of $10.50 per square foot to $12.13 per square foot. All of these leases of older buildings were considered significantly inferior to the subject property. Newer free-standing bank branch buildings show a rental rate of $20.00 to $24.00 per square foot. The locations of these buildings in suburban Kansas City were considered superior to the subject property. From these comparable rentals, Complainant’s appraiser estimated that the subject property would rent for $12.13 per square foot to $17.88 per square foot. From this, Complainant’s appraiser concluded that $14.00 per square foot on a triple net lease would be a market rental rate for the primary bank branch and $9.00 per square foot triple net for the older building. (Ex. A, p. 42-43). He testified that he studied demographics to determine the appropriate adjustments to his rental rates.
Complainant’s appraiser testified that in the Clinton rental history the high point for general retail space was $14.50 per square foot for strip mall space. He testified that, in the Kansas City area, general retail space leased for more than bank space; leasing for $25 to $35 per square foot while bank facilities were leasing for $20 to $24 per square foot. He used this difference in rental rates to project where he believed the subject property would rent in Clinton.
In a triple net lease, all expenses including real estate taxes, insurance and common area maintenance charges are paid directly by the tenant with no recovery from the landlord. However, the landlord would still incur a management fee and a replacement reserve is allocated to cover expenses during vacancy. Complainant estimated a management fee of 3.0%. A 10% vacancy rate was considered reasonable in a stabilized market. Based upon these assumptions, Complainant’s appraiser projected a net operating income of $110,315 or $10.16 per square foot. (Ex., A, p. 43-44).
Inasmuch as there were no sales of similar properties within the three years prior to the tax day, Complainant’s appraiser presented no overall capitalization rate. After review of investor surveys of capitalization rates of office properties, a range of capitalization rates between 7.60% and 9.60% was concluded. The lower rate included a reserve for replacement while the higher rate did not. Complainant’s appraiser also calculated a capitalization rate using a band of investment methodology. He assumed a 25 year loan with 70% financing at 6% interest. He estimated a 14% equity dividend rate and an 18% equity yield rate. This resulted in a capitalization rate of 9.60%. In addition to consideration of occupancy, overall condition, location and other attributes, Complainant’s appraiser indicates that the subject property’s configuration of two separate buildings and limited or no demand for commercial real estate in the downtown area of Clinton, significantly increased the risk for the subject. Given this property specific information, he concluded that the appropriate cap rate for the subject would be 10.00%. Based upon a net operating income of $110,315 and a capitalization rate of 10.00%, he determined value of the subject property to be $1,100,000 or $101.31 per square foot. (Ex. A, pg. 45-47).
Complainant’s appraiser presented four sales of comparable bank buildings located in Pleasant Hill, Saint Joseph and Blue Springs, Missouri and Leawood, Kansas. The sale comparables were currently in use as bank facilities. (Ex. A, p. 35). Adjustments to the sales were made for areas of significant variation. (Ex. A, pg. 36-38). These adjustments indicate a range of value for the subject between $102.97 per square foot to $125.93 per square foot. Complainant’s appraiser utilized an average square foot price of $110.00 per square foot for a market value of the subject property of $1,190,000. (Ex. A, pg. 39). The square foot value was an average of value of the newer structure and the older structure.
Complainant’s appraiser also presented sales listings for eight branch banks currently on the market in Kansas and Missouri. Those listings had asking prices of $54.49 to $276.12 per square foot with the average asking price of $145.57 per square foot. Typically, asking rates establish the high end of the range of value. (Ex. A, p. 40).
Complainant’s appraiser testified that it was difficult to find comparables in Clinton or towns similar to Clinton.
Complainant’s appraiser did not prepare a cost approach to value. He testified that the income approach accounted for economic obsolescence and, therefore, the cost approach would mirror the income approach.
Summary of Conclusions
Complainant’s appraiser found the sales comparison approach to be the most reliable indicator of value for the subject property and proposed a value of $1,190,000. (Ex. A, p. 48).
- No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2013, to January 1, 2014, therefore the assessed value for 2013 remains the assessed value for 2014. Section 137.115.1, RSMo.
- Respondent’s Evidence. Respondent produced an appraisal report identified as Exhibit 1 and Written Direct Testimony of Shane Gretzinger, a certified general real estate appraiser.
The subject improvements consist of a one-story bank-central office built in 2007 which, Respondents appraiser deemed to be in excellent condition. The property has an actual age of 6 years and an effective age of 6 years. Based upon an economic life of 35 years, the indicated physical deterioration is 17.14%. The property has a remaining economic life of 29 years. For construction or replacement purposes, the subject is considered to be a Good Quality Class C, Bank – Central Office building in Marshall & Swift building cost estimators. (Ex. A, Subject –4-9).
The subject improvements also include a one-story bank building built in 1972 and renovated in 1996, currently listed for sale for $395,000. The property according to Respondents appraisal is in average condition. (Ex. A, Subject –4-9).
Respondent’s appraiser contends that a portion of the land associated with this parcel constitutes excess land which should be valued separately, and in addition to, the site value associated with the two buildings.
Respondent’s appraiser looked at market sales of vacant land in the area and determined a range of value for the subject land of $0.59 to $7.67 per square foot with an average of $4.30 per square foot. After making adjustments for areas of significant variation, he determined that the subject land would sell for $5.00 per square foot or $320,000. (Ex. 1, Cost Approach, 4-6).
For the newer building, Respondent’s appraiser classified the improvements as “good” quality which resulted in a Marshall & Swift base cost of $185.75 per square foot or $1,273,570. Cost comparables indicate a range of value of $112.40 to $310.70 per square foot. After adjustments, Respondent’s appraiser determined that his proposed cost estimate of $185.76 was correct. (Ex. 1, Cost Approach, p. 7-8). Additional site improvements had a depreciated value of $121,177. Respondent’s appraiser determined that an addition for entrepreneurial profit was not appropriate since bank facilities were generally owner occupied and rarely built as speculative construction. (Ex. 1, Cost Approach, p. 9).
Respondent’s appraiser found no evidence of external or functional obsolescence in the newer building, but found physical depreciation at the rate of 2.86% annually or 17.14% for the six year old building. He concluded the depreciated value of the building improvements to be $1,165,325. Adding his land value of $320,000 and his depreciated site improvement value of $121,177, he concluded a value for the main structure under the cost approach of $1,606,502, say $1,600,000. (Ex. 1, Cost Approach, p. 12-13).
Respondent’s appraiser looked at rental rates on six new bank facilities located in Lee’s Summit and Independence, Missouri and Overland Park, Leawood, Lenexa and Ottawa, Kansas. All properties leased the year they were built. The range of lease prices was $27.21 per square foot to $44.18 per square foot. (Ex. 1, Income Approach, p.1). Almost all leased on a triple net basis. Respondent’s appraiser estimated that the subject property would lease at the low end of the range at $25.00 per square foot, or $172,075. In addition, Respondent’s appraiser calculated that the tenants would reimburse landlord’s operating expenses of about $30,265. (Ex. 1, Income Approach, p. 1-2).
Rental vacancy at the subject location is near 0%. Overall vacancy in both the retail and office markets are estimated at under 5%. Respondent’s appraiser used a stabilized vacancy for the subject property of 2.5%.
Respondent’s appraiser found that an adjustment for management fees, insurance, repairs and maintenance, common area maintenance, utilities, and cleaning and janitorial expenses was appropriate. He concluded this adjustment should be 19.35% of effective gross income which equates to $5.55 per square foot or $159,124, net operating income. (Ex. 1, Income Approach, p. 2-5).
Respondent’s appraiser found two older bank sales which had overall capitalization rates of 7.00% and 7.98%. Looking at investor surveys, Respondent’s appraiser determined that cap rates should be adjusted 0.10% and 0.75% which resulted in an indicated capitalization rate for the subject property of 7.10% to 7.14%. Other office sales indicate overall rates of 7.27% to 8.10%. Based upon this information, Respondent’s appraiser determined that an overall capitalization rate of 8.00% would be appropriate for the subject property. (Ex. 1, Income Approach, p. 6-8). Respondent’s appraiser also prepared a band of investment capitalization rate based upon a 75% loan at a rate of 8.6% with a 25% equity at a yield rate of 12%. Based upon this analysis, he determined the overall rate under the mortgage equity analysis should be 7.93%. (Ex. 1, Income Approach, p. 9). Respondent’s appraiser found the market extraction method, indicating a cap rate of 8%, to be the most reliable. He then added an effective tax rate of 1.917 for an indicated overall capitalization rate of 9.917%. (Ex. 1, Income Approach, p. 10-11). This cap rate, applied to the net operating income, indicated an adjusted value of $1,600,000. (Ex. 1, Income Approach, p. 11).
Sales Approach – Newer Building
Respondent’s appraiser found seven sales of older bank properties, selling for $130.07 per square foot to $278.44 per square foot. The sales were located in Springfield, Harrisonville and Ozark, Missouri and Olathe and Lawrence, Kansas. Four of the sales were located in larger markets and were, therefore, superior to the subject. Gross adjustments on the comparables were 13%, 60%, 99%, 59%, 30%, 41% and 35%. The sales indicate a range of value for the subject of $207.66 per square foot to $273.27 per square foot. Respondent’s appraiser determined the appropriate value under the sales comparison approach of $235.00 per square or $1,617,505, say $1,620,000. (Ex. 1, Sales Comparison, p. 1-6).
Sales Approach – Older Building
Respondent used six sales of banks or office buildings to determine his value for the older building. Three of those sales were in Clinton, two were in Warrensburg, one was in Holden and one was in Pleasant Hill. After adjustment for areas of significant variation, these sales indicated a value for the older building of $59.09 per square foot to $102.86 per square foot. Total adjustments to each parcel was 29%, 0%, 0%, 0%, 10%, 25%. Respondent’s appraiser used a square foot value of $60.00 for an indicated market value of the older building of $270,000.
Sales Approach – Excess Land
Respondent’s appraiser presented seven land sales in the Clinton area. Those sales indicated a price of $0.59 to $7.67 per square foot. After making adjustments for areas of significant variation, Respondent’s appraiser determined that the appropriate value for the excess land was $2.00 per square foot. He determined that the amount of excess land was 83,010 square feet, for an indicated market value of $166,020, say $165,000.
Summary of Conclusions
Respondent’s appraiser contended that the value of the new building was $1,600,000; the value of the old building was $270,000; and the value of the excess land was $165,000 for a total value for the parcel of $2,035,000. He deducted $5,000 to allow for legal and platting charges to split the parcel, for an indicated value of $2,030,000
10. Presumption of Correct Assessment Not Rebutted. When a party proposes a value different from the value determined by the Board of Equalization, that party bears the burden of proving that the Board’s value was erroneous. Neither party met their burden of proof to establish correct value. (See, Presumption In Appeal and Discussion.)
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. Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.
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. Article X, Sections 4(a) and 4(b), Mo. Const. of 1945. The constitutional mandate is to find the true value in money for the property under appeal. By statute real and tangible personal property are assessed at set percentages of true value in money. Section 137.115.5, RSMo – residential property at 19% of true value in money; commercial property at 32% of true value in money and agricultural property at 12% 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. Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STC, 308 S.W.2d 748, 759 (Mo. 1958).
The 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. Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See, Cupples-Hesse, supra. 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).
Burden of Proof
In order to prevail, a party 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, 2013 and January 1, 2014. Hermel, supra. 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.” 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). 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.
“Where the basis for a test as to the reliability of the testimony is not supported by a statement of facts on which it is based, or the basis of fact does not appear to be sufficient, the testimony should be rejected.” Carmel Energy at 783.
A taxpayer does not meet his burden if evidence on any essential element of his case leaves the Commission “in the nebulous twilight of speculation, conjecture and surmise.” See, Rossman v. G.G.C. Corp. of Missouri, 596 S.W.2d 469, 471 (Mo. App. 1980). Section 137.115, RSMo, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase, but who is not compelled to do so. St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993); Missouri Baptist Children’s Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993).
When Respondent challenges the Board of Equalization value, he or she has the same burden of proof as the taxpayer.
Standard of Valuation
True value in money is defined in terms of value in exchange and not value in use. 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).
It is the fair market value of the subject property on the valuation date. Hermel, supra.
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:
- Buyer and seller are typically motivated.
- Both parties are well informed and well advised, and both acting in what they consider their own best interests.
- A reasonable time is allowed for exposure in the open market.
- Payment is made in cash or its equivalent.
- Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.
- The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction. Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; See also, Real Estate Valuation in Litigation, J . D. Eaton, M.A.I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80; Uniform Standards of Professional Appraisal Practice, Glossary.
Official and Judicial Notice
Agencies shall take official notice of all matters of which the courts take judicial notice. Section 536.070(6), RSMo. Courts will take judicial notice of their own records in the same cases. State ex rel. Horton v. Bourke, 129 S.W.2d 866, 869 (1939); Barth v. Kansas City Elevated Railway Company, 44 S.W. 788, 781 (1898).
In addition, courts may take judicial notice of records in earlier cases when justice requires or when it is necessary for a full understanding of the instant appeal. Burton v. Moulder, 245 S.W.2d 844, 846 (Mo. 1952); Knorp v. Thompson, 175 S.W.2d 889, 894 (1943); Bushman v. Barlow, 15 S.W.2d 329, 332 (Mo. banc 1929); State ex rel St. Louis Public Service Company v. Public Service Commission, 291 S.W.2d 95, 97 (Mo. banc 1956).
Courts may take judicial notice of their own records in prior proceedings involving the same parties and basically the same facts. In re Murphy, 732 S.W.2d 895, 902 (Mo. banc 1987); State v. Gilmore, 681 S.W.2d 934, 940 (Mo. banc 1984); State v. Keeble, 399 S.W.2d 118, 122 (Mo. 1966).
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. Section 138.430.2, RSMo
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. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).
The Hearing Officer as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances. The Hearing Officer is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert’s testimony and accept it in part or reject it in part. St. Louis County v. Boatmen’s Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).
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. 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). 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. 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).
The Supreme Court of Missouri has also held 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. St. Joe Minerals Corp., supra
Opinion Testimony by Experts
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).
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.
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).
Neither party overcame the presumption in favor of the Board of Equalization. Both appraisers are to be commended for their attempts to value the subject property.
However, the flaw in both appraisal reports is that they have no Clinton comparables for the sales approach or the income approach on the newer building. The appropriateness of adjustments cannot be tested. We are left wondering how the fact that the subject property is located in a town with a small and declining population, which already has seven bank facilities, should factor into value. Most of the comparables are located in the greater Kansas City metropolitan area. Even the St. Joseph comparable is located in a town of 75,000 while the subject is in a town of 9,000. Mr. Hawk testified that his latest retail rental information for Clinton showed a rental rate of $14.50 per square foot for strip mall space. We don’t have any further information concerning this rental rate and do not know what the impact the fact that Clinton now has almost no retail vacancy currently available may have on rates.
In the future, we would like to see the use of paired sales or paired rentals to quantify the difference between the location of the subject property and the location of the comparable sales and rentals to validate adjustments made.
It seems more likely than not that this parcel would be split in the event of sale. Both parties agree that the older building is already being marketed separate and apart from the newer building. Splitting the parcel, rather than averaging the square foot value of the improvements, would produce a better indication of what each building was worth. This technique would also produce a better indication of whether or not there was excess land in the parcel.
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Henry County for tax years 2013 and 2014 is AFFIRMED.
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. Section 138.432, RSMo
The Collector of Henry 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 this 26th day of November, 2014.
STATE TAX COMMISSION OF MISSOURI
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed by electronic mail this 26th day of November, 2014, to:
Cathy Steele, Attorney for Complainant, 225 S. Meramec #511, St Louis, MO 63105
Richard Shields, Attorney for Respondent, 100 W. Franklin St, Clinton, MO 64735
Sandra Brownsberger, Henry County Interim Assessor 100 W. Franklin, Room 3
Clinton, MO 64735
Rick Watson, Henry County Clerk, 100 W. Franklin Clinton, MO 64735
Maggie Stoddard, Henry County Treasurer and Ex Officio Collector of Revenue
100 West Franklin St. Clinton, MO 64735.