State Tax Commission of Missouri
PARK 370, LLC, )
v. ) Appeal No.11-10841
JAKE ZIMMERMAN,ASSESSOR, )
ST. LOUIS COUNTY, MISSOURI, )
DECISION AND ORDER
Decision of the St. Louis County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE.Substantial and persuasive evidence in the record rebutted the presumption of correct assessment by the Board of Equalization and established the fair market value of the subject property under the economic conditions existing as of January 1, 2011.
True value in money for the subject property for tax years 2011 and 2012 is set at $4,365,400, commercial assessed value of $1,396,930.
Complainant appeared by Counsel Richard Dvorak, Tomes & Dvorak, Overland Park, Kansas.
Respondent appeared by Associate County Counselor, Paula Lemerman.
Case heard and decided by Senior Hearing Officer W. B. Tichenor.
Complainant appeals, on the ground of overvaluation, 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, 2011.The Hearing Officer, having considered all of the competent evidence upon the whole record, 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. Evidentiary Hearing. The Evidentiary Hearing was held on June 4, 2013, at the St. Louis County Government Center, Clayton, Missouri.Transcript was filed with the Commission on July 9, 2013.Bench Order, dated 7/22/13 gave Respondent until and including 9/6/13 to file Respondent’s Brief.No brief was filed.
4. Description of Subject Property. The subject property consists of 11.28 acres improved with a 213,558 square feet one story, single tenant office warehouse.Detail descriptions were presented in Exhibit A and Exhibit 1.
5. Lease History. Construction on the subject warehouse was completed in 2006.From 2006 until July, 2010 the property was vacant.As of the valuation date, the subject was under a five year triple net lease that commenced on 6/14/10, and will expire on 6/30/15, with 2 – 5 year options to renew.The respective per square foot rentals for the five years of the initial lease were: 0.96¢, $1.16, $1.43, $2.15, $2.50.These rental rates equate to annual rental income for the five years of: $205,696, $246,836, $304,430, $459,150 & $533,895.The subject’s lease was an arm’s-length transaction.
6. Lease Relevant. There was no market data to establish that at the time the existing leased was entered into, given the subject vacancy history that the terms of the lease constituted a sub-market lease or that the transaction was not a prudent business transaction at that time.The actual stream of income under the lease would be given prime consideration by any prospective purchaser on the valuation date.The potential income for the four and a half years after the valuation date was restricted to the terms of the lease.The lease is a relevant factor to consider in arriving at a determination of value under the income approach.
Written Direct Testimony – Troy W. Smith
Warehouse Blog – 3/30/09 – 2009 St. Louis
Industrial Market Trends – Grubb & Ellis – Q2 – 2009
Aerial Photo – Lincoln Lease Comp. 2
Mr. Smith testified at the evidentiary hearing.The value proposed by the Smith appraisal for the Complainant’s property as of 1/1/11 was $4,050,000, based on the income approach to value.
Summary Appraisal – Albert A. Lincoln, Jr.
Written Direct Testimony – Albert A. Lincoln, Jr.
Mr. Lincoln testified at the evidentiary hearing.The value proposed by the Lincoln appraisal for the Complainant’s property as of 1/1/11 was $5,328,000, based on the income approach.
10. No Evidence of New Construction & Improvement. There was no evidence of new construction and improvement from January 1, 2011, to January 1, 2012, therefore the assessed value for 2011 remains the assessed value for 2012.
11. Cost Approach Not Appropriate. Neither appraiser developed the cost approach as an indicator of value for the subject property.This approach to value is not deemed appropriate or reliable based upon the evidence in the record.See, Methods of Valuation – Cost Approach Not Applicable, infra.
12. Sales Comparison Approach Not Appropriate. Neither appraiser relied upon their concluded value under their sales comparison approaches.This approach to value is not deemed appropriate in this particular appeal.See, Methods of Valuation – Sales Comparison Approaches, infra.
13. Income Approach Appropriate. Both appraisers arrived at their final conclusion of value based upon the income approach.This approach is deemed appropriate for concluding the true value in money of Complainant’s property.See, Methods of Valuation – Income Approach Appropriate, infra.
17. True Value in Money. The true value in money for the property under appeal as of January 1, 2011 is $4,365,400, an assessed commercial value of $1,396,930.See, Methods of Valuation – Income Approach Appropriate and Hearing Officer’s Conclusion of Value, 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 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 Complainant’s evidence the presumption in this appeal disappeared.The submission of the appraisal report, performed by a state certified real estate appraiser, along with the information contained therein, established prima facie that the Board’s value was in error.The record provided substantial and persuasive evidence upon which the Hearing Officer could determine the fair market value of the subject property.
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 Officer during the evidentiary hearing made inquiry of 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.
The Hearing Officer has reviewed and analyzed the evidence on the record.Although each appraiser gave his opinion of value for a fee simple interest, the subject property could not have been conveyed as of 1/1/11 under a fee simple scenario.The property was encumbered under a lease. See, FINDINGS OF FACT 5 & 6, supra.Accordingly, the Hearing Officer is persuaded that weight and credit must be accorded to the income methodology relying upon the rental income stream established under the subject’s lease applying a 10.5% vacancy and capitalizing the net operating income by a capitalization rate of 8.5%.
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 the cost approach, but neither developed it.Both appraisers also considered and presented sales comparison methodologies, neither concluded value relying on this approach.Both appraisers developed and concluded fair market value under the income approach.Accordingly, for purposes of this Decision, neither the Cost nor Sales Comparison Approaches are deemed to be applicable for a determination of fair market value in this instance.
Income Approach Appropriate
In the final analysis, the income approach is the methodology which will most clearly reflect the actions of potential investors in the subject property.Both appraisers were in agreement in their final conclusions of value that reliance on the income approach was appropriate.The Hearing Officer shares that opinion.The subject property would most liked have been bought and sold as in investment property as of 1/1/11.The income methodology is most reflective of what a prospective investor would have paid for the property on the valuation date.Accordingly, a value concluded under the income approach presents the most persuasive evidence in this instance.
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.In the present appeal, evidence presented by the experts in the appraisal of real property assists the Hearing Officer to determine the issue of fair market value as of the valuation date.
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.The data upon which both appraisers relied were of the types reasonably relied upon by appraisal experts in the valuation of real property.
Hearing Officer’s Conclusion of Value
Potential Gross Income
The major point of difference between the Smith and Lincoln income approaches rest in the calculation of the Potential Gross Income (PGI).The Smith analysis rests upon a concluded per square foot value of $2.00.The Lincoln conclusion was that $3.65 per square foot was the appropriate amount to calculate PGI.Both appraisers essentially valued the property as if the lease which existed on 1/1/11, and had been entered into just six months prior to that date, did not actually exist.Mr. Smith concluded a PGI of $427,116 for the subject.The simple fact is that the property’s income stream could not reach that level of Gross Income until mid-2013.Mr. Lincoln based his valuation upon a PGI of $692,255.The simple fact is that under the actual income stream, the property will never reach that level of income during the initial five year lease.No evidence was presented to establish that in fact it could achieve such a PGI at any point in the remaining two lease periods.
Mr. Lincoln concluded, based upon his five rental comparables that the subject lease is sub market.Without laying out in the decision the entire analysis of the five Lincoln comparables, suffice it to say that there is no data or information from which the Hearing Officer could conclude that the subject’s least entered into just six months prior to the valuation date was anything other than an open market, arm’s length transaction.The subject had sat vacant for four years.Vacant warehouses generate no income stream.No evidence is present to establish the marketing history from the completion of the subject in 2006 to when it was finally leased in 2010.The record does establish that at the time the subject was finally leased “there was a surplus of other buildings in a similar situation with owners looking for tenants.Renewal leases were being signed, but very few new deals were being done.”There is no evidence from which it can be concluded that at the time the lease was entered into, for this particular property, that it was anything other than a prudent business transaction.It can be concluded that during the period from 2006 to 2010 that offers to lease the subject at rates from $2.00 to $3.50 or more per square foot had simply not been made, else one would have expected a different lease than that in place on 1/1/11.
If the subject property had been an owner occupied facility, available for rent as of 1/1/11, then market data as to the per unit rental rates, as close in physical features as possible to the subject would certainly need to be utilized to establish PGI, Vacancy & Collection Loss, and Expenses to arrive at the indicated Net Operating Income that an investor could expect upon purchasing the property and leasing it.However, in this instance, the property was leased.The rental rate established by the subject’s lease was part of the market and it did in fact establish the market at which the subject could rent.There is no possible way under the subject lease that an investor could receive a rental for the remaining four and a half years for any more than the amount set by the lease.The purchaser of the property as of 1/1/11 would know exactly what the gross rental income would be. This is the plain and simple economic reality of the case.That economic reality cannot be ignored.
Projecting a potential rent of $2.00 or $3.65 per square foot hypothesizes an unrealistic market for the subject.It assumes that the subject property was suddenly available to rent as of 1/1/11.That was a factual impossibility.Such a situation could simply not have existed.In point of fact, both appraisers were in agreement that the property could not and would not be purchased by a knowledgeable, well-informed and prudent investor at either of the two projected levels of potential rental income.See, FINDINGS OF FACT 5, 6, 15, & 16, supra.This, of course, further rebuts the presumption that the Assessor/Board’s value of $5,368,600 was correct.
After reviewing and analyzing all of the rental data in the record, the Hearing Officer is persuaded, that a knowledgeable and prudent investor on 1/1/11 would have given little, if any, weight to what the per square foot rates on the properties presented in the two appraisals to establish the Potential Gross Income for the subject property.The well informed purchaser would only need look to the subject’s lease to ascertain the established stream of income over the next five years.Average actual Annual Rental Income from 1/1/11 to 6/30/15 would be $374,034.The figure of $374,034 is appropriate to be utilized as the PGI for ascertaining fair market value under the income approach.
Determination of NOI
Applying the agreed to vacancy and collection loss of 10.5% results in a deduction of $39,273, producing an Effective Gross Income (EGI) of $332,761.Respondent’s appraiser applied deductions for expenses for management fee and reserves for replacement.Complainant’s appraiser applied expense deductions for management fee, common maintenance, insurance, and non-reimbursed expenses.Mr. Lincoln’s total expenses amounted to a factor of 8% of EGI.Mr. Smith’s total expenses (expressed as a percentage, as opposed to cents per square foot or dollar amounts) calculated to a 15.5%.
Under the subject’s triple net lease, the Tenant pays the insurance expense.The management fee set by the lease is only 1%.This is the appropriate amount for the subject property as of 1/1/11.The costs for repair and replacement of the HVAC, parking area, and roof fall on the Tenant.Maintenance of the sidewalks and areas adjacent to the parking area and sidewalks and all landscaped is the responsibility of the Tenant.Snow removal, planting and landscaping, interior painting and carpet cleaning are all obligations and therefore costs for the Tenant, not the owner.
The Hearing Officer finds that the management fee of 1% of base rent is warranted.It is concluded that there would be no expense for common maintenance area attributable to the owner under the lease.A deduction for insurance on the property is not appropriate based on the lease.No basis is found for any non-reimbursable expenses.Given the language of the lease and the fact that Complainant’s appraiser included no expense item for reserves for replacement, it is determined that an expense deduction for such an item should not be made.Therefore, the only expense deduction would be the management fee of $3,740.Thus, the NOI of $370,294 is the amount to be capitalized to arrive at the indicated fair market value.
Concluded Fair Market Value
The actual economic conditions and circumstances under which a property exists on the date of valuation are not to be ignored, but are to be given consideration and provide a critical factor in the determination of value.The NOI – $370,294 capitalized at the stipulated rate of 8.5% produces an indicated value under the economic conditions existing for the subject property as of 1/1/11 of $4,365,400.
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 years 2011 and 2012 is set at $1,396,930.
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.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 November 5, 2013.
STATE TAX COMMISSION OFMISSOURI
W. B. Tichenor
Senior Hearing Officer
 Exhibit A – Executive Summary; Exhibit 1 – Summary of Important Data and Conclusions
Exhibit A – Executive Summary, Subject Photographs, Site Description, pp. 11 – 13; Improvements Description, pp. 14 – 17; Exhibit 1 – Summary of Important Data and Conclusions; Identification of the Property, p. 10; Description of the Site, pp. 16 – 21; Description of the Improvements, pp. 22 – 25
 Exhibit A – Income Approach – Existing Contract Leases, p. 30, Market Rent Conclusion, p. 32 & Lease Structure, p. 32; Exhibit 1 – Income Approach, pp. 31 & 32; Addendum E – Luxco, Inc. Lease
 Tr. 8:16 – 23; Tr. 73:4 – 8
 “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, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992) – The conclusion of Respondent’s appraiser that the subject lease was sub market is not established by facts on the record, in that: (1) the conclusion was based upon lease information that did not on its face establish that the comparable leases were for properties sufficiently similar to the subject and under the same economic conditions as the subject when the lease was entered in mid-2010; (2) the comparable lease information did not establish that the leases were first time leases (as the subject lease), or whether they were renewal leases; (3) the comparable lease information did not establish that for warehouses similar to the subject as of mid-2010 a five year lease with 2 – 5 year renewals as the subject lease would not have in fact been within the standard for new leases; and (4) the comparable lease information failed to establish that the subject lease when entered into in mid-2010 was not a prudent business transaction under all the circumstances and economic factors applicable to the subject property.Therefore, the conclusion of Mr. Lincoln on this point is not sufficient, and his testimony to the effect that the subject lease was a sub-market lease must be rejected.
 BOE Decision, dated 9/23/11 – Attached to Complaint for Review of Assessment; Exhibit A – Executive Summary; Real Property Taxes and Assessment, p. 18; Exhibit 1 – Taxes and Assessment Data, p. 26
 Counsel for Respondent objected to Exhibits C and D, objections were overruled and the exhibits were received into evidence.See, Tr. 42:16 – 44:17
 MAI, Missouri Certified General Appraiser
 Tr. 6:4 – 53:10
 Exhibit A – Final Estimate of Value, p. 38
 There were no objections to the exhibits.Respondent also had marked as Exhibit 3 – an Aerial photograph of the subject property, however, it was no moved for admission into the record.
 Tr. 54:9 – 76:11
 Mr. Lincoln’s original value was $5,440,000, however, certain corrections were made the Lincoln appraisal at the beginning of the evidentiary hearing that correct the opinion of value to $5,328,000. Tr. 3:5 – 5:15.Under examination by the Hearing Officer, Mr. Lincoln concluded that the correct conclusion of value under the income approach and his final conclusion of value should be $5,322,800.Tr.70:12 – 71:12.
 Section 137.115.1, RSMo.
 Prior to going on the record, in conference with the Hearing Officer, the parties agreed that the Income Approach was the appropriate methodology for a valuation of the subject property.
 Tr. 76:25 – 77:12.Complainant’s vacancy rate was 10%, Respondent’s vacancy rate was 11%; Complainant’s Cap Rate was 8.5% and Respondent’s Cap Rate was 8.5% – Exhibit A & Exhibit 1
 Tr. 52:25 – 53:10
 Tr. 71:12 – 72:10: Lines 9 – 10 – “Actually, under these conditions I doubt if an investor would buy the property.”
 Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.
 Article X, Sections 4(a) and 4(b), Mo. Const. of 1945
 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.
 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)
 United Missouri Bank of Kansas City v. March, 650 S.W.2d 678, 680-81 (Mo. App. 1983), citing to State ex rel. Christian v. Lawry, 405 S.W.2d 729, 730 (Mo. App. 1966) and cases therein cited.
 Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959)
 See, Cupples-Hesse, supra.
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.
 Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).
 Exhibits A & B; Testimony of Complainant’s Expert Witness at hearing
 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).
 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).
 Hermel, supra.
 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.
 Exhibit A – Glossary – Market Value; Exhibit 1 – Definition of Market Value, p. 8
 Section 138.430.2, RSMo.
 Tr. 52:25 – 53:10 – Examination of Mr. Smith; Tr. 70:12 – 76:5
 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).
 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).
 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 A – Valuation Process, p. 21; Exhibit 1 – Valuation, p. 30
 Exhibit A – Valuation Process, pp. 21, 23 – 29; Exhibit 1 – Valuation, p. 30; Sales Comparison Approach, pp. 37 – 60
 Exhibit A – Valuation Process, p. 22,Income Approach, pp. 30 – 38; Exhibit 1 – Valuation, p. 30, Income Approach, pp. 31 – 36; Reconciliation and Final Conclusion of Value, p. 62
 Exhibit A – Reconciliation – Final Estimate of Value, p. 38; Exhibit B – Q & A 6 & 21; Exhibit 1 – Reconciliation and Final Conclusion of Value, p. 63; Exhibit 2 – Q & A 22 & 24
 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).
 Exhibit A – Income Approach – Market Rent Conclusion, p. 32
 See, Missouri Baptist Children’s Home, v. STC, 867 S.W.2d 510, 513 (Mo. banc, 1993)
 To affirm or sustain such a value under an 8.5% cap rate would have required an NOI of $456,331, which the record clearly establishes that the Annual Rental cannot reach until 2013 – 2014.Applying the Assessor’s vacancy and expense deductions to the highest annual Rental Income the property can possibly reach (2014-2015) results in an NOI of only $437,154, or an indicated valueas of 1/1/15 of only $5,143,000, rounded.
 For the two remaining five year terms, a purchaser would have specific information as to how the rental rate was to be established and the base line for it.Exhibit 1 – Addendum E – Renewal – Options to Extend 1 and 2, pp.93 & 94.
 The average monthly income calculates to $31,169.57 over the remaining months of the first 5 year term from 1/1/11, taken times 12 equals an average annual income of $374,034.
 Exhibit 1, p. 36
 Exhibit A, p. 34
 Exhibit 1 – Addendum E
 See, Missouri Baptist, supra – FN 48
 Section 138.432, RSMo.