The parties of record before the Property Tax Appeal Board are Merisant Company, the appellant; and the Kankakee County Board of Review.

As a preliminary matter, Manteno Community Unit School District No. 5 intervened in the appeal through its attorney.  After being served notice of the scheduled hearing the intervenor failed to appear before the Property Tax Appeal Board at the hearing.  Section 1910.69(b) of the Rules of Practice and Procedure before the Property Tax Appeal Board provides that:

When a hearing is ordered by the Property Tax Appeal Board, all parties shall appear for the hearing on the appeal on the date and at the time set by the Property Tax Appeal Board.  Failure to appear on the date and at the time set by the Property Tax Appeal Board shall be sufficient cause to default that party.  86 Ill.Admin.Code 1910.69(b).

Due to the failure to appear at the scheduled hearing the Property Tax Appeal Board hereby finds the intervenor, Manteno Community Unit School District No. 5, to be in default and dismisses the intervenor as a party to the appeal.

The subject property is improved with a one-story industrial building that contains 110,834 square feet of building area located in Manteno, Kankakee County.  The building was constructed in stages from 1989 to 1997.  The building is composed of 83,644 square feet of manufacturing area, 10,000 square feet of warehouse space, and 17,190 square feet of office space.  The exterior walls are composed of concrete block and insulated steel sandwich panels.  The subject has clear ceiling heights that ranged from 16 to 20 feet; the building is sprinkled; there are twelve dock doors and one drive-in door; blacktop parking for 180 cars and 57,600 square feet of concrete paved trailer parking.  The improvements are located on a 17.30-acre parcel resulting in a land to building ratio of 6.80:1.

The appellant appeared before the Property Tax Appeal Board contending the market value of the subject property was not accurately reflected in its assessed valuation. In support of this contention the appellant submitted an appraisal estimating the subject property had a market value of $2,275,000 as of January 1, 2001.  The appraiser was called as the appellant's witness.

The appellant's appraiser initially testified that based on his observation of industrial property sales, there has not been anything that would call for a change in valuation from January 1, 2001 to January 1, 2002.

The appraiser testified the subject property is used in the manufacturing of an artificial sweetener.  He testified the building was constructed from 1989 to 1997 and has a weighted age of nine years.  He determined the subject building also had an effective age of nine years.  The appellant's appraiser inspected the subject property on December 3, 2001.  The appraiser toured the facility, took photographs of the property and also made measurements of the building.  The witness testified the subject property is located in an industrial park approximately two and a half miles from interstate 57.

The witness testified the subject has 15.5% of building area being devoted to office space, which is toward the upper end of possibly overbuilt by today's standards.  He stated that industrial facilities typically have 8% to 10% of building area devoted to office use.  He also testified the subject property has interior walls necessary for its use but may be a nuisance for other industrial users.  The building also has 16 to 20 foot clear ceiling heights with an average of 17 feet.  Approximately 62,000 square feet of building area that was built in 1989 has a ceiling height of 16 feet.  The highest and best use of the facility was determined to be an industrial facility.

The first approach to value developed by the appraiser was the sales comparison approach.  Under the sales comparison approach the appraiser used 8 comparable sales located throughout Illinois.  The comparables were industrial properties that contained from 75,000 to 268,000 square feet of building area.  The comparables were constructed from 1964 to 1998.  The comparables had office areas that ranged from 1.7% to 23.8% of total building area; ceiling heights that ranged from as low as 14 to 28 feet to as high as 20 to 35 feet; and land to building ratios that ranged from 3.15:1 to 7.19:1.  The sales occurred from June 1998 to September 2001 for prices ranging from $1,300,000 to $3,225,000 or from $9.70 to $21.33 per square foot of building area.  The appellant's appraiser testified that he visited each of these comparables and had actually been inside of his comparables numbered 1, 3, 6 and 7.  In verifying the sales the appraiser used the real estate transfer declaration (green sheet) and further verified each sale with a buyer, seller or broker.  The appraiser estimated the subject had a market value of $20.55 per square foot of building area resulting in a total indicated value of $2,275,000.

The next approach to value developed by the appellant's witness was the income approach.  The initial step under this method was to estimate the market rent of the comparables.  The appraiser listed six rental comparables located throughout Illinois.  The comparables contained lease areas that ranged from 40,000 to 174,652 square feet.  The buildings were constructed from 1974 to 1999 and had leases that commenced as early as 1992.  The appraiser indicated these comparables had rentals ranging from $1.84 to $3.50 per square foot of building area.  Using these properties the appraiser estimated the subject would have a net rental of $3.00 per square foot resulting in a potential gross income of $332,502.  The witness indicated that he personally visited the comparables and had been inside comparables 2, 3 and 4.

The appraiser then deducted 10% for vacancy and credit loss resulting in an effective gross income of $299,252.  From this amount the appraiser deducted $38,465 for various expenses to arrive at a net operating income of $260,787.  In estimating the capitalization rate to be applied to the net income the appraiser used the band of investment method to arrive at an estimated rate of 11.4%.  The witness also reviewed Korpacz Real Estate Investor Survey and concluded the subject would have a minimum rate toward the higher end of the 9.0% to 12.0% range due to its age and location.  Finally, the appraiser developed a capitalization rate from the market using nine sales.  Using these sales the appraiser calculated rates ranging from 11.0% to 26.1%.  The witness utilized a capitalization rate of 12% resulting in an estimated value under the income approach of $2,250,000.

The final approach to value developed by the appellant's expert was the cost approach.  His initial step under this approach was to estimate the value of the land using six comparable land sales located in Manteno, Illinois.  These comparables ranged in size from 1.10 to 75 acres and sold from December 1998 to April 2000 for prices ranging from $15,840 to $43,956 per acre.  The appraiser estimate the subject had a land value of $40,000 per acre or $692,000.

In estimating the cost new of the improvements the appraiser used the Marshall Swift Evaluation Service and included a detailed analysis in his report.  The appraiser estimated the subject improvements had a replacement cost new of $5,765,181.  In estimating depreciation the appraiser was of the opinion the subject had an effective age of 9 years and a remaining physical life of 29 years.  Using the age/life concept the appraiser estimated the subject suffered from 23.7% physical depreciation.  The appraiser also estimated the subject suffered from 12.5% functional obsolescence due to interior walls and excessive office space.  The appraiser also estimated the subject suffered from 5% economic obsolescence due to its size.  The appraiser also extracted depreciation from the market using the eight sales from his market approach to value.  Using this method he estimated the subject suffered from 51.75% depreciation.  The appraiser deducted 50% for depreciation or $2,882,591 from the cost new resulting in a depreciated value of the improvements of $2,882,590.  Adding the land value of $692,000 resulted in an estimated value under the cost approach of $3,575,000.

In reconciling the three approaches to value the appraiser placed most weight on the sales comparison approach and estimated the subject had a market value of $2,275,000 as of the assessment date at issue.

Under cross-examination the appraiser indicated the subject property was part of a transfer in 1997.  He indicated on page 17 of his report that the there was a transfer of the total business assets including customer base, patents and goodwill.  He further indicated the market area for the subject property would be statewide.

The appellant's appraiser indicated the subject's property record card disclosed that building permits were issued in 1997 and 1998 in the amounts of $900,000 and $225,000, respectively.  The appraiser was questioned about the comparables concerning their uses, whether they were located in industrial parks, their proximity to Kankakee County and their proximity to an interstate.  In explaining the cost approach the appraiser broke out the cost new of the office and the cost new of the manufacturing area in the cost ladder.

Under redirect examination the witness explained that the subject property was not listed or advertised on the open market in 1997 when it sold.  He testified that the sale was the result of an option to purchase by a lessee.  As a result of these factors the appraiser was of the opinion the sale was not a reliable indicator of fair market value.  He was not aware of any other sales of the subject property subsequent to 1997.

The board of review submitted its "Board of Review Notes on Appeal" wherein its final assessment of the subject totaling $1,799,820 was disclosed.  The subject's assessment reflects a market value of approximately $5,447,400 using the 2002 three year median level of assessments for Will County of 33.04%.

In support of the assessment the board of review submitted a summary appraisal estimating the subject property had a market value of $5,400,000 as of January 1, 2002.  The board of review's appraiser was called as its witness.

The board of review's witness has the Member of the Appraisal Institute (MAI) designation from the Appraisal Institute.  The witness is a certified real estate appraiser in Illinois, Indiana and Michigan.  The appraiser is also involved in the instruction and development of courses offered by the Appraisal Institute.  He has been a real estate appraiser since 1979 and has done a wide variety of appraisal work.

The board of review's witness actually made two appraisals for the subject, one in 2001 and one in 2002.  He estimated the subject had the same market value for each year.  The assessor for Manteno-Rockville Townships hired the appraiser to perform the appraisals.  In each appraisal he utilized the cost and sales comparison approaches to value and did not use the income approach to value.

The board's appraiser considered the subject property to be located in the Chicago Standard Metropolitan Statistical Analysis (SMSA).  The witness inspected the interior and exterior of the subject property on November 14, 2002.  He indicated that he met with the plant manager during his inspection.  He observed the subject to be of good to excellent quality because it had been well maintained.  He was of the opinion the subject property was a higher-end, industrial type warehouse with a very strong utility for its current use.

The board of review's appraiser was of the opinion the office space was typical of an operation that they had at the property although he considered it on the high side.  The highest and best use of the property as improved is its current improvement. 

In estimating the subject's land value in the 2002 appraisal the appraiser used five sales located in Manteno that ranged in size from 118,048 to 1,286,153 square feet.  These sales occurred from July 1996 to December 1999 for prices ranging from $81,000 to $840,000 or from $.65 to $1.13 per square foot of land area.  He estimated the subject parcel had a land value of $.95 per square foot or $715,000.  In the 2001 appraisal the appraiser used two sales located in Monee that occurred in 2000.  He opted not to use the Monee sales in the 2002 appraisal to better reflect what people were paying for land in the Manteno area.

The next step under the cost approach was to estimate the depreciated value of the improvements.  The appraiser used cost estimates from the Marshall and Swift Cost Service to estimate a building improvement value of $5,854,240.  The appraiser estimated the subject suffered from 22% depreciation.  The report contained no analysis or calculations concerning the estimate of depreciation.  The appraiser testified that physical depreciation was estimated to be 15 percent with the balance being related to both functional and economic depreciation.  The depreciated value of the improvements was estimated to be $4,566,307.  The depreciated value of the site improvements of $125,000 was added as well as the land value of $715,000 to arrive at an estimate of value under the cost approach of $5,400,000.

The board of review's appraiser did not prepare an income approach to value for the subject property.  The appraiser was of the opinion the income approach was not applicable due to the extensive office area, interior finish and physical characteristics at the property that made it an owner-user facility.  He also testified that he found insufficient data to develop an income approach.

The final approach to value prepared by the board of review's appraiser was the sales comparison approach.  The appraiser used the same five sales in both the 2001 and the 2002 appraisals of the subject property.  The comparables were located in Joliet, Montgomery and University Park, Illinois.  These comparables consisted of primarily one-story industrial buildings that ranged in size from 64,700 to 250,000 square feet of building area.  One of the comparables was constructed in 1975, one comparable was constructed in 1985 and three comparables were constructed in 2000.  These properties had land to building ratios ranging from 2.39:1 to 12.58:1.  The properties sold from July 1999 to July 2002 for prices ranging from $40.40 to $52.55 per square foot of building area.  Based on these sales the appraiser estimated the subject had a unit value of $48.00 per square foot resulting in a total estimated value of $5,400,000 under the sales comparison approach.

In reconciling the two approaches to value the appraiser placed most relevance on the sales comparison approach and estimated the subject property had a market value of $5,400,000 as of January 1, 2002.

The board of review's witness was also questioned about the data and techniques used by the appellant's appraiser.  The witness was generally critical of the data, methodology and conclusions contained in the appellant's appraisal.  Part of his rational was the alleged purchase of the subject for approximately $4,700,000 and additions or construction costs incurred after the purchase of approximately $1,100,000.  He opined that the appellant's appraisal understated the value of the subject property.

Under cross-examination it was pointed out that the board of review's appraiser did not include in the cost approach a calculation of the weighted age of the subject or an effective age for the subject property.  Furthermore, his report made no reference that he relied on the purported sale of the subject in estimating the market value of the subject property.  The report also had no reference as to how the comparable sales were verified.  The witness testified he visited each of his comparable sales but did not tour the interior of any of the properties.  He also testified that he had only visited the appellant's appraiser's comparable sale number 3 and the appellant's rental comparable number one.  The witness also indicated that other industrial properties located in the subject's industrial park are leased.  It was also brought out that the board of review's appraiser made no specific reference to the Marshall Valuation Service concerning the page, year, and classification of the subject property.

The witness indicated that his comparable sales number 1 and 3 were not leased, however, he was not sure whether sale number 2 was leased.  He further testified that he could not confirm whether sale number 4 was leased and further indicated the tenant purchased sale number 5.

After hearing the testimony and reviewing the record, the Property Tax Appeal Board finds that it has jurisdiction over the parties and the subject matter of the appeal.  The Board further finds the evidence in the record supports a reduction in the subject's assessment.

The appellant contends the market value of the subject property was not accurately reflected in its assessed valuation.  When market value is the basis of the appeal the value of the property must be proved by a preponderance of the evidence.  National City Bank of Michigan/Illinois v. Illinois Property Tax Appeal Board, 331 Ill.App.3d 1038 (3rd Dist. 2002); Winnebago County Board of Review v. Property Tax Appeal Board, 313 Ill.App.3d 179 (2nd Dist. 2000).  The Board finds the appellant met this burden of proof and a reduction in the subject's assessment is warranted.

The Board finds the best evidence of value in the record is the appraisal submitted on behalf of the appellant estimating the subject property had a market value of $2,275,000.  The appellant's appraiser developed a narrative appraisal using the three traditional approaches to value.  The appellant's appraisal contained a more detailed analysis of the cost approach than did the board of review's report.  The appellant's appraisal contained a detailed analysis of the cost new of the subject including identifying the pages from the Marshall Valuation Service used to identify and classify the subject.  The board of review's appraisal had no such analysis.  The appellant's appraisal also had a superior analysis estimating the subject's age and depreciation than did the board of review's appraisal.

The appellant's appraiser also developed an income approach to value whereas the board of review's appraiser did not attempt to develop an income approach to value.  The board of review submitted no data to demonstrate the appellant's appraiser's estimates of market rent, vacancy, expenses and the capitalization rate were incorrect.  The income approach to value contained in the appellant's appraisal at least acts as a check on the validity of the other two approaches contained in the report.

With respect to the sales comparison approach, the Board finds the sales used by the appellant's appraiser support his conclusion of value.  The Board finds that three of the five sales used by the board of review's comparables were constructed in 2000 and are not reflective of the subject's age.  Therefore the Board finds the appellant's appraiser's sales comparison approach is superior to that prepared by the board of review's expert.

The Board recognizes that both parties made reference to the 1997 sale of the subject property for a purported price of approximately $4,700,000.  However, there was an issue as to whether the price was an allocation of total business assets purchased and not reflective of the real estate value.  Neither party submitted the real estate transfer declaration or any documentation substantiating the circumstances surrounding the sale.  The subject's property record card submitted by the board of review also indicated that building permits were issued in September 1997, June 1998, and March 1999, in the amounts of $900,000; $225,000; and $8,500, respectively.  However, there was no description of what was actually expended and constructed in association with these permits.  Additionally, there was no showing that these construction costs equate to a commensurate increase in market value.

In conclusion the Board finds the subject property had a market value of $2,275,000 as of January 1, 2002. Since market value has been established the 2002 three year median level of assessments for Kankakee County of 33.78% shall apply.

The subject property consists of a 19.12 acre industrial site located in Freeport, Illinois.  The site is improved with a part one story and part two story steel frame with concrete block, corrugated metal and glass block manufacturing building that was constructed in 1957 with additions in 1960, 1965, 1969, 1991 and 1994.  The building contains 182,793 square feet of which 41,000 square feet is the two story section.  The ceiling heights in 146,000 square feet are 12 to 13 feet while the 1994 addition contains 12,624 square feet with 20 to 24 foot ceiling heights.  There is a 6,000 square foot office and an additional 3,000 square feet of office located in the plant area.  The total office area is 4.9% of the total building area.  There are two freight elevators and eight overhead doors.  Part of the plant was built six feet higher than the remaining plant and is connected by a ramp. 

The appellant appeared before the Property Tax Appeal Board through its attorney arguing that the fair market value of the subject was not accurately reflected in its assessed value.  In support of that argument, an appraisal was presented.  The appraiser was called as a witness for the appellant.  The board of review stipulated to the appraiser's qualifications to give appraisal testimony in this appeal. 

The appraiser testified he inspected both the interior and exterior of the subject property and drove around the neighborhood and the city.  He indicated the subject was built in stages with the original portion built in 1957.  He stated that a large portion of the building is two-story which is very uncommon today and industrial users do not want and do not build two story buildings anymore.  He stated his research showed there are not very many two story industrial buildings left in Illinois or even the Midwest because they have been torn down.  He knew of no two story industrial buildings built in the last 30 years and he knew of no two story industrial buildings that were sold in the last 30 years for more than $5.00 per square foot.  He stated this shows the market has acknowledged the functional inutility of the two story design.

A majority of the subject building has clear ceiling heights of 12 and 13 feet which is very low by industry standards as they present functional problems.  One of the newer additions has 22 to 24 foot clear ceiling heights which are more in line with 20 to 32 foot clear ceiling heights found in typical industrial buildings. 

The appraiser testified the subject suffers from another functional problem in that the building additions create production flow problems for a manufacturing process because there are so many different component areas and a six foot difference in elevation from one section to the other.  A ramp is used to connect the buildings to enable a flow of production.  Also, the building has a wide span of glass walls that make it difficult to heat and cool the structure.  The appraiser testified the subject is located on the north edge of town and that most of the industry in Freeport is on the south end of town. 

The cost and sales comparison approaches were used in the appellant's appraiser's report.  The weighted age of the subject was calculated by the appellant's appraiser to be 40 years.  The appraiser did not perform an income approach because with a weighted age of 40 years and a two-story design, there was not enough rental information on similar properties to prepare the approach. 

Four Freeport land sales were used to compare to the subject site.  The appraiser stated the sales were dated as there were very few industrial land sales available.  The properties ranged in size from 261,360 to 1,302,008 square feet or from 6.00 to 29.89 acres.  They sold from 1990 to 1997 for prices ranging from $75,000 to $230,000 or from $6,842 to $24,059 per acre.  After making adjustments to the comparables for date of sale, location, size, utilities and zoning, the appraiser estimated a value for the subject land of $15,000 per acre or $290,000.

Replacement costs were estimated to be $7,525,001 using the Marshall Valuation Service.  The appraiser estimated depreciation of 2.3% per year or 92% total depreciation with the market abstracted method using four of his sales in the sales comparison approach.  He indicated for commercial and industrial properties, depreciation tends to be high in the early years and tapers off as the property ages.  He also testified there is no way to calculate depreciation without first calculating replacement or reproduction costs.  Deducting the depreciation total of $6,923,000 and adding the estimated land value of $290,000 resulted in an estimated value under the cost approach of $900,000.

For his sales comparison approach, the appellant's appraiser testified he consulted his own data base of 800 industrial properties and consulted appraisers around the state to find comparables because of the subject's age, ceiling height and two story design.  He also testified that a property the size of the subject with 180,000 square feet would be marketed throughout the Midwest or possibly on a national basis. 

The seven sales comparables utilized by the appellant's appraiser were located in Rockford, Lincoln, Pana, Bloomington and Rochelle.  Several properties were older and/or had low clear ceiling heights, and/or were built in stages like the subject.  The first comparable was a multi-story building that was built in stages with many windows which are factors similar to the subject.  However, the appraiser indicated this property was inferior to the subject.  The properties had building sizes ranging from 94,360 to 445,767 square feet and ranged in age from 25 to 51 years old.  The lot sizes ranged from 4.23 acres to 22 acres, had land to building ratios of 1.23:1 to 4.50:1, had ceiling heights ranging from 9-24 feet to 20.7-25.2 feet and office space of 2.61% to 18%.  The properties sold from July 1997 to October 1999 for prices ranging from $200,000 to $1,930,000 or from $1.03 to $6.52 per square foot.  After adjusting the properties to the subject for date of sale, location, size, land to building ratio, age and clear ceiling heights, the appraiser estimated a value for the subject under the sales comparison approach of $5.00 per square foot or $900,000.

In reconciling the cost and sales comparison approaches, the appraiser gave some weight to the cost approach and most weight to the sales comparison approach.  His final estimated of value for the subject property as of January 1, 2002, was $900,000.

The appellant's appraiser also testified he reviewed the board of review's comments regarding his appraisal.  He indicated there is a difference in square footage from his measurements and the board of review's measurements.  He testified he gathered his figures from actually measuring the property, from the building manager's information and from the assessment records.  He testified the difference in size could have come from a second floor measurement that may have been included twice by the board of review.  This area was approximately 2,000 square feet and the witness testified it would make little difference in a final value estimate on a building over 180,000 square feet.

The witness testified he preferred a weighted age over an effective age because the weighted age is actual age, based on when the section was constructed.  An effective age is an opinion and if you cannot get inside of a sales comparable, it is difficult to arrive at an opinion of effective age to compare to the subject. 

The board of review had also indicated the appellant's appraiser's first comparable had no recorded sale.  The appellant's appraiser testified his information came from the assessor's office and the sale is listed on a property record card and other documents submitted by the board of review.  He also verified this sale with the recorder of deeds and found the warranty deed.  A copy of the deed information from the website of the Winnebago County Recorder of Deeds was presented as an exhibit.  The board of review had also argued this property was loaded with an easement, releases and liens.  The appellant's appraiser testified it would be difficult to find any property in the country and particularly an industrial property without some of these items.  Easements could be for utility lines, releases are liens that have been paid off and released from the property.  Liens are typically mechanic's liens which he found to be typical. 

The board of review argued the appraiser's second comparable was 51 years old, not the reported 46 years.  The appraiser stated the original building is 51 years old but the weighted age of the facility is 46 years.  The sale was a like-kind sale however, the value reported on the declaration sheet of $1,856,700 was based on the sale price of the property two years earlier for $1,840,200.  All of this information is included in his report. 

The appraiser testified he was unable to verify with certainty that his third sales comparable sold in an arm's length transaction that did not include the business in the sale.  He agreed with the board of review on his fourth comparable that it was now used for storage.  He indicated this is very common for older buildings.  The board of review also argued this property had a special warranty deed.  The appellant's appraiser testified special warranty deeds are common and that at least half of the board of review's sales comparables have special warranty deeds.  He agreed there were restrictions placed on the property but that these would not reduce the pool of potential buyers of this property.  The restrictions included a prohibition of using the property for food or drink sales, a grocery store, a school, child care or lodging.  The appraiser testified he could not remember ever seeing an industrial plant converted for these uses.  The appraiser has inspected a small part of the interior of this property and spoke to the broker.

The fifth sales comparable was appraised by the appellant's appraiser and the appraiser was confident in his own measurements of that property.  He also used a weighted age which may be the difference in the age reported by the board of review.  This property had been vacant for one year prior to the sale which the appraiser indicated was not uncommon. 

The sixth sale was argued by the board of review to be in a depressed area.  The appellant's appraiser testified he would find it difficult to find a depressed area in Bloomington/Normal where this property is located.  He stated this is probably the most thriving metropolitan area in Illinois.  It is located in an older area, but is not in an economically depressed area.  The board of review also argued this property had two parcels in the sale however, the appellant's appraiser found no mention of a second parcel in the deed or the transfer declaration.  He also agreed the board of review's own evidence lists only one parcel number for the sale.  The seller of this property also released the buyer from any environmental contamination liability from the former manufacturing process.  He stated this was separate from the sale price in that the buyer would not purchase the subject at all if the liability remained.

The appraiser testified his last sales comparable is located near residential property on one side which is often the case with older properties and that the building has a weighted age of 34 years.  The board of review argued this property was built in 1908 with 33 additions between 1908 and 1983.  The appraiser again stated it would be incorrect to say the building was built in 1908 when that is not the actual age.  He also testified to his adjustments for each of the sales comparables.

During cross-examination the appraiser testified whether a property was occupied or vacant would not be a consideration in valuing a building because he is not valuing the use, only the land and buildings.  He does consider the condition of a building and the state of repair in making comparisons and finding comparable properties.  He also testified he consults with assessing officials each time he estimates land value in a particular area.

The appraiser testified the subject building is 100% air conditioned and none of the comparables had air conditioning throughout the building.  He testified most if not all industrial users would not care that the subject was 100% air conditioned because they will not need it.  He stated they would not pay extra for this unnecessary feature.  He also testified a potential buyer that required 100% air conditioning would not purchase the subject property because it would be cost prohibitive to cool the entire building.  It would be less expensive for a buyer to purchase a much newer building and install the air conditioning than it would be to pay the utility costs to cool the subject. 

The appraiser testified he was not aware of any environmental problems on his sixth sales comparable but that he still relied on the sale price.  He stated he was told the sale was arm's length in nature but he did not know if the contamination was a consideration in the sale price.  The witness also testified the comparable with 33 additions was included because it is more comparable to the subject than any 20 or 30 year old industrial property that was built all at one time with no additions.  The subject has multiple additions, has a large portion of two story area and has different elevations.  The appraiser testified his fifth comparable is the least comparable to the subject.  It is located in a much inferior location however, it is a better building than the subject. 

The appellant's appraiser was next asked on cross-examination to critique the board of review's sales comparables.  He stated the first comparable is only 20 years old and has 21 foot clear ceiling heights; comparable three is only 8 years old and has a 28 foot clear span; comparable four is only 14 years old and has a 32 foot clear span; comparable 5 was part of a corporate buy-out with three properties and corporate stock involved in the $100,000,000 transaction.  He stated he would also not use comparable six because it is only 20 years old with a clear span of 21 feet.  He stated he would not use comparable seven but it is not as dissimilar as the others.  This property is 28 years old, has a clear span of 22 feet and 18% office area.  Comparable ten was built all at one time with no additions, is 29 years old and has a clear span of 24 feet.  The appellant's appraiser testified he would not use the board of review's comparables eleven and thirteen because they are 17 and 19 years old and have clear ceiling heights of 20 feet and 22-26 feet respectively.  The remaining properties were removed from the Board's consideration at the request of the board of review.  He agreed that he considered age and clear ceiling heights as important factors when comparing property to the subject.  The vast majority of the subject has clear ceiling heights of 9 to 13 feet.  One addition has a clear span of 24 feet. 

The appraiser testified that the sale price he listed for his own comparable number 7 was $1,930,000 while the transfer declaration the county presented shows the sale price of $1,950,000. 

During redirect examination the appellant's appraiser testified he was aware of a large number of the sales used by the board of review and has used some of these sales himself in other appraisals.  However, he testified he could not adjust enough for these properties because of the difference in age and the functional inutility of the subject as compared to properties not suffering from the same factors.  He stated the properties presented by the board of review are not similar to the subject at all and are newer buildings located in industrial park type settings.

The board of review presented "Board of Review Notes on Appeal" wherein the subject's final assessment of $597,610 was disclosed.  The assessment reflects an estimated value for the subject of $1,792,472 using the three year median level of assessments for Stephenson County for 2002 of 33.34%.  The board of review also indicated it wanted to remove from consideration its sales comparables numbered 5, 8, 9, 12 and 14.  It also requested substitution of pages 13 through 15 of the board's evidence in light of the removal of these comparables.  The appellant agreed to the removal and substitution while reserving the right to cross-examine witnesses with respect to those properties.

The board of review called the Freeport Township Deputy Assessor as a witness.  She testified she viewed the subject property in September 2003.  She did not measure the ceiling heights while there but relied on blueprints and information from the subject's representative that was present during her visit.  Her records indicate clear ceiling heights of 14 feet in the 1965 warehouse; 14 foot heights in the two story section; 12 foot heights in the 1961 office area; 12 foot heights in the 1961 industrial area; 12 foot heights in the 1991 addition and 24 foot heights in the 1995 addition.  She agreed only 12,624 square feet of the 182,793 square foot subject has a clear ceiling height over 14 feet. 

The assessor was next questioned regarding the sales comparables used in the appellant's appraisal.  She testified she saw the first property from the exterior and it did not appear to be well maintained as it was vacant and had some broken windows.  The assessor testified she saw a copy of the transfer declaration for the third comparable and it indicated the property was not listed on the open market.  She found no problem with the fourth sales comparable in condition or in the transfer documents. 

The assessor next discussed the market abstracted depreciation in the appellant's appraisal.  She stated that the appellant's appraiser estimated that 56% of the sale price of comparable two was attributed to the land.  She determined that percentage was too high and she estimated the land value of this property to be 18% of the total sale price.  She explained that to find a land value for each property, she assumed the value estimate on the property record card was correct.  She also found the land values attributed to the appraisal comparables four, five and seven were also excessive.  She indicated that if the land value estimates were too high as with the appraisal, the building values would be skewed and the estimate of depreciation of the improvements would be too high. 

The assessor next discussed the board of review's sales comparables.  As previously noted the properties numbered 5, 8, 9, 12 and 14 were removed from consideration per the board of review's own request.  The assessor testified she put all of the commercial sales in Freeport in the sale grid and tried to determine an estimated value for the subject after making adjustments for size, age, amenities, land and "whatever you need to do to it" to make the property compare to the subject. 

The witness testified the board of review's comparable one is a one story building now used as a school but was previously an office and warehouse.  The second comparable is a one story office and manufacturing building of which at least 74,444 square feet of the 86,380 square foot building has ceiling heights of 23 feet or 40 feet.  She was asked the same questions regarding the remaining sales.  Each was a one story property and each had ceiling heights from 28 to 32 feet with the heights of two properties unknown.  Each was a one story building and one was built in stages. 

A sales grid analysis was included in the large volume of evidence presented by the board of review.  Sales 1, 2, 3, 4, 6, 7, 10, 11 and 13 were located in Freeport, Loves Park, Belvidere, Rockford and Rochelle.  Land sizes ranged from 8.15 to 27.84 acres.  The buildings ranged in age from nine years to 15-43 years and in building size from 40,912 to 211,200 square feet.  Total depreciation, based on sales prices minus land assessment values to determine building residual value, was estimated from 20% to 71%.  The sales occurred from September 1998 to March 2002 and ranged from $750,000 to $3,750,000 or from $10.50 to $32.20 per square foot.  Subtracting the estimated land value from the sales price resulted in an estimated sales price per building of $9.55 to $25.95 per square foot.  The assessor testified the subject's assessment falls within this range. 

The board of review's evidence, as prepared by the assessor, included documentation for the subject and the comparables presented by both parties including property record cards, transfer documents and photographs.

During cross-examination, the assessor agreed that her evidence assumes that the information on all of the property record cards for the sales comparables is correct and that the land values estimated by the assessor for these properties is correct.  However, the assessor's assessment of the subject's land estimates a value of $27,240, significantly less than the appellant's appraisal value for the land of $290,000. 

In the assessor's evidence she had indicated the appellant's appraiser was incorrect in the amount of tax paid on the subject property.  However, she agreed this difference was only late fee penalties.  She also testified she has never prepared an appraisal on any industrial property.  The witness also agreed that she had previously argued that the appellant's appraisal comparable one was vacant when she viewed the property.  However, she also agreed she viewed the property in September 2003.  The date of sale was May 1998 and the condition and occupancy at that time were at issue, not the occupancy five years later.  She stated the property record card for this property indicated it was in poor condition with fair utility.

The board of review argued the appellant's appraiser stated his sales comparable two was 46 years old when in fact it is 51 years old.  However at the hearing she testified the appellant's appraiser used a weighted age of all of the additions and that she did not know what the correct age was for this property.  The witness also testified her evidence indicated in bold letters that the appellant's appraisal comparable four has restrictions in the special warranty deed.  However, she did not research the special warranty deeds of the board of review's sales comparables to see if they had restrictions that would limit the use of the properties. 

The witness was asked how she arrived at a total estimated percentage of depreciation for the subject.  She testified she took the sale price of each sale and removed the land value as estimated by the assessor on the property record card to find a residual building value.  The replacement costs new were estimated and the difference between the costs new and the building residual in the sales price is the depreciation.  However, her cost approach was not submitted in the board of review's evidence. 

After hearing the testimony and reviewing the record, the Property Tax Appeal Board finds that it has jurisdiction over the parties and the subject matter of this appeal.  The appellant argued the subject property was overvalued.  When market value is the basis of the appeal the value of the property must be proved by a preponderance of the evidence.  Winnebago County Board of Review v. Property Tax Appeal Board, 313 Ill.App. 3d 179 (2nd Dist. 2000), National City Bank of Michigan/Illinois v. Property Tax Appeal Board, 331 Ill.App 3d 1038 (3rd Dist. 2002).  The Board finds the appellant has met this burden.

The appellant presented an appraisal prepared by a state certified appraiser.  The appraiser was present at the hearing, discussed his appraisal and the methodologies employed and was cross-examined by the board of review.  The appraiser also examined and discussed the board of review's evidence.  The board of review presented documentation prepared by the Freeport Deputy Assessor that consisted of property record cards, photographs and transfer documents for numerous sales as well as the same documentation for the appellant's appraisal comparables.

The Board first finds the appellant's appraiser utilized four land sales in Freeport in estimating a land value for the subject of $15,000 per acre or $290,000.  The board of review's assessment reflects a value for the subject land of $27,240 and is less than one tenth the estimated appraised value.  The board of review did not disagree with the appellant's appraiser's estimated land value for the subject, did not cross-examine the appellant's appraiser about his land value estimate and submitted no evidence of its own regarding land values.  Therefore, the Board finds the subject land had a value of $15,000 per acre or $290,000 as of January 1, 2002.

The appellant's appraiser prepared a cost approach for the subject.  He used the Marshall Valuation Service to find replacement costs new.  He then used the market abstraction method of determining depreciation.  He indicated this approach is best for industrial properties as they tend to depreciate the most in the early years and taper off in the later years.  The appraiser used four of his sales comparables in areas where he has land sales data and knew the prices that vacant industrial land was selling for.  He removed the estimated land values from the sales prices to determine residual values for the improvements.  This value was then subtracted from the replacement costs new to find the total percentage of depreciation.  Dividing this figure by the age of each comparable improvement resulted in an annual rate of depreciation.  The rates ranged from 1.95% to 3.4% and the appraiser estimated an annual rate for the subject of 2.3% for a total estimated rate of depreciation of 92%.  Subtracting this amount from the replacement costs and adding the estimated land value resulted in an estimated value under the cost approach of $900,000.  The Board finds this method is reliable and was supported.

The Board finds the board of review's cost analysis is questionable from the start.  The assessor used the land assessments of the comparable sales to determine land values.  No land value research was performed.  However, for the subject property, the assessor used a grossly higher land value than that reflected in the subject's land assessment.  Therefore the assessor followed one method of assuming land assessments to be correct for the comparables and then did not use this same method for the subject.  Indeed, the subject's land assessment reflects a value of $1,425 per acre however, in her evidence, the assessor used a land value for the subject of $12,000 per acre.  The Board finds the assessor knew the subject's assessment was incorrect and used a land value different from the assessment while not inquiring as to the validity and correctness of the land assessments of the comparables.  The Board further finds the board of review's evidence did not contain any cost new information for the subject building.  The Board therefore finds the board of review's cost analysis is questionable at best and therefore the land value estimates and, consequently the depreciation figures, are unreliable.

The appellant's appraiser did not prepare an income approach as the subject has a 40 year weighted age, has an outdated two story design and there were insufficient similar properties to compare to the subject.  The board of review did not present any income information.

For his sales comparison approach the appellant's appraiser researched his own database of 800 industrial properties as well as consulting appraisers around the state.  He testified that because of the subject's age, low ceiling heights and the outdated two story design, he needed to broaden the search.  He also stated a property this size would be marketed throughout the Midwest and possibly on a national basis.

The Board finds the appellant's appraiser's sales comparison approach to be superior to the board of review's sales data.  The appellant's appraiser utilized seven sales of properties that had actual weighted ages of 25 to 51 years with six having ages of 34 to 51 years.  The subject has an actual weighted age of 40 years.  The comparables' clear ceiling heights ranged from 12 to 18 feet to 20.7 to 25.2 feet.  The subject has clear ceiling heights of less than 14 feet in 146,000 of its 182,793 square feet of building area.  Only 12,624 square feet has clear ceiling heights of 20 to 24 feet.  Lot sizes ranged from 4.23 to 22 acres, office space ranged from 2% to 18% and building sizes ranged from 94,360 square feet. 

The Board finds the appellant's appraiser was not certain if his comparable three sold in an arm's length sale without inclusion of the business value.  This property sold for $6.52 per square foot.  The Board also finds the appellant's appraiser's comparable six had environmental concerns that probably affected the sale price.  The original listing price for this property was $1,500,000.  The selling price was $500,000 or $1.29 per square foot.  However, the Board finds that after reviewing the appellant's analysis and adjustments, the removal of these sales does not detract from the analysis of the remaining properties or the estimated value under this approach of $900,000 or $5.00 per square foot.

The Board finds the board of review submitted fourteen sales comparables and then withdrew five of them at the hearing.  The assessor testified she used all of the recent commercial sales in Freeport on her sales grid and then adjusted them for size, amenities, land and "whatever you need to do to it" to make it comparable to the subject.  The Board finds the assessor's base selection process is flawed as well as her analysis.  The Board finds the assessor did not find similar properties to compare to the subject.  Rather, she brought in all properties and then indicated adjustments would be made.  However no adjustment process was included in the report.  The Board finds the assessor also based her estimate of the subject's value on land value assumptions.  As earlier indicated, the assessor assumed the land assessments for her sales comparables was correct even though she admitted the land assessment of the subject was significantly low.  The Board finds the assessor assumed the land values as reflected in the assessments were correct and then subtracted these assumed values from the sales prices of the comparables to arrive at building sales prices.  However, the assessor admitted the subject's land value was incorrect which would call into question the land values as reflected in the assessments of the comparables.  Also, the assessor simply stated "[A] reasonable Land Value for the Subject Property is $12,000 per acre" even though the assessment reflects an estimated value of $1,425 per acre.  The Board finds the assessor changed an incorrect assessment for the subject after reviewing the appellant's appraiser's land research but failed to research the validity of the land values for her own sales comparables.  Furthermore, the land value estimated by the appellant's appraiser came from Freeport land sales where four of the board of review's comparables were located.  This would tend to indicate the land assessments may also be incorrect.  Also, the Board finds the estimates of depreciation using this methodology are flawed.  For instance, a brand new building had total depreciation of 25% while a 34 year old building had a total depreciation of only 7%.

The Board finds the board of review's sales comparables are all newer than the subject with one being constructed in 2002.  The Board also finds the board of review took no consideration for the subject's older, outdated two story design, its very low ceiling heights or its six foot deviation in elevation.  The board of review did not submit evidence of clear ceiling heights for its sales comparables.  At the hearing the assessor testified each of the board of review's comparables was a one story building with clear ceiling heights ranging from 28 to 32 feet, well above the vast majority of the subject's ceiling height which is below 14 feet.  The Board therefore finds it can place no reliance on the board of review's sales information.

The Board finds the board of review had numerous points of argument with the appellant's appraisal.  However, the Board finds the arguments were either negligible and did not significantly impact the evidence, incorrect or were adequately explained by the appraiser in the report or during his testimony.

On the basis of this analysis of the record the Property Tax Appeal Board finds the appellant has supported the claim that the subject was overvalued by a preponderance of the evidence.  The Board finds the appellant's appraisal to be the best evidence of value for the subject property as of January 1, 2002.  The appraiser prepared the cost and sales approaches to value and estimated a final value for the subject of $900,000.  Since fair market value had been established, the three year weighted average median level of assessments for Stephenson County of 33.34% shall apply.