- 8 -
each resorted to an alternate method. Respondent’s expert,
Michael C. Lady (Lady), arrived at a figure of $65,000 ($260 per
acre) by comparing the subject property with certain nursery
properties under long-term lease in the vicinity of the Chicago
metropolitan area. Petitioner’s expert, Stephen L. Cobb (Cobb),
used financial theory to calculate a market rate of return on the
appraised value of the subject property. He conservatively
estimated this return at $111,500 ($446 per acre), but values of
$139,000 to $156,000 would have provided the lessor with a more
reasonable return in his opinion. Petitioner bears the burden of
proof. Rule 142(a). Accordingly, the question for the Court to
decide is whether petitioner, through its expert, has justified
rental payments in excess of the amount of $65,000 adopted by
respondent in her revised determination.
The first step in Cobb’s analysis was to determine the fair
market value of the subject property as of June 1990, assuming
based on neighborhood growth trends that its current agricultural
use was an interim use and that residential development was
likely in the near future. For each tract Cobb identified six
sale transactions in the neighborhood involving vacant land with
comparable characteristics. After making certain adjustments to
correct for significant differences, such as size, utilities, and
zoning, he appraised tract at $593,000 ($4,800 per acre) and
tract B at $278,000 ($2,200 per acre). The aggregate value of
the subject property in Cobb’s opinion was therefore $871,000
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011