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Petitioner’s expert, Byron Slack, separately valued the
developed lots, each resort improvement, and the bare land. He
assumed that the most likely buyer would be a timber company who
would purchase the resort along with the surrounding timberland.
In estimating the value of the developed lots, Mr. Slack utilized
a subdivision approach, wherein he capitalized the net income
expected to be generated from sales of the lots. First, Mr.
Slack estimated the current market value of the lots based on
previous lot sales by petitioner in the Port Ludlow area. He
then estimated the reasonably expected absorption rate (i.e., the
rate and period over which the lots would be sold). Because of
the sewer moratorium, Mr. Slack assumed that lot sales would not
recommence until 1988. He further estimated that lot sales would
average approximately 10 per year from 1988 through 1993 and that
the lots would be entirely disposed of in 1994.
Next, Mr. Slack deducted the estimated costs associated with
selling the lots. He estimated the costs of sale at 55 percent
of the sales price of the lots. These costs would include site
preparation, sales costs, property taxes, utilities, and roads.
Mr. Slack then estimated an additional cost of $40,000 per year
for general overhead, administrative expenses, marketing,
supplies, etc. Mr. Slack also apportioned part of the expected
costs for the sewer upgrade (which he estimated at a total of $3
million) to the developed lots.
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