Pope & Talbot, Inc., & Subsidiaries - Page 35

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          best use of the townsite was reasonably reflected in most                   
          instances by its current mixed use.  He believed that the houses            
          were in fair to average condition and assumed separate sales with           
          no additional development.                                                  
               Mr. Eldred estimated the value of the townsite using a                 
          combination of the cost and comparative sales approaches.  In               
          valuing the millsite and log dump property, he used only the                
          comparative sales approach.  Mr. Eldred determined that the                 
          income approach was inappropriate, because structures like the              
          subject structures are generally not purchased for the purpose of           
          receiving rental income.  He found that most of the                         
          nonresidential buildings, such as the church, fire station,                 
          community hall, and Masonic temple, were special purpose                    
          facilities for which no meaningful rental, expense, and income              
          data are available.  He believed that the actual rents charged by           
          petitioner in 1985 were not reflective of market rents.                     
               Mr. Eldred determined that the fair market value of the Port           
          Gamble townsite and related properties was as follows:                      

                    Land and Improvement            Value                             
                    Millsite industrial land      $1,400,000                          
                    Log dump property                770,000                          
                    Townsite-residential           1,952,000                          
                    Townsite-nonresidential          882,000                          
                    Total                       $5,004,000                            








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