- 37 -
In estimating the value of the nurseries, Mr. Slack
determined that an income approach was the best indicator of
value. He rejected use of the market approach due to lack of
comparable sales. Both nurseries were operating at a continual
loss, and the losses were forecasted to continue into the future.
Based on these losses and the absence of reasonable and probable
alternative uses, Mr. Slack determined that the value of the
nurseries was equal to the estimated salvage value of the
improvements plus the value of the vacant land. Mr. Slack
concluded that the highest and best use of the vacant land was
for residential use, as opposed to agricultural use. He also
considered the lack of water rights at the Hansville Transplant
Nursery to be a limiting factor. Accordingly, Mr. Slack
concluded that the fair market value of the Cyrus Walker Nursery
was $161,000 and the Hansville Transplant Nursery was $69,631.
Mr. Eldred utilized a cost approach to estimate the values
of the nursery improvements, as no comparable sales were
discovered, and he used a comparable sales approach to value the
land underlying and surrounding the nurseries. In valuing the
land, Mr. Eldred assumed a highest and best use as residential
property. Mr. Eldred concluded that the fair market value of the
Cyrus Walker Nursery was $570,000 and the value of the Hansville
Transplant Nursery was $450,000.
We agree with Mr. Eldred that a cost approach is appropriate
in valuing the nurseries and that an income approach artificially
Page: Previous 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 NextLast modified: May 25, 2011