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1. Replacement Cost Approach--Theater
Under the replacement cost method, Mitten/Reynolds estimated
the value of the underlying land to be $770,000 (rounded), using
seven sales of commercially zoned vacant25 land as comparables
($29.00 per square foot times 26,583 square feet).
Mitten/Reynolds made adjustments to the sales prices for
financing, date of sale, location, block orientation,
configuration, size, existing improvements, and buyer motivation.
Mitten/Reynolds allocated 15,929 square feet of land area to the
theater, for a land value of $461,000, and 10,654 square feet of
land area to the retail/office component, for a land value of
$309,000.
For the replacement cost of the theater, Mitten/Reynolds
used the cost estimate in the Adamson report, which they adjusted
by: (1) Subtracting $92,000 for the personal property donated to
the Players; (2) adding the costs of nonconstruction items
(design costs, permits and fees, financing cost, etc.); and (3)
adding an entrepreneurial fee of 10 percent. Mitten/Reynolds
estimated the total replacement cost of the theater, excluding
the land, to be $7,000,862, computed as follows:
Total Direct Construction Cost $4,829,000
Deduction for Non-Operating Personalty92,000
Adjusted Direct Construction Cost 4,737,000
General Conditions (7%) 331,590
25 Mitten/Reynolds’ Comparable #4 was sold with an existing
improvement, which was subsequently demolished by the purchaser.
Consequently, Mitten/Reynolds made an upward adjustment of the
sales price.
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