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renovation of the property to the original purchase, which
resulted in a per seat price of $2,433, a per square foot of
building area price of $69.19, and a per square foot of site area
price of $45.25. Mansbach noted that the purchase price paid by
Jacobs included the entire building, while he was only valuing
the theater component.
Mansbach considered the appropriate unit of comparison among
his comparable sales to be the price paid per seat. For the
Redwood City Fox, Mansbach determined that the "appropriate seat
count to apply in the valuation" was 602. Mansbach acknowledged
that the seating capacity of the Redwood City Fox at one time
exceeded 1,300, and further acknowledged that 756 seats were
installed in the auditorium on the valuation date (602 on the
floor and 154 in the balcony). However, due to a "lack of
documented demand for the mezzanine seats", Mansbach concluded
that a buyer "would not allocate value to these seats in making
its price decisions." Mansbach explained his choice of 602 seats
as follows:
The appraiser was not provided information on the total
potential capacity of the theater given modern
requirements for seat and aisle width, as well as
handicapped seating. Nevertheless, the valuation of
the subject property based on the theoretical maximum
seating would require a deduction from value to account
for the cost of installing such seats. More
importantly, with inadequate demand, the market would
not place a value on the subject property based on the
theoretical maximum seating. Rather, with demand for
only 602 seats at best, there would be no economic
reason to spend such money for additional seats, as
well as bear the added costs for maintenance,
management and potentially insurance.
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