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theater component of the Redwood City Fox. Conversely, the
parties agree, and we find, that the income capitalization
approach is an appropriate method to value the retail/office
component of the property.
Finally, consistent with our findings regarding the highest
and best use of the property and the nonincome producing nature
of the theater, we agree with the appraisers that the willing
purchaser for the Redwood City Fox would be a public or private
nonprofit entity that intends to use the property as it was on
the date of donation.
We now turn to the parties' dispute regarding the validity
of the replacement cost approach with respect to valuing the
Redwood City Fox.
Jacobs contends that the property should be valued primarily
by use of the replacement cost method, with secondary
consideration given to the comparable sales approach. He submits
that the comparable sales approach to fair market value alone is
not reliable where "there is a limited market and limited
comparable sales, where there is special purpose property and
where preservation is the highest and best use." Because the
Redwood City Fox is "unique and of a significant historical
importance to the Redwood City community" and because "there are
only two possible comparables, i.e., the Stanford Theatre and the
San Jose Fox", Jacobs argues that the replacement cost approach,
supported by the comparable sales approach, is the proper method
of valuation.
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