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Petitioner argues that the value should be reduced because, as of
the valuation date, it was unlikely that the property had the
potential to be approved for residential development.
The parties disagree about how to handle the fact that
approval for residential development had not been obtained and
the probative weight, if any, that should be given to the terms
of the June 1994 agreement. Although the June 1994 agreement was
executed sufficiently close in time to the February 1993 date of
death to be considered, it does not involve a contemporaneous
payment of the contract proceeds. The agreement calls for
payments at closings that would occur as much as 3 and 6 years in
the future.
Petitioner contends that the $150,000 per-acre agreement
price was wholly contingent and dependent upon whether the
developer (buyer) was able to obtain entitlement to subdivide the
property for residential development; i.e., that Ponderosa was
not a willing buyer of unapproved land. Conversely, respondent
contends that the agreement is a contract for sale with a delayed
closing and that the contract price represents what a willing
buyer would be willing to pay in a cash or contemporaneous
transaction, irrespective of whether the entitlements were to be
obtained later.
3(...continued)
312, 337-338 (1989).
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