- 43 -
statement. The lease, attached to Atkinson’s report, provides
that “Any holding over after the expiration of the said terms,
[May 31, 1990] with the consent of the Lessor, shall be construed
to be a tenancy from month to month”. Accordingly, Hulberg
ignored the then-existing tenancy, proceeded to determine market
rentals and lessor’s expenses, and concluded that the market
would have produced a net operating income of $101,346 per year.
He capitalized this at 7 percent and came to a valuation of
$1,448,000 by the income approach.
However, the lease on the Parker Property also provides that
the lessee has two options to renew for consecutive 5-year terms,
at rentals to be agreed upon by lessee and lessor. Hinz
testified that the first option to renew had been exercised and
the lessee was still paying $1,500 per month at decedent’s death.
At the end of this renewal term (May 31, 1995), the tenant balked
at Hinz’s proposal to increase the monthly rental to $6,000, and
moved out. Hinz’s testimony is believable, is supported by
evidence of actual receipts from the Parker Property for 1992
through 1997, and was not contradicted by any evidence of record.
We have so found. Thus, at decedent’s death, the Parker Property
was going to produce no more than $18,000 per year ($1,500 per
month) for the next three years, notwithstanding Hulberg’s
estimate of market net operating income of $101,346 per year. If
Hulberg’s estimates as to other elements of value are correct,
Page: Previous 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 NextLast modified: May 25, 2011