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A. The Fair Market Rental Value of Watt Avenue, Mother
Lode Drive, and Fee Drive
Both parties submitted substantial evidence concerning the
fair market rental value of three of the properties petitioner
leased: Watt Avenue, Mother Lode Drive, and Fee Drive.
Respondent submitted separate appraisal reports on each of
the three properties prepared by Kenneth R. Harris, MAI, of
Hopkins Appraisal Services, Inc., a national appraisal firm
specializing in the appraisal of petroleum properties. Mr.
Harris used the same basic methodology for all three properties.
First, Mr. Harris determined the fair market value of the land
using only the cost approach to value, because he found both the
market and income approaches to be irrelevant to the appraisal of
raw land. Under the cost approach, Mr. Harris determined the
sale prices of four or five comparable properties and computed a
sale price per square foot for each of the comparable properties.
He then used his judgment to adjust the sale price per square
foot of each of the comparable properties for perceived
differences between the comparable properties and the subject.
Very significant adjustments were made, leading us to question
whether these properties were true “comparables”. Adjustments on
the Fee Drive property ranged from 20 to 60 percent and on the
Mother Lode Drive property ranged from 15 to 40 percent. One of
the four “comparables” on the Watt Avenue property was adjusted
by 65 percent. It would be very easy to justify much higher or
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Last modified: May 25, 2011