Hunt & Sons, Inc. - Page 11




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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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