- 24 -
death.13 Therefore, we find that the fair market value of Phase
5 on the date of death was $2,813,279.14
C. Valuation of Phase 2
1. Mr. Kelley’s Report
Similar to his valuation of Phase 5, Mr. Kelley used the
comparable sales method to determine Phase 2’s value per square
foot ($6) and then applied a discounted cashflow analysis to
arrive at Phase 2’s “net present ‘as-is’ land value” on the date
of death ($525,000). For the same reasons described above, we
reject the discounted cashflow analysis portion of Mr. Kelley’s
valuation.
To determine the value per square foot of Phase 2, Mr.
Kelley used five comparables:
13 Phase 5’s value per square foot on date of death =
($7.51 + $7.20)/2 = $7.36 [average sales price per square foot of
comparables 1-10 and 2-11] x 0.75 [to reflect a 25-percent
discount] = $5.52.
The estate argues that Phase 5’s value should be reduced due
to: (1) The uncertainty of traffic mitigation costs imposed by
Metro; (2) the city’s hostility towards further development; and
(3) the extraordinary offsite costs associated with making Phase
5 suitable for commercial development. These arguments are
discussed supra in our analysis of Mr. Kelley’s discounted
cashflow analysis.
14 $5.52 per square foot x 43,560 square feet per acre =
$240,451 per acre x 11.7 acres = $2,813,279.
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