Terrene Investments, Ltd., Deerbrook Construction, Inc., Tax Matters Partner - Page 29




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          operation), revd. on other grounds sub nom. Wyatt v. United                 
          States, 221 F.3d 1090 (Fed. Cir. 2001); Cloverport, 6 Cl. Ct. at            
          200 (5% over Treasury rate; existing operation).                            
               5. Other Factors                                                       
               Moritz raised a parade of improbable specters that might               
          also diminish the value of the property.  For example, he                   
          included in his report the possibility of the property’s being              
          subject to wetland regulation, cited social pressure as a factor            
          for lowering the value, and noted other regulatory risks that               
          might dampen the appraised value.  We take none of these claims             
          seriously.  It was well established in the record that property             
          all along the San Jacinto River was being mined for sand and                
          gravel in the late 1990s.                                                   
               6.   Residual Value                                                    
               After the mining operations have ended, the property will              
          have some remaining value, even if it is just a pool of stagnant            
          water surrounded by a fringe of dry land.  Ebanks did not address           
          this issue in his report.  Moritz came up with a future value of            
          $1,000/acre for the property.15  We accept his figure.                      


               15 Moritz calculated this figure by first using Harris                 
          County’s appraisal value of $157,100, which came to $4,600 per              
          acre.  He then adapted his comparable-sales approach.  Sales #2             
          and #4 were sold after being depleted of sand and gravel                    
          resources; Sale #4 sold at a price 67% less than its original               
          value as vacant floodplain land.  In reviewing county records,              
          Moritz saw an appraisal range of between $500 and $1,500 per acre           
          for depleted mining property.  By extrapolating the pit-discount            
          figure, Moritz concluded that the subject property could                    
          reasonably be expected to fetch $1,000 per acre once the deposits           
                                                             (continued...)           




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