CCP 06022025 - Laserfiche WebLink

Home

Attachment 1 File:Valuation Analysis and Conclusions ValuationAnalysisandConclusions METHODOLOGY As discussed, the cost approach to value is used to estimate the value of the individual subject items. The first step is to estimate the replacement cost new (RCN) of each individual item. The tenant has provided documents (proposals, invoices, cancelled checks, receipts) that summarize the historical costs of many of the subject improvements and trade fixtures. The historical costs appear reasonable and consistent with the appraiser’s long observations over the years. Therefore, the historical costs are trended to the present for inflationusing the cost trending indexes found in Section 98 of the Marshall Valuation Service (MVS). The historical costs were available for the tenant improvements; Items A through O; Q through T; and X and Y. The historicalcostswere incurred in the firsthalf of 2014. The Minneapolis indexfound in Section 98 of theMVS indicates an inflation factor of 1.4915 from early 2014 to the effective date of value. Once the historical costs are trended for inflation, a 10% premium is added for entrepreneurialprofit. Historical costs were not available for Items P,R, S, U, V, and W. The RCNs of these items werebased on internet research and the appraiser’s internal files. Once again, a 10% premium is added for entrepreneurialprofit. The items are then depreciated using the effective age/useful life method. In this case, the effective age of the subject items is estimated to be the same as their chronological ages, or 10.50 years. The anticipated useful lives of the tenant improvements and Items A – O are estimated, on average, at 27.50 years. Thus, total depreciation to these items is estimated at about 38.0%(10.50 years ÷ 27.50 years). The inverse of thetotal deprecation rate is 62.0% (1 – 32.0%), which is known as the percent goodratios. The anticipated useful lives of the remaining items areestimated from 20 to 25 years, resulting in percent good ratios of 47.0% to 58.0%. Tenant Improvements & Items A - O These items account for over 85% of the total, thereforemeriting further discussion. The tenant improvements and Items A throughO were constructed and/or installed by Rongitsch Construction Company. The documents provided by the tenant indicate the historical cost to Rongitsch was $117,840. Dodd Advisory & Valuation 23 Qbhf!233!pg!385