ORDERS:
FINAL ORDER AND DECISION
I. STATEMENT OF THE CASE
This is a contested case brought by Myrtle Beach Hospital, Inc. ("Taxpayer") against the
Horry County Assessor ("Assessor") concerning the valuation of a hospital for the 1996 tax year.
The parties exhausted all prehearing remedies with the Assessor and the Horry County Board of
Assessment Appeals ("Board"). Jurisdiction vests in the Administrative Law Judge Division
("ALJD") pursuant to S.C. Code Ann. § 12-60-2540 (Supp. 1997).
This matter was heard on May 7, 1998.
II. ISSUE
What is the true value of the subject property for the 1996 tax year?
III. FINDINGS OF FACT
Having carefully considered all testimony, exhibits, and arguments presented at the hearing
of this matter, and taking into account the credibility and accuracy of the evidence, I make the
following Findings of Fact by a preponderance of the evidence:
1. The Taxpayer owns and operates Grand Strand Hospital, a 172-bed acute care,
investor-owned hospital located at 809 82nd Parkway in Myrtle Beach, South Carolina.
2. The subject property is identified as Tax Map # 165-00-01-016.
3. Using the cost approach to valuation, the Assessor determined the value of the subject
property as of January 1, 1996 to be $24,443,500.
4. On November 7, 1996, the Taxpayer appealed the assessment on the ground that the
property was appraised at more than its total fair market value.
5. On July 31, 1997, the Horry County Board of Assessment Appeals issued its finding
that the true value of the subject property for the 1996 tax year was $26,136,000, based on the
Assessor's presentation of evidence of the cost of another South Carolina hospital, Marion County
Medical Center.
6. The Taxpayer asserts that the subject property must be valued at $13,775,000 for the
tax year 1996.
7. The Taxpayer presented a written appraisal of the subject property utilizing all three
standard appraisal approaches to valuing real property: (1) income; (2) cost; and (3) sales
comparison. These were correlated to arrive at a final value conclusion.
8 The Taxpayer's appraisal was prepared by William H. Beazley, III, an MAI appraiser
with extensive nationwide experience in the appraisal of hospitals. Cornelius O. Thompson, III, an
MAI appraiser with South Carolina certification and local experience in hospital appraisals,
concurred in and co-signed this appraisal. Mr. Beazley and Mr. Thompson were both qualified as
experts in the field of commercial real estate appraisal and gave expert testimony on the value of the
subject property, as well as the appropriate methods used and factors considered in valuation.
INCOME APPROACH
9 . In applying the income approach, the Taxpayer relied on income and expense data
derived from the market as well as actual data from the subject property. The market net income
data was taken from national and regional sources. Actual data was taken from Taxpayer's financial
statements from 1991 through 1995 and excluded any income not attributable to the real estate itself.
10. The actual net income data and the market net income data produced substantially
identical results: $2,240,000 (actual) and $2,322,000 (market net income).
11. The Taxpayer arrived at a capitalization rate of 14.6 % by employing an overall rate
analysis involving a survey of lenders and investors in the market (band of investment - mortgage
and equity components), other hospitals' capitalization rates, and data from actual sales. I find that
a 14.6 % capitalization rate is supported by the evidence and is appropriate for the subject property
as of January 1, 1996.
12. Applying a 14.6% capitalization rate to a $2,322,000 market net income results in a
going concern value of $16,100,000 for Grand Strand Hospital.(1) Included in this amount is the
business value and tangible personal property value, calculated by the Taxpayer to be approximately
$3,100,000. Taxpayer calculated the $3,100,000 by first applying a 2% rate to total net revenue
($38,700,000) to determine the estimated income to the business and personal property. This
application was based on combined outside sources of market data, including hospital audits. The
Taxpayer then capitalized this amount using a rate of 25%, the mid-point of the range quoted by
major hospital owners in the country.(2) Taxpayer then subtracted this amount from the going concern
value to arrive at a fee simple value to the building of $13,000,000.
13. The Taxpayer agreed with the Assessor's estimate of value for the 9.14 acres of
excess land,(3) which was $85,000 per acre, or $776,900, which can be properly rounded to $775,000.(4)
14. The Taxpayer's estimate of value of the subject property under the income approach
is supported by market data in the record.
15. Although the Assessor originally included the income approach to valuation in his
appraisal, he withdrew this portion of his appraisal and it was stricken from the record with the
consent of both parties.
COST APPROACH
16. In applying the cost approach, the Taxpayer obtained data from the Marshall & Swift
Valuation Service and Modern Healthcare Magazine to determine the cost per square foot during
construction at $120 per square foot, for a total reproduction cost of $26,141,760.
17. The Taxpayer's calculation of total accrued depreciation included physical
depreciation as well as external obsolescence.(5) Total accrued depreciation was determined to be
$13,769,034, or 52.67%, which included $7,300,000 (rounded) for external obsolescence.
Comparable sales in the hospital market indicated a range of 51-55% total accrued depreciation,
which supports the 52.67% rate calculated by the Taxpayer.
18. In this case, specific factors contributing to external obsolescence include decreased
length of patient stay, increased competition, and increased availability of outpatient services. These
external factors combined to effect a 60% occupancy rate in the market for the tax year in question.
19. The Taxpayer's calculation of $7,300,000 for external obsolescence was based on a
60% occupancy rate as indicated by the national, regional and local hospital markets.(6) This
occupancy rate was supported by the actual occupancy rate of the subject property, which was 58%.
The Taxpayer attributed this "superadequacy" of the subject property to changes specific to the
hospital industry.
20. The Taxpayer calculated the cost of the superadequacy by determining the over-supply of beds and converting it into square footage. The Taxpayer arrived at $9,411,034 for the cost
of the superadequacy in square footage. The Taxpayer then deducted 22% from that amount for
physical long-lived depreciation; the resulting depreciated reproduction cost for the superadequacy
in square footage of the subject property was $7,340,606 (see Petitioner's Exhibit # 5). I find this
method of determining external obsolescence of the subject property to be acceptable and based on
credible evidence in the record.
21. After deducting total accrued depreciation from reproduction cost and adding
estimated land value, the Taxpayer determined the value of the subject property via the cost approach
to be $14,032,726.
22. The Taxpayer's estimate of value under the cost approach is supported by market data
present in the record.
23. In his valuation under the cost approach, the Assessor determined the reproduction
cost with data from both the Marshall & Swift Valuation Service and his own opinion and
experience.(7)
24. The Assessor did not include external obsolescence in his calculation of total accrued
depreciation.
25. The Assessor admitted that in calculating total reproduction cost, he erroneously
added an allowance for heating and cooling ("HVAC") costs when these costs were already included
in the base cost of the building provided by Marshall & Swift data. The Assessor testified that he
did not revise his final valuation after discovering this error because he subsequently determined that
the use of the Marion County Medical Center as an indicator of replacement cost would yield a
current value of $26,000,000 for the Grand Strand Hospital.
26. The Marion County Medical Center is not a reliable source of data for determining
the value of the subject property under the cost approach because construction of this building was
not completed in 1995, but merely begun in that year. The data pertinent to the 1996 tax year from
the Marshall & Swift service relates to construction completed in 1995. Further, Marion County
Medical Center's cost per square foot is $134.08, compared to $120 per square foot for the subject
property. Also, significant differences exist in the quality and style of construction for the two
properties such that there is no equivalency in the utility of the two properties.
27. The Assessor's estimate of value under the cost approach is not supported by market
data in the record.
SALES COMPARISON APPROACH
28. The Taxpayer's appraisal examined 11 comparable hospital sales within a national
market. The Taxpayer's appraiser personally inspected each comparable property.
29. The most comparable sales presented by the Taxpayer range in value from $70,000
per licensed bed to $75,000 per licensed bed, after deducting an amount attributable to business
value. The Taxpayer used this range, as well as the subject property's location, cost of construction,
and cost of doing business, to estimate a value of $72,500 per licensed bed, for a total value of
$12,470,000. This value supports the reasonableness of the Taxpayer's value estimates under the
income approach and cost approach.
IV. CONCLUSIONS OF LAW
Based on the foregoing Findings of Fact, I conclude the following as a matter of law:
1. The Administrative Law Judge Division has jurisdiction of this matter pursuant to
S.C. Code Ann. § 12-60-2540(A) (Supp. 1997).
2. "Generally, the proper valuation of realty for taxation is a question of fact, to be
ascertained in each individual case in the manner prescribed by statute." 84 C.J.S. Taxation § 411
at 793 (1954).
3. S.C. Code Ann. § 12-37-930 (Supp. 1997) provides:
All real property shall be valued for taxation at its true value
in money which in all cases shall be held to be the price which the
property would bring following reasonable exposure to the market,
where both the seller and buyer are willing, are not acting under
compulsion, and are reasonably well informed as to the uses and
purposes of which it is adapted and for which it is capable of being
used.
(emphasis added).
4. The fair market value is the measure of true value for taxation purposes. Lindsey vs.
S.C. Tax Comm'n, 302 S.C. 504, 397 S.E.2d 95 (1990).
5. "The qualification of a witness as an expert in a particular field is within the sound
discretion of the trial judge." Smoak v. Liebherr-Am., Inc., 281 S.C. 420, 422, 315 S.E.2d 116, 118
(1984); S.C. Dep't of Highways and Public Transp. v. Manning, 283 S.C. 394, 323 S.E.2d 775
(1984).
6. Where the expert's testimony is based upon facts sufficient to form the basis for an
opinion, the trier of fact determines its probative weight. Berkley Elec. Coop. v. S.C. Public Serv.
Comm'n, 304 S.C. 15, 402 S.E.2d 674 (1991); Smoak, supra. A trier of fact is not compelled to
accept an expert's testimony, but may give it the weight and credibility he determines it deserves.
Florence County Dep't of Social Serv. v. Ward, 310 S.C. 69, 425 S.E.2d 61 (1992); Greyhound
Lines v. S.C. Public Serv. Comm'n, 274 S.C. 161, 262 S.E.2d 18 (1980). The trier of fact may also
accept the testimony of one expert over another. S.C. Cable Tel. Assn. v. Southern Bell Tel. and Tel.
Co., 308 S.C. 216, 417 S.E.2d 586 (1992).
7. South Carolina courts, as well as other jurisdictions, have relied on the Appraisal
Institute's standards for valuation as published and updated in several editions of The Appraisal of
Real Estate. See, e.g., South Carolina Tax Commission v. South Carolina Tax Board of Review, 287
S.C. 415, 339 S.E.2d 131 (Ct. App. 1985); Badische Corporation (BASF) v. Town of Kearny, 288
N.J.Super. 171, 672 A.2d 186, 189 (1996).
INCOME APPROACH
8. The income capitalization approach is an accepted means for valuing commercial
property. S.C. Tax Comm'n v. S.C. Tax Bd. of Review, 287 S.C. 414, 339 S.E.2d 131 (Ct. App.
1985).
9. The income capitalization approach to valuation is probably the most useful approach
to the market value of an investor-owned hospital when reliable data on income is available, because
it looks at property value through the eyes of a typical investor. See Appraisal Institute, The
Appraisal of Real Estate at 409 (10th Ed. 1992); see also Reliance Ins. Co. v. Smith, 327 S.C. 528,
489 S.E.2d 674 (Ct. App. 1997)(dicta). "From an investor's perspective, the earning power of a real
estate investment is the critical element affecting its value." Appraisal Institute, The Appraisal of
Real Estate at 424 (10th Ed. 1992). Investment in an income-producing property represents the
exchange of present dollars for the right to receive future dollars. Appraisal Institute, The Appraisal
of Real Estate at 424 (10th Ed. 1992).
10. To measure property value under the income capitalization approach, two
capitalization techniques are acceptable: direct capitalization and yield capitalization. Appraisal
Institute, The Appraisal of Real Estate at 419 (10th Ed. 1992). Direct capitalization, employed by
the Taxpayer's appraiser in this case, involves dividing net operating income by an overall
capitalization rate. Appraisal Institute, The Appraisal of Real Estate at 467 (10th Ed. 1992). 11. The capitalization rate represents the desired yield a purchaser would seek on the
capital investment. See South Carolina Tax Commission v. South Carolina Tax Board of Review,
287 S.C. 415, 339 S.E.2d 131 (Ct. App. 1985). The rate is extracted from market data and is used
in the income approach to property value to calculate the present value of anticipated future income.
Appraisal Institute, The Appraisal of Real Estate at 158, 409 (10th Ed. 1992). In this case, the
Taxpayer arrived at a capitalization rate of 14.6 % by employing an overall rate analysis involving
a survey of lenders and investors in the market (band of investment - mortgage and equity
components), other hospitals' capitalization rates, and data from actual sales.
12. Band of investment (mortgage and equity components) and derivation from
comparable sales are accepted techniques used to estimate an overall capitalization rate. The
Appraisal of Real Estate at 467.
13. I find that a 14.6 % capitalization rate is supported by the evidence and is appropriate
for the subject property as of January 1, 1996.
14. Net operating income is the actual or anticipated net income remaining after all
operating expenses are deducted from effective gross income, but before mortgage debt service and
book depreciation are deducted. Appraisal Institute, The Appraisal of Real Estate at 413 (10th Ed.
1992). Effective gross income, referenced in the Taxpayer's appraisal as "total net revenue," is the
anticipated income from all operations of the real property adjusted for vacancy and collection losses
(or, in the hospital industry, adjusted for payment limitations under private insurance contracts or
government programs). Id.
15. To derive net income data for the valuation of investment properties, the appraiser
should investigate comparable sales in the same market. The Appraisal of Real Estate. at 157.
16. In this case, the Taxpayer relied on income and expense data derived from the market
as well as actual data from the subject property. The market net income data was taken from national
and regional sources. Actual data was taken from Taxpayer's financial statements from 1991
through 1995 and excluded any income not attributable to the real estate itself. The actual net
income data and the market net income data produced substantially identical results: $2,240,000
(actual) and $2,322,000 (market net income).
17. Applying a 14.6% capitalization rate to a $2,322,000 market net income results in a
going concern value of $16,100,000 for Grand Strand Hospital. Included in this amount is the
business value and tangible personal property value, calculated by the Taxpayer to be approximately
$3,100,000. Taxpayer calculated the $3,100,000 by first applying a 2% rate to total net revenue
($38,700,000) to determine the estimated income to the business and personal property. This
application was based on combined outside sources of market data, including hospital audits. The
Taxpayer then capitalized this amount using a rate of 25%, the mid-point of the range quoted by
major hospital owners in the country.
18. To arrive at a value for the real estate alone, the value attributable to tangible personal
property and "business value" must be deducted after the net income is capitalized. See The
Appraisal of Real Estate at 412 (10th Ed. 1992).(8) The Taxpayer properly subtracted the personal
property and business value, calculated at $3,100,000, from the going concern value to arrive at a
fee simple value to the building of $13,000,000.
19. The value of excess land should be added to the building value to arrive at the total
fair market value of the subject property. See Appraisal of Real Estate at 212 (if excess land is
marketable or has value for a future use, its market value as vacant land is added to the estimated
value of the economic entity). The Taxpayer agreed with the Assessor's estimate of value for the
9.14 acres of excess land, which was $85,000 per acre, or $776,900, which can be properly rounded
to $775,000. Adding this amount to the building value calculated by the Taxpayer results in a total
fair market value of the subject property of $13,775,000 under the income approach.
COST APPROACH
20. The cost approach is useful in estimating the market value of special-purpose
properties and other properties not frequently exchanged in the market, although its usefulness may
be limited when valuing older properties. Appraisal Institute, The Appraisal of Real Estate at 316-317 (10th Ed. 1992). Further, when value estimates derived with the cost approach are not supported
by market data, they must be regarded with caution. Id.
21. To estimate market value under the cost approach, an appraiser can calculate the cost
of a reproduction or replacement of the building and then make a deduction for the amount of
depreciation present in the existing improvement. The Appraisal of Real Estate at 321.
22. In valuing real estate, there is an important difference between "reproduction cost"
and "replacement cost." "Reproduction cost" is the estimated cost to construct, at current prices as
of the effective appraisal date, an exact duplicate of the building being appraised, using the same
materials, construction standards, design, layout, and quality of workmanship, and embodying all
the deficiencies, superadequacies, and obsolescence of the subject building. Appraisal Institute, The
Appraisal of Real Estate at 318 (10th Ed. 1992). "Replacement cost" is the estimated cost to
construct, at current prices as of the effective appraisal date, a building with utility equivalent to the
building being appraised, using modern materials and current standards, design, and layout.
Appraisal Institute, The Appraisal of Real Estate at 319 (10th Ed. 1992).
23. In applying the cost approach, the Taxpayer obtained data from the Marshall & Swift
Valuation Service and Modern Healthcare Magazine to determine the cost per square foot during
construction at $120 per square foot, for a total reproduction cost of $26,141,760.
24. Depreciation is caused by deterioration or obsolescence in the property. Appraisal
Institute, The Appraisal of Real Estate at 320 (10th Ed. 1992). This includes not only wear and tear
on the structure, but also functional obsolescence and external obsolescence. Id. Functional
obsolescence is caused by internal property characteristics such as a poor floor plan or functional
inadequacy. Id. External obsolescence is caused by conditions outside the property, such as a lack
of demand, national economic conditions, or government restrictions. Id.; see also Badische
Corporation (BASF) v. Town of Kearny, 288 N.J.Super. 171, 672 A.2d 186, 189 (1996). Indicators
of external obsolescence are reduced demand for products or services caused by the adverse impact
of market forces or other external influences. Brockway Glass Company v. Township of Freehold,
10 N.J.Tax 356 (1989). Externalities may have an especially strong effect on older properties. The
Appraisal of Real Estate at 314 (10th Ed. 1992).
25. Sales comparison techniques are acceptable in estimating accrued depreciation.
Appraisal Institute, The Appraisal of Real Estate at 320.
26. The use of replacement cost eliminates the need to estimate some forms of functional
obsolescence, but other forms of functional obsolescence, physical deterioration, and external
obsolescence must still be measured. The Appraisal of Real Estate at 319.
27. The Taxpayer calculated both the reproduction cost and the replacement cost under
the cost approach method of valuation, but deducted an amount for external obsolescence only from
its calculation of reproduction cost in arriving at a value for the subject property.
28. Reduction of taxes for external obsolescence is not automatic, but must be based on
tangible evidence in the record. See, e.g., B.F. Goodrich Company v. Oldmans Township, 17
N.J.Tax 114 (1997); Brockway Glass Company v. Township of Freehold, 10 N.J.Tax 356 (1989).
29. In addition to actual data on the subject property, the evidence should include data
on market conditions to obtain an accurate estimate of external obsolescence. Id.; see also The
Appraisal of Real Estate at 317 (value estimates under cost approach not supported by market data
must be regarded with caution). When such evidence exists, an assessor's failure to consider
external obsolescence invalidates his valuation for purposes of determining fair market value. See
Chevron, U.S.A., Inc. v. City of Perth Amboy, 10 N.J.Tax 114 (1988).
30. The Taxpayer's calculation of total accrued depreciation included physical
depreciation as well as external obsolescence. Total accrued depreciation was determined to be
$13,769,034, or 52.67%, which included $7,300,000 (rounded) for external obsolescence.
Comparable sales in the hospital market indicated a range of 51-55% total accrued depreciation,
which supports the 52.67% rate calculated by the Taxpayer.
31. In this case, specific factors contributing to external obsolescence include decreased
length of patient stay, increased competition, and increased availability of outpatient services. These
external factors combined to effect a 60% occupancy rate in the market for the tax year in question.
32. The Taxpayer's calculation of $7,300,000 for external obsolescence was based on a
60% occupancy rate as indicated by the national, regional and local hospital markets. This
occupancy rate was supported by the actual occupancy rate of the subject property, which was 58%.
The Taxpayer attributed this "superadequacy" of the subject property to changes specific to the
hospital industry.
33. The Taxpayer calculated the cost of the superadequacy by determining the over-supply of beds and converting it into square footage. The Taxpayer arrived at $9,411,034 for the cost
of the superadequacy in square footage. The Taxpayer then deducted 22% from that amount for
physical long-lived depreciation; the resulting depreciated reproduction cost for the superadequacy
in square footage of the subject property was $7,340,606. I find this method of determining external
obsolescence of the subject property to be acceptable and based on credible evidence in the record.
34. After deducting total accrued depreciation from reproduction cost and adding
estimated land value, the Taxpayer determined the value of the subject property via the cost approach
to be $14,032,726.
35. The Taxpayer's estimate of value under the cost approach is supported by market data
present in the record.
36. Under the cost approach, the difference in the Assessor's proposed value for the
subject property and the Taxpayer's proposed value can be attributed to the Assessor's failure to
consider external obsolescence and his admitted mistake in adding allowances for HVAC costs in
his calculations. Otherwise, their numbers would be substantially the same.
SALES COMPARISON APPROACH
37. The sales comparison approach, which involves examination of sales of similar
properties, is less reliable as an independent approach to valuation of large, complex income-producing properties due to the general unavailability of all pertinent information on factors
influencing the purchase. Appraisal Institute, The Appraisal of Real Estate at 369 (10th Ed. 1992).
This approach, however, is an essential part of the valuation process, as it provides a probable range
of value based on the market that can support a primary value estimate under the income or cost
approach. See Appraisal Institute, The Appraisal of Real Estate at 370 (10th Ed. 1992). Also, it
provides necessary data for use in an accurate application of the income and cost approaches. Id.
38. In the sales comparison approach, the geographic limits of the appraiser's search for
sales data depend on the nature and type of real estate being valued. Id. Certain types of properties
have regional, national, and even international markets. Id. For hospitals, a national market is
reasonable.
39. There has been sufficient market activity in the hospital industry to justify the proper
use of sales comparison techniques to support the income approach and the cost approach to
valuation. The Taxpayer's appraisal examined 11 comparable hospital sales within a national
market. The Taxpayer's appraiser personally inspected each comparable property.
The most comparable sales presented by the Taxpayer range in value from $70,000 per
licensed bed to $75,000 per licensed bed, after deducting an amount attributable to business value.
The Taxpayer used this range, as well as the subject property's location, cost of construction, and
cost of doing business, to estimate a value of $72,500 per licensed bed, for a total value of
$12,470,000. This value supports the reasonableness of the Taxpayer's value estimates under the
income approach and cost approach.
40. The Taxpayer's application of both the income approach and the cost approach to
valuation were supported by the market, as indicated by its application of sales comparison
techniques.
APPRAISAL INDUSTRY STANDARDS
41. The Taxpayer's application of the income approach and the cost approach was
properly done in accordance with the standards of the Appraisal Institute set forth in The Appraisal
of Real Estate.
42. The Assessor deviated from the standards of the Appraisal Institute by improperly
adding allowances for HVAC costs in calculating reproduction cost, when these costs were already
included in the base cost provided by Marshall & Swift data, and by failing to recognize forms of
depreciation other than merely physical depreciation. Therefore, the Assessor's valuation is not a
reliable indication of fair market value.
43. The values derived by the Taxpayer under the income ($13,775,000), cost
($14,032,726) and sales comparison approaches ($12,470,000) were relatively close to each other.
Therefore, each approach taken by the Taxpayer supports the validity of the other two approaches.
44. Because Grand Strand Hospital is an investor-owned property and the Taxpayer
presented reliable data on its income, the income approach provides the most accurate estimate of
true value in this case. Therefore, the true value of the subject property is $13,775,000, including
excess land.
V. ORDER
Based upon the foregoing Findings of Fact and Conclusions of Law,
IT IS HEREBY ORDERED that the Assessor shall value the Taxpayer's property,
identified as Grand Strand Hospital, Tax Map # 165-00-01-016, at $13,775,000 for the 1996 tax
year.
AND IT IS SO ORDERED.
______________________________________
JOHN D. GEATHERS
Administrative Law Judge
Post Office Box 11667
Columbia, South Carolina 29211-1667
Columbia, South Carolina
August 17, 1998
1. "Going concern value" is the value of a proven property operation. It includes the
incremental value associated with the business concern. Appraisal Institute, The Appraisal of
Real Estate at 23-24 (10th Ed. 1992). Going concern value refers to the total value of a property,
including both real property and intangible personal property attributed to business value. Id.
2. The actual personal property was assessed at $5,700,000 by the Taxpayer.
3. Excess land is the surplus land not needed to serve or support the existing improvement.
Appraisal Institute, The Appraisal of Real Estate at 212 (10th Ed. 1992).
4. Rounding final value estimates to reflect market pricing is an accepted appraisal practice.
See Appraisal Institute, The Appraisal of Real Estate at 559 (10th Ed. 1992).
5. External obsolescence, also known as "economic obsolescence," is one of the three
major types of accrued depreciation, and it is caused by conditions outside the property, such as a
lack of demand, national economic conditions, or government restrictions. Appraisal Institute,
The Appraisal of Real Estate at 314, 320 (10th Ed. 1992).
The Taxpayer calculated both the reproduction cost and the replacement cost under the
cost approach method of valuation, but deducted an amount for external obsolescence only from
its calculation of reproduction cost in arriving at a value for the subject property.
6. In fact, the occupancy rate of four local hospitals ranged from 35% to 55%.
7. Although the Assessor referenced replacement cost in his testimony explaining his
calculations, his written appraisal indicates that his data pertained to reproduction cost.
8. "Business value" is a value enhancement that results from items of intangible personal
property such as marketing and management skill, an assembled work force, working capital,
trade names, franchises, contracts, etc. Appraisal Institute, The Appraisal of Real Estate at 412
(10th Ed. 1992). |