First, the Township argued that New Covert's appraisal had inaccurately calculated the replacement cost new
, which describes the cost of what a new and substantially similar property would cost.
The cost approach is where we determine the replacement cost new
for each structure and then subtract depreciation.
The cost approach considers the basic appraisal concept of replacement cost new
as an indication of value.
The question centers on the appropriateness of adjusting for the replacement cost new
of the new substitute replacement item of property, step four in the reproduction cost approach functional obsolescence formula as set forth in The Appraisal of Real Estate, 11th Edition.
Once the correct percentage of obsolescence due to underutilization is determined, total obsolescence in absolute dollar terms is given by multiplying %OBS by the replacement cost new
less straight-line depreciation (RCNSLD).
The commission set a land value of zero based on evidence of high levels of lead and arsenic contamination, and a value for the building at $398,166, a figure reached by using the standard replacement cost new
less depreciation method.
Thus, the market value of the subject property using the replacement cost approach is simply the replacement cost new
(to achieve equivalent utility in the most cost-effective manner)--minus an age-life depreciation charge and minus the lesser of the cost to cure or value of loss to the subject property (to achieve equivalent internal desirability of the subject property)--minus external obsolescence (to achieve equivalent external desirability of the subject property).
Ellsworth is utilizing the reproduction cost approach, whereby both the existing facility and his replacement cost new
are a coal plant with a scrubber and baghouse for pollution control.
Asset value and depreciation are determined using replacement cost new
estimates and an appropriate percent good factor.
replacement cost new
less depreciation plus land value equals depreciated replacement cost) does not precisely simulate what individuals are observed to do when considering production of an alternate property.
The cost approach begins with the establishment of replacement cost new
Cost approach concerns involve all three aspects of the cost approach: land value, replacement cost new
, and depreciation.