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City appraiser defends $5.328M valuation, details income-capitalization steps
Summary
City appraiser explained the income approach and CoStar market inputs that support the city’s valuation of $5,328,000 for the Farrell Street Walgreens, including market rent assumptions, vacancy, expenses and a cap rate that yield a valuation near the city’s figure.
During the BCA hearing, the city’s valuation approach was presented and defended by the lister’s appraiser. The city’s pro forma and income-capitalization analysis used market-data inputs (CoStar), vacancy and expense assumptions, and a cap rate in the 7–8% range to estimate net operating income and a resulting valuation near the city’s $5,328,000 figure.
Ed Clotfelter, the appraiser presenting for the municipal side, described the methodology and inputs: "CoStar ... is a company that develops ... information about rents and expenses ... and they're saying that the market rent for a property like this would be $17 a square foot." He explained that applying the assumed expenses, a 5% vacancy, and an approximate 7.5% cap rate to the pro forma produced a capitalization value in the low-to-mid $5 million range that aligns closely with the assessor’s number.
Clotfelter also noted differences in how upper-floor area was treated and said he used a lower per-square-foot assumption for the second floor in his recalculation. The city’s representative and the appraiser emphasized that the assessor’s figure is supported by standard market-data sources and capitalization techniques presented in the city’s materials. The board asked follow-up questions and requested the inspection team to verify physical conditions and square-footage claims before deliberation.
