42-13203

42-13203. Replacement cost less depreciation
method of valuing shopping centers; election to use income method
on appeal

A. Except as provided by section 42-13204, the county assessor shall determine the
valuation of a shopping center by using the replacement cost less depreciation method.

B. This method shall use base rates in existence on January 1, 1982 subject to any
changes that are necessary to reflect changes in costs of construction. The base rates
shall be based on average costs that relate to this state as reported in professional
cost manuals and publications that are approved by the department.

C. The depreciation schedule used under the replacement cost less depreciation
method, including any adjustment for obsolescence, shall be the schedule in existence on
January 1, 1982 and used by the county assessor.

D. On review or appeal of a valuation determined under this section, the owner of a
shopping center may elect to have the valuation of the shopping center determined by the
income method commonly known as the straight line building residual method if the owner
submits all reasonably necessary income and expense information. The reviewing body
shall use the information submitted by the owner and may also use any other information
customarily analyzed under this method. The capitalization rate used for purposes of
this subsection shall be comprised of:

1. For the 1983 tax year a discount rate of 10.5 per cent, adjusted each year
thereafter according to the percentage change in the weighted average cost of monies
derived from interest paid on savings accounts, federal home loan bank advances and other
borrowed money as reported by the federal home loan bank of San Francisco for this state
for the most recent twelve month period ending June 30. The discount rate shall not be
less than ten per cent.

2. A recapture rate based on a thirty-five year economic life.

3. The effective tax rate for the property for the most recent tax year.

E. The department shall:

1. Determine the average differences in valuations for similar size and age
shopping centers that result from the two valuation methods prescribed by this section
and section 42-13204 and from which the department shall develop a schedule of
obsolescence factors that can be added to the depreciation schedule used in the
replacement cost less depreciation method. County assessors shall incorporate the
obsolescence factors into the depreciation schedule.

2. Develop obsolescence factors prescribed by paragraph 1 of this subsection based
on statistical research in order to, on average, equalize the valuations that result from
the two valuation methods prescribed in this section and section 42-13204. The department
may use data from state sources, nationally recognized publications and journals and
other related research.