Opinion ID: 1653483
Heading Depth: 3
Heading Rank: 3

Heading: The value of the property's earning power based on the capitalization of its incomethe income capitalization approach.

Text: American Institute of Real Estate Appraisers, The Appraisal of Real Estate, 62 (9th ed. 1987); see also id. at 349 (The cost approach is also used to estimate the market value of proposed construction, special purpose properties, and other properties that are not frequently exchanged in the market). Texas also recognizes the existence of various methods of determining market value. Judge Rayburn states: An analysis of the cases discloses that there are four main types of evidence that are allowed to be introduced into evidence as bearing upon the hypothetical market issues and that have been, and are frequently and customarily used by expert real estate witnesses to substantiate their market value opinions.... These four types of evidence are: (1) Comparative market sales; (2) Replacement cost less depreciation.... (3) Capitalization of income.... (4) Real, actual or intrinsic value.... M. Rayburn, Rayburn on Condemnation, § 16.00 (1987). [13] In discussing the cost approach, Rayburn writes that its use is proper as long as it is made clear to the jury that the ultimate point of inquiry and decision is market value.... Id. at § 16.04 (emphasis in original). This court has also discussed the distinction between the broad concept of market value and the various approaches used in its determination. In City of Austin v. Cannizzo, 153 Tex. 324, 267 S.W.2d 808 (1954), we stated: Market value is not restricted to prevailing price.... It was clearly error to instruct the jury that the 4.57 acre tract had no market value unless the evidence revealed a sufficient number of recent sales of comparable property to establish a prevailing price. 267 S.W.2d at 812; see also Huckabee v. State, 431 S.W.2d 927, 930-32 (Tex.Civ. App.Beaumont 1968, writ ref'd n.r.e.) (error to exclude expert testimony regarding the various approaches in determining market value); State v. Richardson, 215 S.W.2d 359, 361 (Tex.Civ.App.Eastland 1948, writ ref'd n.r.e.) (But it does not necessarily follow that in the absence of such [comparable] sale or sales, the tract involved had no market value. By sale or sales of entirely similar tracts is not an exclusive method of proving market val ue.). [14] The City's admission that schools are not sold on the open market and its failure to provide evidence regarding comparable sales do not, as Duchesne suggests, constitute a waiver of the market value measure of compensation. This case presents a unique situation involving the partial taking [15] of a special purpose [16] property. The City correctly recognized that the most common method of determining market valuethe market data approachcould not be successfully utilized in this situation. Consequently, the City concluded that resort to additional methods of determining market value was necessary. At trial, the City argued the applicability of these methods and offered evidence regarding their application. We hold that the City did not waive the market value measure of compensation. [17]