Opinion ID: 882068
Heading Depth: 1
Heading Rank: 1

Heading: Ferro's 1987 and 1988 Appraisals

Text: Ferro, on behalf of the Trustees, had made two appraisals of the Galleria property. Ferro described the first appraisal as an evaluation, using a market approach, and the January 1988 appraisal as a fair market analysis using an income approach. The first appraisal, dated November 9, 1987, set the value of the Galleria property between $256,000 and $325,000, based on sales of other commercial property in Great Falls. Ferro categorized Great Falls office space as good quality, average quality, or lower quality, identifying the Galleria building as having lower quality office space. In calculating the appraisal figures, he deducted the costs of clean-up, maintenance, and renovation, ranging from $100,000 for general clean-up and maintenance to $400,000 for major remodeling. On January 1, 1988, Ferro updated his first appraisal for the purpose of an appeal before the State Tax Appeal Board concerning the Galleria property, arriving at a fair market value of $266,500. Ferro used the income approach as the most applicable approach for investment properties. According to a September 22, 1989, order of the State Tax Appeal Board, the parties stipulated to an appraised value of $562,736 for the Galleria property. Steven Hall, MAI appraiser testifying for Galleria Partnership, rated Ferro's $256,000 to $325,000 evaluation of the Galleria property as very low for 45,000 square feet of gross building area in the heart of the central business district of Great Falls. He pointed out that Ferro's valuations were lower than the $565,000 bid at the sheriff's sale, a value normally less than fair market value; that the basement area was not non-rentable, but previously had been rented for a substantial amount; and that problems with water in the basement required only minor repairs. In Hall's opinion, comparisons with the sales of other commercial properties were invalid because of the few number of sales and the uniqueness of the Galleria property.