Opinion ID: 2493631
Heading Depth: 1
Heading Rank: 9

Heading: Dax Alexander and James Stokes

Text: ¶ 20. In rendering a replacement-cost estimate for the Dedeaux utility system's components as of December 3, 1996, Alexander determined a unit price for each of the items provided by Stokes based upon bid tabulations for actual projects in the area[,] then multiplied that unit price by the quantity data provided by Stokes. In calculating this estimate, Stokes instructed Alexander to determine the cost to construct the Dedeaux system new in 1996... under the conditions it was originally constructed[,] i.e., assuming there was no development in the area. (Emphasis added.) As such, Alexander's estimate admittedly was not based upon the cost to a contractor who would have to go in[to] an existing subdivision and rebuild the water and sewer systems. On this point, Alexander acknowledged that replacing the system in 1996 would have required addressing existing constraints, and that such an estimate would possibly be greater. Likewise, Stokes testified that [i]f you had to replace what was already there you would have to dig up streets and driveways and everything else to replace and it would cost a lot more. (Emphasis added.) But Stokes added that this was a good system, [10] and [t]here's no reason to add cost to these items in theory that you've got to go dig them up and fix the roads and the streets when they don't have to be dug up. According to Stokes, [e]verything I've ever read about depreciated replacement cost ... states ... you replace the asset with current cost and then you depreciate it back to the date and time it was placed in service. Utilizing Alexander's per-unit replacement cost and useful-life estimates for the components of the Dedeaux utility system as of December 3, 1996, Stokes performed the depreciation calculation and determined the depreciated replacement cost of Dedeaux's operating assets was $3,451,961.