Public School Building

[andrew81]

My supervisor has been hired by the school board to appraise a public school building. The building is owned by the elementary school and its use is shared by the elementary and high school. The elementary school has plans to construct a new building and sell the existing building to the high school. The way i understand it the elementary school is looking for a value to sell the building to the high school for budgeting/planing purposes for the new building. The intended use is not for a FRT.

As I am in training as a residential appraiser i do not want to take my supervisors time to explain/teach me the concepts behind this type of appraisal. However i am interested in how the value would be derived.

The school is located in a small town of about 3,000. The town is located in a county of about 20,000. Off the top of my head I can think of some vacated school buildings within the county and nearby counties which have sat vacant and not resold. I can think of one private catholic school building which sold many years ago and has since had many failing ventures. The town did have 1 manufacturing plant which shut down many years ago and did not sell so they tore down the manufacturing plant but left the office space which is still vacant. There is an over supply of small office buildings or similar type space with no active market. There could be many possible uses, however there are only 2 probable uses: continued use as a public school, and vacant.

To me a value-in-use is most appropriate. The high school is the most likely buyer and the use would continue as a school. There is a lack of market date to prove what a similar type building would sell for (lack of sales of similar type buildings even for other uses).

Ok so if there is no market value, then how does one derive a value-in-use? How much is the building worth to the high school to continue its use? How much is the building worth to the elementary school?

Even if one can derive a H&BU as a nursing home or whatever, im still interested in how value-in-use is derived on a 1950's public school building with a lack of market date to derive reliable depreciation for the cost approach, and no reliable income data to derive the income approach?

 

[sputnam]

Your supervisor...if he/she is worth working for...will probably be pleased that you are interested in learning. Ask if you can tag along. Ask any questions you might have.

 

[Terrel L. Shields]

so if there is no market value, then how does one derive a value-in-use?

There is "market value"... It is likely much less than "value in use". Define both. I say there is market value because sight unseen, I offer $20 for it.

The value in use question begs the "remaining good". It is a great time for the use of the cost approach. Cost to construct a similar building. Estimate any repairs needed. Estimate the remaining life then make your judgments from that.

 

[The Warrior Monk]

To me a value-in-use is most appropriate.

I would be careful with that assumption. It is very possible that there are tax consequences that apply, and that fair market value, not use value, is required. I would clarify that issue with the client, the client's accountant, or the client's attorney.

 

[Restrain]

Older school, watch out for asbestos, etc. while the school may not recognize it, asbestos- wrapped pipes, asbestos tile, blown asbestos insulation may be present. Big remediation costs.

 

[Michigan CG]

The school is located in a small town of about 3,000. The town is located in a county of about 20,000. Off the top of my head I can think of some vacated school buildings within the county and nearby counties which have sat vacant and not resold.

State wide search for comps and depending where you are in Iowa cross over to the neighborhing states. You state only 20,000 PPL in the county so that tells me you are most likely in the western or northern part of the state.

 

[JTip]

I have one that just closed on 6/13. 11 acres with a 38,000 s.f. school building. Two baseball fields. They plan on making it an assisted living home.

Less than a thousand mile away......lol....pm for details if it will help

 

[leasedfee]

Public schools sell to private, charter, religious, and trade schools. In a metropolitan area there is a sufficient market to do a sales comparison approach.

(Developer's also may want the land, but this is a slightly different H&BU and shouldn't be used to value the building.)

 

[Mountain Man]

These are the type of properties you'll search for sales throughout the state, or even adjoining states within similar size communities. Sometimes these facilities sell to churches, private school operators, or even as day care facilities. Some other examples of old school buildings I've appraised under an alternative use are: government office, mini-storage, and even one used as a recycling center for different grades of paper. If it's a good, solid building, someone will think of a use. LOL

 

[Meandering]

We have one that's now apartments. One that was listed for sale and expired without selling and one old Ma Bell office building the school district bought and turned into a school. All 3 are all brick buildings.