Docket No. 05-00359.001-C-3
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$85,776 as an expense from his initial value estimate of
$3,139,472. This method resulted in the subject's projected net
operating income of $264,428, capitalized at 8.25%, resulted in
value estimate of $3,205,188 or $33,387 per rental unit. Based
on the two value estimates under the income approach, Nelson
concluded a final value estimate for the subject property of
$3,200,000 or $33,333 per rental unit. Again, Nelson deducted
$50,000 to account for the contributory value of personal
property resulting in a final value estimate under the income
approach of $3,150,000 as of January 1, 2005.
Under cross-examination, Nelson testified he was engaged to
prepare the appraisal report on July 19, 2006; inspected the
subject property on August 26, 2006; and transmitted the report
by letter dated September 11, 2006. He indicated the county
supplied the subject's property record card and the appraisal
report prepared by Richter. With respect to Public Act 93-0533
(35 ILCS 200/10-235, 10-245 and 10-250), Nelson identified the
specific assumptions related to the Act of a 5% vacancy rate and
the use of restricted rents. Nelson testified his appraisal
report is in conformity with Public Act 93-0533, based on his
understanding of the law.
Nelson testified one source of the data within the appraisal was
taken from Richter's appraisal report, but the stabilized
projection amounts were based on his calculations using the
actual data and market comparables. He did not know if the data
used from the Richter report was independently audited. He not
prepare a formal review of the Richter appraisal, but he did read
parts of the report. Page 2-B of the report identified plans for
five barrier-free (handicapped) units to be constructed and these
units were built as planned. However, Nelson acknowledged he did
not see any of these units during inspection and did not know if
they were constructed. The appraiser next discussed Quad City
area retail sales on the Illinois and Iowa sides of the
Mississippi River. He testified the Quad Cities is a single
economic region in the eyes of the federal government with
virtually little difference between the two sides of the
community in terms of economics. He testified the relevance of
Iowa being the largest population is highly important to the
Illinois side of the river.
With respect to expenses under the income approach, Nelson
testified he eliminated the line item for bad debt because the
law required the use of a vacancy and collection loss rate of 5%.
Nelson testified he stabilized the computer expenses at $2,750
based on the consistent amounts reported in 2002 and 2003 of
$1,167 and $2,696, respectively, which reportedly increased to
$5,765 in 2004. Likewise, Nelson stabilized the repairs and
maintenance amount at $15,000 because it is more in-line with the
