The Tax Court then issued a new order in 2016 that again addressed external obsolescence
and made findings and conclusions regarding the value of relator's property.
Kansas Star's appraiser performed a combined functional and external obsolescence
analysis and found 52% obsolescence due to super-adequacy.
Appraisers refer to this as external obsolescence
, which is depreciation caused by external factors not on the property.
Deterioration is the physical decline in a building's fabric due to: Extensive use The effect of the elements The ravages of time Obsolescence however is down to: A change in user requirements (functional obsolescence) A building's competitive usefulness and value (economic obsolescence), or The impact of nearby development and accessibility (external obsolescence
They're not finding the cost approach any easier, either, because there are fewer properties to support an estimate of external obsolescence
** External obsolescence
adjustments of 25-35 percent applied to the manufacturing equipment and CWIP.
The cost approach is useful in determining depreciation values for physical deterioration, or functional or external obsolescence
, as applied to the market approach.
Economic conditions in the area, or within the industry, can cause economic or external obsolescence
to the real estate your company owns or leases.
The four common forms of obsolescence are physical deterioration, functional obsolescence, technological obsolescence, and external obsolescence
. Physical deterioration may affect sports intangibles such as player contracts.
Economic obsolescence, also called external obsolescence
, is defined as "a loss in value caused by factors outside a property." Economic obsolescence can be attributable to such influences as political and social factors, insufficient demand, changing technology, costs attributed to governmental regulations and negative economic conditions.
In the earlier proceeding, the Supreme Court largely affirmed the Tax Court's valuation decision, remanding only for further findings on the beta-factor calculation and reconsideration of relator's external obsolescence
All of these developments factor into the valuation of casino real property, as they represent the elements that create both functional and external obsolescence
, which must be accounted for in each of the three valuation methods discussed next.