By Alyssa Schnugg
Two local appraisal companies were contracted to appraise the property where Oxford Elementary School currently sits. One was hired by the Oxford School District that wants to sell the property. The other was hired by the city of Oxford that wants to purchase the land.
The two appraisals differed by more than $2 million.
Oxford Mayor Robyn Tannehill said the city assumed their appraisal was low and the school district’s appraisal was high.
“So we averaged it out and we offered the district $2 million,” she said.
The OSD received two bids – the city’s and one from a local real estate company. The city was the highest bid, beating the second bid by about $200,000.
However, the OSD Board of Trustees decided last week to let the bids expire and continue negotiating with the city. On Tuesday, during the Board of Aldermen meeting, Tannehill said until the board accepts or rejects the bid, there’s no legal method of moving forward with negotiations.
The city hired Turner Residential Appraisals of Oxford to appraise the 23 acres. The city hopes to purchase the property to build a new Oxford Police Department. The appraisal was completed in January after OSD advertised for bids.
“An inspection of the property and a study of pertinent factors, including valuation trends and an analysis of neighboring data led the appraiser to the conclusion that the market value, as of January 24, 2018, is $702,500,” the appraisal states.
In the city’s appraisal, three properties that were sold within the last year located near the school were used for comparison. They sold for $950,000; $1,200,000, and $1,068,000 at $25K, $37K and $25K per acre, respectfully. That’s an average of $29,000 per acre. The school property is 23 acres. If multiplied at the average price per acre, that figure is $667,000.
The school building itself was not included in either appraisal, due to its age.
Appraiser Kristen Gaines was hired by the OSD to perform the appraisal. The appraisal also used three sale comparisons. A portion of the 23 acres—about 7 acres—is located inside the city limits. The remaining 16 acres is located within the county.
Gaines did two separate cost comparisons, one for the 6 acres located inside the city limits, comparing it to other commercial property sold inside city limits in commercial areas off Highway 6. In those comparisons, the average cost per acre was about $300,000. The appraisal states the 6.8 acres located inside the city limits is worth about $2.1 million.
The average cost per acre in the properties used for comparisons outside the city limits is $37,500. Where the remaining property outside of the city limits is worth about $612,000.
Using cost comparisons is just one of three “approaches” used by appraisers, according to local appraiser Trip Parker, with Parker Appraisal Company, who was not involved in either the city or OSD’s appraisals. The other two are cost and income approaches. The Cost Approach is the current cost of replacing a property, less losses in value from deterioration and functional and economic obsolescence. The Income Capitalization Approach is the market value that the property’s net earning power will support based on the capitalization of net income, stabilization and residual equity.
Parker said it’s hard to say why two appraisals can be so different from each other.
“It could be a lack of information,” he said. “You can’t always compare apples to apples. Government property is hard to appraise. Zoning and location come into play, like if it’s close to the Square.”
The OSD Board is scheduled to meet June 25, but the agenda has not yet been released.
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