Fair market value can change. Simply because the City valued a lot at $16 Million Dollars and simply because an Owner bought it 3 years earlier for almost the same amount does not necessarily mean that is the value of the property.
The best thing an Appraiser can do is to be as fair minded and make his own determination on what he thinks the value is, and verify it should he chose, with a purchase price but within the last 3 years. However, purchase prices can exceed or be far less than their true fair market value of a piece of property. The City’s simple reliance on a purchase price in Nashville, Tennessee was a very, very big mistake.
The Tennessee Court of Appeals affirmed on Tuesdaya lower court’s decision that Metro vastly underpaid for a key piece of property the city took from a private developer to build the 1-million-square-foot building south of Broadway.
The court-ordered higher price puts Music City Center about $16 million over its original $57 million land budget.
A Nashville jury ruled in 2011 that a 5.66-acre parking lot owned by Tower Investments was worth $30.4 million, which was more than double the $14.8 million Metro offered. Tower Investments purchased the property in January 2007 for about $14.6 million.
City officials have expressed dismay at the thought of a parking lot increasing in value by nearly $20 million in nearly three years.
But Tower’s key argument was that it had deep experience developing property, and it would have built a mixed-use project there that would have earned them much more.