Commonly Referenced Numbers
There has been some confusion surrounding the Yampa Building. Specifically, there are a few numbers that have been used without clear understanding of what each number means. Below are commonly referenced numbers and explanations of what each number represents:
$1.6 Million
This number is the "Assessed Value" of the Yampa Building, according to the County Assessor. See below for details on the difference between an "Assessed Value" and a "Market Value".
$5.8 Million
This number is listed as the "Replacement Value" in the Colorado Department of Education's (CDE) BEST Assessment (linked below). This assessment was completed by certified engineers identified by CDE.
$3.3 Million
This number comes from the CDE's BEST Assessment completed in 2017 (linked below). The $3.3 million number is listed as the "Condition Budget" of the Yampa Building. This number represents a cost estimate of needs for the building in the next five years.
What is the difference between "Assessed Value" and "Market Value"?
According to Moffat County Assessor, Chuck Cobb:
Market Value: The most probable price that a given property will bring in an open market (exposed to the market for a reasonable amount of time). Or, in plain English, it's the price that a buyer is willing to pay for a property, and that a seller is willing to accept.
Assessed Value: Municipalities employ an assessor to place a value on a property in order to "levy property taxes" on it. To arrive at a value, the assessor looks at what similar properties are selling for, the value of any recent improvements, any income you may be making from it, and other factors - like the replacement cost of the property. When sales of properties are minimal or non-existent, the assessor uses statistics and modeling to create a value for a specific property. Factors such as the buildings construction type, its typical use, age, condition, improvements, total square footage, and land all are factors that affect the value set by the assessor. Additionally, for commercial properties, the use of the income approach for value is used frequently to determine the value of a commercial building. Factors such as office rental rates, sales, and generally accepted expenses are used to determine a net income and that is then multiplied by a cap rate to determine the value of a commercial property. This approach would be more typical for a building like the schools. Values set by the assessor are only completed every two years in Colorado, and is based on a collection period of 24 months in a rears... Hence the fact that because of the ebbs and flows of a market, the assessors value may be lower or higher than what the current market will bear. Lastly, since properties like the school district's or other municipal buildings are tax exempt, the assessors values are not scrutinized like one that is taxable.
The Bottom Line - Market Value and Assessed Value do have some similarities, but in no way should they be considered equal.