Question

A Government School facility is to be valued, for asset register purposes. The facility is 15 years old. The total floor space is 24,000 square feet. It occupies a site of 2 acres. It is in a residential and commercial area. It is zoned Low Density Residential. The external surfaces are a total area of 16,000 square feet. These are agreed as half way through serviceable life. The most recent local land sale was a site that sold for $1,000,000 per acre, tha site has the planning designation Aeditum Density Residential. The most recent new school built cost $250 per square foot for the buildings, an $100 per square foot for the external surfaces. (Excluding Land) The assumed serviceable life of the new school is 60 years. Assess the value, assume that you are reporting to the Government. State any assumptions.

Answer 1

To assess the value of the Government School facility, the buildings' depreciation, external surface longevity, and land value are considered, totaling a valuation of approximately $7,300,000.

Step-by-step explanation:

To assess the value of a Government School facility for asset register purposes, several factors must be considered, including the condition and age of the facility, the current cost of construction, the serviceable life of the building, and the value of the land it occupies.

The facility has a total floor space of 24,000 square feet and is located on a site of 2 acres in a residential and commercial area. Since the school is 15 years old and the assumed serviceable life of a new school is 60 years, we can approximate the remaining life of the school to be 45 years (75% of its serviceable life is remaining). For the buildings, the construction cost of a new facility is $250 per square foot, which totals $6,000,000 for the floor space. Considering the age of the school, we adjust for depreciation using the remaining serviceable life, which gives us an adjusted building value of $4,500,000.

Regarding the external surfaces, which are half way through their serviceable life, we first calculate the replacement cost at $100 per square foot for the 16,000 square feet, resulting in $1,600,000. As they are halfway through their serviceable life, we take 50% of that value, adding $800,000 to the building's value.

For the land valuation, we note the local land sale price at $1,000,000 per acre for a different zoning type (Aeditum Density Residential), which may not be directly comparable to our zoning (Low Density Residential), but it can provide a rough estimate. Assuming similar land values, the 2 acres of land on which the school sits would be valued at $2,000,000.

The total value of the Government School facility considering adjusted construction costs and land value is therefore $7,300,000.

Assumptions made include that the recent local land sale is a suitable comparable for the school site's value, construction costs have remained stable since the most recent new school was built, and that the facility's age-based depreciation reflects its actual condition.