Sec. 12-63b. Valuations of rental income real property.

(b) In the case of an eligible workforce housing opportunity development project, as defined in section 8-395a , the assessor shall use the capitalization of net income method based on the actual rent received for the property. (c) For purposes of subdivision (2) of subsection (a) of this section and, generally, in its use as a factor in any appraisal with respect to real property used primarily for the purpose of producing rental income, the term “market rent” means the rental income that such property would most probably command on the open market as indicated by present rentals being paid for comparable space. In determining market rent the assessor shall consider the actual rental income applicable with respect to such real property under the terms of an existing contract of lease at the time of such determination. Cited. 220 C. 335; 226 C. 92; 228 C. 23; 231 C. 731; 240 C. 192; 242 C. 363. Assessor may require income and expense reports from property owner only when there are insufficient data re current sales of comparable properties. 292 C. 125. Cited. 11 CA 566; 33 CA 270; Id., 511; 38 CA 158; Id., 165. Statute requires that court give consideration to the replacement cost approach only to the extent applicable in its determination of value and does not mandate that a particular method must be utilized or otherwise serve to limit court's discretion to choose the method that it believes will result in the fairest approximation of the subject property's value. 77 CA 21. Subsec. (c) (former Subsec. (b)): Subsec. requires that a valuation based on the income capitalization approach in Subsec. (a)(2) consider both contract rents and market rents; and neither the amount of time passed since the lease was negotiated nor the length of the lease is a factor contemplated by Subsec. 329 C. 484. Court is required to consider both market rent and actual rent when determining fair market value using income capitalization method. 119 CA 600. The income capitalization approach consists of the following seven steps: (1) estimate gross income, (2) estimate vacancy and collection loss, (3) calculate effective gross income (i.e., deduct vacancy and collection loss from estimated gross income), (4) estimate fixed and operating expenses and reserves for replacement of short-lived items, (5) estimate net income (i.e., deduct expenses from effective gross income), (6) select an applicable capitalization rate and (7) apply the capitalization rate to net income to arrive at an indication of the market value of the property being appraised. 211 CA 559.