Accrued Depreciation. Accrued depreciation may be applied to any of the Utility’s major facilities, such as a building, pump station, power plant, etc. Accrued depreciation shall not apply to the Utility’s primary facilities, such as pipelines, conductors, poles, cable, conduit, etc. If any Utility facility does qualify for an adjustment due to accrued depreciation as defined in Program Guide: Utility Relocation and Accommodation on Federal Aid Highway Projects, the costs are calculated according to the formula in the Program Guide and the result is shown as a Utility cost in Exhibit B Cost Estimate.
Accrued Depreciation. Accrued depreciation is the difference between the replacement cost of the improvements on the effective date of the appraisal and the market value of the improvements on the same date. Depreciation is separated by three general causes including physical, functional, and economic or external. Physical Depreciation taken in this report is based on observed conditions at the time of inspection. Physical deterioration is due to normal wear and tear as a result of occupancy and weathering. The age/life method was used in estimating the physical depreciation of the building improvements. This method is estimated by dividing the remaining life of the improvements by the sum of the effective age and remaining life (known as the total physical life). The building have actual ages ranging from 16 to 19 years, the effective age of the entire building complex is estimated to be approximately years. The remaining physical life is estimated to be approximately forty-five years, assuming normal maintenance. Functional Functional obsolescence reflects the loss in value brought about by such factors as defects, deficiencies, or superadequacies that effect the structure from performing adequately the function for which it was (originally) intended. Generally, functional inadequacies are typical for older buildings and the market accepts them at a certain price level. The replacement cost method is meant to remove certain functional obsolescence relating to the overall design and construction methods, and as a result is most useful in estimating the value of newer buildings. Taking into consideration the subject's age, construction quality, design and layout, no functional obsolescence was charged to the building in the Cost Approach for the lack of adequate handicap facilities. Economic (External) Obsolescence It should be noted that gains or losses in value caused by externalities accrue to both land and buildings. Since the estimated value of the site used in the Cost Approach is its present market value as if vacant, any loss due to external causes is already included. In the Cost Approach, a loss in building value due to external causes is ascribed to external obsolescence. Economic obsolescence is stated as an impairment of desirability or useful life of a structure arising from external factors. Usually, economic obsolescence is comprised of many diverse and complex elements and can be somewhat difficult to estimate. No additional depreciation was charged as economic...
Accrued Depreciation. Accrued depreciation may be applied to any of the UTILITY’s major facilities, such as a building, pump station, power plant, etc. Accrued depreciation shall not apply to the UTILITY’s primary facilities, such as pipelines, conductors, poles, cable, conduit, etc. If any UTILITY facility does qualify for an adjustment due to accrued depreciation as defined in Program Guide, the costs are calculated according to the formula in the Program Guide and the result is shown as a cost that the UTILITY is responsible for (“Utility Cost”) in Exhibit D Cost Estimate, as referenced in Section 4.1 of this Agreement.
