Division of Property Valuation GRAIN ELEVATOR APPRAISAL GUIDE FOR THE STATE OF KANSAS 2021 EFFECTIVE DATE OF APPRAISAL GUIDE JANUARY 1, 2021 300 SW 29th Street, Topeka, KS 66611 Phone (785)296-2365 Fax (785)296-2320 Hearing Impaired TTY (785)2962366 http://www.ksrevenue.org/pvd i Table of Contents PART I - INTRODUCTION ............................................................................................................................................................................... 1 SUMMARY OF IMPORTANT FACTS ....................................................................................................................................................... 1 BASIC GRAIN ELEVATOR OPERATIONS ............................................................................................................................................. 1 PART II - PREMISES OF THE APPRAISAL GUIDE ................................................................................................................................. 3 STATEMENT OF PURPOSE ....................................................................................................................................................................... 3 RIGHTS TO BE APPRAISED ...................................................................................................................................................................... 3 SCOPE OF THE APPRAISAL GUIDE ....................................................................................................................................................... 3 PART III - PRESENTATION OF DATA ........................................................................................................................................................ 4 AREA ANALYSIS ............................................................................................................................................................................................ 4 INDUSTRY BACKGROUND ........................................................................................................................................................................ 7 TYPES OF GRAIN ELEVATORS ............................................................................................................................................................. 14 Type of Operation ................................................................................................................................................................................. 14 TYPES OF GRAIN STORAGE (ELEVATOR) CONSTRUCTION ................................................................................................... 16 GRAIN ELEVATOR - IMPROVEMENT ANALYSIS .......................................................................................................................... 18 INSTRUCTIONS FOR THE GRAIN ELEVATOR WORKSHEET ................................................................................................... 19 PART IV - ANALYSIS OF DATA AND CONCLUSIONS ........................................................................................................................ 24 HIGHEST AND BEST USE ANALYSIS .................................................................................................................................................. 24 APPROACHES TO VALUE ....................................................................................................................................................................... 26 COST APPROACH ....................................................................................................................................................................................... 27 Estimating the Subject’s Land Value ............................................................................................................................................. 29 Cost Analysis ........................................................................................................................................................................................... 29 Depreciation Analysis ......................................................................................................................................................................... 30 Regional Market Analysis .................................................................................................................................................................. 34 East Region Analysis ........................................................................................................................................................................... 34 West Region Analysis .......................................................................................................................................................................... 36 ii Reconciliation of Depreciation ........................................................................................................................................................ 38 SALES COMPARISON APPROACH ....................................................................................................................................................... 39 Map of Grain Elevator Sales Used in Analysis ........................................................................................................................... 40 Analysis of Improved Sales ............................................................................................................................................................... 41 Statewide Database Analyses .......................................................................................................................................................... 42 East Region Analysis ........................................................................................................................................................................... 44 West Region Analysis .......................................................................................................................................................................... 46 Reconciliation of the Sales Comparison Approach ................................................................................................................. 48 INCOME CAPITALIZATION APPROACH ........................................................................................................................................... 49 RECONCILIATION OF VALUE INDICATIONS AND FINAL VALUE ESTIMATE .................................................................. 51 Exposure of Time Analysis ............................................................................................................................................................... 52 ADDENDUM ................................................................................................................................................................................................. 53 GLOSSARY..................................................................................................................................................................................................... 53 APPENDIX A: DIRECTIVES AND STATUTES ....................................................................................................................................... 58 APPENDIX B: MARSHALL VALUATION SERVICE .............................................................................................................................. 62 APPENDIX C: GRAIN ELEVATOR SALES ............................................................................................................................................... 70 MISCELLANEOUS INFORMATION ...................................................................................................................................................... 72 Abstractions and Negative Value ................................................................................................................................................... 72 Premium Value ...................................................................................................................................................................................... 72 Depreciation Floor ............................................................................................................................................................................... 73 Pack and Even Example ..................................................................................................................................................................... 74 Interpolation Calculation .................................................................................................................................................................. 75 GRAIN ELEVATOR SALE REPORTS .................................................................................................................................................... 79 iii PART I - INTRODUCTION SUMMARY OF IMPORTANT FACTS In order to appraise grain elevators, it is important to understand that there are many different variables that can differentiate a grain elevator’s value. Items such as grain production, location, type and physical/operational characteristics are just a few of the things to be considered. Kaufman summed it up best when stating: “...grain is a commodity with a frequently changing price,