50.1K

Verified Solution

Link Copied!

answer asap please and thank you

HIPE A WO INO 4 MOON OM CONTINE EN UW 48 3 2002 PERO EGO 25 . 3 1 2 3 NE MA WOWE es KOTARVATKO VIENEWACOWANIU COM EXHIBIT 2 web 674 10 AN ere MO 7 73 19 2000 1 23 4100 1 40 64 U T 2 00 180 200 Hoe TI Food 34 18 3 413) NO 16 7216 000 120 YA TH 1400 TU Tas M . O 07 14 DOCE 23 PE til SLOW 10 W 12 0032 SO 118 W 120W MO SO MW 2000-10-10 OW OL MO ON Ted YO M 10 0 9 44 41 4 0 osti OE MUM OCE 30 22 28 24 04 IN 10000 TO 723 MOTO SE 48 PER 45 140 IN 144) UT WE 1 What 2 wand What 4 WE ME CE 4 VER 01 11 11 11 110 ET 1541 11 IN SO 2123 131 MW DO KE NE w 104 13 101 3 2 ET PR POTI HO 10000410 7 HIN HI PB 20 M 10 ROL WE 10 1 . Tie NOR 217 10 OP 1 TA OT 11 7123 2 M 4 EN SE 3 41 VIR LA Cal 0 O 49 44 . 2004 5. 22 MO OK WIR M 4 BE 45 Red P 51 WE 225 SR TO 23 WE 5 wit 55 HS HO PL 1 S7 40 40 147 - LAM 10 IR RE THE 99 RE IF 4 WE M TO ga SD 04 PRO NI 11 M 09 14 15 14 SP EXHIBIT 2 Cont'd LASTENWALTOR MOON MATA ME ADO HT ALOILLA F ME TALE TAAL EXHIBIT 2 Cont'd U EEN ACTOR AROMATARA WIPE 10 ON VS . ME W 7 CP SP T! M . 1104 U w WE ha DES LES F 154 M E--THEATRE of H IN ut MI NIR Fie NE H TE PE - 341 wil NO TAN Lex TO 166 Management Control ACCT AC10037 Page 3 960 properties that are an exact match. How do you justify that one property is a better comparator than another? Then there are the final subjective adjustments. An appraiser might say that she needs to increase her estimate by 10 per cent because of location, but I have never heard someone justify why it is 10 per cent as opposed to five per cent or 25 per cent. The Data The city had, in the past, used a formula based upon market value of the amount of land expropriated, plus a lump sum that included costs for all loss, disturbance costs and injurious affection. However, Canning did not feel that the city's formula properly accounted for all the factors and for the total loss of market value the residents would suffer, leaving the city vulnerable to compensation claims. For example, there was no consideration given to the fact that, as a result of the widening, traffic counts were expected to reach 33,000 per day by 2008 Canning had assembled a database that included sales of 104 residential properties on and around Springbank Drive from January 1998 to May 2003. The data (sce Exhibit 2) included past sales of residential properties, along with conditional attributes (c.g. lot size). A total of 18 attributes were included for each property, as well as the date of sale. The Decision Cunning needed to estimate the loss of market value for each homeowner and provide justification for the approach in the event the City of London was challenged over the compensation claims in court 165 Page 2 SA The project also included the construction of sidewalks, the addition of cabling allowances for cyclists, the installation of new pedestrian and traffic signals, improvements to road drainage and street lighting Construction was expected to be completed by 2004 Al issue was the compensation the residents could seck porn to the Expropriations Act for the expected front yard setbacks, increased traffic volumes and other problems caused by the widening of Springbunk Drive as a result of the land expropriation already approved by the city to allow construction to proceed The Real Estate Appraisal Industry A real estate appraiser is normally retained to provide an expert opinion on the value of a property. For residential units, this is often the "fair market value bused upon the analysis and interpretation of sales data. Thus appraisers often become involved in cases where changes in value are anticipated or have occurred as a result of an action or actions by a third party A common approach to valuing residential properties is the sales comparison approach, which looks at the price of similar properties in the marketplace. The sales of these properties are analysed and the sale prices adjusted to account for differences in attributes with the subject property to determine its fait market value. The expert judgment of the appraiser is traditionally used to assign adjustments for attributes such as location, lot size, etc. that affect the fair market value. These adjustments could then be used to determine the losses in market value expected by the homeowners as a result of changes to their property determine appropriate compensation Canning Consultants Inc. As opposed to the traditional methods, Canning Consultants Inc. favored quantitative methods, referred to in the industry as Automatic Valuation Models AVMs)which incorporated specific real estate and property attribute data o produce un estimate of market value. AVMs relied on statistical methods, such as multiple regression, to determine the relationship between the various attributes and market value Canning felt that the amount of subjective bias introduced by the individual appraiser was a problem in the application of the comparison method. According to Canning: There's so much room for subjective judgments in this. You have the appraiser's choice of comparison. You will never find two 164 Montagement Control ACOTACION Ivey Richard Ivey School of Business The University of Western Ontario 9B06E006 SPRINGBANK DRIVE Leo Nacional pred the under the worst of Professor Greg Zaric soley to provide material for The authors may have diaghed certain names and other enting formation to protect Boney Aey Montagem Services proves any form of reproduction storage or warmittal wout as written argento To order one or movest permission to reproduce material contact Ivey Public Ivey Management Services co ich wy School of Business, The University of Western Ontario London Ontario Canada, NSA3KT. hione (579) 661-3305 fax (519) 661-3882. e-matcasesvey.wo.ca Copyright 2000 y Management Services Version: (AJ 2007-04-13 SPRINGBANK DRIVE In June 2003, George Canning, owner of Canning Consultants Inc., was retained by the City of London. The city was expropriating a portion of property as part of a project to widen Springbank Drive between Whamcliffe Road and Wonderland Road. All property owners had been offered some compensation by the city. Canning was asked to determine the appropriate compensation for the taking." Widening of Springbank Drivo London is located in Southwestem Ontario, approximately 200 kilometres southwest of Toronto, and 200 kilometres northeast of Detroit, and it has a population of roughly 350,000. Springbank Drive ran east-west (see Exhibit 1) between Wharncliffe Road on the cast, just east of the downtown core, and Byron in the southwest end of London. Springbank was one of the busiest routes in the city, carrying approximately 24,000 cars per day. At the east end, Springbank Drive flowed into Horton Street, which flowed in Hamilton Road. Together, Springbank, Horton, and Hamilton formed a continuous route across the city On August 16, 2002, the federal government, along with the City of London Ontario, announced plans under the Canada Ontario Infrastructure Program to widen 2.55 kilometres of Springbank Drive from two lanes to four between Horton Street and Wonderland Road and to construct turning lanes at key intersections. HIPE A WO INO 4 MOON OM CONTINE EN UW 48 3 2002 PERO EGO 25 . 3 1 2 3 NE MA WOWE es KOTARVATKO VIENEWACOWANIU COM EXHIBIT 2 web 674 10 AN ere MO 7 73 19 2000 1 23 4100 1 40 64 U T 2 00 180 200 Hoe TI Food 34 18 3 413) NO 16 7216 000 120 YA TH 1400 TU Tas M . O 07 14 DOCE 23 PE til SLOW 10 W 12 0032 SO 118 W 120W MO SO MW 2000-10-10 OW OL MO ON Ted YO M 10 0 9 44 41 4 0 osti OE MUM OCE 30 22 28 24 04 IN 10000 TO 723 MOTO SE 48 PER 45 140 IN 144) UT WE 1 What 2 wand What 4 WE ME CE 4 VER 01 11 11 11 110 ET 1541 11 IN SO 2123 131 MW DO KE NE w 104 13 101 3 2 ET PR POTI HO 10000410 7 HIN HI PB 20 M 10 ROL WE 10 1 . Tie NOR 217 10 OP 1 TA OT 11 7123 2 M 4 EN SE 3 41 VIR LA Cal 0 O 49 44 . 2004 5. 22 MO OK WIR M 4 BE 45 Red P 51 WE 225 SR TO 23 WE 5 wit 55 HS HO PL 1 S7 40 40 147 - LAM 10 IR RE THE 99 RE IF 4 WE M TO ga SD 04 PRO NI 11 M 09 14 15 14 SP EXHIBIT 2 Cont'd LASTENWALTOR MOON MATA ME ADO HT ALOILLA F ME TALE TAAL EXHIBIT 2 Cont'd U EEN ACTOR AROMATARA WIPE 10 ON VS . ME W 7 CP SP T! M . 1104 U w WE ha DES LES F 154 M E--THEATRE of H IN ut MI NIR Fie NE H TE PE - 341 wil NO TAN Lex TO 166 Management Control ACCT AC10037 Page 3 960 properties that are an exact match. How do you justify that one property is a better comparator than another? Then there are the final subjective adjustments. An appraiser might say that she needs to increase her estimate by 10 per cent because of location, but I have never heard someone justify why it is 10 per cent as opposed to five per cent or 25 per cent. The Data The city had, in the past, used a formula based upon market value of the amount of land expropriated, plus a lump sum that included costs for all loss, disturbance costs and injurious affection. However, Canning did not feel that the city's formula properly accounted for all the factors and for the total loss of market value the residents would suffer, leaving the city vulnerable to compensation claims. For example, there was no consideration given to the fact that, as a result of the widening, traffic counts were expected to reach 33,000 per day by 2008 Canning had assembled a database that included sales of 104 residential properties on and around Springbank Drive from January 1998 to May 2003. The data (sce Exhibit 2) included past sales of residential properties, along with conditional attributes (c.g. lot size). A total of 18 attributes were included for each property, as well as the date of sale. The Decision Cunning needed to estimate the loss of market value for each homeowner and provide justification for the approach in the event the City of London was challenged over the compensation claims in court 165 Page 2 SA The project also included the construction of sidewalks, the addition of cabling allowances for cyclists, the installation of new pedestrian and traffic signals, improvements to road drainage and street lighting Construction was expected to be completed by 2004 Al issue was the compensation the residents could seck porn to the Expropriations Act for the expected front yard setbacks, increased traffic volumes and other problems caused by the widening of Springbunk Drive as a result of the land expropriation already approved by the city to allow construction to proceed The Real Estate Appraisal Industry A real estate appraiser is normally retained to provide an expert opinion on the value of a property. For residential units, this is often the "fair market value bused upon the analysis and interpretation of sales data. Thus appraisers often become involved in cases where changes in value are anticipated or have occurred as a result of an action or actions by a third party A common approach to valuing residential properties is the sales comparison approach, which looks at the price of similar properties in the marketplace. The sales of these properties are analysed and the sale prices adjusted to account for differences in attributes with the subject property to determine its fait market value. The expert judgment of the appraiser is traditionally used to assign adjustments for attributes such as location, lot size, etc. that affect the fair market value. These adjustments could then be used to determine the losses in market value expected by the homeowners as a result of changes to their property determine appropriate compensation Canning Consultants Inc. As opposed to the traditional methods, Canning Consultants Inc. favored quantitative methods, referred to in the industry as Automatic Valuation Models AVMs)which incorporated specific real estate and property attribute data o produce un estimate of market value. AVMs relied on statistical methods, such as multiple regression, to determine the relationship between the various attributes and market value Canning felt that the amount of subjective bias introduced by the individual appraiser was a problem in the application of the comparison method. According to Canning: There's so much room for subjective judgments in this. You have the appraiser's choice of comparison. You will never find two 164 Montagement Control ACOTACION Ivey Richard Ivey School of Business The University of Western Ontario 9B06E006 SPRINGBANK DRIVE Leo Nacional pred the under the worst of Professor Greg Zaric soley to provide material for The authors may have diaghed certain names and other enting formation to protect Boney Aey Montagem Services proves any form of reproduction storage or warmittal wout as written argento To order one or movest permission to reproduce material contact Ivey Public Ivey Management Services co ich wy School of Business, The University of Western Ontario London Ontario Canada, NSA3KT. hione (579) 661-3305 fax (519) 661-3882. e-matcasesvey.wo.ca Copyright 2000 y Management Services Version: (AJ 2007-04-13 SPRINGBANK DRIVE In June 2003, George Canning, owner of Canning Consultants Inc., was retained by the City of London. The city was expropriating a portion of property as part of a project to widen Springbank Drive between Whamcliffe Road and Wonderland Road. All property owners had been offered some compensation by the city. Canning was asked to determine the appropriate compensation for the taking." Widening of Springbank Drivo London is located in Southwestem Ontario, approximately 200 kilometres southwest of Toronto, and 200 kilometres northeast of Detroit, and it has a population of roughly 350,000. Springbank Drive ran east-west (see Exhibit 1) between Wharncliffe Road on the cast, just east of the downtown core, and Byron in the southwest end of London. Springbank was one of the busiest routes in the city, carrying approximately 24,000 cars per day. At the east end, Springbank Drive flowed into Horton Street, which flowed in Hamilton Road. Together, Springbank, Horton, and Hamilton formed a continuous route across the city On August 16, 2002, the federal government, along with the City of London Ontario, announced plans under the Canada Ontario Infrastructure Program to widen 2.55 kilometres of Springbank Drive from two lanes to four between Horton Street and Wonderland Road and to construct turning lanes at key intersections

Answer & Explanation Solved by verified expert

See Answer