Amusement Park Improvements Impact Market Value in Buyback Deal

In this case, a Louisiana municipal government passed a resolution which took an amusement park premise from the possession of the plaintiff, and awarded the service contract for those premises to a new party. This resolution required the new entity to invest at least several million dollars into improvements that would not only permit continued operation of the amusement park, but would also permit operation of a multitude of additional facilities on the premises. Because these uses, and other activities in which the new entity was authorized to engage, were not authorized for the plaintiff to conduct during its tenure at the resort,the plaintiff argued that the buyback provision of the lease was triggered, obligating the municipality to buy all buildings and improvements made to the premises during the plaintiff’s tenancy at what was then the fair market value.

The plaintiff believes those improvements include virtually all of the infrastructure of the resort property. The plaintiff believes that the roller coaster they constructed on the property, which was built on old swampland, and the improvements that the plaintiff made to make the land suitable for construction, are perhaps the most valuable improvements to the property. If the swampland had not been properly filled, the new entity would not have been approved and any such operation would not exist today. The plaintiff believes these restorative improvements have a value of several million dollars that the new entity was required to invest when it took over the premises. Since the new entity has already completed much of its improvements, and has already invested up several million dollars on its complex improvements to date, the expert will not be able to look at the improvements operating and in place as is the usual situation. A visit to the premises will show a new amusement park in place that was only possible because of the plaintiff’s work. The plaintiff has photos of the former operation, tax and purchase documents and depreciation schedules supporting the cost and placement of their improvements.

Question(s) For Expert Witness

1. Can you discuss your background and how you can assist by calculating the fair market value (as of July 2012) in this circumstance?

Expert Witness Response E-007686

I have owned a real estate valuation and consulting company for eight years. In addition to the review of specific case details, I can assist in calculating the retrospective fair market value in this circumstance by the following: 1. Determine the cost of the landfill closure. 2. Apply a cost approach using the comparative-unit method and/or actual costs with an appropriate estimate of all three types of depreciation. 3. Research of comparable sales for the improvements. 4. Consider if the income approach would be necessary for the special use property.