Arthur D. Little, Inc. v. Board of Assessors of the City of Cambridge (November 22, 2002)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD





ARTHUR D. LITTLE, INC.		v.	THE BOARD OF ASSESSORS
OF THE CITY OF CAMBRIDGE

Docket Nos.: F205259 (FY 1993)	Promulgated: 
		   F215778 (FY 1994)	November 22, 2002 



	These are appeals under the formal procedure pursuant to G.L. c. 59, §§ 64 and 65 from the refusal of the appellee to abate taxes on certain real estate in the City of Cambridge assessed under G.L. c. 59, § 38 for fiscal years 1993 and 1994.  
	Former Commissioner and Acting Chairman Wall heard these appeals.  Present Chairman Burns and Commissioner Scharaffa joined him in the decisions for the appellant.  
	These findings of fact and report are made pursuant to requests by the appellant pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.  

	Robert W. Harrington, Esq. and Robert J. Harrington, Esq. for the appellant.


	Joseph F. Dalton, P.C., Esq. and Ellen M. Hutchinson, Esq. for the appellee. 

FINDINGS OF FACT AND REPORT

	On January 1, 1992 and 1993, Massachusetts Institute of Technology ("MIT") was the assessed owner of the property located at 30 Memorial Drive and 134 Main Street in the City of Cambridge (together "subject property," "subject," or "property").  The appellant, Arthur D. Little, Inc. ("ADL"), leased the property from MIT in 1962 under a thirty-year lease that, after being renewed for an additional five years, was due to expire in 1997.  The terms of the lease require ADL to pay all of the relevant real estate taxes.  The subject site contains approximately 46,006 square feet of land that is improved with two buildings.  The front building ("30 Memorial Drive"), which was built in 1917, contains 33,485 square feet of space, including the basement area.  The rear building ("134 Main Street"), which was built in 1922, contains 23,960 square feet of space for a total combined area of 57,445 square feet.  At all relevant times, ADL and then, later in 1993, a small spin-off entity were the sole occupants of these two buildings. 
The combined amount of laboratory, office and support space in the two buildings is 33,861, 16,426 and 7,168 square feet, respectively.  
	The subject parcel itself is irregularly shaped with 250 feet of frontage on Memorial Drive and extending northerly to 250 feet of frontage on Main Street.  The land is essentially level with a slight slope to the rear and to the east.  There is paved parking and driveway access from Memorial Drive into the middle yard area that is situated to the rear of 30 Memorial Drive and the front of 134 Main Street.  
	30 Memorial Drive is a three-story building with a brick-veneer exterior, concrete foundation, and flat tar and gravel roof.  This building has historically been devoted to laboratory and associated office and storage use for ADL's research and development programs.  134 Main Street is a two-story edifice with cement block walls finished with stucco on the exterior and ceramic tiles on the interior.  It, too, has a concrete foundation.  This building's concrete floors are finished with a hard epoxy.  134 Main Street has historically been used for ADL's animal research projects and contains laboratory space, operating rooms, and animal treatment and confinement areas.                
	For fiscal years 1993 and 1994, the Board of Assessors of Cambridge ("assessors") valued the property and assessed taxes at the rates specified in the following table. 
 


	Assessed
Value	Tax Rate
Per $1,000	Tax
Assessed
	
FY 1993	$5,959,800	$28.40	$169,258.32	
FY 1994	$5,363,800	$32.78	$175,825.36	

For both of the fiscal years at issue, the appellant timely paid the requisite amount of taxes due.  The appellant also timely filed applications for abatement with the assessors, and, following their denials, seasonably filed appeals with the Appellate Tax Board ("Board").  A summary of the pertinent jurisdictional information is contained in the following table.  

	Actual Tax Bill Mailed	Application for Abatement Filed	Application for Abatement Denied	Petition Filed with Board
	
FY 1993	10/14/92	11/06/92	11/16/92	12/31/92	
FY 1994	10/08/93	11/04/93	11/24/93	02/08/94	

On the basis of these facts, the Board found that it had jurisdiction over these two appeals.  
	The appellant contested the assessments in these appeals through the testimony of three witnesses: Webster A. Collins, a real estate valuation expert; Niles Sutphin, an architect and planner; and Denise Hayes, quality assurance officer for ADL and later director of compliance for one of its spin-off entities.  The appellant also submitted numerous exhibits into evidence, including Mr. Collins' appraisal report and his amendment to the report.  
In support of the assessments, the assessors relied on the testimony and amended appraisal report of their real estate valuation expert, Donald Reenstierna.  In addition, the parties submitted two stipulations as well as post-trial briefs.  The Hearing Officer took a view of the subject property and surrounding area.  
	Webster A. Collins, whom the Board qualified as an expert in commercial real estate appraisal, was the appellant's first witness.  Mr. Collins described the Boston urban and suburban areas' commercial office markets as "collapsing" in 1990 and continuing along the "bottom" into 1993.  The consequence of this crash to landlords was higher vacancies, lower rents, and higher expenses.   Mr. Collins determined that the subject property's highest and best use for the fiscal years at issue was its continued use as an R&D facility that combined laboratory space with related office and storage facilities.  
	In valuing this property, Mr. Collins relied on an income capitalization approach.  In his methodology, he first determined what he considered to be an appropriate gross income from which he subtracted an amount for vacancies to reach an effective gross income.  He then further subtracted expenses and capitalized the remaining net income figure to reach an estimate of the subject property's value for the fiscal years at issue.  He checked the value that he derived from his income capitalization methodology with a value that he calculated using a modified sales-comparison approach.  Mr. Collins did not use a cost approach because the other approaches were more suitable for this type of property.      
More particularly, in his income capitalization methodology, Mr. Collins analyzed purportedly comparable leases and determined that $18.00 per square foot was an appropriate gross rent for all three types of space in the subject property's buildings for both of the fiscal years at issue.  He then estimated a per-square-foot value for tenant improvements amortized over thirty years.  He chose thirty years because the property was leased on a long-term basis.  He then subtracted the amortized tenant improvements from the $18.00 per-square-foot rent because, in his view, this type of property was ordinarily leased on, what he termed a "semi-net basis," where the landlord assumed the cost of tenant improvements and other expenses such as maintenance, repairs, plumbing, exterior maintenance, and management.  In this way, Mr. Collins calculated an "effective semi-net rent" for laboratory space at $12.25 per square foot and for office and support space at $11.28 per square foot, which he converted to a total potential gross income of $680,937.  Mr. Collins then applied a vacancy rate of 5% to reach an effective gross income from which he subtracted expenses measured at 38% of effective gross income for fiscal year 1993 and 42% of effective gross income for fiscal year 1994 to reach net income amounts that he then capitalized by 10.5% to estimate the rounded value of the subject property at $3,800,000 for fiscal year 1993 and $3,500,000 for fiscal year 1994.  Mr. Collins based his vacancy percentage on the property's experience and the market and founded his estimates of expenses on both direct and allocated costs actually incurred by ADL.  He determined his capitalization rate by using market data and industry publications.    
Niles Sutphin, an architect and planner, was ADL's second witness.  He had done "a great deal of space planning and interior design for Arthur D. Little" over the fifteen to twenty years prior to the hearing, including a renovation project in 1983 at 30 Memorial Drive and some smaller projects at both buildings in the early 1990s.  He testified that ADL paid for all of this work.  In addition, Mr. Sutphin was retained by ADL in 1994 to prepare a report that analyzed all of its Cambridge-area buildings' deficiencies over a wide-range of criteria.  He reported that at least 75% of the subject two buildings needed total renovation and window replacement, as well as building code and Americans with Disability Act compliance and repair work.  He estimated the cost of this compliance and repair work alone to be approximately $1.6 million.  However, he did not provide the Board with an adequate foundation to support his estimate in this regard.   Consequently, the Board gave it little weight.  
Mr. Sutphin also measured the subject buildings and analyzed their existing uses.  His measurements of each building's gross square footage by floor and his descriptions of the uses to which the different areas were put helped form the bases of the parties' later stipulations in these regards.  During cross-examination, Mr. Sutphin acknowledged that ADL and other similar lessees in the East Cambridge R&D market paid for any tenant improvements to their spaces in accordance with the terms of their respective leases.  
ADL's final witness was Denise Hayes.  Ms. Hayes had worked for ADL at the subject property from 1975 through December 1993 when she left to work for an ADL spin-off entity located at the subject property.  In 1992 and 1993, she was a quality assurance officer for ADL, and she was familiar with and testified to the layout of and the contemporaneous uses at the two buildings as of the relevant assessment dates.  
In defense of the assessments, the assessors called Donald H. Reenstierna as their valuation expert.  The Board qualified Mr. Reenstierna as an expert in commercial real estate valuation, and he testified that the combined laboratory and office rental market in East Cambridge, after having experienced an earlier decline, improved during fiscal year 1993 as vacancies fell and rents increased.  He observed that vacancies in laboratory spaces were virtually non-existent in East Cambridge during the relevant time period.  He also testified that most of the leases written for combined laboratory and office space, like the subject's, were written on a lump sum basis that did not break down rents into laboratory or office uses.  Accordingly, in his income capitalization approach, Mr. Reenstierna combined laboratory and office space for rental purposes and did not break them down.  
Mr. Reenstierna determined the highest and best use of the subject property to be its continued use as an essentially single-tenanted R&D facility with associated laboratory, office, and storage uses.  To estimate the value of the subject for the fiscal years at issue, he relied on the income capitalization approach, and used a sales comparison approach only as a check because of a lack of comparable sales.  Mr. Reenstierna did not use a cost approach because the other techniques were more appropriate under the circumstances.    
To determine an appropriate triple net market rent for the subject property, Mr. Reenstierna examined numerous leases in the area where the rents ranged from $14.52 to $25.75 per square foot.  Some of the leases, however, were based on gross rents and some included "stops" whereby the landlord paid taxes and expenses up to certain amounts.  Some were from tenants in a multi-tenanted building as opposed to an essentially single-tenanted one like the subject.  Mr. Reenstierna attempted to adjust the rents from these purportedly comparable properties to account for these differences.  He chose $18.00 per square foot as the most appropriate triple net market rent to use in his income capitalization methodology for the two fiscal years at issue.
Based on market data for office, laboratory, and R&D space, Mr. Reenstierna selected a stabilized vacancy rate of 5% for the two fiscal years at issue.  He then subtracted 22% of effective gross income to account for expenses that include some tenant improvements, maintenance, repairs, management, and reserves.  Mr. Reenstierna then capitalized the net income amount by 9.00% for fiscal year 1993 and 9.25% for fiscal year 1994 to reach his rounded estimates of the subject property's value of $8,790,000 and $8,500,000 for fiscal years 1993 and 1994, respectively.  Mr. Reenstierna based his expenses on industry surveys for greater Boston and derived his capitalization rates using the Akerson method, data from sales of properties, discussions with market participants, and information contained in industry publications, such as the Korpacz report and Associated Life Insurance Industry's monthly investment bulletin.  
On the basis of all of the evidence, the Board found that the rental market in East Cambridge, particularly for laboratory space, improved from January 1, 1992 to January 1, 1993 and also found, as Mr. Reenstierna testified, that the combined office and laboratory rental market in East Cambridge, was experiencing only minimal vacancies.  The Board agreed with both parties' valuation experts and found that the subject property's highest and best use was its continued use as an R&D facility with associated laboratory, office, and storage uses.  The Board agreed with Mr. Reenstierna's opinion that the property was best suited for essentially single-tenant occupancy because of its configuration, size, and rental experience.  
The Board further found that the income capitalization approach was the most appropriate valuation technique to use to estimate the value of the subject income-producing property for the fiscal years at issue.  The comparable sales approach was not an appropriate valuation technique to use here because of a lack of comparable sales.  The cost approach was inappropriate because the subject was not special purpose or newly constructed property.  On this basis, the Board used an income capitalization approach to estimate the value of the subject property for the fiscal years at issue.    
In applying an income capitalization methodology, the Board reviewed the underlying leasing information upon which the valuation experts relied and applied a triple net rent of $14.00 per square foot to the subject property's stipulated area of 57,445 square feet.
The rent that the Board selected is between that suggested by the parties' experts and takes into account the essentially single-tenant nature of the subject property for the fiscal years at issue.  The Board's rent is also supported by rents from the comparable properties that the parties' valuation experts used after adjustments are made for time and physical, locational, and functional differences.  The Board found that Mr. Collins' rents were too low because they incorporated inappropriate deductions for tenant improvements.  To adjust from a gross to a modified or semi-gross rent, which the Board assumed is what Mr. Collins intended when he adjusted his gross rent to what he termed a "semi-net" rent, an appropriate amount of expenses or a percentage of expenses in proportion to the tenant's obligations should be deducted from the rent.  See The Appraisal Institute, The Appraisal of Real Estate 477 (12th ed., 2001).   The Board found that Mr. Collins' deduction for tenant improvements in his income capitalization methodology was improper here and was not the equivalent of deducting the  expenses  necessary to adjust gross rents to 



modified gross rents.  Mr. Collins' methodology created a lower than appropriate market rent.  The Board further found that Mr. Reenstierna's rents were too high because he did not adequately adjust for differences between comparable properties' qualities compared to the subject's. The Board attributed the same rent to laboratory, office, and storage areas because that treatment reflects how the market leased this type of R&D property for the fiscal years at issue and also comports with both parties' valuation experts' treatment of rents in their income capitalization methodologies.      
The Board agreed with both parties' valuation experts and found, under the circumstances, that a 5% vacancy rate was appropriate for both of the fiscal years at issue.  The property's relevant experience supported a low vacancy rate, as did the low vacancy rate in the East Cambridge market for R&D properties on the relevant assessment dates.  The Board agreed with Mr. Reenstierna that even under a triple net lease, the landlord is still responsible for some expenses, but did not agree with Mr. Collins' excessive deductions for expenses, which, the Board found, were based erroneously on ADL or the tenant's actual expenses.  Accordingly, the Board considered expenses equivalent to 30% of effective gross income as the appropriate amount to use under the circumstances present in these appeals.  While this amount is more than that recommended by Mr. Reenstierna, it is significantly less than amounts proposed by Mr. Collins under his "semi-net" leasing scenario.  
For its capitalization rates, the Board relied primarily on Mr. Collins' rates and found that 10.50% and 10.25% were the appropriate percentages to apply for fiscal years 1993 and 1994, respectively.   The Board reduced the capitalization rate in fiscal year 1994 to reflect an improving economy and decreased risk for investment in R&D rental property, particularly in the East Cambridge market.  Using this methodology, the Board estimated the value of the subject at $5,093,500 for fiscal year 1993 and $5,217,700 for fiscal year 1994.
  A summary of the Board methodology is contained in the following table.  

	   
      FY
     1993	    
      FY
     1994	
			
GROSS INCOME			
			
57,445 square feet @ $14.00	   $804,230	   $804,230	
			
VACANCY @ 5%	   ($40,211)	   ($40,211)	
			
EFFECTIVE GROSS INCOME	   $764,019	   $764,019	
			
EXPENSES @ 30%	  ($229,205)	  ($229,205)	
			
NET INCOME	   $534,814	   $534,814	
			
CAPITALIZATION RATE 	    (10.5%	    (10.25%	
			
INDICATED VALUE	 $5,093,466	 $5,217,697	
			
FAIR CASH VALUE	 $5,093,500	 $5,217,700	
			

On the basis of these facts, the Board decided these two appeals for the appellant and granted abatements in the amount of $24,602.92 for fiscal year 1993 and $4,789.16 for fiscal year 1994.

OPINION
The assessors are required to assess real estate at its fair cash value. G.L. c. 59, § 38.  Fair cash value is defined as the price on which a willing seller and a willing buyer will agree if both of them are fully informed and under no compulsion.  Boston Gas Co. v. Assessors of Boston, 334 Mass. 549, 566 (1956).  In determining fair market value, all uses to which the property was or could reasonably be adapted on the relevant assessment dates should be considered.  Newton Girl Scout Council, Inc. v. Massachusetts Turnpike Authy., 335 Mass. 189, 193 (1956); Irving Saunders Trust v. Assessors of Boston, 26 Mass. App. Ct. 838, 843 (1989).  The goal is to ascertain the maximum value of the property for any legitimate and reasonable use.  Id.  If the property is particularly well-suited for a certain use that is not prohibited, then that use may be reflected in an estimate of its fair market value.  Colonial Acres, Inc. v. North Reading, 3 Mass. App. Ct. 384, 386 (1975).  On this basis, the Board ruled that the highest and best use of the subject property during the fiscal years at issue in these appeals was, just as the parties' valuation experts suggested, for R&D property with associated laboratory, office, and storage space.  The Board further found that the configuration, size, and experience at the subject property indicated that it was best suited for primarily single-tenancy use as opposed to multi-tenant occupancies.        
Generally, real estate valuation experts, the Massachusetts courts, and this Board rely upon three approaches to determine the fair cash value of property: income capitalization, sales comparison, and cost.  Correia v. New Bedford Redevelopment Authority, 375 Mass. 360, 362 (1978).  "The board is not required to adopt any particular method of valuation."  Pepsi-Cola Bottling Co. v. Assessors of Boston, 397 Mass. 447, 449 (1986).  In these appeals, the Board ruled that neither the sales-comparison nor cost approaches were appropriate under the circumstances.  ADL's valuation expert also ruled out the cost approach but did rely to some extent on a modified sales-comparison analysis.  The Assessors' valuation expert used the value from his sales-comparison approach only as a check on the value derived from his income capitalization technique.  The Board found that, for purposes of these appeals, there were not enough market sales of reasonably comparable properties to meaningfully estimate the value of the subject property using a sales-comparison technique.  Furthermore, the Board ruled that "[t]he introduction of evidence concerning the value based on [cost] computations has been limited to special situations in which data cannot be reliably computed under the other two methods."   Correia v. New Bedford Redevelopment Authority, 375 Mass. at 362.  The Board found here that no such "special situations" existed, and, even if they did, there was no evidence on which to base a value using a cost approach.  Accordingly, the Board ruled that this method of valuation was not an appropriate technique to use for valuing the subject property during the fiscal years at issue in these appeals.  
The use of the income-capitalization approach is appropriate when reliable market data is not available.  Assessors of Weymouth v. Tammy Brook Co., 368 Mass. 810, 811 (1975); Assessors of Lynnfield v. New England Oyster House, 362 Mass. 696, 701-702 (1972); Assessors of Quincy v. Boston Consolidated Gas Co., 309 Mass. 60, 67 (1941).  It is also an appropriate technique to use for valuing income-producing property.  Id. at 64-65.  In these appeals, the Board relied exclusively on the value determined from the income-capitalization approach because the other methods were not appropriate under the circumstances, and the approach that the Board used was equivalent to what buyers and sellers in the marketplace would have used under the circumstances.   See New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 469 (1981); Assessors of Lynnfield v. New England Oyster House, Inc., 362 Mass. at 701-702.
The income stream used in the income-capitalization method must reflect the property's earning capacity or economic rental value.  Pepsi-Cola Bottling Co. v. Assessors of Boston, 397 Mass. at 451.  Imputing rental income to the subject property based on fair market rentals from comparable properties is evidence of value if, once adjusted, they are indicative of the subject property's earning capacity.  See Correia v. New Bedford Redevelopment Auth., 5 Mass. App. Ct. 289, 293-94 (1977), rev'd on other grounds, 375 Mass. 360 (1978); Library Services, Inc. v. Malden Redevelopment Auth., 9 Mass. App. Ct. 877, 878 (1980)(rescript); Avco Manufacturing Corp. v. Assessors of Wilmington, 12 Mass. App. Tax Bd. Rep. 132, 143 (1990).  After accounting for vacancy and rent losses, the net-operating income is obtained by deducting the landlord's appropriate expenses.  Pepsi-Cola Bottling Co. v. Assessors of Boston, 397 Mass. at 452-453.  Generally, the selection of expenses is for the Board.  Id.  "The issue of what expenses may be considered in any particular piece of property is for the board."  Alstores Realty Corp. v. Assessors of Peabody, 391 Mass. 60, 65 (1984).    
The Board's selection of its gross-income figures was consistent with the underlying information submitted by both parties' valuation experts and fell between the values actually used by them in their income capitalization methodologies.  The Board's vacancy and credit loss rates were equivalent to the rates selected by both parties' valuation experts and were based on their testimony and the data contained in their appraisal reports concerning the relevant market.  The Board's expense deductions were also based on both parties' valuation experts' testimony as well as information contained in their appraisal reports regarding the market.  Because the landlord is responsible for some expenses even in a triple-net leasing situation, the Board allowed some deductions for tenant improvements, management fees, replacement reserves, maintenance and repair costs, utility bills during vacancy, and miscellaneous expenses.  The Board's expenses fell between those suggested by the parties' valuation experts.  
The capitalization rate selected should consider the return necessary to attract investment capital.  Taunton Redevelopment Assoc. v. Assessors of Taunton, 393 Mass. 293, 295 (1984).  Use of the "tax factor" is unnecessary under the single-tenant premise because the net rental income reflects the assumption that the tenant pays the taxes.  General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 610 (1984).  Relying on these principles, the Board considered the relevant economic situation in the East Cambridge market for R&D rentals with associated laboratory, office and storage space, both parties' valuation experts' suggested capitalization rates, as well as their underlying data and methodologies and, on this basis, derived its own rates for the fiscal years at issue.  The Board did not use a tax factor here because it found that the property was essentially suited for single-tenant occupancy whereby a single or only a few tenants would lease the subject property under a triple-net leasing scenario.   
In reaching its opinion of fair cash value in these appeals, the Board was not required to believe the testimony of any particular witness or to adopt any particular method of valuation that an expert witness suggested.  Rather, the Board could accept those portions of the evidence that the Board determined had more convincing weight.  Foxboro Associates v. Board of Assessors of Foxborough, 385 Mass. 679, 683 (1982);      New Boston Garden Corp. v. Assessors of Boston, 383 Mass.     at 473; Assessors of Lynnfield v. New England Oyster House, Inc., 362 Mass. at 702.  In evaluating the evidence before it, the Board selected among the various elements of value and formed its own independent judgment of fair cash value.  General Electric v. Assessors of Lynn, 393 Mass. at 605; North American Philips Lighting Corp. v. Assessors of Lynn, 392 Mass 296, 300 (1984).
The Board need not specify the exact manner in which it arrived at its valuation.  Jordan Marsh v. Assessors of Malden, 359 Mass. 106, 110 (1971).  The fair cash value of property cannot be proven with "mathematical certainty and must ultimately rest in the realm of opinion, estimate and judgment."  Assessors of Quincy v. Boston Consol. Gas Co., 309 Mass. at 72.  "The credibility of witnesses, the weight of the evidence, and inferences to be drawn from the evidence are matters for the board."   Cummington School of the Arts, Inc. v. Assessors of Cummington, 373 Mass. 597, 605 (1977).  In making its determination of fair cash value, the Board may take its view of the premises into account. Westport v. Bristol County Commissioners, 246 Mass. 556, 563 (1923); Avco Manufacturing Corp. v. Assessors of Wilmington, 12 Mass. App. Tax Bd. Rep. at 143; Arthur D. Little, Inc. v. Assessors of Cambridge, 2 Mass. App. Tax Bd. Rep. 22, 28 (1982).    
"'The burden of proof is upon the [appellant] to make out its right as a matter of law to abatement of the tax.'"  Schlaiker v. Board of Assessors of Great Barrington, 365 Mass. 243, 245 (1974), quoting Judson Freight Forwarding Co. v. Commonwealth, 242 Mass. 47, 55 (1922).  The appellant must show that it has complied with the statutory prerequisites to its appeal, Cohen v. Assessors of Boston, 344 Mass. 268, 271 (1962), and that the assessed valuation of its property was improper.  See Foxboro Associates v. Board of Assessors of Foxborough, 385 Mass. at 691.  The assessment is presumed valid until the taxpayer sustains its burden of proving otherwise.  Schlaiker v. Board of Assessors of Great Barrington, 365 Mass. at 245.  The Board ruled that the appellant met its burden of proving that the subject property was overvalued in both of the fiscal years at issue in these appeals.
The Board applied these principles in finding the fair cash value of the subject property during the fiscal years at issue in these appeals.  On this basis, the Board decided that the subject property was overvalued in the amounts of $866,300 and $146,100 in fiscal years 1993 and 1994, respectively. Therefore, the Board granted the appellant abatements for fiscal years 1993 and 1994 in the respective amounts of $24,602.92, and $4,789.16.

   						    THE APPELLATE TAX BOARD



By:__________________________  
	   Abigail A. Burns, Chairman

A true copy,


Attest: ________________________
Clerk of the Board
	                                                         

 The parties stipulated to these amounts, but the Board observed that the breakdown of laboratory, office and storage space actually amounts to 57,455 square feet, which is ten square feet greater than the parties' stipulated total.  For purposes of these appeals, the Board used the parties' stipulated total of 57,445 square feet because that is the amount which the parties' valuation experts and the architect used for purposes of these appeals.
 As discussed in The Appraisal Institute, The Appraisal of Real Estate 505 (12th ed., 2001): 
Most leases outline the obligations of the lessor and the lessee to delineate specifically who must pay for taxes, insurance, utilities, heat, janitorial service (if any), repairs, unit owner's or common area [] expenses, and other expenses required to maintain and operate the leased property.  The appraiser should identify the division of expenses in each lease analyzed and compare the rents and estimated rental value of the subject space to those of comparable space.  Any required adjustments in the division of expenses in comparable properties should reflect the same lease terms and divisions of expenses as the subject property.  

ATB  2002-658