Common use of Valuation Procedure Clause in Contracts

Valuation Procedure. 2.1 Each Party shall, within ninety (90) days of the date of the Commencement Notice, advise the other Party in writing of such Party’s opinion as to the value to be assigned to each Asset (each, a “Proposed Value”). The Proposed Value shall be the value of the Asset determined at its Highest and Best Private Use, which shall mean that reasonably probable and legal private use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible and that results in the highest value. Uses that are not considered “highest and best uses” are: interim use, special use, non-conforming use, speculative use and excess land. The term “private” is used to denote typical private sector uses, such as residential, commercial, industrial, etc. versus public sector special uses such as parks, schools, open space, fire stations, libraries, etc. 2.2 Should a leasehold interest of less than ten (10) years be acquired, rather than a fee simple interest or longer-term leasehold interest, the annual rent shall be determined by applying an annual rental rate of 10% to the Agreed-Upon Value. The annual rent for a leasehold interest of ten (10) years or longer shall be determined in the same manner as the value of a fee simple interest in an Asset. If the rent is to be prepaid in a lump-sum amount at the beginning of a lease, the prepaid rent shall be the present value of the future rental income stream, using a factor that is the sum of the annual rental rate and appreciation/inflation rate expectations. For example, if the annual rental rate is to be 10% of the Agreed-Upon Value (as defined in Section 2.1), and appreciation/inflation is 3%, compounded, the total return or yield rate used to calculate the present value for the future rent, for the term of the lease, will be 13%. Notwithstanding the preceding, under no circumstance shall the present value and the value of the reversionary rate together equal more than the Agreed-Upon Value. 2.3 If the Parties’ respective Proposed Values for any given Asset (which, in the case of proposed transaction involving multiple Assets shall mean each particular Asset) are within twenty percent (20%) or less (as a percentage of the larger Proposed Value), the definitive value (“Agreed-Upon Value”) of such Asset for purposes of this Master Agreement shall be the average of District’s Proposed Value and City’s Proposed Value. If the Parties’ respective Proposed Values for any given Asset are more than twenty percent (20%) apart (as a percentage of the larger Proposed Value), the Parties shall negotiate in good faith to agree upon an Agreed-Upon Value for such Asset. The Agreed-Upon Value(s) (however determined) shall be entered in the Ledger, from which the Ledger Balance will be determined. 2.4 If the Parties are unable to agree on the value of any Asset within thirty