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Cost of Cure & Location
RCA #354
BCMA #PD0008b
In reviewing the Guide, 9th, there is no mention under Cost of Cure as to whether it is appropriate to adjust Cost of Cure values by location factors.

My POV is that the costs basis for determining Cost of Cure values have already accounted for location, and there should not be another adjustment for this. I have come across a few cases where consultants have applied a location factor.

What are your opinions on this? Do you adjust CoC for location? Is it a valid technique?

Russ Carlson, RCA
Posts: 287 | Location: Bear, DE USA | Registered: Wednesday June 18, 2003Report This Post
<Scott Cullen>
OK. I'm typing b;ond here becasue of that strange character set. Tried deleting and continuing as you suggested. No good. Tried to write in a word processor and paste it in. No good.

So here goes.

There was quite a thread on this in the old Kmothole. If we look at TFM, RCM and CoC they are all (depreciated replacement) cost approaches to value. The Concept is that the cost of replacing the lost object or its benefits provides and indication of value. To the extent that cost exceeds value we depreciate for Species (a brick house cost would be too high if we are apprasing a straw house... recall the three little pigs). By condition (if the house needs a new furnace and new roof it is worth less than cost new). And by location (the brand new house accross from the slaugher house and next to the sulfur smelter is worth less than the same new house in a nice quiet residential neighborhood).

The assumption in TFM or RCM is that we replace 1:1 size and depreciate for the three factors. the Gyide is very unclear on how to treat this is CoC. We could replace 1:1 size for a single plant and include clean up and site prep costs (otherwise we'd use RCM or TFM). We could use a number of small plants to get 1:1 siaze replacement in the aggregate for 1 apprasied plant. In either case we would then depreciate for three factors in RCM nad TFM and so we should also in CoC. But there is another way to use CoC and that is to replace leass than 1:1 size. The apprasier is making a judgement or SWAG that this lesser replacement in terms of size functionally replaces benefits. Maybe it's a reasonable and supportable judgment, maybe not. The problem is that it is depreciation just the same as Location in TFM or RCM) but it is implicit not explicit. THis is a potential source of confusion for appraisal users if they try to compare CoC results to TFM results for the same tree.

Scott's three prong test for methods is that they should be descriptive, consistent and explicit. Using CoC to reflect functional replacement without an explicit Location adjustemnt fails on the consistency and explicitness tests.

There is also some lack of consistenty in there being no Species adjustment in CoC. The same logic applies.

One issue I see with CoC for a number of trees is the preparation of a replacement or restoration plan. I think the Guide suggeststs that it is often appropriate to do a CoC estimate for a prepared plan, which may be outside the competence of many tree apprasiers. It may be appropriate to rely on a landscape designer or architect. But then the designer has made the implicit depreciation.

So all in all, CoC has a place but IMO it needs much better explanation and elaboration in the Guide.

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