THE M&TS JOURNAL · Volume 34, Issue 1, 1st Qtr 2018 2. THE MTS JOURNAL The International Machinery...

THE M&TS JOURNALThe Journal of the International Machinery & Technical Specialties Committee of the American Society of Appraisers

Volume 34, Issue 1, 1st Quarter 2018

$35.00 ASA Members, MTS Discipline$50.00 ASA Members, Non-MTS Discipline

$65.00 ASA Non-Members

RobertPodwalny,FASA AND LIFE MEMBER

PAGE 9

In Memoriam

T H E M T S J O U R N A L

MTS Journal Editorial Brad Hartsburg, ASA, CPPA, CSA

4

Chairman's Corner Samuel Shapiro, ASA

7

Governor's Bulletin Richard Berkemeier, ASA and David Crick, ASA, MTS Governors

8

In Memoriam - Robert Podwalny, FASA and Life Member Jack Young, ASA, CPA, NorCal Valuation Inc.

9

Fixtures: Realty or Personalty - “Who Knows” Larry L. Perdue, ASA, MVS

15

Risks and Rewards of Fractional Shares Amanda Applegate - Aerlex Law Group

27

ASA - RICS Established the Standards for Accredited Valuations Captain E.S. Geary, P. Eng (UK) FRICS, FRINA, RICS Chartered Surveyor (Admiralty & Maritime)

30

Valuation of Solar Assets Christopher Nugent, ASA

37

What's Hot, What's Not In Equipment Leasing For 2018 Carl Chrappa, ASA, MRICS, IFA.

41

The MTS Journal 2017-18 Media Kit American Society of Appraisers

52

Identifying Heavy Equipment and Serial Number Locations Brad Hartsburg, ASA, CPPA, CSA of Fortress Machinery Appraisals

56

BREXIT - An Unseaworthy Situation... Captain E.S. Geary, P. Eng (UK) FRICS, FRINA, RICS Chartered Surveyor (Admiralty & Maritime)

63

Irontrax Spring 2018 Mining Industry Insight Joseph Santora, ASA .

67

Archived Articles Available for Your Library Brad Hartsburg, ASA, CPPA, CSA

71

The MTS Journal Subscription Form American Society of Appraisers

94

Contents

Volume 34, Issue 1, 1st Qtr 2018 2


The International Machinery & Technical Specialities Committee

MTS Committee Officers Samuel Shapiro, ASA – Massachusetts - Chair Karen M. Milan, ASA - Texas – Vice Chair Paul R. Cogley, Jr. ASA – Rhode Island – Secretary William M. Engel, ASA – NY - Treasurer

John J. Connolly III, ASA – New Jersey – Immediate Past Chair Richard Berkemeier, ASA – Rhode Island - MTS Discipline Governor David Crick, ASA – Australia - MTS Discipline Governor Todd J. Paradis – VA - HQ Liaison Sharon A. Desfor, ASA – International President

MTS Committee Members Jamie Allen, ASA – IL Michael R. Crismyre, ASA - IL David Fisher, ASA – Texas Tim Howard, ASA – U.K.

Matt Kaufman, ASA – OR Ryan Kinahan, ASA – VA Evzen Korner, ASA – Germany John Mathe, ASA – Australia Larry Perdue, ASA – OK

Roberto Raya da Silva, Brazil Harry J. Richardson, ASA - MI Alexander Ruden, ASA - GA Bradley Schulz, ASA - IL Michael Winterfeld, ASA - NE

Emeritus Members Barry Savage, ASA, ARM MTS - OH Victor N. Thompson, ASA – KY

American Society of Appraisers 11107 Sunset Hills Rd, Suite 310, Reston, VA 20190 800-272-8258 ext 125

Editorial Office: Fortress Machinery Appraisals and Consulting Inc. 24 Clover Lane, Calgary, Alberta, Canada T3Z 1G9

Business Office: Strategic Asset Management, 96 Wood Acres Drive, East Amherst, NY 14051

© 2017 American Society of Appraisers. All rights reserved. For permission to reproduce in whole or in part, and for quotation privilege, contact ASA’s International Headquarters. Neither the Society nor its editors accepts responsibility for statements or opinions advanced in articles appearing herein, and their appearance does not necessarily constitute an endorsement.



MTS Journal Editorial B r a d H a r t s b u r g , A S A , C P P A , C S A

I welcome you to the first edition of the MTS Journal for the 2018 calendar year edition Volume 34, Issue 1, 2nd Quarter 2018 and apologize in advance for the late delivery of this edition, but as many of you know by now, one of our very special members – Robert Podwalny, FASA and Life Member passed in mid-April and we felt it right to dedicate this issue to him. Please have a read through his memoriam and incredible life history, it took some extra time to gather and it was worth it. There are few that have achieved what Bob did in over 50 years as an appraiser. He was truly a mentor to many appraisers, including me. There has been an education fund set up in Bob’s honor, please read on for further information on this as well.

I continue to look for interesting articles our members and readers want to learn from. If there is a topic you are passionate about, and you are wondering if it’s relevant, please do not hesitate to contact me. There are plenty of you out there with unlimited knowledge and many looking to learn from it. I am more than willing to work with you on your article.

I again wish to thank all of you that assisted with interesting articles for this issue, there is a lot of great information and we hope it assists you with your daily work and activities. In this issue:

• MTS Journal Editorial by Yours Truly

• Our Chairman, Sam Shapiro, ASA has written his letter in support of the Podwalny family and given us an update on ASA affairs.



• Our Governors, David Crick, ASA and Rick Berkemeier, ASA have updated us on the happenings of education in our MTS discipline and the society as a whole.

• Jack Young, ASA—MTS/ARM has written the memoriam on the incredible life of Robert Podwalny, FASA and Life Member

• Larry Perdue, ASA, MVS has written an article called: Fixtures: Realty or Personality

• Amanda Applegate of the Aerlex Law Group has penned an article about: Risks and Rewards of Fractional Shares

• Captain Ed Geary, P. Eng (UK) FRICS, ASA, FRINA, RICS Chartered Surveyor (Admiralty & Maritime) has written a marine article and also a different slant on the Brexit situation

• The next article is called Valuation of Solar Assets written by Christopher Nugent, ASA

• Carl Chrappa, ASA, MRICS, IFA has written about “What’s Hot, What’s Not in Equipment Leasing for 2018

• The MTS Journal Advertising Media Kit 2018 - 2019 has been included for your information by Yours Truly

• The next subject is: Identifying Heavy Equipment and Serial Number Locations by Brad Hartsburg, ASA, CPPA, CSA

• Irontrax LLC and Joe Santora, ASA have sent us their insight for the Mining Industry 2018

• Please find included all the information for the Cleveland Equipment Conference as well as the International Conference in Anaheim, CA this year. These have a terrific line-up of speakers and are great networking events, not to mention the spectacular location, great food & wine and friendly locals.

• And finally, the list of Archived Articles Available for Your Library and the MTS Journal Subscription Form by your MTS Journal Editor -- Brad Hartsburg, ASA, CPPA, CSA

FPO



Please consider contributing to the MTS Journal! Check your calendars and plan to attend the many interesting conferences and courses that are planned for this year. I will look forward to seeing you there! For more information, please see the ASA website: www.appraisers.org

Respectfully submitted,

Brad Hartsburg, ASA, CPPA, CSA and MTS Journal Editor Fortress Machinery Appraisals and Consulting Inc. Calgary, Alberta, Canada - 403-650-1122 E-mail: [email protected] Website: www.fortressappraisals.ca



Chairman’s Corner S a m u e l S h a p i r o , A S A

Dear MTS Members:

As we have just begun to see some Spring weather and we are all looking for sunshine, we have some darkness to contend with. We have lost a Fellow Member, Teacher and Mentor, Bob Podwalny and I ask for a moment of silence in his memory. Bob was a great friend to the ASA and many of us personally.

Our ASA lost our COO and the search is still continuing. It is unfortunate that this has happened however, our board is trying diligently to find a replacement. While this process is moving forward we hope that all members will write to their governors and express any concerns you may have. Your voices are the voices of the ASA and they need to be heard not from a few but by all.

As we move forward we have the Cleveland Conference in June and we are nearly sold out. This event is one of the finest we have each year and it continues to be spoke of for many months thereafter. Don't miss the opportunity for great speakers and networking.

As we move forward towards the International Conference October 7 - 10, 2018 in beautiful Anaheim, California we ask that you take advantage of the Early Bird Discount in which you would need to register by June 15, 2018. This is a where we could all learn something new and make professional connections as well as enjoy the time.

We have grown immensely in the last year's and we are looking for a total membership of 1500 by year end. With the great success of our instructors and classes both in classrooms and online we hope that the membership continues to grow. I would ask each and every member to speak to a friend or colleague that may not be a member and urge them to consider the ASA. Through your very own actions our ASA is viewed as one of the most highly respected and organized organization in the world. I personally have had some many positive comments while traveling and many inquires as to the education we offer. Please remember to always talk about the organization when making a presentation to a client or friend.

As we have seen some tax reforms and can expect more in the coming year we will need to be prepared for the tax implications and changes they may have on our appraisal profession. There will be some interesting challenges with new additions and subtractions to the various allowances and how they will affect the final values .

As summer approaches I ask that each member consider spending a few hours a week or month speaking with your clients , friends , young students and graduates and discuss the ASA and its continuing education program so that we may seek to increase our profession with good qualified people to move into the future.

I wish you all a healthy and happy summer and look forward to greeting you all in Cleveland and in California as we move forward!

Samuel Shapiro, ASA

MTS Chairman



Governor’s Bulletin R i c h a r d B e r k e m e i e r , A S A a n d D a v i d C r i c k , A S A , M T S G o v e r n o r s

May 2018

Key MTS Developments and road markers include:

MTS membership is at an all-time high at 1,380.

As we move into September we are getting ready for the ASA Conference in Anaheim.

On the Education front we are planning on holding course offering in Eindhoven, Melbourne, London, Moscow, and Mexico over the next 12 months.

We have just completed the USPAP 15 Hour Course and the MTS Aircraft Specific courses at Embry-Riddle Aeronautical University in Daytona

Beach Florida. We had a graduation class of 31 students. The next set of classes will open registration shortly and we have over a 120 interested parties in 30 seats for the class. In the recently completed 204 we had guest speakers from both Airbus and Boeing. Both courses were sold out and student reviews were extremely positive, particularly towards the extra curricular lectures and content from industry leaders that were invited to contribute. These included JSSI, Satcom Direct and ERAU Engineering & Maintenance Services, Boeing and Airbus. The Senior Management at the University is looking forward to next year’s offerings.

The ASA/Embry-Riddle/NAFA Aircraft Valuation Seminar was sold out and a huge success. This was held in May at the Hotel Coronado in San Diego with standing room only.

Plans are also underway to have four more aviation events through 2018 in the USA, Asia and Europe.

We anticipate holding 12-15 webinars over the next year and are always looking for new topics.

We are finalizing the location for the International Plant conference which will be held in 2019.

In 2018-2019 we will be offering the new 2018-19 update to Personal Property USPAP.

Five new MTS courses are in the development stages for release to the membership next year. MTS Report Writing will be offered later this year.

We continue to see tremendous growth in our Chapters in Australia, Japan and Europe.

The Cleveland conference is looking to set another attendance record and its sister conference will be held in New Castle, Australia in 2018. Both seminars sold-out last year and we expect another sell out this year.

The MTS text book “Appraising Machinery & Equipment” is undergoing revision for the fourth edition to be published. We expect it to be released soon.

Yours enthusiastically,

Richard Berkemeier David Crick [email protected] Rhode Island, USA [email protected] Queensland, Australia



In Memoriam - Robert Podwalny, FASA and Life Member J a c k Y o u n g , A S A , C P A , N o r C a l V a l u a t i o n I n c .

Robert Podwalny, FASA and Life Member, passed away on April 16, 2018, at age 74 after a lengthy ordeal with cancer. He is survived by his wife Linda, sons Robert & Daniel, and his sister Alexandra, grandchildren Kayla, Evan, Emma, Lili and Lincoln, as well as many nieces, and nephews. http://www.lastingmemories.com/memorial/robert-b-podwalny?about

Bob was a constant servant to others and to the ASA. He rarely spoke of himself and seemed to prefer taking an interest in others. His impact on the ASA was quite significant and best told by the memories of the folks he influenced over the years. You’ll find some great Bob stories and memories at the end of this article, and you’re welcome to skip this next part, which is a brief bio of Bob’s life, beginning with that interesting ring on his finger, which most of you have probably noticed. Bob wore his grandfather’s ring from the Russian Imperial Guard with a fair amount of pride.

Before Bob was born, however, his parents had fled Russia, where the Bolshevik revolution had made life unsafe for them. Along the way the family was captured by the Nazis and his father, an engineer, was forced to work in occupied Vienna. Bob liked to joke that he’s the only person he knows with a swastika on his birth certificate. After WWII ended, his mother was hired by the United Nations Relief Agency and the family lived for some years in Munich, Germany. The family came to Oberlin, OH under the Displaced Persons Act when Bob was 6. Bob was especially proud of his mother and her gift for languages. She

eventually taught in the foreign languages department at Oberlin College.

Bob attended Oberlin, leaving to begin his appraisal career with American Appraisal. He and his wife Linda moved to San Francisco in the early 1970s; Bob lived in the Bay Area the rest of his life, and raising their two sons with Linda. Over his career he worked for many appraisal firms and banks including Marshall Stevens, Bank of America Leasing, Union Bank, and his own firm. Everywhere he worked, he attracted friends and admirers with his generosity, good humor and integrity.

Bob was an appraiser for nearly 50 years, during which time he was inducted into the College of Fellows with the American Society of Appraisers. He is the past International Education Committee Chairman, Emeritus Member and Past Chairman of the Machinery and Technical Specialties Committee, Past Regional Governor for Northern California, Past President of the San Francisco Bay Area Chapter, contributing author to two Valuation of Machinery and Equipment textbooks, course developer and senior instructor of Machinery and Equipment Principles of Valuation courses taught through the ASA, and Past Vice Chairman of the Board of Examiners for Machinery and Equipment for the ASA for 14 years. He was designated as an expert witness by many courts.

Bob’s contributions to education included teaching valuation courses throughout the US as well as in Mexico, Romania, Slovenia, Canada, Russia, Kazakhstan and China, as well as developing and teaching courses for the World Bank Economic Development Program and for the ASA. Most recently Bob served as an expert witness in litigation involving ad valorem tax appraisal for the Alaska Pipeline and supported the development of ARM 201 and 204 courses in the dialogue education format.



Bob developed those classes with me. I’m honored to have been asked to provide this bio for the ASA and I know that this basic information about Bob can’t begin to express who he was. That is better done by the comments offered below by those who appreciated his friendship and his professional accomplishments and contributions, beginning with my memories of Bob.

I met Bob at an ASA NorCal Chapter meeting. I wasn’t an ASA member at the time and wasn’t sure if I wanted to be, until I met Bob. I came home that night very excited about the level of respect, professionalism and true mentorship within the ASA NorCal Chapter culture. Soon after that I worked with Bob to offer a report writing class for the chapter, in which I heard him say something that I think about every time I write an appraisal report: An appraisal should tell a story. Accurate analysis is necessary and so is a clear and understandable flow of facts leading the user to a clear and understandable conclusion. The ARM classes we developed together continue to carry Bob’s message as well.

Bob and I worked on the chapter board for many years, updating the ARM curricula and on the ARM Committee. While we didn’t always agree on issues, we always operated within an environment of respect.

Bob was my teacher, mentor, role model and a trusted friend. As I read the following memories that others have offered, I realize that Bob managed to be those things to many of us. I am struck by the words of Winston Churchill, “We make a living by what we get; we make a life by what we give.” Bob’s capacity for competency, generosity and kindness was broad and deep. He once told me that many years ago he was complaining to his boss about the poor quality of appraisal reports he was receiving. His boss suggested that he do something about it, and he certainly did. Bob’s contributions did more than move ASA into being the “standard of care” for machinery and equipment appraisals – he moved the entire appraisal profession forward. Bob’s legacy, however, is much more than the educational materials he helped to develop. At the end of the day Bob was not about serving Bob, he was about helping other people and that is his legacy. That’s what made the difference.

Volume 34, Issue 1, 1st Qtr 2018 1 0


According to Bob’s wishes, the ASA Educational Foundation has established the Robert B. Podwalny Educational Fund. The purpose of the fund is to continue to expand the ASA knowledge base that Bob helped to build. The Fund will work with our most senior appraisers to develop programs on advanced the breadth and depth of educational topics in MTS and ARM, such as power feed wiring, process piping, when to depreciate and not depreciate installation costs, developing defensible cost to capacity exponents, functional obsolescence, defensible appraisal reviews for financial reporting and other uses. When addressing controversial topics, the goal is to clearly document current analysis and considerations and advance the discussion by providing useful and in-depth information to our members.

If you would like to contribute to this fund to commemorate Bob, please make your contribution payable to ASAEF and mail to:

ASAEF in care of ASA Headquarters - 11107 Sunset Hills Rd, Ste 310, Reston, VA 20190

In the memo field, the check should state the Robert A. Podwalny Educational Fund #09011 Please enjoy the following memories offered by Bob’s friends and appraisal colleagues. If you have stories or comments you’d like to share, send them to me and we’ll find a way to share them. Rest in Peace, Bob. We’ll miss you.

Ray Springer, AM

Bob and I shared on lots of jobs over the years, but I guess it all goes back to when we originally met in 1973. I was a totally green (2 months "experience") rookie. I had been trained by two very nice young people in the Portland office who had been trained in how to do appraisals the old-fashioned way. The old fashioned way included counting everything including staplers and teaspoons. I found that level of detail excruciating and was discouraged enough to be looking for another job.

Bob and I met at a library in Butte County California where General Appraisal was engaged to do an insurance appraisal of all the county's buildings and equipment. Bob showed me the level of detail he required and some computer shortcuts that would serve the purpose and let me list at a much higher level than teaspoons. In short, if he had not come into my professional life, I would likely be doing something else today.

We became good friends supporting each other professionally and looking for opportunities for each other. Bob was always available to discuss any appraisal problem I came across. This is an invaluable resource for a single shingle like me, because we all need a sanity test on occasion.

I will miss his friendship and our personal conversations as well as our professional discussions.

Bob made a difference in my life.

Art Narverud

I have had the great fortune to know Bob for over 30 years. When I think of Bob, the first word that comes to mind is honor - he was an honorable man. The second word that comes to mind is dedication. He was dedicated to his wife, Linda, his sons Dan and Robert, his family, his friends, his colleagues and his profession.

It was through the appraisal profession that I first became acquainted with Bob. We met at an ASA San Francisco chapter dinner in 1985. We went from acquaintances to colleagues to associates to friends in short order. Not only was he a great friend but he was a great mentor. He taught me what it meant to be a true professional in the appraisal industry.

Over the course of the years, we worked together on various projects for the ASA. Bob was a doer. Whenever he committed, he delivered. The MTS textbook would not exist if it were not for Bob. Much of the MTS coursework is his doing. His latest endeavor with Jack Young, ASA, the ARM courses, are revitalizing the discipline. From the local level to the international level, he made his mark as an ambassador not only for the organization, but for the profession. One would be hard pressed to find many more deserving of the title FASA–Member of the College of Fellows.

During his tenure as Vice President at Banc Amerilease, I had the opportunity to work for Bob as a consultant on various occasions. Bob was very tolerant of my ignorance about leasing and guided me so my work met the Bank's standards. "Use the definition and language in the lease!" he would tell me. I would be amazed when I'd go into his office. He would have piles of paper for all of



his numerous projects stacked on every inch of his desk, table and chairs, not to mention the floor. “Organized chaos" is what he would tell me. If there is any truth in the saying that a tidy desk is the sign of an idle mind, then Bob's mind was in overdrive. He took on a lot and he always delivered.

I will miss Bob for his wisdom, his kindness, his thoughtfulness and his overall positive energy. Like a star ballplayer, he made everyone around him better. And the glass was always half full. He was and will forever be – an honorable man. Cheers, Bob.

David H. Cole, ASA

I first met Bob in April 1990 when I took the ME204 class he was teaching with Les Miles. It was Les’ first time teaching 204; Bob did his best to keep Les on track.

I got to know Bob initially through that class and by attending M&E Committee meetings. In 1992, I had the opportunity to travel to Slovenia with Bob and teach ME201 and 202 for CEEPN (Center for Eastern European Privatization Network [I think that’s right – CEEPN I know is right]). Spending two weeks with someone on the road gives you a lot of insight into them, and yourself. We had a great day off from teaching in Venice, Italy.

Over the years I had the opportunity to work with Bob on several projects for Bank of America as well as work with him on the M&E/MTS Committee as well as a governor, education chair and on several committees. Bob and I didn’t always see eye to eye on issues, but we were always able to discuss matters and remain friends, even when we disagreed.

We enjoyed sharing about our families. Bob was always happy to talk about his family.

I will miss his insight, sense of humor, and his no nonsense approach – he was a friend.

Joseph Orlando, ASA

For the little time I knew him, I was blown away by his knowledge, friendship, humility and willingness to give of himself and his time for a fellow ASA. My last bit of time spent with Bob was typical of his personality and goodness. We were both heading out of an ASA function and I was heading in Bob’s direction to BART and asked if I could walk with him. Knowing Bob’s condition, I knew that it may likely be the last time we spoke. We walked slowly because of his condition and he, of course, apologized to me for slowing me down. I asked him about his condition and he said he felt good and was lucky that he was progressing well with his treatment but I could tell from his labored breathing he was putting up a positive front. He updated me on his favorite subject, his family, and gave me a few updates on his pipeline of work. He was so easy to talk with and a true professional in terms of his expertise and his willingness to share it with others. I really wish I had more opportunities to take that slow walk again and just talk.

Joel D. Gonia, ASA – ARM & MTS / M & E

Bob was my first appraisal instructor back in the early 90's when I took the M & E courses. Here he was, like a Super Hero to this youngster, and yet he always made time to talk and lend a hand. We became friends after a while, guess he didn't have much of a choice with me hounding him all the time to ask questions about various appraisals. Recently he told me he was on borrowed time and wanted to say goodbye. Said he had a good run but his time was up. We talked about his family, the ASA, and the Alaskan Pipeline one more time. And I thanked him for his friendship and counsel. Typical Bob, he just smiled and said to pass it on.

Dana Teicheira, ASA

I knew Bob as an instructor in ME204. I think that it is safe to say that was one of the most difficult courses that I have ever taken, and Bob did a great job presenting material that was difficult and somewhat dry. To top it off the course was held in downtown Chicago, one of my favorite cities to play in during the summer. It was a brutal 4 days. I did not get a chance to know Bob as a friend or colleague, but I wish that I had.

David Eichner, ASA

I spoke to Bob last Thursday while he was at hospice and he had great difficulty talking through the drugs. We had been working on a big lease back deal and he wanted to offer advice on the deal. That’s the kind of man he was, giving always even in the midst of his medical struggles. He was an extraordinary servant to ASA and those of us lucky enough to call him friend.



Dave Mendenhall, Bus Solutions

Bob was a mentor who loved the science of valuation. He taught and challenged me to think in ways that never occurred to me. Bob was always excited to hear about the world of buses when I came to him with a value question or problem. Most importantly, Bob was a friend. A friend that I could call on professionally but he always asked about my family and was concerned about my well being.

Bob will be greatly missed by his friends here as I am sure he will be thought the ASA organization.

Capt. Joseph W. Rodgers, CMS, ASA

Bob Podwalny was my ASA mentor and formidable teacher. Over the years Robert also become my respected friend. Bob instilled upon me the importance of doing a good job and taking pride in the work that was being performed.

Not only did he drill into us the uniform standards of our profession but he showed us how to perform our professional duties with a sense of humor and of course much grace.

When Robert was working for Bank America lease Company here in San Francisco. He hired me as a young appraiser to go down to Louisiana to look at a menhaden fishing boat that the bank had lent money on. Being sent down to the Deep South was a real eye-opening experience for this Nor-Cal boy.

I can remember the look some of those rough and tough Louisiana folk when I first walked into the fisherman’s bar in Dulac, LA, looking for my client that Robert had referred me to. The music stopped the bar; folks looked around at me. I was not sure whether to run out the door or jump in the Bayou.

I called Bob on the pay phone and he told me to order up some beer and food for the crew. Next thing you know music started up again and we were eating oysters, crawdads and drinking beer and have a good old time. After lunch (and a nap) I was able to get to work. Anyway my appraised value on the craft was very low and the bank was a bit upset for they lent quite a bit of money on this particular vessel.

When Robert asked me why the value was so low I simply informed him that the price of the fish at the time had fallen and the whole fleet down in Dulac was for sale and there were no buyers.

A perfect defensible conclusion based on the reality of the market at the time of the appraisal of the vessel in question.

Robert would sometimes refer to this basic valuation scenario when speaking of appraisal practices and of course the importance of the oysters, crawdads and drinking beer and have a good time in developing defensible opinions of value.

I thank Bob Podwalny for inspiring a young appraiser like myself.

And now that I am becoming an old appraiser I wish I had paid more attention to the likes of him. He will be missed.



Fixtures: Realty or Personalty - “Who Knows” L a r r y L . P e r d u e , A S A , M V S

This paper was written to explain the difference between “building fixtures” and “trade fixtures.” In that I am most familiar with Oklahoma law, I have used Oklahoma in most examples.

Personal property appraisers are asked by their clients to appraise an array of furniture, fixtures, machinery and equipment. Many of these items are improperly classified, either as items of real property or trade fixtures, or vice versa. When valuing fixtures in our reports, we specify “trade fixtures” as it relates to personal property.

To properly complete these assignments, appraisers – especially machinery and equipment appraisers – must possess a definite and clear understanding of what comprises the different types or classifications of property.

The purpose of this article is to provide a clearer understanding and definition of the specific types of property that are most often incorrectly classified: Fixtures. Are they real property or are they trade

fixtures and therefore personal property?

Before we enter into the discussion of what constitutes a fixture or trade fixtures and when it should or should not be classified as realty or personalty, we must examine “who cares.”

Professional appraisers should care. When appraisers accept assignments to appraise any asset for their clients, they are committed to attain and provide competent service, practice ethically and recognize not only their responsibilities to their clients, but also their fiduciary responsibility to third parties and to the public.1 As members of professional appraisal organizations, they are bound to a code of ethics that governs and dictates their actions. The American Society of Appraisers states that it is an appraiser’s obligation to give competent service.

It is not proper for an appraiser to accept an engagement to make an appraisal of property of a type he is not qualified to appraise or in a field outside his society membership classification.2

In any appraisal report, all property listed must be clearly identifiable as to being either real or personal. As in the case of fixtures (that may be classified as either, depending upon the intent of the affixer), their status must be so noted that the user of the report has a complete understanding of how they were classified and appraised as either real or personal property.

Buyers and sellers should care. In any action that involves the transfer of ownership of any asset containing both real and personal property, there must be a clear understanding of what items are considered removable personal property and what items are considered permanent real property.

Lenders should care. In any financial transaction involving chattel or real estate mortgages, there must be a specific and definitive agreement as to the classification of a property that makes up these two different types of collateral. Items of personal property that may become either building fixtures or trade fixtures must be correctly identified, not only to properly effect the Uniform Commercial Code security interest filings, but also in the repossession of those assets in the event of non-performance by the maker of the loans.

Tax Assessors should care. In different jurisdictions real property and personal property may be taxed differently. The classification of property as either real or personal must conform to the applicable statutory and legal guidelines.

In Oklahoma, when tangible personal property is sold for consumption or use, whether new or used, state law requires the collection of the appropriate amount of sales tax. When real property is sold it is exempt from this sales tax. An item of personal property that has by statute become a building fixture and therefore part of the realty (when sold with realty), will change ownership – tax exempt – for sales tax purposes.



Another area in Oklahoma where identification is critical to the proper classification of property as real or personal is found in Ad Valorem taxation. Currently in Oklahoma County, real property is assessed at 11% of its fair cash value and personal property is assessed at 13.75% of its fair cash value, with the millage rates being equal. The improper classification of items in a large commercial property could greatly affect an owner’s tax liability. It should be noted if it is a stock purchase of the entire company, there would be no sales tax due.

In eminent domain condemnation settlement cases, the owner of personal property is only compensated for the cost to move and reinstall their property. In income producing real property, the owner is entitled to the Net Present Value of the property over its remaining useful life.

A case I was involved in dealt with a billboard which the city had condemned as personal property and was to award the owner the cost to move and reinstall which was only a few thousand dollars. The billboard owner also owned the land that the billboard was permanently attached to making it a fixture, part of the real estate. We proved that he was entitled to the Net Present Value (loss of income from the billboard) for its remaining useful life.

It must be noted that different condemnation authorities may have differing forms of compensation, i.e. city, county, state, DOT, FAA, etc.

As can be seen from the preceding examples, the correct identification of property, whether classified as real or personal, is crucial in the completion of any appraisal, real estate purchase or sales agreement, asset-based financing, or the taxation of any asset containing both real and personal property.

Another reason to distinguish real from personal is when the real and personal property is being appraised by two separate appraisers. It is important for them to communicate and agree on what is what, so that assets are not double counted or missed.

To identify building fixtures and trade fixtures, we must first establish definitions for real and personal property. Real property is defined as the land and, generally, whatever is erected, growing upon, or affixed to the land. Crops requiring annual cultivations are not usually included in this definition.

Real property includes all interests, benefits, and rights inherent in the ownership of physical real estate. A right or interest in real estate is also referred to as an estate. Specifically, an estate in land is the degree, nature, or extent of interest that a person has in it5

The word “realty” was used historically to connote the land. It is now used in practice as a synonym for real property (which means strictly speaking, the interest in the land) or anything which partakes of the nature of real property.3

The land, in legal theory, is conceived as being not only the lot or tract referred to in a deed, but as extending upward over the land to the sky and downward from the lot to the center of the earth. Most attachments to the house or building become a part of the real property and are dealt with under the heading of fixtures. Real estate is basically a term that has come about as a result of commercial usage. It is often employed interchangeably with realty and real property in the sense that it is the thing itself.3

The Guide to American Law defines real property as the land and all that is erected, growing upon, or affixed to it; any right or interest that an individual has in immovable things. The term real property – also known as realty or real estate – is comprehensive. It refers to lands, tenements, and hereditaments that pass to the owner’s heirs in the event that he or she dies intestate. It includes all rights that issue out of, are annexed to, and are exercisable within or about land.4

Included in the category of real property are crops (other than those requiring annual cultivation that are to be harvested), fixtures, emblements, and all that is attached to or forms part of the land.

Real estate is further defined as “land and anything that is permanently affixed thereto, including buildings, fences, and things attached to building, such as plumbing, heating, and light fixtures, or anything that would be regarded as personal property if it were not attached to the land.4



The two previous definitions of real property and real estate are quite similar. They both state that real estate and real property are used synonymously.

The American Institute of Real Estate Appraisers quite properly points out that “an important distinction must be made between the terms real estate and real property.” Although these concepts are different, some state laws treat them as synonymous.

Real estate is the physical land and appurtenances affixed to the land, e.g., structures. Real estate is immobile and tangible. The legal definition of real estate includes land and all things that are a natural part of land (e.g., trees and minerals), as well as all things that are attached to it by people (e.g., buildings and yard improvements). All permanent building attachments (e.g., plumbing, electrical wiring, heating installations), as well as built-in items (.e.g., cabinets and elevators) are usually considered part of the real estate.

Real property includes all interests, benefits, and rights inherent in the ownership of physical real estate. A right or interest in real property is also referred to as an estate. Specifically, an estate in land is the degree, nature, or extent of interest that a person has in it.

Interests vary, so real property is said to include a “bundle of rights” that are inherent rights including the right to use real estate, to sell it, to lease it, to enter it, to give it away, or to choose to exercise all or none of these rights. The bundle of rights is often likened to a bundle of sticks, with each stick representing a distinct and separate right or interest. Private enjoyment of these rights is guaranteed by the U.S. Constitution subject to certain limitations and restrictions.

It is possible to own all of the rights in a parcel of real estate or only some of them. The extent of ownership determines the kind of interest, or estate, that is held. A person who owns all the property rights is said to have fee simple title. A fee simple estate implies absolute ownership unencumbered by any other interest or estate.

Partial interests in real estate are created by selling, leasing, or otherwise limiting the bundle or rights in a fee simple estate. Partial estates include leased fee and leasehold estates.

A leased fee estate is an ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others; the rights of lessor (the leased fee owner) and leased fee are specified by contract terms contained within the lease. An appraisal assignment may call for the appraisal of a fee simple estate or a partial interest, such as a leasehold estate held by a lessee (the tenant or renter) and under certain conditions.5

The distinctions between real estate and real property with its “bundle of rights” must be completely understood if we are to correctly identify the property rights and interest inherent with the ownership and classification of fixtures as being either removable personal property or immovable real property.

Although the preceding definitions of real estate and real property may be universally used and accepted, it is very important to note that different states or jurisdictions may have their own definitions.

The State of Oklahoma defines real property as: “land, that which is affixed to land, that which is incidental or appurtenant to land, or that which is immovable by law.”6 Oklahoma Statutes further define real property for the purpose of Ad Valorem taxation by statute, i.e.,

Real property - things included shall be construed to mean the land itself, and all rights and privileges thereto belonging or in any wise appertaining, such as permanent irrigation, or any other right or privilege that adds value to real property, and all mines, minerals, quarries and trees on or under the same, and all buildings, structures and improvements or other fixtures of whatsoever kind thereon, exclusive of such machinery and fixtures on the same as are, for the purpose of Ad Valorem taxation, defined as personal property.7

It is interesting that the State of Oklahoma classifies “fixtures of whatsoever kind” as real property for Ad Valorem taxation in the first part of Title 68 Oklahoma Statute Section 2419, and then specifically exclude those fixtures as real property in the last part of Title 68 Oklahoma Statute Section 2419, if “for the purpose of Ad Valorem taxation, [they are] defined as personal property.”



Now that you are totally confused as to what constitutes real property and real estate, it is time to explore the concept of personal property.

Personal property is defined as everything that is subject to ownership and not coming under the domination of real estate; hence, anything that is not attached to the land or any buildings thereon. These articles are called personalty. For example, the interest or ownership of an automobile is personalty. In practice, “personal property” is used as a synonym for personalty.8

Sometimes an article of real property may change in character from real property to personal property. For example, trees, when growing, are to be considered a part of real property and their ownership is a real property interest. However, when the trees are cut, they are considered as being personalty, even though they may be lying on the particular parcel of real property on which they grew. The interest in the cut trees becomes personal property interest and is no longer a real property interest.9

To expand our concept of personalty let us examine the American Institute of Real Estate Appraisers’ definition. Personal property is a moveable item of property that is not permanently affixed to or part of real estate. Personal property is not endowed with the rights of real property ownership.

Items of personal property include furniture and furnishings, e.g., refrigerators, free-standing shelves, that are not built into the structure.

Although personal property generally consists of tangible items, called chattels personal in the legal profession, an intangible personal property right, called chattel real, may be created by a lease.

Historically, personal property also included ownership rights to real estate for a fixed number of years, such as a tenant’s interest. These were called chattels personal. Today, it is more common to refer to a lessee’s interest as an interest in, or rights to, real estate.10

The Oklahoma Statute has established two different definitions for personal property. The first concept being the literal (traditional) states that “every kind of property that is not real is personal.”26 This is a rather simple, straightforward definition and should make the identification of personal property quite easy, providing one can determine whether or not property is realty.

Oklahoma further defines personal property for the purpose of Ad Valorem taxation in Title 68 Oklahoma Statute Section 2420 as: “Personal property, for the purposes of taxation, shall be construed to include ...” At this point the definition lists all of the items that are to be classified as personal property. Included in this list are some specific items that are unequivocally real property; but for Ad Valorem tax purposes, the State of Oklahoma has classified them as personalty.

An example of such ambiguity is evident in the following:

(h) All machinery and materials used by manufacturers, and all manufactured articles, including all machinery and equipment of cotton gins, cotton seed oil mills, newspaper and printing plants, refineries, gasoline plants, flour and grain mills and elevators, bakeries, ice plants, laundries, automobile assembly stations, tractors, graders, road machinery and equipment, and all other similar or related plants or industries ...

1. All tanks and containers used to store or hold crude oil or any of its products or byproducts and all tanks and containers used to store or hold gasoline, water, or other liquids or gases.

2. All oil, gas, water or other pipelines.3. All telegraph and telephone lines.4. All railroad tracks.5. All oil and petroleum products in storage.

6. All other property, having an actual, constructive or taxable situs in this state, and not coming within the definition of real property.29



As noted earlier in this article and as can be seen from the State of Oklahoma’s definitions of personal property, the term personal property may mean many different things, depending on whose definition is used, and the intent and purpose of the definer.

By reviewing the different definitions of real and personal property and how each is used, the importance of the correct classifications of property and the knowledge necessary to determine if a fixture should be personal property or real property becomes quite evident.

With a thorough understanding of the definition of real and personal property, it is time to examine the thesis of this article. Fixtures – are they realty or personalty? Just as trees or other types of real property may change in character from real property to personal property, so may personal property change to real property? Articles that have changed from personalty to real property are commonly known as fixtures. Confusion sometimes exists as to when personal property becomes real property. For example, an oil burner displayed in the window of a hardware store is an item of personal property. However, once the oil burner is removed from the store and installed in a permanent manner and has become an inherent part of a building, it is then classified as real property. When attached to the building in a permanent manner it is commonly called a fixture.11

Another example of how real property may become personal property to again become real property is in the case of the clay used to make brick. As long as the clay is part of the land, it is considered real property. If the clay is dug and transported to a brick plant and is made into bricks, it becomes tangible personal property. When that brick is used in construction of a building that is resting on or attached to real estate, the dried clay, now a brick, once again becomes real estate. Another definition of fixture is an article, initially regarded as moveable personal property that has been annexed to realty in such a manner that it is viewed as a part of it. Under the Uniform Commercial Code, goods constitute fixtures when they are so connected to certain realty that an interest in them is created under real property law.12

Fixtures possess the attributes of both real and personal property. Fixtures are generally classified as agricultural, domestic, ornamental, or trade. Agricultural fixtures are articles that are annexed for the purpose of farming. Domestic and ornamental fixtures are objects that a tenant may attach to a unit in order to render it more habitable. Stoves, shelves, and lighting equipment are types of domestic fixtures. Ornamental fixtures include curtains, chimney grates, blinds, and beds fastened to walls.12

The article must be physically annexed to the realty or something appurtenant thereto in order for it to become a fixture. Annexation to land occurs when the object is permanently affixed to the property through the application of plaster, cement, bolts, screws, nuts, or nails.

The attached article must also be adapted to the intended use or purpose of the realty so that it effectively becomes inseparable from the land itself.12

Obviously, it is sometimes difficult to determine whether an item should be considered personal property or real estate. Often the courts must resolve the conflict. The courts have defined a fixture as an article that was once personal property, but has since been installed or attached to the land or building in a rather permanent manner; it is regarded in law as part of the real estate. Therefore, a fixture is endowed with the rights of real property ownership and is part of the real estate.13

In determining whether or not an article placed in a building is a fixture, the courts will look into the intent of the parties, the method of annexation, the relation of the parties, and the adaptation of the article.

Intent of the Parties. The courts, upon raising the question of the intent of the parties when an article is placed in a building, ask whether or not the item was attached with the idea (or intent) of making it a permanent part of the building. Refrigerators in apartment houses have been held to be part of the real estate. The reasoning has been that the refrigerators were installed and were intended to remain permanently because their presence increased the rental value of the apartments.

The Method of Annexation. The courts consider the method of annexation of an article to real property and raise the question of whether there would be substantial injury to the real property if the article were removed.



The plumbing in a house must be regarded as a fixture, for substantial injury to the property would result from its removal. There exists, too, what is known as constructive annexation as in the case of those articles that are not fastened to the realty, but are made for use in connection with real property. A key is an example of this.

The Relation of the Parties. Suppose a landlord rents a building to a tenant for the purpose of operating a restaurant and the tenant installs a counter. Could the landlord claim that it was a permanent fixture and that its title had therefore passed to him? Unless specifically determined in the lease agreement, he could not, for the court will encourage a tenant to equip himself with the necessary tools of his trade. The tenant, however, must remove the counter, called a trade fixture, before the expiration of his lease; otherwise, it would become a fixture. If it did become a fixture, it would be regarded as real property and title would pass to the landlord, unless determined by the language in the lease agreement.

The Adaptation of the Article. This test also tends to show the intention of the annexing party. Where an article is essential to the purpose for which the building was intended, it is presumed to be a fixture. This presumption holds true even though the article can be severed from the building.14

The State of Oklahoma, by statute, when defining fixture specifically addressed the method of attachment.

A thing is deemed to be affixed to land when it is attached to it by roots, as in the case of trees, vines, or shrubs, or imbedded in it, as in the case of walls, or permanently resting upon it, as in the case of the buildings, or permanently attached to what is thus permanent as by means of cement, plaster, nails, bolts, or screws.15

In examining the various definitions of fixture, especially as defined in the Oklahoma statues, permanent attachment appears to be the primary concern or test in determining if an item of moveable personal property has become real estate.

Although means of attachment may be the easiest to determine, it is only a portion of the test necessary to classify a fixture. The courts have held that:

In determining whether chattels become fixtures, actual or construction annexation to realty, or something appurtenant thereto, appropriateness to the use or purpose of that part of the realty with which it is connected, and the intention of the party making the annexation to make a permanent accession to the freehold, must be considered.16

The Hartford Court, cited above, was dealing with an issue involving carpet. The question in the Hartford case was whether the carpeting was personal property or was so attached to the dwelling that it became a part of it. The Hartford Court described the manner in which the carpet was attached, which was nailed with small cement nails, which by statute indicated permanent attachment. The Court held that the intention of the plaintiffs, that the carpet not become a part of the realty, was the determining factor in the test of a fixture and not the fact that it was permanently attached.17

In a similar rule set down in Potts v. Biggs & Co., the Court accepted the following rule:

Rule in determining whether machinery is fixture or chattel, remains chattels or becomes fixtures, is as follows: First by determining whether the machinery has been actually annexed to realty, or something appurtenant to realty; third, intention of party making annexation to make permanent annexation to freehold.18

A case where attachment carried stronger emphasis in the test of a fixture can be seen in Taylor v. Willibey,19 which dealt with the issue of theater seats bolted to the floor of a theater. For several years, the seats had been considered a part of the realty. The defendant tried to establish that the seats were personalty and therefore subject to personal taxes. The Taylor Court had held in a previous case involving the plaintiff’s theater, that because the seats were attached to the floor with bolts and had been since 1931, they were a part of the realty covered by a real estate mortgage.

In the Turner v. Spokane County case, the Court held that opera chairs screwed to the floor in a theater lost their character of personal property, “and by reason of their attachment or connection with real property became a part thereof and should have been assessed as such.21



In Ohio, double poly hoop greenhouses, which are usually disassembled and stored in the summer, are to be taxed as real property because structures, improvements, or buildings on land are “real property” for property tax purposes. The greenhouses are structures attached to the land by means of vertical members bolted to metal pipes embedded in concrete in the ground. A series of satellite boilers and piping systems are connected to the greenhouses to provide heat.22

The third test of a fixture is the adaptation of the article. As stated previously, this test also tends to show the intention of the annexing party. Where an article is essential to the purpose for which the building was intended, it is presumed to be a fixture. This presumption holds true even though the article can be severed from the building.14

The Court In Re Albanese20 also dealt with determination of whether theater chairs were personalty or realty. They drew attention to the fact that a theater is a permanent structure and would be incomplete without its seating capacity.

In a more recent Court decision involving an antenna tower, a New Jersey Tax Court has classified the article as a fixture using three of the four tests for a fixture.

An antenna tower owned by a cable television company constitutes real property subject to local New Jersey property tax, rather than personal property subject to the state business property tax. The 250-foot metal tower was assembled using bolts, washers, and nuts, and was attached to a steel-reinforced concrete foundation. The structure supports electronic dishes for the receipt and transmission of television signals.

The tower is of a type normally intended to be permanently affixed to real property because a reasonable cable television company would intend that it remain in place as long as it remained useful. The method of installation and height of the tower evidences the owner’s intent to use the tower into the foreseeable future. Moreover, the removal of the structure would materially injure the real property to which it is affixed because the concrete foundation would be backfilled with crushed stone and remain embedded in the ground.23

The fourth test for a fixture is based on the relationship of the parties and deals with a type of fixture. Trade fixtures are articles affixed to rented buildings by merchants, in order to pursue the business for which the premises are occupied. They encompass those items that merchants annex to the premises to facilitate the storage, handling, and display of their stock for sale to the public – such as booths, bars, display cases, and lights – that are usually removable without material damage to the premises. The objective of this rule is to promote trade and industry. A tenant, however, has no right to disengage a trade fixture if its detachment would cause substantial damage to the premises.24

An example of relationships between parties is in the lessor and lessee agreements referred to as leases.

The parties may enter into an agreement in regard to the nature of an item to be utilized with realty. Statutes confer this right in some jurisdictions, and these agreements are enforceable whenever the rights of third persons are not violated.

The terms of a lease often define the rights of a landlord and tenant in regard to fixtures. If the lease unequivocally stipulates that the tenant has the right to remove particular articles, the fact that the removal will damage the rented premises is immaterial.

Fixtures are usually attached to rented premises for the tenant’s benefit without any intention of increasing the value of the landlord’s property. Generally, when no agreement exists between the parties, articles annexed by the tenant may be detached by the tenant, during the term of the tenancy provided such can be done without damaging the premises.

The law favors the tenant’s position that certain articles should be regarded as personal property rather than as part of the realty. Improvements made to the rented premises by a tenant for personal enjoyment and use and, therefore, should retain their character as personal property.24

Trade fixtures are defined under Title 60 Oklahoma Statute Section 334, which sets forth exceptions to the general rule of fixtures not being removable. When a person affixes his property to the land of another without an agreement permitting him to remove his property, the property affixed belongs to the owner of the land unless the owner of the land chooses to require a permit the former to remove it:



Provided, that a tenant may remove from the demised premises at any time during the continuance of his term anything affixed thereto for the purpose of trade, manufacture, ornament or domestic use, if the removal can be effected without injury to the premises, unless the thing has, by the manner in which it is affixed, become an integral part of the premises.17

To differentiate between a building fixture and a trade fixture lies primarily within the intent of the person making the attachment, and the test for fixture and/or trade fixture is basically the same. If the intent of the person making the attachment is to utilize the item in the furtherance of trade with the idea that someday the item be removed either at the termination of a lease or for any other preconceived notion, then the item must be classified as a trade fixture.

Are Fixtures Realty or Personalty? By definition fixtures are items of personal property that have been permanently attached to real estate, with the affixer’s intention that they remain a permanent part and increase the value thereto. Yes, fixtures are real property.

On the other hand, trade fixtures by definition are removable items of personal property that may have been attached to real property for a variety of reasons with the intention that they may someday be removed as qualified in the lease agreement.

For any appraisal involving assets that could be classified as either permanent fixtures “realty” or removable trade fixtures “personalty,” the following must be considered:

1. The manner in which the item is affixed. Generally, an item is considered personal property if it can be removed without serious injury to the real estate or itself. Be aware that there are exceptions to this rule.

2. The character of the item and its adaptation to the real estate. Items that are specifically constructed for use in a particular building or installed to carry out the purpose for which the building was erected are generally considered permanent parts of the building. The presumption holds true even though the article can be severed from the building.

3. The intention of the party who attached the item. Frequently, the terms of a lease reveal whether the item is to be permanent, or is to be removed at some future time.

Only through thorough research can the distinction be made between the two. As professional appraisers, it is our responsibility to determine our client’s intent and purpose for determining if items are fixtures or trade fixtures. We must ascertain under what applicable jurisdiction our appraisal reports will be governed and clearly state how those items were classified and under what parameters they have been appraised

About the Author - Resume & QualificationsExperience

July 2006-Present Asset Appraisal Corporation - Executive Director, appraiser, expert witness, liquidation consultant, field operations, court-appointed receiver. Extensive background in furniture, trade fixtures, machinery and equipment appraisals nationally and internationally.

2000-Present Business Valuators & Appraisers, LLC - Director of Appraisal & Brokerage Services, a sister professional service company to D.R. Payne & Associates.

April 1999-July 2005 Asset Development & Management Corporation - President & Owner

February 1991-1995 Asset Auctioneers Incorporated - President & Owner

May 1988-July 2006 Asset Appraisal Corporation - President, senior appraiser, expert witness, liquidation consultant, field operations, court-appointed receiver. Extensive background in furniture, trade fixtures, machinery and equipment appraisals nationally and internationally.

October 1984-Present Asset Management - Owner, responsible for machinery and equipment appraisals, sales, liquidation consulting, auctioneer, and court-appointed receiver. Extensive background in sales and liquidation of machinery, equipment, furniture, fixtures and inventory; (October 1984 to present) machinery and equipment appraiser, liquidation consultant, court-appointed receiver.



Education:

Master’s Degree in Valuation Sciences (M.V.S.) - Lindenwood College, St. Charles, Missouri (1992); Bachelor of Science Degree - Central State University, Edmond, OK (1979); Numerous appraisal classes and seminars on a continuing basis

Professional Memberships, Associations:

American Society of Appraisers - Accredited Senior Appraiser (ASA), Machinery/Technical Specialties: Machinery and Equipment, Certified January 1988; Past State Director, President, and Treasurer (in addition to other chair positions) of the Oklahoma/Arkansas Chapter of American Society of Appraisers

Areas of Expertise:

Appraisal of assets for any purpose; asset tagging and database management of assets; banking and computer equipment; construction and contractor's equipment; electric generating equipment - steam/gas turbines, natural gas, etc.; farm machinery and feed mills - grain elevators; fiberglass mfg. - tanks, fittings, boats, swimming pools, etc.; firearms; food processing and packaging equipment; heat treating facilities - metal and glass; hotels, motels, amusement parks, and recreational facilities; inventories - raw materials, work in process, parts and components, finished goods; laboratory instruments and testing equipment; manufacturing plants - all industries; medical equipment - conventional and high-tech; medicine and pharmaceuticals; metal production; metalworking, plastics, and woodworking equipment; office furniture, trade fixtures, machines, and equipment; oil and gas industry exploration - seismic mapping, drilling, completion, production and refining; printing plants, pre-press, sheet fed, web, binary, etc.; radio/broadcast/telecommunications/fiber optics transmission equipment; restaurant and food service equipment; service equipment-automotive, truck, etc.; vehicles, transportation, aircraft, marine - all classes; and, video/arcade game equipment and vending machines; and including many other categories and/or types of assets; court - appointed receiver and liquidator; expert witness - local, state, and U.S. district courts - Oklahoma, New Mexico, Texas, Kansas, Maryland, and Arkansas; asset liquidator - U.S. Bankruptcy Court, Western District of Oklahoma; equipment sales and liquidation consultant

Works Cited1American Society of Appraisers, The Principles of Appraisal Practice and Code of Ethics, Section 3, (Reprint Series #23, July 1987).2American Society of Appraisers, The Principles of Appraisal Practice and Code of Ethics, Section 4.2, (Reprint Series #23, July 1987).3Unger, Maurice A., Real Estate Principles & Practices, 4th ed., South-Western Publishing Company, Ch.1: 17, Ch.3: 52.4The Guide to American Law, West Publishing Co., 389.5American Institute of Real Estate Appraisers, The Appraisal of Real Estate, 9th ed. 5660 Okla. Stat. Section 5 (1981)760 Okla. Stat. Section 2419 (1981)8Unger, Maurice A., Real Estate Principles & Practices, 4th ed., South-West Publishing Company, Ch.3: 52.9Unger, Maurice A., Real Estate Principles & Practices, 4th ed., South-West Publishing Company, Ch.3: 53.10American Institute of Real Estate Appraisers, The Appraisal of Real Estate, 9th ed., 6, 7.11Unger, Maurice A., Real Estate Principles & Practices, 4th ed., South-West Publishing Company, Ch.3: 53.12The Guide to American Law, West Publishing Co., 259.13American Institute of Real Estate Appraisers, The Appraisal of Real Estate, 9th ed., 7.14Unger, Maurice A., Real Estate Principles & Practices, 4th ed., South-West Publishing Company, Ch.3: 53, 54.1560 Okla. Stat. Section 7 (1981)



16Hartford Fire Insurance Co. v. Balch, 350 P.2d 514 (S.Ct. Okla. 1960).17Jones, Blaney & Williams, Re: FDIC v. Interurban, 11-2-88, Oklahoma City, OK, Memorandum.18Potts v. Biggs & Co., 54 P.2d 341 (Okla.1936).19Taylor v. Willibey, 212 P.2d 453 (S.Ct. Okla. 1949).20In Re Albanese, 44 F.2d 602 (D.C. 1930).21Turner v. Spokane County, 150 Wash. 524, 273 P. 949 (1929).22Green Circle Growers, Inc., Ohio Supreme Court, January 13, 1988, as cited in International Association of Assessing Officers, Personal Property Section News, Summer 1988, Vol. 9, #3.23NYT Cable TV, New Jersey Tax Court, October 16, 1987, as cited in International Association of Assessing Officers, Personal Property Section News, Summer 1988, Vol. 9, #3.24The Guide to American Law, West Publishing Co., 259, 260.2660 Okla. Stat. Section (1981).27Rickert, Richard, Ph.D., Appraisal & Valuation, an Interdisciplinary Approach, Ch. 2, 19.28American Institute of Real Estate Appraisers, The Appraisal of Real Estate, 9th ed., 82968 Okla Stat. Section 2420 (1981)



The AmericAn SocieTy of ApprAiSerS

7th Annual Equipment Valuation Conference

Cleveland, OH | june 4-6, 2018

Educational topics:Marine, aircraft, transportation, appraisal reivew, economy,

USPAP & more

Who Should Attend?Appraisers, equipment managers, leasing/finance professionals, remarketers

and service providers.

Where: Metropolitan at The 9

2017 E 9th Street Cleveland, OH 44115

ASA has reserved a block of rooms at a discounted rate, please use this link here to book your room.

Visit www.appraisers.org/eVc2018 or call (800) 272-8258 for more information.



Fees: early bird discount - $100 off if you register before march 1, 2018!

$795 member$895 non-member Bonus!ASA will also be hosting a pre-conference course, 7-hour USpAp for pp, GJ and mTS on June 4, 2018. registration for this will be separate from the conference.

continuing education hours will be awarded to

attendees.

Visit www.appraisers.org/evc2018 to register.



Risks and Rewards of Fractional Shares A m a n d a A p p l e g a t e - A e r l e x L a w G r o u p

*As originally printed in Business Aviation Advisor May/June 2017.”

Regular Appraisal Helps Prevent Sticker Shock

Among the many business aircraft travel options, fractional ownership offers the flexibility, convenience, privacy, and tax- and time-saving benefits of whole aircraft ownership, without the attendant capital expense or management responsibilities. Just buy the share size appropriate to your annual flight requirement in a suitable aircraft make, model, and size. Then pay a fixed amount per month and per hour flown, without having to hire personnel, pay hangar rent, or attend to the many other details inherent in whole aircraft ownership, including variable costs.

Fractional ownership has been a useful corporate business tool for more than 20 years. Fractional providers enjoy a remarkable safety record, given the huge number of operations they perform.

But when your share contract is due for termination or renewal, you may be in for sticker shock. Share values in fractional fleet aircraft have suffered from accelerated loss in recent years, often 25% to 40% more than that of a comparable single-owner aircraft. While some decline is normal, a fractional aircraft’s high flight time (3x the average on a wholly owned aircraft) creates a negative market perception of accumulated wear-and-tear. That factor, combined with the current surfeit of preowned aircraft for sale, has accelerated that decline.

Fractional share owners generally depreciate the asset as would any whole aircraft owner, using a double-declining schedule over the five-year contract. At termination, you must decide whether to renew a share on the same aircraft, switch to a different model, or leave the program and sell the share back to the fractional operator at a price dictated by a formula in the fractional contract.

For example, you may have purchased a quarter share in an aircraft, allowing for 200 hours of occupied flight hours annually, and depreciated it at the double-declining balance rate. But while you are flying only 200 hours annually, your shared aircraft is losing market value based on its total usage: perhaps as much as 1,300 hours per year.

Furthermore, if your share is on an aircraft model that the fractional operator intends to retire, your options are even more limited. Since renewing the same make/model is not possible, you’ll have to sell your share back to the provider at contract end. For example, NetJets is replacing its fleet of Gulfstreams with Bombardier Globals and Challengers, and FlexJet is moving from Bombardiers to Gulfstreams. Your current make/model may not be available from your current fractional operator.

So unless you’ve monitored the trends, when your contract term ends, you may not be anticipating the costs of making a change.



And unless you’ve monitored your hours usage, you may discover you have a surplus of accumulated underflown hours which may be forfeited, all or in part, if you are not continuing with the same provider with the same share size.

If you want to stay in the program with the same fractional operator, you’ll have to contribute significant additional capital to cover the difference between the reduced fair market value of the share on the aircraft being retired and the price of the share on the new model aircraft being introduced.

When selecting or renewing a fractional program, either as your primary source of air transportation, or as supplemental lift, you have many options to consider – particularly if your current share is in an aircraft model your operator is phasing out.

There are regional and global fractional programs, card memberships, pure charter programs, and whole aircraft ownership with guaranteed income derived from charter revenue – all very different offerings, each with its own advantages. Reexamine your flight requirements and choose the option – or options – that best meet your own distinct travel needs. Be sure to consult your tax adviser on any like-kind exchange issues before moving forward with any sale or purchase.

About the AuthorAmanda Applegate, is a Partner at Aerlex Law Group. She formerly served as Associate General Counsel and VP of NetJets Services, Inc., heading a team that handled more than 3,500 fractional ownership contracts.

W W W.BIZ AVADVISOR .COMA Business Aviation Media, Inc. Publication W W W.BIZ AVADVISOR .COMA Business Aviation Media, Inc. Publication

RISKS AND REWARDS OF FRACTIONAL SHARESLONGER FLIGHTS, SAFER FLIGHTSYOUR BEAUTIFUL TIME MACHINEIN FOR THE LONG HAULWIDE DIVIDE ON FAA

Six Ways to Find the Right Completions Center

Who Audits the Auditor?Asking the Right Questions Helps to Keep You Flying Safely

Completions Satisfaction

MAY / JUNE 2017



A Multi-Disciplined Appraisal CompanySince 1971, more than 13,000 Appraisals

APPRAISAL DISCIPLINES

Business Valuation

APPLICATIONS

Estate Planning/Gifting

INDUSTRIES

Chemical/Petrochemical

Machinery & Equipment Exit Planning Oil and Gas

Intangible Assets Mergers & Acquisitions Steel and Specialty Metals

Commercial Real Estate Property Tax Appeal Pharmaceuticals

Industrial Real Estate Insurance Placement Construction/Transportation

Frank Merenda ASA, MSChE610-687-5855 [email protected]

101 West Elm Street, Suite 500Conshohocken, PA 19428www. eacvaluations.com

Your trusted Appraisers in Israel

Ran Greenberg Eli El Al

Mech. Eng. CPA

ASA – MTS ASA - BV

Fair Value Group, 20 Lincoln St. Tel Aviv, Israel,

Tel: +972.3767.6966, fax: +972.3767.6964

E mail: [email protected]



ASA - RICS Established the Standards for Accredited Valuations C a p t a i n E . S . G e a r y , P. E n g ( U K ) F R I C S , F R I N A , R I C S C h a r t e r e d S u r v e y o r ( A d m i r a l t y & M a r i t i m e )

The American Society of Appraisers (ASA) founded in 1939 and the Royal Institution of Chartered Surveyors (RICS) founded in 1868 has attained the status and recognition as the international authorities in the field of professional valuation. Initially both of these organizations focused their appraisals on professional valuations of real and personal property, but over the years have expanded their multi-disciplined portfolios to include the valuation of commercial marine assets and accredited valuations of yachts and ships.

Completing a condition and valuation survey of any vessel and preparation of an International Valuation Standards or Uniform Standards of Professional Appraisal Practice compliant report requires the appraiser to have documented training and experience in naval architecture, types of hull construction, power and electrical systems, statutory and regulatory regulations, flag requirements, and requirements of the Maritime Labour Convention and accreditation with either the RICS or the ASA. An accredited appraiser ho holds a masters license can always be beneficial as the appraiser

will be familiar with the technical aspects and the professional skills needed for the operation of a yacht or ship.

General Valuation MethodologyIn rendering an opinion of value the appraiser must always consider the vessel’s Highest and Best Use

For purposes of an appraisal, the highest and best use of a vessel is considered to be the reasonably probable and legal use of the vessel, which is physically possible, appropriately supported, financially feasible, and that results in the highest value.

The appraisal is performed using the following Full and True Value definition:

The full and true value is the estimated price the vessel would bring in an open market and under the then prevailing economic/market conditions in a sale between a willing seller and a willing buyer both conversant with the property and with prevailing general price levels.

Consistent with accepted techniques, the approach to the appraisal includes the consideration of three indicators of value:

• The Income Approach, which reflects the present value of estimated future earning produced as a commercial vessel.

• The Cost Approach, which represents the capital expenditure that would be required to build a new vessel with the same capabilities, less various forms of depreciation sustained by the actual subject property.

• The Comparable Sales Approach, which measures the value based on sales of other similar vessels.

Generally accepted appraisal practice also dictates that the evaluation of the above approaches to value depends upon the subject property being valued and the data available. When reliable transactions are somewhat limited to conclude a separate valuation using the Income or Comparable Sales Approach the conclusion in the determination of Full and True Value relies on the Cost Approach.

Cost Approach ValuationThe Cost Approach reflects the principle of substitution which states that the value of the vessel is based upon the value of what you give up to acquire it. Accordingly, it seeks to determine the Fair Market Value of an asset by considering the cost of constructing functionally similar assets. This method relies upon both an estimate of current replacement cost and an assessment of



physical depreciation and obsolescence, or reduction in utility or value due to any situation or event.

The steps for completing the Cost Approach include determination of the Replacement Cost New (RCN) of the vessel and then deducting for three types or causes of depreciation. If applicable due to extraordinary and prevailing market conditions since the 2008 global meltdown a fourth type of depreciation may be applicable: Excessive Economic Depreciation. The three types of normal depreciation comprising a Cost Approach analysis are:

1. Physical Obsolescence

2. Functional and Technological Obsolescence

3. Economic Obsolescence & Excessive Economic Obsolescence

Yacht and ship appraisers most often rely on the Cost Approach to value because:

• New replacement costs are generally easy to establish with reasonable certainty

• Non-commercial vessels are not tied to an income stream for concluding an Income Approach

• Information on sales transactions that are truly comparable to the subject property are often not available to conclude a Comparable Sales Approach.

Deductions for DepreciationThe concept of depreciation for an appraisal differs entirely from accounting depreciation. Appraisal depreciation is the difference in value between an existing old vessel and a hypothetical new vessel taken as a standard of comparison. The depreciation of the vessel’s current or Fair Market Value would be subject to annual percentages of depreciation for applicable physical, functional and technological, and economic obsolescence based on the expected twenty to twenty five year in-service life of the vessel while she remained in compliance with the applicable statutory and regulatory requirements.

During the first 10 years the percentages of depreciation remain fairly constant. As she ages the percentages of depreciation will show an increase depending on her care and maintenance and market conditions. Definitions and discussion of the three types or causes of depreciation related to the vessel are as follows:

Physical Obsolescence is the loss in value or usefulness of the vessel due to using up or expiration of its useful life caused by wear and tear, deterioration, exposure to various elements, physical stresses, and similar factors during the in-service life of the vessel.

Functional and Technological Obsolescence is the loss in value or usefulness of a vessel caused by inefficiencies or inadequacies of the vessel itself, when compared to a more efficient or less costly replacement vessel that new technology has developed. Symptoms suggesting the presence of functional obsolescence are excessive operating costs, excess construction, over capacity, inadequacy, and lack of utility or similar conditions. Empirical data and experience suggests that the annual depreciation rate will increase slightly as the vessel ages, but generally remain constant until the vessel’s scrapping.

Economic Obsolescence (sometimes called “external obsolescence”) is the loss in value or usefulness of a vessel caused by influences external to the vessel such as increased labour or utility costs, reduced demand for the vessel as a result of economic influences, increased competition, environmental or other regulations, inflation or high interest rates, or similar factors relating to compliance with statutory and regulatory requirements.

Since 2008 the severe financial crisis has resulted in the depressed condition of the second hand yacht market. Because of the glut of unsold yachts both super and small, valuations should now consider Excessive Economic Obsolescence and external market factors which have a direct impact on the in-use market value of the vessel.

The Market Approach is applicable on smaller yachts where an appropriate number of comparables are available. In the case of larger one-off custom built yachts the replacement cost new (RCN) is relatively easy to substantiate and the Cost Approach will consider and include the percentages relating to the three types of depreciation – physical obsolescence, functional and technological obsolescence, and economic obsolescence.



Captain E.S. Geary a former ASA is now a Fellow and RICS Chartered Surveyor who has extended the Royal Institution Of Chartered Surveyors valuation portfolio to include expertise in admiralty and maritime. The USCG appointed him as Department Chief Pan-American Auxiliary Liaison and commissioned him with the rank of Captain. Following his successful training mission of the Coastguard Command of the Venezuelan Navy he was awarded a commission with the rank of Captain in the Venezuelan Navy. He has authored a number of articles on international yacht and ship appraisal valuations and written books on the subject. Captain Geary is a registered professional engineer and has appeared as a maritime expert for the United States Maritime Administration., US General Services Administration, and the US Department of the Treasury-Internal Revenue Service. With experience and training in the requirements of Manning and Licensing, the STCW Code (Seafarers Training, Certification and Watchkeeping Code), a consultant QMS 2000 Internal Auditor of ISO 9001, ISM Code (International Safety Management Code), and a US Coast Guard/US Government Maritime Administration Certified Port Facility, Company and Vessel Security Officer, He has served as an expert in maritime valuations in the United States, United Kingdom and other international tribunals and is a national panelist in admiralty with the American Arbitration Association

One of Captain Geary’s more fascinating assignments involved the condition and valuation appraisal of the Ferro-Cement replica of HMS Bounty. Constructed by MGM Studios, HMS Bounty was used in the 1962 motion picture starring Trevor Howard and Marlon Brando. The original British warship was built in 1784 at the Blaydes Shipyard, Kingston-upon-Hull in East Yorkshire at a cost of £1,950.00 and was lost by fire in 1790. Many years later a USPAP compliant valuation appraisal of the replica owned at the time by Ted Turner of CNN fame, was required by the US Internal Revenue Service for purposes of taxation in the ship’s donation to a charity. On October 29th 2012 the HMS Bounty was sadly lost in the Atlantic during Hurricane Sandy with the death of her master and a crewmember.

1960 Replica of HMS Bounty



In the event of an insurance claim the determination of a yacht or ships residual value following a storm or hurricane exposes the appraiser to a plethora of important issues relating to value which include the extent of damages, repair and restoration costs, availability of repair facilities, and the time needed to carry out the repairs.

To arrive at a true fair market value the trained maritime appraiser must not only be fully conversant with engineering principles and practices of design and construction, but must also have expertise with Flag administration requirements and statutory and regulatory compliance. Private clients, underwriters, lending institutions, owners, and prospective purchasers rely and have confidence on receiving accurate, comprehensive and unbiased reports of valuation. In the case of agreed values in insurance policies and considering the overriding factor of Uberrimae Fidei or Utmost Good Faith, over-valuation presents a moral hazard where under-valuation precariously exposes the insured to becoming a co-insurer.

Published articles written by Captain Geary Include:• Assessing the Assessor - The Royal Institution of Naval Architects • Appraising the Appraiser - The Superyacht Report • Sea Trials – The Superyacht Owner• The Case for a Standard Practice: A Sensible & Simple Approach to Ship Safety - A Snapshot of the STCW Code • The HIN: A Boats Social Security/NHS Number - Who Conceived it & its Date of Birth • Marine Forensic Engineering & the Valuation Sciences in Claims & Losses • Maritime Experts & The Federal Rules of Evidence • Floating Assets - World Values of Ships & Yachts • The Loss of the British Yacht Cheeki Rafiki -Keel Bolt Failure – The Hidden Killer• Bogus credentials – ‘The Naval Architect who wasn’t’.• BREXIT – An Unseaworthy Situation• 27 Years as an ASA qualified appraiser in Marine Commercial & Marine Yachts• Floating Assets - World Values of Ships & Yachts • The Loss of the British Yacht Cheeki Rafiki -Keel Bolt Failure – The Hidden Killer

Damage and valuation assessments of yachts following Hurricane Ivan – Grenada, West Indies


T H E M T S J O U R N A LEDITORIAL COMMENT

Still lessons to be learned

The Cheeki Rafiki verdict has indicted the yacht’s irresponsible operator – but to truly learn lessons from this tragedy, we also need to address the issue of inadequate surveyors

This summer saw Winchester Crown Court, UK reach a verdict on the May 2014 Cheeki Rafiki capsizal – a

tragic, yet ultimately avoidable, incident that led to the deaths of her four crew members crew when the Beneteau First 40.7 cruiser racer capsized in the mid-Atlantic.

Although it may be scant consolation for the families of Andrew Bridge, James Male, Steve Warren and Paul Goslin, at least some sort of justice has been served: Stormforce Coaching, the operator of the yacht, swiftly had its recognition withdrawn by the Royal Yachting Association (the UK’s national governing body for these vessel types) and went into liquidation, while its owner, Doug Innes, faces four counts of manslaughter. Too little too late, some may argue…but at least the verdict ensures that Innes’ negligence will claim no more lives, and may serve as a timely warning to other operators who’ve prioritised cost-cutting at the expense of safety.

The case also serves to remind us of the importance of a qualified surveyor throughout the vessel’s lifespan. For naval architects and boatbuilders, each job is typically ‘over’ once the vessel has been delivered, brand spanking new, to the client: but, from thereon in, it’s over to the owner to ensure that the boat is adequately and regularly surveyed and checked for faults. This is rarely ‘glamorous’ work, and can sometimes feel like a chore, but it is work that nonetheless needs to be arranged – and, crucially, with a qualified surveyor to hand.

However, for some, the verdict has not just indicted Innes and Stormforce, but also potentially shaken the sector’s faith in

surveyors in general. This is of particular concern to Captain Ed Geary, RICS chartered surveyor and FRINA / FRICS. We should start by giving credit where it’s due: in both his initial article “Keel bolt integrity failure – the hidden killer” (Ship & Boat International January/February 2015, pages 15-17) and the follow-up feature, in which he replied to critics of his assessment (Ship & Boat

International September/October 2015, pages 18-24), Capt Geary correctly identified the yacht’s weakened keel bolts as the primary cause of the vessel’s disintegration mid-voyage. As he puts it: “Tight keel bolts don’t fail – loose ones do, which is why, with parametric rolling in the North Atlantic, Cheeki Rafiki’s 3,700kg keel swung free and eventually separated from the hull.”

Most readers will share Geary’s condemnation of Stormforce, but he also makes the valid point that inadequate surveys – either as a result of collusion between the surveyor and owner, or simply due to the incompetence of the surveyor – also harm the reputation of the marine sector as a whole, as well as endangering the lives of

anyone who takes to sea. This is especially true in the case of Cheeki Rafiki, as the yacht was known to have a record of frequent groundings. It indeed seems utterly bizarre that the condition of the keel bolts was not thoroughly checked and recorded, given that particular yacht’s history.

The importance of employing reputable and accredited surveyors cannot be overemphasised, and, while there are lessons to be taken from the Cheeki Rafiki tragedy, it would be naïve to assume that they have all been learnt. As a whole, the marine sector might do well to push for greater emphasis on these vessel components and for tighter controls on boat surveys overall. The sea is a perilous enough environment as it is: boats breaking up due to barely inspected, loosened keel bolts simply shouldn’t be happening in this day and age.

Meanwhile, Cheeki Rafiki sailor James Male’s legacy will live on in the form of a new wheelchair-accessible powerboat jointly launched by UK charity The Wheelyboat Trust (see Ship & Boat International July/August 2016, pages 63-64) and the QE2 Activity Centre in late August. The motorboat James Male will enable the QE2 Activity Centre to train disabled people in how to helm and crew a motorboat, as well as enabling persons with mobile impairments to enjoy the recreational side of waterborne life.

This project demonstrates the kind of adventurous spirit displayed by Cheeki Rafiki’s sadly departed crew – a spirit we can’t allow to be extinguished by lazy, corner-cutting approaches to marine safety. SBI

“The importance of employing reputable and accredited surveyors cannot be overemphasised”

Ship & Boat International September/October 2017 7

S&BI Sept-Oct 17 - p7.indd 5 29/08/2017 11:57:21Volume 34, Issue 1, 1st Qtr 2018 3 5


Over 183 years of industry leadership are ready to work for you.

MACHINERY APPRAISALS

• Liquidation Value • Orderly Liquidation Value • Fair Market Value • Fair Market Value In Place • Desktop Opinion • Walk Through Evaluation

ASA Code of EthicsUSPAP Complaint

Wm. F. Comly & Son, Inc. – Philadelphia, PA

Valuing Machinery and Equipment: The Fundamentals of Appraising Machinery and Technical AssetsGet the latest information on inventory valuation, aviation, marine appraisal techniques and report writing and ethics.

Hard copy and/or e-Book versions available

Order online at www.appraisers.org or by phone at (800) 272-8258

Valuing Machinery and Equipment:The Fundamentals of AppraisingMachinery andTechnical Assets

Third Edition

American Society of Appraisers

Valuing Machinery and Equipment: The Fundamentals of Appraising Machinery and Technical Assets

Third Edition American Society of Appraisers

The International Society of Professional Valuers


Third Edition


Valuin

g M

achin

ery and

Equ

ipm

ent

The Fu

nd

amen

tal of A

pp

raising

Mach

inery an

d Tech

nical A

ssetsTh

ird Ed

ition

• Am

erican So

ciety of A

pp

raisers


Third Edition


11107 Sunset Hills Road, Suite 310 Reston, Virginia 20190

Tel (800) ASA-VALU • Fax (703) 742-8471www.appraiser.org

O r d e r Y o u r C o p y T o d a y !Topics included:• Processplant appraising

• Appraisingassetsin groups

• Valuationforfinancial reporting

• Costsegregation studies

• International valuations



Valuation of Solar Assets C h r i s t o p h e r N u g e n t , A S A

OverviewStrong growth is continuing in alternative energy, with crashing prices for solar installations driving a lot of the growth and causing a lot of the growth through increased economies and reduced manufacturing costs. These 40-year assets are an attractive place for leasing and investment. Valuation of solar assets, facilities and projects, is best accomplished by the income approach, as the production of the commodity of power can be relatively straightforward to value – discount the value of the megawatts of power produced for 7-10 years and the value emerges.

IntroductionMachinery and equipment assets are most typically valued by the market approach, by examination of the sale of comparable forklifts, cranes, or class 8 tractors which are widely available in the market. Solar assets are generally not subject to valuation by market comps. A typical 1.5 megawatt (“MW”)

solar project consists of $525,000 of solar PV panels plus $1.2 million of racking, inverters, electrical installation, engineering costs, and profit for the developer. There is some market developing for used PV solar panels, but the highest and best value is sale of the system as is, one big operational project since you can’t sell electrical installations and big metal racks.

The developer is the primary manager of the project and is usually the project operator as well. The “offtaker” is the entity using and paying for the power and the entity that hires and pays the developer. Almost all solar projects have underlying “PPAs”, or power purchase agreements, which are 25 year contracts by the utility to purchase the power for escalating prices.

Valuation of Solar AssetsThe total value of the renewable energy market has been in the $230 billion - $310 billion range in the last ten years, with the peak of $312 billion occurring in 2015 as US tax credits were threatened to expire on 1/1/2016. The credits were extended for at least another five years, and the growth has resumed. The global investment of $241 billion in 2016, 23% than 2015, brought 138.5GW of new renewable power capacity, up 8% from 127.5GW in 2015. The average dollar expenditure per MW for solar and wind dropped by over 10%. In 2008, new solar projects were being built for over $7 per watt, now under $1.50 per watt. The US solar market is now at approximately $30 billion, the majority of which is project financed. Banks, investors, developers, and other stakeholders have a need for appraisals of these projects.

Cost Analysis for PV Solar Project

A typical 1.9MW PV solar project built in 2018 might cost $2.5 million, or $1.35 per watt. The nearby chart shows project cost, PPA pricing (explained below), and other basic facts about the project. When valuing the solar project it is important to understand and verify that the costs are reasonable and customary. Overpaying for an asset does not make it more valuable.

Two important cost items to review are cost per watt, the bottom line cost of the project, and soft cost percentage. Soft costs are typically 15% - 25% of the cost of a solar project, and includes the considerable cost of the electrical contractors to install the PV panels, the string of inverters, and other power components of the system. The PV panels, leading OEMs including Jinko, Canadian Solar, Trina, and Hanwha, generally comprise a third of the cost of a PV solar installation. “BOS” stands for “balance of system”, and this cost includes the electrical work, developer profit margin, and other costs.

Here is the cost breakdown for that typical 1.9MW PV solar project:



The future value of a PV solar project can be estimated by value of the components on the secondary market, and by value of the power produced by the project – the income approach. Because most developers and offtakers are not efficient taxpayers and the huge 30% tax credit is there, most solar projects are lease financed. The typical tenor of an operating lease financing, one that leaves ownership of the asset in the ownership of the big bank and not the small developer, is 7-12 years. The asset must stay in place for 5 years for the ITC to remain valid. The lessor takes the ITC and applies it to the lease payments. 90% of projects have a PPA in place.

PPA – Guaranteed Income for the Project

A PPA, power purchase agreement, is a contract between the offtaker and the local utility for the utility to purchase the power, usually for an escalating price, for, say, 25 years. It is like guaranteed income for the project. The PPA buyer receives stable, low cost electricity and the ability to claim green bragging rights and fulfill any government contractual requirements to be “renewable”. Importantly, the PPA income stream stays with the project and is transferable to any new owner. PPAs are allowed in most states but are explicitly prohibited in a handful of states including Florida, Alabama, Oklahoma, and Kentucky. In some states, there are certain restrictions on municipalities with respect to PPAs.

PV Solar Array – Determination of Value

The first step in valuation of solar assets is to understand the project and to ensure that it is a viable, economical project. Many firms, including developers, do engineering studies of solar projects which project detailed costs and exact power output by month and by hour of each day. The “PVsyst” is a commercial software system that accepts all the project inputs – latitude/longitude, average temperature, elevation, illumination intensity – and computes the likely project output in watts per day,

ABC Industrial Solar 2/1/2018

Lessee: ABC Industrial

PPA: 25 year 2017

Lease ground lease 30 year control

Location: Arizona

Operating Lease PricingN term 120

PV cost $2,570,000

int 5.7500%

pmt $25,826

FV% 12.00%

FV$ RV $385,500

PPAyear

2017-2021 0.1115

2022-2026 0.1427

2027-2031 0.1827

2032-2036 0.2338

2037-2041 0.2993

system cost

PV panels $760,000 29.57% 6.700 Jinko panels

racking $650,000 25.29%

BOS $550,000 21.40%

soft costs $610,000 23.74%

total cost $2.570,000 100.00%

DC watts 1,900,000

cost/watt $1.3526

30% Federal investment tax

cost $2,570,000

tax credit% 30.00%

tax credit $ $771,000



per month, and per year. The PVsyst run is only as valid as the quality of the inputs, and so must be carefully evaluated for reasonableness. The PVsyst is used by developers, architects, engineers, researchers, and investors to evaluate the project value.

The PV solar project is a 30+ year asset. The appraiser must consider the ownership and control of the land the project sits on. For a 10-year lease, the appraiser should ensure that the offtaker has control of the land for at least 20 years – and the appraiser should review the lease to make sure this is true.

One way to recover value, and to determine value, of the solar project is through the sale of the PV panels independent of the operating project. The fair market value in exchange of a PV solar module is a concept that is emerging as the industry begins to mature. Some projects go bust, real estate deals go bad, and sometimes panels are sold. You can go to eBay right now and buy used solar panels, and independent value for used solar panels is beginning to have some meaning. Prices for used solar panels on eBay and on other equipment trading websites have come down as the price of new solar panels has come down. The price of new solar panels has come down drastically over the last ten years – a 315 watt panel that cost $7 seven years ago can now be purchased for around $0.62 per watt, so used prices have to come down as well. The price per watt for a new solar project is leveling off at around $1.00 - $1.25 per watt, so the dramatic price declines of the past will not be repeated. Since the price of the panels are only about a third of the price of the total PV project, if the used price of the panel is 30% of the original price of the panel then the total amount recovered will be about 10% of the cost of the project. A more realistic approach to valuation is to value the whole project, using the income approach.

PV Solar Project – Valuation of an Operating Solar System

Power is a commodity – everyone needs it and the grid has an insatiable need for more power. Developers own and operate large portfolios of projects, employ central monitoring stations to track performance and problems with projects in real time. As such, there is a robust and active market for sale of operating solar projects. Active developers will calculate the value of a project by taking the PV of the power over the next 7 or 10 years, then discount by 7% - 10% and that’s how much they will pay. The value of the power if covered by a continued PPA is easy to calculate; if no PPA then the value of electricity in that state is pretty well known, from 10 cents per watt in some states up to 20 cents per watt in New England.

Here is an example of valuation of an operating 1.5MW PV solar project. Estimate how much power will be produced each year and multiply by the value of the electricity. Select or negotiate the term to determine the exact value.

assumptions

annual degredation 1.75%

inflation value of power 1.50%

discount rate 7.50%

hours/day production 8.00

year year # output KWh $$/KWh output value PV(output) cum PV

2017 0 1,500 $0.1200 $381,600 $381,600 $381,600

2018 1 1,474 $0.1218 $380,546 $353,996 $735,596

2019 2 1,448 $0.1236 $379,495 $328,389 $1,063,985

2020 3 1,423 $0.1255 $378,446 $304,634 $1,368,619

2021 4 1,398 $0.1274 $377,401 $282,598 $1,651,217

2022 5 1,373 $0.1293 $376,358 $262,156 $1,913,373

2023 6 1,349 $0.1312 $375,319 $243,192 $2,156,565 2024 7 1,326 $0.1332 $374,282 $225,600 $2,382,165

2025 8 1,302 $0.1352 $373,248 $209,281 $2,591,446

2026 9 1,280 $0.1372 $372,217 $194,142 $2,785,588

2027 10 1,257 $0.1393 $371,188 $180,098 $2,965,686



ConclusionThe solar market is experiencing strong growth, and production of electricity by coal continues to fall. Investors, banks, and leasing companies have a need to evaluate the value of the project to compute the appropriate financing rates.

The value of an operating PV solar project can be calculated in the developer market by estimating the value of the power which will be produced in the next 7 years, then discount to present value.

About the AuthorChris Nugent is Managing Director of Bluechip Asset Management, an appraisal and asset management services company. Mr. Nugent has over 25 years of experience in valuation, leasing, and financial services, focusing on equipment appraisal, residual management, asset remarketing, and portfolio management, including positions with Key Equipment Finance, Babcock & Brown, Comdisco, US Leasing, and other companies. Mr. Nugent has equipment management expertise in IT, healthcare, technology, semiconductor, energy, business equipment, construction equipment, and a variety of other industries, and has managed staff and transactions in the US, Europe, and Asia.

Mr. Nugent is an Accredited Senior Appraiser of the American Society of Appraisers. He holds a BA in Statistics from the University of California, Berkeley, and an MBA from Santa Clara University.



What's Hot, What's Not In Equipment Leasing For 2018 C a r l C h r a p p a , A S A , M R I C S , I F A .

In January and February, 2018, The Alta Group, LLC (“Alta”), with the assistance of the Equipment Leasing and Finance Association ("ELFA"), conducted a confidential internet survey of equipment managers and consultants throughout the United States regarding what's hot, what's not in equipment leasing for 2018. A total of (53) responses were received, of which 80% were lessors, asset-based lenders, or financial advisors, and 20% were service providers.

Composition Of RespondentsLessors reported that they added the following amounts of equipment to their portfolios in 2017: 22% added up to $50 million; 4% added $50 to $100 million; 28% added $100 to $500 million; 11% added $500 million to $1 billion; 13% added $1 to $3 billion; and 22% added over $3 billion. Thus, this survey was heavily influenced by the 74% of lessors who added $100 million or more of equipment to their portfolios in 2017. Note: this is 11 percentage points higher than last year.

Survey Results And Future Leasing Business VolumeThe survey consisted of six questions. One of the most important was Question VI(B), which asked for the "Total dollar amount (volume) of business per specific equipment type expected to be booked by your firm, (in the future) 2018 compared to 2017?" Respondents were simply asked to "click" on either the "increase," "about the same," or "decrease" box, with the final score, referred to as a Net Rising Index (NRI) representing the net difference between the percentage of respondents increasing (+) and decreasing (−) for each type. Chart I illustrates the ‘NRI’ results for the 15 equipment types surveyed. Overall, this year’s volume results were similar to last year's. Thus favorable scores were tabulated for many of the same types of equipment as last year. For example, construction scored the highest with a (+85) compared to a (+83) in 2017, and (+64) in 2016’s survey; followed by machine tools which scored (+56) compared to (+69) last year; followed by truck/trailer which scored (+48) this year, compared to (+29) last year; containers/chassis scored (+29) this year and (+17) last year; and plastic scored (+24) this year and (+30) last year.

Also, hi-tech/ computers scored (+22), compared to (+42) last year; medical scored at (+18) this year compared to (+42) last year; and oil/gas/energy (O/G/E) at (+12) compared to (-2) last year. Finally, aircraft and rail both scored (+8), compared to last year’s (+13) and (+28), respectively. This year only five types showed negative results, an increase of three from last year. The five ‘losers’ were FF&E at (-4) compared to (+17) last year; automobiles at (-9) compared to (+15) last year; marine/intercoastal at (-12) compared to (+20) last year; telecom at (-25) compared to (+14) last year; and printing (-44) compared to (-25) last year. This year’s survey results were weaker than last year’s, perhaps due to the large portfolio size of most of the respondents.

Based on past surveys, a score of +20 or greater indicates a strong preference for adding a specific type of equipment to the portfolio during the coming year, while a score of -20 or greater indicates a strong preference for not adding. Chart I shows a strong preference for adding six types of equipment, two less than last year. This year’s survey also found a strong preference for ‘not adding’ two types (telecom and printing), compared to only one type last year. Thus, the results of this year’s survey strongly resemble a “topping” shape, meaning conditions have normalized at high levels and increases are harder to achieve. This also means that the volume of equipment to be leased in 2018 is expected to increase moderately.

Using the same ‘NRI’ scoring methodology, Question VI (A) asked for "The total (current) amount of business (volume) that was booked by your firm per specific equipment type as of year-end 2017 versus 2016?" The responses to this question, illustrated in Chart II, indicate business conditions were a little weaker last year compared to the year before. There was a strong preference (score of 20+) for three equipment types, compared to five types last year and seven the year before. This year’s



survey also showed O/G/E (-23), marine/intercoastal (-32), and printing (-36) remain largely out-of-favor. The 2018 survey results are weaker than 2017's, with most scores lower across the board. This illustrates that the industry’s growth rate is reflective of a mature marketplace. However, this also illustrates that volume increased again in 2017, although at a moderate rate.

Changes In Residual Assumptions Residuals Trending LowerFinally, Question VI(C) asked for "Change in the amount of residual value assumed this year (increase/decrease), per specific equipment type in comparison to last year." The results found on Chart III show that the industry is becoming even more conservative in booking residuals this year. This reflects a growing concern of the impact of foreign competition, along with rising inflation and interest rates, in tandem with quantitative tightening. This year five types showed increased residuals (vs. 3 types last year), and ten types showed decreased residuals (vs. 12 types last year). It should be noted 2010 was the third time in the 28-year history of this survey that all equipment types scored negative. This year’s results showed higher highs and lower lows compared to last year. This illustrates the impact of asset and risk management on assumed residual values. Overall, on a net percentage basis, 17% to 33% of respondents increased residual values for containers/chassis, plastic, machine tool, and construction equipment. Also a net 3% of respondents increased residual values for truck/trailers. All other types had residuals lowered. High-tech/computer (-30), FF&E (-32), and printing (-44) had the largest declines. It is clear that the industry is becoming more entrenched in its views on residual value positions.

Historically, positive results (increases) in residual positions, taken together with positive results of 20 or more in the survey's Future Business Volume question, indicate a strong willingness on a lessor's part (or if negative, a lack thereof) to aggressively seek (or avoid) business within certain equipment types. Overall, this year's survey shows three types very positive (construction, machine tools, and plastic), compared to one type last year and no types the year before. Meanwhile two types (telecom and printing) showed ‘very negative’ results this year, versus no types in 2017. Thus, these results show again that lessors have become even more selective and risk conscious on a portfolio basis.

Most And Least Favorable Future Equipment Leasing OpportunitiesFor clarification and correlation purposes, additional questions were asked and a ‘weighted’ approach to scoring the survey was used (i.e., Questions III and IV), versus the previously discussed ‘unweighted’ approach (i.e., Question VI). Questions III and IV asked respondents to pick only the three best and worst future equipment leasing opportunities (in order, 1 through 3) by specific equipment type.

The results for each equipment type were weighted by assigning a numerical weighting (multiplier) to each 'place' selected, whether positive or negative. For example, a first place vote was assigned five (5) points, a second place vote three (3) points, and a third place vote one (1) point. A weighted score was tabulated for each equipment category by multiplying the actual number of votes for each place by their respective multipliers (+ or –), then summing the total. A final weighted equipment score (net weighted score) was determined by calculating the difference between each equipment type's total positive and total negative weighted scores. Note, this year the weighted results for the most part, (see Chart IV), show a close correlation with the unweighted results (see Chart I), in that the general order of equipment types – best to worst – is similar in both approaches (weighted/unweighted). This lends support to the survey's findings. However, the overall weighted scores showed higher lows and lower highs, showing the industry is not quite as selective as last year. However, the enormity of this year's most positive and negative scores indicates, for the ninth year in a row, that the industry is still focused on certain equipment types.

The weighted scoring approach indicates the level of preference (strong or weak) for a specific type of equipment – whether positive or negative. This year's results show that respondents expect very strong (positive) future equipment leasing opportunities for: construction (+132) versus (+231) last year; truck/trailer (+83) versus (+74) last year; machine tools (+39) versus (+85); medical (+26) versus (+138) last year; but not for O/G/E (-24) versus (-131) last year; automobiles (-32) versus (-30); telecom (-34) versus (-56); marine/intercoastal (-40) versus (-32); and finally, printing (-99) versus (-227) last year. It is interesting to note that this year's top three and bottom three scores are polar opposites, clearly showing exactly “what’s hot



and what’s not” in the industry. Overall, survey respondents rated four (4) equipment types very high (+20 or greater) versus five (5) last year, and five (5) equipment types very low versus nine (9) last year. Thus, these results again indicate that leasing companies are selective about which equipment types to focus on.

Final Overall RankingConstruction Equipment Repeats Again as Winner, Containers/Chassis Breaks into the Top 5, While Printing Remains at the Bottom

Finally, a combined overall score was tabulated by summing each equipment type's place (rank) for survey Question VI(B) – the amount of future leasing volume - unweighted, and Questions III and IV – the best and worst future equipment leasing opportunities - weighted. The combined results, shown on Chart V, indicate that this year, with the exception of new top tier arrival containers/chassis, there was little change in the most desirable. There is a very strong preference for construction, machine tools, truck/trailer, containers/chassis, hi-tech/computer, and medical. Also scoring in the top eight were plastic and rail. On the other hand, marine/intercoastal, telecom, and printing had poor showings. The lower the overall score, the better the ranking. For instance, construction, which has a combined overall score of 2, finished first with the best possible score for the second year in a row in both of the two future leasing business opportunity questions (1+1 = 2), while printing has a score of 30 (the worst possible out of 15 places in both of the questions).

Changes In PreferenceConstruction Rules, Preference for Containers/Chassis Rises While Marine/Intercoastal Dives

Table I shows a comparison between the overall results of the 2018 and 2017 surveys, in order to determine trends (preferences) in leasing towards ("+"), or away from ("–") certain types of equipment over the past year. Once again, the overall combined scores taken from the final rankings for each of the two years were compared. The lower the score the better, and the larger the year-over-year difference the greater the trend towards ("+") or away from ("–") a given type. In comparing the two surveys, the equipment leasing industry's perception of construction (+0) and machine tools (+1) remained high. Containers/chassis moved into the top five with a very large move (+8), while on the other hand, lessors’ preference for marine/intercoastal plunged (-11), while telecom (-2) and printing (0) remained low. The best year-over-year improvement came from containers/chassis (+8) and O/G/E (+9). On the other hand, the worst year-over-year move came from marine/intercoastal (-11). Overall, for 2018, it appears that during the past year leasing companies have developed a greater preference for six types versus eight last year; no change in preference for two types, versus one type last year, and diminished preference for seven types, versus six last year.

Equipment OutlookBased on the 2018 survey results, equipment managers and leasing companies remain very optimistic with some of their equipment outlooks, yet decidedly pessimistic in others.

Specifically, for the fifth year in a row, Construction equipment was the big winner of this year’s survey, edging out number 2 machine tools by 3 points. It also ranked number three in largest increase in residual value sentiment (+33), a very powerful 1-2 punch. The leasing and finance industry seems to be very comfortable with this segment, due to its rather ‘standard’ equipment designs, broad demand in domestic and global markets, and finally, its vast and ‘transparent’ secondary market. The outlook for construction remains solid, pinned to the continued improving health of the economy propelled by relatively low interest rates. The infrastructure bill, if passed, would be a huge plus to this already hot segment. Machine tools finished tied for second place, with an increase (+1) in preference from last year and the second highest net jump in respondents increasing residual values assumed (+28). This ranking is believed to be linked to the strong domestic automotive and allied industries, along with the now improving oil exploration sector. Final results in the primary market indicate sales for metal cutting equipment rose by (+8.0%) in 2017. This positive trend is expected to continue through 2018, aided by the new tax law and strong consumer sentiment. December was the 16th consecutive month of ISM’s Purchasing Managers’ Index above



50, indicating strong manufacturing expansion. According to a recent survey, about 1/3 of all 2018 machine tool spending is planned for horizontal and vertical machining centers. Job shops and the automotive & machinery industries are expected to account for more than half of this consumption. 2017 was a pivotal year for additive manufacturing with the emergence of carbon fiber 3D printing. The secondary market for machine tools has been buoyed for the past few years due the shortage of tools manufactured during 2008 to 2010, but a dip in used pricing is expected in 2018, as the relatively plentiful 2011-2012 tools are now entering the market. Truck/trailer finished in a tie for second place after finishing in fifth place last year. New class 8 truck sales fell by 0.2% last year. The driver shortage is limiting demand. New trailer shipments increased to over 300,000 for the year, the third highest ever. Sales of used trucks and trailers remain good. The volume of used class 8 trucks fell by 1% for 2017, while prices fell by an average of 5% for the year. Thus, there is continued optimism for this equipment type. This sector has greatly benefited from low fuel prices and interest rates.

Medical equipment finished tied for fourth place, down from second last year, with a fall in preference of (-6). This decline in rank is likely linked to confusion regarding the future of healthcare finance with changes to the Affordable Care Act, and its effect on hospitals and clinics. This industry has a preference for leased equipment, which continues unabated, driven by demographics linked to the increasing health care needs of the ‘baby-boom’ generation. However, various DRA reimbursement cuts, rules, etc., aimed at the industry, are weakening the equipment markets. Reimbursements were reduced for analog x-ray in 2017 and beginning this year for computerized (CR), to push healthcare providers to digital radiography (DR). The big stories in healthcare and the predominant trends at RSNA 2017 were the controversy about the safety of certain MRI contrast agents that has caused several to be pulled from the market and artificial intelligence used for the generation & interpretation of diagnostic medical images. AI is expected to be used first for services that are time-consuming and poorly reimbursed. Siemens Healthineers (formerly Siemens Healthcare) is cutting costs in preparation for its IPO. The 2002-04 peak in MRI scanner installations foretells of a corresponding replacement peak in the near future. The medical equipment secondary market is robust, and the global refurbished equipment market is forecast to grow sharply from 2017 levels at an estimated 12.7% compound annual rate, reaching approximately $11.9 billion by 2021. Hi-tech/computers finished tied for fourth place, with the third largest percentage of respondents lowering residual values (-30), and a (-4) drop in preference. This industry continues to operate on very low margins but has a vast secondary market. Thus, volume is important. In 2013, global computer sales dropped by a record (-9.8%), due to the rapid increase in sales of smartphones and tablets. In 2015, global PC sales plunged by (-10.6%), surpassing 2013’s record decline. Then fell again in 2016 by (-6%) and by (-3%) in 2017. After 12 consecutive quarters of declining unit sales, PC shipments are forecast to continue to fall in 2018 (-5.4%), with notebooks showing the steepest decline (-6.8%) and the premium ultramobile market the only PC segment expected to show growth. In contrast, server shipments grew 1% in 2017, with growth forecast to continue into 2018. Increasing DRAM costs have pushed up prices of both severs and PCs; this trend is expected to continue into 2018. Declining primary market PC sales reflect a growing preference for phablets and wearables, which could have positive implications for the secondary market. Containers/chassis finished in a tie for fourth place, six places better than last year, including a strong move in preference (+8), and fourth best in net residual value position sentiment (+17), a very strong showing. Over the past year, due to strengthening global trade, primary market sales for ISO containers increased sharply by about (+55%). This demand also caused an increase in new container prices of around 25%. Used container prices increased somewhat and remain relatively high by historical standards. For 2018, global trade is expected to increase again, which bodes well for the continued strength of this market.

Plastics equipment tied for seventh place, after finishing in fourth place last year, with a decline in preference (-4) and a net 20% (+20) of respondents increasing residual value assumed. Currently, this market segment continues to perform well in almost all categories. Sales of new injection molding machines increased again for the eighth year in a row after substantial declines in 2007-2009. Used prices for plastic injection molding machines have increased up to 30% and more over the past five years. Much of this is thanks to the automotive industry, which requires high-capacity IMMs for its products, and auto parts suppliers which utilize mid to medium capacity plastic equipment. However, new and used blow molding equipment prices related to PET bottling have declined due to advances in technology and industry consolidation. This sector scored



in the top half of the survey this year, with predictions of sales volume holding steady in 2018. Rail finished tied for seventh place, one better than last year. 2017 was a year of transition, as carloads shipped increased by a solid +2.9% over 2016. In addition, intermodal traffic hit an all-time high, as those shipments increased by 3.9% to 14.01 million. Total carloads for all car types, including intermodal, increased by (+3.4%). Railcar supply and demand is still somewhat of a problem, especially in OT hopper car, gondola, and tank car markets. New design standards and regulations have adversely affected the flammable and hazardous material tank car fleet and could lead to many scrappings. Aircraft finished in ninth place, up from twelfth place last year. This improvement includes a material increase in popularity (+5), but a net 29% of respondents reported lowering of residual value positions (-29). This indicates that leasing and finance companies are becoming cautiously optimistic about this equipment. Respondents appear to view parts of the aircraft market as being challenged, with some improvement seen in the commercial sector, dampened by technology changes in the emerging next generation new engine option (neo) aircraft. U.S. regional airliners continued in the past year to cull their fleets of turboprops and small regional jets amid a broad shift in the U.S. industry towards larger and more efficient regional aircraft. There is a sense of optimism in the global business jet market as ‘full sale’ transactions increased by 5.9% through September. Used prices, however, continue to be depressed, as average asking prices were down 22.6% for the year, with all groups recording a decrease (large cabin jets seeing the biggest drop). The helicopter market remains very challenged due to oil patch and offshore logistics conditions. The aircraft segment is one of the segments expected to benefit the most from changes in the new tax law.

Oil/gas/energy finished in tenth, up from fourteenth place last year and rising up from last place the year before. Just four years ago O/G/E was in second place. In the 2016 survey, O/G/E’s score of (-408) smashed the ‘weighted results’ all-time 26-year low set by Printing (-279) in 2013. However, this sector has been improving in popularity for the past two years, for example - last year (+2) and (+9) in this year’s survey. It is still currently viewed in a very negative light, with a (-8) in net residual value position sentiment, but much improved from last year’s (-39). This finish seems to reflect a bit of a turn in the perception for this asset class due to slow improvement in the price of oil and rising output. This has greatly affected the values of oil/gas production and exploration equipment, as well as operating cash flows. The Baker Hughes total rig count during January 2018 showed a year-over-year increase of about 45%. WTI prices are expected to average $58.00 in 2018. This increase shows there is still life in this sector. Meanwhile, solar and wind power, both supported by tax incentives and government support, had good years. Next, FF&E finished in eleventh place, the same as last year, with a score of (20). FF&E showed a slight increase in preference (+1). However, net residual value position sentiment declined by the second most of any type (-32). The secondary market continues to be flush with inventory affecting wholesale prices, but also continues to improve. Last year sales in the primary market increased by just over 7%, and look to increase again this year. Meanwhile, the copier segment is challenged and is expected to remain so. In response to continued declines in new copier sales, OEMs first fought for market share and control of the secondary market but have now progressed to reductions and restructuring. There is general cause for optimism in the FF&E segment given that job creation is again forecast to increase by over 2.5 million this year, which will have a positive impact on new office space, requiring furniture. Automobiles finished in twelfth place, a fall from 8th place last year. Wholesale prices for all used light vehicles increased by 1.5% in 2017 compared to 2016. Prices paid for used cars declined by -0.9%, but increased by +2.5% for used trucks. New U.S. light vehicle sales fell from 2016’s all-time high of 17.55 million to 17.24 million and are projected to fall again in 2018, to about 16.7-16.8 million. 2017 saw continued strong demand for new light trucks, SUVs, and crossovers, capturing about 65% of the market. New car sales, on the other hand, fell by about 11% to 6.1 million. These trends in market composition are expected to continue in the coming years with crossovers expected to surpass cars in 2018. Concerns over subprime loans are creating an element of risk for lenders. Oversupply of used vehicles and an expected record number of lease returns should create downward pressure on residual values in the near term. This most likely accounts for the net residual value sentiment score of (-23).

Marine/Intercoastal plunged into a tie for thirteenth place from seventh last year, showing a collapse in preference (-11), and a decline in net residual value sentiment (-20). This deterioration is felt largely to be due to several large bankruptcies in this segment and their ripple effect through the leasing and finance industry. The improving world economy helped global seaborne trade bounce back strongly, in addition to promoting a record number of secondhand sales in the blue-water marine market.



Prices rose substantially for bulkers and containerships while rising more modestly for tankers. However, prices remained low throughout the intercoastal segment, as the supply and demand equation remains out of balance and continues to promote the scrapping or laying-up of vessels. New prices for hopper barges have fallen by over 35% from past highs. OSV and PSV markets remain in very poor condition with utilization rates at or below 40%. Crew boats have seen discounts of 50% or more compared to four years ago. Inland river push boats on the market for sale are at their highest level since 2003. Telecom finished in a tie for thirteenth place, the same as last year, with a drop in preference of (-2), and net residual value sentiment falling by (-25). This equipment segment continues to be turning the corner with capex spending made over the past four years in order to make ready for 5G deployment. Sales in the secondary market are stable. Also, sales of new and used IP PBX systems continue to gain wider acceptance. Finally, for the sixth year out of the past seven, Printing equipment finished in last place. This equipment type continues to register a poor showing in this survey. These results seem to sum up the leasing and finance industry’s continued very negative outlook for printing equipment. Meanwhile, its net residual value sentiment continued to weaken, placing last with (-44), down from (-16) last year. The economics surrounding this industry remain challenging, as more and more publications, flyers, newspapers, etc. move away from print media to digital. Meanwhile, digital press sales continue to increase at the expense of traditional press room equipment. Overall this equipment segment appears very weak. There is some promise in the specialty offset market, especially for plastic and packaging printers. Used equipment inventories have significantly shrunk, and a supply and demand balance is finally returning to the industry, albeit with lower volume and pricing compared to eight or nine years ago.

SummationConstruction equipment was the overall winner for the fifth year in a row, while printing remained in last place. In addition, machine tools and truck/trailer tied for second place, while containers/chassis made a major move to break into the top five this year. A look at the top three finishers reveals that yellow iron and industrial equipment seem to be a class above the rest.

Based on the overall results of the 2018 survey, it appears leasing and finance companies have become more comfortable with specific types of equipment. They appeared to be very selective in their equipment finance choices, as illustrated by the results of the Weighted Future Opportunities question, which carried bifurcated results with very high and very low scores. Preference ranking showed greater volatility in both positive and negative scores. The bifurcation in scoring once again indicates increased competition for the leasing and financing of specific types of equipment, as, for the most part, a growing consensus of opinion appears to have formed over the past several years regarding moves towards or away from certain types. Also, not to be missed, is the point that prices of many types of used equipment actually fell a bit in 2017. Let’s hope this reverses in the new year.

Final CommentsThis year marks the eighth year in a row of positive survey results. However, it also shows new volatility within the market, as illustrated by some of the large moves in preference scores. That said, some equipment markets have fallen in popularity to the point where knowledgeable operating lessors with solid market experience can take a contrarian view to parts of this survey, and consider a sharp drop in popularity for a given equipment type to be an opportunity for future business success.

Perhaps the industry’s perception can best be summed up in some of the following comments received about the greatest threats to the secondary market:

• Economy;• Oversupply of new and used equipment;• Over regulation;• Global trade;• Rising interest rates;• Effects of quantitative tightening.



It is clear from the comments received that the biggest threat to the secondary market this year appears to come mainly from oversupply of new and used equipment and the health of domestic and global economies.

Bonus QuestionsThis year’s survey also carried with it four bonus questions, one dealing with the Domestic GDP, another with Unemployment, a third with Inflation, and a fourth with Prime Lending Rate.

Based on this year’s survey, respondents felt that U.S. GDP would increase during 2018; by a consensus of around 2.8%.

Regarding Unemployment: Respondents forecast the unemployment rate at year-end 2018 to be about 3.8%.

Next, respondents predicted that the Inflation Rate for 2018 would be approximately 2.3%.

Finally, respondents forecast that by the end of 2018 the Prime Rate would be 5.25%. It is hoped the information contained in this article will help you chart your course to success in 2018.

About the AuthorCarl C. Chrappa is Senior Managing Director - Asset Management Practice Leader of the Asset Management Practice of The Alta Group, LLC, headquartered in Clearwater, Florida. He is a registered auctioneer, and nationally (A.S.A.) as well as internationally (M.R.I.C.S.) tested and accredited senior equipment appraiser with over 40 years of experience.

Mr. Chrappa is uniquely qualified to author this article, since he actively trades in global equipment markets, and provides appraisals and equipment consulting services to companies throughout the world. He is also a member of the National Association for Business Economics (NABE), where he was elected to serve two-terms as Chair of the Association’s Industrial/ Manufacturing Roundtable. Since 2009 Mr. Chrappa has served as a panelist on the Federal Reserve Bank of Philadelphia’s – ‘Livingston Survey,’ which twice a year forecasts macroeconomic moves in the U.S. economy.

He is a current and founding member of The Equipment Leasing and Finance Association's Equipment Management Committee, also serves on the Board of Directors of the Commercial Finance Association. He has served on the ELFA’s Service Providers Steering Committee, and is a past national technical director of the American Association of Cost Engineers. Mr. Chrappa received the ELFA’s Distinguished Service Award in 2010. In addition, he co-authored a book entitled A Leasing Company's Guide to Equipment Management and is the author of several columns devoted to equipment management as well as being a regular content provider to the ELFA's web-based ELFAonline.org. He has given numerous presentations at professional and trade association meetings and seminars throughout the United States and Europe, and has been interviewed and quoted by such news media as The Wall Street Journal, the L.A. Business Times, TheStreet.com, CNBC MoneyLine, and NPR radio. Mr. Chrappa is a graduate of the University of Massachusetts at Amherst.

Carl C. Chrappa Senior Managing Director - Asset Management Practice Leader The Alta Group, LLC 2451 McMullen Booth Road, Suite 305 - Clearwater, FL 33759 Phone (727) 796-7733 email: [email protected]; [email protected]



The Journal of the International Machinery

& Technical Specialties Committee of the American Society of Appraisers

Volume 32, Issue 2, 2nd Qtr 2016

$35.00 ASA Members, MTS Discipline

$50.00 ASA Members, Non-MTS Discipline

The Leading voice for machinery & equipment valuers

2017-18 Media Kit | www.appraisers.org/mtsjournal

Our Profession. Your Opportunity

The MTS Journal 2017-18 Media Kit A m e r i c a n S o c i e t y o f A p p r a i s e r s



Reader demographics

Total Circulation

882 Subscribers

Breakdown by Years Subscribed

66% More than five years15% Three to five years19% Two years or less

Breakdown by Credentials

67%32%

1%

Credentialed Members Candidate Members non-Members

Breakdown by Location

85% north america

10% australia

2% asia

3% europe

Breakdown by Years Credentialed

50%

40%

30%

20%

10%

0%

0-10 years

11-20 years

21-30 years

31-40 years

Over 40 years

2%7%

18%

23%

50%

Specialty Markets Serviced

• aircraft• Cost Surveys• Machinery & equipment• Marine Survey• Mines & Quarries• Oil & gas• Public Utilities

1,710+ Total reach from

bonus distribution at aSa classes & conference



advertising Opportunities

Why Advertise?

• Published since 1984• exclusive access to credentialed experts• Targeted readers in all major industrial markets• Bonus distribution at aSa classes and conferences• Comprehensive technical articles• expert columnists• extensive industry news coverage

Editorial Calendar (subject to change)

• 1st Quarter 2017 issue Closes: January 15 | Materials due: January 30

• 2nd Quarter 2017 issue Closes: April 15 | Materials due: April 30 Bonus distribution: ASA Equip. Valuation Conf.

• 3rd Quarter 2017 issue Closes: July 15 | Materials due: July 30 Bonus distribution: ASA Intl. Appraisers Conf.

• 4th Quarter 2017 issue Closes: October 15 | Materials due: October 30

• 1st Quarter 2018 issue Closes: January 15 | Materials due: January 30

• 2nd Quarter 2018 issue Closes: April 15 | Materials due: April 30 Bonus distribution: ASA Equip. Valuation Conf.

• 3rd Quarter 2018 issue Closes: July 15 | Materials due: July 30 Bonus distribution: ASA Intl. Appraisers Conf.

• 4th Quarter 2018 issue Closes: October 15 | Materials due: October 30

2017-18 Rates 1X 4X (10% discount)

Full Page $200 $720

1/2 Page Horizontal or Vertical $125 $450

1/4 Page Horizontal or Vertical $75 $270

Business Card $11.25 $50

Classified $10 $36

Ad Size Width Height

Full page 8.5" 11"

1/2 page horizontal 8.5" 5.5"

1/2 page vertical 4.25" 11"

1/4 page horizontal 8.5" 2.75"

1/4 page vertical 2.125" 11"

Business card 3.5" 2"

Classified 500 characters or less




Coal Is King No More: When Do You Determine Economic Obsolescence?

A l a n C . I a n n a c i t o , F A S A

Peabody Energy (NYSE:BTU), the largest non-state owned coal miner in the world, said Wednesday it

may have to seek bankruptcy protection after it missed a $70 million interest payment which was due

yesterday. (http://www.mining.com/worlds-largest-private-coal-company-likely-going-bust/)

This March 17, 2016 announcement follows earlier announcements by the number two and number

three largest U.S. coal producers seeking Chapter 11 Bankruptcy protection.

The current U.S. and international coal industry is on a teeter-totter. The U.S. coal market is

substantially a�ected by economic obsolescence, i.e. the undercutting of coal prices by natural

gas, a cheap and cleaner commodity, and continuing pressure from the Environmental Protection

Agency. This is largely due to the current U.S. administration and has a�ected the importance and

predictability of the coal industry as we knew it.

Further, Democratic presidential hopeful, Hillary Clinton, on one hand, says that coal is dead and that

she will see that coal miners and coal U.S. coal companies will be out of jobs, out of business. On the other hand Mrs. Clinton

has announced plans to save coal miners and companies with 30-billion dollars in education and reassembling a torn body.

Regulation, rhetoric and government action is a direct route to economic depreciation. But, as appraisers, do not be caught in

the immediate pitfall of, “economic depreciation.”

Approximately 44% of U. S. electrical power is still generated by coal. Europe has a di�erent take on the need for coal.

Germany, for example, has a huge coal industry although the country is pushing for a change in energy sources through

taxation to support alternative sources like wind, solar, and water power. So, what happens in the U.S. is not necessarily

happening in other parts of the world despite a general slowdown.

The big player in all of this is China. China, largely self-sustaining, still influences the international commodities market. But,

China was the fastest growing economy driving the world’s commodity prices. China now su�ers their own economic slowdown

thereby cutting into the former high international demand for fossil fuels, hard rock mining and minerals.

(Courtesy of UKY.edu and en.citizendium.org)

Volume 32, Issue 2, 2nd Qtr 20163 6

11107 Sunset Hills Road, Suite 310Reston, Va 20190 United States

+1 (703) [email protected]

www.appraisers.org

advertising Specifications

Display Ads

• Color mode: RgB• Resolution: 72 ppi• File Format: adobe acrobat PdF• no crop or printer marks

Submission

ads and payment should be submitted to:

• american Society of appraisers c/o MTS Treasurer 11107 Sunset Hills Rd., Ste 310 Reston, Va 20190 e-mail: [email protected] dropbox: http://bit.ly/1OTa4mf

Questions

additional promotional opportunities available, contact us for your customized proposal.

• (800) 272-8258• [email protected]



Identifying Heavy Equipment and Serial Number Locations B r a d H a r t s b u r g , A S A , C P P A , C S A o f F o r t r e s s M a c h i n e r y A p p r a i s a l s

\

I am sure your clients are like ours. They want the proper information and a well-researched evaluation when they hire you to do an appraisal. There are some dark, greasy shapes out there in the heavy equipment world. There are lots of different machines, all with their own specific purpose.

When you go to inspect a piece of heavy equipment, how on earth (aren’t these the kinds of machines that move earth?) do you know where to find the main serial number on one of these and identify it properly and why? Finance companies, banks, lenders and insurance companies will rely on your hands-on physical inspection of the condition of the machine and the due diligence of obtaining and recording the accurate main serial number. These companies will register and collateralize the serial number for finance and insurance replacement reasons, among other reasons so it is of utmost importance that you provide the correct information, no guesswork here.

Some Reasons for Proper Equipment Identification

Major rework after water damage Total Loss - Insurance

Potential for sinking excavator in mud Success! Deer relocated to safe ground



General Identification CommentsThis article is meant to be of assistance to all in the heavy equipment industry and we will discuss ways and locations on the machine to identify equipment. It is a diverse topic, but I attempt to simplify and not complicate the matter. It will be beneficial to break this down into categories of machine types (crawler tractors, excavators, etc.) and will provide some illustrations for some.

What everyone should know first off is that there is only ONE main serial number on a piece of heavy equipment. This will be the number your client will want on all documents, insurance and records. We will elaborate later for the different categories, but the main number is usually attached to the main frame or a major part of any machine. There is usually a plate with the model and serial number stamped on it. These plates are affixed in a variety of ways, from rivets, screws or space age adhesives. The main serial number will also be stamped into the steel of the main frame usually underneath where the serial plate was affixed. This method of stamping into the steel cannot be reversed once it has been done, as it embeds and changes the properties of the steel. There are some cases of heavy equipment theft where someone has attempted to grind the serial number stamping off and re-stamp it with another. Even though the number had been ground off, the original number remains embedded as it has changed the properties of the steel. This number can be located by a forensic X-ray and will reveal the original serial number.

It is not difficult to find many other serial number plates on any item of heavy equipment. These other serial plates are for serialized components on a machine such as the diesel engine, transmission, hydraulic system, ROPS (roll over protection structure) and a multitude of different and specialized attachments. These component and attachment serial number plates are NOT the main serial number to identify the machine, but used to identify that specific component or attachment only for service related issues and identification of a component or attachment if it is re-sold, bought or traded. Most of these serial plates will also include what is called an arrangement number which assists service personnel to identify that component, its specific application, and in the case of an engine, its horsepower and torque setting and what it works with. For example, a Caterpillar C-15 diesel engine can be installed in a variety of machines with many different horsepower settings, turbocharger locations, different front and rear covers and engine mounts.

This also goes for transmissions, which could fit a similar machine, one could be a standard configuration and another could have much heavier duty internal components for an extreme service application. Following this will be a set of pictures showing main serial number locations on different types of equipment. There will also be pictures showing locations of components, attachments, engines and transmissions, which are NOT the main serial number of any piece of heavy equipment

Equipment Identification Photo Descriptions for: Crawler Tractors

Common main frame serial number location for Caterpillar crawler tractors Cat D6T main machine serial number located on left front of radiator hardnose



Cat D6T transmission serial and arrangement number plate on rear of machine and transmission cover

Cat D6T main, engine and transmission serials and arrangement numbers, located

on left pillar of operator cab

Cat D6T Multi- Shank rear ripper serial number on main beam Cat D6T PAT bulldozer serial number on rear right side of blade

Equipment Identification Photo Descriptions

Articulated Dump Truck main serial location on lower main frame near hitch Backhoe Loader main serial location on main frame near operator cab

NOTE: photos are for illustration purposes only.



Compactor main serial location on main frame near articulating hitch Excavator main serial location on main frame near cab on carbody

Motor Grader main serial location on main frame near front axle Wheel Loader main serial location on main frame in hitch area

Inspection of Equipment and ComponentsDuring your discussion with your client about performing the appraisal and providing an engagement letter, it would be a really good time to ask for copies of the equipment invoices or bill of sale, whether it is digital or paper, it is information that will assist with dates, initial cost options or extra equipment and to see if the purchase price includes taxes, transportation or other installation costs that do not add to the appraised value. This document should have a list of the major equipment that came with the machine; serial numbers, dates and the new cost at that time. I have found mistakes in serial numbers on invoices and new bills of sale and especially on a client’s equipment list. All these numbers need to be verified by physical inspection if you are to provide assurance that they are accurate in your report. It is always best to locate the serial number on the machine itself to verify. This is also the time that I ask for any major component rebuild history up to maximum of 24 months. There are many circumstances, some apply and some do not but in some cases, a portion of that rebuild could be considered as a value upgrade and the rest simply as normal maintenance. I will also ask for a meeting with the company equipment manager to have him show and explain their service, rebuild and maintenance practices as well as how they keep these records. Whether it is paper books, a high tech computer system or whatever they use I want to see how they do it and ask for demonstration on a few units. This assists with assessing the condition of the equipment as we cannot see inside the components, only the outside appearance.



Many manufacturers have an ultramodern equipment technology system. These systems provide a multitude of features and use GPS (global position satellite) technology to send information from the machine’s remote location to the equipment manager. I did an appraisal project a few months ago and the client had all his equipment in a system like this. It made the inspection process incredibly smooth. As I was working with the equipment manager, first he would give me directions to an area and from there he would simply send by text or e-mail the exact directions to the next machine. This company had 300 crawler tractors and each of them were on a different, remote oilfield site, the system made it a simple task and there was no backtracking. It also has been a very popular addition for grade controls on bulldozers and motor graders. Among the many other benefits, this system locates the machine around the world and makes them difficult to steal. It also assists in equipment service management, controlling costs, improving on site costs and operations, managing people and reducing risk. For example and not all that are available, here is a brief outline of what Komatsu, Caterpillar, John Deere and Tatems offer:

1. Komatsu - Komtrax is Komatsu’s remote equipment machine health fleet monitoring system. Leading-edge wireless and satellite technology with a secure, user-friendly, web and mobile based interface/application that provides critical machine health and performance factors…anytime, anywhere, cost free. Designed for construction industry requirements, KOMTRAX provides machine information to effectively utilize, deploy and maintain your equipment. Look up information on your individual machines or view data for the entire fleet. See more at http://www.komatsuamerica.com

2. Caterpillar - Cat® Product Link™ redefines fleet management effectiveness. Its easy-to-use interface, called VisionLink®, enables customized health and utilization reports, mapping and mixed fleet capabilities. And Product Link transmits the information via cell and satellite. Product Link connects customers to our world-class dealer network. Product Link gets you accurate, timely and useful information about the location, utilization and condition of your equipment—the kind of information that can make a huge difference in the efficiency and costs of your entire operation. See more at http://www.cat.com

3. John Deere - John Deere WorkSight - bringing together machines, technology, and your John Deere dealer to make your job easier. Turn data into insights to optimize your machines, uptime, jobsites, and, ultimately, your bottom line. It begins with our five key technologies: JDLink™ Telematics, Machine Health Prognostics, Remote Diagnostics and Programming, Payload Weighing, Grade Control. John Deere WorkSight lets you see machines that are idling excessively, inactive, running at very high loads for long periods of time, or moving when they shouldn’t be. See more at http://www.deere.com

4. Tatems – Truck and Trailer Equipment Maintenance Software – combines a number of services. Work orders - you create work orders that deduct parts inventory, labor costs and assign repair code categories so you can see what you are spending on each category of repair or maintenance. Lube/Services and DOT inspections based on miles/kilometers, or hours or day’s intervals and reminders to let you know what they are coming due. Fuel logs - you get a fuel log that lets you track by miles/km or by hour meter and report on miles/km traveled and fuel purchased within states or provinces. See more at http://www.tatems.com

Most appraisers will have their own system or format for a field inspection worksheet. Some use a worksheet with checkboxes, some use digital recorders or a fill in the blanks type worksheet. It doesn’t matter what you use, as long as you somehow get the prompt to get the right information you need for each machine.

Field Worksheet Example

This is an example of what we use, the worksheet is a “fill in the blanks” type and if something is not on the machine, we simply cross it out on the sheet. The space below is for extra information, equipment, notes from clients and etc. The top box of the page has seventeen spaces to ensure we record the complete 17 digit serial number: (this sheet filled out for illustration only)



C A T 0 0 D 6 T C K S B 0 0 0 0 0

VERIFIED YEAR: ___ 2017 _______________ (year verified by serial handbook) OK ____

Take four corner pictures, of serial plate and other certification plates - OK ____

MAKE: Caterpillar ___________________________________________________________________________

MODEL: D6T LGP Crawler Tractor________________________________________________________________

CONDITION: Very Good ___________________ UNIT NUMBER: D6T 001___________________________________

DATE & LOCATION: Today’s Date in Middle of No Where Oilfield, Alberta ________________________

__1,250 _________ HOURS, Caterpillar C-9 ACERT ___ (model) ______ diesel engine, 205 _____ HP, s/n MYE00000 ____ emergency shutdown device, powershift transmission and differential _____ steering. EROPS operator cab with climate control. Heavy duty radiator guard, canopy, front sweeps, engine doors, third posts, battery box & hydraulic tank guards, side & rear screens, fuel tank guard, transmission guard or winch guard.

____ 31” ____ extreme service single ______ grouser track shoes on LGP eight ______ roller track frames.

Front attachment - Caterpillar 6VPAT (variable pitch, angle and tilt) bulldozer blade (serial number)

Rear attachment - Caterpillar #6 Multi- shank rear ripper (model - winch or ripper type and serial 1EH00000)

(This area used for extra information or attachments) __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________

Identifying Equipment and ComponentsTo use Caterpillar products as an example and because of their popularity, the main machine serial number and to repeat for clarity, is usually affixed and stamped to a major part of the main frame. This is a good assumption for most brands of heavy equipment. At times, a component that mounts to a major part of the main frame, such as a rear ripper on a crawler tractor may have to be removed to obtain the correct serial number if it has been damaged or removed by a machine’s working environment from other locations.

The main serial number will be on the main frame on most models. For convenience and ease for service personnel, many current models will have a plate near the operator station with the main serial number with engine, transmission and other component information as well. All Caterpillar serial numbers always have a prefix which consists of one to three letters from the alphabet and number which follows. Current model Caterpillar machines have seventeen character serial numbers which include the prefix and serial number mentioned previously. For example, late model Caterpillar crawler tractors will have that same seventeen digit serial number on the main frame as well as to the left hand side of the radiator hardnose, and an additional plate near the operator station with serial and arrangement numbers for the main machine, engine, transmission and hydraulic system.



If you are unsure or cannot locate the main serial number, call the manufacturer or local dealer for help before you go to the machines work site. Perhaps you know an experienced appraiser in your area that can assist you too. There are also supplemental serial location guides available from various manufacturers. Now that you have the correct number, we suggest you develop a system to record it. In the course of taking photos of the machine, we always take a digital photo of the machine serial number for our records and quadruple check that it gets transposed properly to our reports. There have been many instances that have been settled by having that serial number photo as many discrepancies occur with clients’ equipment list and what finance institutions have recorded on their documents.

About the AuthorBrad Hartsburg, ASA, CPPA, CSA is the president of Fortress Machinery Appraisals and Consulting Inc. which is based in Calgary, Alberta and serves predominantly the west and other areas of Canada, including the Yukon and Northwest Territories. Brad is an Accredited Senior Appraiser (ASA) with the American Society of Appraisers, as well as CPPA, a Canadian Personal Property Appraiser with the Canadian Personal Property Appraisers Group, and CSA, a Certified Senior Appraiser with the Equipment Appraisers Association of North America with 40 years of industry experience. He specializes in appraisals of heavy equipment; heavy trucks and trailering equipment in all industries for specific purposes of asset based lending, insurance purposes, International Financial Reporting Standards as well as mergers and acquisitions. The list of clients includes finance companies, banks, oilfield service companies, construction companies and trucking companies. He has 24 years of Caterpillar dealer experience as Used Equipment Manager, Customer Service Manager, Product Support Salesperson, General Line Equipment Salesperson and Interprovincial Journeyman Heavy Duty Mechanic and was the General Manager of an industrial auction company as well as a heavy truck and diesel engine consultant for the Ford Motor Company and grew up in the family heavy truck and trailer business. He belongs to local industry associations such as the Alberta Road Builders and Heavy Construction Association and was the American Society of Appraisers (ASA) Membership Chairman of the Vancouver Chapter and currently is a member of the American Society of Appraisers (ASA) Machinery & Technical Specialties Committee as well as the Editor of the ASA MTS - Machinery and Technical Specialties Journal.

ContactFor more information, please contact: Brad Hartsburg, ASA, CPPA, CSA at 403-650-1122 or E-mail - [email protected] Website - www.fortressappraisals.ca



BREXIT - An Unseaworthy Situation… C a p t a i n E . S . G e a r y , P. E n g ( U K ) F R I C S , F R I N A , R I C S C h a r t e r e d S u r v e y o r ( A d m i r a l t y & M a r i t i m e )

The United Kingdom has been an important member of the European Union for over forty years and in good times and bad the country has grown and prospered. On June 23rd 2016 the UK held a referendum where a majority voted to swiftly and unceremoniously leave the EU. When tallied the referendum revealed some interesting voting patterns in the age of voters and where they lived. Older voters singing the praises of Rule Britannia in the northeast were firmly convinced that the UK would be better off without the rules and regulations of the European Union while the younger millenniums in the south and other parts of the country believed that a BREXIT was foolish. Foolish because only a few miles across the channel the UK enjoyed a common duty free customs union and passport free movement to the continent with over 500 million customers. Northern Ireland and Scotland agreed and 93% of Gibraltar voted to remain. I would not endeavour nor would it be appropriate to open Pandora’s Box and debate the pros and cons of the good or the bad of BREXIT as it has and will continue to have a troubling impact on the UK’s commercial and maritime interests. A

number of commercial operators have or are in the process of removing their ships from the Red Ensign registry to ensure free movement of their vessels within the remaining EU-27 countries. At 00:00 hours on March 29th 2019 the European Union will recognize the United Kingdom as a ‘third world country.’ To avoid the impending hassle that will soon emerge many owners of small recreational yachts or those coded commercially under the MCA Code of Practice located in Spain or other countries in the Mediterranean, are moving from the Red Ensign and re-flagging in places like Holland and Malta. After March 29th 2019 when entering a port within the EU UK flagged yachts should be ready to hoist the ‘Q’ flag. In addition to this the Superyacht News reported that UK commercial licenses and UK mariner’s certificates will no longer be recognized by the EU-27. According to the European Commission, it follows that, as of the withdrawal date of the UK from the EU, certificates issued by the United Kingdom can no longer be presented for an ‘endorsement attesting recognition’ by EU nations. The Commission also points out that “preparing for a withdrawal is not just a matter for Union and national authorities, but also for private parties.” The commission further warns of “certain legal repercussions” for the mutual recognition of seafarer’s certificates arising from the UK’s withdrawal from the EU and its consequent move to ‘third country’ status. “When we received the statement, we read it as a real shot across the bow of the UK,” comments Andrew Limington, director of campaigns and communications at Nautilus International. “It was really quite alarming. The statement explicitly outlined that, following BREXIT, UK seafarers will no longer be automatically recognised by the EU’s 27 remaining member states and that existing UK certificates will only be accepted until their expiry date – for some this may be five years – but the automatic endorsement will not be transferable between flag states.” With these developments many industry leaders are questioning what effect BREXIT will have on the UK’s long and impressive maritime history particularly with the shipyards that have and continue to create impressive yachts both super and small. In view of what some have described as the UK’s ridiculous and inconclusive negotiations with Mr. Michel Barnier on behalf of the EU-27, this is a question that can’t be answered. When questioned early on, the eminent John Leonida, partner at international law firm Clyde & Co. said, “Firstly we need to know when Britain will leave the EU and how, it will be challenging for the negotiators. I have no expectations that there will be a specific superyacht negotiation team, but perhaps there should be, given the major presence the UK and British nationals have in the European superyacht sales and services space.” In the hey-days of joy and delight following the success of the leave campaign or sadness depending on ones persuasion, the Hon. David Davis announced to Parliament that his BREXIT Committee was conducting studies of over 50 industries and services sectors to determine the economic impact that the UK’s departure would have. Amongst others the economic studies included insurance, financial services and the maritime industries. In 2017 Mr. Davis was called to testify before a House Select Committee and present the findings of his impact studies. When questioned by an MP and committee member about the specific findings related to the financial services industry Mr. Davis said no economic study had been carried out on the



financial sector or of the shipping industry. Further questioning by the Select Committee found that no economic studies had been carried out on any UK industry or service sector. The UK is a great trading nation with an enviable reputation and prominence in the engineering field. Its ship building industry is blessed with an abundance of multifaceted highly skilled and enthusiastic technicians at all levels of the workforce. However, a government that argues within, can’t agree on anything, appears to lack negotiating skills, and repeatedly contradicts itself is not a good omen. On the other hand UK yacht and ship builders who promote their willingness to accept payment by means of Bitcoin or one of the other cryptographic currencies / utility tokens and who embrace the underlying Distributed Ledger Technology (DLT) more commonly known as Blockchain may find they have a significant sales and marketing advantage over their European competitors. Payment by means of crypto currencies is gaining in popularity particularly with commercial shipping companies and with Ultra High Net Worth Individuals (UHNWI) - worldwide. Shipyards that recognize the opportunities and adapt will have a better chance of survival, those who don’t will surely ‘miss the boat.’In a recent article published by Lloyds Register, Distributed Ledger Technology expert Gary Pogson said: “Maritime Blockchain Labs and its projects will drive intelligent, informed blockchain adoption in the maritime sector through demonstrator projects that will deliver first-hand, real-world insight into how these technologies can be applied, and how the industry can realise maximum benefit from their capabilities.” UK classification society Lloyds Register will provide the funding to come up with three projects demonstrating how blockchain can provide solutions for risk and safety problems in the maritime industry. Albeit necessary that the industry adapt their products and services to today’s demands and market climate, but faced with numerous uncertainties and until the multitude of issues and unanswered questions are resolved the UK’s maritime sector will continue to endure the chaos and confusion of indecision. To the distain of the fisheries industry it appears that the transition period will continue until December 2020, while the extended 21 month transition period was welcomed by others. Whether UK shipyards and builders will continue to grow and prosper or die a slow death is only a matter of speculation. In not being part of the customs union the question arises if or when the EU will introduce some sort of import controls or tax levies on British built yachts and ships that will increase costs to the consumer. Inflated costs of Post BREXIT UK built vessels would unquestionably come to the attention of customers and the attractiveness of the lower costs of European built vessels. Of course any trade deals or tariffs will be closely monitored by European yacht manufacturers who enjoy the support of their respective governments and are looking to maintain their high production levels of all craft to allow them to remain profitable in a market that has seen a dramatic decline since the 2008 financial meltdown. The question of VAT status and cabotage arises, but remains unclear. Another uncertainty is after the UK’s departure will a yacht that has paid VAT in the UK be recognized as EU-VAT paid or will the UK-VAT be considered null and void and the vessels cabotage rights denied. With a hard border between the UK and the EU-27 it’s unknown what delays and difficulties will be encountered in receiving and sending parts and/or finished vessels to customers in the EU-27. The Bottom Line: until Whitehall resolves the increasing number of uncertainties, there’s no way to determine the impact that Britain’s departure from the EU will have on the UK’s builders of boats, yachts and ships, and the purveyors of other marine services.

In the meantime whether you’re a Remainer or a Leaver – Have a nice day!

Captain E. S. Geary,

Fellow: The Royal Institution of Naval Architects Fellow: The Royal Institution of Chartered Surveyors Fellow: The Institution of Diagnostic Engineer Geary International Limited of Gibraltar



International Maritime Club (IMC) honours stalwarts from Insurance & Assurance Sector with IMC Golden Shield Awards –UK ChapterSEPTEMBER 19, 2017

International Maritime Club (IMC), a non-profit making & largest conglomerate of over 250 organisations across the globe, organised IMC Golden Shield Excellence Awards 2017 – UK chapter to honour the stalwarts from Marine, Energy, and Oil & Gas Insurance & Assurance Sector.

The event took place at historic The Old Library Hall, Lloyd’s in London on 15th September 2017.

IMC Golden Shield Excellence Awards honoured individuals and organisations that have provided excellent services to Marine, Energy, and Oil & Gas Insurance & Assurance sectors under three different categories including Insurance Excellence Awards; Maritime Excellence Awards – Assurance & Commitment and Lifetime Achievement Award.

Besides the Award presentation, the event also witnessed some renowned experts share their expertise with the audience on the topic ‘Trends to transform marine and energy insurance’ as a topic of relevance on conclusion of London Shipping Week 2017. The Session was moderated by Capt Deepak Singh, COO – Aries Group.

Companies who were honoured at venue for IMC Golden Shield Insurance Excellence Awards were: for Leading Syndicate – Marine presented to QBE; Award for Leading Syndicate – Project Cargo to bestowed upon Pembroke; Award for Leading Syndicate – Energy Offshore was presented to Talbot; Charles Taylor was presented with Award for Leading Loss Adjuster; Award for Leading Broker – Marine was bestowed upon Lockton; Leading Broker – Energy was presented to Arthur J Gallagher & Co; Leading Broker – Project Cargo was presented to Willis Towers Watson; WK Wester was being bestowed upon Award for Leading Claims Management.

DNV GL was named Leading Classification Society; Inmarsat was presented with the Leading Maritime Security Service Provider award; SNAME-Western Europe was recognised as Leading Maritime Professional Society; WISTA UK was presented with Leading Maritime Trade Association award; Institute of Chartered Shipbrokers was recognised as Professional body for Commercial Shipping and International Institute of Marine Surveying was bestowed with Leading Maritime Training Award.

IMC Golden Shield Excellence Awards had a special Lifetime Achievement award section which was presented to recognize individuals who, during their professional career have made creative contributions of outstanding significance to the maritime industry. The award for this category was bestowed upon Trevor Blakeley, Chief Executive of The Royal Institution of Naval Architects for Contribution to Maritime Professional Integrity Assurance and Capt. E.S. Geary for Lifetime Achievement Award in Insurance Surveys and Claims Adjusting. IMC Professional Individual Excellence Award – Insurance was awarded to Tom Bolt,President, UK&Southern Europe, Berkshire Hathaway Specialty Insurance.

The Awards were presented by Dr Ravi K Mehrotra, Founder & Executive Chairman of Foresight Group.



Lawyer Monthly Expert Witness Awards 2018

www.lawyer-monthly.com1

• International Trial Experience/Litigation Support to Defense & Plaintiff Counsel

• Accredited Senior Appraiser - Yacht & Ship Survey/Valuations to any tonnage

• Insurance Claims & Losses / Maritime Injury Litigation

• IMC lifetime achievement award in Admiralty

• Authorized UK Maritime & Coastguard Agency MCA SCV Code of Practice Inspector

• Technical advisor and expert witness at trial - US General Services Administration, Department of the Treasury (IRS)

•USCoastGuard/USMaritimeAdministrationCertifiedPortFacility,CompanyandVesselSecurity Officer International Ship& Port Facility (ISPS)Code, Florida Institute of Technology-Det Norske Veritas(DNV)

• Master of Science Studies - Criminal Justice Management: Masters Thesis, ‘Crime-Conspiracy Cocaine-The Caribbean Connection’

• FormerFraudExaminer–AssociationofCertifiedFraudExaminers(USA)

• By Appointment: Marine Consultant to the US DOT Maritime Administration (MARAD)

• By Appointment: Marine Consultant to the US General Services Administration

• ExpertWitness–USDepartmentoftheTreasury–InternalRevenueService

Chartered Surveyor Expert of the YearCapt. E. S. Geary, RICS Chartered Surveyor (Admiralty & Maritime)

About Capt. E. S. Geary of GibraltarCredentials & Professional Qualifications

• USCG Continuity Document Merchant Marine Officer–Master

• QualifiedExpertWitnessUnderCPR35&PD35

• RegisteredSurveyor:FederationofEuropean Maritime Associations of Surveyors and Consultants

• Member: Yacht Designers and Surveyors Association - UK

• SocietyofNavalArchitects&MarineEngineers- USA

• AmericanSocietyofNavalEngineers

• NationalPanelist:AmericanArbitration Association - Admiralty

Coastguard / Naval Service:• SeniorAuxiliaryTrainingOfficer/SpecialPolicy AdvisortotheCOMMANDANT-Coastguard CommandoftheVenezuelanNavy. Rank:Captain

• Retired Department Chief US Coast Guard Pan AmericanAuxiliaryLiaison-Rank:Captain

• FormerGovernmentMarineInspectorPortofSint Maarten,NetherlandsAntilles Email: [email protected]

Fellow: The Royal Institution of Chartered Surveyors

Fellow: The Royal Institution of Naval Architects

Fellow: The Society of Consulting Marine Engineers & Ship Surveyors



Irontrax Spring 2018 Mining Industry Insight J o s e p h S a n t o r a , A S A

This document focuses on a number of topics that pertain to the mining industry as a whole, including the outlook for the oil industry, the increase in coal mining productivity, the Environmental Protection Agency (EPA)plans to roll back fuel efficiency standards, the launching of Responsible Mining Index 2018, the expected growth in the market for underground mining equipment,and a brief summary of trends in used equipment values.

Oil Industry Outlook: In 2017, the price of oilrose more than 12%, posting an annual gain for the second year in a row. Keeping up the momentum, oil got off to a strong start this year with the West Texas Intermediate (WTI) crude futures climbing 7.1% in January. Though this benchmark tumbled 4.8% in February in the wake of a broad stock market selloff, crude continues to trade above the psychologically important $60 per barrel level. The key question is, are prices sustainable or have they risen too far, too fast? The sentiment in the oil market has not been this good in years, with U.S. crude prices recently hitting a more than three-year high of around $66 – a spectacular recovery

from below $30 in early 2016. While it is extremely difficult to predict movements in oil prices, analysts have identified several fundamentals that support the rising trend:

Extension of Production Cuts -- OPEC and other major producers agreed to extend the cut in oil production beyond March to the end of 2018, thus continuing to narrow market imbalances.

Sharp Drawdowns in inventory -- Oil stockpiles have shrunk in 35 of the last 47 weeks and are down approximately 110 million barrels since April last year as a result of lower imports and spiraling exports. At 423.5 million barrels, current crude supplies are 19% below the year-ago period.

Booming Exports -- Following the lifting of the four-decade long ban on oil exports at the end of 2015, the U.S. witnessed a substantial increase in demand for its oil. Average exports in the first six months of 2017 were around 75,000 barrels per day and soared to an all-time high of 1.7 million barrels per day during October. With U.S. crude trading at a fair discount to international benchmark Brent, U.S. oil remains attractive to foreign buyers.

Favorable Economic Data -- The final three months of 2017 saw U.S. GDP grow by 2.6% following gains of more than 3% in the previous two quarters. This marks one of the strongest stretches of growth since the economic recovery started in mid-2009. In January 2018, the unemployment rate remained at a 17-year low of 4.1%, while the average level of jobless claims continues to hover at just over 200,000, the lowest level since the early 1970s. In addition, wage growth in January hit the fastest pace in more than eight-and-a-half years. Finally, strong earnings reports from corporate giants boosted sentiments.

According to analysts at Zack’s Investment Research, though the triple-digit levels experienced in 2014 look improbable, we can expect oil prices to continue to head higher. They believe that for the time being it is likely that improving fundamentals have put a floor under crude prices. While this may be true, one has to remember that although Syria is nota significant oil producer, the wider Middle East is the world's most important crude exporter and tension in the region tends to put oil markets on edge.

U.S. Coal Mining Productivity Increases as Production Falls: According to the U.S. Energy Information Administration’s (EIA) Annual Coal Report and data from the Mine Safety and Health Administration(MSHA), coal mining productivity in the U.S. increased 26% over the past five years, reaching 6.8 tons per miner hour in 2017, up from 5.4 tons per miner hour in 2012. This increase occurred despite mine closings and decreasing employment and production. Both technology and process improvements contributed to the increase in productivity, but a more significant factor is the distribution of productivity across mines. The mines that are first to close during market downturns are often the ones with higher production costs and lower productivity, while more productive mines remain in operation, thus increasing overall productivity. Of the 1,229 mines



operating in 2012, an estimated 547, or 45%, have since been closed or idled. Over the same period, miner hours declined by 39%. U.S. coal production has also fallen, but to a lesser extent, decreasing from 1,016 million tons in 2012 to 774 million tons in 2017, a 24% drop. During 2017, productivity ranged from 2.4 tons per miner-hour in Central and Southern Appalachia to 28.8 tons per miner-hour in the Powder River Basin. This wide range is a result of fundamental differences between the coal-producing regions, including the size of mines, coal seam geology, extraction technology, and coal types.

After several years of declines, coal production and employment rose in 2017. According to data from MSHA, coal production in 2017 increased by an estimated 6%, and total labor hours rose by 7% from the prior year. These increases were driven in part by the stabilizing financial condition of producers that had been in bankruptcy proceedings during 2016 and by increasing export demand. U.S. coal exports were 97 million tons in 2017, up from 60 million tons in 2016, and at the highest level since 2014. In 2017, export markets were a destination for an estimated 13% of total U.S. coal production.

Steel Industry Applauds EPA’s Plans to Roll Back Fuel Efficiency Standards: The EPA plans to revisit federal greenhouse gas standards for 2022-2025 model year vehicles, intended to combat climate change and reduce consumption of finite fossil fuels. These standards have posed a threat to the steel industry’s long dominance as the material of choice for automakers. They would open the door for lighter but more expensive alternatives like aluminum, thereby forcing steelmakers to develop more advanced high-strength steel products. The belief is that a reduction in these forthcoming standards may restore some demand for traditional steel since automakers have mainly been focused on reducing emissions by cutting the weight of cars, trucks and SUVs. The EPA recently shared its belief that a requirement for automakers to average 54.5 miles per gallon by 2025 is too steep, partly because gas prices have fallen since the regulations were imposed, and fewer consumers are buying smaller cars.

“Today’s announcement by Administrator (Scott) Pruitt is a positive development for the steel industry and our partners in the auto sector,” American Iron and Steel Institute President and CEO Thomas Gibson said in a statement. “In the past, we expressed concern the good faith efforts by our industry and our customers were short-circuited by the previous administration in an attempt to push through a final determination before all of the public comments were thoroughly considered.” Steelmakers have argued the fuel efficiency regulations were short-sighted since they focus only on tailpipe emissions and could in fact ultimately increase the amount of greenhouse gases released into the atmosphere, by boosting emissions from aluminum smelters and other steel rivals.

Responsible Mining Index 2018 Launched in Geneva, Switzerland: The Responsible Mining Index 2018 was launched on April 11 and is the first of a multi-year initiative by the Responsible Mining Foundation. This organization supports the principle that mining should benefit economies, improve the lives of people, and respect the environments of producing countries, while



also benefitting mining companies in a fair and viable way. Its goal is to encourage continuous improvement in responsible mining by large-scale companies across a range of economic, environmental, social and governance (EESG) issues.

The Responsible Mining Index 2018 aims to support the goal of the foundation and to support leading practices and learning. The Index is independent of the industry and covers 30 large-scale mining companies. These companies represent 25% of the global production of mined commodities and operate over 700 mines in more than 40 countries. The index assesses and compares company policies and practices across six different EESG areas: economic development, business conduct, lifecycle management, community wellbeing, working conditions and environmental responsibility. As an evidence-based assessment, the Index measures the extent to which companies can demonstrate, rather than simply claim, that they have established responsible policies and practices. Among the key findings are:

1. The vast majority of the assessed mining companies demonstrate responsible practices on certain particular issues. However, very few companies show systematic action taken across a wider range of key issues. For example, little or no action is being taken to monitor the impacts of mining on children, track whether community grievances are being dealt with appropriately, or check that workers' wages meet or exceed living wage standards.

2. Many companies have not put into practice some of their own policy commitments such as those pertaining to the management of human rights issues.

3. Although companies are collectively demonstrating responsible mining across many issues and strong cases of leading practice are evident, few companies keep track of how effectively they are managing EESG issues and fewer still can demonstrate that they are working to improve their performance.

4. Companies typically show a lack of systematic attention to monitoring their performance on EESG issues and reporting their performance to other stakeholders, including mining-affected communities. This lack of 'knowing and showing' their own performance is most evident at the mine-site level.

A lack of public reporting is most likely one of the main factors limiting company scores in the Index. Performances might be considerably higher if companies were more transparent about their management of EESG issues. Greater openness would also enable more learning and sharing of good practices.

Underground Mining Equipment Market Expected to Grow at a GAGR of 6.24% by 2024: Underground mining is the process of extracting mineral and ores that are buried too far underground. The primary objective of the underground mining is to extract ore from underground as safely and economically as possible while producing as little waste. According to an April 2018 report issued by Research Nester, a leading research provider for strategic research and consulting, the underground mining equipment market is expected to grow at a CAGR of 6.4% over the 2017-2024 forecast period. Rising development in major countries across the world and growing industrialization particularly in emerging economies is increasing the demand for metal and minerals. Increasing mining activities and improving economic conditions across the world are motivating miners to invest in advanced underground mining equipment to improve their productivity. Additionally, government regulations related to mining safety, employment, environment, and equipment usage have also strengthened the demand for technologically improved underground mining equipment. At present, Asia Pacific is dominating the global market with a leading share because of the increase in mining activities in the emerging economies of China, and India. A recent noticeable trend in the global underground equipment market is the massive thrust on developing innovative and more effective mining equipment for transportation, excavation, washing and screening processes that helps to keep energy costs at bay.

Caterpillar, a key player in the underground mining equipment market, and Minetec, a wholly owned subsidiary of Codan Limited, recently announced an agreement for the development and delivery of technologies targeting underground hard rock mining challenges. The collaborative work will deliver best-in-class site solutions for mining customers and will be offered as part of Cat MineStar. Caterpillar expects the integrated solutions to focus on applications of underground mobile equipment and to enable expansion of MineStar capabilities through the use of improved high precision tracking and wireless communications, task management technology and proximity detection.



Trends in Used Equipment ValuesThe market for most used mining equipment continues to be very soft, largely due to an oversupply brought about over the past few years as a result of a number of economic and technological factors. As such, the holders of this equipment have been reluctant to sell in a market in which the oversupply has caused prices to be depressed. Although the prices of such equipment are still relatively low, they appear to have leveled off, due in part to the shortage of used equipment coming to auctionand the relatively high cost of newer equipment.

At the same time, the demand for new equipment with current technology and greater efficiencies continues to grow as a result of the heightened focus and anticipated growth in underground mining, growing industrialization in emerging economies, the global push to raise emissions standards, and government regulationspertaining to the factors cited in the previous section.

About the AuthorJoseph Santora, ASA is the Founder & Managing Partner of Irontrax LLC. Irontrax specializes in asset management, consulting, appraisal, and the remarketing of bank-owned construction, transportation, and mining equipment. Irontrax also consults for lease-end negotiations, workouts, and litigations. Santora sits on the American Society of Appraisers (ASA) Machinery & Technical Specialties Committee. He is also Past Vice Chair of the Ohio Contractors Association and current Conference Chairman for the ASA Asset Identification and Valuation Conference held in Cleveland each year, usually in June.



Brad Hartsburg, ASA, CPPA, CSA [email protected]

Archived Articles Available for Your Library

Missing recent MTS Journal articles? Need ideas or direction? Archived articles are available for your library. Below is an index for the last several years of articles. See an article or issue that interests you? Just let me know what you need and I will get back to you with pricing.

THE MTS Journal# VOL ISSUE YEAR AUTHOR TITLE PAGES OVERVIEW

24 20 1 2003 04

Edward D. Biggs Railroads: It’s Not Just Nostalgia P. 4-6 A Resurgent Interest In Passenger Trains To Relieve Highway Congestion Has Revitalized The Segment Of The Industry.

Kenneth Howard, ASA Relationship Between Equipment Financing & Appraising:” Intricacies Of Residual Setting”

P. 7-8 Funding Institution’s Return On Investment Is Highly Dependent Upon The Market Information Provided By An Appraiser.

Leslie H. Miles, Jr., ASA Depreciated Installation P. 9-11 Discussion Of The Argument Of Depreciating Installation.

Leslie H. Miles, Jr., ASA A Review Of Functional Obsolescence P. 12-15 Open Concerns As To How You Convert Functional Depreciation That Can Be Defended And Explained.

Michael J. Remsha, ASA, PE, CMI

Intangibles Assets: What Makes A Business A Going Concern

P. 16-23 When Valuing A Business, Just Adding All The Tangible And Intangible Assets Together Does Not Necessarily Equal The Value Of The Business Enterprise.

John S. Ferguson, ASA, PE

The Use Of Scaling Factors For Measuring Obsolescence In Industrial Property-A Rebuttal

P. 29-33 Discusses Iowa-Type And Weibull Distribution Survivor Curves.

Frank Stern Valuing Generation Assets In Today’s Distressed Markets

P. 34-40 Presents A Warning To Appraisers And The Users Of Appraisals On The Misuse Of Scale Factors And The Six-Tenths Rule

Gerald L. Huether, ASA What’s A Machinery & Technical Specialties Appraiser To Do?

P. 41-52 Attention To USPAP Rules Regarding A Definition Of Value And How To Apply Highest And Best Use.

25 20 2 2003-04

Robert B. Podwalny, ASA Typical Problems With Appraisal Reports P. 6-9 Explanation Of Report Writing As Related To Standard 8 Of Uspap.

J. Michael Clarkson, ASA For What It’s Worth-Dynamic Obsolescence

P. 10-13 Dynamic Obsolescence Is Particular To Certain Industries And Predictable.



# VOL ISSUE YEAR AUTHOR TITLE PAGES OVERVIEW

Jack J. Landesberg Training The MTS Appraiser P. 14-17 Discusses Short Falls Of Not Enough Appraisal Training.

Dr. Charles Gililand The Business Enterprise Valuation Controversy: Intangible Value In Going Concern

P. 18-22 Determining A Firm’s Value By Capitalizing The Entire Income Generated.

H. Denis Neumann, ASA The Used Car Business (And Values) P. 23-29 In Pursuit Of A Dealer’s License Discovered The Car Business Is Highly Regulated.

Steven C. Tatro, ASA Tangible Personal Property Tax Appeals: A Special Master’s Perspective

P. 30-33 The Value Adjustment Board Is Enjoined To Protect The Public Trust By Providing Fair And Impartial Hearings.

Raymond Springer Depreciation Of Installation Costs P. 34-36 Argues The Methodology Of Depreciating Installation Costs In The Sales Comparison Approach.

26 20 3 2003-04

Harry Richardson, ASA And J. Barry Savage, ASA

A Short History Of Cat Type Tooling P. 5-8 Development Of HSK Tooling May Mark The Beginning Of The End For CAT Type Tooling.

R. Lee Robinette, ASA Inventory Valuation P. 13-17 Discussion The Impact Of “Level Of Trade” In The Inventory Valuation Process.

J. Michael Clarkson, ASA For What It’s Worth-Spacecraft Appraisal P. 18-20 The Appraisal Of The Soviet Spacecraft Proved A Challenging But Interesting Assignment.

William S. Ingles An Analysis Of Flaws In The Direct Capitalization Model Applied To Merchant Coal-Fired Electric Generating Plants

P. 21-29 Discussion Of Issues Surrounding The Application Of The Direct Capitalization Model Or Variations Of The Gordon Growth Model.

Leslie H. Miles, Jr., ASA Value Of Ad Valorem Tax P. 30-37 Ad Valorem Tax Value Depends Upon The Definition Within The Tax Code Or Prevailing Case Law.

27 20 4 2003-04

Robert F. Reilly, ASA Illustrative Personal Property Appraisal Report Outline

P. 5-22 Complete Overview Of What Should Be Included In An Appraisal Report That Will Be In Compliance With USPAP.

Michael J. Remsha, ASA, PE, CMI

Valuation Of A Nuclear Power Generating Facility

P. 24-37 Overview Of Nuclear Power Plant And Government Policy Dictating Better Understanding By The Appraiser Using The Market Approach.

28 21 1 2004-05

Steven C. Tatro, ASA Florida Department Of Revenue Holds Hearing On Proposed Modifications To Depreciation Table

P. 5 December 2004, Florida Department Of Revenue Conducted A Public Rule Development Workshop Regarding Potential Modifications To Their Depreciation Tables.




Douglas R. Krieser, ASA, Marcus A. EWALD, CFA

Identifying And Measuring Economic Obsolescence With Underperforming Global Assets

P. 6-15 Overseas Expansion By Corporations Are Encountering Issues Associated With Both Financial Reporting And Related Tax Matters.

International MTS Committee

Asa Mts Candidate-Report Review Checklist

P. 16-21 Checklist For Submitting MTS Appraisal Reports For Accreditation.

Edward D. Biggs III, ASA Appraising Railcar Movers P. 25-26 Sources For Appraising Railcar Movers.

Leslie H. Miles, Jr., FASA Highest And Best Use For Personal Property

P. 27-30 Consideration Of USPAP Standard 7 And 8 Related To Highest And Best Use.

Merritt Agabian, FASA True Value P. 31-32 Discussion Of Continued Use Of Items In Place And In Use.

29 21 2 2005 Franklin D. Reid, ASA Appraisal Considerations In Third World Countries

P. 5-8 Issues To Understand When Applying USPAP In Developing Nations.

Robert Neumuller Measuring Economic Obsolescence In Oil Refineries

P. 9-22 Article Describes How Economic Obsolescence Fits Into Value Estimates Using The Cost Approach.

Alan C. Iannacito, ASA Valuations Of Patterns P. 23-28 Patterns Have Value Based On The “Level Of Trade”.

30 21 3 2005 Tom Sexton, ASA Rail Equipment P. 4-16 Rail Industry Is Dealing With Changes In A Recovering Economy.

Douglas R. Krieser, ASA The Changing World Of Insurance Valuation

P. 17-24 Performing An Insurance Appraisal Is Becoming More Difficult. The Appraiser Needs To Consider A Variety Of Tools To Arrive At Their Conclusion.

V. Neil Thompson, ASA Hurricane Runs The Table P. 25-26 Overview Of Hurricane Katrina To The Gulf Coast Casino Industry.

Leslie H. Miles, Jr. FASA True Value Rebuttal P. 27-32 Rebuttal To Fair Value Issues In Ad Valorem Cases.

Mike Clark, L&M Publications

Market Conditions P. 33 Overview Of Market Conditions As Of July 2005.

Edward D. Biggs, III, ASA Trusted Counselor P. 34 Mentoring Is A Win-Win Endeavor For The Society.

31 21/22 4&1 2005-06

Lee Robinette, ASA Letter To Chief Counsel: Missouri Tax Commission

P. 35-37 Official Position Of The MTS Committee Regarding The Proposed Appraisal Requirements.

J. Barry Savage, ASA and Harry J. Richardson, ASA

Hydroformng P. 10-11 Explanation Of How Sheet Metal Hydroforming Works And The Advantages.

Daniel L. Lagace, ASA How Exponents Work P. 12-20 Article With Intent To Diminish The Perceived Mystery Associated With The Use Of Exponents In The Cost To Capacity Formula.




Art Narverud, ASA A MTS Appraiser’s War Story P. 21 Surprise Encounter To A Small Fish Cannery In Alaska.

Alan C. Iannacito, ASA Basic Machinery Identification Seminar P. 22 Update Of Id Seminar Held In Los Angeles In October 2005.

Robert D. Podwalny, FASA

Managing A Portfolio Of Leased Aircraft P. 24-32 Why The Corporate And Commercial Aircraft Industries Rely On Leasing.

Steven C. Tatro, ASA Divorce-Appraisal Style P. 33-35 Issues To Be Considered Before Accepting An Divorce Settlement Case.

Charles Dixon, ASA 2005 Membership Report P. 36-40 The Latest Membership Numbers By Disciplines As Of 2005.

Leslie H. Miles, ASA USPAP Will Be Changing P. 41-44 Uspap Changes Are A Recognition Of Economic Realities.

Douglas R. Krieser, ASA FASB Releases Fair Value Measurement Working Draft

P. 45-51 Fair Value Is In The Process Refined And Clarified By The Fasb.

32 22 2&3 2005-06

Jack Washbourn, ASA MTS Governor’s Report P. 5 Written Awareness Of What Asa Board Of Governor’s Activities In 2006.

China Appraisal Society Valuation Of Machinery And Equipment In China

P. 7-13 Focus On Imported Second-Hand Equipment.

Robert S. Svoboda, PE, ASA

Value In Use VS. Value In Exchange P. 14-30 Definition Overview Of Fair Market Value In Use Vs. In Exchange From Several Appraisal Societies.

John A. Matthies, ASA A Forgotten Research Tool P. 31 The Yellow Pages Can Be An Excellent Information Source.

Nicole Stango ASA: Strength In Numbers P. 32-34 Article On How Efforts Can Be Made To Increase MTS Membership.

Charles Dixon, ASA AMTDA Trade Show P. 35-36 Overview Of American Machine Tool Distributor’s Association Trade Show.

Daniel L. Lagace, ASA Machinery Identification And Cost Approach Seminar

P. 37 Overview Of ID Workshop Conducted In Chicago In March 2006.

Leslie H. Miles, Jr. FASA Aircraft Maintenance Care And Overhaul P. 45 Discussion Of The Rapid World Growth Rate Of Maintenance, Repair, And Overhaul (Mro).

33 22/23 4&1 2006-07

Dong W. Cho Average Prices Of New Business Aircraft P. 5-14 Dr. Cho Explains The Importance Of Index Reflecting Real Price Vs. Nominal Price.

Ken Dufour/Wade Young The Truth About Fractional Aircraft Shares

P. 15-18 Overview Of Getting Maximum Value For Investment In Aircraft.

Douglas R. Krieser, ASA FASB Releases Final Version Of Fair Value Measurement

P. 19-28 Mr. Krieser Recommends An Understanding Of Sfas 157 When Performing Sfas 141 And Sfas 142




Alan C. Iannacito, ASA Appraising Clutter P. 30-35 Dealing With An Industrial Category That Can Be Overlooked But Needs To Be Addressed By The Appraiser.

John S. Ferguson, ASA Depreciation Based On Observed Condition

P. 36-41 Discussion Of The Observed Condition Being More Interest As An Historical Reference.

Jack Beckwith, ASA A Case To Determine Lost Value For New Series Equipment

P. 42-49 Importance Of Market Influences May Cause An Adjustment To Both The Functional And Economical Obsolescence In The Cost Approach.

David Fawcett FRICS ASA Annual Conference July 2006 P. 50-53 Outsiders Perspective Of The International Conference.

MTS Board Of Examiners What Does Your Report Say About You, Your Company, And The Asa?

P. 54 - 62

The MTS Board Of Examiners Give A Checklist And Overview Of What Should Matter In The Appraisal Reports That Are Evaluated.

34 23 2 2007 Dale H. Bracken, ASA How Movies Are Really Made P. 6-9 Article Describes All The Steps, Equipment, And Techniques That Allows The Film To Go From The Camera To What Is Seen On The Screen.

Sharon Desfor The Sun Sets On Fas 13 - Will We Be Left In The Dark?

P. 10-11 Discussion As To How Recent Fasb Definitionn For Value May Be A Concern For Leasing.

Joel B. Levinson, ASA, CSA

Valuing Manufacturers' Secret Weapons Against Costs

P. 12-15 Article Discusses Phraseology That Should Be Used In Describing The Scope Of Work For The Client To Sign.

Catherine J. Rein An Overview Of Photovoltaic Equipment & Issues Affecting Its Value

P. 16-21 Overview Of World Market Demand For Photovoltaic Equipment And Reasons For The Growth.

H. Denis Neumann, ASA Mobile Homes And Their Value P. 22-25 Mobile Homes May Be Considered Personal Property Or Real Property. Article Is Another Method To Determine Value.

Terry L. Duda, P.E., ASA, CEA

Boiler Valuation P. 26-30 Basic Knowledge Of What To Know About Valuing Boilers.

Jeffrey W. Brend Attorney Tricks-Witness Traps The Abc's Of Testifying

P. 31-43 Insight To The Four Stage Process In Preparing As An Expert Witness.

35 23/24 4 & 1 2007-08

Alan C. Iannacito, ASA Letter From MTS Governor P. 4-5 Details On Various Subjects Including: Proposed Unification Between Asa, Appraisal Institute, And American Society Of Farm Managers And Rural Appraisers.




Norman F. Laskay, ASA Identification and Appraisal Of Marine Dredging Equipment

P. 6-18 Identification Of And Valuation Of “Technical Real Property” For Taxation Purposes.

J.P ("Buck") Ward III, ASA Some Thoughts On The Valuation Of Office Furniture

P. 19-21 Various Considerations And Market Discussions On Furniture.

Dennis C. Neilson, CMI, P.E. ASA and Michael J. Remsha, CMI, P.E., ASA

Technical Real Property Issues And Property Taxation: Heavy Manufacturing, Utilities, And Process Industries

P. 22-31 Identification Of And Valuation Of “Technical Real Property” For Taxation Purposes.

Sharon Desfor, ASA The Convention On International Interests In Mobile Equipment And The International Registry

P. 32-35 Discussion Of The Capetown Convention And Its Application To Mobile Equipment (Including Rail, Aircraft, And Other “Mobile” Assets).

Alan C. Iannacito, ASA Growing A Machinery And Technical Valuation Appraiser

P. 36-38 The Importance Of Mentoring And Knowledge Transfer When Developing New Valuation Talent.

Osato Osawaye Emerging Markets In Nigeria And The Opportunities For Specialist Valuation Practices

P. 39-41 Economic And Business Development In Nigeria And The Potential Opportunities For Valaution Professionals Within That Area Of The World.

Bob Clark, ASA Industrial Pumps - The Basics P. 42-44 General Overview Of Various Pumps And Their Uses.

Joe Santora Mobile Cranes - Is The Sky The Limit? P. 45-46 Observations Of The Current Used Market For Large Mobile Cranes.


Buyer’s Premium P. 47-48 Discussion On Buyer’s Premium In Auctions.

Dave Evans, ASA Appraisal Matters P. 49 Discussion Of Various Industries And The Current State Of The Auction Markets For These Industries.

Les Miles, ASA; Ed Raether, ASA And Douglas Krieser ASA MRICS

International Plant And Machinery Conference

P. 51-53 Overview Of The October 2007 International Plant And Machinery Conference Held In London.

36 24 2 & 3 2008 Jack Washbourn, ASA Board Of Governor's Report P. 6 Discussion On ASA Headquarters It Proposal For Service And Various Other Pertinent Subjects.

Jack Beckwith, ASA Mentoring P. 7-11 General Discussion About Mentoring And Why Mentoring Is Important To The ASA.

Ed Biggs, ASA What Will Be Under Your Hood? P. 12-13 Discussion About Converting And Rebulding Locomotives.

Richard Ellsworth, PE, ASA, CCE

Scale Factor Estimates For Infrastructure Assets

P. 14-20 Scaling Factors For Use In Valuing Infrastructure Assets Including Use Of Cost To Capacity.




Micheal J. Remsha, PE, ASA, CMI

The Complete Cost Approach And The Order Of Deductions

P. 21-29 Discussion Regarding The Current Order Of Depreciation Taught By The ASA And An Introduction To An Alternate Approach Based On The Experience Of The Author.

Philip L. Burk, ASA, CMA, PE

Valuation Of Public Utility And Other Property With Limited Earning Ability

P. 30-39 Discussion On How Limited Earnings Effect The Value Of Various Regulated And Unregulated Industries.

Richard Scuster, ASA The Fractional Aircraft Ownership Value Conundrum

P. 40-42 Valuing Fractional Ownership Of Aircraft Under Various Scenarios.

Editor Recent MTS M&E Identification Seminar And Report Writing Seminar

P. 43-44 Outline Of The Recent MTS Machinery And Equipment Identification Seminar And Report Writing Class Given In Detroit.

Editor Los Angeles Chapter Provides Seminar On Tangible Asset Valuations For Financial Reporting Purposes

P. 45-46 Outline Of The Recent Seminar Given In Los Angeles.


Selecting And Publishing Sales Comps From Auction

P. 47-50 Outline Of Some Of The Data And Items Considered By L&M Publications When Listing Sales Comps.

Dave Evans, ASA Appraisal Matters P. 51-53 Discussion Of Various Industries And The Current State Of The Auction Markets For These Industries.

Editor Planning Begins For 2009 International Plant And Machinery Conference

P. 53 Announcement And Update On The Planning For The Joint ASA/RICS/AAI Plant And Machinery Conference In 2009.

37 24/25 4 & 1 2008 Douglas R. Krieser, ASA MRICS

Editor’s Corner P. 4-5 General Overview Of The Current Issue And Recent MTS Committee Meetings.

V. Neil Thompson, ASA Chairman’s Prospective P. 6 Neil Thompson Outlines Various Accomplishments Of The MTS Committee And Other Issues Such As The Recent Merger Discussions With AS, ASFMRA And RICS.

Jack Washbourn , ASA Letter From MTS Governor P. 7 Jack Washbourn Discusses The Importance Of Being An Active And Not “Simply A Dues Paying Member” And Some Ideas On The Asa’s Goal Of Becoming “Discipline Centric”.




Alan C. Iannacito, ASA Letter From MTS Governor Alan C. Iannacito, ASA

P. 8 -9 Alan C. Iannacito Discusses The Evolvement Of The Asa MTS Committee And Recent Issues Important To Members Of The ASA.

Stephen L. Barreca, ASA, CDP, PE

Proper Consideration Of Future Net Salvage In An Appraisal Of Value

P. 10-18 Discusses The Considerations That An Appraiser Should And Should Not Give To The Future Net Salvage Value Of A Tangible Asset When Applying The Various Approaches To Value.

Mark S. Buettner, ASA One Appraiser’s Perspective of IMTS 2008

P. 19-20 Comments On The Bi-Annually International Machinery Technology Show In Chicago In 2008.

Richard K. Ellsworth, PE, ASA, CFA

Survivor Curves And Equipment Life Expectancy

P. 21-27 Insight And Commentary On The Development Of Iowa Curves.

Phillip Kolczynski Ethical Challengers For Expert Witnesses P. 28-39 2008 International Conference Presenter Provides Commentary On Some Of The Challenges Faced By The Expert Witness. Mr. Kolczynski Is An Attorney Based Out Of Southern California.

Roman Karpov External Obsolescence. Value Change Factor Of Industrial Personal Property Entering Secondary Market

P. 40-44 Roman Karpov Presents A Methodology For Quantifying And Qualifying External (Economic) Obsolescence.

Roman Karpov Russian Version Of The Article Listed Above

P. 45-50 Russian Version Of The Article Listed Above.

Sharon Desfor, ASA, MRICS

The Banking Liquidity Crisis P. 51-53 Sharon Desfor Discusses How The Liquidity Crisis Can Effect Borrowers, Lenders And Appraisers.

John S. Fergusen, PE, ASA, CDP

Valuation Of Public Utility And Other Property With Limited Earning And Ability - A Commentary

P. 54-56 Mr. Fergusson’s Response To “Valuation Of Public Utility And Other Property With Limited Earning Ability” Published In The Last Issue Of The Journal.

Michael J. Remsha, P.E., ASA, CMI

Electrical Generating Plant Valuation P. 57-67 Mike Remsha PE, ASA, CMI Offers Some Interesting Insight Into Valuing A Variety Of Different Power Plants Using All Three Approaches To Value.

Mike Clark Valuation In Time Of Turmoil P. 68-69 Mike Clark Discusses The Effects Of The Current Economy On The Auction Market.




Dave Evans, ASA - Chief Appraisal Officer

Appraisal Matters... With Wells Fargo Business Credit & Wholesale Bank D

P. 70-71 Discussion Of Various Industries And The Current State Of The Auction Markets For These Industries.

38 25 2 & 3 2009 Douglas R. Krieser, ASA MRICS

Editor’s Corner P. 4 General Overview Of The Current Issue.

V. Neil Thompson, ASA Chairman’s Perspective P. 5 Neil Thompson Outlines The Importance Of Education And Some New MTS Courses The ASA Has Developed.

Alan C. Iannacitto, ASA P. 6 Alan C. Iannacito Discusses The Recent ASA/AMEA Seminar, The New ASA Website, And Other Issues.

John S. Ferguson, PE, ASA, CDP

The Value of Writing P. 8 John Ferguson Discusses The Strategic Reasons For Writing Articles For The MTS Journal And Other Publications.

Catherine J. Rein MBA, AM

Don’t Forget the Website in Asset Appraisal

P 10-13 Catherine Rein Discusses The Importance Of Valuing The Web Site Name When Valuing A Company And Some Considerations The Appraiser Should Consider When Valuing These Assets.

Alan C. Iannacitto, ASA Principles of Mining Processing Listing and Valuing Continuous Mills

P. 14-18 Alan C. Iannacito Discusses Various Factors In The Valuation Of Ball And Rod Mills Including Differentiating Between The Two, The Data Required To Value Each, And Various Reference Materials Regarding Mills.

John S. Ferguson, PE, ASA, CDP

On Survivor Curves and Equipment Life Expectancy

P. 19-20 John Ferguson Commentary Of An Article Written By Richard K. Ellsworth Regarding Survivor Curves.

Michael J. Remsha, PE, ASA, CMI

Fair Market Value in Continues Use P. 21 - 26

Mike Remsha Discussed The Intricacies Of Fair Market Value In Continued Use And What The Appraiser Needs To Consider When Using This Value Premise.

Joseph M. Santora, ASA Mobile Cranes - Is the Sky Falling? Market Observations

P. 27-28 Joseph M. Santora Discusses The Current Market For Mobile Cranes And How It Has Changed Since His Article In Late 2007.

Richard K. Ellsworth, PE, ASA, CFA

Retirement Dispersion and Appraisal Depreciation

P. 29-33 Richard K. Ellsworth Continues His Discussion Of The Use Of Iowa Curves And How They Are Utilized To Estimate Depreciation.




Dennis C. Neilson, Cmi, P.E. Asa And Michael J. Remsha, Cmi, P.E., Asa

Personal Property Tax Appeal/Valuation P. 34-41 Dennis C. Neilson And Michael J. Remsha Outline Various Issues The Personal Property Appraiser Has To Consider When Performing A Tax Appeal Appraisal Including: The Three Approaches To Value; Classifying Real Vs. Personal Property; Highest And Best Use (Inuse Vs. In Exchange); Mass Appraisal; Assessor Approaches To Value; Excess Depreciation; And Other Relevant Topics.

Mike Clark Random Thoughts on the Market P. 42-43 Mike Clark (L&M Publications) Discusses Various Markets In General Including Metal Working, Plastic Equipment, Food Processing Equipment, Printing Equipment, Etc. Also, He Discusses How The Number Of Auctions Have Varied In The Past Year.

Dave Evans, ASA - Chief Appraisal Officer

Appraisal Matters...With Wells Fargo Business Credit & Wholesale Bank

P. 45-46 Discussion Of Various Industries And The Current State Of The Auction Markets For These Industries.

39 25/26 4 & 1 2010 Sharon Desfor, ASA, MRICS

Editor’s Corner P. 4

Peter Campbell, ASA Chairman’s Prospective P. 5

Alan C Iannacito, FASA Letter From MTS Governor P. 6

Robert S Risbridger and Kenneth M Heyse, ASA

The Perfect Storm P. 8-11

Leslie H Miles, Jr, FASA Physical Life Explained P. 12-17

Alexander Skorniakov, ASA

Second-Hand Value And Financial Reporting

P. 18-20

Douglas R Krieser, ASA, FRICS

International Conference On The Valuation Of Plant Machinery And Equipment

P. 24-25

William M Engel, ASA Making Valuation Research More Dynamic

P. 26-34

Richard K Ellsworth, PE, ASA, CFA, CCE

Depreciation Methods In Theory And Practice

P. 35-42

Alan C Iannacito, FASA ME214 - The Identification and Appraisal of Mining and Mineral Processing Equipment

P. 43-48

Mike Clark Random Thoughts on the Market P. 49-50

Dave Evans, ASA Appraisal Matters… With Wells Fargo Business Credit & Wholesale Bank

P. 53-54




In Memoriam - Leroy L Ackermann-Ackermann & Tinker Appraisal Specialties, Paul Rice, ASA - The Rice Group

P. 55

40 26 2 & 3 2010 Sharon Desfor, ASA, MRICS

Editor's Corner P. 4-5

Peter Campbell, ASA Chairman’s Prospective P. 6

Alan C Iannacito, FASA Letter from MTS Governor P. 7

Tom Sexton, ASA Machine Tool Market P. 9-12

Joseph M Santora, ASA and David Helle, ASA

2009 Crane Market Conditions…Is The Sky Falling?

P. 13-14

Mike Clark The Market Is Rebounding P. 15

Jack Young, ASA, CPA An Overview Of The California Air Resources Board Diesel Regulations

P. 16-18

Edward D Biggs, III, LLC, ASA

Appraised Fair Market Value And AAR Interchange Rule 107

P. 19

Jack Beckwith, ASA 2010 Changes & Challenges In Healthcare

P. 20-23

Alan C Iannacito, FASA M&E Local P. 24-26

Norman Laskay, ASA The Life Of A Ship P. 27-33

Paul Wride, ASA What An Equipment Lessor Looks For In An Appraiser

P. 34-36

Robert A Davis, MBA, AVA

Applications Of The Inutility Model P. 37-41

Michael J Remsha, PE, ASA, Cmi And Kevin S Reilly, ASA

Economic Obsolescence: Real Life Stories

P. 42-47

41 26/27 4 & 1 2011 Sharon Desfor, ASA, MRICS

Editor's Corner P. 4

Charles C Dixon, ASA Excerpt From Governor Charlie Dixon's January Report To The MTSC

P. 5-6

MTS Committee Definitions Of Value Relating To MTS Assets

P. 7-8

Robert S Risbridger and Kenneth M Hyse, ASA

The Aftermath Of The Perfect Storm P. 9-12

Leslie H Miles Jr, FASA What Is Orderly Liquidation Value? P. 13-15

Douglas R Krieser, ASA, FRICS

Financial Reporting Process P. 16-21

Alexander F Rudin, ASA, CG/GA and Shelby St John

Valuation Modeling P. 22-28

Alan C Iannacito, Fasa ME214 Class Report P. 29-24




Peter Daley, ASA Calculating The Economic Useful Life And Forecasting Residual Value For It Equipment

P. 35-39

Barry Gunderson, CPA, CMA, CIA, CCM, CPIM, CSCP

Reducing Banker Lending Risk: Inventory Valuations - More Science Than Art

P. 40-44

Michael J Remsha, PE, ASA, CMI and Kevin S Reilly, ASA

Functional Obsolescence: Real Life Stories

P. 45-55

42 27 2 2011 Richard A Berkemeier, ASA

Chairman's Perspective P. 4

William M Engel, ASA Editor's Corner P. 5

Danial Lagace, ASA and Sharon Desfor, ASA

Machinery And Technical Specialties Discipline Governors' Commentary

P. 6-8

Jack Beckwith, ASA Medical Imaging Report P. 9-12 Discussion Of The Technologies And Market For Medical Imaging Equipment.

Alan C Iannacito, FASA When Values Hibernate P. 13-15 Explains How The Intrinsic Value Of Equipment Impacts Value Fluctuation.

Mike Clark Premises Of Value: What Is Forced Liquidation?

P. 16-17 Discusses How Some Sales Labled As Auctions Don’t Always Fit The Definition Of “Forced Liqudation Value”.

MTS Journal Interview with Michael Makin, CEO and President of the Printing Industries of America

P. 18-22 An Overview Of The Printing Industry Including It’s Health And Them Market For Used Equipment.

Alan C Iannacito, FASA ME214 Identification And Appraisal Of Mining And Mineral Processing Equipment

P. 23-26 A Review Of ME214 Identification And Appraisal Of Mining And Mineral Processing Equipment Class.

William M Engel, ASA How Do You Use Technology In Your Appraisal Practice?

P. 27

43 28 1 2012 William M Engel, ASA, Editor's Corner P. 4

Dan Lagace, ASA and Sharon Desfor, ASA

Governor’s Report P. 5

Thomas A. Sexton, ASA Food Processing Equipment P. 6-10 Discusses Values, Considerations And Trends In The Food Processing Equipment Market.

Richard Buckner, President, Fair Market Graphics, Inc.

Sheetfed Printing Presses In The Current Marketplace

P. 11-12 An Overview Of The Current Market For Sheetfed Offset Presses.

Les Miles & Robert Clark China Plant and Machinery Conference a Resounding Success

P. 14-16 Review Of The ICVPME Held In China.




Norm Laskay, ASA Understanding the Marine Marketplace P. 17-30 An Overview Of The Different Types Of Vessels And Their Characteristics Along With Considerations When Determining Value.

Gregory W. Kort, P.E., ASA, CMI

Environmental Issues – Impacts on Industrial Property Value

P. 31-36 A Discussion On How Environmental Issues Impact Industrial Property Along With Ideas On Quantification And Accounting For Them.

Michael Rikon Condemnation of Machinery and Equipment: A Case Study

P. 37-46 History Of Condemnation Along With How It Is Treated In Different Countries And States And A Case Study That Demonstrates How A Court Views It.

Kenneth R. Loso, Lessons Learned, Warning Signs, and “Banana Skins”

P. 47-50 Reviews Warning Signs Of Economic Crisis.

44 28 2 2012 Richard Berkemeier, ASA Chairman’s Perspective P. 4

Danial Lagace, ASA and Sharon Desfor, ASA

Machinery And Technical Specialties

Discipline Governors’ Commentary

P. 5-6

William M Engel, ASA Editor’s Corner P. 7

Rob Schlegel, ASA, MCBA

The Nexus Of Business Valuation And Valuation Of Equipment

P. 8 -10 The Differences Between MTS And Bv And How Bv And MTS May Work Together.

Douglas R Krieser, ASA,FRICS

Gn6 Depreciated Replacement Cost Method Of Valuation For Financial Reporting - A Summary

P. 11-13 A Summary Of RICS Standards Guidance Note 6 Which States, In Part, Market Approach Should Be Used Over Cost Approach For Financial Reporting.

Bruce Leister, ASA Forward To The Past With Semiconductor Market

P. 14 -16

Explains The Market And Sales For Older 200MM Equipment Versus Newer 300MM.

Richard Zhang, MBA, ASA, MRICS, CPV

How Should We Perform Equipment Appraisals

P. 17-22 Explores Why Equipment Appraisals Are Necessary And Considerations The Appraiser Should Keep In Mind.

Kevin S Reilly, ASA A Market Perspective: Identifying, Quantifying, And Applying Economic Obsolescence

P. 23-31 An Overview Of Economic Obsolescence Providing A Case Study Explaining The Application And Theory.

Alan C Iannacito, FASA Eminent Domain And Personal Property P. 32-34 Discusses How To Work On An Eminent Domain Assignment.


Chairman’s Perspective P. 4

Daniel Lagace, Asa And Sharon Desfor, ASA

Machinery And Technical Specialties Discipline Governors’ Commentary

P. 5-6

William M Engel, ASA Editor’s Corner P. 7




Simon Landy The Value Of Valuations: New International Standards To Benefit Investors

P. 8-9 Current Status And Explanation Of The International Valuation Standards

Tammy Blackburn, ASA Do I Need An Appraisal To Reduce My Ad Valorem Tpp Tax? - A Magistrate’s Perspective

P. 10-11 The First In A Series Of Articles Explaining The Burdens Of Appraising For Tangible Personal Property Tax Appeal Purposes Along With Explanations Of The Appeal Process And Selecting An Appraiser.

William M. Engel, ASA The Art Of The Interview P. 14-16 An Overview Of Questions That An Appraiser May Ask A Subject Company To Assist An Appraisers Knowledge Of The Industry, Equipment, And General Edification.

46 28 4 2012 Daniel Lagace, ASA and Sharon Desfor, ASA


P. 4

William M Engel, ASA Editor's Corner P. 7

Lee P. Hackett, FASA, FRICS, CRE

International Opportunities For Appraisal And Valuation

P. 8 A Glimpse Into The Word Of International Appraising And Advice On How To Get Started

Steven J. Sherman Raising The Bar For The Valuation Profession

P. 10 The Author Shares The Progress Of The IVSC

Robert A. Davis, MBA, ACA, ASA

Inutility Model Scaling Factor - What If The Factor Is Not Six-Tenths?

P. 12 Determining Economic Obsolesence And An Alternative Method Rather Than Using Six- Or Seven-Tenths Scaling Factors

Tammy Blackburn, ASA Preparing For The Vab Hearing - A Magistrate’s Perspective

P. 16 Insights Into What Steps An Appraiser Can Take To Strengthen Their Ad Valorem Appeal Appraisals

J. P. “Buck” Ward, ASA What Color Is Your Blanket P. 19 Gives The M&E Appraiser Points To Consider When Working With

Asset-Based Lenders As Clients.Alan C Iannacito, FASA The Richest Desposit of Mining

KnowledgeP. 22 A Review of MINExpo 2012


Chairman's Perspective P 4

Daniel Lagace, ASA And Sharon Desfor, ASA


P 5

William M Engel, ASA Editor's Corner P 7

James Matthews, ASA Biodiesel Industry Expansion Phase In The United States, An Overview And Its Process Machinery And Equipment

P 8 An Outline Of The Biodiesel Industry And The Equipment Involved




Jack Beckwith, ASA How Will The Ppaca Affect Diagnostic Imaging Equipment Moving Forward?

P 23 How Equipment Use And Value Are Impacted By The Patient Protection And Affordable Care Act

Tammy Blackburn, ASA Considering The Evidence - A Magistrate's Perspective

P 25 Insights Into The Evidence A Magistrate Sees When Considering Ad Valorem Appeal Appraisals

Martin L. King, CR, ASA Actual Cash Value In Property Losses P 27 Appraisals From An Insurance Perspective

Jack Young, ASA, CPA Appraising Equipment For Retail Propane Companies

P 29 What To Look For When Appraising The Equipment Of Retail Propane Firms

Kevin S. Reilly, ASA; Clayton T. Baumann, PE

Valuation Of Cogenration Plants; Things To Consider

P 33 What To Consider When

Appraising Cogeneration FacilitiesLetters To The Editor P 41

48 29 2 2013 Daniel Lagace, ASA and Sharon Desfor, ASA

Discipline Governors’ Commentary

William M Engel, ASA Editor's Corner P 6

Christina Chojnacki, ASA and Leslie Vitale, ASA

Implications Of Economic Obsolescence In Fixed Assets For Financial Reporting Purposes

P 7 Implications, Indentification, And Quantification Of Economic Obsolescence

John Martin, Chairman Of The IVSC- Advisory Forum

The Role Of The Ivsc Advisory Forum In Developing A Valuation Profession Globally

P 11 Discusses The Progress Made By The Forum And The Challenges That It Faces

Austrailian ASA Chapter Review Of Equipment ID Seminar P 14 Reviews The Equipment ID Seminar Held In Australia, March 2013

Garrett Schwartz, Asa, Cea

MTS Equipment ID Seminar: Premiere Speakers, Networking And Education

P 17 Reviews The Equipment ID Seminar Held In Cleveland, OH In June 2012

Leslie H Miles Jr, Fasa Nigeria And The ASA P19 Reviews Mr. Miles Trip To Nigeria And Explains The Growing Market For ASA

49 29 3 2013 Roger Durkin, J.D., M.S., FASA

The Top Twelve Mistakes Appraisers Make in Court Preparation

P10

Richard Buckner, President of Fair Market Graphics, Inc.

Sheetfed Printing Presses and Today’s Marketplace

P13

Garrett Schwartz, ASA MTS Appraisers Return to Cleveland for Networking & Equipment Education

P15

Les Miles, FASA ASA’s International Demand – Three Weeks in Japan

P18

Nancy Stacy, GG, ASA In Memoriam P36

50 29 4 2013 Liu Ping Achieve Collaborative Development of the Valuation Profession

P12




Aleksey Shaskolsky Ethic Dilemmas in Russian Appraisal Practice

P21

Алексей Шаскольский

Дилеммы этики в российской оценочной практике

P22

A. Shaskolsky, V. Romanovsky, S. Edomsky, V. Biryukov, A. Timkov

Federal Appraisal Standard FAS-0 “Paid-for Valuation”

P24

А. Шаскольским, В. Романовского, С. Эдомского, В. Бирюкова , А. Тимкова

Федеральный стандарт оценки ФСО-0 “Заказная оценка”

P27

Thomas Boyle, MAI Banks Run on Standards P31

Alan C. Iannacito, FASA The Class of 2013, ME214 P33

51 30 1 2014 Park Johnson, ASA, MRICS Editor’s Letter P4

Robert W. Clark, ASA Chairman’s Corner P5

Michael J. Remsha, ASA, P.E., CMI

The Cost Approach and its Relationship to the Sales Comparison and Income Approaches

P6

Jack West, ASA Assessors and Independent Fee Appraisers P32

P. Barton DeLacy, ASA, MAI, CRE, FRICS

Wind Power and the Tax Base: Reliable as the Resource?

P35

Robert B. Podwalny, FASA USPAP Reports and Reports in Submitted for Advancement

P46

Clayton T. Baumann, P.E. Cost to Capacity Method: Applications and Considerations

P49


Robert W. Clark, ASA Chairman’s Report P5

Daniel Lagace, ASA and Sharon Desfor, ASA

Governor’s Bulletin P6

Robert F. Reilly, CPA The Unit Valuation of Taxpayer Assets for Protpery Taxx Purposes

P15

Alan C, Iannacito, FASA What Do Value-Added Businesses Pffer and What are Their Affecs on the Market?

P33


Robert W. Clark, ASA Chairman’s Report P5

Robert W. Clark, ASA ICVPME Report P6

Daniel Lagace, ASA and Sharon Desfor, ASA


Norman Laskay, ASA Marine Asset Appraisal and the Three Approaches to Value

P10

Thomas Sexton, ASA Current Trends in Energy Use and Their Effect on Railcars

P13

Barbara A. Spoor, ASA, (MTS – Aircraft, MTS – M&E, ARM)

Appraisal Review and Management P15




David Helle, ASA MTS Appraisers Attend Equipment Identification Seminar

P17

Park Johnson, ASA, MRICS The Tools We Use: Marshall Valuation Service (MVS)

P20

54 30/31 4/1 2014/15 Park Johnson, ASA, MRICS Editor’s Corner P4

Robert W. Clark, ASA Chariman’s Report P5

Richard Berkemeier, ASA, MTS Governor


In Memroiam Samuel F. Lucerno, FASA

P7

Mike Clark, ASA Asking Price is Not Selling Price P8

J.P. (Buck) Ward, ASA What Color is Your Blanket? Collateral Documentation and Asset Recovery for Asset Based Loans

P10

Jim Becker, ASA Demystifying New Paint & Interior... Assessing Aircraft Value

P14

Stephen L. Barreca, ASA, PE, CDP Founder & President, BCRI Valuation Services BCRI Inc.

Modeling the Life-Cycle of Multiple Forces of Depreciation

P18

Charlie Burkhardt, ASA, CAE, Senior Consultant, CostQuest Associates and Luis A. Rodriguez, Program Manager, CostQuest Associates

Development of a Replacement Cost New for Wireline Communication Property

P42

55 31 2 2015 Park Johnson, ASA, MRICS Editor’s Corner P4

Robert W. Clark, ASA Chariman’s Report P5

Sharon Desfor, ASA, MRICS, Richard Berkemeier, ASA, MTS Governor


Anthony Kioussis, President, Asset Insight

Used Citation Xs from NetJets are Rebranded by Guardian Jet as Elites

P9

Nathan J. Arnold Appraising Chemical-Processing Machinery and Equipment

P16

Les Miles, FASA and Park Johnson, ASA ME202 Taught in Japan P17

Joseph Feldman, President, Joseph Feldman Associates

Acquisition Surprises: Best Practices for Preparation and Risk Management

P18

Joe Santora, ASA Compliance P20

56 31 3 2015 Brad Hartsburg, ASA, CPPA, CSA

MTS Editorial P4




John J. Connolly, III, ASA Chairman’s Report P5

Richard Berkemeier, ASA and David Crick, ASA, MTS Governors


William Engel, ASA Memorial Tribute to Park Johnson, ASA P7

J. Fernando Sosa, ASA, MRICS

The Scary Truth about Ghosts Assets P9

Bob Zuskin of Jet Perspectives

Corporate Aircraft: Valuing The Intangibles P14

Joseph Santora, ASA of Irontrax, LLC

Choose Your Equipment Appraiser Wisely P17

Jean Jackson and David Helle of PNC Financial Services Group

4th Annual Equipment Valuation Conference in Cleveland

P19

Brad Hartsburg, ASA, CPPA, CSA of Fortress Machinery Appraisals and Consulting Inc.

Identifying Heavy Equipment and Serial Number Locations

P23

Keith M. Bransky, ASA, ARM-MTS

Damaged Aircraft and Diminution in Value Back-to-Basics

P30

Barrie Roesler, ASA Are your Comparables Really Real? P36


MTS Editorial P5




Richard Berkemeier, ASA Finding the Right Appraiser is as Easy as ASA

P9

Sharon Desfor, ASA State of the Helicopter Market P11

Tony Grant, FRICS Ethics in the Global Real Estate Market - A New International Coalition

P19

John Mathe, ASA Supportable Evidence in Appraisals P25

Alan C. Iannacito, FASA and Allan K. Bowles, PE

MTS214 Identification and Appraisal of Mining and Mineral Processing Equipment Course

P29


Virtual Chapter News P37

Joseph Santora, ASA IRONTRAX LLC Mining Industry Insight (Winter 2015) Mining Industry Statistics

P39

Leslie H. Miles, Jr. FASA, FAPI

9th International Conference of Plant and Machinery and Equipment

P44

Peter J. Turecek The Past and Future of Compliance and Fraud in Aviation: Don’t Fly Blind

P46

Harry J. Richardson, ASA / Edited by: J. Barry Savage ASA, Emeritus

Technological Obsolescence Finally Arrives in the Metal Stamping Press Industry

P50




Walter W. O’Connell M.E., ASA, SCSP

The Ideal Pricing Index P53

Tom Sexton, ASA Freight Railcar Basics P56

Jack Beckwith, ASA, CEA ASA Trains ODR Analysts on Machinery and Equipment Valuation Methodology

P64


MTS Editorial P5




J. Richardson, ASA / Edited By: J. Barry Savage, ASA Emeritus

New Automotive Hot Stamping Presses Makes For More Efficient & Safer Cars and Technological Obsolescence

P12

Walter W. O’Connell, M.E., ASA, SCSP

To Trend in Microsoft Excel™, or Forecast in Microsoft Excel™, That is the Question

P14

Norman F. Laskay, ASA Emeritus

What Does a Buyer Want? P20

Dexter D. MacBride, CAE, FASA, Submitted by Norman F. Laskay, ASA Emeritus

Who Gets the Credit? P23

Douglas R. Krieser, ASA FRICS

Do Audit Reviews Fall Under USPAP Standard 3?

P24

Interviewer: Raymond Moran, ASA, MRICS

Interview with Liying Han – China Appraisal Society

P32

The Appraisal Foundation Revisions to the USPAP and USPAP Advisory Opinions

P34

Alan C. Iannacito, FASA Coal Is King No More: When Do You Determine Economic Obsolescence?

P36

Art Pincomb, ASA, CPG Mineral Appraisals: What is the Value of a Quarry or Mine?

P41

Leslie H. Miles, FASA & Karen Milan, ASA

Inutility Exponent Development P49

Keith M. Bransky, ASA, NSCA

Bransky - Ruden Meeting and 40+ Years of ASA Journals

P53

Roman Karpov and Anna Levleva

Obsolesce and Depreciation – International Style

P64

Douglas R. Krieser, ASA FRICS; Jack Beckwith, ASA, CEA, William Engel, ASA and Richard Tondre

How Asset Tracking Can Potentially Save Money

P61


MTS Editorial P5

Louis C. Seno, Jr., ASA, Chairman Emeritus, JSSI

Foreword P7

Rolland Vincent Pilatus PC- 12 Enduring P8




Sharon Desfor, ASA, MRICS Helicopters: A Different Type of Asset P13

Sharon Desfor, ASA, MRICS Regulatory Impact on Helicopter Leasing P19

Keith M. Bransky, ASA, ARM-MTS

Damaged Aircraft and Diminution in Value - Back to Basics

P25

Richard A. Berkemeier, ASA Finding the Right Appraiser is as Easy as ASA

P32

Peter J. Turecek The Past and Future of Compliance and Fraud in Aviation: Don’t Fly Blind

P34

Gordon R. Page, ASA Some Pitfalls of Aircraft Field Inspections P38

Gordon R. Page, ASA The TEMCO TF-51D Mustang - A Truly Rare Breed

P40

Daniel Hall, ASA Bizjets not Business as Usual P44

The MTS Journal Spotlight on New Aircraft Appraisal Education Program

P48

Bill Dodrill, ASA Do Business Jets have a Pedigree? P51

Barbara A. Spoor, ASA Aircraft Maintenance Condition and Asset Value

P54

David Wyndham The Key to Your Aircraft’s (Future) Value P56

Carls Janssens Valuing the Gulfstream G550 P59

George Kleros Aircraft- Identifying a Properly Preserved Aircraft

P63

Barrie Roesler, ASA Double Registration Change in the USA: Is It Worth the Hassle?

P68

Chris Wills Market Turmoil for Heavy Offshore Helicopters

P70

Bob Zuskin Corporate Aircraft: Valuing The Intangibles P74

David Crick, BSC, ASA Appraising Corporate Aircraft & Helicopters – Survey Inspections – What Is Required?

P77

Kim Seward Oil Price – What Is It Going To Take To Get The Civilian Helicopter Market Back On Track?

P82

Stephen Friedrich and Kyra Nyman

LTSAs: the Hottest Trend in Aerospace P85


MTS Editorial P5



Walter W. O’Connell, M.E., ASA, SCSP

Auction Theory, Game Theory, and Appraisal

P8

Landy A. Stinnett, ASA, P.E. Royalties and Valuation of Mineral Rights P14

Alison Ho ASA and Embry-Riddle to Offer Courses for Accredited Aircraft Appraisers

P18




Raymond Springer, ASA Depreciation of Installation Costs P19

Jean Jackson and David Helle, AS

5th Annual Equipment Valuation Conference in Cleveland

P22

Charles W. “Bill” Ruth, ASA ASA Advanced Mining Topics Course Report - September 23- 28, 2016 - Las Vegas, Nevada

P27

John J. Connolly III, ASA The Value of Mining Equipment Appraisal Education

P36

John J. Connolly III, ASA Chairman's Corner P37


MTS Journal 2016-17 Media Kit P38

Roger Durkin, J.D,. M.S., FASA

ASA Appraisal Review and Advanced Course 201

P42

Jack Beckwith, ASA, CEA Purpose and Intent of IVSC P43

Peter Bolton King Fair Competition and Fair Gain P47

Mike Clark 2016 Market Overview P49

Alex Ruden, ASA (M&TS & ARM), CG/GA

Insurance Valuations and Loss Preparedness

P52

Larry L. Perdue, ASA, MVS FDIC Rental Value - A Nontraditional Approach

P54

J. Fernando Sosa, ASA, MRICS

Why Net Book Value Does Not Equal Fair Value

P62

Mike McCracken Aircraft Residual Value Puzzle P67

Alexander Lopatnikov, ASA, RICS

Valuing Assets in Extractive Industries P69


American Society of Appraisers Update P73

Amanda Applegate Upon Receipt of the Inspection Report P74

James Becker, ASA Demystifying Engine Terms P76

Mike Pratt, ASA Region 2 Governor's Bulletin P79

Joel D. Gonia, ASA Scope of Work within Appraisal Review P80


Journal Advertising Notice P83


MTS Journal Editorial P4


Governor's Bulletin P6

The Appraisal Foundation The Personal Property Appraiser Qualification Criteria

P8

The Appraisal Foundation Revisions to USPAP and USPAP Advisory Opinions

P20

David Fisher, ASA, NAAA Aviation Market Watch - What Can We Expect In 2017?

P22




Alan C. Iannacito, FASA The Craft Brewing Craze and the Valuation of Brewing Equipment, Part One

P23


The MTS Journal 2016-17 Media Kit P31

Spring 2017 Irontrax LLC Mining Industry Insight P35

Clayton Baumann, PE, CCP & Alexander Lopatnikov, ASA, RICS

Scaling Laws: Uses and Misuses in Industrial Plant and Equipment Replacement Cost Estimates

P38

10th ICVPME 2017 The International Conference on Industrial Valuation

P45

John J. Connolly, III, ASA Chairman's Corner P60

61 33 3 2017 American Society of Appraisers

Upcoming Conferences P3


The International Machinery & Technical Specialities Committee

P4

Brad Hartsburg, ASA, CPPA, CSA


Samuel Shapiro, ASA Chairman's Corner P7



By Mark Chaplin, CFA, ASA and Patrick Prendergast

Estimating Economic Obsolescence – Why the Inutility Formula is of Limited Utility

P11

Sharon A. Desfor, ASA International President

ASA International Appraisers Conferences - Information and Update

P16

The Appraisal Foundation A Bridge from USPAP to IVS P18

Pablo Fernandez. Professor of Finance. IESE Business School. Madrid, Spain

Is it Ethical to Teach that Beta and CAPM Explain Something

P26


ASA Launches New Online Reaccreditation Portal

P56

Jack Young, ASA, MTS/ARM, CPA

The “Art” of Appraising? P57



Bradley Schulz, ASA International Airport Physical Inventory P63


Embry Riddle ASA Aircraft POV Classes to Start

P67



Samuel Shapiro, ASA Chairman's Corner P7





Jean White Writing: A Critical Attitude? P12




John Mathe, ASA 10th ICVPME 2017 - Sydney, Australia – September 4-6

P16

Chris Condon, ASA, CSA Equipment Appraised Values In Light of Equipment Finance Documentation and End of Lease Returns

P19


7th Annual Equipment Evaluation Conference Notice

P22

Joel D. Gonia, ASA – ARM & MTS / M & E

Scope of Work within Appraisal Review P24

Alan C. Iannacito, FASA Following the Changes in the Mining Sector P28

Jack Young, ASA—MTS/ARM, CPA

Following the Changes in the Mining Sector P33

Alan C. Iannacito, FASA The Craft Brewing Craze and the Valuation of Brewing Equipment

P35

John Hagist The State of the Evolving Manufacturing Sector

P40

Joseph Santora, ASA IRONTRAX LLC Mining Industry Insight (Fall 2017)

P42

Joseph Santora, ASA IRONTRAX LLC Mining Industry Insight (Fall 2017)

P46

Joseph Santora, ASA IRONTRAX LLC Electric, Self-Driving Trucks — The Way of the Future

P50


The MTS Journal is a publication of the International Machinery & Technical Specialties Committee of the American Society of Appraisers, the only multi-discipline testing/accrediting appraisal society in America. The MTS Journal is written both for the appraisers who value equipment on a regular basis, and for those others who may have a professional interest in the subject. These include attorneys, bankers, business brokers, estate planners, used equipment dealers, real property and business valuation appraisers. The MTS Committee is a nonprofit organization with a goal to standardize and educate all in our profession. Letters from readers are encouraged. Letters will be printed without editing, in the sequence received, subject only to space limitations.

Subscriptions & Renewals ASA MTS Members & Candidates $35.00 | ASA Members, Non-MTS Discipline $50.00 MTS Journal subscriptions are delivered electronically, so please be certain that ASA headquarters has your current and correct email address in their records.

Send all editorial inquiries to: The MTS Journal c/o Brad Hartsburg, ASA (Editor) Fortress Machinery Appraisals and Consulting Inc. Calgary, Alberta, Canada [email protected]

Display Ads Accepted for publication in one issue only and should reach the Treasurer not later than the 15th of the month prior to publication. Rates: Full page - $200. One half page - $125. One quarter page - $75.

Advertising must be sent in PDF format and sized in the proper proportion based upon an 8½ x 11 format. Advertising will be accepted or rejected based upon editorial approval. Advertising should be submitted at least one month prior to publication to the editor at the address above.

Professional Services Advertising To raise additional funds for the MTS Committee's educational efforts, we offer both fee appraisers and companies an opportunity to advertise their services in this journal. For the reasonable sum of $50.00 we will run your business card for one year. Please send your check, made payable to the American Society of Appraisers, in the amount of $50.00 (US FUNDS) and either 2 clean business cards along with your check to the Treasurer, William Engel, ASA, at the address on the subscription form (below) or a PDF of the business card to [email protected].

Indices Indices for many years’ MTS Journal and Machinery & Equipment / Technical Valuation Journal articles are available. Please contact the editor for copies of these indices.

Subscription Form

Send all Subscription inquiries to: The MTS Journal c/o William Engel, ASA (Treasurer) Strategic Asset Management 96 Wood Acres Drive, East Amherst, NY 14051 [email protected]

Checks should be made payable to the American Society of Appraisers

The MTS Journal c/o William Engel, ASA (Treasurer) Strategic Asset Management 96 Wood Acres Drive

East Amherst, NY 14051 [email protected]

Name ASA Member Number

Company Amt. Enclosed $

Address

City State Zip


Sharon Desfor, ASA President

T: 847.487.8258 • F: 847.487.0206 • [email protected] N. Old Rand Road, Unit 101 • Wauconda IL 60084-0575

Ben Moore, ASA Senior Appraiser


Jason Kmiecik, ASA Vice President Operations


Carol Busch, AM Associate Appraiser



THE M&TS JOURNAL · Volume 34, Issue 1, 1st Qtr 2018 2. THE MTS JOURNAL The International Machinery...

Documents

Transcript of THE M&TS JOURNAL · Volume 34, Issue 1, 1st Qtr 2018 2. THE MTS JOURNAL The International Machinery...