Twenty & 50 Park Plaza v. Board of Assessors of the City of Boston (June 12, 2013)

           
COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD


TWENTY & 50 PARK PLAZA	     v.	   BOARD OF ASSESSORS OF   							     THE CITY OF BOSTON
Docket Nos.:  F291212 (FY 2007)
              F296897 (FY 2008)
              F303493 (FY 2009)
              F306975 (FY 2010)
				

SAUNSTAR LAND CO., LLC	     v.	   BOARD OF ASSESSORS OF   							     THE CITY OF BOSTON
Docket Nos.:  F291211 (FY 2007)
              F296896 (FY 2008)
              F302801 (FY 2009)				

        Promulgated: 
                                      June 12, 2013


	These are appeals filed under the formal procedure, pursuant to G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 and 65, from the refusal of the Board of Assessors of the City of Boston (the "appellee" or "assessors") to abate taxes on certain real estate in the City of Boston (the "subject properties") owned by and assessed to Twenty & 50 Park Plaza ("Park Plaza") and Saunstar Land Co., LLC ("Saunstar Land Co.") (collectively, the "appellants") under       G.L. c. 59, §§ 11 and 38, for fiscal years 2007 through fiscal year 2010 for Park Plaza and fiscal years 2007 through 2009 for Saunstar Land Co.  
	Commissioner Rose heard these appeals.  Chairman Hammond and Commissioners Scharaffa, Mulhern, and Chmielinski joined him in the decisions for the appellant Park Plaza in docket numbers F291212, F296897, F303493, and F306975, the decision for appellant Saunstar Land Co. in docket number F302801 and the decisions for the appellee in docket numbers F291211 and F296896.  
	These findings of fact and report are made pursuant to the Appellate Tax Board (the "Board")'s own motion under G.L. c. 58A, § 13 and 831 CMR 1.32.  The Board's decisions are promulgated simultaneously herewith.  

	Philip S. Olsen, Esq., Frank E. Ferruggia, Esq., and Daniel P. Zazzali, Esq. for the appellants.

	Anthony M. Ambriano, Esq. and Nicholas P. Ariniello, Esq. for the appellee. 


FINDINGS OF FACT AND REPORT
Introduction and Jurisdiction
	On January 1, 2006, January 1, 2007, January 1, 2008, and January 1, 2009, Park Plaza was the assessed owner of property located at 20 and 54 Park Plaza Street in Boston.  This portion of the subject properties consists of an 80,285-square-foot parcel improved with the fifteen-story Boston Park Plaza Hotel and the adjoining fourteen-story Park Plaza Office Building (collectively, the "Boston Park Plaza Hotel and Office Building").  The subject hotel contains 941 guest rooms plus approximately 25,207 square feet of rentable retail and restaurant space, primarily on the street level.  The subject hotel also includes approximately 48,000 square feet of meeting and function space on the second and fourth floors.  The subject office building contains 259,532 square feet of rentable area, including 238,100 square feet of office space which contains a 17,130-square-foot Executive Center, 15,490 square feet of first-floor retail space, and 5,942 square feet of storage space in the basement.  
	On January 1, 2006, January 1, 2007, and January 1, 2008, Saunstar Land Co. was the assessed owner of property located at 130 Columbus Avenue and 101 Arlington Street in Boston.  The property consists of a 27,585-square-foot parcel improved with a multi-story Armory and Castle Head House building constructed between 1891 and 1897 and known as The Armory of the First Corps. of Cadets/Plaza Castle (the "Park Plaza Castle and Armory" or the "Armory").  The building contains an estimated 56,000 square feet of total gross floor area including the basement and 46,641 square feet of rentable area including the basement.  The Castle Head House portion of the Armory (the "Head House") at the corner of Columbus Avenue and Arlington Street is four-plus stories over a basement and includes 15,000 square feet of rentable area that, at all relevant times, was leased to S&W of Boston, LLC ("Smith & Wollensky").  The remainder of the building extending along Columbus Avenue consists primarily of a one-story high bay exhibition hall over a basement.  
For assessing purposes, the single parcel of land containing the Boston Park Plaza Hotel and Office Building is identified as parcel 05-00810-000.  The pertinent assessment information for each of the fiscal years at issue is summarized in the below table.



Fiscal
Year	
Component	Assessed Value ($)	Tax Rate ($) per $1,000	
Taxes ($)	
					
2007	Subject Hotel	 84,400,000			
	Subject Office Bldg.	 41,967,000			
	Total	126,367,000	26.87	3,395,481.29	
					
2008	Subject Hotel	100,440,500			
	Subject Office Bldg.	 59,500,500			
	Total	159,941,000	25.92	4,145,670.72	
					
2009	Subject Hotel	114,148,000			
	Subject Office Bldg.	 50,242,000			
	Total	164,390,000	27.11	4,456,612.90	
					
2010	Subject Hotel	115,421,000			
	Subject Office Bldg.	 45,518,000			
	Total	160,939,000	29.38	4,728,387.82	

The relevant jurisdictional information is summarized in the following table.

Event	FY 2007	FY 2008	FY 2009	FY 2010	
					
Tax Bill Mailed	12/26/06	12/31/07	12/31/08	12/31/09	
Application for Abatement Filed	02/01/07	02/01/08	02/02/09	02/01/10	
Application for Abatement Denied	03/22/07	03/21/08	04/15/09	03/03/10	
Petition Filed with Board	06/19/07	06/19/08	07/08/09	06/02/10	

For all four of the fiscal years at issue, in accordance with G.L. c. 59, § 57C, Park Plaza timely paid the taxes due without incurring interest.  For all four of the fiscal years at issue, in accordance with G.L. c. 59, § 59, and G.L. c. 4, § 9, Park Plaza timely filed its abatement applications with the assessors who denied them.  Even though the abatement application for fiscal year 2009 was filed on Monday, February 2, 2009, the Board found and ruled that when the last day of a filing period falls on a Sunday, the filing is still considered timely if, as here, it is made on the following business day.  See Barrett v. Assessors of Needham, Mass. ATB Findings of Fact and Reports 2004-614, 615, n. 2 ("When the last day of a filing period falls on a Saturday, Sunday, or legal holiday, the filing is still considered timely if it is made on the following business day.").  For all four of the fiscal years at issue, in accordance with G.L. c. 59, §§ 64 and 65, Park Plaza seasonably appealed the denials of its abatement applications by filing Petitions Under Formal Procedure with the Board.
For assessing purposes, the parcel of land containing the Armory is identified as parcel 05-01135-000.  The pertinent assessment information for each of the fiscal years at issue is summarized in the following table.
Fiscal
Year	
Component	Assessed Value ($)	Tax Rate ($) per $1,000	
Taxes ($)	
					
2007	    Total	4,117,500	26.87	110,637.22	
					
2008	    Land	1,414,000			
	    Building	3,288,500			
	    Total	4,702,500	25.92	121,888.80	
					
2009	    Total	5,394,500	27.11	146,244.90	

The relevant jurisdictional information is summarized in the following table.


Event	FY 2007	FY 2008	FY 2009	
				
Tax Bill Mailed	12/29/06	12/31/07	12/31/08	
Application for Abatement Filed	02/01/07	02/01/08	02/02/09	
Application for Abatement Denied	03/22/07	03/21/08	03/27/09	
Petition Filed with Board	06/19/07	06/19/08	06/24/09	

For all three of the fiscal years at issue, in accordance with G.L. c. 59, § 57C, Saunstar Land Co. timely paid the taxes due without incurring interest.  For all three of the fiscal years at issue, in accordance with  G.L. c. 59, § 59, Saunstar Land Co. timely filed its abatement applications with the assessors who denied them.  As with Park Plaza's fiscal year 2009 abatement application, Saunstar Land Co.'s abatement application for fiscal year 2009 was filed on Monday, February 2, 2009.  Once again the Board found and ruled that, when the last day of a filing period falls on a Sunday, the filing is still considered timely if, as here, it is made on the following business day.  For all three of the fiscal years at issue, in accordance with G.L. c. 59, §§ 64 and 65, Saunstar Land Co. seasonably appealed the denials of its abatement applications by filing Petitions Under Formal Procedure with the Board.
On the basis of these facts, the Board found and ruled that it had jurisdiction over all seven of these appeals.
The appellants presented their case-in-chief primarily through the testimony of their commercial real estate appraiser, Emmet T. Logue.  Mr. Logue testified that he is a member of the Appraisal Institute with MAI and SRA designations; has considerable experience appraising commercial properties in the Boston area, including hotels and office buildings; and previously has been qualified to testify as a commercial real estate valuation expert at the U.S. Bankruptcy Court, the Massachusetts Land Court, and this Board.  Based on his designations and experience, and without objection from the assessors, the Board qualified Mr. Logue as a commercial real estate valuation expert.  Following the completion of his testimony, the Board allowed his two-volume self-contained appraisal report into evidence.  The appellants also entered into evidence the capital project report for the Boston Park Plaza Hotel, and submitted a post-hearing errata sheet in an effort to correct errors in Mr. Logue's original valuation reports.   
Mr. Logue testified that he was initially engaged to appraise the Boston Park Plaza Hotel and Office Building but the assignment was later expanded to include the Park Plaza Castle and Armory.  In the course of conducting his appraisals, Mr. Logue inspected the subject properties, reviewed the subject properties' historical financial statements and reports, including those for capital improvements, examined rent rolls and various industry publications, and researched the market.  Mr. Logue also spoke with the subject hotel's property manager and one of its senior accountants to ascertain additional relevant information pertaining to the subject hotel.  Further, he reviewed relevant zoning and land-use controls.  As will be discussed in greater detail, infra, the values that Mr. Logue derived for the subject properties for the fiscal years at issue are summarized in the following table.
	Boston
Park Plaza Hotel
	Park Plaza Office Building
	Park Plaza Castle and Armory
	
Fiscal Year 2007	$61,700,000	$25,600,000	$3,900,000	
Fiscal Year 2008	$84,100,000	$32,500,000	$4,000,000	
Fiscal Year 2009	$87,000,000	$41,400,000	$3,600,000	
Fiscal Year 2010	$63,200,000	$30,800,000	N/A	

In defense of the assessments, the assessors presented two witnesses -- Rachel Roginsky and Pamela McKinney.  Based on their respective educations, designations, and experiences in their fields of expertise, the Board qualified them as expert witnesses.  More particularly, and without objection, the Board qualified Ms. Roginsky as an expert in the Boston and national hotel markets, the preparation of stabilized income and expense statements for hotels, the use of those statements by participants in the market, and the analysis of competitive sets of hotels.  The assessors did not seek to qualify her as an expert real estate appraiser, and the Board did not do so.  Rather, the assessors sought to qualify, and the Board qualified, without objection, Ms. McKinney as a commercial real estate valuation expert.  After the completion of their testimony, the Board allowed into evidence Ms. McKinney's three-volume self-contained appraisal report.  The assessors also entered into evidence numerous other exhibits, including the requisite jurisdictional documents and a management contract agreement. 
 Ms. Roginsky provided Ms. McKinney with significant assistance in the preparation of the subject hotel appraisal, which also had some application for Ms. McKinney's appraisal of the Armory, by providing input relating to the lodging market, the selection of a competitive set, the evaluation of the subject hotel's financial statements, the expected performance of the subject hotel on the relevant valuation dates, and the preparation of the market income and expense estimates for the subject hotel.  In providing her recommendations, Ms. Roginsky relied on historical financial statements and actual budget information, past performance summaries from reliable industry sources, such as Pinnacle Perspective ("Pinnacle") and Smith Travel hotel operating statistics ("HOST") and accommodation ("STAR") reports for a competitive set of hotels, and projections from industry sources, such as the Outlook Perspective ("Outlook"), which are based on historical performance data.  Ms. Roginsky testified that she also was familiar with the subject hotel from past work and analyses.
In undertaking her appraisal assignment, Ms. McKinney inspected the subject properties, reviewed information supplied by the appellants, including operating histories and budgets, rent rolls and leases, the capital expenditures and capital budgets, and gross and rentable building areas and room counts.  The appellants also provided the particulars of selected lease agreements, property deeds and mortgages, prior appraisals undertaken within the relevant time period, and a purchase-and-sale agreement relating to the recent sale of a partial interest in one or more of the subject properties.  Ms. McKinney additionally investigated regional and local economic trends, including employment, population and income characteristics, as well as applicable zoning and land-use trends.  She collaborated with Ms. Roginsky for hotel-related information, and studied lodging, office, and retail market supply and demand characteristics including room rates and occupancy trends, and commercial rents, vacancy levels, and absorption trends for the subject market area.  She identified, again with Ms. Roginsky's assistance for hotel-related information, what Ms. McKinney ultimately deemed to be comparable or competitive properties to better understand market potentials and the positioning of the subject properties in the market during the relevant time period.  Ms. McKinney also spoke with local officials and conducted online research.  As will be discussed in greater detail, infra, the values that Ms. McKinney derived for the subject properties for the fiscal years at issue are summarized in the following table.

	Boston
Park Plaza Hotel
	Park Plaza Office Building
	Park Plaza Castle and Armory
	
Fiscal Year 2007	$100,900,000	$52,600,000	$5,400,000	
Fiscal Year 2008	$124,500,000	$59,700,000	$5,200,000	
Fiscal Year 2009	$120,300,000	$63,700,000	$5,200,000	
Fiscal Year 2010	$105,800,000	$63,600,000	N/A	

The following four tables compare the assessments to the values developed by Mr. Logue and Ms. McKinney for the subject properties for the fiscal years at issue.
Boston Park Plaza Hotel

	
Assessments
	Mr. Logue's Values
	Ms. McKinney's Values
	
Fiscal Year 2007	$ 84,400,000	$61,700,000	$100,900,000	
Fiscal Year 2008	$100,440,500	$84,100,000	$124,500,000	
Fiscal Year 2009	$114,148,000	$87,000,000	$120,300,000	
Fiscal Year 2010	$115,421,000	$63,200,000	$105,800,000	

Park Plaza Office Building


	
Assessments
	Mr. Logue's Values
	Ms. McKinney's Values
	
Fiscal Year 2007	$41,967,000	$25,600,000	$52,600,000	
Fiscal Year 2008	$59,500,500	$32,500,000	$59,700,000	
Fiscal Year 2009	$50,242,000	$41,400,000	$63,700,000	
Fiscal Year 2010	$45,518,000	$30,800,000	$63,600,000	

Combined
Boston Park Plaza Hotel and Office Building


	
Assessments
	Mr. Logue's Values
	Ms. McKinney's Values
	
Fiscal Year 2007	$126,367,000	$ 87,300,000	$153,500,000	
Fiscal Year 2008	$159,941,000	$116,600,000	$184,200,000	
Fiscal Year 2009	$164,390,000	$128,400,000	$184,000,000	
Fiscal Year 2010	$160,939,000	$ 94,000,000	$169,400,000	

The Castle Head House and Armory


	
Assessments
	Mr. Logue's Values
	Ms. McKinney's Values
	
Fiscal Year 2007	$4,117,500	$3,900,000	$5,400,000	
Fiscal Year 2008	$4,702,500	$4,000,000	$5,200,000	
Fiscal Year 2009	$5,394,500	$3,600,000	$5,200,000	

Based on information submitted into evidence by the parties and their witnesses, the Board makes the following findings of fact related to the subject properties' neighborhood, descriptions, and zoning. 
The Subject Properties' Neighborhood
The Boston Park Plaza Hotel and Office Building and the Park Plaza Castle and Armory are located in the Park Plaza and Bay Village areas of Boston at the easterly boundary of the Back Bay, one block from the Boston Public Garden and Boston Common.  The Back Bay includes some of the most exclusive residential addresses in the city, three of which, the Heritage on the Garden Condominiums, the Four Seasons Hotel and Condominiums, and the One Charles Condominiums, are located opposite the Boston Park Plaza Hotel and Office Building facing the Public Garden.  The Back Bay also contains several large prominent hotels, including the Colonnade, the Westin Copley Plaza, the Fairmont Copley Plaza, the Back Bay Hilton, the Marriott Copley, the Four Seasons, the Taj Boston, the Radisson Boston, and the Sheraton Boston, in addition to the subject hotel.  Located several blocks to the west of the Boston Park Plaza Hotel and Office Building and the Park Plaza Castle and Armory is the Back Bay's main shopping destination which encompasses four major locations - The Shops at the Prudential Center, Copley Place, Boylston Street, and Newbury Street.  Many of the hotels and shopping destinations include high-end stores and restaurants.
	The Park Plaza area is generally characterized by a mix of older office buildings, a number of institutional uses, as well as several high-end residential complexes, such as Heritage on the Garden, Four Seasons, and One Charles Street.  Some of the other more noteworthy properties in the area include the City Place State Transportation Building, 100 Arlington Street, the Park Square Office Building, the eight-story Motor Mart parking garage, the eight-story South Cove Plaza public housing development, New England School of Law, and the Liberty Mutual complex.  Most of these buildings, as well as the Boston Park Plaza Hotel and Office Building, contain retail and restaurants on the first floor.
Description of The Boston Park Plaza Hotel and Office Building

The Situs
The Boston Park Plaza Hotel and Office Building site, which is approximately 1.84 acres in area, is bordered by Park Plaza Street on the north and northwest, Arlington Street on the west, Columbus Avenue on the south and Park Plaza Street to the east.  These roads are two or three lane one-way streets in alternating directions and include curbs and sidewalks and traffic light intersections on Arlington Street at the corners of Columbus Avenue and Park Plaza Street.  The property has about 472 feet of frontage along Park Plaza Street, 580 feet of frontage along Columbus Avenue, and 255 feet of frontage along Arlington Street.  There are sidewalks surrounding the property.
	The Boston Park Plaza Hotel and Office Building is serviced with city water and sewer, as well as natural gas and electricity.  This property is within one block of the Arlington Street/Boylston Street Green Line MBTA station and within several blocks of the Orange Line and commuter rail stations as well as I-93 and the Mass. Turnpike (I-90) connections.
	The entire site is occupied by a fifteen-story hotel and fourteen-story office building which are abutting and serviced, in part, by common mechanical systems.  The following two sections contain separate descriptions of the subject office building and the subject hotel.
Park Plaza Office Building
	The subject office building is situated at 20 Park Plaza Street and is located at the corner of Park Plaza Street and Columbus Avenue adjoining the easterly side of the Boston Park Plaza Hotel.  The building has fourteen stories and contains a total rentable area of about 259,532 square feet, including approximately 221,000 square feet of office space, a 17,130-square-foot Executive Center on the fourth floor, 15,490 square feet of first floor retail space and 5,942 square feet of storage area.  The subject office building was constructed in 1927 and was in overall average condition as of the relevant valuation and assessments dates.
	The foundation for the subject office building is steel reinforced concrete, and the building's frame is steel reinforced concrete and masonry.  The exterior walls are brick with ornate limestone panels and cornices on the first three levels of the Park Plaza Street façade.
	The subject office building has double hung wood sash windows with insulated glass on the upper levels and fixed aluminum sash thermal pane windows on the street level.  The flat roof is built up tar and gravel surface over concrete deck.  
	The subject office building's street level floor includes the office building lobby with security desk and elevators as well as five retail spaces varying from less than 500 square feet to almost 7,000 square feet.  The total rentable retail area is 15,490 square feet.  The largest of these spaces, M.J. O'Connors Restaurant and Room for Dessert, include frontage and access at Park Plaza Street and Columbus Avenue as well as entrances off the interior lobby.  The remaining spaces, Ben & Jerry's, Carol Richards Photograph/Miller Studio and Au Bon Pain, have frontage and access along Park Plaza Street as well as an entrance on the interior hallway.
	Floors two, three, and five through fourteen are office spaces occupied by multiple tenants except for a single tenant on the thirteenth floor.  These floors typically include private offices and open work stations with access off a central lobby.
	There is also a fitness center on the second floor.  The office space included between 71 and 74 tenant spaces during the relevant time period and averaged approximately 3,000 square feet per tenant space.
The fourth floor consists of the 17,130-square-foot Executive Center which contains its own lobby and reception area, numerous small offices containing 250 to 500 square feet each, as well as support meeting space.  The offices generally have superior quality finishes compared to the other offices located in the subject office building, including raised panel walls in the hallways, crown moldings, textured carpeting and cherry wood finishes.  The Executive Center is equipped with state-of-the-art technology, including video-conferencing, high-speed internet access, and in-house help desk support.  The suite package also includes professional reception service, kitchenette with complimentary beverage service and use of fully equipped conference rooms.
All floors, including the Executive Center, have centrally located bathrooms for men and women.  Each bathroom has standard quality fixtures with older ceramic tile floors and walls.  The retail spaces and a number of executive suites have private bathrooms and showers.
The basement includes utility spaces and supply rooms, as well as storage spaces for the subject office building tenants.
There are six elevators servicing floors one through fourteen plus one freight elevator connecting the basement to the fourteenth floor.  Additional interior access is via two stairwells servicing floors one through fourteen and separate stairways connecting to the basement.
The subject office building's flooring consists of commercial grade carpet, marble in the Executive Center lobby, terrazzo in the first floor lobby and painted concrete in the basement.  The walls are generally painted plaster or gypsum board.  The first and thirteenth floor lobbies have marble panel and the Executive Center lobby walls are marble and stained wood panel.  The Office ceilings are primarily suspended acoustic tile with recessed fluorescent or incandescent lighting.  The ceilings are plaster in the office lobbies and Executive Center with recessed fluorescent or incandescent lighting.  The basement also has plaster ceiling along with ceiling or wall-mounted fluorescent lighting.
The subject office building does not have central air conditioning.  The thirteenth floor has a supplemental air-conditioning system, and the retail spaces have individual air-conditioning units owned and installed by each tenant.  Individual office tenants must purchase and install their own air-conditioning units.
Steam heat is provided to the office and retail spaces from the central plant located in the subject hotel.  The subject office building does not have its own heating plant.  Its electrical system is a 208/20 volt service with generators dating back to 1940s and 1950s located throughout the building.  There is an emergency generator on the roof.  The subject office building is equipped with high speed internet access.  There is a wet pipe sprinkler system throughout the subject office building with hard-wired smoke detectors.  There are also 24-hour security and video surveillance cameras on each floor.
The subject office building appears to be structurally sound and in overall average condition.  There have been improvements to bathrooms, elevators and life safety systems.  The windows were replaced with insulated glass in the 1980s, but need re-caulking.  The exterior walls also need some caulking and repointing.  The elevators, while improved in recent years, include original machinery dating back to the 1920s.  Many of the electrical generators are also more than fifty years old.  
The floor plates are approximately 18,000 square feet and with the considerable amount of exterior window space are conducive to single-tenant or multi-tenant occupancy.  A significant drawback to the subject office building's floor plates are their triangular or "boomerang" shape.  This layout is inefficient and generally limits occupancy.  Considering that the average office tenant in the building, excluding those in the Executive Center, occupies only 3,000 square feet and that the median tenant size is even smaller, additional common hallways are needed to accommodate the typical tenant and maintain a sufficiently high occupancy.  As reported by Mr. Logue, these problems are characteristic of older, lower quality Class B office buildings, like the subject office building, and increase the loss factor between rentable and usable space.  Moreover, the small first floor lobby is also characteristic of older, lower quality Class B office buildings and contributes to comparatively small tenants and possibly limited achievable rents for the space in comparison to other quality Class B buildings in the market area.  

Boston Park Plaza Hotel 
	The subject hotel occupies the westerly two-thirds of the site including the entire frontage along Arlington Street and the majority of the frontage along Park Plaza Street and Columbus Avenue.  The subject hotel contains approximately 725,000 square feet of gross floor area, which includes 941 guest rooms and suites, approximately 48,000 square feet of function and meeting space, about 25,207 square feet of rentable retail and restaurant area, including the 1,907-square-foot barbershop in the basement, as well as kitchen, laundry and other support spaces.  The building was constructed between 1925 and 1927. 
	The subject hotel's primary use is as a full-service convention center hotel.  Its foundation and frame are composed of steel reinforced concrete.  The exterior walls are brick with ornate limestone panels and cornices on the first three levels of the Park Plaza and Arlington Street façades.  The windows are double glazed and double hung wood sash on the upper levels with fixed aluminum sash thermal pane on the street level.  The subject hotel has a flat roof made up of tar and gravel over a concrete deck with interior roof drains. 
	The principal entrance to the subject hotel is at 54 Park Plaza Street with other entrances on Arlington Street and Columbus Avenue.  The first-floor retail and restaurant spaces include doorways opening to the main lobby or interior hallways; most have exterior entrances as well.
	The main floor includes a two-story hotel lobby and 22,491 square feet of rentable retail and restaurant spaces accessible off the main lobby and interior hallways.  As of the relevant valuation dates, the lobby floor contained the McCormack & Schmick, Melting Pot, and Pairings restaurants, the Whiskey Park and Swan lounges, plus several smaller gift shops.  SLC Operating Limited Partnership (the "Starwood Lodging Corp.") operated the Pairings restaurant and Swan lounge in conjunction with its management of the subject hotel, and, for purposes of these appeals, those spaces are not included in the subject hotel's rentable retail and restaurant area.  SaunStar Operating Company, LLC (the "Saunders management team") or affiliate managed the remaining spaces.  The street-level floor also contains the main full-service kitchen which services the Pairings restaurant and room service.  There is an additional full-service kitchen located on the mezzanine level to service the ballroom.
	The basement contains the Terrace meeting room, fitness center, hotel laundry, and Pietro's 1,907-square-foot barber shop.  The basement also includes several dry and refrigerated storage spaces, staff washrooms and locker rooms, various utility spaces, the chiller room, and the upper part of the boiler room which extends to the sub-basement level.
	The mezzanine level wraps around the two-story main lobby and consists of a number of meeting and function rooms, including the three-story Imperial and Plaza ballrooms as well as the ballroom kitchen.  There is approximately 48,000 square feet of function and meeting space, primarily on the mezzanine and fourth floors.  There are a total of thirty-nine meeting rooms, the largest of which contains 14,520 square feet.
	The third floor includes administrative offices, the staff cafeteria, and various fan and storage rooms.  The fourth floor is known as the Conference Center and includes 26 meeting rooms and a large housekeeping space for supplies, locker rooms, and storage.  Floors five through fifteen are the guest room floors which are nearly identical.  The fifteenth floor, which is the executive level, has a generally similar layout to the other guest room floors but also has the subject hotel's Presidential Suite and the Towers Lounge.
	A breakdown of the various room types available at the subject hotel is contained in the following table.
Kings		240
Doubles		239
Economy		106
Parlors	 	 20
Queens		334
Suites		  2
Total Rooms	941

	The subject hotel is equipped with six 3,000-lb. passenger elevators, two 3,000-lb. freight elevators, and four 3,000-lb. service elevators, which service all fifteen floors.  There is also a food service elevator for the basement through fourth floors.  Several interior stairways connect the main floor lobby and rear hallway with the function and meeting rooms on floors two through four.  A number of other stairways service the guest room floors.  The subject hotel abuts and interconnects with the Park Plaza Office Building on the fourth floor.
	The subject hotel's flooring consists primarily of commercial grade carpet with quarry tile floors in the kitchens and a marble floor on the second level encircling the two-story lobby.  The walls are generally terra cotta or painted plaster and the ceilings are plaster or acoustical tile.  The function or meeting room floors have decorative beamed ceilings.  The second floor meeting and function areas have generally higher quality finishes and include raised paneled floors and crown moldings in a number of rooms.  The basement has painted concrete floors, brick walls and open ceilings with exposed piping and conduit.
	Lighting includes a mixture of fluorescent or incandescent fixtures throughout most of the hotel, as well as chandeliers in the main lobby and Imperial Ballroom.
	The subject hotel is equipped with three gas-fired steam boilers which are approximately 30-years old and are convertible from gas to oil.  The rooms and common areas are served by a three-pipe system with gas-fired boilers providing hot water and three chillers providing cooling waters.  The coils serving the chillers date back to the 1950s.  Hot water to the guest rooms is delivered through induction units or fan-coiled units.  Public areas are serviced by a central system of air handlers and perimeter steam radiator units.
	The subject hotel's electrical system is a 208/120 volt service with outdated older wiring and transformers, some of which date to the 1920s.  There is a central fire alarm system with hard-wired smoke detectors and a wet pipe sprinkler system throughout.   
	At all relevant times, the subject hotel was in average condition.  The building has been maintained as needed, and the windows were replaced in the late 1980s.  The guest room finishes on floors five through fifteen are of standard to good quality and in average condition.  The only guest room areas that have been completely modernized and upgraded in quality are the Towers Lounge and Presidential Suite on the fifteenth floor.  	The furniture, fixtures, and equipment ("FF&E") were last completely replaced in 2002-2004.  The most recent bathroom fixtures in the rooms date back to about 2000.
The guest room sizes are generally smaller than at most competing hotels in the market area.  The functional obsolescence in the rooms is compounded by the old televisions, small bathrooms, outdated heating and air-conditioning units and poor interior internet connections, which include Wi-Fi access on floors one through four and fifteen but only DSL service on the remaining floors.  Internet service at the subject hotel is slow and unreliable and paid for directly by the guest room occupant unlike other hotels in the market area.
	Other physical and functional drawbacks include the steam heat and utility systems which service the adjacent subject office building in addition to the subject hotel, the approximately 70-year-old air handling units and the outdated electrical system which includes older transformers and some electrical panels dating from the original construction in the 1920s.  Although the heating and air conditioning systems, as well as the electrical system, have had some upgrades, they are functionally obsolete and require substantial improvements to rise to the level of a more modern, full-service hotel.  The older tar and gravel roof has been patched periodically but has not been replaced.  
	Some of the major capital improvements and other renovation projects addressing the deferred maintenance and functional obsolescence at the hotel and that were proposed by management in 2006 include: upgrade electrical system, Wi-Fi telecommunications, lobby restoration, replace roof and sidewalks, new FF&E and carpet, renovate guest bathrooms, repoint and re-caulk building exterior, new televisions, and replace plumbing in 53 shafts.  These repairs, renovations, and improvements reflect the considerable deferred maintenance and functional drawbacks of the subject hotel.  Although necessary to maintain the status and desirability of the subject hotel as a competitive full-service convention hotel in the Downtown Boston market, the improvements had not been undertaken as of January 1, 2009, the relevant valuation and assessment date for the last fiscal year at issue in these appeals, fiscal year 2010.

Description of The Park Plaza Castle and Armory

The Park Plaza Castle and Armory is located at 130 Columbus Avenue and 101 Arlington Street.  It consists of a 27,585 square foot site improved with a multi-story Armory and Castle Head House building constructed between 1891 and 1897.  The Castle Head House portion of the building, which is sometimes referred to as the "Head House," is four-plus stories over a basement at the corner of Columbus Avenue and Arlington Street and includes 15,000 square feet of rentable area that for all of the fiscal years at issue was under lease to Smith & Wollensky. 
The remainder of the building extends along Columbus Avenue and consists primarily of a one-story high bay exhibition and function hall over a basement.  The building contains an estimated 56,000 square feet of total gross floor area including the basement and 46,641 square feet of rentable area including the basement.
The foundation of the building is granite, and the frame is steel with granite walls.  It has six-pane, rectangular, double-hung windows and arched windows on the front and rear of exhibition and function hall portion of the building and on the fourth floor of the Head House.  There are also some irregularly arranged lancet windows throughout.
The roof of the Head House contributes greatly to its castle-like appearance.  It has a corbelled arcade surrounded by crenelated roofline, towers, and turrets of varying scale, and a flat two-bayed arched central portion facing Columbus Avenue, as well as a winged dragon on the tower façade.  The exhibition and function hall portion of the building has a slate pitched roof with pyramidal-shaped dormer windows, along with copper gutters and trim.
The Head House
The Head House was leased to Smith & Wollensky in April 2000 and was subsequently renovated and modernized into the existing 430-seat restaurant.  All plumbing, heating, air-conditioning and kitchen equipment and fixtures were replaced with good quality materials and workmanship.  
The first floor includes the reception area, main bar, and casual dining, and also a full-service kitchen.  The second floor includes one large and one smaller dining room as well as one set of men's and women's washrooms and a small full-service kitchen that services the second floor only.  The third floor includes a dining area, one set of men's and women's washrooms and a full-service kitchen which services the third floor and also the fourth floor via a dumbwaiter.  The fourth floor includes a main dining room, known as the "Battle Room."  The two-story Battle Room includes a decorative gold-leafed beamed ceiling and a balcony extending along three sides.  The partial fifth floor extends above the tower only.  The basement under the restaurant is used for storage and also includes large men's and women's washrooms with a common seating area used by first floor patrons.  Each floor is serviced by a main stairway and adjacent passenger elevator as well as a service elevator opposite the kitchens.  The Smith & Wollensky Restaurant space includes package heating and air-conditioning units for each floor.
Notwithstanding the renovations by Smith & Wollensky in 2000-2001, the Head House restaurant space is impacted by functional obsolescence to the extent that the dining facilities are located on four separate levels.  In addition, the multiple kitchens increase labor, maintenance and capital costs versus an otherwise comparable restaurant of similar quality and size designed on one or two levels.
The Exhibition and Function Hall  
The Park Plaza Castle and Armory's exhibition and function hall includes 16,461 square feet of exhibition space on the main level and has an estimated clear height of 33 feet in the center.  The storage and support basement contains 15,150 square feet.  The basement is used in conjunction with events for storage, kitchen set up, and other purposes.  The main floor of the exhibition and function hall includes carpet over hardwood floors, painted brick walls and a steel truss ceiling with several sky lights.  The basement has a concrete floor, painted brick walls and a painted concrete deck ceiling with timber beams. The exhibition and function hall is heated via overhead gas-fired radiant heat.    
The Armory's exhibition and function hall has provided exhibition and meeting space for trade shows, fund-raisers, corporate and social events, and other purposes for many years.  The clear span area has extensive space for booths, seating, and reception, and also has ample clear height for a range of lighting and ventilation requirements.  Banquet storage, as well as other support space, is readily available in the basement.       
Zoning and Other Regulatory Restrictions
	The subject properties are located in the Mid-Town Cultural District - General Area as described in the City of Boston Zoning Ordinance and on the zoning map in effect as of the relevant valuation and assessment dates.  This zoning district provides for a broad range of uses by right, which include a variety of retail, commercial, service, and cultural uses on the ground level, as well as retail, restaurant, service, office, hotel, and residential uses on the upper floors.  While there are no minimum lot area, frontage, or depth requirements, the maximum building height is 125-150 feet and the maximum floor area ratio is 8.0-10.0.  Minimum front yard, side yard, and rear yard setbacks for new development vary.  Off-street parking is required according to use.
	The current office, retail, restaurant, and hotel uses of the subject properties are allowed by right within the Mid-Town Cultural District.  With limited exception, the existing buildings exceed the maximum allowed and enhanced building-height and floor-area ratios, are built out to the sidewalk lines without setbacks, and do not include on-site parking.  The existing buildings, however, are typical of older buildings in this regard and are legally non-conforming structures since they were built prior to the enactment of current zoning regulations.  In addition, the subject properties are registered landmarks in the City of Boston.  Accordingly, any structural changes to their façades or interiors require the approval of the City Landmarks Commission.   

Valuation of the Subject Properties by the Parties' Real Estate Valuation Experts

The Subject Properties' Highest-and-Best Uses
When contemplating the subject properties' highest and best uses, both real estate valuation experts confirmed that the subject properties' existing uses were legally permissible, physically possible, financially feasible, and maximally productive.  They agreed that the subject properties' existing uses represented their highest-and-best uses.  Mr. Logue confirmed that the existing hotel and office uses of the subject properties are allowed by right within the Mid-Town Cultural District and are legally non-conforming structures in terms of intensity of development standards.  Ms. McKinney assumed compliance and further noted that the adjoined Boston Park Plaza Hotel and Office Building is a landmarked structure which limits redevelopment and major alterations to the building exterior.   
Mr. Logue observed that the subject hotel is a substantial mid-high rise structure which is not unlike other downtown Boston hotels of similar vintage.  He noted that the subject hotel is well-located in Boston's Back Bay, and while its average daily room rates ("ADRs") are modest compared to most downtown Boston hotels, its occupancy has been reasonably similar to the market as a whole.  Mr. Logue reported that the Boston Park Plaza Hotel has considerable deferred maintenance and is also impacted by functional obsolescence.  However, many of these worn and outdated components were scheduled for replacement or significant upgrading within the foreseeable future following the dates of valuation.  The subject hotel includes substantial meeting and banquet facilities, as well as a variety of restaurants and other support spaces characteristic of a full-service hotel.  The number of the subject hotel's rooms, 941, is reasonably similar to other hotels in the market.  
Even though the subject office building is, in Mr. Logue's opinion, an older, lower quality class B property with considerable deferred maintenance and functional obsolescence related to its age, design, and limited upgrades, it is, nevertheless, well-located in the Back Bay, which helps it compete favorably with other reasonably similar class B and C office building in the market area.  The subject office building's older design and other functional obsolescence have constrained its achievable rents compared to similar vintage and located office buildings that have been more extensively upgraded.  Nonetheless, the Park Plaza Office Building has maintained an occupancy of generally 95% or higher during the relevant time period and benefits from a number of retail and restaurant uses on its ground floor and that of the subject hotel, as well as its location next to a full-service hotel.  Ms. McKinney reported that her market analysis identified demand for office and retail space in the area and that the subject hotel and office building's occupancy and rate statistics support their current uses.
 Mr. Logue observed that the Park Plaza Castle and Head House is developed to a substantially lower density than is currently allowed under zoning.  Because of the building's Landmark Designation, however, demolishing the building and redeveloping the site is unlikely.  In addition, the Head House portion of the property is reasonably well located for restaurant use and is situated in an area where there are a number of other high-end restaurants.  The Head House has been leased to Smith & Wollensky since 2000 and has been substantially renovated and improved.  While the floor layout is a functional drawback, the space has good utility for restaurant use because of the quality of the finishes and décor, elevator accessibility to each floor, and, particularly, kitchens and bathrooms being located on most levels.  While gross sales and percentage rent decreased during the relevant time period, the achievable base rent for continued restaurant use would be higher than for office or other potential uses, particularly considering the cost required to convert the restaurant to an alternative use.  
Mr. Logue further noted that the exhibition hall section of the property was built as a drill hall and the expansive nature of the space has continued for many years as an exhibition hall for trade shows, business meetings, and similar functions.  While the food and beverage revenue has been modest during the relevant time period, it has nonetheless been consistent and profitable.  Further, the Armory's location adjacent to the Boston Park Plaza Hotel and Office Building and proximate to several other large hotels enhances the demand for the exhibition hall as a venue for conventions, large business meetings, and other large functions.  Ms. McKinney reported that her market analysis identified demand for function and retail space in the area and that the Armory's occupancy and rental rates support the current uses.
After taking into consideration the relevant data and information concerning zoning and land-use controls, location, area market, deferred maintenance, functional obsolescence, scheduled refurbishment and upgrading as necessary, ADR and occupancy of the subject hotel, rents and occupancy of the subject office building, actual revenue and expenses of the Armory, as well as allowances for capital improvements, Mr. Logue determined that the highest-and-best uses of the subject properties as of the relevant assessment dates, as well as for the foreseeable future, was their existing uses as a full-service hotel, a multi-tenanted lower quality class B office building, and a restaurant and exhibition or meeting hall.  Ms. McKinney essentially concurred with Mr. Logue's assessment of the subject properties' highest-and-best uses except for the Park Plaza Office Building which she considered to be a Class B, not a lower Class B, office building.
The Valuation Methodologies Selected by the Real Estate Valuation Experts
  
In evaluating the most appropriate methodologies to use for valuing the subject properties, the real estate valuation experts considered all three of the usual valuation approaches.  They both ruled out the cost approach because of the subject properties' age, deferred maintenance, accrued physical depreciation, and the difficulty in determining functional obsolescence.  Furthermore, as Mr. Logue reported, in the case of the Armory, it was highly unlikely that a replica of the building would or even could reasonably be constructed.  
Although Mr. Logue conducted a sales-comparison approach for the subject hotel and subject office building, he rejected this methodology because of, in the case of the subject hotel, the inherent unreliability of trying to adjust or allocate for the sales of going concerns and for sales in bulk.  Moreover, he suggested that adjustments to the sales for business enterprise value and personal property would likely result in unreliable estimates of the remaining real property.  In the case of the subject office building, the available sales were of leased-fee interests, which, without considerable adjustment, would not relate to the fee-simple nature of the assignment.  With respect to the Armory, Mr. Logue elected not to use a sales-comparison approach because he was unable to identify sales of fee-simple interests of comparable properties.  Similarly, Ms. McKinney reported that there was insufficient data to support sales-comparison methodologies for determining the values of the subject properties.  
Both real estate valuation experts concluded that only income-capitalization approaches were suitable for valuing the subject properties for the fiscal years at issue, given the deficiencies, defects, and shortcomings inherent in the other two approaches and the availability of sufficient property and market data upon which to base estimates of value using income techniques. 
Mr. Logue's Valuation of the Park Plaza Office Building
Mr. Logue's Market Overview       
Mr. Logue described the Back Bay location of the subject office building as a distinct office market within the overall Downtown market, which generally extends southerly from Commonwealth Avenue to Columbus Avenue and easterly from Massachusetts Avenue to the immediate environs of the subject office building along the southerly side of the Boston Public Gardens and Boston Common.  According to Mr. Logue, the Back Bay has historically been one of the strongest office markets in Boston with one of the lowest vacancy rates in the market area.  
Industry reports studied by Mr. Logue indicated that Back Bay total office and Class B office vacancy rates declined during the period from late 2004 to the beginning of 2008 and then increased by the beginning of 2009.  According to several industry sources, the Class B office rates ranged from 4.5% to 6% through the first quarter of 2007 and then declined to 3.2% to 4% around the beginning of 2008, which Mr. Logue described as the peak of the market.  By the first quarter of 2009, rates had increased to 7% to 8%.  Another source reported vacancy rates declining to 5% to 6% during 2007 but increasing to 10% by the beginning of 2009.
Mr. Logue reported that Back Bay office rents for Class B/C space increased from 2005 through the end of 2008 as the market improved but then declined as market conditions softened.  Based upon his review of available industry surveys and also actual office rents during the relevant time period, Mr. Logue concluded that Class B/C office rents in the Back Bay were stable to modestly higher in 2005 but increased between 10% and 15% per year in 2006 and 2007.  Rents then increased modestly in the first few months of 2008 but then stabilized and declined significantly in the latter part of 2008 due to the sub-prime mortgage crisis and other problems in the capital markets, as well as declines on Wall Street and higher unemployment.
Mr. Logue's Income-Capitalization Methodologies
In applying income-capitalization methodologies to estimate the values of the subject office building for the fiscal years at issue, Mr. Logue inspected the property and reviewed the actual reported rents and operating expenses for the subject office building and for other similar office properties which he had appraised or was otherwise familiar.  He also spoke with representatives of knowledgeable property management and leasing teams and consulted relevant industry publications.  Mr. Logue then applied this information in the implementation of his income-capitalization methodologies for valuing the subject office building for the fiscal years at issue that: first, estimated its potential gross incomes, vacancies, and effective gross incomes; second, estimated its fixed and variable operating expenses; third, estimated its stabilized net-operating incomes; and, lastly, selected appropriate capitalization rates using accepted capitalization methods to achieve estimates of the subject office building's values.  
For his first step, Mr. Logue determined appropriate market rents for the subject office building's various spaces, which included office, Executive Center, retail and restaurant, and storage.  For his office rents, Mr. Logue reviewed the leases in and rent rolls for the subject office building during the relevant time period.  From this review, he identified and analyzed 28 new leases and 22 lease renewals, which ranged mainly from two- to five-year terms and included annual CPI adjustments.  The average size of the office space leased at the subject office building was approximately 3,000 square feet.  In his analysis, Mr. Logue applied a 2.5% annual CPI adjustment and calculated the average annual rent over the term of the lease.  The rents were net of tenant electricity, heat, water and sewer, and were adjusted for free monthly rent incentives where appropriate.  This data indicated a steady increase in rents per square foot from 2005 into 2008 after which the market declined significantly.  
As part of his analysis, Mr. Logue also analyzed rents at competing office buildings in the market area.  He identified five older office buildings, varying from average to low Class B quality, and reviewed new and renewal leases within them for the relevant time period.  His review of this information confirmed the rental estimates that he had developed from his review of the subject office building's data.  Mr. Logue's indicated market rents at the subject office building for the fiscal years at issue are as follows:
January 1, 2006 (FY 2007)	$25.00 per square foot
January 1, 2007 (FY 2008)	$28.00 per square foot
January 1, 2008 (FY 2009)	$32.00 per square foot
January 1, 2009 (FY 2010)	$29.50 per square foot
   
Mr. Logue then multiplied these indicated market rents by the 220,853 square feet of rentable office area in the subject office building to achieve the total revenue amounts attributable to this office space for the fiscal years at issue.  These amounts are as follows:
January 1, 2006 (FY 2007)	$5,521,325
January 1, 2007 (FY 2008)	$6,183,884
January 1, 2008 (FY 2009)	$7,067,296
January 1, 2009 (FY 2010)	$6,515,164

The 17,130-square-foot Executive Center that is located on the fourth floor of the subject office building is divided into 55 fully furnished modules containing from 250 to 500 square feet.  Most tenants rent from one to three spaces.  Mr. Logue observed that the Executive Center is highly specialized with considerably superior overall quality and services than what is available for office tenants on the other floors.
The tenants pay a base monthly rent plus additional charges for services.  Because of the specialized nature of the Executive Center and its history of operating on a stabilized basis, Mr. Logue concluded that the most appropriate method of estimating the stabilized annual revenue from the Executive Center was to review actual revenues as reported on the year-end monthly financial reports.  The revenues from the Executive Center are summarized below:
Calendar Year	Effective Gross Rent	Services	Total Revenue
	
2005	$773,945	$317,067	$1,091,012	
2006	$737,245	$374,139	$1,111,384	
2007	$770,393	$371,094	$1,141,487	
2008	$796,226	$372,504	$1,168,730	
2009	$703,283	$369,007	$1,072,290	

	The total annual revenues from the Executive Center ranged from $63 to $68 per square foot of rentable area from 2005 to 2009, which is substantially higher than the prevailing office rents in the Park Plaza Office Building.  The total annual revenues, which are net of vacancy, trended in the same general direction as the office market as a whole - increasing from 2005 to 2008 and then declining significantly in 2009.  Mr. Logue concluded that the stabilized annual revenues which he developed for valuation purposes for each of the fiscal years at issue should reflect both the market trend as of the corresponding valuation date and the actual revenue received in the prior twelve months.  Based on this analysis, Mr. Logue estimated stabilized annual revenues for the Executive Center for the fiscal years at issue at:
	January 1, 2006 (FY 2007)	$1,105,000
	January 1, 2007 (FY 2008)	$1,130,000
	January 1, 2008 (FY 2009)	$1,160,000
	January 1, 2009 (FY 2010)	$1,100,000
 
	According to Mr. Logue, the ground floor of the subject office building includes 15,762 square feet of rentable retail and restaurant space.  As of the relevant valuation dates, that space was leased to five entities, but only one of them, Ben & Jerry's, negotiated its lease during the relevant time period, and Ben & Jerry's leased only 477 square feet.  Mr. Logue determined that the calendar year 2006 rent was approximately $52 per square foot net of electricity, heat, and water and sewer. 
Mr. Logue also examined three timely leases to retail and restaurant entities located in the adjacent Boston Park Plaza Hotel.  These rents varied from $33.83 to $40.06 to $53.33 per square foot.  This latter rent, however, was for only 225 square feet.  The actual reported rental income from the subject office building's retail and restaurant space increased from approximately $39 per square foot in 2006 to approximately $48 per square foot in 2008, which Mr. Logue found to be consistent with the market as a whole.  The total first floor rental income then declined substantially to below $38 per square foot in 2009, again consistent with the market as a whole.
Mr. Logue concluded that the first floor retail and restaurant space in the Park Plaza Office Building was uniquely situated within a site including the Boston Park Plaza Hotel that is bordered entirely by city streets, has limited foot traffic along the store frontage, and is oriented toward the clientele generated by more than 900 guest rooms in the hotel and the substantial number of large conventions and banquets.  For these reasons, he concluded that the actual annual rents from the first floor space in the subject office building, adjusted for real estate tax and operating expense escalation payments, represented the best indication of market rents as of the relevant valuation dates.  Based on this analysis, Mr. Logue estimated market rents for the first floor retail and restaurant space in the subject office building for the fiscal years at issue at:
January 1, 2006 (FY 2007)	$39.00 per square foot
January 1, 2007 (FY 2008)	$41.00 per square foot
January 1, 2008 (FY 2009)	$48.00 per square foot
January 1, 2009 (FY 2010)	$38.00 per square foot

For the storage space in the basement which, according to Mr. Logue, reportedly contained a total floor area of 4,913 square feet, he noted that the actual rents varied from about $100 to $300 per month, but he was unaware of the actual storage space sizes.  In the market, he was able to identify several basement storage spaces that leased between $10.00 and $12.00 per square foot during the relevant time period.  Based on his review of this data, and apparently placing the most emphasis on the buildings located nearest to the subject office building, Mr. Logue concluded that $12.00 per square foot, net of electricity, was a reasonable rent to use.  Accordingly, he estimated the potential gross rent for the subject office building's basement storage space at $58,956 for each of the fiscal years at issue.
His total potential gross rents for the subject office building's office, Executive Center, retail, and storage space for the fiscal years at issue were as follows:
	January 1, 2006 (FY 2007)	$7,299,999
	January 1, 2007 (FY 2008)	$8,019,082
	January 1, 2008 (FY 2009)	$9,042,828
	January 1, 2009 (FY 2010)	$8,273,076
 
 	As of the relevant dates of valuation, Mr. Logue observed that the retail and restaurant space was 100% occupied.  The actual vacancy rates for the upper floor office space, not including the Executive Center, as of year-end, were as follows:
		 	2004			 2.5%
 	2005			 4.8%
 	2006 	     11.1%
		 	2007 	      5.6%
		 	2008 	      3.2%

The Executive Center vacancies ranged from a low of 1.82% in calendar year 2004 to a high of approximately 22% in calendar year 2006.  Mr. Logue, however, did not deduct the Executive Center vacancies in his methodology because his annual income estimate was based on the actual reported revenue in which the vacancy was subsumed.  As discussed in his market overview, Mr. Logue also considered information compiled by certain industry sources, which revealed that Back Bay direct vacancies generally declined from 2005 to 2007 before increasing toward the end of 2008 as market conditions softened, and that Back Bay Class B office vacancies were generally in the 4.5% to 5.5% range from late 2004 into the beginning of 2006.  Direct vacancy rates for Back Bay Class B space increased to the 5% to 8% range during 2007 and into 2008, and then further increased to 7% to 10% range by the first quarter of 2009.
	Based upon his review of the actual and market vacancy rates, and considering the market trends during the relevant time period, Mr. Logue concluded that realistic stabilized vacancy allowances for all of the subject office building's categories of spaces, excluding the Executive Center, were 8% for fiscal years 2007 and 2008, 7% for fiscal year 2009, and 8% for fiscal year 2010.      
To estimate stabilized annual expenses for the subject office building, assuming multi-tenant occupancy, modified gross rental terms, and professional management, Mr. Logue reviewed and analyzed its actual expenses and the actual expenses reported by several other office buildings in the market area, as well as expense parameters for Downtown Boston office buildings contained in Building Owners and Managers Association ("BOMA") and the Institute of Real Estate Management ("IREM") publications.  He also discussed the subject office building's data with property ownership, management, and accounting representatives, and the information from other office buildings in the market area with knowledgeable brokers and property managers.  As a result of his reviews, analyses, and discussions, Mr. Logue developed estimates for the subject office building's various expense categories, including operating expenses, Executive Center expenses, as well as reserves for   replacement, brokerage commissions, and tenant improvements. 
Mr. Logue's operating expense category includes costs associated with general and administrative expenditures, in-house marketing and leasing payments, property management fees and building maintenance salaries, elevator expenses, utilities (fuel oil, gas, electricity, and water and sewer payments), cleaning of common areas, security, and repairs and maintenance outlays.  His expense totals, however, exclude reimbursable utility expenses just as his market rent estimates are net of these utilities.  After adjustment for Executive Center expenses, he determined that the actual total expenses for the office and retail space in the subject office building as well as the retail stores in the adjacent subject hotel ranged from a low of $12.26 per square foot in calendar year 2005 to a high of $16.74 per square foot in calendar year 2008.  Mr. Logue found these costs to be higher than those found in similar Class B properties in the market area, particularly with respect to repairs and maintenance outlays.  Accordingly, Mr. Logue concluded that more realistic annual stabilized operating expenses for the general office and retail rentable area in the subject office building would be $11.00 per square foot for fiscal year 2007 increasing by $0.25 per year thereafter to $11.75 per square foot for fiscal year 2010.
For the expenses related to the Executive Center, Mr. Logue reviewed and analyzed the actual expenses for calendar years 2004 through 2009 and also considered the trends relevant to the fiscal years at issue.  The Executive Center's actual expenses are summarized as follows:
Calendar Year	Total Expenses
	Expenses Per Square Foot	
2004	$754,719	$44	
2005	$698,911	$41	
2006	$868,318	$50	
2007	$753,238	$44	
2008	$803,879	$47	
2009	$654,365	$38	

Based on these expenses and trends, and recognizing that because of the Executive Center's small office spaces, extensive service offerings, décor, and furnishings, its expenses should be significantly higher than those associated with the office and retail and restaurant spaces, Mr. Logue concluded that realistic stabilized expenses of $45 per square foot for fiscal years 2007 and 2008 and $46 per square foot for fiscal years 2009 and 2010 were appropriate. 
	For his reserves for the periodic replacement of short-lived items such as roof, HVAC and electrical systems, Mr. Logue considered the age and condition of the building and plant and determined that $0.75 per square foot of rentable area, excluding the basement, or $190,309, was a reasonable allocation for each of the fiscal years at issue.
	Mr. Logue ascertained that brokerage commissions were paid for office and retail leases at the subject office building and that the market rate for brokerage commissions during the relevant time period was $1.50 per square foot.  He projected that brokerage commissions would only be paid on new leases and not renewals and that after applying a 40% rollover probability to new tenants, the annualized amount was 40% of $1.50 or $0.60 per square foot, which totaled $152,247 for each of the fiscal years at issue.  
	According to Mr. Logue, the subject office building's actual reported tenant improvements averaged $471,840 per year or $1.98 per square foot.  The market rents that he used in his methodologies assumed a $20 per square foot tenant improvement allowance over a five-year lease term.  For purposes of calculating tenant improvement expenses to use in his methodologies, he further assumed a 40% rollover probability to new tenants and a five-year amortization period at 6% annual interest.  These assumptions resulted in an annualized amount for tenant improvements of approximately $1.85 per square foot.  Using these assumptions but assuming amortization on a straight-line basis without interest, the annualized tenant improvement allowance equaled $1.60 per square foot.  On this basis, Mr. Logue selected $1.75 per square foot as his tenant improvement allowance, and he applied it to general office space and the Executive Center only.  He assumed that retail space would be rented as is and that no tenant improvements would be necessary for the storage areas.  Accordingly, Mr. Logue's tenant improvement allowance for each of the fiscal years at issue was $416,470.
	After deducting his various expense categories from his effective gross incomes, he estimated the net-operating incomes for the fiscal years at issue as follows:
   	January 1, 2006 (FY 2007)	$2,671,758
	January 1, 2007 (FY 2008)	$3,276,161
	January 1, 2008 (FY 2009)	$4,222,952
	January 1, 2009 (FY 2010)	$3,371,997

Mr. Logue based his estimated capitalization rates on rates derived from the mortgage-equity technique and a review of the Korpacz/PWC surveys for institutional and non-institutional grade office buildings during the relevant time period.  In his mortgage-equity technique, he assumed a 70% mortgage amortized over twenty years; interest rates of 6.00% for fiscal year 2007 and 6.25% for fiscal years 2008, 2009, and 2010; a ten-year holding period; and equity yield rates of 14% for fiscal year 2007, 13.5% for fiscal year 2008, 12.5% for fiscal year 2009, and 14% for fiscal year 2010.  Mr. Logue also estimated that that a purchaser of the subject property would anticipate a 25% increase in property value over a ten-year holding period as of the valuation date for fiscal year 2007, a 30% increase for fiscal year 2008, but only a 20% increase for fiscal years 2009 and 2010.  The capitalization rates that he developed using a mortgage-equity technique and these assumptions for each of the fiscal years at issue are as follows:
			FY 2007		7.6%
			FY 2008		7.3%
			FY 2009		7.4%
			FY 2010		8.0%

Recognizing that the subject office building has characteristics consistent with non-institutional grade office properties, such as its older and functionally obsolete building in only average condition, but also maintains an occupancy level and a location consistent with institutional grade office properties, Mr. Logue considered published rates for both institutional and non-institutional grade office properties.  Relying on the capitalization rates that he developed using his mortgage-equity technique and the published institutional and non-institutional grade rates that he reviewed in industry surveys, as well as his adjustments to them, Mr. Logue suggested capitalization rates for the fiscal years at issue are as follows:
			FY 2007		7.75%
			FY 2008		7.50%
			FY 2009		7.50%
			FY 2010		8.00%

After adding appropriate real estate tax factors to these capitalization rates, and then dividing the appropriate net-operating incomes by the applicable rate, and then rounding that result, Mr. Logue's estimated values for the Park Plaza Office Building for the fiscal years at issue are as follows:
 			FY 2007		$25,600,000
			FY 2008		$32,500,000
			FY 2009		$41,400,000
			FY 2010		$30,800,000



Summaries of Mr. Logue's income-capitalization methodologies for the fiscal years at issue are contained in the following two tables:
			 Fiscal Year 2007		Fiscal Year 2008	

Potential Gross Income	
Square Feet	
Rent/SF	
Total	
Rent/SF	
Total	
Office	220,853	$25.00	$5,521,325	$28.00	$6,183,884	
Executive Center	17,130	$64.51	$1,105,000	$65.97	$1,130,000	
Retail	15,762	$39.00	$  614,718	$41.00	$  646,242	
Storage	    4,913	$12.00	$   58,956	$12.00	$   58,956	
 Total PGI	  258,658		$7,299,999		$8,019,082	
						
Vacancy & Credit Loss		8%	$  495,600	8%	$551,127	
						
Effective Gross Income			$6,804,399		$7,467,955	
						
Expenses						
Operating Expenses						
  Office & Retail	$11.00	$2,602,765		$11.25	$2,661,919	
  Executive Center	$45.00	$  770,850		$45.00	$  770,850	
Brokerage Commissions	$ 0.60	$  152,247		$ 0.60	$  152,247	
Reserve for Replace.	$ 0.75	$  190,309		$ 0.75	$  190,309	
Tenant Improvements	$ 1.75	$  416,470		$ 1.75	$  416,470	
						
  Total Expenses			-$4,132,641		-$4,191,795	
						
Net Operating Income			$2,671,758		$3,276,161	
						
Capitalization						
Capitalization Rate	  	  7.750%		 7.500%		
Tax Factor	  	  2.687%		 2.592%		
  Overall Rate	  	 10.437%		10.092%		
						
Indicated Value			$25,598,908		$32,462,948	
						
Rounded			$25,600,000		$32,500,000	
						
Value/SF			$115.91		$147.16	



			 Fiscal Year 2009		Fiscal Year 2010	

Potential Gross Income	
Square Feet	
Rent/SF	
Total	
Rent/SF	
Total	
Office	220,853	$32.00	$7,067,296	$29.50	$6,515,164	
Executive Center	17,130	$67.72	$1,160,000	$64.21	$1,100,000	
Retail	15,762	$48.00	$  756,576	$38.00	$  598,956	
Storage	    4,913	$12.00	$   58,956	$12.00	$   58,956	
 Total PGI	  258,658		$9,042,828		$8,273,076	
						
Vacancy & Credit Loss		7%	$  551,798	8%	$573,846	
						
Effective Gross Income			$8,491,030		$7,699,229	
						
Expenses						
Operating Expenses						
  Office & Retail	$11.50	$2,721,073		$11.75	$2,780,226	
  Executive Center	$46.00	$  787,980		$46.00	$  787,980	
Brokerage Commissions	$ 0.60	$  152,247		$ 0.60	$  152,247	
Reserve for Replace.	$ 0.75	$  190,309		$ 0.75	$  190,309	
Tenant Improvements	$ 1.75	$  416,470		$ 1.75	$  416,470	
						
  Total Expenses			-$4,268,079		-$4,327,232	
						
Net Operating Income			$4,222,952		$3,371,997	
						
Capitalization						
Capitalization Rate	  	  7.500%		 8.000%		
Tax Factor	  	  2.711%		 2.938%		
  Overall Rate	  	 10.211%		10.938%		
						
Indicated Value			$41,356,885		$30,828,279	
						
Rounded			$41,400,000		$30,800,000	
						
Value/SF			$187.46		$139.46	

Ms. McKinney's Valuation of the Park Plaza Office Building
To better appreciate the economic context and perceptions under which the subject properties operated during the relevant time period, Ms. McKinney developed, with Ms. Roginsky's assistance for hotel-related matters, market area analyses by examining numerous industry publications, including summaries of historical data and projections, and garnering information from various market participants. She reported that Boston's economy experienced moderate growth from 2004 through much of 2008 before showing signs of weakening.  More specifically, Boston's office market, which strengthened from 2005 through 2007 with lower vacancy rates, less available space, and positive absorption, experienced a downward shift during the last two quarters of 2008.  In the subject properties' Back Bay submarket, Ms. McKinney reported a pattern of rent increases in the 2005 to 2008 period with a reversal in the first quarter of 2009.  
With respect to the office rentals at the subject office building, Ms. McKinney considered it to be an older Class B office building with an excellent Park Square location that competes in the middle of the Back Bay Class B market - below the newest and best located properties but above the "mom and pop" operated buildings that predominate in the district.  The owner's leasing plans for 2006, 2007, and 2008 revealed expected per-square-foot rents of $24.00, $27.00 to $28.00, and $28.00, respectively.  The owner's prospective budgets showed rent expectations, excluding an approximate $2.00-per-square-foot electricity charge, ranging from $19.00 to $25.00 per square foot for 2006, $26.00 to $31.00 per square foot for 2007, $25.00 to $30.00 per square foot for 2008, and $25.00 to $30.00 per square foot for 2009, most coupled with modest tenant improvement expenditures.  Ms. McKinney reported that the effective rents at the subject office building signed during the relevant time period were generally in the range of $21.05 to $30.00 per square foot in 2005, $19.42 to $25.00 per square foot in 2006, $27.00 to $35.79 per square foot in 2007, and $31.89 to $39.18 in 2008.
Ms. McKinney also examined Back Bay market leasing activity during the relevant time period.  She discovered that effective rents ranged from $20.07 to $31.80 for fiscal year 2007, from $20.07 to $45.00 for fiscal year 2008, from $24.00 to $55.97 for fiscal year 2009, and from $24.19 to $55.97 for fiscal year 2010.  The median per-square-foot rents were $25.73, $31.46, $36.76, $35.46, respectively; while the average per-square-rents were $26.19, $30.84, $37.28, and $37.24, respectively.
Based on this information, and emphasizing data from what she considered to be the "most analogous deals" in the market area, and also adopting tenant-improvement costs of $25.00 per square foot over a five-year lease term, Ms. McKinney estimated the market rents for the subject office building for fiscal years 2007 through 2010 as summarized in the following table.   


	FY 2007	FY 2008	FY 2009 	FY 2010
	
Market Rents/Square Foot	$27.00	$28.00	$30.00	$32.00	

	With respect to retail space in the subject office building and hotel, Ms. McKinney observed that retail rents for the broad Boston/Suffolk County market ranged from $21.50 to $24.74 per square foot on triple-net terms but the Boston submarkets were considerably stronger.  The Back Bay retail submarket averaged $47.26 per square foot at the end of 2007, $31.34 per square foot at the end of 2008, and $48.22 per square foot at the end of 2009. The Mid-Town retail submarket, which encompasses the Theater District, of which she believed the subject properties are a part, averaged $63.34 per square foot at the end of 2007, $34.60 per square foot at the end of 2008, and $36.45 per square foot at the end of 2009.  
Ms. McKinney considered the subject properties' location in Park Square as the center of the "restaurant Mecca" between the Back Bay and Boston's Theater District.  In addition, she opined that the demand for retail at the subject properties is generated by both onsite office and hospitality demand but to an even greater extent by the subject properties' contributing role in this larger destination restaurant and entertainment district.  Ms. McKinney concluded that this customer base largely accounted for the positive performance of retail businesses and retail space demand at the subject properties during the relevant time period. 
The owner's leasing plan for calendar year 2006 revealed expected per-square-foot retail rents, excluding recoveries, of $26.75 at the subject hotel and $28.29 at the subject office building.  The owner's leasing plan for calendar year 2007 revealed expected per-square-foot retail rents, excluding recoveries, of $23.14 at the subject hotel and $30.89 at the subject office building.  The owner's 2008 budget showed rent expectations, excluding recoveries, of $31.92 for the subject hotel and $29.92 for the subject office building.  The owner's 2009 budget showed rent expectations, excluding recoveries, of $32.44 for the subject hotel and $31.42 for the subject office building.
Ms. McKinney also reviewed Downtown Boston leasing activity for the retail market in her data base for the ten-year period beginning in 1999.  This data revealed that effective retail rents ranged from $32.00 to $48.33 for fiscal year 2007, from $27.50 to $61.14 for fiscal year 2008, from $25.00 to $65.00 for fiscal year 2009, and from $36.00 to $75.00 for fiscal year 2010.  The median per-square-foot rents for the four fiscal years at issue were $40.00, $38.70, $49.66, $51.00, respectively.
Based on this information and considering the attributes of the retail spaces, Ms. McKinney estimated the triple-net retail market rents for the subject hotel and office building for fiscal years 2007 through 2010 as summarized in the following table.
	FY 2007	FY 2008	FY 2009 	FY 2010
	
Market Rents/Square Foot	 $36.00	 $46.00	 $46.00	 $46.00	

After estimating market rents for the subject office building's office and retail space, Ms. McKinney determined that 6,627 square feet in the basement was suitable for rent as storage space.  She based this area measurement on plans of the subject office building and based her $10.00-per-square-foot rent estimate on a market area analysis.  She opined that $10.00 per square foot was an appropriate rent to use for all of the fiscal years at issue.
In addition to these market rent estimates, Ms. McKinney included in her income-capitalization methodologies for the subject office building two additional income categories - tenant service income and miscellaneous income.  To estimate appropriate amounts for these two categories for the fiscal years at issue, Ms. McKinney reviewed the subject office building's actual operating histories during this time period, the owner's relevant budgets, and pertinent statistical surveys published by BOMA.  The actual operating histories revealed respective tenant service and miscellaneous incomes of $0.03 and $0.01 per square foot as of the valuation date for fiscal year 2007, $0.04 and $0.01 per square foot as of the valuation date for fiscal year 2008, $0.03 and $0.09 per square foot as of the valuation date for fiscal year 2009, and $0.02 and $0.01 per square foot as of the valuation for fiscal year 2010.  The owner's respective budgeted amounts for tenant service and miscellaneous incomes for the coming years were $0.23 and $0.03 per square foot, $0.03 and $0.02 per square foot, $0.03 and $0.03 per square foot, and $0.02 and $0.11 per square foot, respectively.  The BOMA surveys for the coming calendar years reported tenant service income in the range of $0.17 to $0.47, $0.14 to $0.29, and $0.16 to $0.32, respectively, and reported miscellaneous income in the range of $0.06 to $0.25, $0.11 to $0.57, $0.04 to $0.15, $0.11 to $0.13, respectively.  Based on this information, Ms. McKinney stabilized the tenant service income and the miscellaneous income for each of the fiscal years at issue at $0.20 and $0.05, respectively.
	Ms. McKinney considered the market conditions as of the relevant valuation dates, the subject office building's attributes, and both national and Boston office statistics, in estimating stabilized vacancy and credit loss allowances of 5.97% for fiscal year 2007, 4.65% for fiscal year 2008, 5.05% for fiscal year 2009, and 5.56% for fiscal year 2010.  She placed her primary reliance on the average vacancy rate for Boston offices from the fourth quarter data of the calendar year prior to the relevant valuation date. 
	For management fees, Ms. McKinney again reviewed both national and Boston office information, focusing primarily on the averages.  For fiscal year 2007, the national and Boston office averages for the fourth quarter of calendar year 2005 were 2.86% and 2.97%, respectively, with each having a range of 2.00% to 4.00%.  On this basis, Ms. McKinney selected a management fee of 3.00%.  For fiscal year 2008, the national and Boston office averages for the fourth quarter of calendar year 2006 were 2.70% and 2.84%, respectively, with the national office data showing a range of 0.50% to 4.00% and the Boston office revealing a high of 4.00%.  On this basis, Ms. McKinney again selected a management fee of 3.00%.  For fiscal year 2009, the national and Boston office averages for the fourth quarter of calendar year 2007 were 3.04% and 2.81%, respectively, with the national office data showing a range of 0.50% to 4.00% and the Boston office revealing a high of 4.00%.  On this basis, Ms. McKinney once again selected a management fee of 3.00%.  Lastly in this regard, for fiscal year 2010, the national and Boston office averages for the fourth quarter of calendar year 2008 were 2.63% and 3.00%, respectively, with the national office data showing a range of 0.50% to 4.00% and the Boston office showing a range of 2.00% to 4.00%.  On this basis, Ms. McKinney selected a management fee of 3.00%.  Although they were based on different data points, Ms. McKinney used a management fee of 3.00% for each of the fiscal years at issue.  
	For other operating expenses which include, among other categories, general and administrative, cleaning, repairs and maintenance, utilities, and security, Ms. McKinney reviewed the subject office building's actual expenses for the year prior to the relevant valuation date, the owner's applicable budget for the coming year, as well as BOMA market statistics for the year prior to the relevant valuation date.  This information revealed a significant difference between the BOMA expense data and the actual and budgeted expenses; in essence, the subject office building's actual and budgeted expenses were approximately twice the median amounts reported in BOMA.  By adopting figures of $8.00, $8.50, $9.00, and $9.50 per square foot for fiscal years 2007, 2008, 2009, and 2010, respectively, Ms. McKinney's estimates of the subject office building's other operating expenses were substantially lower than the actual and budgeted amounts but nonetheless equivalent to those reported in the BOMA surveys' upper quartile.  
Ms. McKinney's effective gross incomes, management fees, other operating expenses and net-operating incomes for the fiscal years at issue are summarized in the following table.
	FY 2007	FY 2009	FY 2009	FY 2010
	
Effective Gross Income	$7,553,658	$8,232,489	$8,659,505	$9,052,899	
Other Operating Expense	(1,914,400)	(2,025,814)	(2,147,787)	(2,263,727)	
Management Fee	(  226,610)	(  246,975)	(  259,785)	(  271,587)	
Net-Operating Income	$5,412,648	$5,959,701	$6,251,933	$6,517,586	

	To develop capitalization rates to use in her income capitalization methodologies, Ms. McKinney reviewed national central business district and Boston office surveys compiled and published by Korpacz/PWC for the fourth quarter of the calendar year preceding the valuation date and the first quarter of the calendar year after the valuation date.  She also conducted band-of-investment and debt-coverage calculations using debt and equity rates and underwriting thresholds drawn from timely Korpacz/PWC and RealtyRates.com surveys and summaries.  The following tables encapsulate the rates that she reviewed and developed for the fiscal years at issue.
Fiscal Year 2007
Cap Rate Summary	National Office Survey	Boston
Office Survey	Band of Investment	Debt Coverage	
Averages	
Q4 2005

Q1 2006	7.42%

7.29%	7.85%

7.72%	
7.13%	
6.76%	
7.36%
	

Fiscal Year 2008

Cap Rate Summary	National Office Survey	Boston
Office Survey	Band of Investment	Debt Coverage	
Averages	
Q4 2006

Q1 2007	6.94%

6.87%	7.51%

7.57%	
7.33%	
7.17%	
7.23%
	

Fiscal Year 2009
Cap Rate Summary	National Office Survey	Boston
Office Surveys	Band of Investment	Debt Coverage	
Averages	
Q4 2007

Q1 2008	6.64%

6.63%	  7.21%   N/A    

  7.34%  6.74%	
6.96%	
5.27%	
6.68%
	

Fiscal Year 2010
Cap Rate Summary	National Office Survey	Boston
Office Surveys	Band of Investment	Debt Coverage	
Averages	
Q4 2008

Q1 2009	7.14%

7.52%	7.41%  6.94%

7.69%  7.28%	
6.63%	
4.93%	
6.94%
	

On this basis, Ms. McKinney selected capitalization rates of 7.25% for fiscal year 2007, 7.00% for fiscal year 2008, 6.75% for fiscal year 2009, and 7.00% for fiscal year 2010.  After adding the appropriate tax factor to these rates, her combined or overall capitalization rates were 9.937% for fiscal year 2007, 9.592% for fiscal year 2008, 9.461% for fiscal year 2009, and 9.938% for fiscal year 2010.  Ms. McKinney then divided her net-operating income figures by her combined capitalization rates to achieve her stabilized values for the subject office building of $54,469,645, $62,131,996, $66,081,103, and $65,582,468, for fiscal year 2007, 2008, 2009, and 2010, respectively.  From these stabilized values, she then subtracted various amounts for deferred maintenance - $1,886,000 in fiscal year 2007, $2,386,000 in fiscal year 2008, $2,386,000 in fiscal year 2009, and $2,000,000 in fiscal year 2010 to reach her fair cash values of $52,583,645, $59,745,996, $63,695,103, and $63,582,468 for fiscal years 2007, 2008, 2009, and 2010, respectively.  Ms. McKinney's rounded values for the subject office building for the fiscal years at issue are contained in the following table. 
	FY 2007
	FY 2008	FY 2009	FY 2010	
Rounded Values	$52,600,000	$59,700,000	$63,700,000	$63,600,000	

Summaries of the income-capitalization methodologies that she employed in valuing the subject office building for the fiscal years at issue are contained in the following four tables.

Fiscal Year 2007
	Area/RSF	Per RSF	Amounts	
ANNUAL INCOME				
Storage	  6,627	$10.00	$  66,270	
Retail (hotel & office building)	 40,168	$36.00	$1,446,048	
Office	239,300	$27.00	$6,461,100	
Rent Subtotal	286,095	$27.87	$7,973,418	
				
Tenant Services Income		$ 0.20	$   47,860	
Miscellaneous Income		$ 0.05	$   11,965	
Other Income Subtotal (Office only)		$ 0.25	$   59,825	
				
Potential Gross Income		$28.08	$8,033,243	
				
Vacancy & Credit Loss (Stabilized)		5.97%	($  479,585)	
				
Effective Gross Income ("EGI")		$26.40	$7,553,658	
				
ANNUAL COSTS	EGI	Per RSF		
Operating Expense	25.3%	$ 8.00	$1,914,400	
Management Fee	 3.0%	$ 0.95	$  226,610	
Total Expenses (Office only)	28.3%	$ 8.95	$2,141,010	
				
Net-Operating Income		$18.92	$5,412,648	
				
CAPITALIZATION RATE				
Market Capitalization Rate	(Incl leasing costs & reserves)	7.250%	
Adjustments for City Tax Factor			2.687%	
Combined Capitalization Rate			9.937%	
				
Stabilized Value			$54,469,645	
				
EXTRAORDINARY ITEMS				
Deferred Maintenance - Cost to Cure			($ 1,886,000)	
Other			 $         0   	
Total Extraordinary Items			($ 1,886,000)	
				
Fair Cash Value			$52,583,645	
Rounded		$183.86	$52,600,000	




Fiscal Year 2008
	Area/RSF	Per RSF	Amounts	
ANNUAL INCOME				
Storage	  6,627	$10.00	$  66,270	
Retail (hotel & office building)	 39,888	$46.00	$1,834,848	
Office	238,331	$28.00	$6,673,268	
Rent Subtotal	284,846	$30.10	$8,574,386	
				
Tenant Services Income		$ 0.20	$   47,666	
Miscellaneous Income		$ 0.05	$   11,917	
Other Income Subtotal (Office only)		$ 0.25	$   59,583	
				
Potential Gross Income		$30.35	$8,633,969	
				
Vacancy & Credit Loss (Stabilized)		4.65%	($  401,480)	
				
Effective Gross Income ("EGI")		$28.90	$8,232,489	
				
ANNUAL COSTS	EGI	Per RSF		
Operating Expense	24.6%	$ 8.50	$2,025,814	
Management Fee	 3.0%	$ 1.04	$  246,975	
Total Expenses (Office only)	27.6%	$ 9.54	$2,272,788	
				
Net-Operating Income		$20.92	$5,959,701	
				
CAPITALIZATION RATE				
Market Capitalization Rate	(Incl leasing costs & reserves)	7.000%	
Adjustments for City Tax Factor			2.592%	
Combined Capitalization Rate			9.592%	
				
Stabilized Value			$62,131,996	
				
EXTRAORDINARY ITEMS				
Deferred Maintenance - Cost to Cure			($ 2,386,000)	
Other			 $         0   	
Total Extraordinary Items			($ 2,386,000)	
				
Fair Cash Value			$59,745,996	
Rounded		$209.59	$59,700,000	




Fiscal Year 2009
	Area/RSF	Per RSF	Amounts	
ANNUAL INCOME				
Storage	  6,627	$10.00	$  66,270	
Retail (hotel & office building)	 39,888	$46.00	$1,834,848	
Office	238,643	$30.00	$7,159,290	
Rent Subtotal	285,158	$31.77	$9,060,408	
				
Tenant Services Income		$ 0.20	$   47,729	
Miscellaneous Income		$ 0.05	$   11,932	
Other Income Subtotal (Office only)		$ 0.25	$   59,661	
				
Potential Gross Income		$31.98	$9,120,069	
				
Vacancy & Credit Loss (Stabilized)		5.05%	($  460,563)	
				
Effective Gross Income ("EGI")		$30.37	$8,659,505	
				
ANNUAL COSTS	EGI	Per RSF		
Operating Expense	24.8%	$ 9.00	$2,147,787	
Management Fee	 3.0%	$ 1.09	$  259,785	
Total Expenses (Office only)	27.8%	$10.09	$2,407,572	
				
Net-Operating Income		$21.92	$6,251,933	
				
CAPITALIZATION RATE				
Market Capitalization Rate	(Incl leasing costs & reserves)	6.750%	
Adjustments for City Tax Factor			2.711%	
Combined Capitalization Rate			9.461%	
				
Stabilized Value			$66,081,103	
				
EXTRAORDINARY ITEMS				
Deferred Maintenance - Cost to Cure			($ 2,386,000)	
Other			 $         0   	
Total Extraordinary Items			($ 2,386,000)	
				
Fair Cash Value			$63,695,103	
Rounded		$223.38	$63,700,000	




Fiscal Year 2010
	Area/RSF	Per RSF	Amounts	
ANNUAL INCOME				
Storage	  6,627	$10.00	$  66,270	
Retail (hotel & office building)	 39,888	$46.00	$1,834,848	
Office	238,287	$32.00	$7,625,184	
Rent Subtotal	284,802	$33.45	$9,526,302	
				
Tenant Services Income		$ 0.20	$   47,657	
Miscellaneous Income		$ 0.05	$   11,914	
Other Income Subtotal (Office only)		$ 0.25	$   59,572	
				
Potential Gross Income		$33.66	$9,585,874	
				
Vacancy & Credit Loss (Stabilized)		5.56%	($  532,975)	
				
Effective Gross Income ("EGI")		$31.79	$9,052,899	
				
ANNUAL COSTS	EGI	Per RSF		
Operating Expense	25.0%	$ 9.50	$2,263,727	
Management Fee	 3.0%	$ 1.14	$  271,587	
Total Expenses (Office only)	28.0%	$10.64	$2,535,313	
				
Net-Operating Income		$22.88	$6,517,586	
				
CAPITALIZATION RATE				
Market Capitalization Rate	(Incl leasing costs & reserves)	7.000%	
Adjustments for City Tax Factor			2.938%	
Combined Capitalization Rate			9.938%	
				
Stabilized Value			$65,582,468	
				
EXTRAORDINARY ITEMS				
Deferred Maintenance - Cost to Cure			($ 2,000,000)	
Other			 $         0   	
Total Extraordinary Items			($ 2,000,000)	
				
Fair Cash Value			$63,582,468	
Rounded		$223.31	$63,600,000	

Mr. Logue's Valuation of the Boston Park Plaza Hotel
Mr. Logue's Market Overview
According to Mr. Logue, the Boston/Cambridge hotel market steadily improved from 2003 through 2007 with annual increases in the average daily room rate (the "ADR"), occupancy, and the revenue per available room (the "RevPAR").  He attributed the market's improvement in 2003 to an increase in conventions, commercial business, and tourism following the devastating effects connected to the events of September 11, 2001. His information indicated that ADR and RevPAR in the Back Bay increased approximately 20% between 2005 and 2008.  During this same period, ADR and RevPAR increased 12.5% and 29%, respectively, at the subject hotel.  
Mr. Logue observed that the market stabilized in early 2008 but was in decline by the latter half of 2008 into 2009 as a result of a deteriorating economy, higher unemployment, and substantial declines in the financial and capital markets.  The ADR in the Back Bay decreased by approximately 10% from 2008 to 2009, but due to a substantial decline in occupancy, RevPAR declined approximately 17%.  During this same period, ADR and RevPAR declined 7% and 17%, respectively, at the subject hotel. 
STAR reports for year-end 2005-2009 compared the performance of the subject property with a competitive set of additional hotels in the market area.  The competitive set properties include a total of 5,520 rooms and consist of the Sheraton Hotel, Radisson Hotel, Marriot Boston Copley Place, Omni Parker House, Hilton Boston Back Bay, Hyatt Regency, Boston and the Seaport Hotel.  The below table recapitulates the STAR report summary upon which Mr. Logue relied.
		 Occupancy			   ADR			RevPAR
Year End	Subject	Comp. Set	Subject	Comp. Set	Subject	Comp. Set
	
2005	68.00%	75.80%	$145.57	$172.28	$98.99	$130.59	
2006	74.20%	77.80%	$159.03	$190.00	$117.04	$148.52	
2007	74.80%	78.50%	$169.25	$205.23	$126.65	$161.17	
2008	77.90%	75.10%	$163.78	$203.66	$127.58	$153.03	
2009

Budget	70.30%	71.70%	$152.46	$179.50	$107.19	$129.05	
2009	72.40%		$173.46		$125.95		

	The ADR for the competitive set increased approximately 19% from the year-end 2005 to the year-end 2007, while it increased 16% for the subject hotel.  The occupancy increased at the subject hotel considerably during this time frame versus a slight increase for the competitive set, which resulted in a higher percent increase in RevPAR at the subject hotel compared to the competitive set.  Notwithstanding the better overall performance of the subject hotel over the competitive set between 2005 and 2007, the ADR at the subject hotel lagged by 15% to 18% compared to the competitive set.  Mr. Logue attributed this phenomenon to the subject hotel's inferior condition, smaller rooms, more limited high-speed internet access, and its other functional obsolescence compared to the competitive set.
	The ADR at the subject hotel declined at a slightly lower rate from 2008 to 2009 than the competitive set's rate, but the occupancy decline at the subject during this same time period was somewhat greater.  As a result, the RevPAR for the subject hotel and the competitive set each declined approximately 16% from year-end 2008 to year-end 2009.  Mr. Logue found that this trend was consistent with industry forecasts and reports, including the Pricewaterhouse/Coopers ("PWC") Hospitality Directions - U.S. Edition - February 2009, segments of which were reported in the semi-annual PWC National Lodging Highlights Segment for the 1st Quarter 2008 and 1st Quarter 2009.
Mr. Logue's Income-Capitalization Methodology
In applying an income-capitalization approach to estimate the value of the subject hotel, Mr. Logue inspected the subject hotel and reviewed its Summary Income Statements, including actual revenue and expenses for the twelve months preceding the dates of valuation and budgeted revenue and expenses for the twelve months following the dates of valuation.  He also reviewed year end Monthly Financial reports and analyzed the subject property's historical and projected operating data and compared and contrasted it to industry standards in various authoritative publications.  Mr. Logue then reconstructed this information into a stabilized statement of income and expenses by: (1) estimating the potential revenue; (2) estimating the departmental expenses; (3) estimating the undistributed expenses; (4) estimating fixed expenses; (5) deducting allowances; and (6) converting the annual net income into an indication value for the real property using a capitalization rate. 
Relying on the subject property's historical and projected data as well as information about the market and the competitive set of hotels gleaned from authoritative industry publications, Mr. Logue determined the subject property's potential revenues from rooms, food and beverage, telecommunications, laundry, rents from retail and restaurant space and other income, which includes income from valet parking, cancellation or attrition fees, interest income, and other miscellaneous sources.  
For room revenue, Mr. Logue noted that the ADR at the subject hotel increased significantly from approximately $146 per night in 2005 to approximately $169 per night at the high point in the market in 2007.  While the actual ADR was projected to remain stable in 2008, it actually decreased to $164 per night in 2008 and $152.46 per night in 2009.  Mr. Logue reported that the ADRs at the subject hotel have been historically somewhat less than those for the Back Bay and Cambridge/Boston markets, as well as the competitive set analyzed in the STAR reports.  The market trends, which showed that 2007-2008 was the high point for ADRs which declined substantially thereafter into 2009, roughly corresponded to the subject hotel's experience.  On this basis, Mr. Logue stabilized his ADRs for the subject hotel for the fiscal years at issue as follows:
	January 1, 2006 (FY 2007)	$150.00
	January 1, 2007 (FY 2008)	$163.00
	January 1, 2008 (FY 2009)	$169.50
	January 1, 2009 (FY 2010)	$168.00

Mr. Logue observed that occupancy levels at the subject hotel increased steadily from 68% in 2005 to 77.9% in 2008 before declining in 2009. Budgeted occupancy projections followed an upward trend as well, although the Downtown/Back Bay hotel market began to soften in 2008 and was forecast to and actually did decline in 2009.  The Smith Travel Trend Reports for the competitive set, excluding the subject hotel, show a stable occupancy trend from 2005 into 2008 but a precipitous decline between 2008 and 2009.  Based on his review of the occupancy trends at the subject hotel and trends in the market, Mr. Logue concluded that realistic stabilized annual occupancies as of the relevant valuation and assessment dates were:
	

January 1, 2006 (FY 2007)	70%
	January 1, 2007 (FY 2008)	74%
	January 1, 2008 (FY 2009)	76%
	January 1, 2009 (FY 2010)	75%
       
As for other revenue, Mr. Logue stabilized the annual food and beverage revenues in the $17,100,000 to $17,400,000 range for fiscal years 2006 through 2010, giving primary weight to the actual amounts, which he determined were in line with other full service hotels with substantial meeting and banquet facilities.  Focusing primarily on the subject hotel's actual experience during the relevant time period, Mr. Logue concluded that realistic stabilized annual revenues from telecommunications and guest laundry were:
	January 1, 2006 (FY 2007)	$710,000
	January 1, 2007 (FY 2008)	$725,000
	January 1, 2008 (FY 2009)	$650,000
	January 1, 2009 (FY 2010)	$690,000

Mr. Logue included revenue from rents from the leased retail space on the ground floor and on the lower level and also from reimbursements for various expenses from tenants in a category that he termed "Plaza Retail."  Relying on the actual reported retail revenue, which included percentage rent revenue, for the ground level space and on actual reported rent for the lower level barbershop, which he considered to be a unique situation, Mr. Logue stabilized the annual revenue from the retail space at:
	January 1, 2006 (FY 2007)	$735,000
	January 1, 2007 (FY 2008)	$950,000
	January 1, 2008 (FY 2009)	$775,000
	January 1, 2009 (FY 2010)	$900,000

Mr. Logue's final revenue category was rents and other income which includes revenue from various concessions, cancellation fees, interest income, movie rentals and other miscellaneous sources.  His research indicated that the actual rents and other income were reasonably consistent from calendar years 2005 through 2007 but declined substantially in 2008, and budgeted revenues tended to be lower than the actuals.  Based on his review of the actual and budgeted annual revenues and considering the downward trend of this revenue source, he concluded that a realistic stabilized annual revenue would be:
	January 1, 2006 (FY 2007)	$1,400,000
	January 1, 2007 (FY 2008)	$1,500,000
	January 1, 2008 (FY 2009)	$1,250,000
	January 1, 2009 (FY 2010)	$  920,000

By combining all of these revenue sources, Mr. Logue estimated the stabilized annual revenues for the fiscal years at issue at:
	January 1, 2006 (FY 2007)	$56,108,825
	January 1, 2007 (FY 2008)	$62,003,748
	January 1, 2008 (FY 2009)	$64,020,161
	January 1, 2009 (FY 2010)	$62,986,590

Mr. Logue separated the subject property's operating expenses into two major categories: departmental expenses and undistributed expenses.  Mr. Logue's departmental expenses included expenses for rooms, food and beverage, telecommunications and guest laundry, and rents and other income.  He found that the subject hotel's actual and budgeted costs for rooms, food and beverage, and telecommunications and guest laundry were generally consistent with published hotel industry information.  He, therefore, based his estimates on the actual and budgeted data.  His expenses for rents and other income were based primarily on this expense's 0.3% average of total revenue in 2005 through 2007.  The following table summarizes these four departmental expense categories.
	
Rooms
	Food and Beverage	Telecommunications & Guest Laundry	Rents & Other Income	
FY 2007	$11,200,000	$14,615,000	$585,000	$158,000	
FY 2008	$12,250,000	$15,300,000	$620,000	$185,000	
FY 2009	$13,200,000	$15,400,000	$675,000	$172,575	
FY 2010	$13,775,000	$16,150,000	$750,000	$0	
 	
For the relevant fiscal years, Mr. Logue's departmental expenses totaled:
	January 1, 2006 (FY 2007)	$26,558,000
	January 1, 2007 (FY 2008)	$28,335,000
	January 1, 2008 (FY 2009)	$29,447,575
	January 1, 2009 (FY 2010)	$30,675,000

For the relevant fiscal years, his gross operating incomes before undistributed expenses and fixed costs are:
	

January 1, 2006 (FY 2007)	$29,550,825
	January 1, 2007 (FY 2008)	$33,648,748
	January 1, 2008 (FY 2009)	$34,572,586
	January 1, 2009 (FY 2010)	$32,311,590

Mr. Logue's undistributed expenses include administrative and general costs, credit card commissions, marketing expenses, repairs and maintenance expenditures, energy costs, and management and license fees.  He based his stabilized estimates for these expense items on industry standards, historical hotel information, and budget projections.  He also recognized that repairs and maintenance and energy costs would likely be higher at the subject hotel than the market might otherwise indicate because of the age of the subject hotel's building, its significant capital needs, its ongoing issues with deferred maintenance, and its antiquated heating, air-conditioning, and electrical systems.   Mr. Logue also recognized from his experience in valuing hotels that the subject hotel's actual and projected management fees of 2.1% to 2.3% of total revenue were abnormally low.   He, therefore, increased this percentage to 3% to bring it more in line with published industry standards for full service hotels.  A summary of these expenses for each of the fiscal years at issue are contained in the following table.
	Administrative & General	
Marketing
	Repairs & Maintenance	
Energy	Management & License	
FY 2007	$4,100,000	$2,900,000	$4,540,000	$4,000,000	$1,683,265	
FY 2008	$4,300,000	$3,100,000	$4,825,000	$4,600,000	$1,860,112	
FY 2009	$4,650,000	$3,200,000	$5,100,000	$4,500,000	$1,920,605	
FY 2010	$4,975,000	$3,500,000	$5,000,000	$4,200,000	$1,889,598	

	For the relevant fiscal years, Mr. Logue's undistributed expenses totaled:
	January 1, 2006 (FY 2007)	$17,223,265
	January 1, 2007 (FY 2008)	$18,685,112
	January 1, 2008 (FY 2009)	$19,370,605
	January 1, 2009 (FY 2010)	$19,564,598

For the relevant fiscal years, his gross operating profits before fixed costs are:
	January 1, 2006 (FY 2007)	$12,327,560
	January 1, 2007 (FY 2008)	$14,963,636
	January 1, 2008 (FY 2009)	$15,201,981
	January 1, 2009 (FY 2010)	$12,746,992

Mr. Logue also included in his methodology a category for fixed costs, which includes costs for property insurance, rental of office equipment, and what he termed "business taxes."  He reviewed both the subject hotel's actual and projected costs and then stabilized what he considered to be a reasonable representation of them.  He determined that his stabilized amounts were consistent with other older full service hotels like the subject hotel.  The following table summarizes these expenses.
	Property Insurance
	Rent for Office Equipment	Business Taxes	Total Fixed Costs	
FY 2007	$635,000	$55,000	$20,000	$710,000	
FY 2008	$650,000	$57,000	$25,000	$732,000	
FY 2009	$730,000	$60,000	$30,000	$820,000	
FY 2010	$730,000	$65,000	$30,000	$825,000	

After deducting the total fixed costs from his gross operating profits for the fiscal years at issue, Mr. Logue calculated his net-operating incomes as:
	January 1, 2006 (FY 2007)	$11,617,560
	January 1, 2007 (FY 2008)	$14,231,636
	January 1, 2008 (FY 2009)	$14,381,981
	January 1, 2009 (FY 2010)	$11,921,992

From this net-operating income, Mr. Logue then applied additional deductions for reserves for replacement, in the form of short-lived real estate components and FF&E, as well as a return on FF&E.  The reserve for short-lived real estate accounts for the periodic replacement of real estate components such as roofing and heating systems.  The reserve for FF&E accounts for the periodic replacement of furniture, fixtures, and equipment in the hotel rooms, corridors, lobby, meeting facilities, and other common areas.  Mr. Logue estimated that 3% of total revenue was an appropriate deduction for a short-lived real estate reserve considering the subject hotel's extensive mechanical, electrical, and plumbing systems and that a number of the subject hotel's major building components, including roof, chillers, air handlers, boilers and electrical transformers are older and outdated.  Mr. Logue estimated that 3.5% of total revenue was an appropriate deduction for an FF&E reserve considering the extent, quality, and condition of the subject hotel's soft goods and case goods and that the useful life of FF&E in similar full service hotels is seven to eight years.  Mr. Logue's selection of a 6.5% total for both of these reserves was consistent with the subject hotel's actual annual expenditures and was within the 3% to 8% combined range reported in authoritative industry publications.  
Mr. Logue's deduction for a return on FF&E was based on his discussions with knowledgeable representatives of the subject hotel and on a review of cost information from similar hotels.  He applied an estimated cost for FF&E of $20,000 per room for fiscal years 2007 and 2008 and $25,000 per room for fiscal years 2009 and 2010 to the subject hotel's 941 rooms to calculate the total cost new for the FF&E.  Based on the actual FF&E's condition and age, he depreciated that amount by 55% for fiscal year 2007, 60% for fiscal year 2008, 65% for fiscal year 2009, and 70% for fiscal year 2010, thereby calculating a depreciated cost for the FF&E for each of the fiscal years at issue.  Mr. Logue subsequently applied his estimated overall capitalization rates to the depreciated costs of the FF&E to establish an annual return for each of the fiscal years at issue.  Those returns are summarized as follows:
	January 1, 2006 (FY 2007)	$762,210
	January 1, 2007 (FY 2008)	$658,700
	January 1, 2008 (FY 2009)	$679,284
	January 1, 2009 (FY 2010)	$599,888

Mr. Logue then deducted the annual replacement reserves for short-lived real estate and FF&E, as well as the annual return on FF&E, to reach his indicated net real estate incomes to be capitalized as summarized below:
	January 1, 2006 (FY 2007)	$7,208,277
	January 1, 2007 (FY 2008)	$9,542,692
	January 1, 2008 (FY 2009)	$9,541,387
	January 1, 2009 (FY 2010)	$7,227,976

Mr. Logue's final step in his income-capitalization methodology was to convert the indicated net income attributable to the real estate into an indication of value.  In this case, he considered the direct capitalization of stabilized net income to be the most meaningful technique because of the availability and provision of multiple years of the subject hotel's income and expense history and the stabilized occupancy of the subject hotel during the relevant time frame.     Mr. Logue employed two methods for developing his capitalization rate: the mortgage-equity technique and reference to the semi-annual National Lodging Highlights segment of the Korpacz survey.  
In applying his mortgage-equity technique, Mr. Logue stated that he based his overall rates on prevailing market conditions as of the fourth quarter of calendar year 2003.  He based his selection of the most probable financing for a first mortgage on discussions with loan officers in major financial institutions, as well as actual mortgage terms during the fourth quarter of calendar year 2003.  On this basis he selected a 20-year mortgage term, a 70% loan-to-value ratio, and a 6.00% interest rate for fiscal year 2007 and a 6.25% interest rate for fiscal years 2008, 2009, and 2010.  He also assumed a 10-year investment holding period, a 16% equity yield rate for fiscal year 2007, a 15% equity yield rate for fiscal year 2008, a 14% equity yield rate for fiscal year 2009, and back up to a 15% equity yield rate for fiscal year 2010, considering capital market problems in late 2008.  Mr. Logue further estimated a 20% appreciation on the subject hotel from the dates of valuation and assessment for fiscal years 2007 and 2008 but only 15% for fiscal years 2009 and 2010 due to a sense that the market had peaked and values would be increasing more slowly.  Accordingly, his capitalization rates for the fiscal years at issue using the mortgage-equity technique were as follows.      
January 1, 2006 (FY 2007)	8.7%
	January 1, 2007 (FY 2008)	8.5%
	January 1, 2008 (FY 2009)	8.3%
	January 1, 2009 (FY 2010)	8.7%

Mr. Logue reported that the relevant Korpacz/PWC surveys indicated that the overall capitalization rates for full-service hotels gradually declined through 2006 and 2007, stabilized in 2008 and then began to increase during the second half of 2008.  Based upon a review of this data and in consideration of the capitalization rates that he developed using his mortgage-equity technique, Mr. Logue concluded that realistic capitalization rates for the fiscal years at issue, both before and after adding the tax factors, were as follows:
January 1, 2006 (FY 2007)	9.000%	11.687%
January 1, 2007 (FY 2008)	8.750%	11.342%
January 1, 2008 (FY 2009)	8.250%	10.961%
January 1, 2009 (FY 2010)	8.500%	11.438%

Mr. Logue then divided the estimated net incomes that he attributed to the subject hotel's real estate for each of the fiscal years at issue by his total overall capitalization rates for each corresponding fiscal year in calculating his indicated values, which he then rounded. 
The summary of the income-capitalization methodologies that appears in the appellant's errata sheet, "as [a] substitute[] for the corresponding page[]" in Mr. Logue's appraisal report, is reproduced below.
	FY 2007 			FY 2008 		FY 2009 		FY 2010 																	ROOM COUNT 	941 			941 			941 			941 				OAYS 	365 			365 			365 			365 				Occupancy 	70.0% 			74,0% 			76.0% 			75.0% 				Average Oally Rale-ADR 	$150.00 			$163.00 			$169.50 			$168.00 				RevPAR 	105.00 			120.62 			128.82 	I-- 	126.00 				DEPARTMENTAL REVENUES 														ROOMS 	$36,063,825 	64.3% 		$41,428,748 	66.8% 		$44,245,161 	69.1% 		$43,276,590 	68.7% 			FOOD & BEVERAGE 	$17,200,000 	30.7% 		$17,400,000 	28.1% 		$17,100,000 	26.7% 		$17,200,000 	27.3% 			TELECOMMUNICATIONS & LAUNDRY 	$710,000 	1.3% 		$725,000 	1.2% 		$650,000 	1.0% 		$690,000 	1.1% 			PARK PLAZA HOTEL RETAIL 	$735,000 	1.3% 		$950,000 	1.5% 		$775,000 	1.2% 		$900,000 	1.4% 			RENTS & OTHER INCOME 	$1 400000 	2.5%		$1 500000 	2.4%		$1 250000 	2.0%		$920000	1.5%			TOTAL REVENUE 	$56,108,825 	100.0% 		$62,003,748 	100.0% 		$64,020,161 	100.0% 		$62,986,590 	100.0% 			DEPARTMENT EXPENSES 														ROOMS 	$11,200,000 	20.0% 		$12,250,000 	19.8% 		$13,200,000 	20.6% 		$13,775,000 	21.9% 			FOOD & BEVERAGE 	$14,615,000 	26.0% 		$15,300,000 	24.7% 		$15,400,000 	24.1% 		$16,150,000 	25.6% 			TELECOMMUNICATIONS 	$585,000 	1.0% 		$620,000 	1.0% 		$675,000 	1.1% 		$750,000 	1.2% 			PARK PLAZA HOTEL RETAIL 	$0 	0.0% 		$0 	0.0% 		$0 	0.0% 		$0 	0.0% 			RENTALS & OTHER INCOME 	$158,000 	0.3% 		$185,000 	0.3% 		$172,575 	0.3% 		$0 	0.0% 			TOTAL DEPARTMENTAL EXP. 	$26,558,000	~ 		$28,355,000	~ 		$29,447,575	46.0%		$30,675,000	48.7%			GROSS OPERATING INCOME 	$29,550,825 	52.7% 		$33,648,748 	54.3% 		$34,572,5`86 	54.0% 		$32,311,590 	51.3% 			UNDISTRIBUTED EXPENSES 														ADMINISTRATION AND GENERAL 	$3,300,000 	5.9% 		$4,300,000 	5.3% 		$3,600,000 	5.6% 		$4,975,000 	7.9% 			CR CARD COMMISSION 	$800,000 	1.4% 		$1,000,000 	1.6% 		$1,050,000 	1.6% 		$0 	0.0% 			MARKETING 	$2,900,000 	5.2% 		$3,100,000 	5.0% 		$3,200,000 	5.0% 		$3,500,000 	5.6% 			REPAIRS AND MAINTENANCE 	$4,540,000 	8.1% 		$4,825,000 	7.8% 		$5,100,000 	8.0% 		$5,000,000 	7.9% 			ENERGY 	$4,000,000 	7.1% 		$4,600,000 	7.4% 		$4,500,000 	7.0% 		$4,200,000 	6.7% 			MANAGEMENT/LICENSE FEE 	$1 683265 	~ 		$1860112	~ 		$1 920605 	~ 		$1 889598 	~ 			TOTAL UNDISTRIBUTED EXPENSES 	$17,223,265	30.7%		$18,685,112	30.1%		$19,370,605	~ 		$19,564,598	31.1%			GROSS OPERATING PROFIT 	$12,327,560 	22.0% 		$14,963,636 	24.1% 		$15,201,981 	23.7% 		$12,746,992 	20.2% 			FIXED COSTS 														PROPERTY INSURANCE 	$635,000 	1.1% 		$650,000 	1.0% 		$730,000 	1.1% 		$730,000 	1.2% 			RENT (OFFICE EQUIPMENT) 	$55,000 			$57,000 			$60,000 			$65,000 				BUSINESS TAXES 	$20,000 			$25,000 			$30,000 			$30,000 				TOTAL FIXED COSTS 	$710,000	1.3%	$732,000	 1.2%	 $820,000	1.3%	$825,000	1.3%1		NET OPERATING INCOME 	$11,617,560 	20.7% 	$14,231,636 	23.0% 		$14,381,981 	22.5% 		$11,921,992 	18.9% 			Additional Deductions 														Reserves for Replacements 														Short Lived Real Estate 	$1,663,265 	3.0% 	$1,860,112 	3.0% 	$1,920,605 	3.0% 	$1,869,598 	3.0% 		FF&E 	$1,963,809 	3.5% 	$2,170,131 	3.5% 	$2,240,706 	3.5% 	$2,204,531 	3.5% 		Return on FF & E+- 	$762,210 	1.4% 	$658,700 	1.1% 	$679,284 	1.1% 	$599,868 	1.0% 		Cost new per room 	$20,000 			$20,000 			$25,000 			$25,000 				Depreciation Est. 	55% 			60% 			65% 			70% 				NET INCOME TO BE CAPITALIZED 	$7,208,276 	12.8% 	$9,542,693 	15.4% 	$9,541,386 	14.9% 	$7,227,976 	11.5% 		Capitalization Rate 	9.00% 			8.75% 			8.25% 			8.50% 				Tax Factor 	2.6870%			2.5920% 			2.7110% 			 2.9380%			Overall Rate 	11.6870% 			11.3420% 			10.9610% 			11.4380% 				INDICATED VALUE 	$61,677,727 			$84,135,893 			$87,048,499 			$63,192,660 				ROUNDED VALUE ESTIMATE 	$61,700,000 			$84,100,000 			$87,000,000 			$63,200,000 				Value Per Room 	$65,589 			$89,373 			$92,455 			$67,183 				


The combined values that Mr. Logue derived for the Boston Park Plaza Hotel and the Park Plaza Office Building using his income-capitalization methodologies for the fiscal years at issue are summarized below.
				Boston Park   Park Plaza     Combined   
Plaza Hotel   Office Bldg.    Total

January 1, 2006 (FY 2007)	$61,700,000	  $25,600,000    $ 87,300,000
January 1, 2007 (FY 2008)	$84,100,000	  $32,500,000    $116,600,000
January 1, 2008 (FY 2009)	$87,000,000	  $41,400,000    $128,400,000
January 1, 2009 (FY 2010)	$63,200,000	  $30,800,000    $ 94,000,000

Ms. McKinney's Valuation of the Boston Park Plaza Hotel
Ms. Roginsky and Ms. McKinney's Market View
The first witness to testify for the assessors was Ms. Roginsky, their expert on Boston and national hotel markets, the preparation of stabilized income and expense statements for hotels, the use of those statements by participants in the market, and the analysis of competitive sets of hotels.  In evaluating the applicable lodging market during the relevant time period, Ms. Roginsky first examined the four components that contribute to lodging demand - office data, air travel trends, tourism, and convention center data, focusing primarily on the latter three.  Relying on flight and passenger information from Logan International Airport, Ms. Roginsky related that passenger traffic at Logan experienced significant declines in 2001 and 2002 as a direct result of the September 11, 2001 terrorist attacks.  After showing modest increases in 2003, passenger counts increased dramatically in 2004 and continued to rise through 2007, exceeding the pre-9/11 levels.  Economic upheaval in the fall of 2008 reversed the trend with passenger counts off roughly 7% overall for the year. 
Relying on data collected and reported by the Greater Boston Convention and Visitors Bureau, Ms. Roginsky observed that tourist visitation climbed steadily between 1999 and 2007, with a relatively modest decline in 2001.  She attributed increases in 2002 and 2003 to aggressive marketing in "drive-to" markets such as New York, Hartford, and Philadelphia, as well as lower room rates that hotel operators implemented to stimulate demand.  In 2008, as a result of the global economic recession, tourism in Boston declined by 10%.
Ms. Roginsky testified that the convention market is a major demand generator for hotels, and Boston is a popular destination for conventions, typically hosting between twenty and thirty citywide conventions each year.   Boston has two major convention centers - the new 1.3 million square foot Boston Convention and Exhibition Center (the "BCEC") which opened in 2004 and is located in the Seaport area and the 260,000-square-foot John B. Hynes Convention Center (the "Hynes CC") which is part of the Prudential Center mixed-use development in the Back Bay.  The following table summarizes Boston convention bookings for 2004 through 2008 and also includes reservations for 2009 and 2010 as of December 2008.
	2004	2005	2006	2007	2008	2009	2010		BCEC Conventions	
4	
6	
15	
16	
14	
16	
15		BCEC 
Room-nights	
120,140	
64,465	
288,710	
269,279	
281,306	
254,139	
324,046		Hynes CC Conventions	
14	
15	
14	
11	
13	
9	
6		Hynes CC Room-nights	
110,792	
168,843	
140,597	
127,960	
119,557	
105,587	
55,713		Total Conventions	
18	
21	
29	
27	
27	
25	
21		Total 
Room-nights	 230,932	 233,308	 429,307	 397,239	 400,863	 359,726	 379,759		        
In 2006, the number of citywide conventions and room-nights increased substantially over prior years.  They remained strong in 2007 and 2008 as well.  According to the Massachusetts Convention Center Authority, now that the BCEC has achieved stabilization, it is expected to generate approximately 315,000 room-nights annually on a stabilized basis.  The Hynes CC can host conventions of up to 22,000 attendees or handle seven separate smaller functions simultaneously.  Historically, the Hynes CC has typically generated between 110,000 and 170,000 room-nights per year and is expected to continue to compliment the BCEC due to its location in the Back Bay.  
In examining the Boston Park Plaza Hotel's position in the market, Ms. Roginsky noted that the subject hotel is conveniently located in the Park Square area of Boston within walking distance of the Theater District, several nearby office buildings, and Boston Consulates.  Destinations outside the Park Square area are only a short taxi or subway ride away.  The subject hotel is easily accessible by public and private transportation, and while its location between two primary commercial areas is a secondary location for a hotel, its excellent price-to-value relationship offsets its somewhat lesser location. 
Based on the Boston Park Plaza Hotel's location, orientation, and rate structure, Ms. Roginsky identified nine hotels, including the subject hotel, to include in her competitive set.  The following table lists the hotels included in Ms. Roginsky's competitive set, along with their number of rooms, affiliation dates, and locations.



Hotels	# of
Rooms
	Affiliation
Date
	Location from Subject Hotel
	
Omni Parker House	  551	Jun-85	10 blocks	
The Seaport Hotel	  428	May-98	2 miles	
Hilton Boston Back Bay	  390	Nov-82	8 blocks	
BOSTON PARK PLAZA HOTEL AND TOWERS	  941	Jun-98	Park Square	
Radisson Hotel Boston	  358	Mar-97	Park Square	
The Colonnade Hotel	  285	Aug-91	6 blocks	
Marriott Boston Copley Place	1,145	May-84	6 blocks	
Sheraton Hotel Boston	1,220	Jun-65	7 blocks	
Westin Boston Waterfront	  793	Jun-06	2 miles	
Total                               	6,111			
  	
After identifying her competitive set, Ms. Roginsky obtained pertinent operating statistics through STAR.  The following two tables show rate and occupancy and supply and demand statistics for the competitive set as a whole.  
Year
	Occupancy
	% Change
	ADR
	% Change
	RevPar
	% Change
	
2000	76.7%		$185.38		$142.17		
2001	69.4%	-7.3%	$171.68	 -7.4%	$119.22	-16.1%	
2002	69.8%	 0.4%	$159.35	 -7.2%	$111.21	 -6.7%	
2003	71.4%	 1.6%	$150.07	 -5.8%	$107.15	 -3.7%	
2004	73.3%	 1.9%	$163.87	  9.2%	$120.05	 12.0%	
2005	74.2%	 0.9%	$168.87	  3.1%	$125.33	  4.4%	
2006	75.0%	 0.8%	$186.49	 10.4%	$139.86	 11.6%	
2007	75.5%	 0.5%	$200.06	  7.3%	$151.05	  8.0%	
2008	73.4%	-2.1%	$197.93	 -1.1%	$145.29	 -3.8%	


Year
	Total Supply
	% Change
	Total Demand
	% Change
	
2000	1,907,733		1,463,067		
2001	1,940,340	1.7%	1,347,465	-7.9%	
2002	1,940,340	0.0%	1,354,143	 0.5%	
2003	1,940,340	0.0%	1,385,375	 2.3%	
2004	1,940,340	0.0%	1,421,510	 2.6%	
2005	1,940,340	0.0%	1,440,049	 1.3%	
2006	2,110,042	8.7%	1,582,514	 9.9%	
2007	2,229,785	5.7%	1,683,590	 6.4%	
2008	2,230,515	0.0%	1,637,273	-2.8%	
Average		2.0%		 1.4%	

Changes to the competitive supply reflect rooms being pulled in and out of service at the Hilton Boston Back Bay and Sheraton Hotel Boston in 2000 and 2001 and the opening of the 793-room Westin Boston Waterfront hotel in June of 2006.  Between 2000 and 2008, the lodging supply in this market increased by 2.0%, compounded annually, juxtaposed against demand increases averaging 1.4%.  Demand declined dramatically in aftermath of September 11, 2001 and to a lesser extent in 2008 due to troubles in the financial markets.  In the interim, growth was driven by a combination of the opening of the BCEC and the general expansion in the local economy.  While ADR declined in 2001, 2002, and 2003, consistent with this category's normal lag behind occupancy, it grew at relatively strong rates from 2004 to 2007, before declining again in 2008.
The subject hotel's actual occupancy and room rates for the relevant time period, which are summarized in the following table, trended similarly to the competitive set's movement.
	2005	2006	2007	2008
	
Occupancy	68%	74.2%	74.8%	77.9%	
ADR	$145.57	$159.03	$169.25	$163.78	

Ms. Roginsky also examined the historical and current performance of each market segment affecting the competitive set, including corporate, group, leisure, and airline sectors.  Corporate demand is composed primarily of visitors to and employees of the city's commercial businesses, universities, and medical institutions.  Over the relevant time period, the corporate segment represented approximately 25% of total demand.  Corporate demand grew at a compound annual rate of 2.7% between 2004 and 2008 but in 2008, it declined 3.2%.  
Group demand is comprised of association demand from the BCEC and Hynes CC, corporate groups, training sessions, social groups, and bus tours.  Corporate group demand is generated by local businesses involved in high technology and pharmaceutical industries, as well as national companies.  Over the relevant time period, this group segment represented approximately 47% of total demand.  Group demand grew at a compound annual rate of 4.8% between 2004 and 2008, but declined 2.4% in 2008.  
Boston draws leisure visitors from regional, national, and international origins.  Over the relevant time period, the leisure segment represented approximately 23% of total demand.  Leisure demand increased at a compound rate of 1.1% between 2004 and 2008, but similar to the previous two segments, declined in 2008 by 3.7%.
Flight crews and distressed airline passengers comprise what Ms. Roginsky termed airline contract or crew demand.  This relatively low-rated source of hotel demand is accommodated by some hotels in order to maintain a steady base of business and offset lower occupancies during weak demand periods.  Over the relevant time period, this group segment represented approximately 5% of total demand.  Crew demand grew at a compound annual rate of 3.9% between 2004 and 2008, but declined 4.4% in 2008.  
Ms. Roginsky estimated the subject hotel's ability to capture future market area demand by performing fair market share and penetration analyses.  These analyses provided much of the bases for the income and expenses that she recommended to Ms. McKinney for inclusion in Ms. McKinney's income-capitalization methodologies.  Ms. Roginsky defined "fair market share" as the percentage of rooms that a property contributes to the total supply of guest rooms in the defined competitive market area; she defined "penetration rate" as the percentage of a property's fair share of demand actually accommodated by that property.  Accordingly, penetration rates in excess of 100% indicate that a hotel possesses competitive advantages, while one below 100% reflects the existence of weaknesses.  For the fiscal years at issue, Ms. Roginsky reported that the subject hotel's overall penetration rate for occupancy for relevant prior years ranged as follows:  
	Fiscal Year 2007	Fiscal year 2008	Fiscal Year 2009	Fiscal Year 2010
	
Range (%)	87-92	87-98	87-99	87-106	

Based primarily on these ranges, she estimated the subject hotel's penetration rates, which led directly to her determinations of the subject hotel's occupancy rates for the fiscal years at issue as follows:
	Fiscal Year 2007	Fiscal Year 2008	Fiscal Year 2009	Fiscal Year 2010
	
Penetration (%)	93	100	100	100	
Occupancy (%)	70	75	75	75	

Ms. McKinney's Income-Capitalization Methodology

Revenues
Rooms
In 2005, market occupancy for competing hotel properties was 74.2%.  The subject hotel was ramping up after renovations but because of its age and lack of a national brand affiliation, it was expected to achieve only a 93% share of market demand with a stabilized occupancy of 70%.  Its ADR in 2005 was only $145.57 compared to the market's $168.87.  Based on the subject hotel's historical penetration and projections for the future and also considering its place in the market, as well as other information, Ms. Roginsky and Ms. McKinney projected a stabilized ADR of $159.00 for fiscal year 2007.
In 2006, market occupancy for competing hotel properties was 75.0%.  The subject hotel's occupancy had increased from 68.0% in 2005 to 74.2% in 2006.  Based on the subject hotel's historical penetration and projections for future growth, now that it was, in their opinion, fully ramped up, Ms. Roginsky and Ms. McKinney expected the subject hotel to achieve its fair share of market demand - that is, a 100% share with the same stabilized occupancy as the competitive set - 75.0%.  While the subject hotel's age and lack of affiliation were still negative attributes, they believed that it was well established in the local market and attractive to leisure travelers.  The subject hotel's ADR in 2006 was $159.03 compared to the market's $186.49.  However, both the subject hotel and the competitive set trended similarly.  The competitive set's average rate increased at a compound annual rate of 4.0% compared to the subject hotel's increase of 4.6%.  Based on this and other information, Ms. Roginsky and Ms. McKinney projected a stabilized ADR of $165.00 for fiscal year 2008, a 4% increase over the ADR for the preceding fiscal year.
At year-end 2007, the competitive set was operating at 75.5% occupancy with an ADR of $200.06.  The subject hotel's occupancy had increased slightly to 74.8% in 2007.  Based on the subject hotel's historical penetration and projections for future growth, and also considering its improved condition and position in the local market, Ms. Roginsky and Ms. McKinney expected the subject hotel to continue to achieve its fair share of market demand -- that is, a 100% share with a stabilized occupancy of 75.0%.  The subject hotel's ADR in 2007 was $169.25.  However, both the subject hotel and the competitive set were continuing to trend similarly.  The competitive set's average rate increased at a compound annual rate of 7.5% compared to the subject hotel's increase of 8.3%.  Based on this and other information, including the subject hotel's positioning in the local market and reliance on lower rated leisure demand, Ms. Roginsky and Ms. McKinney projected a stabilized ADR of $170.00 for fiscal year 2009.
In 2008, the competitive set's occupancy and ADR decreased to 73.4% and $197.43, respectively.  The subject hotel's occupancy increased in 2008 to 77.9%.  Based on the subject hotel's historical penetration and projections for the future, and also considering its position in the local market, Ms. Roginsky and Ms. McKinney projected that it would continue to achieve a 100% fair share of market demand and accordingly a stabilized occupancy of 75.0%.  The subject hotel's ADR declined about 3.3% in 2008 to $163.78.  However, both the subject hotel and the competitive set were continuing to trend similarly.  The competitive set's average rate declined 1.1% from 2007 to 2008.  Based on this and other information, including the subject hotel's positioning in the local market and its segmented rate structure and demand, Ms. Roginsky and Ms. McKinney projected a stabilized ADR of $167.00 for fiscal year 2010.  The competitive set's and the subject hotel's occupancies and ADRs for the relevant time period are compared in the following tables.
Historic Average Daily Rates
Year	Comp. Set	Change	Subject Hotel	Change
	
2004	$163.87	 9.2%	$141.46	15.1%	
2005	$168.87	 3.1%	$145.57	 2.9%	
2006	$186.49	10.4%	$159.03	 9.2%	
2007	$200.06	 7.3%	$169.25	 6.4%	
2008	$197.93	-1.1%	$163.78	-3.2%	

Historic Occupancy Rates
Year	Comp. Set	Change	Subject Hotel	Change
	
2004	73.3%	 1.9%	63.6%	-1.9%	
2005	74.2%	 0.9%	68.0%	 6.9%	
2006	75.0%	 0.8%	74.2%	 9.1%	
2007	75.5%	 0.5%	74.8%	 0.8%	
2008	73.4%	-2.1%	77.9%	 4.1%	
  
Food and Beverage Revenue
The subject hotel includes several food and beverage departments including banquets, catering, room service, Pairings Restaurant, lobby dining room (Swans), and Pairings To Go.  This category also includes audio-visual, room rental, and service charges.  Ms. Roginsky and Ms. McKinney may have also included food and beverage revenues associated with events held at the Armory in this category.  Historically, food and beverage revenue contributed between $63.97 and $74.25 per occupied room ("POR") between 2004 and 2008.  Since its peak of $74.25 in 2004, POR revenues declined to a low of $63.97 in 2008.  The subject hotel's budgets and HOST data ranges for the relevant years are summarized in the following table.
Year	Budgeted Amount	Year	HOST Ranges
	
2006	$72.21	2005	$52.03-$ 92.19	
2007	$73.34	2006	$54.56-$105.92	
2008	$66.57	2007	$58.37-$108.43	
2009	$69.95	2008	$56.89-$ 98.72	

Based on this data and information, Ms. Roginsky and Ms. McKinney selected food and beverage revenues at $72.00 POR for fiscal year 2007, $70.00 POR for fiscal year 2008, and $67.00 POR for fiscal years 2009 and 2010. 
Other Operated Department 
This category includes revenue from telephone and guest laundry.  Consistent with the industry trend of decreased revenue associated with telephone and telecommunications charges because of the proliferation of cell phones and cellular communications, the subject hotel's revenues for this category have declined over the relevant years from $3.47 POR in 2004 to $2.58 POR in 2008. The subject hotel's budgets and HOST data ranges for the relevant years are summarized in the following table.


Year
	Budgeted Amount
	Year
	HOST Ranges
	
2006	$2.77	2005	$ 7.79-$28.06	
2007	$3.03	2006	$ 8.76-$30.16	
2008	$2.73	2007	$10.06-$36.49	
2009	$2.79	2008	$ 9.62-$41.65	

Placing less reliance on the HOST ranges because the reporting entities offer different amenities and ancillary revenue sources that can vary significantly, Ms. Roginsky and Ms. McKinney selected other operated department revenues of $2.85 POR for fiscal year 2007, $3.00 POR for fiscal year 2008, $2.75 POR for fiscal year 2009, and $2.65 POR for fiscal year 2010. 
Rentals and Other Income
This revenue category consists of various commissions including parking and other third-party revenue sources for the subject hotel.  The largest income streams are for valet commissions, cancellation charges, and in-room movies.  Historically, between 2004 and 2008, revenue from this category has ranged from $3.43 to $5.60 POR.  The revenue from this source peaked in 2005 and has since declined from 2006 to 2008. The subject hotel's budgets and HOST data ranges for the relevant years are summarized in the following table.


Year
	Budgeted Amount
	Year
	HOST Ranges
	
2006	$2.77	2005	$3.93-$ 9.27	
2007	$4.95	2006	Did not consider	
2008	$4.33	2007	$3.30-$ 8.36	
2009	$3.60	2008	$3.24-$10.08	

Once again placing little, if any, reliance on the HOST ranges because the reporting entities offer different amenities and ancillary revenue sources that contribute to this category, Ms. Roginsky and Ms. McKinney selected rentals and other incomes of $5.00 POR for fiscal years 2007 and 2008, $4.50 POR for fiscal year 2009, and $3.50 POR for fiscal year 2010. 
Expense Estimates
Room Expenses 
This expense category includes expenses associated with the operation of the subject hotel's rooms department, including front office and housekeeping payroll, discounts, refunds, cable television expenses, laundry and cleaning supplies.  During the relevant time period, this expense category historically ranged from $34.60 to $51.63 POR.  The budgeted amounts for fiscal years 2006 through 2009 were $47.77, $49.77, $51.89, and $55.10 POR, respectively.  The HOST ranges are summarized in the following table.


Year
	HOST Ranges	
2005	$32.28-$50.56	
2006	$34.53-$46.49	
2007	$36.52-$48.39	
2008	$37.95-$48.46	

Based primarily on the historical and budgeted amounts, Ms. Roginsky and Ms. McKinney selected room expenses in the amount of $46.50 POR for fiscal year 2007, $48.00 POR for fiscal year 2008, $51.00 POR for fiscal year 2009, and $50.00 POR for fiscal year 2010.    
ii. Food and Beverage Expenses
This category includes all expenses related to the subject hotel's food and beverage revenue with the exception of the leased restaurants.  For fiscal year 2007, Ms. Roginsky and Ms. McKinney selected an expense of 85% of food and beverage revenue based the subject hotel's past five-year experience, ranging from 84.2% to 88.7%, and the HOST data range of 72.8% to 79.8% of revenue.  For fiscal year 2008, Ms. Roginsky and Ms. McKinney selected an expense of 86% of food and beverage revenue based the subject hotel's past five year experience, ranging from 84.2% to 88.7%, and the HOST data range of 71.6% to 76.1% of revenue. For fiscal year 2009, Ms. Roginsky and Ms. McKinney selected an expense of 88% of food and beverage revenue based on the subject hotel's past five-year experience, ranging from 84.2% to 90.6%, and the HOST data range of 71.6% to 76.0% of revenue.  For fiscal year 2010, Ms. Roginsky and Ms. McKinney selected an expense of 89% of food and beverage revenue based the subject hotel's past five-year experience, ranging from 84.5% to 93.3%, and the HOST data range of 71.6% to 76.5% of revenue.  
iii. Other Operated Department Expenses
The other department expenses category for the subject hotel consists of all costs associated with the other operated departments revenue category.  More specifically, it includes telephone and telecommunications expenses, as well as guest laundry expenses.  Because of declining revenue, this expense item has increased as a percentage of that revenue, from 48.9% to 110.8% during the relevant time period.  Projected budget expenses over the relevant time period were 85.4% for 2006, 81.3% for 2007, 76.5% for 2008, and 100.5% for 2009.  Relying exclusively on historical and projected budget amounts, because there was no HOST reported data, Ms. Roginsky and Ms. McKinney selected expenses of 85% of the associated revenue for fiscal year 2007, 90% for fiscal year 2008, and 98% for fiscal years 2009 and 2010.  

Administrative and General
Fixed administrative and general expenses include salaries of the general manager, personnel and accounting expenses, building security, licenses, liability insurance, administrative telephone, office supplies, travel costs and other miscellaneous expenses.  Historic expenses ranged from $3,434 to $5,130 PAR between 2002 and 2008.  The budgeted amounts and HOST ranges for the relevant time periods are summarized in the following table.   
Year	Budgeted Amount	Year	HOST Ranges
	
2006	$4,147	2005	$3,962-$5,911	
2007	$4,541	2006	$4,207-$6,570	
2008	$5,253	2007	$4,592-$7,305	
2009	$5,554	2008	$4,566-$6,744	

Relying primarily on the subject hotel's actual historic costs and the projected amounts, Ms. Roginsky and Ms. McKinney selected expenses for this category of $4,400 PAR for fiscal year 2007, $4,550 PAR for fiscal year 2008, $4,900 PAR for fiscal year 2009, and $5,100 PAR for fiscal year 2010.  
Sales and Marketing
Sales and marketing expenses include advertising and promotional expenses, internal merchandising expenses, and on-site sales and marketing staff. Historic expenses ranged from $1,917 to $3,766 PAR between 2002 and 2008.  The budgeted amounts and HOST ranges for the relevant time periods are summarized in the following table.   
Year	Budgeted Amount	Year	HOST Ranges
	
2006	$2,916	2005	$3,699-$4,688	
2007	$3,332	2006	$3,947-$5,105	
2008	$3,496	2007	$3,643-$5,464	
2009	$3,777	2008	$4,158-$4,980	

Relying primarily on the subject hotel's actual historic costs and the projected amounts, Ms. Roginsky and Ms. McKinney selected expenses for this category of $3,100 PAR for fiscal year 2007, $3,200 PAR for fiscal year 2008, $3,400 PAR for fiscal year 2009, and $3,600 PAR for fiscal year 2010.  
Property Operating and Maintenance
This expense consists of payroll for the engineering department, as well as expenses associated with the upkeep of the building, grounds and landscaping, painting, and maintenance of electrical and mechanical systems within the property. Historic expenses ranged from $3,027 to $5,490 PAR between 2002 and 2008.  The budgeted amounts and HOST ranges for the relevant time periods are summarized in the following table.   
Year	Budgeted Amount	Year	HOST Ranges
	
2006	$4,826	2005	$2,334-$3,320	
2007	$5,243	2006	$2,412-$3,594	
2008	$5,278	2007	$2,571-$3,595	
2009	$5,322	2008	$2,556-$3,530	

Relying primarily on the subject hotel's actual historic costs and the projected amounts, Ms. Roginsky and Ms. McKinney selected expenses for this category of $4,800 PAR for fiscal year 2007, $5,100 PAR for fiscal year 2008, $5,300 PAR for fiscal year 2009, and $5,300 PAR for fiscal year 2010.  
Utilities
Utility expenses include the cost of electricity, gas, water, and trash collection.  Historic expenses ranged from $11.40 to $18.03 POR between 2002 and 2008.  The budgeted amounts and HOST ranges for the relevant time periods are summarized in the following table.   
Year	Budgeted Amount	Year	HOST Ranges
	
2006	$20.17	2005	$ 8.32-$11.46	
2007	$19.35	2006	$ 9.08-$13.55	
2008	$17.20	2007	$ 9.35-$14.08	
2009	$18.38	2008	$10.62-$13.87	

Relying primarily on the subject hotel's actual historic costs and the projected amounts, Ms. Roginsky and Ms. McKinney selected expenses for this category of $17.00 POR for fiscal year 2007, $18.00 POR for fiscal year 2008, $17.50 POR for fiscal year 2009, and $15.50 POR for fiscal year 2010.  
Management Fee
Industry standard fees charged by hotel management companies typically range from 2.0% to 5.0% of total revenue, depending on the complexity of the operation, the revenue potential, and other strategic considerations.  Data from the Host reports consistently range from about 2.5% to 3.7% during the relevant time period.  Relying on this data as well as the Hotel Management Agreement's fee of 2.25%, Ms. Roginsky and Ms. McKinney selected a management fee of 2.2% percent for all of the fiscal years at issue.
Insurance
This expense reflects building and contents insurance for the subject hotel.  Historically the subject hotel's insurance expense has ranged from $421 to $784 PAR from 2002 to 2008.   The budgeted amounts and HOST ranges for the relevant time periods are summarized in the following table.   
Year	Budgeted Amount	Year	HOST Ranges
	
2006	$627	2005	$589-$1,000	
2007	$734	2006	$596-$1,070	
2008	$744	2007	$558-$1,267	
2009	$784	2008	$492-$  986	

Relying primarily on the subject hotel's actual historic costs and the projected amounts, Ms. Roginsky and Ms. McKinney selected expenses for this category of $600 PAR for fiscal year 2007, $700 PAR for fiscal year 2008, $750 PAR for fiscal year 2009, and $775 PAR for fiscal year 2010.  
Reserve for Replacement
Ms. Roginsky and Ms. McKinney considered capital improvements to be inevitable in maintaining the property in operable and marketable condition.  According to the future capital projects budget provided to them by Park Plaza, there were no major renovations on the horizon following the major renovation in 2003-2005.  Nevertheless, they included a reserve for replacement of 5% for necessary capital improvements, which, in Ms. McKinney's methodologies, is the equivalent of approximately $3,000,000 per year.  Ms. McKinney explained that this reserve does not anticipate a major capital improvement, only typical future projects necessary to ensure the subject hotel's competitive position in the market.  Ms. McKinney reported that she accounted for the risks associated with longer-term capital needs through her capitalization rate selection.  In her testimony, she attempted to clarify the narrative in her appraisal report that by stating that this 5% reserve item accounted for the return on and the return of FF&E. 
Capitalization Rate Selection
Ms. McKinney relied on several sources in developing her capitalization rates for the fiscal years at issue.  She reviewed investor surveys published by various companies that track expected investor equity capitalization rates for full-service hotel properties nationwide and also published capitalization rates for national and Boston hotel investors for the quarters just prior to or just after the relevant valuation dates.  In addition to examining expected capitalization rates, Ms. McKinney conducted band-of-investment and debt-coverage analyses using debt and equity rates and underwriting thresholds from RealtyRates.com.  She also reviewed capitalization rates from sales of hotel properties in Boston and considered the many factors that influence the risk associated with the subject property.  The positive risk factors included the subject hotel's established reputation in the marketplace, its facilities, its RevPAR, the limited supply of hotels in the market, the desirability of its Boston location, the advent of the BCEC, and the competitiveness of full-service hotels.  Some of the negative risk factors include the subject hotel's secondary location, the Boston lodging market's expansion, and the subject hotel's age and inefficiencies.  The following tables summarize most of the rates that Ms. McKinney reviewed and developed for the fiscal years at issue.

Fiscal Year 2007
IRR-Viewpoint
Boston	Realty- Rates.com	Korpacz Full-Service	Band of Investment	Debt Coverage	Boston Sales	

9.00%	
6.66%-12.25%	
6.00%-11.00%	
7.28%	
6.51%	
1.0-6.3%
	

Fiscal Year 2008
IRR-Viewpoint
Boston	Realty- Rates.com	Korpacz Full-Service	Band of Investment	Debt Coverage	Boston
Sales	

9.00%	
6.98%-12.47%	
6.00%-10.50%	
7.49%	
6.77%	
1.0-6.3%
	

Fiscal Year 2009
IRR-Viewpoint
Boston	Realty- Rates.com	Korpacz Full-Service	Band of Investment	Debt Coverage	Boston
Sales	

8.50%	
6.81%-12.35%	
6.00%-10.50%	
7.31%	
6.49%	
1.0-6.9%
	

Fiscal Year 2010
IRR-Viewpoint
Boston	Realty- Rates.com	Korpacz Full-Service	Band of Investment	Debt Coverage	Boston
Sales	

9.00%	
6.36%-13.18%	
6.00%-10.50%	
6.91%	
6.04%	
1.0-6.9%
	

On this basis, Ms. McKinney selected capitalization rates of 7.00% for fiscal year 2007, 6.50% for fiscal year 2008, 6.00% for fiscal year 2009, and 6.25% for fiscal year 2010.  After adding the appropriate tax factor to these rates, her combined capitalization rates were 9.687% for fiscal year 2007, 9.092% for fiscal year 2008, 8.711% for fiscal year 2009, and 9.188% for fiscal year 2010.  Ms. McKinney then divided her net-income figures by her combined capitalization rates to achieve her rounded values of $101,600,000, $124,500,000, $120,300,000, and $105,800,000, for fiscal years 2007, 2008, 2009, and 2010, respectively.
Fiscal Year 2007 - Ramp-Up Year  
For fiscal year 2007, however, Ms. McKinney and Ms. Roginsky believed that the subject hotel had yet to achieve stabilization following the recent renovation and was still ramping up to a stabilized state as of January 1, 2006.  Therefore, they adjusted the prescribed ADR of $159 for fiscal year 2007 to $155 to reflect that the subject hotel was not yet operating at a stabilized level.  To capture the impact of this ramp-up year, both income and variable line item expenses were estimated to vary from stabilized levels by 2.5% commensurate with the difference in ADR and were adjusted accordingly.  Fixed expenses were estimated at the stabilized level -- without reduction.  The difference between the estimated ramp-up year performance and the stabilized performance for fiscal year 2007 reflects what they termed "a capital loss" of $674,890.  Ms. McKinney then deducted this amount from the subject hotel's stabilized value for fiscal year 2007 to produce a final rounded estimate of the subject hotel's ramp-up year fair market value -- $100,900,000.

Pro Formas 
Summaries of the income-capitalization methodologies that Ms. McKinney employed in valuing the subject office building for the fiscal years at issue are contained in the following four tables.

Fiscal Year 2007
	As Ramp-Up Year		As Stabilized Year		
RATE & OCCUPANCY					
 Number of Rooms	941		941		
 Occupancy	70.0%		70.0%		
 ADR	$155.00		$159.00		
 RevPAR	$108.50		$111.30		
 Occupied Rooms	240,426		240,426		
					
REVENUES	$	%	$	%	
 Rooms	37,265,953	 65.9	38,227,655	 65.9	
 Food & Beverage	17,395,078	 30.8	17,829,955	 30.7	
 Other Operated Depts.	688,555	  1.2	705,769	  1.2	
 Rentals & Other Inc. 	 1,207,992	  2.1	 1,238,191 	  2.1	
   Total	56,557,577	100.0	58,001,570	100.0	
DEPARTMENT EXPENSES					
 Rooms	11,234,321	30.1	11,515,179	30.1	
 Food & Beverage	14,785,816	85.0	15,155,462	85.0	
 Other Operated Depts.	    585,272	85.0	   599,904	85.0	
   Total	26,605,410	47.0	27,270,545	47.0	
DEPARTMENTAL INCOME	29,952,168	53.0	30,731,025	53.0	
OPERATING EXPENSES					
 Admin. & General	4,264,612	 7.5	4,264,612	 7.4	
 Sales & Marketing	3,004,613	 5.3	3,004,613	 5.2	
 Prop. Opera. & Maint.	4,652,304	 8.2	4,652,304	 8.0	
 Utilities	 4,209,851	 7.4	 4,209,851	 7.3	
   Total	16,131,380	28.5	16,131,380	27.8	
GROSS OPERATING PROFIT	13,820,788	24.4	14,599,646	25.2	
 Management Fee	1,244,267	 2.2	1,276,035	 2.2	
FIXED EXPENSES					
 Prop. & Other Taxes	N/A	 0.0	N/A	 0.0	
 Insurance	581,538	 1.0	581,538	 1.0	
 Replacement Reserve	2,827,879	 5.0	2,900,078	 5.0	
   Total	3,409,417	 6.0	3,481,616	 6.0	
NET OPERATING INCOME	9,167,105	16.2	9,841,995	17.0	
					
STABILIZED NOI DIFFERENTIAL			1 year   $674,890 total		
					
	Capitalization Rate		7.000%		
	Real Estate Tax Adj.		2.687%		
	Combined Cap. Rate		9.687%		
					
Value Bef. Stabil. Adj.			$101,600,027		
Ramp-Up/Stabil. Adj. (-)			$    674,890		
Fair Market Value			$100,925,137		
Rounded FMV			$100,900,000		
	Per Key - $107,226				
    

Fiscal Years 2008 & 2009
	Fiscal Year 2008		Fiscal Year 2009		
RATE & OCCUPANCY					
 Number of Rooms	941		941		
 Occupancy	75.0%		75.0%		
 ADR	$165.00		$170.00		
 RevPAR	$123.75		$127.50		
 Occupied Rooms	257,599		257,599		
					
REVENUES	$	%	$	%	
 Rooms	42,503,794	 67.3	43,791,788	 69.0	
 Food & Beverage	18,572,870	 29.4	17,776,890	 28.0	
 Other Operated Depts.	795,980	  1.3	729,648	  1.1	
 Rentals & Other Inc. 	 1,326,634	  2.1	 1,193,970 	  1.9	
   Total	63,199,277	100.0	63,492,296	100.0	
DEPARTMENT EXPENSES					
 Rooms	12,735,682	30.0	13,531,662	30.1	
 Food & Beverage	15,972,668	86.0	15,643,663	85.0	
 Other Operated Depts.	    716,382	90.0	   715,055	98.0	
   Total	29,424,732	46.6	29,890,381	47.0	
DEPARTMENTAL INCOME	33,774,545	53.4	33,601,915	53.0	
OPERATING EXPENSES					
 Admin. & General	4,409,997	 7.0	4,749,227	 7.5	
 Sales & Marketing	3,101,536	 4.9	3,295,382	 5.2	
 Prop. Opera. & Maint.	4,943,073	 7.8	5,136,919	 8.1	
 Utilities	 4,775,881	 7.6	 4,643,217	 7.3	
   Total	17,230,486	27.3	17,824,745	28.1	
GROSS OPERATING PROFIT	16,544,059	26.2	15,777,170	24.8	
 Management Fee	1,390,384	 2.2	1,396,831	 2.2	
FIXED EXPENSES					
 Prop. & Other Taxes	    N/A	 0.0	    N/A	 0.0	
 Insurance	678,461	 1.1	726,923	 1.1	
 Replacement Reserve	3,159,964	 5.0	3,174,615	 5.0	
   Total	3,838,425	 6.1	3,901,537	 6.1	
NET OPERATING INCOME	11,315,250	17.9	10,478,802	16.5	
					
  Capitalization Rate	6.500%		6.000%		
  Real Estate Tax Adj.	2.592%		2.711%		
  Combined Cap. Rate	9.092%		8.711%		
					
Fair Market Value	$124,452,811		$120,293,902		
Rounded FMV	$124,500,000		$120,300,000		
Per Key	$132,306		$127,843		
    

Fiscal Year 2010
RATE & OCCUPANCY			
 Number of Rooms		941	
 Occupancy		75.0%	
 ADR		$167.00	
 RevPAR		$125.25	
 Occupied Rooms		257,599	
			
REVENUES	$	%	
 Rooms	43,018,991	 68.9	
 Food & Beverage	17,776,890	 28.5	
 Other Operated Depts.	703,116	  1.1	
 Rentals & Other Inc. 	   928,643 	  1.5	
   Total	62,427,640	100.0	
DEPARTMENT EXPENSES			
 Rooms	13,266,336	30.8	
 Food & Beverage	15,821,432	89.0	
 Other Operated Depts.	   689,053	98.0	
   Total	29,776,821	47.7	
DEPARTMENTAL INCOME	32,650,819	52.3	
OPERATING EXPENSES			
 Admin. & General	4,943,073	 7.9	
 Sales & Marketing	3,489,228	 5.6	
 Prop. Opera. & Maint.	5,136,919	 8.2	
 Utilities	 4,112,564	 6.6	
   Total	17,681,784	28.3	
GROSS OPERATING PROFIT	14,969,035	24.0	
 Management Fee	1,373,408	 2.2	
FIXED EXPENSES			
 Prop. & Other Taxes	    N/A	 0.0	
 Insurance	751,153	 1.2	
 Replacement Reserve	3,121,382	 5.0	
   Total	3,872,535	 6.2	
NET OPERATING INCOME	9,723,092	15.6	
			
  Capitalization Rate	6.250%	
  Real Estate Tax Adj.	2.938%	
  Combined Cap. Rate	9.188%	
			
Fair Market Value		$105,823,813	
Rounded FMV		$105,800,000	
		$112,434	
    
Ms. McKinney further explained that the rounded fair cash values for the subject hotel derived using her income-capitalization methodology reflect values for the real property.  For each of the fiscal years at issue, she accounted for the contribution of the personalty by her deduction for replacement reserves.  
Ms. McKinney also considered whether an additional deduction for business enterprise value was appropriate here.  She quoted the definition of business enterprise value found in Appraisal Institute, The Appraisal of Real Estate (13th ed.): "A value enhancement that results from items of intangible personal property, such as management or marketing skill, an assembled workforce, working capital, trade names, franchises, patents, trademarks, non-realty related contracts and leases and some operating agreements."  Ibid at 578.  She explained that in her view for the goodwill and other intangibles associated with a hotel enterprise to have independent value above and beyond the real estate, one must prove that the entrepreneurial efforts of the business manager, ownership entity or franchisee are responsible for a sustainable, supra-normal cash flow and that this entrepreneurial value is not real estate related.  No such proof was offered in the subject hotel appeals.  Therefore, she determined that business enterprise value cannot be separated and the economic benefits of management flow to the real estate.  She noted, however, that a market-based management fee was deducted to account for the intangible value present from the operation of the hotel as a going concern.
The combined values that Ms. McKinney derived for the Boston Park Plaza Hotel and Office Building using her income-capitalization methodologies for the fiscal years at issue are summarized below.
				Boston Park   Park Plaza     Combined   
Plaza Hotel   Office Bldg.    Total

January 1, 2006 (FY 2007)	$100,900,000  $52,600,000    $153,500,000
January 1, 2007 (FY 2008)	$124,500,000  $59,700,000    $184,200,000
January 1, 2008 (FY 2009)	$120,300,000  $63,700,000    $184,000,000
January 1, 2009 (FY 2010)	$105,800,000  $63,600,000    $169,400,000

Mr. Logue's Valuation of the Park Plaza Castle 
and Armory

Mr. Logue's Market Overview
	Mr. Logue considered the market overviews for the Park Plaza Hotel and the Park Plaza Office Building to be market overviews for the Armory, as well.  The Armory's function and meeting hall space was managed by Starwood and administered and operated by hotel personnel.  The Head House was leased to a restaurant that was subject to essentially the same market forces as the retail or restaurant space located in the subject hotel and the subject office building.  The Head House was also managed by Saunders, the same entity that managed the Park Plaza Office Building and the retail spaces in the Park Plaza Hotel.  Accordingly, Mr. Logue included those market overviews in his self-contained appraisal report for the Armory.  
Mr. Logue's Income-Capitalization Methodology 
    
In applying an income-capitalization approach to estimate the value of the Park Plaza Castle and Armory, Mr. Logue inspected the property, reviewed pertinent financial records, and investigated rents for restaurants and retail spaces at other properties in the immediate area.  Given the unique nature of the Armory, he focused primarily on the reported income and expenses for the exhibition hall and what he considered to be reasonable market rents for the restaurant located in the Head House portion of the subject property in implementing his income-capitalization methodology for valuing the Armory for the fiscal years at issue.  
	Mr. Logue noted that the annual food and beverage revenue from the exhibition hall portion of the Armory was reasonably consistent during the relevant time period; it varied from a low of approximately $229,000 in 2006 to a high of approximately $310,000 in 2008.  He stabilized the annual revenue relying on the three calendar years closest to the respective dates of valuation.  This method produced stabilized annual revenues for the exhibition hall of $250,000 for fiscal years 2007 and 2008 and $260,000 for fiscal year 2009.
	For the four-story plus basement Head House, Mr. Logue examined the long-term actual lease with Smith & Wollensky, which provided for a base lease, as well as percentage rent in excess of the base and real estate tax escalation payments.  The following table summarizes the total annual rent that Smith & Wollensky paid during the relevant time period.
	2005
	2006	2007	2008	2009	
 Base Rent	$300,000	$300,000	$300,000	$300,000	$399,144	
 Percentage Rent	$459,519	$427,905	$259,968	$ 54,501	$0	
 RE Taxes	$  8,009	$ 39,511	$ 37,213	$ 57,617	$ 62,859	
 Total Rent	$767,528	$767,416	$597,181	$412,118	$462,003	
 Rent/SF	$51.16	$51.00	$39.81	$27.47	$30.80	

	In addition to his examination of the actual lease in place for the Head House, Mr. Logue considered four restaurant rents and two retail rents in the immediate vicinity of the Armory.  Based on this actual and market information, Mr. Logue determined that per-square-foot rents that included base year taxes and structural repairs of $40 for fiscal years 2007 and 2008 and $35 for fiscal year 2009 were appropriate.
	After adding these two income sources, his potential gross incomes for fiscal years 2007, 2008, and 2009, were $850,000, $850,000, and $785,000, respectively.
	As of the dates of valuation, Mr. Logue observed that the Head House restaurant space was 100% leased to and occupied by Smith and Wollensky and the first floor restaurant space at the Boston Park Plaza Hotel and the Park Plaza Office Building was also 100% leased and occupied.  Nonetheless, Mr. Logue noted that these spaces in downtown Boston buildings are not anticipated to be fully occupied throughout their economic life or even a typical investment term and an allowance therefore must be made for vacancy and credit loss.  Mr. Logue applied a 5% vacancy and credit loss to the restaurant space.
	For expenses, Mr. Logue reviewed the actual expenses reported on the subject property's financial statements and discussed the expense information with property ownership, management, and accounting representatives.  He stabilized them using, to the extent possible, the three years closest to the dates of valuation.  He included reserves and security in his repairs and maintenance expense category.  Mr. Logue determined that management fees of 4% were appropriate for a mixed-use building the size of the subject property for the fiscal years at issue and that brokerage commissions of 4% with a projected annual turnover to new tenants of 50%, resulting in an annualized brokerage commission of 2% was appropriate to apply to the restaurant space only for the fiscal years at issue.     
	After deducting the expenses from the effective gross incomes, the estimated net-operating incomes for the fiscal years at issue were as follows:
		FY 2007 (1/1/2006)		$456,700
		FY 2008 (1/1/2007)		$456,700
		FY 2009 (1/1/2008)		$390,400

Mr. Logue based his estimated capitalization rates on rates that he derived from the mortgage equity technique and a review of the Korpacz/PWC Real Estate Investor Surveys for National Full Service Hotels during the relevant time period.  He considered the income generated from the Armory to be somewhat similar to that generated by a hotel.  In his mortgage-equity technique, he assumed a 70% mortgage amortized over twenty years; interest rates of 6.00% for fiscal year 2007 and 6.25% for fiscal years 2008 and 2009; a ten-year holding period; and equity yield rates of 16% for fiscal year 2007, 15% for fiscal year 2008, and 14% for fiscal year 2009.  Mr. Logue also estimated that a purchaser of the subject property would anticipate a 20% increase in property value over a ten-year holding period as of the valuation date for fiscal years 2007 and 2008, but only a 15% increase for fiscal year 2009. The capitalization rates that he developed using this mortgage-equity technique and these assumptions for each of the fiscal years at issue are as follows:
		FY 2007		8.7%
		FY 2008		8.5%
		FY 2009		8.3%

Mr. Logue reported that the relevant Korpacz/PWC surveys indicated that the overall capitalization rates for full-service hotels gradually declined through 2006 and 2007, stabilized in 2008 and then began to increase during the second half of 2008.  Based upon a review of this data and in consideration of the capitalization rates that he developed using his mortgage-equity technique, Mr. Logue concluded that realistic capitalization rates for the fiscal years at issue, both before and after adding the tax factors, were as follows:
January 1, 2006 (FY 2007)	9.000%	11.687%
January 1, 2007 (FY 2008)	8.750%	11.342%
January 1, 2008 (FY 2009)	8.250%	10.961%

Mr. Logue then divided the estimated net incomes for the Armory for each of the fiscal years at issue by his total overall capitalization rates for each corresponding fiscal year in calculating his indicated values, which he then rounded to $3,900,000 for fiscal year 2007, $4,000,000 for fiscal year 2008, and $3,600,000 for fiscal year 2009. 
The two below tables summarize the income-capitalization valuation methodology utilized by Mr. Logue for the three fiscal years at issue.
Fiscal Years 2007 & 2008

Potential Gross Income	Location of Space
	SF	Rent/SF	Total	
Food & Beverage/Functions	Exhibition Hall			 $250,000
	
Restaurant	Head House	15,000	$40.00	 $600,000
	
Tot. Potential Gross Income				 $850,000	
					
Vacancy & Credit Loss		5%		 -$30,000	
					
Effective Gross Income				 $820,000	
					
Expenses					
  Food & Beverage			$ 55,000		
  Administrative & General			$ 35,000		
  General Building/Legal			$ 30,000		
  Repairs & Maintenance			$130,000		
  Energy/Utilities			$ 59,000		
  Insurance			$  9,500		
  Management		4%	$ 32,800		
  Brokerage Commissions		2%	$ 12,000		
					
Total Operating Expenses				-$363,300	
					
Net Operating Income				 $456,700
	
					
FY 2007 Capitalization					
  Capitalization Rate		 9.000%			
  Tax Factor		 2.687%			
FY 2007 Overall Rate		11.687%			
					
FY 2007 Indicated Value				$3,907,761	
					
FY 2007 Rounded				$3,900,000
	
					
FY 2008 Capitalization					
  Capitalization Rate		 8.750%			
  Tax Factor		 2.592%			
FY 2008 Overall Rate		11.342%			
					
FY 2008 Indicated Value				$4,026,627	
					
FY 2008 Rounded				$4,000,000	


Fiscal Year 2009
Potential Gross Income	Location of Space
	SF	Rent/SF	Total	
Food & Beverage/Functions	Exhibition Hall			 $260,000
	
Restaurant	Head House	15,000	$35.00	 $525,000
	
Tot. Potential Gross Income				 $785,000	
					
Vacancy & Credit Loss		5%		 -$26,250	
					
Effective Gross Income				 $758,750	
					
Expenses					
  Food & Beverage			$ 60,000		
  Administrative & General			$ 39,000		
  General Building/Legal			$ 30,000		
  Repairs & Maintenance			$130,000		
  Energy/Utilities			$ 59,000		
  Insurance			$  9,500		
  Management		4%	$ 30,350		
  Brokerage Commissions		2%	$ 10,500		
					
Total Operating Expenses				-$368,350	
					
Net Operating Income				 $390,400	
					
Capitalization					
  Capitalization Rate		 8.250%			
  Tax Factor		 2.711%			
Overall Rate		10.961%			
					
Indicated Value				$3,561,719	
					
Rounded				$3,600,000	
	
Ms. McKinney's Valuation of the Park Plaza Castle 
and Armory

Ms. McKinney considered the operation of the Armory to be complicated by the shared management arrangement between the Saunders management team and Starwood Lodging Corp.  The building is operated as an extension of the subject hotel with meeting and function space being sold through the subject hotel sales office.  Personnel from the subject hotel are often utilized to staff events.  In addition, the space in the Head House, approximately 15,000 square feet, is rented to Smith & Wollensky for a multi-level, 430-seat first class restaurant.  Ms. McKinney observed that income and expense information for the Armory is presented differently on various documents prepared by Starwood and the Saunders Company.  She judged that the statements from the Starwood were the most reliable ones.  The following table summarizes that information for calendar years 2005 to 2008.
	2005
$	%	2006
$	%	2007
$	%	2008
$	%		Revenue										Function Room Rental	  260,485	24	229,148	23	249,360	28	310,399	 37		Headhouse Rental	  842,588	76	754,427	77	644,192	72	534,328	63		Total Revenue	1,103,073	100	983,575	100	893,552	100	844,727	100												Operating Expenses										Function Room	 46,683		 68,109		 48,528		 60,532			Headhouse	253,015		328,956		203,136		136,914			Total Dept. Expenses	299,698	27	397,065	40	251,664	28	197,446	23												Total Dept. Profit	803,375	73	586,510	60	641,888	72	647,281	77												Utilities										Electricity	52,579	5	52,621	5	46,905	5	54,095	6		Gas	22,226	2	22,269	2	28,376	3	26,822	3		Total Utilities	74,805	7	74,890	8	75,281	8	80,917	10												Management Fees	  5,861	0.53	  5,156	0.52	  5,611	0.63	  6,984	0.83		Real Estate Tax	117,060	11	117,060	12	122,047	14	127,515	15												Net Operating Income	605,649		389,405		438,949		431,865			
	Ms. McKinney reported that the historic revenues consist of room rental charges for the meeting and function space and rental income from the Smith & Wollensky restaurant space.  While she found it difficult to discern from the available data, Ms. McKinney reported that the Armory revenues likely included operating pass-throughs for the restaurant space which were later deducted as expenses.  Expenses for the meeting and function space include rental equipment and cleaning as well as utilities.  She assumed that the reported utility expenses were for only the meeting and function space.  
	Consistent with the retail market analysis that Ms. McKinney conducted for the retail space at the subject hotel and office building and in consideration of the leasing plans and projections for calendar years 2006 through 2009 in which the base and percentage rent for the Headhouse space was estimated at $56.17, $50.29, $42.95, and $35.62, respectively, she estimated that the market rent for the Headhouse space was $35.00 on a triple-net basis for the three fiscal years at issue.  Relying on the same market analysis, Ms. McKinney estimated the vacancy and collection loss at 5% for the three fiscal years at issue.  Ms. McKinney based her income estimates for the meeting and function space on the historical information.  
	For expenses associated with the meeting and function space, Ms. McKinney deducted an overall 20% of related revenue for fiscal year 2007, which she increased to 25% for the following two fiscal years.  She stated that she based these expense percentages on the historical financials.  She also included deductions for electricity and gas, starting at $50,000 and $25,000, respectively for fiscal year 2007, which she increased by 3% over the prior year for the two successive fiscal years.  For the Smith & Wollensky space, she did not deduct for utilities or other operating expenses because the restaurant's rent was based on a triple-net leasing scenario.  She did, however, deduct a management fee of 3% of effective gross income for each of the fiscal years at issue.
	Ms. McKinney used direct capitalization rates of 9.0%, 8.75%, and 8.50% for fiscal years 2007, 2008, and 2009, respectively.  Because of the greater risk intrinsic to a single-tenant restaurant and a function hall rental operation, these rates reflect a premium of 175 to 200 basis points for fiscal year 2007, a premium of 175 to 225 basis points for fiscal year 2008, and a premium of 175 to 250 basis points over rates that she derived for the subject office building's retail space and the subject hotel.  Ms. McKinney added a tax factor to each of these rates before dividing the corresponding fiscal year's net-operating incomes by, what she termed, the adjusted capitalization rate.
	Based on this methodology, Ms. McKinney estimated the rounded fair cash values of the Armory at $5,400,000 for fiscal year 2007 and at $5,200,000 for fiscal years 2008 and 2009.  The following table summarizes her income capitalization approaches for the three fiscal years at issue. 
	2007 ($)	%	2008 ($)	%	2009 ($)	%		Revenue								Function Room Rental	 250,000	32	  250,000	33	  250,000	33		Headhouse Rental	 525,000	68	  498,750	67	  498,750	67		Total Revenue	 775,000	100	  748,750	100	  748,750	100										Operating Expenses								Function Room	  50,000	20	   62,500	25	   62,500	25		Headhouse	     NNN	0	     NNN	0	      NNN	0		Total Dept. Expenses	  50,000	6	  62,500	6	   62,500	8										Total Dept. Profit	 725,000	94	  686,250	92	  686,250	92										Utilities								Electricity	  50,000	6	   51,500	7	   53,045	7		Gas	  25,000	3	   25,750	3	   26,523	4		Total Utilities	  75,000	10	   77,250	10	   79,568	11										Management Fees	  23,250	3.00	   22,463	3.00	   22,463	3.00										Net Operating Income	 626,750		  586,537		  584,219											Direct Cap Rate	 9.000%		 8.750%		 8.500%			Tax Factor	 2.687%		 2.592%		 2.711%			Adjusted Cap Rate	11.687%		11.342%		11.211%											Value	5,362,796		5,171,376		5,211,132			Rounded	5,400,000		5,200,000		5,200,000			

The Board's Findings

Preliminary Findings

For the reasons that they provided, the Board agrees with the parties' real estate valuation experts that the subject properties' highest-and-best uses for the fiscal years at issue were their current ones.  In making this finding, the Board not only gave credence to the real estate valuation experts' highest-and-best-use analyses and rationales but also considered, among other factors, the subject properties' history, size, location, and layout, as well as the uses of properties similar to the subject properties and located in its market area.   The Board finds that, for the fiscal years at issue, the subject properties' then current uses represented "[t]he reasonably probable and legal use of . . . improved property that is physically possible, appropriately supported, and financially feasible and that results in the highest value."  The Appraisal of Real Estate (13th ed. 2008) at 277-278.  
For the rationales that they provided, the Board also agrees with the parties' real estate valuation experts that the income-capitalization approach is the most suitable methodology to use to value the subject properties for the fiscal years at issue.  The income-capitalization approach is often used to determine the value of income-producing property like the subject properties, particularly where, as here, there is inadequate fee-simple sales data and the cost approach is ill-advised because of the age of the subject properties and related issues.  Moreover, the Board finds that there are no "special circumstances" associated with the subject properties, which would necessitate the use of a cost approach.  
Valuation Findings for the Park Plaza Office Building
The Board adopts Ms. McKinney's technique of valuing all of the independent retail and restaurant rental space in the subject hotel and office building in the valuation methodology for the Park Plaza Office Building.  The Board finds that this approach best comports with the reality that, during all relevant times, the Starwood Lodging Corp. managed the subject hotel while the Saunders Family management team managed the independent retail, restaurant, and commercial office rental space for the subject hotel and office building.  In the Board's view, this approach also offers a more straightforward and precise approach for valuing the subject hotel.  
In determining the amount of rental space in the various rental categories for the fiscal years at issue, the Board relies primarily on the rent rolls, professional measurements of useable space, and areas of agreement or near agreement between the two real estate valuation experts.  The Board also decides to treat the area utilized by the Executive Center as recommended by Mr. Logue, which results in the Board incorporating in its methodologies the actual stabilized income and expenses associated with the Executive Center's existing special use.  In her income-capitalization methodologies, Ms. McKinney considered that space to be standard commercial office space.  The Board adopts Mr. Logue's approach for the Executive Center space because his method better reflects that rental area's highest-and-best use, particularly considering its existing build-out, the relevant market, and the net-income amounts that it generated.  The Board treats the space rented to the barbershop discretely, and not as part of the overall rentable retail area, because of its basement location, its significantly lower rent, and its actual existence as an amenity for the guests of the subject hotel and the tenants of the subject office building or their guests. 
For rents, vacancy rates, certain expenses, and capitalization rate choices, the Board considers the two real estate valuation experts' market analyses and their underlying supporting information, including market and actual data, in ascertaining trends.  More particularly, in developing its stabilized office and retail rents, the Board relies primarily on the actuals, the owner's leasing plans, the rents from similar Class B neighboring properties, and the recommendations from the two real estate valuation experts.  The Board's office rents are, like Ms. McKinney's, net of electric while the retail rents are triple net.  For its storage rents, the Board relies completely on Mr. Logue's recommendations because they were well-supported.  
As for additional income in the form of tenant service income and miscellaneous income generated from the commercial office space (but not the area encompassed by the Executive Center), the Board relies entirely on Ms. McKinney recommendations because they appear to comport with the reality associated with the subject office building and are supported by market surveys.  The Board's integration of these two income categories and the modest amount of revenue generated by them into its income-capitalization methodologies also complements the Board's selections for market rents and its treatment of the Executive Center. 
For its stabilized vacancy rates, the Board examined the market trends and market rates in evidence and considered the subject office building's actual vacancy rates, as well as the real estate valuation experts' recommendations along with their supporting data and rationales.  Based on these sources, the Board selects vacancy rates of 6% for fiscal years 2007, 2008, and 2009, and a vacancy rate of 8% for fiscal year 2010.  The Board does not apply a vacancy adjustment to the space utilized by the Executive Center because any vacancy is already captured by using that area's actual income and expenses figures, as stabilized by Mr. Logue.     
The following tables summarize the Board's development of the effective gross incomes that it uses in its income-capitalization methodologies for the fiscal years at issue.


INCOME                              Size(SF)   Rate/SF

Commercial Office Space ("COS")      220,970   $27.00              $5,966,190
Executive Center ("EC")	               17,130   $64.51              $1,105,056
Retail (hotel & office)               38,790   $36.00              $1,396,440
Storage                                5,942   $12.00              $   71,304 
Barbershop ("B")                       1,907   $ 6.04              $   11,518

Tenant Service Income                220,970   $ 0.20              $   44,194
Miscellaneous Income                 220,970   $ 0.05              $   11,048

Potential Gross Income:                                            $8,605,750	

Less: Vacancy & Collection Allowance (excludes EC) - 6.0%
      ($  450,042)


	
Effective Gross Income:                                            $8,155,708	
Fiscal Year 2007
                   


Fiscal Year 2008

INCOME                              Size(SF)   Rate/SF

Commercial Office Space ("COS")      221,201    $28.00              $6,193,628
Executive Center	 ("EC")               17,130    $65.97              $1,130,066
Retail (hotel & office)               37,981    $46.00              $1,747,126
Storage                                5,942    $12.00              $   71,304 
Barbershop ("B")                       1,907    $ 6.28              $   11,976

Tenant Service Income                221,201    $ 0.20              $   44,240
Miscellaneous Income                 221,201    $ 0.05              $   11,060

Potential Gross Income:                                             $9,209,400	

Less: Vacancy & Collection Allowance (excludes EC) - 6.0%
       ($  484,760)


	
Effective Gross Income:                                             $8,724,640	


Fiscal Year 2009

INCOME                              Size(SF)   Rate/SF

Commercial Office Space ("COS")      221,513    $31.00              $6,866,903
Executive Center	 ("EC")               17,130    $67.72              $1,160,044
Retail (hotel & office)               37,981    $46.00              $1,747,126
Storage                                5,942    $12.00              $   71,304 
Barbershop ("B")                       1,907    $ 6.41              $   12,224

Tenant Service Income                221,513    $ 0.20              $   44,303
Miscellaneous Income                 221,513    $ 0.05              $   11,076

Potential Gross Income:                                             $9,912,980	

Less: Vacancy & Collection Allowance (excludes EC) - 6.0%
       ($  525,176)


	
Effective Gross Income:                                             $9,387,804	



Fiscal Year 2010

INCOME                              Size(SF)   Rate/SF

Commercial Office Space ("COS")      221,157    $30.00              $6,634,710
Executive Center	 ("EC")               17,130    $64.21              $1,099,917
Retail (hotel & office)               37,981    $46.00              $1,747,126
Storage                                5,942    $12.00              $   71,304 
Barbershop ("B")                       1,907    $ 6.69              $   12,758

Tenant Service Income                221,157    $ 0.20              $   44,231
Miscellaneous Income                 221,157    $ 0.05              $   11,058

Potential Gross Income:                                             $9,621,104	

Less: Vacancy & Collection Allowance (excludes EC) - 8.0%
       ($  681,695)


	
Effective Gross Income:                                             $8,939,409	

	The Board applies operating expenses to the areas identified for commercial office and Executive Center use.  For the Executive Center space, the Board uses the stabilized actual expenses as presented by Mr. Logue.  The Board's approach in this regard is consistent with its treatment of the potential gross income received from this area for income-capitalization purposes.  For the commercial office space, the Board examined and appropriately adjusted, as needed, the recommendations offered by the two real estate valuation experts, certain industry sources, and the subject office building's actual expenses.  The Board notes that Mr. Logue's expense suggestions exclude utilities but include management fees, while those offered by BOMA break out management fees but include utilities.  Ms. McKinney's recommended expenses include neither management fees nor utilities.  Based on these sources, and incorporating a recognizable trend of increasing costs, the Board adopts stabilized operating expenses for the commercial office space of $9.00, $9.50, $10.00, and $10.50 per square foot for fiscal years 2007, 2008, 2009, and 2010, respectively.  The actual expenses for the Executive Center, which Mr. Logue stabilized and the Board approves, are $45.00 per square foot for fiscal years 2007 and 2008 and $46 per square foot for fiscal years 2009 and 2010. 
	In addition, the Board utilizes a stabilized management fee of $1.00 per square foot in its income-capitalization methodologies for each of the fiscal years at issue for the subject office building's commercial office and retail space.  This amount is consistent with the 3% management fees recommended by Ms. McKinney and the management costs incorporated into Mr. Logue's operating expenses.  The Board finds that its management fee is commensurate with the degree of management necessary for an office building of the same age, in a similar condition and market, and plagued with comparable inefficiencies as those associated with the Park Plaza Office Building.  The area to which the Board applies the management fee is equivalent to that used by Mr. Logue.
	The Board also adopts Mr. Logue's suggested brokerage commission costs of $0.60 per square foot and his recommended reserve for replacement expense of $0.75, both being applied to commercial office, Executive Center, and retail space.  The Board finds that these amounts are well-supported and reasonable under the circumstances.  The Board utilizes, however, a tenant improvement expense of $1.60 per square foot applied to commercial office and Executive Center space, which is $0.15 lower than the figure ultimately suggested by Mr. Logue.  The Board's selection is nonetheless in keeping with the figure for tenant improvements that Mr. Logue derived when he amortized on a straight-line basis without interest.  Under the then existing financial and market circumstances, the Board chooses a no-interest approach over Mr. Logue's method which employed 6% interest.  The Board further notes that the amount selected for tenant improvements is consistent with the commercial office rents that it has selected.  The amounts that the Board deducts for tenant improvements, leasing commissions, and replacement reserves for the fiscal years at issue are summarized in the following table.  


	FY 2007	FY 2008	FY 2009	FY 2010
	
Tenant Improvements  	$380,960	$381,330	$381,829	$381,259	
Leasing Commissions  	$167,278	$166,931	$167,119	$166,905	
Replacement Reserves 	$209,098	$208,664	$208,898	$208,631	
  Total	$757,336	$756,925	$757,846	$756,795	
   
	Before adding in the appropriate tax factor, the Board selects capitalization rates of 7.375%, 7.25%, 7.00%, and 7.25% for fiscal years 2007, 2008, 2009, and 2010, respectively.  The Board bases its capitalization-rate selection primarily on Mr. Logue's suggested rates, the ranges of capitalization rates, after adjustment, in industry sources, including Korpacz/PWC surveys, and the trend in rates as demonstrated by both Mr. Logue's and Ms. McKinney's rates, as well as the industry sources.  The Board does not otherwise consider the rates proposed by Ms. McKinney because they were loaded for leasing costs and reserves, which the Board previously deducted as expenses in its income-capitalization methodology.
	After dividing its net-operating incomes by its corresponding capitalization rates loaded with an appropriate tax factor, the Board determines rounded values for the subject office building of $43,500,000 for fiscal year 2007, $49,120,000 for fiscal year 2008, $55,200,000 for fiscal year 2009, and $47,225,000 for fiscal year 2010.                
The Board's income-capitalization methodologies for the fiscal years at issue are summarized in the following four tables.


INCOME                              Size(SF)   Rate/SF

Commercial Office Space ("COS")      220,970   $27.00              $5,966,190
Executive Center ("EC")	               17,130   $64.51              $1,105,056
Retail (hotel & office)               38,790   $36.00              $1,396,440
Storage                                5,942   $12.00              $   71,304 
Barbershop ("B")                       1,907   $ 6.04              $   11,518

Tenant Service Income                220,970   $ 0.20              $   44,194
Miscellaneous Income                 220,970   $ 0.05              $   11,048

Potential Gross Income:                                            $8,605,750	

Less: Vacancy & Collection Allowance (excludes EC) - 6.0%
      ($  450,042)


	
Effective Gross Income:                                            $8,155,708	
	
EXPENSES
	
  Operating Expenses
    for COS                         $ 9.00/SF x 220,970 SF = $1,988,730 
    for EC                           $45.00/SF x 17,130 SF = $  770,850

  Management Fee (COS, B & Retail)  $ 1.00/SF x 261,667 SF = $  261,667  

  Tenant Improvements (COS & EC)              $380,960 @ $1.60/SF x 238,100 SF
  Leasing Commissions (COS, EC, B, & Retail)  $167,278 @ $0.60/SF x 278,797 SF
  Replacement Reserves (COS, EC, B, & Retail) $209,098 @ $0.75/SF x 278,797 SF  
                                              $757,336

Total Expenses:                                                   ($3,778,583) 	
  	
Net-Operating Income:                                              $4,377,125	
	
 Divide by: Capitalization Rate              7.375% + 2.687% = 10.062%	
	
Indicated Value for Fiscal Year 2007                               $43,501,540
	
Rounded Value for Fiscal Year 2007                                 $43,500,000	
Park Plaza Office Building Including All Retail
Fiscal Year 2007






INCOME                              Size(SF)   Rate/SF

Commercial Office Space ("COS")      221,201    $28.00              $6,193,628
Executive Center	 ("EC")               17,130    $65.97              $1,130,066
Retail (hotel & office)               37,981    $46.00              $1,747,126
Storage                                5,942    $12.00              $   71,304 
Barbershop ("B")                       1,907    $ 6.28              $   11,976

Tenant Service Income                221,201    $ 0.20              $   44,240
Miscellaneous Income                 221,201    $ 0.05              $   11,060

Potential Gross Income:                                             $9,209,400	

Less: Vacancy & Collection Allowance (excludes EC) - 6.0%
       ($  484,760)


	
Effective Gross Income:                                             $8,724,640	
	
EXPENSES
	
  Operating Expenses
    for COS                         $ 9.50/SF x 221,201 SF = $2,101,410 
    for EC                          $45.00/SF x  17,130 SF = $  770,850

  Management Fee (COS, B & Retail)  $ 1.00/SF x 261,089 SF = $  261,089  

  Tenant Improvements (COS & EC)             $381,330 @ $1.60/SF x 238,331 SF
  Leasing Commissions (COS, EC, B & Retail)  $166,931 @ $0.60/SF x 278,219 SF 
  Replacement Reserves (COS, EC, B & Retail) $208,664 @ $0.75/SF x 278,219 SF  
                                             $756,925

Total Expenses:                                                    ($3,890,274) 	
  	
Net-Operating Income:                                               $4,834,366	
	
 Divide by: Capitalization Rate              7.25% + 2.592% = 9.842%	
	
Indicated Value for Fiscal Year 2008                                $49,119,752
	
Rounded Value for Fiscal Year 2008                                  $49,120,000	
Park Plaza Office Building Including All Retail
Fiscal Year 2008



INCOME                              Size(SF)   Rate/SF

Commercial Office Space ("COS")      221,513    $31.00              $6,866,903
Executive Center	 ("EC")               17,130    $67.72              $1,160,044
Retail (hotel & office)               37,981    $46.00              $1,747,126
Storage                                5,942    $12.00              $   71,304 
Barbershop ("B")                       1,907    $ 6.41              $   12,224

Tenant Service Income                221,513    $ 0.20              $   44,303
Miscellaneous Income                 221,513    $ 0.05              $   11,076

Potential Gross Income:                                             $9,912,980	

Less: Vacancy & Collection Allowance (excludes EC) - 6.0%
       ($  525,176)


	
Effective Gross Income:                                             $9,387,804	
	
EXPENSES
	
  Operating Expenses
    for COS                         $10.00/SF x 221,513 SF = $2,215,130 
    for EC                          $46.00/SF x  17,130 SF = $  787,980

  Management Fee (COS, B & Retail)  $ 1.00/SF x 261,401 SF = $  261,401  

  Tenant Improvements (COS & EC)             $381,829 @ $1.60/SF x 238,643 SF
  Leasing Commissions (COS, EC, B & Retail)  $167,119 @ $0.60/SF x 278,531 SF 
  Replacement Reserves (COS, EC, B & Retail) $208,898 @ $0.75/SF x 278,531 SF  
                                             $757,846

Total Expenses:                                                    ($4,022,357) 	
  	
Net-Operating Income:                                               $5,365,447	
	
 Divide by: Capitalization Rate              7.00% + 2.711% = 9.711%	
	
Indicated Value for Fiscal Year 2009                                $55,251,231
	
Rounded Value for Fiscal Year 2009                                  $55,250,000	
Park Plaza Office Building Including All Retail
Fiscal Year 2009



INCOME                              Size(SF)   Rate/SF

Commercial Office Space ("COS")      221,157    $30.00              $6,634,710
Executive Center	 ("EC")               17,130    $64.21              $1,099,917
Retail (hotel & office)               37,981    $46.00              $1,747,126
Storage                                5,942    $12.00              $   71,304 
Barbershop ("B")                       1,907    $ 6.69              $   12,758

Tenant Service Income                221,157    $ 0.20              $   44,231
Miscellaneous Income                 221,157    $ 0.05              $   11,058

Potential Gross Income:                                             $9,621,104	

Less: Vacancy & Collection Allowance (excludes EC) - 8.0%
       ($  681,695)


	
Effective Gross Income:                                             $8,939,409	
	
EXPENSES
	
  Operating Expenses
    for COS                         $10.50/SF x 221,157 SF = $2,322,148 
    for EC                          $46.00/SF x  17,130 SF = $  787,980

  Management Fee (COS, B & Retail)  $ 1.00/SF x 261,045 SF = $  261,045  

  Tenant Improvements (COS & EC)             $381,259 @ $1.60/SF x 238,287 SF
  Leasing Commissions (COS, EC, B & Retail)  $166,905 @ $0.60/SF x 278,175 SF 
  Replacement Reserves (COS, EC, B & Retail) $208,631 @ $0.75/SF x 278,175 SF  
                                             $756,795

Total Expenses:                                                    ($4,127,968) 	
  	
Net-Operating Income:                                               $4,811,441	
	
 Divide by: Capitalization Rate              7.25% + 2.938% = 10.188%	
	
Indicated Value for Fiscal Year 2010                                $47,226,551
	
Rounded Value for Fiscal Year 2010                                  $47,225,000	
Park Plaza Office Building Plus All Retail
Fiscal Year 2010




Valuation Findings for the Boston Park Plaza Hotel
For the fiscal years at issue, the Board finds, like the parties' valuation experts, that the subject hotel contained 941 rooms.  The Board further finds that, for valuation purposes, its occupancy rates are 70% for fiscal year 2007 and 75% for the remaining three fiscal years.  The Board bases its stabilized occupancy findings on the subject hotel's actual rates for calendar years 2005 through 2008, which were 68.0%, 74.2%, 74.8%, and 77.9%, respectively; the average rates of the experts' competitive sets for those same years, as well as the experts' recommendations, which approximate the Board's findings.  Accordingly, the Board also finds that the number of occupied rooms for fiscal year 2007 is 240,426, while the number of occupied rooms for fiscal years 2008 through 2010 is 257,599.
For ADR, the Board finds that the most appropriate stabilized rates are $156.00 for fiscal year 2007, $165.00 for fiscal year 2008, $170.00 for fiscal year 2009, and $168.00 for fiscal year 2010.  The Board finds that these rates and their trending comport with the experts' depictions of the relevant market and are also consistent with the subject hotel's relevant actual rates of $145.57, $159.03, $169.25, and $163.78 for calendar years 2005, 2006, 2007, 2008, respectively, and their trending.  Moreover, the Board's trending follows the average rates for the experts' competitive sets for those same years, which for Mr. Logue's set were $172.28, $190.00, $205.23, and $203.66, respectively, and for Ms. Roginsky and Ms. McKinney's set were $168.87, $186.49, $200.06, and $197.93, respectively.  In making its findings regarding ADR, the Board also considers and gives some weight to Mr. Logue's recommended ADRs of $150.00 for fiscal year 2007, $163.00 for fiscal year 2008, $169.50 for fiscal year 2009, and $168.00 for fiscal year 2010, as well as Ms. Roginsky and Ms. McKinney's recommended ADRs of $159.00 for fiscal year 2007, $165.00 for fiscal year 2008, $170.00 for fiscal year 2009, and $167.00 for fiscal year 2010.
As a result of its findings regarding number of rooms, occupancy, number of occupied rooms per fiscal year, and ADR, the Board determines that the RevPARs for fiscal years 2007 through 2010 are $109.20, $123.75, $127.50, and $126.00, respectively, and the stabilized revenues generated from room rentals for fiscal years 2007 through 2010 are $37,506,456, $42,503,835, $43,791,830, and $43,276,632, respectively.
The Board adopts Mr. Logue's recommendations for food and beverage revenue for fiscal years 2007 through 2010, which are $17,200,000, $17,400,000, $17,100,000, and $17,200,000, respectively.  It agrees with his approach of stabilizing and relying primarily on the relevant actual amounts after confirming their similarity to the market for other full-service hotels.  Ms. Roginsky and Ms. McKinney's recommended food and beverage revenues for the fiscal years at issue were significantly higher than Mr. Logue's.  The Board attributes this difference to their probable inclusion of revenues generated from catering or banquet events at the Armory.  The Board, therefore, rejects their recommendations but does rely on the industry ranges that they presented, which provide additional support for Mr. Logue's suggested revenues and, therefore, the Board's findings in this regard. 
For the revenue category accounting for telecommunications and laundry and the revenue category accounting for rentals and other income, the Board again adopts Mr. Logue's recommended stabilized amounts, which are primarily based on relevant actual revenue sums and projections.  The Board finds, among other things, that Mr. Logue's recommendations for these two categories appropriately reflect the industry trend of decreased revenue associated with telecommunication charges and are reasonably consistent with the market data introduced by Ms. Roginsky and Ms. McKinney, as well as those two experts' recommended revenues for these two categories.  For these reasons, the Board's findings for the revenues related to telecommunications and laundry are $710,000 for fiscal year 2007, $725,000 for fiscal year 2008, $650,000 for fiscal year 2009, and $690,000 for fiscal year 2010.  The Board's findings for the revenues related to rentals and other income were $1,400,000 for fiscal year 2007, $1,500,000 for fiscal year 2008, $1,250,000 for fiscal year 2009, and $920,000 for fiscal year 2010.  
The Board does not include a revenue category for "Park Plaza Hotel Retail," as Mr. Logue did, because the Board includes the revenues for the independent retail stores and restaurants located at the subject hotel in its analyses for the subject office building, for the same reasons that Ms. McKinney did.  The Board's revenue totals for the subject hotel for fiscal years 2007 through 2010 are $56,816,456, $62,128,835, $62,791,830, and $62,086,632, respectively.      
For its department expenses, which comprise costs associated with rooms, food and beverage, telecommunications and laundry, and rentals and other income categories, the Board's stabilized totals are $26,550,450 for fiscal year 2007, $28,356,385 for fiscal year 2008, $29,163,375 for fiscal year 2009, and $29,570,485 for fiscal year 2010.  These totals closely reflected those proposed by Mr. Logue and are slightly higher than the departmental expenses that Ms. Roginsky and Ms. McKinney developed.  
As for the component categories, the Board adopts most of the room expenses recommended by Mr. Logue because he based his selections on the subject hotel's relevant actual and budgeted annual room expenses and trends, which he confirmed with appropriate industry data.  For fiscal years 2007 through 2009, his room expenses were approximately 31%, 30%, and 30% of the corresponding room revenue, respectively.  For fiscal year 2010, however, this expense increased to about 32% of the corresponding revenue.  The Board finds that this expense should be stabilized and reduced to 31% of revenue.  Ms. Roginsky and Ms. McKinney's room expense percentages are similar to the Board's and were developed using sources comparable to Mr. Logue's.  Accordingly, the room expenses that the Board adopts for fiscal years 2007 through 2010 are $11,200,000, $12,250,000, $13,200,000, and $13,335,000, respectively.  
The Board adopts Mr. Logue's recommended food and beverage costs of $14,615,000 for fiscal year 2007 and $15,300,000 for fiscal year 2008, but not his recommended costs of $15,400,000 for fiscal year 2009 and $16,150,000 for fiscal year 2010.  The Board finds that these latter two amounts are excessive given the applicable industry ranges, as well as the percentage costs proposed by Ms. Roginsky and Ms. McKinney.  While Mr. Logue's fiscal year 2007 and 2008 expense amounts represented reasonable percentages of food and beverage revenue at approximately 86% and 88%, respectively, his latter two fiscal-year cost recommendations approximated 90% and 94% of food and beverage revenue.  The Board finds that, given the weight of the evidence, these percentages are excessive and therefore lowers them for use in its methodologies to approximately 88% and 89%, respectively, which, particularly for fiscal year 2010, results in expense percentages closer to those suggested by Ms. Roginsky and Ms. McKinney.  The Board further finds that its approach produces more stabilized results.  Accordingly, the food and beverage costs that the Board uses for fiscal years 2007 through 2010 are $14,615,000, $15,300,000, $15,100,000, and $15,300,000, respectively.  For this category of expenses, Mr. Logue once again relied on relevant actual and budgeted data that he confirmed to some extent with published hotel industry sources.  Ms. Roginsky and Ms. McKinney relied heavily on the subject hotel's prior five-year experience coupled with industry data ranges.  The Board finds that its chosen expense amounts best reflect the weight of the evidence.
For its telecommunication and laundry expenses, the Board adopts Mr. Logue's suggested amounts of $585,000 and $620,000 for fiscal years 2007 and 2008, respectively, as well as his recommendations of $675,000 and $750,000 for fiscal years 2009 and 2010, respectively, which result in losses for this category.  Mr. Logue based his recommendations for these expenses on costs actually incurred by the subject hotel and on its budget.  He believed that these cost amounts were reasonably consistent with industry standards for the fiscal years at issue.  Recognizing the limited availability of reliable market data for this expense category, Ms. Roginsky and Ms. McKinney based their recommendations on virtually the same sources, but, with little explanation, departed significantly from the relevant actual and projected expenses for the latter two fiscal years.  The Board adopts Mr. Logue's expenses for this category because they are truer reflections of the subject hotel's experience than those suggested by Ms. Roginsky and Ms. McKinney and, moreover, the Board's approval of Mr. Logue's expenses is consistent with its adoption of his revenue recommendations for this category. 
For the expenses associated with the rentals-and-other-income category of department expenses, the Board adopts the percentage of total revenue -- 0.3% -- proposed by Mr. Logue.  The Board finds that his recommendations reflect a stabilized assessment of the subject hotel's experience for this expense category, which he believed was consonant with the market.  Ms. Roginsky and Ms. McKinney did not include an itemization of this expense category in their methodologies.  The Board's expenses for this category for fiscal years 2007 through 2010 are $170,450, $186,385, $188,375, and $185,485, respectively.    
After subtracting its department expenses from its total revenues, the Board determines that its department incomes for fiscal years 2007 through 2010 are $30,211,006, $33,772,450, $33,628,455, and $32,516,147, respectively.
The Board's undistributed operating expenses include costs and fees for administration and finance, sales and marketing, property operation and maintenance, utilities, and management.  These five categories, with some minor labeling and composition differences, are essentially the same ones that Mr. Logue and Ms. Roginsky and Ms. McKinney employed in their analyses.  Unlike Mr. Logue for fiscal years 2007, 2008, and 2009, however, the Board combined credit card commissions in its expenses for administration and finance for consistency.  Using the same industry data upon which Ms. Roginsky and Ms. McKinney relied, coupled with the subject hotel's actual and budgeted data upon which all the experts relied, and taking Mr. Logue's, as well as Ms. Roginsky and Ms. McKinney's, recommended costs for administration and financing, sales and marketing, property operation and maintenance, and utilities into consideration, the Board adopts PAR costs for administration and finance, sales and marketing, and property operation and maintenance and POR costs for utilities as follows:
	Fiscal Year 2007
	Fiscal Year 2008
	Fiscal Year 2009
	Fiscal Year 2010
	
Admin. & General (PAR)	$4,500	$4,700	$5,000	$5,200	
Sales & Marketing (PAR)	$3,200	$3,300	$3,500	$3,700	
Prop. Opera. & Maint. (PAR)	$4,900	$5,200	$5,400	$5,400	
Utilities (POR)	$17.00	$18.00	$17.50	$17.00	
                                       
These findings result in expenses for administration and finance, sales and marketing, property operation and maintenance, and utilities totaling as follows:
	Fiscal Year 2007
	Fiscal Year 2008
	Fiscal Year 2009
	Fiscal Year 2010
	
Admin. & General (PAR)	$4,235,000	$4,423,000	$4,705,000	$4,893,000	
Sales & Marketing (PAR)	$3,011,000	$3,105,000	$3,294,000	$3,482,000	
Prop. Opera. & Maint. (PAR)	$4,611,000	$4,893,000	$5,081,000	$5,081,000	
Utilities (POR)	$4,087,000	$4,637,000	$4,508,000	$4,379,000	
	
Ms. Roginsky and Ms. McKinney used management fees of 2.2% of total revenue for all of the fiscal years at issue.  The evidence revealed that typical management fees for hotels similar to the subject hotel ranged from 2.5% to 3.7% for the relevant time period.  The Hotel Management Agreement for the subject hotel provided for a management fee of 2.25%.  Mr. Logue recommended a management fee of 3%.  Relying primarily on the actual rate, the lower part of the industry range, and the valuation experts' rationales for their selections, the Board decides that a management fee of 2.5% is appropriate for the subject hotel for all of the fiscal years at issue.  This finding results in management fees for fiscal years 2007 through 2010 of $1,420,000, $1,553,000, $1,570,000, and $1,552,000, respectively.
	The Board's totals for undistributed operating expenses for fiscal years 2007 through 2010 are $17,364,000, $18,611,000, $19,158,000, and $19,387,000, respectively.  Subtracting these totals, from the corresponding department income amounts, result in gross-operating profits for fiscal years 2007 through 2010 of $12,847,006, $15,161,450, $ 14,470,455, and $13,129,147, respectively.
In addition to department expenses and undistributed operating expenses, the Board also subtracts the costs related to two categories of fixed expenses -- property insurance and rental of office equipment -- from the subject hotel's gross-operating profit for the fiscal years at issue.  The Board does not include a category for taxes here because applicable real estate taxes are addressed in the tax factors applied to the corresponding capitalization rates and the presence, of what Mr. Logue termed, "business taxes," was not reliably substantiated.  Any personal property taxes are sufficiently accounted for in the tax factors added to the capitalization rates used in calculating returns on personal property.
For the property insurance category, the Board gives approximately equal weight to Ms. Roginsky and Ms. McKinney's recommendations for fiscal years 2007 through 2010 of $600, $700, $750, and $775 PAR, respectively, and Mr. Logue's stabilized totals for fiscal years 2007 through 2010 of $635,000, $650,000, $730,000, and $730,000, respectively. In making their recommendations, the experts relied primarily on the subject hotel's historical and budgeted costs, which they confirmed and adjusted using industry data and survey ranges.  On this basis, the Board finds that appropriate stabilized costs associated with property insurance for fiscal years 2007 through 2010 are $610,000, $660,000, $730,000, and $740,000, respectively.
For the rental of office equipment category, the Board adopts Mr. Logue's stabilized expenses of $55,000, $57,000, $60,000, and $65,000 for fiscal years 2007 through 2010, respectively.  He based these costs on the subject hotel's actual and projected expenditures which he believed were consistent with other full-service hotels.  Ms. Roginsky and Ms. McKinney did not provide a breakdown for this category.  
After subtracting these fixed expenses, which for fiscal years 2007 through 2010 totaled $665,000, $717,000, $790,000, and $805,000, respectively, from the subject hotel's corresponding gross-operating profits, the Board calculates net-operating incomes for fiscal years 2007 through 2010 of $12,182,006, $14,444,450, $13,680,455, and $12,324,147, respectively.
To attain its net-operating incomes to be capitalized, the Board makes several additional deductions from its net-operating incomes to account for reserves for the replacement of short-lived real property and the influence of personal property on the subject hotel's values.  The Board essentially adopts the methods, but not necessarily the assumptions, used in Mr. Logue's income-capitalization methodologies, in which he addressed these items in each of the fiscal years at issue by deducting 3% of total revenue for his reserves for the replacement of short-lived real estate, 3.5% of total revenue for his reserves for the replacement of FF&E, as well as certain amounts for returns on FF&E.  For their part, Ms. Roginsky and Ms. McKinney attempted to account for all of these items with a single 5% of total revenue deduction as their reserve for replacement in each of the fiscal years at issue.  The Board, however, does not find their deduction credible because, in Ms. McKinney's appraisal report, she wrote that this reserve was necessary only "to cover necessary capital expenditures"; the report did not mention anything relating to a return of or on FF&E.  In her testimony, conversely, Ms. McKinney stated that this reserve was intended to address the return of and on FF&E.  When juxtaposed against the discussion in her appraisal report, the Board finds her testimony in this regard unconvincing.  
To address the periodic replacement of short-lived real property and the replacement of and return on FF&E at the subject hotel, the Board adopts as credible Mr. Logue's 3% reserves for replacement of short-lived real property, his 3.5% reserves for replacement of FF&E, but not his recommended returns on FF&E.  Like Mr. Logue, the Board finds that 3% of the subject hotel's applicable total revenue constitutes an appropriate deduction for short-lived real property reserves considering the subject hotel's extensive mechanical, electrical, and plumbing systems, and the age of several of its major and outdated building components.  Also like Mr. Logue, the Board finds that 3.5% of applicable total revenue is an appropriate deduction for FF&E reserves considering the extent, quality, and condition of the subject hotel's soft goods and case goods and that the useful life of FF&E in similar full-service hotels during the relevant time period was seven to eight years.       
For its return on FF&E, the Board adopts Mr. Logue's $20,000 cost per room to replace FF&E for fiscal years 2007 and 2008 with that cost increasing to $25,000 per room for fiscal years 2009 and 2010.  Mr. Logue derived these costs from information obtained from industry sources, as well as from the subject hotel's management.  The Board also accepts his average depreciation rate of 55% for fiscal year 2007, but believes that his 5% reduction in that rate in each successive fiscal year is too conservative, particularly considering the seven-to-eight year useful life associated with most of the FF&E.  Accordingly, the Board finds that the average depreciation rates for fiscal years 2008 through 2010 are 62.5%, 70%, and 77.5%, respectively.  To calculate his return on FF&E, Mr. Logue uses the same capitalization rates that he uses to estimate the value the real property associated with the subject hotel, without applicable tax factors.  The Board uses the same capitalization rates that it used to estimate the value of the real property associated with subject hotel, without applicable tax factors.  The Board finds that its approach is consistent with customary appraisal practices and the lack of evidence establishing that Park Plaza or Starwood Lodging Corp. paid personal property taxes on the FF&E associated with the subject hotel.  See Stephen Rushmore's Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations (The Appraisal Institute 1997) 240 ("The current market value of FF&E in place" is used for calculating a return on FF&E.) and 245 ("If the FF&E is subject to personal property tax, the personal property tax rate is factored into the return.").  Based on these findings, the Board's additional deductions for reserves for short-lived real estate, reserves for FF&E, and its return on FF&E are summarized in the table below.
	Fiscal Year 2007
	Fiscal Year 2008	Fiscal Year 2009	Fiscal Year 2010	
Short-Lived RE (3%)	$1,704,494	$1,863,865	$1,883,755	$1,862,599	
FF&E (3.5%)	$1,988,576	$2,174,509	$2,197,714	$2,173,032	
Return on FF&E	$  677,520	$  546,956	$  511,669	$  396,984	
Total	$4,370,590	$4,585,330	$4,593,138	$4,432,615	

After subtracting appropriate additional deductions from its corresponding net-operating incomes, the Board determines that its net-operating incomes to be capitalized for fiscal years 2007 through 2010 were $7,846,416, $9,859,120, $9,087,317, and $7,891,532, respectively.   
To convert these amounts into estimates of value for fiscal years 2007 through 2010, the Board applies capitalization rates of 8.00%, 7.75%, 7.25%, and 7.50%, respectively, that it loads with appropriate tax factors before determining the subject hotel's values.  Prior to loading his capitalization rates with applicable tax factors, Mr. Logue's rates for fiscal years 2007 through 2010 were 9.00%, 8.75%, 8.25%, and 8.50%, respectively.  Ms. McKinney's capitalization rates before the addition of applicable tax factors for fiscal years 2007 through 2010 were 7.00%, 6.50%, 6.00%, and 6.25%, respectively.  Both valuation experts developed their capitalization rates using, among other things, forms of the band-of-investment technique and various industry sources.  The Board finds that Ms. McKinney's capitalization rates, and some of the assumptions that she used to develop them, did not adequately reflect the condition of the subject hotel and its inherent risk.  The Board finds that Mr. Logue's capitalization rates and the assumptions that he used to develop them overcompensated for the subject hotel's condition and its inherent risk.  Relying on both real estate valuation experts' recommended rates, their underlying data and calculations, and the Board's own analysis of the subject hotel's condition, its inherent risk, and the state of the market during the relevant time periods, the Board developed its own capitalization rates, which fall between the valuation experts' recommendations.  After loading these capitalization rates with applicable tax factors, the Board's combined rates are summarized in the following table.
	Fiscal Year 2007
	Fiscal Year 2008	Fiscal Year 2009	Fiscal Year 2010	
Capitalization Rate
Tax Factor
Combined Rate	 8.000
+2.687
10.687	 7.750
+2.592
10.342	 7.250
+2.711
 9.961	 7.500
+2.938
10.438	

	By dividing the net-incomes to be capitalized by the corresponding combined capitalization rates, the Board determines that the fair market values of the subject hotel for fiscal years 2007 through 2010 are $73,420,193, $95,330,884, $91,228,963, and $75,603,870, respectively, which the Board then rounds to $73,400,000, $95,300,000, $91,200,000, and $75,600,000, respectively.  The following two tables summarize the Board's income-capitalization methodologies for valuing the subject hotel for the fiscal years at issue.

Boston Park Plaza Hotel
Fiscal Years 2007 & 2008

	Fiscal Year 2007		Fiscal Year 2008		
RATE & OCCUPANCY					
 Number of Rooms	941		941		
 Occupancy	70.0%		75.0%		
 ADR	$156.00		$165.00		
 RevPAR	$109.20		$123.75		
 Occupied Rooms	240,426		257,599		
					
REVENUES	$		$		
 Rooms	37,506,456		42,503,835		
 Food & Beverage	17,200,000		17,400,000		
 Telecommun. & Laundry	   710,000		   725,000		
 Rentals & Other Inc. 	 1,400,000		 1,500,000		
   Total	56,816,456		62,128,835		
					
DEPARTMENT EXPENSES					
 Rooms	11,200,000		12,250,000		
 Food & Beverage	14,615,000		15,300,000		
 Telecommun. & Laundry	   585,000		   620,000		
 Rentals & Other Inc.	   170,450		   186,385		
   Total	26,570,450		28,356,385		
DEPARTMENT INCOME	30,246,006		33,772,450		
UNDISTRIBUTED OPERATING EXPENSES					
 Admin. & General	 4,235,000		 4,423,000		
 Sales & Marketing	 3,011,000		 3,105,000		
 Prop. Opera. & Maint.	 4,611,000		 4,893,000		
 Utilities	 4,087,000		 4,637,000		
 Management Fee (2.5%) 	 1,420,000		 1,553,000		
   Total	17,364,000		18,611,000		
GROSS-OPERATING PROFIT	12,882,006		15,161,450		
FIXED EXPENSES					
 Property & Other Taxes	0		0		
 Insurance	   610,000		   660,000		
 Rent (Office Equip.)	    55,000		    57,000		
   Total	   665,000		   717,000		
NET-OPERATING INCOME	12,217,006		14,444,450		
ADDITIONAL DEDUCTIONS					
 Replacement Reserves					
  Short-Lived RE (3.0%)	 1,704,494		 1,863,865		
  FF&E (3.5%)	 1,988,576		 2,174,509		
 Return on FF&E	   677,520		   546,956		
   Total	 4,370,590		 4,585,330		
NET-OPERATING INCOME 
TO BE CAPITALIZED	
 7,846,416		
 9,859,120		
					
  Capitalization Rate	 8.000%		 7.750%		
  Real Estate Tax Adj.	 2.687%		 2.592%		
  Combined Cap. Rate	10.687%		10.342%		
					
Fair Market Value	$73,420,193		$95,330,884		
Rounded FMV	$73,400,000		$95,300,000		
Per Room	$78,002		$101,275		

Boston Park Plaza Hotel
Fiscal Years 2009 & 2010
	Fiscal Year 2009		Fiscal Year 2010		
RATE & OCCUPANCY					
 Number of Rooms	941		941		
 Occupancy	75.0%		75.0%		
 ADR	$170.00		$168.00		
 RevPAR	$127.50		$125.25		
 Occupied Rooms	257,599		257,599		
					
REVENUES	$		$		
 Rooms	43,791,830		43,276,632		
 Food & Beverage	17,100,000		17,200,000		
 Telecommun. & Laundry	   650,000		   690,000		
 Rentals & Other Inc. 	 1,250,000		   920,000		
   Total	62,791,830		62,086,632		
					
DEPARTMENT EXPENSES					
 Rooms	13,200,000		13,335,000		
 Food & Beverage	15,100,000		15,300,000		
 Telecommun. & Laundry	   675,000		   750,000		
 Rentals & Other Inc.	   188,375		   185,485		
   Total	29,163,375		29,570,485		
DEPARTMENT INCOME	33,628,455		32,516,147		
UNDISTRIBUTED OPERATING EXPENSES					
 Admin. & General	 4,705,000		 4,893,000		
 Sales & Marketing	 3,294,000		 3,482,000		
 Prop. Opera. & Maint.	 5,081,000		 5,081,000		
 Utilities	 4,508,000		 4,379,000		
 Management Fee (2.5%)	 1,570,000		 1,552,000		
   Total	19,158,000		19,387,000		
GROSS-OPERATING PROFIT	14,470,455		13,129,147		
FIXED EXPENSES					
 Prop. & Other Taxes	0		0		
 Insurance	   730,000		   740,000		
 Rent (Office Equip.)	    60,000		    65,000		
   Total	   790,000		   805,000		
NET-OPERATING INCOME	13,680,455		12,324,147		
ADDITIONAL DEDUCTIONS					
 Replacement Reserves					
  Short-Lived RE (3.0%)	 1,883,755		 1,862,599		
  FF&E (3.5%)	 2,197,714		 2,173,032		
 Return on FF&E	   511,669		   396,984		
   Total	 4,593,138		 4,432,615		
NET-OPERATING INCOME 
TO BE CAPITALIZED	
 9,087,317		
 7,891,532		
					
  Capitalization Rate	7.250%		 7.500%		
  Real Estate Tax Adj.	2.711%		 2.938%		
  Combined Cap. Rate	9.961%		10.438%		
					
Fair Market Value	$91,228,963		$75,603,870		
Rounded FMV	$91,200,000		$75,600,000		
Per Room	$96,918		$80,340		

Valuation Findings for Parcel 05-00810-000

To determine the fair market value of parcel        05-00810-000, which contains the Boston Park Plaza Hotel and Office Building, the Board adds the corresponding values of the subject hotel to those of the subject office building.  The following table shows those results.
	Fiscal Year 2007 
	Fiscal Year 2008 	Fiscal Year 2009 	Fiscal Year 2010 	
Subject Hotel	$ 73,400,000	$ 95,300,000	$ 91,200,000	$ 75,600,000	
Subject Office Building	$ 43,500,000	$ 49,120,000	$ 55,200,000	$ 47,225,000	
Total for Parcel	$116,900,000	$144,420,000	$146,400,000	$122,825,000	

	The following table compares the assessments for parcel 05-00810-000 for the fiscal years at issue with the Board's corresponding findings of fair market value and overvaluation.
	Fiscal Year 2007 
	Fiscal Year 2008 	Fiscal Year 2009 	Fiscal Year 2010 	
Assessment	$126,367,000	$159,941,000	$164,390,000	$160,939,000	
Board's Finding of FMV	$116,900,000	$144,420,000	$146,400,000	$122,825,000	
Overvaluation	$  9,467,000	$ 15,521,000	$ 17,990,000	$ 38,114,000	

Valuation Findings for the Park Plaza Castle and Armory

The "effective gross incomes" that Mr. Logue used in his income-capitalization methodologies for estimating the value of the Armory for the fiscal years at issue are somewhat higher than the equivalent "total revenue" figures that Ms. McKinney used in her income-capitalization methodologies.  The differences in fiscal years 2007 and 2008 are almost wholly attributable to the $40-per-square-foot market rent that Mr. Logue applied to the Head House restaurant rental area versus the $35-per-square-foot market rent applied to that space by Ms. McKinney.  They applied the same market rent for fiscal year 2009.  Mr. Logue's effective gross incomes and Ms. McKinney's total revenue amounts are summarized in the following table.  
	FY 2007
	FY 2008
	FY 2009
	
Mr. Logue	$820,000	$820,000	$758,750	
Ms. McKinney	$775,000	$748,750	$748,750	

Based on both Mr. Logue's and Ms. McKinney's market research and recommendations, as well as the actual rental and revenue figures and projections in evidence, the Board adopts Ms. McKinney's suggested exhibition and function hall and restaurant rental amounts, as well as both real estate valuation experts' identical vacancy and credit loss rate of five percent for the Head House space, for which they provided adequate market support. 
Mr. Logue's and Ms. McKinney's capitalization rates are virtually identical for the fiscal years at issue.  The only difference between their recommended rates is for fiscal year 2009 where Ms. McKinney used a base rate of 8.500% while Mr. Logue used a slightly lower base rate of 8.250%.  The overall capitalization rates, including appropriate tax factors, which they used in their income-capitalization methodologies, are summarized in the following table.
	FY 2007
	FY 2008
	FY 2009
	
Mr. Logue	11.687%	11.342%	10.961%	
Ms. McKinney	11.687%	11.342%	11.211%	

	Based on both experts' underlying data and methodologies and recognizing their similar results but varying assumptions, and in consideration of the expense categories which the Board accepted, the Board adopts overall capitalization rates loaded with appropriate tax factors of 11.687% for fiscal year 2007, 11.342% for fiscal year 2008, and 10.961% for fiscal year 2009.    
The primary area of contention between the parties' real estate valuation experts is the appropriate amount of expenses, however defined, to deduct from their "effective gross incomes" or "total revenue" amounts to reach their net-operating incomes to be capitalized.  The total expense deductions that they used in their income-capitalization methodologies for the fiscal years at issue are summarized in the following table.
	FY 2007
	FY 2008
	FY 2009
	
Mr. Logue	$363,300	$363,300	$368,350	
Ms. McKinney	$148,250	$162,213	$164,531	

	In analyzing the differences in the real estate valuation experts' expenses, the Board discerns that Ms. McKinney did not include categories for administrative and general costs or for repairs and maintenance, as Mr. Logue did, because she considered these expenses to be costs paid by the restaurant tenant in the triple-net market leasing scenario that both she and Mr. Logue adopted.  Additionally, she did not include specific expense categories for insurance, general building and legal, or for brokerage commissions, as Mr. Logue did, but may have captured some of those costs in her more general category of "function room rental expenses."  Mr. Logue also had a separate expense category labeled "food and beverage" which the Board equated to a large extent with Ms. McKinney's "function room rental expenses."  Both real estate valuation experts included a category for management fees -- Mr. Logue at 4% of effective gross income and Ms. McKinney at 3% of total revenue.  They both also included a category for utilities or energy costs -- with Mr. Logue's costs at $59,000 for all of the fiscal years at issue and Ms. McKinney's costs at $75,000 for fiscal year 2007, $77,250 for fiscal year 2008, and $79,560 for fiscal year 2009. 
	Based on these observations and in consideration of its other findings, as well as the shortcomings in the evidence regarding some conflicting and sparse expense information, and the real estate valuation experts' recommendations, the Board adopts Mr. Logue's expenses for "food and beverage," "general building and legal," "energy and utilities," "insurance," and "brokerage commissions."  The Board finds that Mr. Logue's more specific breakdown of these expenses likely resulted in more accurate expense depictions than Ms. McKinney's blanket 20% and 25% of function room revenue.  The Board also adopts Mr. Logue's utility and energy costs because Ms. McKinney was not certain if her costs excluded the Head House.  The Board does not adopt and does not include in its methodologies, principally for the reasons espoused by Ms. McKinney,    Mr. Logue's expense categories for "repairs and maintenance" and "administrative and general."  The Board adopts Ms. McKinney's management-fee percentage because it appears to be consistent with relevant market data and the Board's previous selections for the other subject properties. The Board's income-capitalization methodologies for valuing the Park Plaza Castle and Armory for the fiscal years at issues are summarized in the following tables.
                Park Plaza Castle and Armory
Fiscal Years 2007 & 2008

Potential Gross Income	Location of Space
	SF	Rent/SF	Total	
Food & Beverage/Functions	Exhibition Hall			 $250,000
	
Restaurant	Head House	15,000	$35.00	 $525,000
	
Tot. Potential Gross Income				 $775,000	
					
Vacancy & Credit Loss		5% applied to Head House		 -$26,250	
					
Effective Gross Income				 $748,750	
					
Expenses					
  Food & Beverage			$ 55,000		
  General Building/Legal			$ 30,000		
  Energy/Utilities			$ 59,000		
  Insurance			$  9,500		
  Management		3%	$ 22,463		
  Brokerage Commissions	Head House	2%	$ 10,500		
					
Total Operating Expenses				-$186,463	
					
Net Operating Income				 $562,287
	
					
FY 2007 Capitalization					
  Capitalization Rate		 9.000%			
  Tax Factor		 2.687%			
FY 2007 Overall Rate		11.687%			
					
FY 2007 Indicated Value				$4,811,217	
					
FY 2007 Rounded				$4,800,000
	
					
FY 2008 Capitalization					
  Capitalization Rate		 8.750%			
  Tax Factor		 2.592%			
FY 2008 Overall Rate		11.342%			
					
FY 2008 Indicated Value				$4,957,565	
					
FY 2008 Rounded				$4,960,000	


Park Plaza Castle and Armory
Fiscal Year 2009
Potential Gross Income	Location of Space
	SF	Rent/SF	Total	
Food & Beverage/Functions	Exhibition Hall			 $250,000
	
Restaurant	Head House	15,000	$35.00	 $525,000
	
Tot. Potential Gross Income				 $775,000	
					
Vacancy & Credit Loss		5% applied to Head House		 -$26,250	
					
Effective Gross Income				 $748,750	
					
Expenses					
  Food & Beverage			$ 60,000		
  General Building/Legal			$ 30,000		
  Energy/Utilities			$ 59,000		
  Insurance			$  9,500		
  Management		3%	$ 22,463		
  Brokerage Commissions	Head House	2%	$ 10,500		
					
Total Operating Expenses				-$191,463	
					
Net Operating Income				 $557,287	
					
Capitalization					
  Capitalization Rate		 8.250%			
  Tax Factor		 2.711%			
Overall Rate		10.961%			
					
Indicated Value				$5,084,271	
					
Rounded				$5,100,000	

	The following table compares the Board's values for the Park Plaza Castle and Armory for the fiscal years at issue to the corresponding assessments.
	FY 2007
	FY 2008
	FY 2009
	
Assessment	$4,117,500	$4,702,500	$5,394,500	
Board's Value	$4,800,000	$4,960,000	$5,100,000	

	On this basis, the Board determines that the Park Plaza Castle and Armory was not overvalued for fiscal years 2007 and 2008 but was overvalued for fiscal year 2009 by $294,500.  Accordingly, the Board decides the fiscal year 2007 and 2008 appeals for the appellee and the fiscal year 2010 appeal for the appellants.    

Conclusion
Based on all of the evidence and reasonable inferences drawn therefrom, the Board finds that for fiscal years 2007 through 2010 the assessments associated with the Boston Park Plaza Hotel and Office Building, identified for assessing purposes as parcel 05-00810-000, exceeded their corresponding fair cash values.  The following table summarizes the Board's findings of overvaluation. 
	Fiscal Year 2007 
	Fiscal Year 2008 	Fiscal Year 2009 	Fiscal Year 2010 	
Assessment	$126,367,000	$159,941,000	$164,390,000	$160,939,000	
Board's Finding of FCV	$116,900,000	$144,420,000	$146,400,000	$122,825,000	
Overvaluation	$  9,467,000	$ 15,521,000	$ 17,990,000	$ 38,114,000	

Accordingly, the Board decides docket numbers F291212, F296897, F303493, and F306975 for the appellant and grants abatements as summarized in the following table.
	Docket No. F291212 
	Docket No. F296897 	Docket No. F303493 	Docket No. F306975 	
Overvaluation	$9,467,000	$15,521,000	$17,990,000	$38,114,000	
Tax Rate/$1,000	      $26.87	      $25.92	      $27.11	       $29.38	
  Abatement	$254,378.29	$402,304.32	$487,708.90	$1,119,789.32	

Based on all of the evidence and reasonable inferences drawn therefrom, the Board finds that for fiscal years 2007 and 2008, the assessments associated with the Park Plaza Castle and Armory, identified for assessing purposes as parcel 05-01135-000, did not exceed their corresponding fair cash values.  The Board further finds that the assessment for fiscal year 2009 did exceed the Armory's corresponding fair cash value.  Accordingly, the Board decided docket numbers F291211 and F296896 for the appellee and docket number F302801 for the appellant.  The following table summarizes the Board's finding of overvaluation and its grant of abatement in docket number F302801 for fiscal year 2009. 
Assessment	$5,394,500	
Board's Finding of FCV	$5,100,000	
Overvaluation	$  294,500	
Tax Rate/$1,000	    $27.11	
Abatem        Abatement	$ 7,983.90	


OPINION
The assessors are required to assess real estate at its fair cash value.  G.L. c. 59, § 38.  Fair cash value is defined as the price on which a willing seller and a willing buyer will agree if both of them are fully informed and under no compulsion.  Boston Gas Co. v. Assessors of Boston, 334 Mass. 549, 566 (1956).  
In determining fair cash value, all uses to which the property was or could reasonably be adapted on the relevant assessment dates should be considered.  Irving Saunders Trust v. Assessors of Boston, 26 Mass. App. Ct. 838, 843 (1989).  The goal is to ascertain the maximum value of the property for any legitimate and reasonable use.  Id.  If the property is particularly well-suited for a certain use that is not prohibited, then that use may be reflected in an estimate of its fair market value.  Colonial Acres, Inc. v. North Reading, 3 Mass. App. Ct. 384, 386 (1975).  "In determining the property's highest and best use, consideration should be given to the purpose for which the property is adapted."  Peterson v. Assessors of Boston, Mass. ATB Findings of Fact and Reports 2002-573, 617 (citing Appraisal Institute, The Appraisal of Real Estate 315-16 (12th ed., 2001)), aff'd, 62 Mass. App. Ct. 428 (2004).  The Board found here that the subject properties' existing uses represented "[t]he reasonably probable and legal use of    . . . improved property that is physically possible, appropriately supported, and financially feasible and that results in the highest value."  Appraisal Institute, The Appraisal of Real Estate 277-78 (13th ed., 2008).  In making this finding, the Board not only gave credence to the real estate valuation experts' highest-and-best-use analyses and rationales but also considered, among other factors, the subject properties' history, size, location, and layout, as well as the uses of properties similar to the subject properties and located in their market area.  After extensive study, the real estate valuation experts concluded that the subject properties' highest-and-best uses were their existing uses.  On this basis, the Board rules that, for the fiscal years at issue, the subject properties' highest-and-best uses were their current ones.            
Generally, real estate valuation experts, the Massachusetts courts, and this Board rely upon three approaches to determine the fair cash value of property: income capitalization, sales comparison, and cost reproduction.  Correia v. New Bedford Redevelopment Authority, 375 Mass. 360, 362 (1978).  "The [B]oard is not required to adopt any particular method of valuation."  Pepsi-Cola Bottling Co. v. Assessors of Boston, 397 Mass. 447, 449 (1986).  In these appeals, the Board found and ruled that neither sales-comparison nor cost approaches were appropriate under the circumstances.  The real estate valuation experts eschewed these methods as well.  They determined that there were insufficient fee-simple market sales of reasonably comparable properties to meaningfully estimate the value of the subject properties using a sales-comparison technique.  The Board agreed.  See Olympia & York State Street Co. v. Assessors of Boston, 428 Mass. 236, 247 (1998)("The assessors must determine a fair cash value for the property as a fee simple estate, which is to say, they must value an ownership interest in the land and the building as if no leases were in effect.").  The real estate valuation experts did not use a cost approach because of the subject properties' age, deferred maintenance, accrued physical depreciation, and the difficulty in determining functional obsolescence.  The Board again agreed with the real estate valuation experts and further found and now rules that "[t]he introduction of evidence concerning the value based on [cost] computations has been limited to special situations in which data cannot be reliably computed under the other two methods."  Correia, 375 Mass. at 362.  The Board found here that no such "special situations" existed, and, even if they did, there was no verified or substantiated evidence on which to base a value using a cost approach.  
Accordingly, the Board rules that neither sales-comparison nor cost methods of valuation were appropriate techniques to use for valuing the subject properties for the fiscal years at issue.  
The use of the income-capitalization approach is appropriate when reliable market-sales data are not available.  Assessors of Weymouth v. Tammy Brook Co., 368 Mass. 810, 811 (1975); Assessors of Lynnfield v. New England Oyster House, 362 Mass. 696, 701-702 (1972); Assessors of Quincy v. Boston Consolidated Gas Co., 309 Mass. 60, 67 (1941).  It is also an appropriate technique to use for valuing income-producing property.  Id. at 64-65.  In these appeals, the Board relied exclusively on the values determined from income-capitalization analyses because the other approaches were not suitable under the circumstances.  The methodologies that the Board used were equivalent to those recommended by both real estate valuation experts.  
"Direct capitalization is widely used when properties are already operating on a stabilized basis and there is an ample supply of comparable [rentals] with similar risk levels, incomes, expenses, physical and locational characteristics, and future expectations."  The Appraisal of Real Estate at 499 (13th ed., 2008).  The Board found here that the subject properties were operating on a stabilized basis and there were an adequate number of comparable rentals to support the use of a direct income-capitalization methodology to estimate the value of the subject properties for the fiscal years at issue.  "The direct capitalization of income method analyzes the property's capacity to generate income over a one-year period and converts the capacity into an indication of fair cash value by capitalizing the income at a rate determined to be appropriate for the investment risk involved."  Olympia & York State Street Co., 428 Mass. at 239.  "It is the net income that a property should be earning, not necessarily what it actually earns, that is the figure that should be capitalized."  Peterson v. Assessors of Boston, 62 Mass. App. Ct. 428, 436 (2004)(emphasis in original).  Accordingly, the income stream used in the income-capitalization method must reflect the property's earning capacity or economic rental value.  Pepsi-Cola Bottling Co., 397 Mass. at 451.  Imputing rental income to the subject property based on fair market rentals from comparable properties is evidence of value if, once adjusted, they are indicative of the subject property's earning capacity.  See Correia v. New Bedford Redevelopment Auth., 5 Mass. App. Ct. 289, 293-94 (1977), rev'd on other grounds, 375 Mass. 360 (1978); Library Services, Inc. v. Malden Redevelopment Auth., 9 Mass. App. Ct. 877, 878 (1980)(rescript).  Actual rents from the subject properties are also probative if they reflect the subject properties' true earning capacity.  Pepsi Cola Bottling Co., 397 Mass. at 451; Irving Saunders Trust, 26 Mass. App. Ct. at 842.  After accounting for vacancy and rent losses, the net-operating income is obtained by deducting the landlord's appropriate expenses.  General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 610 (1984).  The expenses should also reflect the market.  Id.; see Olympia & York State Street Co., 428 Mass. at 239, 245.  In the case of a hotel, income attributable to the personal property and business component of the hotel is also deducted.  See Cambridge Hyatt Joint Venture v. Assessors of Cambridge, Mass. ATB Findings of Fact and Reports 1990-203, 218-20; Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment Analysis and Valuations (Appraisal Institute, 1997) 240-41 ("Hotels and Motels I").
The Park Plaza Office Building 
and
The Park Plaza Castle and Armory

The Board's selections of its rentable areas for the various rental categories for the fiscal years at issue for these two subject properties were based primarily on rent rolls, professional measurements of useable space, and areas of agreement or near agreement between the two real estate valuation experts.  The Board adopted Ms. McKinney's approach of valuing all of the independent restaurant and retail space in the subject hotel and office building in the valuation analyses for the Park Plaza Office Building.  The Board found and now rules that this approach best comported with how these properties were managed and also offered a more straightforward and concise approach for valuing the subject hotel.  See Olympia & York State Street Co., 428 Mass. at 242 (acknowledging that it is appropriate for the Board to "exercise . . . independent decision-making based on the evidence").   
For the subject office building's rents, the Board considered the two real estate valuation experts' market analyses and their underlying supporting information, including relevant market and actual data, as well as projections.  The Board adopted Mr. Logue's approach for determining the income attributable to the subject office building's Executive Center because his method better reflected that rental area's highest-and-best use.  For additional income in the form of tenant service income and miscellaneous income generated from the commercial office space (but not the area encompassed by the Executive Center), the Board relied entirely on Ms. McKinney's recommendations because they were realistic suppositions which were supported by market data.  Id.
 For the subject office building's vacancy and credit allowances, the Board examined market trends and market rates and considered the subject office building's actual vacancy rates, as well as the real estate valuation experts' recommendations along with their supporting data and rationales.  The Board did not apply a vacancy adjustment to the space utilized by the Executive Center because any vacancy there is already captured by using that area's actual income and expense figures, as stabilized by Mr. Logue.  Id.  
"The issue of what expenses may be considered in any particular piece of property is for the board."  Alstores Realty Corp. v. Assessors of Peabody, 391 Mass. 60, 65 (1984).  The Board applied operating expenses to the areas of the subject office building identified for commercial office and Executive Center use.  For the Executive Center space, the Board used the stabilized actual expenses as presented by Mr. Logue.  The Board's approach in this regard is consistent with its treatment of the potential gross income received from this area for income-capitalization purposes.  For the commercial office space, the Board examined and appropriately adjusted, as needed, the recommendations offered by the two real estate valuation experts, certain industry sources, and the subject office building's actual expenses.  See Olympia & York State Street Co., 428 Mass. at 242.   
The Board applied a $1.00 per-square-foot management fee to the subject office building's commercial office and independent restaurant and retail space.  This amount is consistent with the management fees proposed by each of the real estate valuation experts and is commensurate with the degree of management which the Board found necessary for properties comparable to the subject office building.  Id.  
The Board adopted Mr. Logue's suggested brokerage commission costs and his recommended reserve for replacement expenses and applied them, as he did, to commercial office, Executive Center, and restaurant and retail space.  The Board also used tenant improvement expenses and applied them, as Mr. Logue did, to commercial office and Executive Center space.  The Board's selections mirrored Mr. Logue's except that the Board amortized its figures on a straight-line basis without interest to better reflect the then existing financial and market conditions.  Id. 
The capitalization rate selected should consider the return necessary to attract investment capital.  Taunton Redevel. Assoc. v. Assessors of Taunton, 393 Mass. 293, 295 (1984).  The Board based its capitalization rates primarily on Mr. Logue's suggested rates, the range of capitalization rates, after adjustment, in industry sources, and the trend in rates as demonstrated by both Mr. Logue's and Ms. McKinney's rates, as well as industry sources.  The "tax factor" is a percentage added to the capitalization rate "to reflect the tax which will be payable on the assessed valuation produced by the [capitalization] formula."  Assessors of Lynn v. Shop-Lease Co., 364 Mass. 569, 573 (1974).  The Board then divided its capitalization rates, loaded with appropriate tax factors, into the corresponding fiscal year's net-operating incomes to determine the fair cash values of the subject office building for the fiscal years at issue.
Based on both real estate valuation experts' market research and recommendations for the Park Plaza Castle and Armory, as well as actual rent figures and projections, the Board adopted Ms. McKinney's suggested exhibition and function hall and restaurant rental amounts, as well as the valuation experts' identical vacancy and credit loss rate of 5% for the Head House space.  See Olympia & York State Street Co., 428 Mass. at 242.     
For the Armory's expenses, the Board adopted Mr. Logue's expenses for "food and beverage," "general building and legal," "energy and utilities," "insurance," and "brokerage commissions."  The Board found that Mr. Logue's more specific breakdown of these expenses likely resulted in more accurate expense depictions than Ms. McKinney's blanket 20% and 25% of function room revenue.  The Board also adopted Mr. Logue's utility and energy costs because Ms. McKinney was not certain if her costs excluded the Head House.  The Board did not adopt and did not include in its methodologies, principally for the reasons espoused by Ms. McKinney, Mr. Logue's expense categories for "repairs and maintenance" and "administrative and general."  The Board adopted Ms. McKinney's management-fee percentage because it appeared consistent with relevant market data and the Board's previous selections for the other subject properties.  See Alstores Realty Corp., 391 Mass. at 65.
The real estate valuation experts' overall or combined capitalization rates for the Armory are virtually identical for the fiscal years at issue.  Based on both valuation experts' underlying data and methodologies and recognizing their similar results but varying assumptions, and in consideration of the expense categories which the Board accepted, the Board determined the most appropriate overall capitalization rates, see Taunton Redevel. Corp., 393 Mass. at 295, loaded with the corresponding fiscal year tax factors.  See Shop-Lease Co., 364 Mass. at 573.  
The Boston Park Plaza Hotel
For the fiscal years at issue, the Board found, like the parties' valuation experts, that the subject hotel contained 941 rooms.  The Board based its stabilized occupancy findings on the subject hotel's actual rates for calendar years 2005 through 2008, the rates of the experts' competitive sets for those same years, as well as the experts' recommendations, which approximate the Board's findings.
The Board's ADRs and their trending comport with the experts' depictions of the relevant market and are also consistent with the subject hotel's relevant actual rates and their trending.  Moreover, the Board's trending follows the average rates for the experts' competitive sets for those same years.  In making its findings regarding ADR, the Board also considered and gave some weight to Mr. Logue's recommended ADRs, as well as Ms. Roginsky and Ms. McKinney's recommended ADRs.
As a result of its findings regarding number of rooms, occupancy, number of occupied rooms per fiscal year, and its ADRs, the Board determined its RevPARs and the stabilized revenues generated from room rentals for the fiscal years at issue.  See Stephen Rushmore and Erich Baum, Hotels & Motels -- Valuations and Market Studies 148 (Appraisal Institute, 2001)("Hotels & Motels II") ("Because [RevPAR] accounts for both occupancy and average rate together, this figure provides the best overall measure of revenue-generating results for a single property or group of hotels.").   
The Board adopted Mr. Logue's recommendations for food and beverage revenue for fiscal years 2007 through 2010.  It agreed with his approach of stabilizing and relying primarily on the relevant actual amounts after confirming their similarity to the market for other full-service hotels.  The Board also relied on the industry ranges that Ms. Roginsky and Ms. McKinney presented. 
For the revenue category accounting for telecommunications and laundry and the revenue category accounting for rentals and other income, the Board again adopted Mr. Logue's recommended stabilized amounts, which were primarily based on relevant actual revenue sums and projections.  The Board found, among other things, that Mr. Logue's recommendations for these two categories appropriately reflected the industry trend of decreased revenue associated with telecommunication charges and were reasonably consistent with the market data introduced by Ms. Roginsky and Ms. McKinney, as well as those two experts' recommended revenues for these two categories.  
The Board did not include a revenue category for "Park Plaza Hotel Retail," as Mr. Logue did, because the Board included the revenues for the independent retail stores and restaurants located at the subject hotel in its analyses for the subject office building, as and for the same reasons that Ms. McKinney did.  The Board ruled that the amounts assigned to these revenue categories properly reflected the subject hotel's earning capacity and approximated the market.  See Three Corners Realty Trust v. Assessors of Salem, Mass. ATB Findings of Fact and Reports 2002-47, 71; Cambridge Hyatt Joint Venture v. Assessors of Cambridge, Mass. ATB Findings of Fact and Reports 1990-203, 209.      
For its department expenses, which comprise costs associated with rooms, food and beverage, telecommunications and laundry, and rentals and other income categories, the Board's stabilized totals closely reflected those proposed by Mr. Logue and were slightly higher than the departmental expenses that Ms. Roginsky and Ms. McKinney developed.  
As for the component categories, the Board adopted most of the room expenses recommended by Mr. Logue because he based his selections on the subject hotel's relevant actual and budgeted annual room expenses and trends, which he confirmed with appropriate industry data.  For fiscal year 2010, however, based on the weight of the evidence, the Board reduced his recommended amount to 31% of revenue.  Ms. Roginsky and Ms. McKinney's room expense percentages were similar to the Board's and were developed using sources comparable to Mr. Logue's.  
The Board adopted Mr. Logue's recommended food and beverage costs for fiscal years 2007 and 2008 but not his recommended costs for fiscal years 2009 and 2010.  The Board found that these latter two amounts were excessive given the applicable industry ranges, as well as the percentage costs proposed by Ms. Roginsky and Ms. McKinney.  Given the weight of the evidence, the Board found that Mr. Logue's proposed costs, when analyzed as percentages, were excessive and therefore lowered them for use in its methodologies to approximately 88% and 89%, respectively, which, particularly for fiscal year 2010, resulted in expense percentages closer to those suggested by Ms. Roginsky and Ms. McKinney.  The Board further found that its approach produced more stabilized results.  For this category of expenses, Mr. Logue had once again relied on relevant actual and budgeted data that he confirmed to some extent with published hotel industry sources.  Ms. Roginsky and Ms. McKinney had relied heavily on the subject hotel's prior five-year experience coupled with industry data ranges.  The Board found that its chosen expense amounts best reflected the weight of the evidence.
For its telecommunication and laundry expenses, the Board adopted Mr. Logue's suggested amounts.  Mr. Logue based his recommendations for these expenses on costs actually incurred by the subject hotel and on its budget.  He believed that these cost amounts were reasonably consistent with industry standards for the fiscal years at issue.  Ms. Roginsky and Ms. McKinney based their recommendations on virtually the same sources, but, with little explanation, departed significantly from the relevant actual and projected expenses for the latter two fiscal years.  The Board adopted Mr. Logue's expenses for this category because they were truer reflections of the subject hotel's experience than those suggested by Ms. Roginsky and Ms. McKinney and, moreover, the Board's approval of Mr. Logue's expenses was consistent with its adoption of his revenue recommendations for this category.  See Foxboro Associates v. Assessors of Foxborough, 385 Mass. 679, 683 (1982) (holding that the Board may accept the more convincing evidence).   
For the expenses associated with the rentals-and-other-income category of department expenses, the Board adopted the percentage of total revenue proposed by Mr. Logue. The Board found that his recommendations reflected a stabilized assessment of the subject hotel's experience for this expense category, which he believed was consonant with the market.  Ms. Roginsky and Ms. McKinney did not include an itemization of this expense category in their methodologies.  Id.    
After subtracting its department expenses from its total revenues, the Board determined its department incomes.
The Board's undistributed operating expenses included costs and fees for administration and finance, sales and marketing, property operation and maintenance, utilities, and management.  These five categories, with some minor labeling and composition differences, were essentially the same ones that Mr. Logue and Ms. Roginsky and Ms. McKinney employed in their analyses.  Unlike Mr. Logue for fiscal years 2007, 2008, and 2009, however, the Board combined credit card commissions in its expenses for administration and finance for consistency.  Using the same industry data upon which Ms. Roginsky and Ms. McKinney relied, coupled with the subject hotel's actual and budgeted data upon which all the experts relied, and taking Mr. Logue's, as well as Ms. Roginsky and Ms. McKinney's, recommended costs for administration and financing, sales and marketing, property operation and maintenance, and utilities into consideration, the Board adopted PAR costs for administration and finance, sales and marketing, and property operation and maintenance and POR costs for utilities.  Id.
Relying primarily on the actual management rate, the lower part of the industry range, and the valuation experts' rationales for their selections, the Board chose a management fee of 2.5% for all of the fiscal years at issue.  Given the evidence here, the Board accepted the valuation experts' recommendations that this deduction be used to account for the income attributable to the business component of the subject hotel.  See Sanmar, Inc. v. Assessors of North Adams, Mass. ATB Findings of Fact and Reports 2005-81, 109-110.       
	The Board then subtracted its undistributed operating expenses from the corresponding department income amounts to calculate its gross-operating profits for the fiscal years at issue.
In addition to department expenses and undistributed operating expenses, the Board also subtracted the costs related to two categories of fixed expenses -- property insurance and rental of office equipment -- from the subject hotel's gross-operating profit for the fiscal years at issue.  The Board did not include a category for taxes here because applicable real estate taxes were addressed in the tax factors applied to the corresponding capitalization rates, Shop-Lease Co., 364 Mass. at 573, and the presence, of what Mr. Logue termed -- "business taxes" -- was not reliably substantiated.  Any personal property taxes would be sufficiently accounted for in the tax factors added to the capitalization rates used in calculating returns on personal property.  See Hotels and Motels I at 245 ("If the FF&E is subject to personal property tax, the personal property tax rate is factored into the rate of return in the same manner that the real property tax rate is combined with the overall rate").  There was no evidence in these appeals suggesting that Park Plaza or Starwood Lodging Corp. paid any personal property taxes on the subject hotel's FF&E.
For the property insurance category, the Board gave approximately equal weight to Ms. Roginsky and Ms. McKinney's recommendations and Mr. Logue's stabilized totals.  In making their recommendations, the experts relied primarily on the subject hotel's historical and budgeted costs, which they confirmed and adjusted using industry data and survey ranges.
For the rental of office equipment category, the Board adopted Mr. Logue's stabilized expenses which he based on the subject hotel's actual and projected expenditures that he believed were consistent with other full-service hotels.  Ms. Roginsky and Ms. McKinney did not provide a breakdown for this category.
With respect to the departmental and undistributed expenses and the fixed costs, the Board found and now rules that the expense and costs figures that it adopted are consistent with market expenses and costs for the fiscal years at issue and the expense categories that it employed are consistent with those allowed in other hotel valuations.  See, e.g., SLT Realty Limited Partnership v. Assessors of Barnstable, Mass. ATB Findings of Fact and Reports 2009-684, 713-16; Zuckerman v. Assessors of Cambridge, Mass. ATB Findings of Fact and Reports 567, 596-99, aff'd 2009 Mass. App. Unpub. LEXIS 720; Three Corners Realty Trust, Mass. ATB Findings of Fact and Reports at 2002-67-88; G.F. Springfield Mgmt., Inc. v. Assessors of West Springfield, Mass. ATB Findings of Fact and Reports 2000-228, 247-48; Cambridge Hyatt Joint Venture, Mass. ATB Findings of Fact and Reports at 1990-209. 
After subtracting these fixed expenses from the subject hotel's corresponding gross-operating profits, the Board calculated its net-operating incomes.
To attain its net-operating incomes to be capitalized, the Board made several additional deductions from its net-operating incomes to account for reserves for the replacement of short-lived real property, see Assessors of Brookline v. Buehler, 396 Mass. 520, 531 (1986) (upholding the Board's recognition that the replacement of certain building components are appropriate items for a reserve), and the influence of personal property on the subject hotel's values, see Cambridge Hyatt Joint Venture, Mass. ATB Findings of Fact and Reports at 1990-37-39.  To address the periodic replacement of short-lived real property and the replacement of and return on FF&E at the subject hotel, the Board adopted as credible Mr. Logue's 3% reserves for replacement of short-lived real property, his 3.5% reserves for replacement of FF&E, but not his recommended returns on FF&E.  Like Mr. Logue, the Board found that 3% of the subject hotel's applicable total revenue constituted an appropriate deduction for short-lived real property reserves considering the subject hotel's extensive mechanical, electrical, and plumbing systems, and the age of several of its major and outdated building components.    Also like Mr. Logue, the Board found that 3.5% of applicable total revenue was an appropriate deduction for FF&E reserves considering the extent, quality, and condition of the subject hotel's soft goods and case goods and that the useful life of FF&E in similar full-service hotels during the relevant time period was seven to eight years.  Hotels & Motels II at 360 ("A reserve for replacement allowance can be estimated . . . as a percentage of gross revenue.").       
For its return on FF&E, the Board adopted Mr. Logue's $20,000 cost per room to replace FF&E for fiscal years 2007 and 2008 with that cost increasing to $25,000 per room for fiscal years 2009 and 2010.  Mr. Logue derived these costs from information obtained from industry sources, as well as from the subject hotel's management.  The Board also accepted his average depreciation rate of 55% for fiscal year 2007, but believed that his 5% reduction in that rate in each successive fiscal year was too conservative, particularly considering the seven-to-eight year useful life associated with most of the FF&E.  Accordingly, the Board found that the average depreciation rates for fiscal years 2008 through 2010 are 62.5%, 70%, and 77.5%, respectively.  To calculate its return on FF&E, the Board used the same capitalization rates, before loading them with the applicable tax factors, which it used to estimate the value of the real property associated with subject hotel.  The Board found that its approach was consistent with customary appraisal practices and its finding that there was no evidence supporting the payment of personal property taxes on behalf of the subject hotel.  See Hotels and Motels I at 240 ("The current market value of FF&E in place" is used for calculating a return on FF&E.) and 245 ("If FF&E is subject to personal property tax, the property tax rate is factored into the rate of return in the same manner that the real property tax rate is combined with the overall rate.").  
After subtracting these additional deductions from its corresponding net-operating incomes, the Board determined its net-operating incomes to be capitalized.
To convert these amounts into estimates of value for fiscal years 2007 through 2010, the Board applied capitalization rates loaded with appropriate tax factors to determine the subject hotel's values.  Both valuation experts developed their capitalization rates using, among other things, forms of the band-of-investment technique and various industry sources.  The Board found that Ms. McKinney's capitalization rates, and some of the assumptions that she used to develop them, did not adequately reflect the condition of the subject hotel and its inherent risk.  The Board found that Mr. Logue's capitalization rates and the assumptions that he used to develop them overcompensated for the subject hotel's condition and its inherent risk.  Relying on both real estate valuation experts' recommended rates, their underlying data and calculations, and the Board's own analysis of the subject hotel's condition, its inherent risk, and the state of the market during the relevant time periods, the Board developed its own capitalization rates, which fell between the valuation experts' recommendations.  See New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 467 (1981).  
	By dividing the net-incomes to be capitalized by the corresponding combined capitalization rates, the Board determined the fair market values of the subject hotel for fiscal years 2007 through 2010 and then rounded them.  
In reaching its opinion of fair cash value in these appeals, the Board was not required to believe the testimony of any particular witness or to adopt any particular method of valuation that an expert witness suggested.  Rather, the Board could accept those portions of the evidence that the Board determined had more convincing weight.  Foxboro Associates, 385 Mass. at 683; New Boston Garden Corp., 383 Mass. at 473; New England Oyster House, Inc., 362 Mass. 696, 702 (1972).  In evaluating the evidence before it, the Board selected among the various elements of value and appropriately formed its  own independent judgment of fair cash value.  General Electric Co., 393 Mass. at 605; North American Philips Lighting Corp. v. Assessors of Lynn, 392 Mass. 296, 300 (1984).
The Board need not specify the exact manner in which it arrived at its valuation.  Jordan Marsh v. Assessors of Malden, 359 Mass. 106, 110 (1971).  The fair cash value of property cannot be proven with "mathematical certainty and must ultimately rest in the realm of opinion, estimate and judgment."  Boston Consol. Gas Co., 309 Mass. at 72.  "The credibility of witnesses, the weight of the evidence, and inferences to be drawn from the evidence are matters for the [B]oard."   Cummington School of the Arts, Inc. v. Assessors of Cummington, 373 Mass. 597, 605 (1977).  
 "'The burden of proof is upon the [appellant] to make out its right as a matter of law to abatement of the tax.'"  Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974)(quoting Judson Freight Forwarding Co. v. Commonwealth, 242 Mass. 47, 55 (1922)).  The appellant must show that it has complied with the statutory prerequisites to its appeal, Cohen v. Assessors of Boston, 344 Mass. 268, 271 (1962), and that the assessed valuation of its property was improper.  See Foxboro Assoc., 385 Mass. at 691.  The assessment is presumed valid until the taxpayer sustains its burden of proving otherwise.  Schlaiker, 365 Mass. at 245.  Based on all of the evidence and reasonable inferences drawn therefrom, the Board found and now rules that the appellants met their burden of proving that assessing parcel number 05-00810-000, containing the subject hotel and office building, was overvalued for fiscal years 2007 through 2010 and that the Armory was overvalued for fiscal year 2009, but not for fiscal years 2007 and 2008.
The Board applied the foregoing principles and subsidiary findings and rulings in reaching its opinion of the fair cash values of parcel 05-00810-000 and whether and to what extent it was overvalued for the fiscal years at issue, as summarized in the following tables.
	Fiscal Year 2007 
	Fiscal Year 2008 	Fiscal Year 2009 	Fiscal Year 2010 	
Assessment	$126,367,000	$159,941,000	$164,390,000	$160,939,000	
Board's Finding of FCV	$116,900,000	$144,420,000	$146,400,000	$122,825,000	
Overvaluation	$  9,467,000	$ 15,521,000	$ 17,990,000	$ 38,114,000	

Accordingly, the Board decided docket numbers F291212, F296897, F303493, and F306975 for the appellant Park Plaza and granted abatements as summarized in the following table.
	Docket No. F291212 
	Docket No. F296897 	Docket No. F303493 	Docket No. F306975 	
Overvaluation	$9,467,000	$15,521,000	$17,990,000	$38,114,000	
Tax Rate/$1,000	      $26.87	      $25.92	      $27.11	       $29.38	
  Abatement	$254,378.29	$402,304.32	$487,708.90	$1,119,789.32	

The Board also applied the foregoing principles and subsidiary findings and rulings in reaching its opinion that the fair cash values of the Park Plaza Castle and Armory, identified for assessing purposes as parcel 05-01135-000, did not exceed their corresponding fair cash values for fiscal years 2007 and 2008.  The Board further found that the assessment for fiscal year 2009 did exceed the Armory's corresponding fair cash value.  Accordingly, the Board decided docket numbers F291211 and F296896 for the appellee and docket number F302801 for the appellant Saunstar Land Co.  The following table summarizes the Board's finding of overvaluation and its grant of abatement in docket number F302801 for fiscal year 2009. 
Assessment	$5,394,500	
Board's Finding of FCV	$5,100,000	
Overvaluation	$  294,500	
Tax Rate/$1,000	    $27.11	
Abatem        Abatement	$ 7,983.90	
     				   

THE APPELLATE TAX BOARD

By:_______________________________
   Thomas W. Hammond, Jr. Chairman


A true copy,

Attest: _____________________
         Clerk of the Board
APPENDIX (4 Pages)

		Roginsky	Board's		
		    Methodology	     Calculations		
Revenues	Ramp Up Year	2007	2007	%	
Rooms	$37,265,953	$38,227,655	$38,227,734	66.6	
Food and Beverage	$17,395,078	$17,829,955	$17,310,672	30.1	
Other Op. Depts.	$688,555	$705,769	$685,214	1.2	
Rentals and Other	$1,207,992	$1,238,191	$1,202,130	2.1	
Total	$56,557,578	$58,001,570	$57,425,750	100.0	
					
Dept. Expenses					
Rooms	$11,234,321	$11,515,179	$11,179,809	19.5	
Food and Beverage	$14,785,816	$15,155,462	$14,714,071	25.6	
Other Op. Depts.	$585,272	$599,904	$582,432	1.0	
Total	$26,605,409	$27,270,545	$26,476,312	46.1	
					
Dept. Income	$29,952,169	$30,731,025	$30,949,438	53.9	
					
Operating Expenses					
Admin. & General	$4,264,612	$4,264,612	$4,140,400	7.2	
Sales & Marketing	$3,004,613	$3,004,613	$2,917,100	5.1	
Prop. Opera. & Maint.	$4,652,304	$4,652,304	$4,516,800	7.9	
Utilities	$4,209,851	$4,209,851	$4,087,242	7.1	
Total	$16,131,380	$16,131,380	$15,661,542	27.3	
					
Gross Op. Profit	$13,820,789	$14,599,645	$15,287,896	26.6	
					
Management fee	$1,244,267	$1,276,035	$1,263,367	2.2	
					
Fixed Expenses					
Prop. & Other Taxes	N/A	N/A	N/A		
Insurance	$581,538	$581,538	$564,600	1.0	
Replacement Reserve	$2,827,879	$2,900,078	$2,871,288	5.0	
Total	$3,409,417	$3,481,616	$3,435,888	6.0	
					
Net Oper. Income	$9,167,105	$9,841,994	$10,588,642	18.4	
					
NOI Differential		$674,889	$1,421,537		
					
Capitalization Rate		9.687%	9.687%		
					
Value Bef. Stabil. Adj.		$101,600,021	$109,307,752		
Ramp-Up/Stabil. Adj. (-)	$674,890	$1,421,537		
Fair Market Value		$100,925,131	$107,886,215		
Rounded FMV		$100,900,000	$107,900,000		
Per Key		$107,226	$114,665		
					
					
					
					
					
	Roginsky	Board's			
	  Methodology	    Calculations			
Revenues	2008	2008	%		
Rooms	$42,503,794	$42,503,835	67.9		
Food and Beverage	$18,572,870	$18,031,930	28.8		
Other Op. Depts.	$795,980	$772,797	1.2		
Rentals and Other	$1,326,634	$1,287,995	2.1		
Total	$63,199,278	$62,596,557	100.0		
					
Dept. Expenses					
Rooms	$12,735,682	$12,364,752	19.8		
Food and Beverage	$15,972,668	$15,507,460	24.8		
Other Op. Depts.	$716,382	$695,517	1.1		
Total	$29,424,732	$28,567,729	45.6		
					
Dept. Income	$33,774,546	$34,028,828	54.4		
					
Operating Expenses					
Admin. & General	$4,409,997	$4,281,550	6.8		
Sales & Marketing	$3,101,536	$3,011,200	4.8		
Prop. Opera. & Maint.	$4,943,073	$4,799,100	7.7		
Utilities	$4,775,881	$4,636,782	7.4		
Total	$17,230,487	$16,728,632	26.7		
					
Gross Op. Profit	$16,544,059	$17,300,196	27.6		
					
Management fee	$1,390,384	$1,377,124	2.2		
					
Fixed Expenses					
Prop. & Other Taxes	N/A	N/A			
Insurance	$678,461	$658,700	1.1		
Replacement Reserve	$3,159,964	$3,129,828	5.0		
Total	$3,838,425	$3,788,528	6.1		
					
Net Oper. Income	$11,315,250	$12,134,544	19.4		
					
Capitalization Rate	9.092%	9.092%			
					
Fair Market Value	$124,452,816	$133,463,966			
Rounded FMV	$124,500,000	$133,500,000			
Per Key	$132,306	$141,870			
					
					
					
					
					
					
					
					
	
Roginsky	
Board's			
	Methodology	Calculations			
Revenues	2009	2009	%		
Rooms	$43,791,788	$43,791,830	69.6		
Food and Beverage	$17,776,890	$17,259,133	27.4		
Other Op. Depts.	$729,648	$708,397	1.1		
Rentals and Other	$1,193,970	$1,159,196	1.8		
Total	$63,492,296	$62,918,556	100.0		
					
Dept. Expenses					
Rooms	$13,531,662	$13,137,549	20.9		
Food and Beverage	$15,643,663	$15,188,037	24.1		
Other Op. Depts.	$715,055	$694,229	1.1		
Total	$29,890,380	$29,019,815	46.1		
					
Dept. Income	$33,601,916	$33,898,740	53.9		
					
Operating Expenses					
Admin. & General	$4,749,227	$4,610,900	7.3		
Sales & Marketing	$3,295,382	$3,199,400	5.1		
Prop. Opera. & Maint.	$5,136,919	$4,987,300	7.9		
Utilities	$4,643,217	$4,507,983	7.2		
Total	$17,824,745	$17,305,583	27.5		
					
Gross Op. Profit	$15,777,171	$16,593,158	26.4		
					
Management fee	$1,396,831	$1,384,208	2.2		
					
Fixed Expenses					
Prop. & Other Taxes	N/A	N/A			
Insurance	$726,923	$705,750	1.1		
Replacement Reserve	$3,174,615	$3,145,928	5.0		
Total	$3,901,538	$3,851,678	6.1		
					
Net Oper. Income	$10,478,802	$11,357,272	18.1		
					
Capitalization Rate	8.711%	8.711%			
					
Fair Market Value	$120,293,904	$130,378,509			
Rounded FMV	$120,300,000	$130,400,000			
Per Key	$127,843	$138,576			
					
					
					
					
					
					
					
					
	

Roginsky	

Boards's			
	Methodology	Calculations			
Revenues	2010	2010	%		
Rooms	$43,018,991	$43,019,033	69.5		
Food and Beverage	$17,776,890	$17,259,133	27.9		
Other Op. Depts.	$703,116	$682,637	1.1		
Rentals and Other	$928,643	$901,597	1.5		
Total	$62,427,640	$61,862,400	100.0		
					
Dept. Expenses					
Rooms	$13,266,336	$12,879,950	20.8		
Food and Beverage	$15,821,432	$15,360,628	24.8		
Other Op. Depts.	$689,053	$668,985	1.1		
Total	$29,776,821	$28,909,563	46.7		
					
Dept. Income	$32,650,819	$32,952,837	53.3		
					
Operating Expenses					
Admin. & General	$4,943,073	$4,799,100	7.8		
Sales & Marketing	$3,489,228	$3,387,600	5.5		
Prop. Opera. & Maint.	$5,136,919	$4,987,300	8.1		
Utilities	$4,112,564	$3,992,785	6.5		
Total	$17,681,784	$17,166,785	27.7		
					
Gross Op. Profit	$14,969,035	$15,786,052	25.5		
					
Management fee	$1,373,408	$1,360,973	2.2		
					
Fixed Expenses					
Prop. & Other Taxes	N/A	N/A			
Insurance	$751,153	$729,275	1.2		
Replacement Reserve	$3,121,382	$3,093,120	5.0		
Total	$3,872,535	$3,822,395	6.2		
					
Net Oper. Income	$9,723,092	$10,602,685	17.1		
					
Capitalization Rate	9.188%	9.188%			
					
Fair Market Value	$105,823,814	$115,397,090			
Rounded FMV	$105,800,000	$115,500,000			
Per Key	$112,434	$122,742			
					
					

 While the appellant is not identified as a limited liability company ("LLC") on the petitions or any of the other pleadings, other documents in evidence identity it as "20 & 50 Park Plaza Complex, LLC," and the Board so finds.
 The way in Boston known as "Park Plaza" is referred to herein as "Park Plaza Street" to avoid confusion with other uses in these findings of the name Park Plaza.
 The rentable retail and restaurant square-foot measurement is for fiscal year 2007 and includes the barbershop located in the basement.  This measurement for the other three fiscal years at issue is 24,398 square feet.  
 These measurements are for fiscal year 2007.  The measurements for the other three fiscal years at issue are set forth in the findings, infra, and may differ slightly from these measurements depending on the space.  
 As described by the assessors' real estate valuation expert, the Park Plaza Castle and Armory is located "kitty-corner across the intersection of Arlington and Columbus Avenues" from the Boston Park Plaza Hotel and Office Building.
 General Laws, c. 4, § 9 provides in pertinent part that "when the day, or last day, for the performance of any act . . . required by statute . . . falls on Sunday or a legal holiday, the act may, unless it is specifically authorized or required to be performed on Sunday or on a legal holiday, be performed on the next succeeding business day."
 See the preceding footnote.
 Ms. McKinney reported that the BOMA survey that she used for her fiscal year 2010 valuation did not include information on tenant service income. 
 For fiscal years 2009 and 2010, Ms. McKinney included two Boston Office Surveys for both quarters - the first column under the Boston Office Surveys heading contains overall averages for all Boston office properties while the second column contains an average for central business district properties only.
 See preceding footnote.
 To be consistent with how the Starwood Lodging Corp. handled credit card commissions, Mr. Logue broke out a separate expense category for them for fiscal years 2007 through 2009, but included them with his administrative and general costs for fiscal year 2010.  In summarizing Mr. Logue's methodology, the Board included them in his administrative and general costs for all of the fiscal years at issue.  
 While Mr. Logue testified that business taxes do not include real estate taxes, he did not define what exactly they do include.
 There were numerous small errors in the income-capitalization table that Mr. Logue used to summarize his methodologies.  The Board attempted to correct these errors in its presentation of this table.
 A citywide convention is defined as one that generates more than 2,500 room nights on its peak night.
 According to Ms. Roginsky, it is appropriate to include the subject hotel in the competitive set because it is part of the relevant market.
 The Board notes that a significant number of Ms. McKinney's calculations appeared to be erroneous.  The Board was not able to duplicate the totals in many of the categories that Ms. McKinney employed in her income-capitalization methodologies, despite using the same underlying unit recommendations.  See the Appendix attached to the end of this Findings of Fact and Report.  To the extent that the Board adopts some of Ms. McKinney's recommendations for the subject hotel, the Board uses her unit suggestions but calculates its own totals. 
 The Board was unable to discern how Ms. McKinney accounted for her suggested vacancy rate of 5% in her income-capitalization methodology for fiscal year 2007.  She apparently accounted for it in fiscal years 2008 and 2009 by applying it directly to the revenue generated by the Head House rental, without a separate line item.  The Board also detected and corrected several small mathematical errors in her methodologies. 
 Ms. Roginsky and Ms. McKinney also recommended an ADR of $155.00 for fiscal year 2007, as a ramp-up year. 
 The experts' presentation of the historic expenses and budget information differed, but not substantially.  
 While the Board finds that, with respect to brokerage commissions, Mr. Logue's projected annual turnover to new tenants of 50% appears on the high side, it is undisputed.

ATB 2013-461