IDAPA 35.01.03.405 — ASSESSMENT OF OPERATING PROPERTY

Section 63-405, Idaho Code
01.
The Unit Method. The unit method of valuation is preferred for valuing a railroad or public utility
when the individual assets function collectively, are operated under one ownership and one management, are
interdependent, and the property would be expected to trade in the marketplace as a unit. Under the unit method, the
value of the tangible and intangible property is equal to the value of the going concern. The market value of the unit
is referred to as the system value. For interstate property, allocation factors are used to determine what part of the
system value is in Idaho.
(7-1-24)
02.
Identify the Unit. The unit includes all property used or useful to the operation of the system,
property owned, used or leased by the business and the leased fee and leasehold interests. All title and interest in unit
property is assessed to the owner, lessee or operating company.
(7-1-24)
03.
Appraisal Approaches. The three (3) approaches to value may be considered for all property.
(7-1-24)
04.
Appraisal Procedures. Market value is determined through procedures, methods, and techniques
accepted by nationally recognized appraisal and valuation organizations. For operating property, the direct
capitalization techniques or derivatives thereof will not be used in estimating value.
(7-1-24)
05.
The Cost Approach. The appraiser may consider replacement, reproduction, original or historical
cost.
(7-1-24)
a.
Contributions in aid of construction are valued at zero in the cost approach.
(7-1-24)
b.
Construction work in progress may be considered in the cost approach.
(7-1-24)
c.
Obsolescence. The appraiser will attempt to measure obsolescence, if any exists. If obsolescence is
found to exist, it may be considered in the cost approach.
(7-1-24)
06.
The Income Approach. The income approach is based on the premise that value can be
represented by the present worth of future benefits derived from the ownership, use or operation of the unit. The
appraiser will consider yield capitalization in processing the income approach.
(7-1-24)
07.
The Market Approach. In the market approach, the appraiser will consider the sales comparison
approach or the stock and debt approach.
(7-1-24)
08.
Reconciliation. Reconciliation, also called correlation, is an opinion regarding the weight that
should be placed on each approach. The appropriate weight to be given each indicator is based on the appraiser's
opinion of the inherent strengths and weaknesses of each approach and the data utilized. The appraisal report will
disclose the weight given to the indicators.
(7-1-24)
09.
Allocation. Use readily available data from existing records to calculate the factors that are
multiplied by the correlated system value to allocate that value to Idaho.
(7-1-24)
10.
Situs Property Apportionment. For situs property, as described in Subsection 404.04 of these
rules, apportionment is based on physical location, meaning the market value will not be apportioned based on
mileage but only to the tax code area(s) within which said property is situs or physically located.
(7-1-24)
11.
Valuation of Rate-Regulated Electric Utility Property. The methods set forth in this Rule will
apply to the valuation of operating property of rate-regulated electric utility companies except to the extent any
provision is inconsistent with the valuation criteria set forth in Section 63-205B, Idaho Code, in which case, the
criteria in Section 63-205B, Idaho Code. will control.
(7-1-24)
IDAHO ADMINISTRATIVE CODE
IDAPA 35.01.03
State Tax Commission
Property Tax Administrative Rules
Section 407
Page 31
12.
Cross Reference. See Sections 63-404 and 63-602L, Idaho Code, and Rules 404 and 615 of these
rules.
(7-1-24)