Definition

2.1. "Bands of investment technique" means a synthesis of capital components used in financing and investment to estimate the overall capitalization rate of a property. It involves combining the capitalization rates of different components of a capital investment (e.g., debt and equity) to arrive at a weighted average overall rate for the entire property.

2.2. "Capitalization rate" means a rate, used to convert an estimate of income to an estimate of market value. Capitalization rate is typically a ratio that compares a commercial property's net operating income to the property's market value. Capitalization rate is typically expressed as a percentage and indicates the estimated expected rate of return from a property investment.

2.3. "Interstate commercial motor vehicle" means a qualified motor vehicle registered under a proportional registration agreement, or a qualified motor vehicle that, except for the fact that it is engaged only in intrastate commerce, would otherwise be subject to registration under proportional registration agreements. "Commercial motor vehicle" status may, at the option of the party registering the vehicle, be conferred upon a non-qualified motor vehicle such as a vehicle that has a gross vehicle weight of 26,000 pounds or less, that has only two axles, or that is used in the transportation of charter parties.

2.4. "Cost approach" means the appraisal process in which cost of the property being valued is considered in determining an estimate of fair market value. As a general rule, original cost shall be used to value public utility operating property. However, when such original cost is not available, replacement cost or reproduction cost may be considered.

2.5. "Economic obsolescence" means a loss in value of an asset caused by external economic conditions or events not directly related to the asset's condition or design. This loss in value could, for example, arise from factors such as changes in use, legislation that restricts or impairs property rights, or changes in supply and demand relationships.

2.6. "Fair market value" means the highest price in terms of money that a property will bring in a competitive and open market, assuming that the buyer and seller are acting prudently and knowledgeably, allowing sufficient time for the sale, and on the condition that the price is not affected by improper manipulation or influences, with neither the buyer or the seller being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

2.7. "Final assessed values" means values established by the Board of Public Works required by W. Va. Code §11-6-11.

2.8. "Functional obsolescence" means a loss in value of a property due to changes in style, taste, or technology, or due to outdated design, diminished utility or usefulness, inefficient technology, or poor condition.

2.9. "Gross capital cost" means the actual cost of the new or used vehicle at the time of purchase, as illustrated on the bill of sale, purchase contract, or similar document showing the purchase price of the vehicle. The cost at the time of purchase means 100% of the cost as shown on the books and records of the purchaser and includes freight, installation charges, trade-ins, federal tax allowances and any applicable credits utilized by the purchaser at the time of purchase.

2.10. "Income approach" means the appraisal process of discounting an estimate of future benefits into an expression of present worth.

2.11. "Market data approach" means the appraisal process of examining sales data and translating the data into an estimate of present worth.

2.12. "Operating property" means utility operating property used for purposes immediately connected with providing the respective utility service or in providing microgrid power or data center services. The Tax Commissioner construes "utility operating property used for purposes immediately connected with providing utility service" to be synonymous with properties considered by regulatory bodies in constructing the utility rate base for rate making purposes. The Tax Commissioner shall therefore give primary consideration to whether property is included in the "utility operating property" classification as reflected in the applicable uniform system of accounts, when deciding operating versus non-operating property issues. If the business is a certified high impact data center as defined in W.Va. Code § 11-6N-2 or power generation enterprise within a certified microgrid district and not subject to regulation by a rate-making regulatory body, the valuation of property of the business shall be made with consideration paid to whether the property is necessary to perform the function of the enterprise. Property necessary to perform the function of the certified high impact data center or power generation enterprise(s) within a certified microgrid district is hereby designated "operating property" for the purposes of ad valorem property tax valuation and for the purposes specified with reference to certified high impact data centers or certified microgrid districts in sections 4.3 et seq. of these rules.

2.13. "Original cost" means the initial cost paid for constructing or acquiring property.

2.14. "Physical deterioration" means a loss in value due to wear and tear in service.

2.15. "Proportional registration agreement" means an agreement entered into by the West Virginia Commissioner of Motor Vehicles under the authority of W. Va. Code §17A-2-10a.

2.16. "Public service corporation" means business entities contemplated by the provisions of W. Va. Code §11-6-1 et seq.

2.17. "Public utility" means a "public service corporation" as herein defined.

2.18. "Qualified motor vehicle" means a motor vehicle used, designed or maintained for the transportation of persons and property and:

2.18.1. Which is a self-propelled unit having a gross vehicle weight in excess of 26,000 pounds;

2.18.2. Is a self-propelled unit having three or more axles, regardless of weight;

2.18.3. Is used in combination with another vehicle, when the combined gross vehicle weight exceeds 26,000 pounds; or

2.18.4. The combined gross vehicle weight or combined registered gross vehicle weight of the two or more vehicles exceeds 26,000 pounds.

2.19. "Rate base" means that group of accounts or derivatives of those accounts, from the Uniform System of Accounts, on which a public utility is allowed a return on investment.

2.20. "Regulation" means the oversight of public service corporations by applicable federal and state regulatory bodies.

2.21. "Replacement cost" means the cost, including material, labor, and overhead, that would be incurred in constructing an improvement having the same utility to its owner as the improvement in question, without necessarily reproducing exactly any particular characteristic of the property.

2.22. "Reproduction cost" means the cost, including material, labor, and overhead, that would be incurred in constructing an improvement having exactly the same characteristics as the improvement in question.

2.23. "Return on investment" means a margin of profit generally expressed as a percentage of investment capital.

2.24. "Stock and debt technique" means a process of reviewing market trading prices of securities in order to arrive at an estimate of value.

2.25. "Tentative assessments" means property valuation estimates furnished by the Tax Commissioner to the Board of Public Works in accordance with W. Va. Code §11-6-9.

2.26. "Uniform system of accounts" means the most current system of accounting developed and required by state and federal regulatory bodies, as further described in section 4.3 et seq. of these rules.

2.27. "Unit rule" means an appraisal of an integrated property as a whole without any reference to the values of its component parts.