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APPROVED 5/10/2010 <br /> <br />OC Board of Adjustment – 3/8/2010 Page 37 of 86 <br />1 2 3 <br />4 <br />5 6 7 <br />8 <br />9 10 11 <br />12 <br />13 14 15 <br />16 <br />17 18 19 <br />20 <br />21 22 23 <br />24 <br />25 26 <br />27 <br />28 <br />29 30 <br />31 <br />32 <br />33 34 <br />35 <br />36 <br />37 38 <br />39 <br />40 <br />41 42 <br />43 <br />44 <br />45 46 <br />47 <br />48 <br />49 50 <br />51 <br />52 <br />53 54 <br />Rob Maitland: Let’s talk about that. Let’s look at house number one. From 1995 to 2000, the house went up 23%. That is <br />in an aggregate, shouldn’t you have to annualize this number and tell us how much it went up each year? How can I <br />possibly compare that to house number two if it is not in the same timeframe? You have got to annualize this on an annual <br />basis. I mean 23% means nothing. Did you make any allowance in here for, did the guy add a bedroom, and did he add a <br />garage? It just sold five years later for 23% more. Now, I calculated it out and that is a 4.9% annual return. Does that sound <br />about right? <br /> <br />Vic Knight: I haven’t done it specifically on that. <br /> <br />Rob Maitland: That is my question. If this is what you are basing your decision on? <br /> <br />Nick Herman: What is your question? I know you are making an argument here but ask him why he did what he did. <br /> <br />Rob Maitland: Alright, why did you do that? The next house at 1008 Alexander went up 88%. <br /> <br />Vic Knight: That is the difference between the two sale dates. In methodology, you can pick one of them and you could <br />annualize that, you could or you could look at all them when you are finished and annualize that number as well. <br /> <br />Rob Maitland: How, if each house has got a different time frame, in one house you are measuring for 20 years and one of <br />these houses you measuring a sale that was six months apart. You can’t weight them all the same, you have to break it <br />down by some common denominator, isn’t that standard practice? <br /> <br />Vic Knight: If you had a list of numbers on the board behind you and whether you multiplying or adding them, you add a <br />series of number horizontally and then you average whatever that number happens to be, you put that number of the to the <br />side, that is the methodology you are describing, right? If you did it on a one by one basis. <br /> <br />Rob Maitland: At each house, you need to annualize their appreciation, you can’t say one house went up 88% and another <br />house went up 10% if they are not the same timeframe and try to average that which it looks like what you tried to do. Is that <br />what you did? <br /> <br />Vic Knight: I am trying to give you an answer to your first question. If you looked at any one of these, equivalent to having a <br />string of numbers on the board and when you got to the end you decided to average that series of numbers, it would be an <br />average for that particular series. If you have row after row after row after row, which is what we did here and you <br />annualized each one of them or averaged them, when you got to the bottom, what would you have if you summed that <br />number up? It would be just a number and then you could average that number and it would be exactly the same thing. It is <br />just a mathematical mix of how that works. <br /> <br />Rob Maitland: I went to Carolina. I got to tell you, I don’t understand how you can say that if one house didn’t sell for ten <br />years and it went up 88%, let’s take a look at that one, 1008 Alexander, it didn’t sell from 1988 to 1999. That is an eleven <br />year difference it went up 88% and the house right above it you measured five years of a different time frame, how do you <br />mix those apples and oranges. It is not even the same years and on top of that it is an aggregate and on top of that, you are <br />not accounting for any capital improvements that have been made on the properties. <br /> <br />Vic Knight: That is actually a pretty good point, is that if, as you put it, that capital improvements are being made, I think one <br />reference was that one bedroom was added, garage may have been added, actually shows that people regardless of what <br />may be happening in this particular location and the effects that Wal-Mart and Home Depot brought to it, they are willing to <br />continue to invest in their property. <br /> <br />Rob Maitland: I am asking which house did the capital improvement. <br /> <br />Vic Knight: It doesn’t have any significant difference on how you arrive at a conclusion when you look at an entire body of <br />data. You can’t do it on a house by house basis. You can’t look at one house, if that is the case then you would just go pick <br />a house, good, bad or indifferent and say I found three sales and one is here, and one is there and one is there and draw a <br />conclusion but that is not the methodology that is implied.