Current through Register Vol. 61, No. 4, April 1, 2022
Comparable Facilities includes both
nonprofit and for-profit facilities with similar:
Levels of care:
(A) Retirement living only: no meals are
included in the rent; similar to apartment or condominium living.
(B) Retirement living: monthly rent can
include meals; laundry; utilities; housekeeping; and, assistance with daily
living: includes all of (B), and nursing services.
(b) Age, quality, and building condition.
(c) Functional considerations: For
example; ADA requirements; room mix; and, size.
(d) Locational considerations.
(2) Qualified Operating Gross
Income is income that meets the 95 percent test outlined in ORS
307.375, and tenant rent is
competitive with other comparable facilities. If the tenant rent is not at
market rent, then stabilized market rent is to be used. Periodic donations made
solely to keep the facility solvent are excluded from the 95 percent test.
Qualified Operating Gross
Income includes the income generated from the following sources:
(b) Amortized entrance fees. The present
worth of amortized entrance fees is based on both life expectancy and level of
care provided according to GAAP. The interest rate is the same as calculated in
(c) Monthly tenant rent;
(d) Pharmacy fees;
(e) Nursing fees;
(f) Income or fees received for space rent
from vendors who provide social services, such as a bank, beauty parlor, gift
shop, or post office.
Recreational facility income from the publics participation and use of the
(h) Service income from
rented storage space, laundry machines, concessions, etc.
(4) Investment Income earnings from invested
entry fees or other invested revenues is specifically excluded from the
Qualified Operating Gross Income calculation ORS
For the purpose of determining
net operating income, income and expenses must be adjusted to typical market
levels for comparable facilities. If actual expenses are at typical market
levels for comparable facilities, they may be used to calculate the net
operating income. Expenses may include, but are not limited to, the following:
(a) Real Estate Taxes. If real estate taxes
are a line item expense, they may not be included in the overall rate.
(b) Repairs and Maintenance.
Charges may not include accounted for replacement reserves.
(c) Real Estate Insurance;
(d) Landscaping Maintenance;
(e) Replacement Reserve is based on current
replacement costs. Items in this category are short lived and may include
built-in appliances, carpeting, roofing, heating, air conditioning, elevator
machinery, plumbing fixtures, and electrical fixtures. Reserves to replace
personal property may be included in this category;
(g) Management not included in payroll;
(k) Utilities such as gas, electricity,
water, sewer, garbage;
Housekeeping not included in payroll;
(m) Advertising. Does not include start-up
(n) Publication and
Services other than those accounted for in listed categories;
(p) Nursing Services not included in payroll;
(q) Liability Insurance;
(s) Other miscellaneous operating costs.
(6) Overall Rate. The
appropriate overall rate is selected from the analysis of sales of comparable
for-profit facilities. The overall rate includes the appropriate tax component.
(7) Additional Depreciation.
Additional depreciation shall be calculated using age life tables and current
cost information from commercial cost publications for the type and quality of
structure being appraised. The amount of additional annual depreciation will be
capitalized using the rate calculated in (6). This amount is deducted from the
estimated real market value.
Personal Property. The current assessed value of personal property is deducted
from the estimated value. If there is no personal property account for the
facility being appraised, no deduction shall be made.