Actual Value: Market value of a property as determined by the assessor’s office.
Assessed Value: The valuation used for tax purposes. Assessed Value is determined by multiplying the Actual Value by the assessment rate. (see chart)
| Type | Assessment Rate |
|---|---|
| Residential | 6.7% |
| Commercial | 27.9% |
| Industrial | 27.9% |
| Vacant Land | 27.9% |
As Built Plans (or Drawings): Sometimes referred to simply as “As Built”. As built plans provide a precise record of the building as it was constructed, including any modifications made during construction. This is crucial for future reference, maintenance, renovations and repairs.
Capitalization Rate (Cap Rate): A common metric used to evaluate the potential return on an investment property, calculated by dividing the property's net operating income (NOI) by its current market value or purchase price.
Cash Flow: The net balance of cash moving into and out of a business at a specific point in time.
Certificate of Occupancy: A document issued by a local government authority certifying that a building complies with building codes and is safe for occupancy.
Debt Coverage Ratio (DCR): A measure of a firm’s available cash flow to pay current debt obligations. Often referred to as “DCR”.
Easement: A legal right to use another person's land for a specific purpose, such as access to utilities or pathways.
Effective Gross Income: The potential gross rental income plus other income minus vacancy and credit costs of an investment property.
Entitlement: The legal process of obtaining approval from local authorities for a development project, including zoning changes, permits, and other regulatory approvals.
Fixed Expenses: Refers to ownership costs that do not vary with occupancy. This may include insurance and property taxes.
Gross Leasable Area (GLA): The total floor area available for lease to tenants, excluding common areas.
Hard Costs: Defined as those items associated with construction including materials, labor and equipment. Hard costs also includes contractor overhead and profit.
Net Operating Income (NOI): All revenue from the property, minus all operating expenses.
Operating Reserve: Cash reserve set aside for planned replacement not covered under insurance. This may include roof replacement, HVAC systems, and other mechanical systems.
Setback: The minimum distance a building must be from property lines, streets, or other structures, as mandated by zoning regulations.
Soft Costs: Refers to costs associated with the architecture and design fees, sales commissioners, legal fees and other expenses not directly related to building materials and labor.
Total Operating Expenses: Total expenses that are incurred over a given period of time (usually annually) as a result of normal business activities.
Variable Expenses: Refers to costs that vary with occupancy. This can include repairs, trash removal, utilities and property management fees.
Zoning: Regulations that dictate how land can be used and developed in specific areas, including residential, commercial, and industrial classifications.