4.4.3.3. Reproduction Cost and Replacement Cost.The appraiser must distinguish between reproduction cost and replacement cost, despite the fact that many courts have used the terms interchangeably.564 Reproduction cost is the present cost of reproducing the improvement with an exact replica using the same physical materials; replacement cost is the present cost of replacing the improvement with one of equal utility.565 The appraiser may typically use either measure, but must demonstrate the relevance of the selected measure to the market value of the specific property being appraised and account for all forms of depreciation appropriate to the selected method.566 

The estimate of the reproduction or replacement cost of the improvements must be based on current local market cost of labor and materials for construction of improvements; to be considered, such improvements and any associated cost data must be relevant to the property’s highest and best use.567