Saskatchewan Assessment Management Agency Commercial Advisory Committee Meeting Minutes for November 15, 2007 Regina, Saskatchewan

Transcription

1 Saskatchewan Assessment Management Agency Commercial Advisory Committee Meeting Minutes for November 15, 2007 Regina, Saskatchewan Joint Session with City Advisory Committee Commercial Members Present: Craig Melvin, Committee Chair, SAMA Board Chair Fred Clipsham, City Sector Board Member (non-voting) Sharon Armstrong, Urban Sector Board Member (nonvoting) John Wagner, Rural Sector Board Member (non-voting) Art Scherr, Board Member (non-voting) Tracy Fahlman, Regina Downtown Business Improvement District Alan Migneau, Saskatoon Regional Economic Development Authority Ted Hillstead, Saskatchewan Chamber of Commerce Marilyn Braun-Pollon, Canadian Federation of Independent Business Tom Mullin, Hotels Association of Saskatchewan Archie Cameron, National Golf Course Owners Pat Earl, Western Grain Elevator Association Tax Committee Rick Johnston, Canadian Energy Pipeline Association Mike Kehler, Saskatchewan Assessment Appraisers Association Grace Muzyka, Saskatchewan Association of the Appraisal Institute of Canada City Members Present: Fred Clipsham, Committee Chair, City Sector Board Member Craig Melvin, SAMA Board Chair Carol Carson, Board Member (non-voting) Pat Lorje, City of Saskatoon Mike Kehler for Mike Schulkowsky, Saskatchewan Assessment Appraisers Association Commercial Observers Present: Ken Marsh, Canadian Energy Pipeline Association Norm Magnin, Saskatchewan Government Relations Colleen Mackenzie, Saskatchewan Industry and Resources, Industrial Development Don Barr, City of Regina Gord Lawson, City of Saskatoon Joe Day, City of Prince Albert City Observers Present: John Edwards, Saskatchewan Government Relations Velma Geddes, Saskatchewan School Boards Association, Administrator Don Barr, City of Regina Gord Lawson, City of Saskatoon Joe Day, City of Prince Albert SAMA Administration Present: Stuart McDonald, Commercial Committee Secretary Steve Suchan, Acting City Committee Secretary Irwin Blank, CEO Shaun Cooney, Director of Policy and Liaison Nancy Wollner-Epoch, Regional Manager, Moose Jaw Agenda Item: 1. Call to Order City Advisory Committee Chair F. Clipsham called the joint session of the City Advisory Committee and Commercial Advisory Committee to order at 10:10 a.m. 2. Opening Remarks SAMA Board Chair C. Melvin welcomed committee members and observers to the meeting, and explained the Board s rationale for joint advisory committee meetings. 3. Introductions C. Melvin introduced the SAMA Board members present. Other members and observers introduced themselves. SAMA Commercial Advisory Committee 1

2 4. Presentation of materials 4a. SAMA 2009 Revaluation Publication Amendments S. Suchan gave a PowerPoint presentation and handout on proposed amendments to the: Saskatchewan Assessment Manual 2006 Base Year SAMA s 2006 Cost Guide Market Value Assessment Handbook General discussion: The three principles adopted by the Board for the 2009 Revaluation were developed and recommended by the Technical Development Committee. The four-year revaluation cycle is set out in The Assessment Management Agency Act. Legislative changes would be needed to shorten the revaluation cycle from the current four-year cycle. Recommendations would come through SAMA, but Government Relations would carry it forward. In the Board will hold public meetings to review the 2009 Revaluation, following which consideration of a shorter revaluation cycle may be undertaken. Because the Sask. Assessment Manual is regulatory all changes, including typographical changes, are brought forth to the advisory committees before being passed into regulation by the Board. To be consistent and for transparency, typographical changes to the non-regulatory guides (SAMA s 2006 Cost Guide and the Market Value Assessment Handbook) are also brought to the advisory committees. 4b Revaluation Progress Reports S. Cooney provided a summary of the status/progress of all jurisdictions in completing the preliminary valuations for delivery to the Province for tax policy analysis by December 31, City of Saskatoon reported: Over 90% response rate from commercial property owners to the income and expense questionnaire. Residential and condominium valuation models are complete. The initial valuation of hotels and shopping centres on the income approach has been done. In early 2008 will be sending out preliminary values to commercial property owners to review before they are finalized. City of Regina reported: Have provided Government Relations with a test file for testing their tax modelling program. There is an issue with parcel matching that the city will need to work through with Government Relations. Have a 70% response rate from commercial property owners to the income and expense questionnaire. This is up from 50% in June. SAMA Commercial Advisory Committee 2

3 Fully into development of the income models now. Preliminary valuations for commercial properties will be based on trend analysis. 4c. Response to 2007 SAMA Annual Meeting Resolution I. Blank gave a PowerPoint presentation and handout on the proposed response to the one resolution that was adopted by municipalities and school divisions at the agency s 2007 annual meeting in June. General discussion: The SAMA Board needs to deal with the resolution because it was passed at the agency s annual meeting. The Board s responsibility is to look at the underlying issues and decide how to best proceed. The issue raised in the resolution is a very real concern that needs to be treated seriously. The solution put forth in the resolution would be a shift away from market valuation principles. The R.M. of Piapot No. 110 sponsored the resolution: o Market value didn t work for farmland because of boundary sheers between municipalities. o A growing issue for resort areas and country residential areas. o There are no tax tools for RMs to manage the shifts. o Rural municipalities abated taxes without consulting school divisions. o What options are there that will deal with the issue for resorts and country residential in rural municipalities? o The same resolution was passed unanimously at the 2007 SARM convention, and passed again at the 2007 SARM midterm convention. If the solution presented in the resolution isn t workable, then someone still needs to figure out how to deal with the issue. Canadian Energy Pipeline Association: Concerned that resolution calls for a move away from market value assessment. Allowing municipalities the option to choose their neighbourhoods politicizes the assessment valuation. It would be more appropriate for local governments to deal with the issues using tax tools. Municipalities shouldn t be allowed to compromise the assessment valuation. SAMA Commercial Advisory Committee 3

4 Saskatchewan Association of the Appraisal Institute of Canada: Cautious that the policy might get revised when only 36 of over 800 municipalities and school divisions in the province voted on the issue. It has taken 10 years to move to the market value standard, why is there a resolution to change this now? Recognized that a similar policy change was adopted for farmland and questioned the reasoning for this. Saskatchewan Assessment Appraisers Association: Concerned ethically that appraisers would be required to not abide by the principles of valuation. City of Saskatoon: Concerned the change proposed in the resolution would hurt just as many property owners as it would benefit. If the issue needs to be managed, then it should be done on the tax policy side. Canadian Federation of Independent Business: The Commercial Advisory Committee has consistently pushed to move assessment policies to implement market valuation principles. What the resolution proposes is contrary to market value assessments. 4d. SAMA Planning Cycle I. Blank provided a summary of the agency s four-year planning cycle, the strategic planning that is underway to develop the Four-Year Funding, and the preparation of the agency s Annual Budget and Performance Plan. 4e. Committee Terms of Reference 4f. Delegation Shopping Centre Allocations I. Blank reviewed recent changes to the terms of reference for all advisory committees. Organizations are now being asked to name two alternates that could attend on their behalf when their appointed member is unable to attend. Alternates will be allowed to propose and vote on motions. Clarified that observers attending advisory committee meetings can participate in the discussion, but cannot propose or vote on a motion (this is not a new procedure). Some voting members will now be paid an honorarium and travel expenses to attend advisory committee meetings. The committee received a delegation from AltusDerbyshire representing shopping centres. Members of the delegation were: Christine Van Staden, AltusDerbyshire Doug Hamilton, AltusDerbyshire Robert Gagne from AEC International also attended as an observer for anchor tenants (Sears and WalMart). SAMA Commercial Advisory Committee 4

5 The delegation provided impact information and a proposed regulation prior to the meeting, which were distributed to committee members along with other materials for the meeting. Comments made by the delegation in response to questions from committee members: Concerned that with the change from a cost based assessment system to a market value assessment system, that there will be a significant shift in taxes from anchor tenants to central retail unit (CRU) tenants. The problem is a function of those long-term leases that were developed under a different tax regime (cost approach valuation procedures), so didn t consider market value concepts. The leases will probably be renegotiated when they come due. Many jurisdictions (ie. Manitoba) ignored the issue when they moved to market value assessments. o In Manitoba, rents on CRUs increased $8/sqft in one year. Alberta passed regulations to phase-in the shift over 10 years. o Under the Alberta regulations, the phase-in is only done at the owner s request, the assessor has to do the phase-in calculations, and the owner pays for the work to be done. o The City of Edmonton s assessment department contracts the work out to a private appraiser. The proposed regulation reflects something similar to what was done in Alberta. The objective is not to eliminate market value assessments, but to try and mitigate the impact on the CRUs. o The assessed value of the property would not be affected. o The property owner would continue to pay the same amount of taxes. o The regulation would deal with the internal distribution of the taxes by the property owner to the CRU and anchor tenants. The delegation wants to work with stakeholders to develop a solution by February o Currently there isn t agreement among all of the businesses within the malls, so need to work on the solution with them as well. There is a dispute resolution mechanism built into the regulations. When the buildings are on separate parcels and assessed separately, the regulation wouldn t come into play. Comments made by Robert Gagne, AEC International: The anchor units want to understand the issue and see what the options are for moving forward. SAMA Commercial Advisory Committee 5

6 I. Blank distributed a letter to the agency from F. Zimmer regarding the position of the Hudson s Bay Company, an anchor tenant. City of Saskatoon: Concerned with the assessment department getting involved in the contractual arrangements between landlord and tenants within a shopping mall. The onus should not be on the assessor. If the CRUs and anchors can agree on a reallocation, then they shouldn t need regulations to make it happen. Observed that there was not a big outflow from CRUs in Manitoba s malls when that province moved to market value assessments. Government Relations: Observed that the delegation s proposal for a regulated solution appeared to be asking government to override private lease agreements. Observed that the proposal would require legislative amendments because there is no existing authority to deal with it through regulation. Saskatchewan Association of the Appraisal Institute of Canada: Observed that if the mall s CRU and anchor tenants agreed to a different allocation scheme than set out in their leases, that they should be able to deal with it themselves. City of Prince Albert: Observed that the letter from F. Zimmer indicates there is one mall that is concerned with the potential for government interference in lease agreements. Observed that mall owners are not currently asking the assessor for allocations when one assessed value is determined for the entire property. Saskatchewan School Boards Association: Observed that the potential looser would appear to be anchor stores. Concerned if the proposed regulation would mean that the government was interfering with lease agreements. Committee Chair C. Melvin concluded the discussion noting that: The agency s advisory committees may not be the forum in which to examine the issue because they were set up for a different purpose. If the delegation can obtain a consensus between the affected parties, then it would be largely a government responsibility if the consensus were to regulate a solution. SAMA Commercial Advisory Committee 6

7 Committee Chair C. Melvin thanked the delegation for providing the agency and its advisory committees notice of the issue and the discussions that it plans to undertake with its stakeholders. The joint session adjourned for lunch at 12:40 p.m. to reconvene in separate business meetings. Business Meeting PRESENT: Craig Melvin, Committee Chair, SAMA Board Chair Sharon Armstrong, Urban Sector Board Member (nonvoting) Rick Brundson, Board Member (non-voting) Art Scherr, Board Member (non-voting) Tracy Fahlman, Regina Downtown Business Improvement District Alan Migneau, Saskatoon Regional Economic Development Authority Ted Hillstead, Saskatchewan Chamber of Commerce Marilyn Braun-Pollon, Canadian Federation of Independent Business Ken Love, Canadian Property Tax Association Tom Mullin, Hotels Association of Saskatchewan Pat Earl, Western Grain Elevator Association Tax Committee Robert Schultze for Mike Schulkowsky, Saskatchewan Assessment Appraisers Association Grace Muzyka, Saskatchewan Association of the Appraisal Institute of Canada ABSENT: Fred Clipsham, City Sector Board Member (non-voting) John Wagner, Rural Sector Board Member (non-voting) Dan Danielson, Education Sector Board Member (nonvoting) John Kearley, Saskatoon Broadway Business Improvement District Rob Lawrence, Saskatchewan Real Estate Association Ken Suchan, Saskatchewan Real Estate Association John Hopkins, Regina & District Chamber of Commerce Laurie Ell, Building Owners and Managers Association Alan Thomarat, Saskatchewan Home Builders Association Archie Cameron, National Golf Course Owners Garth Gish, Inland Terminal Association of Canada Rick Johnston, Canadian Energy Pipeline Association Dave Loader, Canadian Association of Petroleum Producers Darrell Zwarych, Saskatchewan Mining Association Kevin Olmstead, Railway Association of Canada Tyler Lloyd, Tourism Saskatchewan Observers: Norm Magnin, Saskatchewan Government Relations Colleen Mackenzie, Saskatchewan Industry and Resources, Strategic Sector Development SAMA Administration: Stuart McDonald, Committee Secretary Irwin Blank, CEO Observers: Ken Dueck, Saskatchewan Industry and Resources, Industrial Policy Don Barr, City of Regina Gord Lawson, City of Saskatoon Joe Day, City of Prince Albert Vacant, City of Moose Jaw Cameron Duncan, City of North Battleford Mike Kehler, City of Swift Current SAMA Commercial Advisory Committee 7

8 Call to Order 5. Approval of the Business Meeting Agenda 6. Minutes from February 22, Business Arising from the Minutes Committee Chair C. Melvin reconvened business meeting of the Commercial Advisory Committee at 1:20 p.m. Moved by T. Fahlman that the business meeting agenda be approved. Moved by M. Braun-Pollon that the minutes of the Commercial Advisory Committee s meeting for February 22, 2007 be adopted. Action items arising from the minutes: Grain elevator throughput adjustment factor and the railway roadway net ton mile classification I. Blank reported that the policy in the 2006 Saskatchewan Assessment Manual has been revised to provide for a fixed three year average. Clarify the interaction between the 2006 Manual, SAMA s 2006 Cost Guide and the Market value Assessment Handbook I. Blank reported that a new front end has been written into the preface for each of the documents. Timelines for 2009 tax policy review N. Magnin reported that with the recent change in government past processes may change, but that won t be known for awhile yet. Expects to know what the process will be by the next advisory committee meeting. (The next meeting is in April 2008) Commercial Property Fact Sheet I. Blank reported that the fact sheet has been updated to clarify reference to the term mass appraisal. N. Magnin reported that Government Relations will provide training to Board of Revision members in 2008, and that the training manual will be posted on the Government relations website. 8. SAMA 2009 Revaluation Publication Amendments Moved by S. Armstrong that the report be received. Moved by R. Schultze that the report be received Revaluation Progress Reports S. Cooney will prepare an abbreviated update of the progress report for committee members to use when they report back to their own organizations. I. Blank reported that trending has been used in the past to provide the preliminary assessment values, and has shown to be fairly stable on an aggregate basis. SAMA Commercial Advisory Committee 8

9 Moved by G. Muzyka that the report be received. 10. Response to the 2007 SAMA Annual Meeting Resolution Saskatchewan Association of the Appraisal Institute of Canada: Concerned that it would be a move in the opposite direction from the market valuation policy that has been adopted. Have worked so hard to get to the market valuation principle for property assessment, just to have municipalities move away from it. Canadian Property Tax Association: Municipalities are abusing the use of tax tools now. If there are social issues, they should be dealt with other than through tax policies or assessment policies. Should be looking to roll back tax policy tools, not expanding them. Saskatchewan Chamber of Commerce: The strength of SAMA is that the assessment tools are not politicized to any great extent. The resolution proposes to put the issue back on SAMA. The issue is shifts and it is not SAMA s responsibility to mitigate impacts. It should be done with tax tools. Regina Downtown Business Improvement District: The issue is not an assessment issue. It should be forwarded to Government Relations. Government Relations: The cities have tax policy tools now that allow them to phase-in taxes. Smaller municipalities had the option to phase-in taxes but it was removed for the 2005 revaluation because it was not being used. Saskatchewan Assessment Appraisers Association: Concerned that assessments would be tailored to what the municipality wants and not to valuation principles. Moved by K. Love that the Commercial Advisory Committee opposes Resolution , and suggests it be referred to Government Relations for their review of tax policy considerations. 11. SAMA Planning Cycle Moved by K. Love that the report be received. SAMA Commercial Advisory Committee 9

10 12. Committee s Terms of Reference I. Blank noted that organizations are now being asked to name two alternates that could attend on their behalf when their appointed member is unable to attend. Moved by R. Schultze that the report be received. 13. Other Business 13a. Shopping Centre Allocations General discussion: The issue is not an assessment issue. The issue is on the tax side of the equation and interior to the property. The amount of shift probably would depend on the makeup of CRUs and anchor stores within the mall. The transition may not be as abrupt in Saskatchewan as experienced in other provinces because Saskatchewan is already on a market related system. Assessment values the whole property, not CRUs and anchor tenants. How the property owner allocates taxes is their own issue, not the appraiser s. The agency s advisory committees are not an appropriate venue to resolve their concerns. Canadian Federation of Independent Business: Noted that can t support or not support their issue because more questions than answers were raised by the delegation. Saskatchewan Chamber of Commerce: Recognized that the delegation has an issue that they are trying to come to terms with. Because they are not proposing a change in assessment policy, the advisory committee is not the venue to deal with their issue. Concluded that their best bet would be to try and resolve the issue themselves. Moved by G. Muzyka that the report be received. 13b. Questionnaire on the joint meeting format Committee members were asked to complete a questionnaire to help evaluate the joint advisory committee meeting format that was used for this meeting. 14. Adjournment Moved by T. Hillstead that the meeting adjourn at 2:10 p.m. Original signed by Stuart McDonald Stuart McDonald Committee Secretary SAMA Commercial Advisory Committee 10