Saskatchewan Municipal Board Assessment Appeals Committee

Transcription

1 Saskatchewan Municipal Board Assessment Appeals Committee Appeal: JOINT RECOMMENDATION RESPONDENT: City of Saskatoon In the matter of an appeal to the Assessment Appeals Committee, Saskatchewan Municipal Board, by: Derby Holdings Ltd. c/o Garry Coleman Altus Group Limited 226C Cardinal Crescent Saskatoon, SK S7L 6H8 respecting the assessment of: for the year 2011; Parcels , th Street East Roll Number REPRESENTING THE APPELLANT: REPRESENTING THE RESPONDENT: Garry Coleman Travis Horne, Tim Ritchie The parties to the appeal provided a signed Joint Recommendation under date of April 10, The agreed upon value is reflected at the conclusion of this decision.

2 APPEAL [Page 2] This appeal is against the decision of the Board of Revision (the Board) for the City of Saskatoon, pursuant to section 216 of The Cities Act (the Act). ISSUE: Did the Board err in its finding that the assessor had correctly determined the rent rate applied to establish the subject s adjusted net operating income? FACTS: (1) The subject property is a retail shopping mall, property type 3118, located in the Grosvenor Park geographic area. The building has 160,942.7 square feet of leasable area. It is assessed with base rental rates of $4.96, $15.65 and $ The assessed value of the property is $24,072,600. (2) The assessed value was arrived at using the income approach to value. As a commercial class of property the percentage of value equals 100% of the assessed value. (3) The grounds of appeal to the Board were: Ground 1: Facts: Ground 2: Facts: The Cap Rate is too low and in error. a) The 8% cap rate being applied is too low and does not reflect a cap rate for a large retail area. The cap rate of 8% is incorrect because the calculation is made up of sales that are not comparable to the subject property. b) The use of st Avenue South is not comparable to the subject property nor is the location comparable. This property is located in the retail core. The market is different in the market core in comparison to 8 th Street. Finally this sale does not represent a >40,000 square foot retail parcel. This was a finding of fact by the Board of Revision in c) The following sales indicate a retail cap of 9.0 on 8 th Street. The buildings located at , 2002, 2600 and 3421, 8 th Street East would indicate a CAP rate greater than 8%. The NOI is incorrect.

3 APPEAL [Page 3] a) The base rent being applied to the Westfair as an Anchor is $12.60 which is higher than the rental rate reported to the City. Similar anchors, such as London Drugs, that are acting as Anchors in other shopping malls receive a rent rate that is more comparable to their actual rent rate. b) The $12.60 rental rate being applied is not representative of a grocery store space of 52,109 square feet. The most recent rental rate for a grocery store that was negotiated (between 2004 and 2006) was for less than $7.00 per square foot. c) The assessor has not correctly applied the poor visibility, lease greater than 14,000 and end cap adjustments. The assessor applies a ratio based on PGI and NOI instead of subtracting the adjustment from the base rent. This is mathematically incorrect and results in a higher assessment value. Ground 3: Facts: Equity has not been maintained. a) Comparable properties such as Winners, Preston Crossing, Walmart and Staples receive an 8.26% cap rate. b) Comparable grocery stores such as Safeway, Walmart, Sobey s (Preston Crossing) receive a much lower base rental rate. (4) In response to a March 3, 2011, letter from the Board wherein it found that the grounds of appeal above did not meet the provisions of Section 197(6) of the Act, the appellant s agent provided the following: 1a) Which sales are not comparable and why are they not comparable? The Act states that assessments must be prepared and meet the valuation standard. This standard can only be met if the assessment reflects typical market condition for similar properties. If the assessor uses nonsimilar (non-comparable) properties, the assessor has not achieved the market value standard as proposed by the act. We feel that this is an error. The sales that are not comparable are; st Avenue North, th Street East, nd Avenue North, 7 Assiniboine Drive, nd Avenue North. They are not comparable in the following terms;

4 APPEAL [Page 4] 1) The Physical characteristics of the properties: Building size/areas; Construction style/materials; Condition of improvements; Building configuration; Site size, and; Location. 2) The supply and demand conditions in the market place. 3) Legal Restrictions: i.e. zoning 1c) How are they not comparable? This ground speaks to four sales that we believe would be comparable to the property. In contrast to ground 1a, the sales listed are comparable to the subject in terms of; 1) The Physical characteristics of the properties: Building size/areas; Construction style/materials; Condition of improvements; Building configuration; Site size, and; Location. 2) The supply and demand conditions in the market place. 3) Legal Restrictions: i.e. zoning 3a) How are they comparable? Besides the fact that the properties listed are large retail properties, they are also comparable to the subject in terms of; 1) The Physical characteristics of the properties: Building size/areas; Construction style/materials; Condition of improvements; Building configuration; Site size, and; Location. 2) The supply and demand conditions in the market place. 3) Legal Restrictions:

5 APPEAL [Page 5] i.e. zoning 3b) Which Safeway and Walmart locations are being referenced and how are they comparable? The Safeway stores located on 33 rd Street West and th Street East as well as the Walmart located at Preston Crossing are the properties being referenced. Besides the fact that the properties listed are large retail grocery store properties, they are also comparable to the subject in terms of; 1) The Physical characteristics of the properties: Building size/areas; Construction style/materials; Condition of improvements; Building configuration; Site size, and; Location. 2) The supply and demand conditions in the market place. 3) Legal Restrictions: i.e. zoning (5) The July 7, 2011 decision of the Board finds the following: DECISION: The assessment shall be recalculated using a CAP rate of 8.25%. The assessment shall be further adjusted to reflect the Recommendation for Change contained in Exhibit R.1 in the amount of -$44,500 which addresses the NOI adjustment for a single tenant with leased space greater than 14,000 sq. ft., an adjustment for poor visibility, and an adjustment for an end cap. The NOI adjustment change is from -$113,415 to -$116,974. The changes to the assessment for 2011 are as follows: Current Assessed Value Current Taxable Assessment Proposed Assessed Value Proposed Taxable Assessment Change in Assessed Value Change in Taxable Assessment Commercial 24,869,300 24,869,300 24,072,600 24,072, , ,700 The filing fee is refunded. (6) The July 29, 2011 notice of appeal to the Saskatchewan Municipal Board, Assessment Appeals Committee (the Committee) states: The 2011 Board of Revision for the City of Saskatoon erred in its decision in several respects;

6 APPEAL [Page 6] 1. The Board erred in its finding that the rental rate being applied was correct and representative of the subject property. 2. The Board erred in its finding that the rental rate was equitable with comparable properties. 3. The Board erred in its finding that equity was maintained. 4. The Board erred in its finding that the assessment met the market valuation standard as defined in the Act. (7) Under date of April 10, 2012, a Joint Recommendation was signed and filed with the Committee. The noted recommendation reflects the following: Please be advised that the property involved in the above-captioned appeal, and relevant decisions of the Saskatchewan Municipal Board, have been reviewed by staff from the Corporate Services Department, Office of the City Assessor, City of Saskatoon, and the Agent for the owners of the Subject property. As a result of the review, both parties are recommending the following changes to the Appellant s 2011 Notice of Assessment: Present Recommended Recommended Description: Assessment Assessment Decrease 2011 Assessment 24,072,600 21,866,900 2,205,700 Comments and Reason for Recommendation: Recommendation incorporates SMB decisions AAC and Effective Date, this 5 day of April, Please be advised that I, the Respondent in the within proceedings, have read the recommended changes to my 2011 Assessment including the reasons and comments with respect thereto on the above and, after careful reflection on the matter, I hereby recommend to the Saskatchewan Municipal Board that the changes to my 2011 Assessment, which has been recommended by the Appellant, be accepted by the Saskatchewan Municipal Board in resolution of the appeal in the abovecaptioned matter. This document is not binding or valid unless dated, signed and returned within five business days of the Effective Date as noted. Dated this 10 day of April, Name: Garry Coleman Travis Horne Signature of Respondent Address: Altus Group _

7 APPEAL [Page 7] Tim Ritchie Signature of Assessment Appraiser

8 APPEAL [Page 8] LEGISLATION: The Cities Act: 163 In this Part: (f.1) market valuation standard means the standard achieved when the assessed value of property: (i) is prepared using mass appraisal; (ii) is an estimate of the market value of the estate in fee simple in the property; (iii) reflects typical market conditions for similar properties; and (iv) meets quality assurance standards established by order of the agency; (f.2) market value means the amount that a property should be expected to realize if the estate in fee simple in the property is sold in a competitive and open market by a willing seller to a willing buyer, each acting prudently and knowledgeably, and assuming that the amount is not affected by undue stimuli; 164.1(2) Non-regulated property assessments shall be determined according to the market valuation standard. 165(1) An assessment shall be prepared for each property in the city using only mass appraisal. (2) All property is to be assessed as of the applicable base date. (3) The dominant and controlling factor in the assessment of property is equity. (3.1) Each assessment must reflect the facts, conditions and circumstances affecting the property as at January 1 of each year as if those facts, conditions and circumstances existed on the applicable base date. (4) Equity in regulated property assessments is achieved by applying the regulated property assessment valuation standard uniformly and fairly. (5) Equity in non-regulated property assessments is achieved by applying the market valuation standard so that the assessments bear a fair and just proportion to the market value of similar properties as of the applicable base date. 216 Subject to subsection 196(5), any party to an appeal before a board of revision has a right of appeal to the appeal board: (a) respecting a decision of a board of revision; and

9 APPEAL [Page 9] (b) against the omission, neglect or refusal of a board of revision to hear or decide an appeal. CONCLUSIONS AND REASONS: The Committee received a copy of the signed Joint Recommendation on April 10, 2012 pertaining to the subject property. It was signed by Travis Horne and Tim Ritchie on behalf of the City of Saskatoon and by Garry Coleman on behalf of the appellant. The recommendation is attached hereto and forms part of the decision. The recommendation indicates that the assessed value of the property is to be $21,866,900 (a reduction of $2,205,700) for the year DECISION: The Committee concurs with the attached recommendation. For the year 2011, the assessed value of the subject property is to be $21,866,900. The filing fee will be returned. DATED AT REGINA, Saskatchewan this 25 th day of April, SASKATCHEWAN MUNICIPAL BOARD Assessment Appeals Committee - original signed by - Per: David Wilkin, Chairman - original signed by - Per: Cynthia J. Schwindt, Secretary