Assessment Appeals Committee

Assessment Appeals Committee DETERMINATION OF AN APPEAL UNDER Section 16 of The Municipal Board Act and Section 246 of The Municipalities Act Appeal Number: AAC 2015-0156 Date and Location: April 6, 2016 Saskatoon, SK Rural Municipality of Corman Park No. 344 (as represented by the Saskatchewan Assessment Management Agency [SAMA]) - and - 61842 Saskatchewan Ltd. (as represented by Brunsdon Lawrek and Associates) Appellant Respondent APPEARED FOR: The Appellant: The Respondent: SAMA: Tanya Kolbeck, Assessor Grace Muzyka, Appraiser Michelle Fuhr, Appraisal Agrologist Darwin Kanius, Manager, Quality Control HEARD BEFORE: Lorna Cottenden, Panel Chair Gord Androsoff, Member Peter Stroh, Member

APPEAL AAC 2015-0156 Page 2 INTRODUCTION: [1] The 2015 assessment for the property under appeal is: Board Appeal No. Assessment Roll No. RM344/2015-003 000611302.01 Parcel Y Pt SE 11-36-6-W3 RM344/2015-003 000611302.01 Parcel Y Pt SE 11-36-6-W3 Legal Description Classification Original Assessed Value Board s Assessed Value Land $644,300 $198,800 Golf Course Development Costs $139,500 $ 0 [2] The name of the subject property is Crickle Creek. Crickle Creek has an 18-hole short course, pitch and putt golf course, miniature golf course, and improvements such as an ice cream stand. The record of the Board of Revision (Board) indicates Crickle Creek is non-regulated and the Assessor used the cost approach to value the subject property. SAMA s submission to us indicates it is a commercial property. The Notice of Appeal to the Board indicates the subject property is zoned Recreation (REC). [3] The Board removed the golf course development costs and changed the land rate. SAMA asks the Committee to restore the original assessed values. ISSUES: [4] a) Did the Board make a mistake when it removed the Golf Course Development Costs? b) Did the Board make a mistake when it changed the applicable base land rate to $17,150 per acre? DECISION: [5] The Committee finds the Board made a mistake when it removed the Golf Course Development Costs. The Committee is unable to determine whether the applicable base land rate is $17,150 or $95,750 and remits the land value to the Assessor. PRELIMINARY MATTERS: [6] The Panel Chair clarified the issues with the parties. They agreed the issues are as stated in paragraph [4]. [7] The Panel Chair asked if the parties wished to carry forward everything from AAC 2015-0155 to this appeal and both parties agreed with the proviso that paragraph 69 of

APPEAL AAC 2015-0156 Page 3 SAMA s submission to the Committee for AAC 2015-0155 was not before the Board so we could not use it for the current appeal and we did not. The Board s Decision [8] The Board made the following mistakes: a) The Board used dictionary definitions for equity instead of the definitions in the legislation subsections 193(e.1) and 195(7) of The Municipalities Act, SS 2005, c M- 36.1 (Act). Dictionary definitions can form part of an analysis, for example, when engaging in the modern method of legislative interpretation; however, if legislation provides definitions for words, then decision makers must use them. In this case, the relevant definition is in the Act. If the Act does not provide a definition, then one would check The Interpretation Act, 1995, SS 1995, c I-11.2 for a definition before using a dictionary definition in an analysis. b) The Board s decision refers to a three part test in determining if the assessed values of improvements on the subject property are correct and to ensure equity has been established (para 41). We are unaware of the test and do not believe it has a basis in law. There is no reference or citation for the test in the Board s decision. c) The Board did not have the authority to remove the Golf Course Development Costs because they were not properly before the Board in the Notice of Appeal. We can find no record of a revised or amended Notice of Appeal. There were two grounds of appeal on the Notice of Appeal to the Board dated June 1, 2015. The first ground was about the REC zoning of the land and the second ground was about the decrease in the property s value because of being located on a floodplain. Generally, an appeal body will not consider something that is not a ground of appeal; however, sometimes an appeal body will permit an amendment to the Notice of Appeal. The Board s record does not contain a revised or amended Notice of Appeal. d) The Board used an undertaking from a different appeal for the current appeal. Unless a group of appeals is assigned a lead appeal and they are heard together, an undertaking is specific to the facts and circumstances of a particular appeal and is not relevant to other appeals. To reference a previous decision is acceptable, but not an undertaking. If an appeal body needs to issue an undertaking and it believes the undertaking is similar to one previously issued for a different appeal, it must issue a separate undertaking for the appeal in question. [9] We set aside the Board s decision and will do what the Board should have done.

APPEAL AAC 2015-0156 Page 4 Issue a): Did the Board make a mistake when it removed the Golf Course Development Costs? [10] As mentioned in paragraph [8]c), the Golf Course Development Costs were not a ground of appeal before the Board and it did not have the authority to remove them. [11] The Committee finds the Board made a mistake when it removed the Golf Couse Development Costs. Issue b): Did the Board make a mistake when it changed the applicable base land rate to $17,150 per acre? POSITIONS OF THE PARTIES: [12] SAMA: a) The Board was wrong when it changed the land rate by ignoring the fact that the property was assessed at the same land rate as similarly zoned REC parcels in this municipality. b) The Board was wrong when it changed the land rate by changing the base land rate without sales evidence to indicate similarly zoned and located parcels sell for a different rate than what was applied to the subject property. c) Potential for flooding does not mean it will happen. d) There is no market evidence that a floodplain lowers value. e) Zoning is the main reason the subject property is treated differently. f) The City of Saskatoon v North Ridge Development Corporation (AAC 2011-0089 and AAC 2012-0066) (North Ridge) is not applicable to the current appeal. [13] Ms. Muzyka: a) The subject property is not comparable to the properties that SAMA used as comparable properties because the Rural Municipality of Corman Park No. 344 (RM) has placed restrictions on the subject property and it is not a commercial property. b) The data SAMA used came from properties north of Saskatoon which are not subject to restrictions. c) The subject property is also very different from SAMA s comparable properties because it does not have the same level of services. d) North Ridge supports that factors other than just zoning must be taken into account for comparability.

APPEAL AAC 2015-0156 Page 5 ANALYSIS: Property Valuation [14] The Act states the application of the Market Valuation Standard (MVS) achieves equity for non-regulated property assessments when assessments bear a fair and just proportion to the market value of similar properties as of the applicable base date [s. 195(7)]. [15] The application of the MVS occurs when the assessment: 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 [SAMA] [s. 193(e.1), the Act]. [16] The cost approach used to value the subject property requires the use of vacant land sales. If vacant land sales are unavailable, an assessor uses comparable properties to determine the assessment. The valuation of similar properties must meet the MVS and be treated the same because property assessment must be equitable [s. 195(5), the Act]. [17] Ms. Muzyka believes the Assessor did not group the subject property in a comparable neighbourhood and suggested there are alternatives to supplement sales data. She believes the applicable land rate is the country commercial land rate of $17,150. [18] SAMA s 2011 Cost Guide confirms the use of the cost approach to assess the value of golf courses when there is insufficient data: The assessed value of golf courses can be determined by the income, sales comparison, and cost approaches to value. Where there is insufficient data to use the income approach or sales comparison approach, the cost approach is used [Saskatchewan Assessment Management Agency, version 1.1 (Saskatchewan: Saskatchewan Assessment Management Agency, 2012) at c 2.13, 1]. [19] SAMA s submission to the Board indicates: The land of the subject property was assessed according to Doc 1.1.4 of the Manual, whereby zoning dictates valuation. And the land rate was chosen based on the neighbourhood groupings as defined in the RM of Corman Park market report, specifically that of commercial properties in the townships that are adjacent to Saskatoon (see Appendix B). As such, all 21.89 acres were assessed using the market valuation standard and the low value commercial land rate was applied (as described in paragraphs 57, 58 of this submission). Therefore, the valuation of the land abides by the requirements based on zoning as well as the neighbourhood groupings defined through market analysis [BE 47, para 67].

APPEAL AAC 2015-0156 Page 6 [20] Section b) of Document 1.1.4 of the Saskatchewan Assessment Manual (Saskatchewan: Saskatchewan Assessment Management Agency) refers to Regulated Property and Agricultural Land Mixed Use: Parcels three acres or greater shall be assessed as follows: i. A minimum of three acres, or the actual area of the parcel used for nonagricultural use, whichever is greater, shall be assessed in a manner equivalent to the methodology that would be applied under the market valuation standard for a similar sized parcel [emphasis added]. [21] SAMA s submission to the Board indicates There were 17 vacant land sales used in the market analysis to develop the land rate for neighbourhood 400 in Corman Park. Appendix B is Evidence and Discussion. It lists a lot of text and refers to grids but there is no map it is confusing. Presenting data in an easily understandable format increases clarity, especially so the opposing party can test the data, similar to how a laboratory report enables scientists to recreate an experiment and test the results. Tables are a particularly helpful tool to convey information. [22] The Evidence and Discussion refers to a list of verified sales in Appendix C. The list of 17 sales does not include location, zoning, or neighbourhood. At the Committee s hearing, it was our understanding that some of these properties were zoned REC and some were not, and that some had contract zoning and some did not. This type of information should be included in the evidence because it provides clarity, transparency, and information relevant to an analysis, especially since comparability is a factor. [23] The subject property is in neighbourhood (NBHD) 400. SAMA s submission to us indicates the Assessor used the commercial/industrial land rate of $95,750 per acre to value the subject land. The standard size for this neighbourhood (400 or low commercial) is 5.01 acres. A Land Size Multiplier (LSM) curve of 180% was applied to the subject property because its size is greater than the standard parcel size of 5.01 acres. [24] The record contains Comparable Property Profiles for three different assessment IDs 344000315101, 344000322301, and 344000322400. The profiles all indicate Moon Lake Golf and Country Club and there are no profiles for any other comparable properties.

APPEAL AAC 2015-0156 Page 7 [25] SAMA s submission to the Committee indicates: There are no vacant land sales of comparably zoned property in the correct time period to base land values on. SAMA, in consultation with the Municipality, has decided that the most appropriate grouping to base the land rate on is the low value commercial grouping and has applied that rate to parcels with the same zoning as the subject property. This is based on the premise that the zoning and allowed use is what is most appropriate and the best way to group the property for land rates, rather than the actual use the owner chooses for the property (para 62) (emphasis added). [26] The Committee is confused by the premise because it is as if the premise applies to all cases. Sometimes zoning and allowed use may be what are most appropriate but there is no overall premise that zoning and allowed use are more appropriate in all cases. Recreation (REC) Zoning [27] SAMA s detailed property profile indicates zoning as Commercial Zoning REC. SAMA identified REC zoning as problematic. [28] REC zoning has existed in the RM for approximately 10 years. SAMA said the land rate of $95,750 is not the best fit and there could be a middle ground for the assessed value; however, there is no market evidence. SAMA said it needs market evidence, but there are no sales for REC zoning. Also, SAMA said it has struggled because REC zoning is unique to the RM and it needs further research. [29] Based on the evidence and the comments from the parties at our hearing, we find the property is unique. It is an anomaly and there are also restrictions on the property. We believe the property s uniqueness has resulted in SAMA s difficulties and the need for further research. Contract Zoning and Floodplain [30] The subject property is zoned REC and it is located on a floodplain. The property owner entered into a contract zoning agreement with the RM, which limits the development on the property. The agreement determines the permitted and discretionary uses of the land. The Board s record indicates one restriction is no hole on the golf course can be longer than 90 yards. The Board s record does not contain the contract zoning agreement between the property owner and the RM. [31] We do not know if the floodplain location is the reason for all the restrictions on the property or not. For example, we do not know if the restrictions are the result of REC zoning or the floodplain. Also, we do not know if all REC zoned properties have restrictions and the reasons for the restrictions.

APPEAL AAC 2015-0156 Page 8 [32] Contract zoning can affect land values. Restrictions can result in a decrease to value and as Ms. Muzyka explained, contract zoning can result in an increase to value if an owner can get council to agree to the contract zoning changes. [33] Just as zoning is a type of land use control, floodplain restrictions are another type of land use control. They limit what can and cannot be developed on a property. SAMA explained that even though the subject property is in a floodplain, there is no market evidence to suggest that location in a floodplain affects value. Ms. Fuhr also explained there has to be a reoccurring problem with flooding over a period of two to three years or more before it would affect an assessment. [34] Ms. Muzyka explained that whether or not the subject property has flooded is a moot point because the RM places restrictions on the property. These restrictions lessen value and should be considered. [35] We agree that whether or not the subject property has flooded is a moot point because it is a floodplain. The nature of a floodplain is that it is prone to flooding. When a property owner enters into a contract zoning agreement with a municipality, both parties agree to the terms of that agreement. A letter from the RM s Planning Department indicates the contract zoning agreement was executed on February 9, 2004, and a revised development agreement was executed on February 19, 2008, because there was a change in ownership. The letter indicates the other terms of the agreement remained the same. However, the agreement is not in the record. [36] Even though we did not require a Request for Information (RFI) in this case, contract zoning agreements should always be included in the record for clarity and to prevent possible delays, such as an RFI. [37] Ms. Muzyka said the properties SAMA used for its data analysis are located north of Saskatoon. The Committee notes these properties are within the RM and not Saskatoon. She told us the subject property is very different than the properties that SAMA used for comparability and the properties SAMA used to develop the $95,750 land rate are not comparable to the subject property. First, the subject property is zoned REC. Second, the other properties SAMA used are located along East Quarry Road and Yellowhead Industrial Park with water, graded roads, infrastructure, and good access. The subject property does not have the same level of services and it is in a different location.

APPEAL AAC 2015-0156 Page 9 [38] We note that location in and of itself is not an exclusive determining factor for comparability because comparable properties do not need to be in close physical proximity to each other to be comparable, but in general, they should have more similarities than differences. [39] There are three properties within approximately 400 metres of the subject property. Each of these three properties has different zoning: agricultural commercial; agricultural; and agricultural with contract recreational. Ms. Muzyka believes the Assessor should have looked at zoning, the zoning contract, and the Official Community Plan (OCP). She also believes the Assessor made an error by calling the property a commercial property. [40] Ms. Muzyka said this case is similar to the Committee s appeals for North Ridge, but SAMA disagrees. SAMA referenced paragraphs 75 and 76 of the leave to appeal application to the Court and said the critical thing about North Ridge is it concerned phasing for future development and this case is not about future development but about how to reconcile lack of sales evidence. [41] The current case is distinguishable from North Ridge because it is not about whether or not the Assessor should have considered phasing as a potential influence on value; however, this case is similar to North Ridge because it concerns restrictions to development. [42] North Ridge was an anomaly because zoning permitted development but phasing prevented development. The current case is an anomaly because the subject property is unique. It is zoned REC. The RM is the only RM in the province that has REC zoning so there is a lack of market evidence. [43] In North Ridge, the Committee stated: The error lies in the assessor using zoning when zoning has no effect here and phasing (under the OCP) does. Further, the assessor looks at zoning too narrowly; he should consider land use controls instead because zoning is but one method to control land use. A thorough reading of the textbook references raised by the Respondent at the Board hearing supports the Committee s view that the broader land use controls are to be considered. Zoning is the most common form of land use control, but as exemplified by this case, it is not always the dominant or effective form (para 18 of AAC 2011-0089 and AAC 2012-0066).

APPEAL AAC 2015-0156 Page 10 [44] The Court in North Ridge stated: The Committee reasoned in this manner: (i) the Assessor had to consider the effect of land use control; (ii) zoning, as a method of land use control, had no effect so should not have been considered; (iii) phasing, as a land use control, did have an effect and therefore should have been considered; and (iv) given that the City had changed phasing without changing zoning, it was unfair to group the subject land with those whose zoning and phasing permitted development (2015 SKCA 13 at para 79). [45] A comparison to the current case is that it would be questionable to group the subject property with properties that have no restrictions or with properties that have dissimilar restrictions. Also, the RM s OCP places restrictions on recreational development (s. 8.2.1 p. 25). In North Ridge, zoning permitted development but phasing prevented development. In this case, zoning permits development but the OCP restricts development. [46] Because we set aside the Board s decision we must look at all the evidence in order to answer the issues. The evidence, combined with the presentations at our hearing, result in us finding that neither of the base land rates are correct. We have the authority to issue an RFI, but we do not believe it would be helpful in this case because as has been discussed, REC zoning is an anomaly to the RM. [47] SAMA expressed several times that it does not believe the land rate of $95,750 is the best fit. That is not to suggest that assessments must be 100% perfect. However, when SAMA indicates it is not comfortable with the assessed value and it should probably be somewhere between $17,150 and $95,750, we believe it is reasonable that the current assessed value is neither accurate, fair, nor equitable as required by the Act. In addition, SAMA s belief that this matter needs further study also results in us believing that remittal is the most appropriate course of action to determine the land value. [48] The Committee finds we are unable to determine whether the applicable base land rate is $17,150 or $95,750. We set aside the assessed value for the land and remit the land value to the Assessor. CONCLUSION: [49] The Committee sets aside the 2015 assessed value for the land and remits the matter to the Assessor under subsection 226(1)(c) of the Act. The assessed value for improvements is $8,100 and the golf course development costs are $139,500.

APPEAL AAC 2015-0156 Page 11 [50] This ruling will result in a new 2015 assessment for the subject property for land. The new assessment will be subject to the usual notice and appeal processes. Because the new assessment is the result of an appeal, the revised assessed value cannot exceed the original 2015 assessment. Dated at REGINA, Saskatchewan this 2 nd day of June, 2016. Saskatchewan Municipal Board Assessment Appeals Committee Per: Lorna Cottenden, Panel Chair Per: Lise Gareau, Director