Saskatchewan Municipal Board Appeals Committee Appeal: 2011-0061 JOINT RECOMMENDATION RESPONDENT: City of Saskatoon In the matter of an appeal to the Appeals Committee, Saskatchewan Municipal Board, by: Westfair Properties Ltd. c/o Garry Coleman Altus Group Limited 226C Cardinal Crescent Saskatoon, SK S7L 6H8 respecting the assessment of: Parcel 118983730 Block F, Plan 96S55464 2815/2825 Wanuskewin Road 30 Kenderdine Road Roll Number 435203970 Roll Number 475731950 for the year 2011; Blocks F & G, Plan 60S16901 2901 8 th Street East Roll Number 515428400 REPRESENTING THE APPELLANT: REPRESENTING THE RESPONDENT: Garry Coleman Travis Horne, Don Davison, Les Smith The parties to the appeal provided three, signed Joint Recommendations, under dates of February 1, 2012 (435203970) and February 10, 2012 (475731950 and 515428400). The agreed upon values are reflected at the conclusion of this decision.
APPEAL 2011-0061 [Page 2] This appeal is against the decisions of the Board of Revision (the Board) for the City of Saskatoon, pursuant to section 216 of The Cities Act (the Act). There are three properties addressed by this decision: ISSUES: Property A 2815/2825 Wanuskewin Road; Roll No. 435203970 Property B 30 Kenderdine Road; Roll No. 475731950 Property C 2901 8 th Street East; Roll No. 515428400 (i) (ii) The Cap Rate applied to the subject buildings. The Net Operating Income (NOI) adjustment. Property A 2815/2825 Wanuskewin Road; Roll No. 435203970 FACTS: (1) The subject property is a free standing retail store, property type 3112, located in the Hudson Bay Industrial geographic area. The parcel size is 254,497 square feet. The building has 48,753 square feet of leasable area. It is assessed with a base rental rate of $19.38 with an adjustment for size of $1.80 per square foot resulting in an assessed value of $17.58 per square foot. The assessed value of the property is $9,774,900. (2) The assessed value was arrived at using the income approach to value. (3) The grounds of appeal to the Board were: Ground 1: Facts: Ground 2: 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 154 1 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 2009. The NOI is incorrect.
APPEAL 2011-0061 [Page 3] Facts: Ground 3: Facts: a) The base rent being applied to the Extra Foods area is $17.58 ($19.38-$1.80). Similar free standing buildings, such as London Drugs and Walmart receive a rent rate that is more comparable to their actual rent rate. b) The $17.58 rental rate being applied is not representative of a grocery store space of 48,753 square feet. c) The grocery store rent analysed by the assessor indicates a much lower rental rate than what is being applied. d) The assessor has not correctly applied the lease greater than 14,000 adjustment. 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. Equity has not been maintained. a) Comparable properties such as Winners and Staples receive an 8.26% cap rate. b) Comparable grocery stores such as other Safeway locations receive a much lower base rental rate. c) The assessment per square foot of Walmart at Preston Crossing is significantly lower than the subject even though the square footages are similar. (4) In response to a March 3, 2011, letter from the Board wherein it found that the grounds of appeal as found in Fact (3) 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; 154 1 st Avenue North, 3124-3130 8 th Street East; 255 2 nd Avenue North, 7 Assiniboine Drive, 255 2 nd Avenue North. They are not comparable in the following terms:
APPEAL 2011-0061 [Page 4] 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; i.e. zoning 3b) Which locations and how are they comparable? The Safeway stores located on 33 rd Street West and 3310 8 th Street East 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;
APPEAL 2011-0061 [Page 5] 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 -$26,000 which addresses the NOI adjustment for a single tenant with a leased area greater than 14,000 sq. ft. The changes to the assessment for 2011 are as follows: Current Current Proposed Proposed Change in Change in Commercial 10,104,100 10,104,100 9,774,900 9,774,900 329,200 329,200 The filing fee is refunded. (6) The July 29, 2011 notice of appeal to the Saskatchewan Municipal Board, Appeals Committee (the Committee) states: The 2011 Board of Revision for the City of Saskatoon erred in its decision in several respects; 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 February 1, 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 :
APPEAL 2011-0061 [Page 6] Present Recommended Recommended Description: Decrease 2011 9,774,900 8,385,000 1,389,900 Comments and Reason for Recommendation: Recommendation incorporates SMB decisions AAC 2009-0132, 0133, 0110-0117 and BOR decision 71-2011. Effective Date, this 1 day of February, 2012. Please be advised that I, the Respondent in the within proceedings, have read the recommended changes to my 2011 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, which has been recommended by the Appellant, be accepted by the Saskatchewan Municipal Board in resolution of the appeal in the abovecaptioned matter. This agreement applied to only 2815/2825 Wanuskewin Road and has no effect on the other properties involved in AAC appeal 2011-0061 2901 8 th Street East and 30 Kenderdine. This document is not binding or valid unless dated, signed and returned within five business days of the Effective Date as noted. Dated this 1 st day of Feb., 2012. Name: Garry Coleman Travis Horne Signature of Respondent Address: Altus Group Don Davison Signature of Appraiser Property B 30 Kenderdine Road; Roll No. 475731950 FACTS: (1) The subject property is a free standing retail store, property type 3111, located in the University Heights Suburban Centre geographic area. The parcel size is 156,070 square feet. The building has 38,662 square feet of leasable area with a rental rate of $16.41 per square foot ($18.21 - $1.80). The assessed value of the property is $5,348,200. (2) The assessed value was arrived at using the income approach to value.
APPEAL 2011-0061 [Page 7] (3) The grounds of appeal to the Board were: Ground 1: The NOI is incorrect. Facts: a) The base rent being applied to the Extra Foods area is $16.41 ($18.21-$1.80). Similar free standing buildings, such as London Drugs and Walmart receive a rent rate that is more comparable to their actual rent rate. b) The $16.41 rental rate being applied is not representative of a grocery store space of 38,662 square feet. c) The grocery store rent analysed by the assessor indicates a much lower rental rate than what is being applied. d) The assessor has not correctly applied the lease greater than 14,000 adjustment. 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 2: Facts: Equity has not been maintained. a) Comparable properties such as Winners and Staples receive an 8.26% cap rate. b) Comparable grocery stores such as other Safeway and Sobey locations receive a much lower base rental rate. c) The assessment per square foot of Walmart at Preston Crossing is significantly lower than the subject even though the square footages are similar. (4) In response to a March 3, 2011, letter from the Board wherein it found that the grounds of appeal as found in Fact (3) above did not meet the provisions of Section 197(6) of the Act, the appellant s agent provided the following: 2a) How are these properties comparable? Besides the fact that the properties listed are large retail properties, they are also comparable to the subject in terms of;
APPEAL 2011-0061 [Page 8] i.e. zoning 2b) Which locations and how are they comparable? The Safeway stores located on 33 rd Street West and 3310 8 th Street East as well as the Sobey s location 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; i.e. zoning (5) The July 7, 2011 decision of the Board finds the following: DECISION: The assessment shall be adjusted to reflect the Recommendation for Change contained in Exhibit R.1 in the amount of -$15,200 which addresses the NOI adjustment for a single tenant with leased space greater than 14,000 sq. ft. The NOI adjustment change is from -$65,126 to -$66,807. The changes to the assessment for 2011 are as follows: Current Current Proposed Proposed Change in Change in Commercial 5,363,400 5,363,400 5,348,200 5,348,200-15,200-15,200 The filing fee is refunded. (6) The July 29, 2011 notice of appeal to the Committee states:
APPEAL 2011-0061 [Page 9] The 2011 Board of Revision for the City of Saskatoon erred in its decision in several respects; 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 February 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 : Present Recommended Recommended Description: Decrease 2011 5,348,200 4,919,120 429,080 Comments and Reason for Recommendation: Recommendation incorporates SMB decisions AAC 2009-0132 and 0133. Effective Date, this 10 day of February, 2012. Please be advised that I, the Respondent in the within proceedings, have read the recommended changes to my 2011 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, 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 Feb., 2012.
APPEAL 2011-0061 [Page 10] Name: Garry Coleman Travis Horne Signature of Respondent Address: Altus Group Les Smith Signature of Appraiser Property C 2901 8 th Street East; Roll No. 515428400 FACTS: (1) The subject property is a free standing retail store, property type 3112, located in the Greystone Heights geographic area. The parcel size is 284,849 square feet. The subject property is a Real Canadian Superstore, with 141,311 square feet of leasable area having a rental rate of $12.60 per square foot ($14.40 - $1.80). The assessed value of the property is $20,319,600. (2) The assessed value was arrived at using the income approach to value. (3) The grounds of appeal to the Board were: Ground 1: 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 154 1 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 2009. c) The following sales indicate a retail cap of 9.0 on 8 th Street. The buildings located at 3124-3130, 2002, 2600 and 3421, 8 th Street East would indicate a CAP rate greater than 8%.
APPEAL 2011-0061 [Page 11] Ground 2: Facts: Ground 3: Facts: The NOI is incorrect. a) The base rent being applied to the Superstore area is $12.60 ($14.40- $1.80). 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 141,291 square feet. c) The grocery store rent analysed by the assessor indicates a much lower rental rate than what is being applied. d) The assessor has not correctly applied the lease greater than 14,000 adjustment. 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. Equity has not been maintained. a) Comparable properties such as Winners and Staples receive an 8.26% cap rate. b) Comparable grocery stores such as other Safeway locations, and Sobey s (Preston Crossing) receive a much lower base rental rate. c) The assessment per square foot of Walmart at Preston Crossing is significantly lower than the subject even though the square footages are similar. (4) In response to a March 3, 2011, letter from the Board wherein it found that the grounds of appeal as found in Fact (3) 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; 154 1 st Avenue North, 3124-
APPEAL 2011-0061 [Page 12] 3130 8 th Street East; 255 2 nd Avenue North, 7 Assiniboine Drive, 255 2 nd Avenue North. They are not comparable in the following terms: 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; 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;
APPEAL 2011-0061 [Page 13] 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 3310 8 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; i.e. zoning (5) The July 7, 2011 decision of the Board finds the following: DECISION: The assessment shall be calculated 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 -$90,500. The changes to the assessment for 2011 are as follows: Current Current Proposed Proposed Change in Change in Commercial 21,042,400 21,042,400 20,319,600 20,319,600 722,800 722,800 The filing fee is refunded. (6) The July 29, 2011 notice of appeal to the Committee states: The 2011 Board of Revision for the City of Saskatoon erred in its decision in several respects;
APPEAL 2011-0061 [Page 14] 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 February 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 : Present Recommended Recommended Description: Decrease 2011 20,319,600 14,352,410 5,967,190 Comments and Reason for Recommendation: Recommendation incorporates SMB decisions AAC 2009-0132 and 0133. Effective Date, this 10 day of February, 2012. Please be advised that I, the Respondent in the within proceedings, have read the recommended changes to my 2011 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, 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.
APPEAL 2011-0061 [Page 15] Dated this 10 day of Feb., 2012. Name: Garry Coleman Travis Horne Signature of Respondent Address: Altus Group Les Smith Signature of Appraiser 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.
APPEAL 2011-0061 [Page 16] (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 (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 February 1, 2012 pertaining to Property A (435203970). It was signed by Travis Horne and Don Davison 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 $8,385,000 (a reduction of $1,389,900) for the year 2011. On February 10, 2012 the Committee received a copy of two signed Joint Recommendations pertaining to Property B (475731950) and Property C (515428400). These were signed by Travis Horne and Les Smith on behalf of the City of Saskatoon and by Garry Coleman on behalf of the appellant. These recommendations are attached hereto and form part of the decision. The recommendations indicate that the assessed values of the properties are: for Property B (475731950) $4,919,120, a reduction of $429,080; and for Property C (515428400) $14,352,410, a reduction of $5,967,190; both for the year 2011. DECISION: The Committee concurs with the attached recommendation. For the year 2011, the assessed values of the subject properties are to be:
APPEAL 2011-0061 [Page 17] Property A (435203970) - $8,385,000 Property B (475731950) - $4,919,120 Property C (515428400) - $14,352,410. The filing fees will be returned. DATED AT REGINA, Saskatchewan this 2 nd day of March, 2012. SASKATCHEWAN MUNICIPAL BOARD Appeals Committee - original signed by - Per: David Wilkin, Chairman - original signed by - Per: Cynthia J. Schwindt, Secretary