saskatchewan municipal board assessment appeals committee€¦ · by the board on april 30, 2010...

Appeal: 2010-0068 RESPONDENT: City of Saskatoon In the matter of an appeal to the Assessment Appeals Committee, Saskatchewan

Municipal Board, by:

Centre At Circle & Eighth Property Inc. c/o Garry Coleman Altus Group Limited

226C Cardinal Crescent Saskatoon, SK S7L 6H8

respecting the assessment of:

Parcels 120984273, 135950519 3310 8th Street East Roll Number: 525515860

for the year 2010; BEFORE: David Wilkin, Chairman

Jenny Lai Yu, Member Randy Markewich, Member

APPEARED FOR THE APPELLANT: Garry Coleman APPEARED FOR THE RESPONDENT: Christine Bogad

Travis Horne Darcy Huisman This appeal was heard in the Large Conference Room, 3830 Thatcher Avenue, in Saskatoon, Saskatchewan, on May 16, 2012.

Saskatchewan Municipal Board Assessment Appeals Committee

APPEAL 2010-0068 []

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). ISSUES: Did the Board err in its decision by: (i) Increasing the assessment when the appeal before it specifically asked that

the assessment be reduced; and,

(ii) Finding that the median restaurant rental rate used to calculate the assessment represented what was typical for a larger restaurant?

FACTS: (1) The subject property is the enclosed shopping centre at 3310 8th Street

East commonly known as the Centre or the Mall at Circle and 8th. The property has been valued using the income approach to value. (2) According to the Property Valuation Sheet in Appendix A of Exhibit R1, a

median rental rate of $23 per square foot was applied to 13,286 square feet of restaurant space in the subject property. The Smitty’s restaurant is comprised of 3,730 square feet and the Double Deuce Bar and Grill occupies 9,556 square feet.

(3) The assessed values (assessment) and taxable assessment for the subject property as determined by the Board are:

Assessed Value Taxable Assessment

Total $56,873,900 $56,873,900

The retroactive base date of municipal assessments for taxation purposes in the Province of Saskatchewan is June 30, 2006. As a commercial class of property, the percentage of value equals 100% of the assessed value.

(4) The grounds of appeal to the Board were as follows:

“Ground 1: The Cap Rate is too low and in error. Facts:

a) The Market Mall is significantly

different from the subject property and should be removed from the calculation of the cap rate.

APPEAL 2010-0068 []

Ground 2: The NOI is incorrect. Facts:

a) The vacancy adjustment calculated

does not correctly account for the vacancy. The assessor used the square footage of the total area instead of the proportionate value of each area which affects the vacancy allowance.

b) The $23 base rent that is being applied to the restaurant area is excessive for a restaurant area of this size based on the actual rent being paid.”

(5) The record of the Board includes:

a) Exhibit A1 – Notice of appeal dated and received by the Board on February 12, 2010 with Schedule A attached;

b) Exhibit B1 – A sufficiency letter dated February 18, 2010 from the secretary of the Board to the agent;

c) Exhibit A2 – Clarification letter dated February 19, 2010 from the agent to the secretary of the Board;

d) Exhibit A3 – A 10-page submission on behalf of the appellant received by the Board on April 20, 2010 including Appendices A to F inclusive;

e) Exhibit A4 – Confidential submission on behalf of the appellant received by the Board on April 20, 2010 including Appendices A to I inclusive;

f) Exhibit R1 – A 22-page assessment report from the assessor received by the Board on April 30, 2010 including Appendices A and D;

g) An order from the Board to treat Exhibit A4, Appendices A, E, F, H and I as confidential documents;

h) Minutes of the Board for May 10, 2010; i) A request on behalf of the Board secretary for an undertaking to the

City assessor dated May 11, 2010 asking for a recalculation; j) Assessor’s response to the undertaking dated May 12, 2010 with a

copy of a December 15, 2009 undertaking response attached; k) Response to undertaking response letter dated May 13, 2010 from the

agent to the secretary of the Board; and, l) The decision of the Board, dated July 14, 2010.

(6) The decision of the Board found the following:

“... The change in methodology for determining the vacancy adjustment has the effect of also changing the capitalization rate calculation from 8.26% to 8.00% as determined in Appeal 375-2009. This recalculation resulted in the assessed value of the property under appeal being increased by $266,200 from $56,607,700 to $56,873,900, the same assessed value as determined in 2009.

APPEAL 2010-0068 []

While the Respondent determined the 2010 assessed value using the vacancy calculation method found by the Board to be in error in 2009, both the Respondent and the Appellant agreed to a protective appeal for this ground of appeal and to accept the decision of 375-2009; the Appellant should have been aware that the impact of agreeing to a protective appeal pending a decision by the Saskatchewan Municipal Board on the findings of 375-2009 would be an increase in the assessed value to the amount determined in 2009. Notwithstanding the Appellant’s letter of May 13, 2010, objecting to any change to the capitalization rate, the Board made this change as part of the decision in 375-2009, and given the protective nature of the appeal in 2010, it is consistent to make the same ruling in 2010. ... ... While the property under appeal is currently configured as restaurant and night club space, the Board accepts that all of the space could be converted to restaurant use and that a lower median rent cannot be based on this factor. Actual rents negotiated prior to 2004 and after 2006 for a specific property cannot be considered in determining the median rent applied to all similar properties. The Appellant has not proven to the Board that the median rent rate was determined in error and this ground of appeal is denied. DECISION: The net effect of accepting a protective appeal for the first two grounds of appeal and rejecting the third ground is to restore the assessed value to the 2009 amount of $56,873,900.”

(7) The grounds of appeal to the Saskatchewan Municipal Board, Assessment Appeals Committee (the Committee) are:

“1. The Board erred in increasing the assessment when

the appeal specifically asked for the assessment to be reduced.

2. The Board erred in changing the Cap Rate based on

a change in the vacancy adjustment for the subject property.

3. The Board erred in its finding that the restaurant

rate used in the assessment calculation represented what was typical for a larger restaurant area.”

The notice of appeal to the Committee was dated August 4, 2010 and was received on August 16, 2010.

APPEAL 2010-0068 []

Note: Ground 2 was withdrawn at the hearing and will not be addressed in the decision.

LEGISLATION: The Cities Act:

“2(1) In this Act:

(x) “parcel of land” means the whole or any part of a lot or block in an approved plan or a number of lots or blocks when assessed together, or any subdivided area of land used for a single assessment;

163 In this Part:

(d) “base date” means the date established by the agency for determining the value of property for the purpose of establishing assessment rolls for the year in which the valuation is to be effective and for each subsequent year preceding the year in which the next revaluation is to be effective; (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; (f.3) “mass appraisal” means the process of preparing assessments for a group of properties as of the base date using standard appraisal methods, employing common data and allowing for statistical testing;

164(1) All property in a city is subject to assessment. (2) An assessment must be prepared for an improvement whether or not the improvement is complete or capable of being used for its intended purpose.

APPEAL 2010-0068 []

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. 210(1) After hearing an appeal, a board of revision or, if the appeal is heard by a panel, the panel may, as the circumstances require and as the board or panel considers just and expedient: (a) confirm the assessment; or

(b) change the assessment and direct a revision of the assessment roll accordingly:

(i) subject to subsection (3), by increasing or decreasing the assessment of the subject property; (ii) by changing the liability to taxation or the classification of the subject property; or (iii) by changing both the assessed value of the subject property and its liability to taxation or its classification.

(1.1) Notwithstanding subsection (1), a non-regulated property assessment shall not be varied on appeal using single property appraisal techniques. (2) A board of revision or panel shall not exercise a power pursuant to subsection (1) except as the result of an appeal.

(3) Notwithstanding subsection (1), an assessment shall not be varied on appeal if equity has been achieved with similar properties. (4) A board of revision shall make all decisions on appeals within 180 days after the date on which the city publishes a notice pursuant to section 187, and no appeal may be heard after that date except where allowed pursuant to subsection 189(2) or 213(9) or section 360. (5) After a decision is made pursuant to subsection (1), the secretary of the board of revision shall, by registered mail, send to each party:

APPEAL 2010-0068 []

(a) a copy of the decision together with written reasons for the decision; and (b) a statement informing the party of the rights of appeal available pursuant to section 216 and the procedure to be followed on appeal.

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.

217(1) An appellant, including a city, other taxing authority or the agency, bringing an appeal to the appeal board shall serve on the secretary of the appeal board a notice of appeal setting out all the grounds of appeal. (2) A notice of appeal pursuant to subsection (1) must be in the form prescribed in regulations made by the minister. (3) The appellant shall serve the notice of appeal mentioned in subsection (1):

(a) within 30 days after being served with a written notice of the decision of the board of revision; or

(b) in the case of the omission or neglect of the board of revision to hear or decide an appeal, at any time within the calendar year for which the assessment was prepared.

(4) The appellant may file a notice of appeal pursuant to this section personally, by registered mail or by ordinary mail. (5) Subject to subsection (6), if an appellant does not file a notice of appeal in accordance with this section, the appeal is deemed to be dismissed.

(5.1) If, in the opinion of the secretary of the appeal board, the notice of appeal does not comply with this section, the secretary shall:

(a) notify the appellant of the deficiencies in the notice of appeal; and (b) grant the appellant one 14-day extension to perfect the notice of appeal.

(6) If, in the opinion of the appeal board, the appellant’s failure to perfect an appeal in accordance with this section is due to a procedural defect that does not affect the substance of the appeal, the appeal board may allow the appeal to proceed on any terms and conditions that it considers just. 218(1) When filing a notice of appeal pursuant to section 217, the appellant shall pay the applicable filing fee established for the purposes of an assessment or classification appeal pursuant to this or any other Act.

APPEAL 2010-0068 []

(2) For the purposes of subsection (1), the fees must be paid within the 30-day period mentioned in subsection 217(3). (3) If an appellant fails to pay the fee as required pursuant to this section, the appeal is deemed to be dismissed. (4) If the appellant is successful on an appeal, the appeal board shall refund the filing fee paid pursuant to this section to the appellant. 219 Immediately after a notice of appeal is filed with the appeal board, the secretary of the appeal board shall provide a copy of the notice of appeal to:

(a) the secretary of the board of revision; and

(b) every other party to the appeal other than the appellant.

220 On the request of the secretary of the appeal board, the secretary of the board of revision shall, with respect to each appeal to the appeal board, send to the appeal board: (a) the notice of appeal to the board of revision; (b) materials filed with the board of revision before the hearing; (c) any exhibits entered at the board of revision hearing;

(d) the minutes of the board of revision, including a copy of any order made pursuant to section 209; (e) any written decision of the board of revision; and (f) the transcript, if any, of the proceedings before the board of revision.

221(1) The appeal board shall, with respect to each appeal: (a) set the date, time and place of the hearing of the appeal; and (b) give written notice of the hearing to each of the parties. (2) For the purposes of clause (1)(a), the notice mentioned in that clause must set out:

(a) the name of the appellant and the names of the other parties to the appeal; (b) the legal description or address of the property to which the appeal relates; and

(c) the scheduled date, time and place of the hearing of the appeal.

APPEAL 2010-0068 []

(3) The assessor to whom a notice is sent pursuant to subsection (1) shall post the notice in a conspicuous place in the building in which the central offices of the city are located. 222 Subject to section 223, and notwithstanding any power that the appeal board has pursuant to The Municipal Board Act to obtain other information, an appeal to the appeal board pursuant to this Act is to be determined on the basis of the materials transmitted pursuant to section 220. 224(1) In conducting the hearing of an appeal, the appeal board may exercise the powers that are vested in it pursuant to The Municipal Board Act.

(2) The appeal board may adjourn the hearing of an appeal to a later date, to the next sitting of the appeal board or to an unspecified date, as the appeal board considers appropriate in the circumstances. 226(1) After hearing an appeal, the appeal board may:

(a) confirm the decision of the board of revision; or (b) modify the decision of the board of revision in order that:

(i) errors in and omissions from the assessment roll may be corrected; and (ii) an accurate, fair and equitable assessment for the property may be placed on the assessment roll.

(2) If the appeal board decides to modify the decision of the board of revision pursuant to subsection (1), the appeal board may adjust, either up or down, the assessment or change the classification of the property.

(3) Notwithstanding subsections (1) and (2), a non-regulated property assessment shall not be varied on appeal using single property appraisal techniques. (3.1) Notwithstanding subsections (1) and (2), an assessment shall not be varied on appeal if equity has been achieved with similar properties.

227(1) A decision made by a board of revision or the appeal board on an appeal of an assessment of any property applies, to the extent that it relates, to any assessment placed on the assessment roll for the property after the appeal is initiated but before the decision is made, without the need for any further appeal being initiated with respect to the assessment. (2) If the parties to an appeal cannot agree as to whether or to what extent subsection (1) applies in their circumstances, any party to the appeal may apply to the board that issued the decision to issue a ruling on the matter. (3) On an application pursuant to subsection (2), the board may make any ruling that it considers appropriate and that ruling is subject to appeal in the same manner as any other decision issued by the board.”

APPEAL 2010-0068 []

CASE LAW: Prince Albert (City) v. 101027381 Saskatchewan Ltd., 2009 SKCA 59. Regina (City) v. East Landing Plaza Ltd., 2000 SKCA 141. Sasco Developments Inc. v. Moose Jaw (City), 2012 SKCA 24. Cadillac Fairview Corp. v. Saskatoon (City), 2000 SKCA 84, 199 Sask. R. 72. COMMITTEE DECISIONS: Appeal 2010-0065, Edsask Properties Ltd., et al v. City of Saskatoon Appeal 2009-0145, City of Saskatoon v. Centre At Circle & Eighth Property Inc.

PRELIMINARY ISSUES:

[1] The respondent referenced the Committee’s postponement decision for

Edsask Properties Ltd. et al, noted above, in requesting the agent’s clarification

regarding which issues identified for this appeal would be withdrawn now that the

Saskatchewan Court of Appeal (the Court) has rendered its decision for Sasco

Developments Inc., noted above.

[2] Ms. Bogad referenced the 2010 Board hearing for this appeal, specifically

as it relates to the first two issues identified. She submitted that as the parties

had agreed that these issues were protective of those placed before the

Committee for its consideration of the 2009 appeal, the Committee should not

proceed with hearing these two issues and requested that both be dismissed

outright.

[3] In response to Ms. Bogad’s request for clarification on the applicability of

the Sasco Developments Inc. decision, referenced above, the agent noted that

the specific guidance provided by the Court as it relates to this appeal, would

become evident as his case is submitted.

[4] The agent advised that the vacancy calculation and corresponding

adjustment to the capitalization rate resulting in the 2010 Board increasing the

subject’s assessed value is captured in the first two grounds. The agent noted

APPEAL 2010-0068 []

that when this appeal was heard he advised the Board that the vacancy issue

resulting from its 2009 decision had been submitted to the Committee for its

consideration. The agent advised that it was his position to the Board that this

issue was the same as decided by the 2009 Board.

[5] The agent advised that the Committee’s decision for the 2009 appeal was

not rendered until after the 2010 Board hearing. Accordingly, he was unaware of

the potential increase in assessed value resulting from his agreement on the

protective nature of the vacancy issue. He noted that he never agreed that

acceptance of his position that the vacancy adjustment has been calculated in

error would properly lead to a correction of the capitalization rate and a resulting

increase in the assessed value. The agent noted that as the vacancy issue has

now been decided by the Committee, he is withdrawing the second ground of

appeal.

[6] Regarding the first ground of appeal, the agent submitted that it is evident

that there was no increase to the initial assessed value resulting from the

Committee’s finding on this issue. Accordingly, the 2010 Board erred in its

decision to increase the assessed value as a result of this appeal. The Board’s

decision reflects the application of a lower capitalization rate when the issue

before it was that the capitalization rate was initially too low. The agent

referenced prior Court decisions which have consistently held that an assessed

value cannot be increased through appeal where it is alleged that the error

results in an assessed value that is too high.

[7] In response to the agent’s position that prior Court decisions on this issue

are instructive, Ms. Bogad submitted her position that they could be

differentiated from the facts for this appeal. She noted that unlike the situation

for this appeal, in the Court’s decision for 101027381 Saskatchewan Ltd., noted

above, the property owner was unaware that a consequence of having his error

corrected would result in the assessed value increasing.

APPEAL 2010-0068 []

[8] In light of the agent’s acceptance of the Committee’s decision for Centre

At Circle & Eighth Property Inc., noted above, and his resulting withdrawal of the

vacancy adjustment issue, the Committee advised the parties that it would

proceed with hearing argument relating to grounds 1 and 3.

CONCLUSIONS AND REASONS:

[9] This Committee has received an appeal against a decision of the City of

Saskatoon Board of Revision, and on the basis of the presentations of the

appellant and respondent, must decide if the record shows that an error has

occurred. The role of the Committee is not to redo the hearing. Rather, the

Committee is to review the evidence from that hearing and determine whether

the Board came to the proper conclusion in rendering its decision. Should the

Committee conclude that the Board did not come to the proper conclusion based

upon the evidence before it the Committee is then required to do what the Board

ought to have done. The onus is upon the appellant to demonstrate to the

Committee where the Board has erred.

Agent’s Submissions:

[10] The agent submitted that the Board erred in its decision to increase the

subject’s assessed value as the appeal before it was based on his belief that the

assessed value was too high. He noted that had the Board corrected his alleged

errors in the capitalization rate, vacancy adjustment and the base rent for the

restaurant area as requested in the notice of appeal, the subject’s assessed

value would have decreased.

[11] The agent argued that the Board’s decision is not supported by the

available case law. The agent referenced both Regina (City) v. East Landing

Plaza Ltd., noted above, and Prince Albert (City) v. 101027381 Saskatchewan

Ltd., noted above, in support of his position that the Board did not have

APPEAL 2010-0068 []

jurisdiction to increase the subject’s assessed value as it did not have a notice of

appeal alleging that the assessed value was too low. The agent noted that all

evidence and submissions to the Board on the three issues raised in his notice

of appeal were in support of his position that a reduction in the assessed value

was warranted.

[12] The agent referenced page 2 of Appendix A of Exhibit A4 in support of his

position that the Board erred in maintaining the median restaurant rental rate

used to determine the subject’s assessed value as it did not reflect a typical

rental rate for a larger restaurant area. Three restaurant rents were used to

develop the median restaurant rental rate for the subject grouping. The areas of

these three restaurants were between 1,148 and 3,730 square feet. The

appellant referenced Appendix A of Exhibit A4, in noting that the square footage

for the two largest restaurants of 5,930 square feet (Smitty’s Lawson) and 9,556

square feet (Double Deuce in The Centre) with rental rates of $□ (A) and $□ (A) per

square foot respectively, in arguing that these larger restaurants did not achieve

rental rates that were comparable to smaller restaurants.

[13] Additionally, the agent referenced the Retail Commercial Retail Unit

(CRU) analysis included at page 12 of Appendix D of Exhibit A3. He noted that

this analysis for both the subject and the Lawson Heights Mall supports the

application of a lower rental rate for Retail CRUs that are greater than 3,000

square feet. In his view, this analysis supports his position that a size

adjustment should likewise be applied to restaurants in these two malls.

[14] The agent referenced the following comment from the Court as found at

paragraph 58 of Sasco Developments Inc., noted above, in support of his

position that within a mass appraisal model, individual variations from the group

can be accommodated:

“[58] This is not to be taken as having any bearing upon what the Committee had to say, speaking hypothetically,

APPEAL 2010-0068 []

about the possibility by one means or another of accommodating some individual variations from the group norm in the context of a mass appraisal model. As the Committee suggested, this is a complex and multi-faceted subject, the consideration of which it left for a case specifically focused on the evaluation model used by SAMA, or some aspect of the model.”

Further, the agent noted that the Court’s comment at paragraph 4 of this

decision that “… mass appraisal entails the systematic appraisal of a group of

properties based in significant part on market value data common to the group”,

likewise supports a finding that the subject’s actual restaurant rental rate could

be used to determine that the assessed value for the subject property is

excessive.

[15] In response to a question from the panel the agent advised that the

Smitty’s (Lawson) rental rate as identified at page 2 of Appendix A of Exhibit A4

was the result of a lease that commenced prior to the assessor’s timeframe for

market analysis. Additionally, the agent advised that the Double Deuce rental

rate of $□ (A) per square foot as referenced in that analysis was the result of a

lease executed in 2008. The agent submitted his position that in order to

determine market value, it would be appropriate to look to rental rates that were

negotiated outside of the 2004, 2005 and 2006 timeframe used by the assessor.

Postponement Request:

[16] Ms. Bogad submitted that due to the fact that the appellant had not

provided a written submission identifying the issues and case law that would be

referenced for the hearing, now that the appellant’s submissions have been

made, the city should be granted a postponement of hearing in order that it could

properly respond to the case put forward by the agent.

[17] In considering this request, the Committee noted the appellant’s

withdrawal of the second ground of appeal. Based on this withdrawal and in

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conjunction with the specificity of his submissions relating to the remaining two

grounds that he spoke to, the Committee determined at the hearing that a

postponement to allow further consideration of these two issues would not be

granted based on the following consideration.

[18] Specifically, the first ground being advanced relates solely to whether an

assessed value can be increased through an appeal where it is alleged that the

assessed value is too high. In the Committee’s view, the specific case law

referenced by the agent in support of his position on this issue is well

established. The fact that it had not been referenced in a written submission

prior to the hearing should have no bearing on the ability of the respondent to put

forward its position on how the present situation is distinguishable from the two

cited decisions.

[19] The second ground of appeal submitted and argued by the agent is

likewise in the Committee’s view, narrow in scope. It was clearly stated in the

agent’s notice of appeal that he believed the Board erred in its finding that the

rental rate applied to determine the subject’s assessed value was not reflective

of the size of the largest subject restaurant. His submission to the Committee in

support of his position on this issue is identified in the analysis included at page

2 of Appendix A of Exhibit A4. It is evident from the following comment as found

at page 3 of the Board’s decision that this analysis and submission was placed

before it for consideration:

“The Assessor applied a median rent of $23.00 to the two mall restaurants and while this reflects the actual rent paid by one of the restaurants, it is unduly high for the second restaurant which had an actual rent of $□ (A)

in the assessment period from 2004-06 and a rent of $□ (A)

since 2008. The three leases that were signed in the relevant time period and used by the Assessor in determining the $23.00 median rent were for restaurants that ranged in size from 11,483,800 [sic] square feet and thus, considerably smaller than the restaurant under appeal which is 9,556 square feet of which about 2/3 is night club space rather than traditional restaurant space. The Appellant referred to information from Exhibit A.4 which shows that in another

APPEAL 2010-0068 []

mall, a restaurant over 5,000 square feet in size paid rent of $□ (A)

per square foot whereas two smaller restaurants under 1,700 square feet in size paid higher actual rents in the range of $□ (A)

. Two of these rent levels were negotiated after the relevant time period for this assessment of 2004-06. The Appellant noted that the Assessor does make a distinction in median rent based on size for retail property in malls and should make a similar distinction for restaurants. There should be a lower rent applied to larger restaurant spaces than for smaller spaces such as those used to determine the $23.00 median rent.”

In the Committee’s view, the agent offered no further evidence or argument on

this issue.

[20] The Board decision clearly identifies that both Ms. Huisman and Mr.

Horne were in attendance when the above submissions were placed before it.

The fact that both were attending this hearing on behalf of the respondent

indicates both representatives would have been well aware of the substantive

submissions placed before the Board by the agent. In light of the fact that the

Committee heard no new submissions from the agent relating to this issue, the

Committee must conclude that the respondent would not be placed at a

disadvantage in this hearing due to the fact that the agent failed to copy the

above Board discussion into a new “written” submission.

[21] As it relates to the agent’s reference to Sasco Developments Inc., noted

above, in support of his position that within a mass appraisal model, individual

variations from the group can be accommodated, the Committee accepted the

respondent’s position that no prior notification of the agent’s position on this

issue had been provided. Accordingly, the Committee determined that it would

allow the respondent an opportunity to provide a written response to the agent’s

submissions relating specifically to his position on this case. Further, the

Committee advised the parties that should either determine that this issue was

significantly complex as to require reconvening the hearing in order to fully vet

either position, a reconvened hearing would be scheduled.

APPEAL 2010-0068 []

[22] The Committee received a written submission from the respondent on

June 13, 2012 and from the agent on June 28, 2012. Neither party requested

that the Committee reconvene the hearing.

Respondent’s Submissions:

[23] According to the assessor, the restaurant rental analysis was based upon

rents that were negotiated in 2004, 2005 and 2006. Within this timeframe, two

restaurant leases were negotiated in Lawson Heights Mall and one restaurant

lease was negotiated in the subject mall. These three leased areas ranged in

approximate size from 1,100 to 3,800 square feet. Ms. Huisman noted that the

largest leased area did not have the lowest rental rate. The respondent

submitted that this fact supports the assessor’s conclusion that restaurant rental

rates were not impacted by size.

[24] The respondent referenced Cadillac Fairview Corp., noted above, and the

Saskatchewan Assessment Management Agency’s (SAMA) “Market Value

Evidence” Order dated November 1, 2007 as support for the position that market

data negotiated prior to January 1, 2004 and after December 31, 2006 cannot be

used to determine the assessed value of non-regulated properties.

Increasing the assessment:

[25] For the reasons that follow, the Committee finds that the Board did err in

its decision to increase the subject property’s assessed value from $56,607,700

to $56,873,900.

[26] The grounds of appeal to the Board were specific in identifying the agent’s

concern that firstly, the capitalization rate was too low and secondly, that the net

operating income was incorrect. In his submission to the Board relating to his

allegation of error in the calculation of the capitalization rate, the agent requested

APPEAL 2010-0068 []

the removal of one of the three sales that had been used by the assessor to

calculate the capitalization rate. Had the Board accepted the agent’s

submissions on this issue, the revised capitalization rate would have increased

from 8.26% to 8.91%. This change would have resulted in the assessed value

decreasing from $56,607,700 to $52,478,100.

[27] The Committee accepts the agent’s position that the following guidance

from 101027381 Saskatchewan Ltd., noted above, supports a finding that

neither the Board nor the Committee have jurisdiction to consider an issue that

was not raised in the notice of appeal to it:

“[5]... That is, the Court in East Landing Plaza accepted the primary importance of the notice of appeal in determining the scope of assessment appeals. There was no appeal by the municipality in that case claiming that the assessment should be varied in its favor. The decision in East Landing Plaza concluded that the only matter raised by the parties had been that the assessment was too high and this was the only issue which could be dealt with. Here, similarly, the tax payer has sought a reduction and the City at no point gave any indication by filing an appeal or a cross-appeal that it was seeking an increase. [6] Accordingly, as in East Landing Plaza the only issue that could be before the Board was that raised in the notice of appeal before it.”

[28] As was the case in both East Landing Plaza Ltd., noted above, and in the

above decision, the subject notice of appeal to the Board did not take issue with

the assessment being too low and the City failed to file an appeal grounded on

its belief that the assessed value should be increased. The Committee

concludes that the Board did err in its decision to increase the assessed value

for the subject as this was an issue that had not been identified in the notice of

appeal to it.

Restaurant rental rate:

[29] The Committee heard the agent’s position that the size analysis included

at Appendix A of Exhibit A4 supported the application of a lower rental rate for

APPEAL 2010-0068 []

restaurants that were larger than 5,900 square feet in area. The agent

referenced Smitty’s (Lawson) and the subject (Double Deuce) rentals as his

support within this analysis for this position.

[30] The Committee does not accept this position based on the fact that the

two critical rental rates included in this analysis transpired either prior to the

assessor’s market analysis time frame (1998) or after the deadline for market

analysis as provided through the following from the SAMA Board order:

“1 Market data that occurred or arose after December 31,

2006, shall not be used to determine the assessed value of non-regulated properties for the years 2009 to 2012.

2 Notwithstanding section 1, where property owners' fiscal

years do not follow the calendar year but end on or before May 31, 2007, the income and expense information respecting those properties may be used to determine the assessed value of non-regulated properties for the years 2009 to 2012.”

As indicated by the Court in its decision for Cadillac Fairview Corp., noted above,

market information outside of the analysis timeframe used by the assessor

cannot be used to determine assessed values nor can this type of information be

referenced to “shore up” assessed values, as suggested by the agent:

“[77] There is no evidence from which one can conclude that the circumstance consisting of the MAF established in Regina through two sales of enclosed malls and the circumstance consisting of the sale price of Midtown Plaza itself after the cut off date are "circumstances" that meet the criteria outlined above. For this reason, the MAF arrived at by the assessor in the present case cannot be shored up by these "circumstances".” (Emphasis added)

[31] The Committee references page 14 of Exhibit R1 where the assessor

advises there were three restaurant rents that had been negotiated between

January 1, 2004 and December 31, 2006 as support for the development of the

median restaurant rental rate of $23 per square foot. The assessor noted that the

analysis of the three available rents did not support the application of a size

adjustment.

APPEAL 2010-0068 []

[32] As it relates to the agent’s submissions that the assessor should have

considered the Retail CRU rental analysis to determine a size adjustment for

restaurant rental rates, for the following reasons the Committee does not accept

this position. As found by the Court in its decision for Cadillac Fairview Corp.,

noted above, the assessor is provided the discretion to determine comparability

of properties:

“[36] The word comparable is not defined in the manual, nor are the words compare, comparative, comparison or similar. We must take them to have their ordinary dictionary meaning, subject, of course, to the context in which they are used, that is, the surrounding words and the manual as a whole. The immediate context is that the purpose of the comparison to buildings that have been sold is to measure market influences on the value of any building, and to use the comparison in the determination of a MAF. Subject to this context, which will be considered in detail with the appellants' grounds of appeal, the use of words of such broad and general meaning confer upon the assessor a broad discretion in respect of determining whether buildings are comparable within the meaning of the manual. [37] This sort of discretion was described in Laing at paras. [28] and [29] as the personal judgment of the valuator at work, and as being the backbone of local tax administration. Unless founded on material error of fact or law or of assessment principles and practice as laid down in the manual, it should not be interfered with.” (Emphasis added)

[33] As noted earlier, the assessor analyzed the three available restaurant rents

negotiated within the appropriate time frame. The median restaurant rental rate of

$23 per square foot was developed through this analysis. The assessor submitted

that the analysis of the three available rents did not support the application of a

size adjustment as the largest leased area did not have the lowest rental rate. As

no contradictory evidence was provided, the Committee accepts that this fact

supports the assessor’s conclusion that restaurant rental rates were not

impacted by size.

[34] In the Committee’s view and in the absence of any evidence that would

support a finding that there is an error in fact, law or methodology applied by the

assessor, the Committee concludes that the Board was correct in denying the

APPEAL 2010-0068 []

agent’s request for application of a size adjustment for the 9,556 square foot

lease area occupied by Double Deuce Bar and Grill.

[35] Based on this finding, consideration of the positions submitted by the

parties relating to the findings of the Court in its decision for Sasco

Developments Inc., noted above, as it relates to the appropriateness of using the

actual rental rate for the subject restaurant, is not required. Accordingly, the

Committee will provide no further comment on this issue.

[36] The Committee finds that the Board did err in increasing the assessed

value as the notice of appeal to it was founded on the belief that correction of the

alleged errors would result in a lower assessed value.

DECISION:

This appeal is granted. For 2010, the assessed value shall be $56,607,700.

The filing fee shall be returned.

APPEAL 2010-0068 []

DATED AT REGINA, Saskatchewan this

5th day of December, 2012. SASKATCHEWAN MUNICIPAL BOARD Assessment Appeals Committee Per: _________________________ David Wilkin, Chairman

Per: _________________________ Cathy Moberly, Director

I concur:

_________________________

Jenny Lai Yu, Member

_________________________ Randy Markewich, Member Some of the information in this document has been severed from the document pursuant to The Freedom of Information and Protection of Privacy Act and/or The Cities Act: Reference Severed pursuant to A The Cities Act, section 202 B The Freedom of Information and Protection of Privacy Act paragraph 24(1)(d) C The Freedom of Information and Protection of Privacy Act paragraph 24(1)(e) D The Freedom of Information and Protection of Privacy Act paragraph 24(1)(i) E The Freedom of Information and Protection of Privacy Act paragraph 24(1)(k)

saskatchewan municipal board assessment appeals committee€¦ · by the board on april 30, 2010...

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