Decision and Order
IN THE MATTER OF AN APPEAL PURSUANT TO S. 50 OF THE ASSESSMENT ACT
CONCERNING:
AND
Assessor Of Area #08 - Vancouver Sea To Sky Region
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Appeal Nos.: |
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Refer to as: |
0753393 BC Ltd v. Area 08 (2009 PAABBC 20091980) |
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Date of Decision: |
December 17, 2009 |
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Properties: |
08-48-338-500-0001845.000, 37778 Galbraith Avenue, District of Squamish 08-48-338-500-0001876.000, 39540 Galbraith Road, District of Squamish |
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Heard: |
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Submissions: |
From the Appellant received October 16 and November 6, 2009 |
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From the Respondent received October 16 and November 6, 2009 |
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Board Panel: |
Rob Fraser, Panel Chair |
INTRODUCTION
[1] These appeals involve two properties with common ownership located in close proximity in the community of Squamish. They are under appeal for both the 2008 and the 2009 assessment years.
[2] The properties are located on a peninsula bordered by the Mamquam Blind Channel and the Cattermole Slough. They are in an area designated as ‘Downtown’ in the existing draft Official Community Plan (“OCP”).
[3] I have set out the relevant facts separately for each property. Although sharing some things in common, there are significant differences that impact my decision.
[4] The sole issue for each property in this appeal is whether the assessed value is equitable. Neither party produced an appraisal report or any other evidence of actual or market value.
[5] There are two years under appeal, but Bill 45 - Economic Incentive and Stabilization Statutes Amendment Act, 2008 dictates that the actual value at issue for both years is the value as of July 1, 2007.
[6] The Board’s jurisdiction to determine equity arises from section 57 of the Assessment Act:
57 (1) In an appeal under this Part, the board
(a) may reopen the whole question of the property's assessment to ensure accuracy and that assessments are at actual value applied in a consistent manner in the municipality, treaty lands of the taxing treaty first nation or other rural area,
[7] Section 57 also directs the Board to deal with the land and improvements together. The parties do not take issue with the improvement values, which in each case account for less than 1% of the current total assessed value. Therefore, the decision that follows is limited to determining only the equitable value of each parcel of land.
[8] The issue for me to decide is whether the current assessments are “applied in a consistent manner”, or whether there is sufficient evidence to vary one or both assessments.
[9] Submissions Considered:
Preliminary Issue
[10] The Assessor says the actual value of each property is incorrectly assessed and asks the Board to increase the actual value of 37778 Galbraith and reduce the actual value of 39540 Galbraith, arguing to decrease one without increasing the other would perpetuate a gross inequity. The Assessor states:
The information provided provides compelling evidence to recommend that both an increase for 37778 Galbraith as well as a reduction for 39540 Galbraith is required. To consider the reduction for 39540 in isolation and ignore the required increase for 37778 Galbraith would be to further perpetuate a gross inequity. Both properties are part of one appeal, one case, and subject to one decision. The Assessor has not asked for an increase for this appeal as the overall reconciled value yields a result that does not conclude with one. To recognize only one aspect of an inequity, which warrants a reduction, while ignoring another within the same appeal, which in this case happens to require an increase appears contrary to law. The assessor recognizes this issue and submits that both should be corrected. In amending the value for both properties equity between the subjects and the neighbouring properties will be restored and insure that Actual Value is served.
[11] For 37778 Galbraith, the Assessor suggests increasing the land value from $1,930,000 to $4,255,000, and for 39540 Galbraith reducing the land from $5,412,000 to $2,363,000. Finally the Assessor proposes a global value of $6,618,000 for land and $66,660 for the improvements (unchanged from the current assessments) as entirely equitable to other properties in the ‘Downtown’ planning area.
[12] The Appellant objects to the Assessor’s proposal to treat the properties as one for assessment purposes. The Appellant says this was not raised during the appeal management process, the Assessment Act directs the Assessor to assess each property individually, and that Orr Development (1980) Corp. v. Area 09 (2008 PAABBC 20072391) supports assessing parcels independent of common ownership.
[13] The Board’s administration grouped these two properties under one appeal number for each of the years under appeal. This is an administrative efficiency and does not mean that the Board, for assessment or adjudicative purposes, believes these properties are in any way linked other than they share a common ownership and are located in the same community. The Board’s administration could as easily have assigned an individual appeal number to each property so including both properties in one appeal number in no way infers, implies or dictates that there is any assessment linkage or commonality between them.
[14] Physically the properties are separate, although in close proximity. There is no common boundary, since each abuts different sides of a municipal road. The actual use is different. The zoning is not identical. They have individual legal descriptions. The Assessor has entered them on the roll individually. Following Orr, these are separate parcels for assessment purposes.
[15] I reject the contention that the Assessor is not asking for an increase for 37778 Galbraith. It appears to me that the Assessor is asking the Board to overlook two assessment errors. The Assessor is saying that one parcel is over assessed and one is under assessed, and the remedy is to correct both achieving a result that is on average equitable. This approach is fundamentally wrong. Each parcel is entitled to an independent assessment, and in each case the Appellant is entitled to the lower of the actual or equitable value (Assessor of Area #09 – Vancouver v. Bramalea Limited, Stated Case 374, (S.C.B.C., B.C.C.A.)).
[16] I find that the Assessor did not serve adequate notice on the Board or the Appellant that the Assessor would be seeking an increase in the assessment of 37778 Galbraith. The purpose of the appeal management process is to identify the issues, narrow the issues and if not resolved, to set out a process for efficient adjudication. Fundamental to this process is the concept of natural justice, where a party is entitled to know the case to be met. In this case, the Appellant was not aware that the Assessor was seeking an increase in the actual value until the production of evidence in chief. This is far too late in the process, and is a breach of administrative fairness. Therefore, I reject the Assessor’s request and will deal only with the question of whether the current assessment is equitable. The Assessor had the opportunity, both before and during the appeal management process, to identify what they believe is an error in the assessment and raise this as an issue. The Assessor did not, and raising it well after the completion of the appeal management process is simply too late and unfair.
[17] In the alternative, if notice is not required, which I do not agree is the case, the Assessor provides no support for the view that averaging assessments of independent parcels is correct in appraisal theory, assessment practice or in law. This may correct, to the Assessor’s satisfaction, the Assessor’s two errors but does not reflect the fundamental principle of determining actual value, which is to reflect how the market views each individual property, free from value to owner considerations.
[18] The Assessor did not produce appraisal evidence to suggest the requested increase in value in any way reflects the actual value of the property. The first step in any equity analysis is to determine the actual value and then, determine the equitable value. Here, the parties entered the adjudicative process without challenging actual value, which I interpret to be an agreement that the assessed value is the actual value.
[19] Therefore, in the reasons that follow, I will examine the equitable value of each property independent of the other.
EVIDENCE AND ANALYSIS:
39540 Galbraith (roll #08-48-338-500-0001876.000):
[20] Assessment as of July 1, 2007:
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Land |
05 – light industry |
$ |
5,412,000 |
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Improvements |
05 – light industry |
$ |
51,300 |
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Total assessed value |
$ |
5,463,300 |
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[21] The property is composed of 19 lots legally described as Lot 12, lock 46A, DL 486 of Plan 4676, which the Assessor has assessed as one parcel. Neither party raised the subdivision as a valuation issue.
[22] The land is 5.024 acres, irregular shape, with the length fronting on the Mamquam Blind Channel of the Squamish River. The current zoning is I-5 (Log sort). The Assessor records the actual use as “logging operations”.
[23] In the 1998 OCP, the land is designated as Industrial. Later planning initiatives identify these lands as the Oceanfront lands (the Nexen lands) that along with Interfor lands are identified for redevelopment to mixed use residential and commercial.
[24] The land is designated ‘Downtown’ in the 2007 draft OCP. In the draft OCP, Downtown land uses include residential, commercial, light industrial, institutional, limited recreational, and intensive recreational. Specifically excluded uses are agricultural, heavy industrial, resource extraction, and transportation and utilities. The draft OCP reiterates the desire for mixed use commercial and residential development.
[25] The draft OCP says that this area is a functional extension of the downtown but requires the development and adoption of a sub-area plan.
[26] Mr. Parkes compares the assessed value of the subject, at 5.024 acres, at $1,077,229 per acre with those of five properties in the same area, with the same or similar zoning, and in an area designated “Downtown” in the draft OCP. They exhibit a range of assessed values from $454,061 to $597,973 per acre. They vary in size from 1.005 acres to 7.52 acres. Two are not on the water.
[27] Mr. Fitzpatrick notes that two of these comparables did not exist in 2008, as the roll numbers were created due to leases from BCR to taxable occupiers.
[28] After considering positive and negative adjustments, Mr. Parkes concludes an equitable per acre value of $460,000 (or $10.56 per square foot). This rate lies between the assessed value per acre for the 7.72 parcel and the next largest parcel at 3.94 acres.
[29] Mr. Fitzpatrick also relies on assessed land value of five properties from the same area. They range in size from 3.94 acres to 63.59 acres (table on page 58 of Assessor’s submission) or 1.48 acres to 63.59 acres (page 59), and have the same or similar zoning. Four appear to front on the water, with two fronting on Cattermole Slough. The assessed values range from $4.12 to $10.80 per square foot (table on page 58) or $4.12 to $13.73 per square foot (page 59).
[30] After considering adjustments for differences, Mr. Fitzpatrick says that all the comparables are assessed appropriately, and a land rate of $10.80 ($470,448) is an equitable rate.
[31] I have reviewed both sets of equity comparables, and find that the two best indicators, based on size and location are the two that are common to both Mr. Parkes and Mr. Fitzpatrick. They bracket the subject in size, one has a very similar location while the other is likely somewhat inferior, the zoning is similar, and the potential for redevelopment appears similar. The other comparables are not as similar. For example, Mr. Fitzpatrick’s index #3 is almost 13 times larger than the subject, and Mr. Parkes index #4 is comprised of 12 individual lots grouped together for the purposes of this equity exercise.
[32] I note that in his rebuttal, Mr. Parkes does not take issue with Mr. Fitzpatrick’s conclusion, other than noting both conclusions are close. Mr. Parkes gives most weight to the parcel of 3.94 acres, which is smaller but immediately adjacent to the subject. Mr. Fitzpatrick gives more weight to the parcel of 7.52 acres located on Cattermole Slough, which he says is an inferior location for his two indices located there. The equitable value lies somewhere between the two opinions, and I give equal weight to each, finding that a mid-point of value, or $465,000 per acre reconciles their differing opinions and produces a reasonable value when compared to the equity comparable.
37778 Galbraith (roll #08-48-338-500-0001845.000):
[33] Assessment as of July 1, 2007:
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Land |
05-light industry |
$ |
1,544,000 |
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Land |
08-recreational/non-profit |
$ |
386,000 |
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Improvements |
05-light industry |
$ |
15,300 |
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Total assessed value |
$ |
1,945,300 |
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[34] The Assessor records the actual use as “miscellaneous (forestry and allied industries)”.
[35] This site is 1.97 acres with an irregular shape located on the eastern branch (Mamquam Blind Channel) of the Squamish River. The land is split zoned between I-5 and I-3, and serviced with hydro, water, telephone and gas. The zoning includes general industrial and log sorting. At the relevant dates, the Appellant used the southern portion as a log sort, with a marina operation to the north.
[36] The improvements consist of a marina clubhouse with parking, and a storage warehouse. I note that Mr. Fitzpatrick was not aware that the clubhouse was located on the subject.
[37] The property is situated in an area designated in 1998 as “Downtown District” and identified as “Downtown” in the Draft of the Land Use Schedule B of the District of Squamish Official Community Plan (the Draft OCP) dated July 24, 2007. As of the relevant dates, the OCP remains in draft form.
[38] In the Draft OCP, Downtown land uses include residential, commercial, light industrial, institutional, limited recreational, and intensive recreational. Specifically excluded uses are agricultural, heavy industrial, resource extraction, and transportation and utilities.
[39] In 1998, the Squamish Official Community Plan identified Mamquam Blind Channel area as a Development Permit Area. The Squamish 2000 Plan (updated 2003) indentified the property’s location as precinct 3 – the Channel. In the Draft OCP, the Mamquam Blind Channel is grouped with the downtown core.
[40] The Draft OCP identifies the subject’s area as the Development Permit Area No. 4, based on the Mamquam Blind Sub-Area Plan, adopted in 1993. Generally, the objectives for this area are to provide direction for the gradual change from industrial use to more urban uses.
[41] I think it useful to set out the current assessment in terms of units of value, and contrast this with the values sought by each party. The current land assessment is $979,695 per acre or approximately $22.50 per square foot. Mr. Parkes seeks a land value of $550,000 per acre or $12.63 per square foot. Mr. Fitzpatrick’s values are based on 86,003 square feet, which is slightly larger than the 1.97 acres reported by both parties. However, the difference although a little confusing, results in his desire for a land value of approximately $2,155,350 per acre or $49.48 per square foot.
[42] The starting point in the analysis of this property is the current assessed land value. As I noted previously, neither the Appellant nor the Assessor lead evidence of a higher (or lower) actual value, so my starting presumption is that the assessed value is at actual value. I have no market evidence suggesting otherwise. Bramalea stands for the proposition that a taxpayer is entitled to the lower of the actual or the equitable value. Since the only value at issue is the equitable value, changing the assessed value above the actual value is contrary to Bramalea.
[43] In his analysis, Mr. Parkes relies on exactly the same equity comparables as he used for the previous property. Unflatteringly, Mr. Fitzpatrick characterizes them as of little value and irrelevant.
[44] Mr. Fitzpatrick relies on the land assessments of 12 properties, all located in the ‘Downtown’ area. Two are zoned I-3, eight are zoned I-1 that permits automobile commercial use, and two are zoned CD37 permitting mixed use residential/retail. In size, they vary from 0.32 acres to 1.65 acres, with eight less than 0.6 acres and ten less than 1.0 acres. In the Draft OCP, they are designated “Downtown Plan – Residential Mixed Use”, the same as the subject.
[44] The values per square foot vary from $48.55 to $63.45, compared with the subject assessed at $22.49.
[46] Mr. Fitzpatrick contends the subject is under assessed, and includes a highest and best use analysis to support his opinion. He finds the current use is not the highest and best use. Instead the highest and best use is as vacant, waiting for redevelopment to multifamily with commercial on the main level. He reaches this conclusion by examining current developments in the area, the direction found in the draft OCP, and the intentions of the owner.
[47] After examining all of the relevant factors, he concludes that there is a greater than 50% chance that the property will be redeveloped. Following Petro-Canada v. Assessor of Area 12 Stated Case 321(B.C.C.A.), he says it is not speculative for the Assessor to value the property at the potential higher and best use.
[48] He says the subject is best compared, for equity purposes, to properties in the downtown core that share the same highest and best use, and rejects comparing them with the industrial properties relied on by Mr. Parkes. These comparables, according to Mr. Parkes, are much superior to the subject in terms of immediate redevelopment potential, have locational superiority and the majority have different and superior zoning. He contends they are radically different and not remotely comparable to the subject.
[49] Mr. Fitzpatrick believes the other properties are properly assessed, and the subject is, therefore, under assessed.
[50] I accept Mr. Fitzpatrick’s highest and best use conclusion as generally persuasive and I accept that his equity comparables are superior to those advanced by Mr. Parkes. The subject shares many common features with Mr. Fitzpatrick’s comparables, and it is unlike the industrial comparables produced by Mr. Parkes in location and development potential. However, I do not accept that the subject shares the identical potential for redevelopment, either in terms of location or of development horizon, as the comparables. The subject is just more like Mr. Fitzpatrick’s equity comparables than it is like those presented by Mr. Parkes.
[51] It is clear to me from the evidence of both Mr. Parkes and Mr. Fitzpatrick that the location of the subject is critical to its correct valuation. It is located at the extreme limit of the area of active redevelopment, although I find it more appropriate to compare it to Mr. Fitzpatrick’s comparables than Mr. Parkes’. The subject’s immediate neighbour is an industrial log sort, which, as best I can tell from the evidence, is not a feature of any of Mr. Fitzpatrick’s comparables. On the other hand, the subject shares similarities in development potential to his comparables, based on its location within the development area and sub-area in the Draft OCP. Further, Mr. Fitzpatrick is able to demonstrate that the Draft OCP is not an impediment to redevelopment, and it is not necessary to wait for its final passage before rezoning.
[52] Although located at the fringe of the downtown development area and abutting an area of industrial uses that will in time morph into uses similar to the downtown area, I cannot find any evidence from either party for locational adjustments. From a development perspective, I prefer Mr. Parkes’ comments that Mr. Fitzpatrick’s comparables have superior locations.
[53] Neither party provides evidence of the subject’s redevelopment horizon. Mr. Fitzpatrick’s comparables appear to be at or close to redevelopment, but his own evidence shows that the owner as of September 2009 has not achieved a rezoning of the property. Neither party produced evidence for an adjustment for the time required to realize the subject’s redevelopment potential.
[54] I find that without a thorough and convincing analysis of both the subject’s location and development potential as of the relevant dates, I am not persuaded that either party is so correct that I will amend the current assessment. The unknowns are simply too large to adjust with certainty the value down to an industrial rate. Although the highest and best use of the subject is more like that of Mr. Fitzpatrick’s equity comparables I do not believe the land rate is the same or similar as found for sites with actualized or readily achievable redevelopment potential. The current land rate is above that for the industrial properties, which is expected as it appears to be closer to its redevelopment horizon, and it is below the rate for properties in superior locations. Based on these factors I cannot agree that the property is under assessed, nor can I accept that it is over assessed. Therefore, I find there is insufficient evidence to adjust the current assessment for reasons of equity.
DECISION:
[55] The Board is charged with finding the actual and equitable values of the land and improvements together. In this case the improvements are of negligible value and are not in dispute. Because in each case the land makes up over 99% of the current assessed value, I find it proper to limit the equity analysis to the land alone, which in the facts of this appeal does not offend the legislation. As well, neither party questioned the value the Assessor attributed to the improvements.
[56] The Assessor floated the argument that because the Board included the two properties under one appeal number and because they are part of one decision, it is proper to average or blend their assessments into a global value and rely on that as the test of equity. For the reasons explained earlier, I find this is wrong as there is no support for this contention. Each property it entitled to its own unique actual value based on market indicators and, therefore, is entitled to be assessed equitably in relation to other similar properties. Since neither party led value evidence, I accept that the current assessed values are at actual value, as I have no other evidence of actual or market value.
[57] For 39540 Galbraith, I find the evidence produced by the parties, reconciled as best possible based on their submissions, produces a per acre rate of $465,000. This equates to a land value of 5.024 acres x $465,000 = $2,336,160 or $2,336,000 rounded. This is the equitable value of the land, based on the assessments of other similar properties in the area with similar use, location, and development potential. Each party produced an opinion of equitable value, but I found neither more persuasive than the other leaving me unable to select one as superior. I, therefore, selected the mid point as reasonable, giving equal weight to each opinion. In any case, the mid point in the two opinions is less than 2% different from either, and is not significant.
[58] I considered all of the evidence for the equitable value for 37778 Galbraith, and I was not convinced by either party that the current assessment is not correct. The Assessor said the actual value was less than the equitable value, but without leading any market evidence to suggest the assessed value was not at actual value. Bramalea stands for the proposition that a taxpayer is entitled to the actual value or the equitable value, which ever is lower. Therefore, it strikes me as incongruous for the Assessor to agree tacitly or by implication that the actual value is about half of the equitable value and then suggest that the Board increase the actual value to what the Assessor proposes is the equitable value. If the actual value is the assessed value, and the parties agree it is, this approach to equity is simply wrong.
[59] I considered the evidence and the arguments from each party, and was struck by their entirely opposite approaches to the equity evidence, with each adopting an analysis that ignores the merits of the other. They have placed themselves on opposite sides of an unbridgeable evidentiary chasm.
[60] The views held by Mr. Parkes and Mr. Fitzpatrick in this case are irreconcilable without a more thorough analysis of the development horizon and of how differences in location impact on value. Each firmly grasped their view of what is the appropriate evidence of equity, and each effectively challenged the evidence of the other, leaving me without evidence sufficiently compelling to accept one opinion over the other. In fact, I found both opinions lacking in the analysis of factors that based on their comments, are certain to impact market value. Without more than the evidence they have offered and particularly, without evidence of market value of the property, they have not persuaded me to view the current assessment as either too low or too high. Based on their submissions, there is more reason to believe that the current assessed value is likely within a range of equitable values than either of the values they presented as equitable.
ORDER
[61] The Board orders the Assessor to amend the assessment of 39540 Galbraith (roll #08-48-338-500-0001876.000) for the assessment years of 2008 and 2009 as follows:
Roll No. 08-48-338-500-0001876.000:
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FROM |
TO |
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Land: |
Class 5 - Light Industry |
$ |
$ |
2,336,000 |
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Improvements: |
Class 5 - Light Industry |
$ |
51,300 |
$ |
51,300 |
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Total Assessed Value: |
$ |
$ |
2,387,300 |
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[62] The Board confirms the decisions of the 2008 and 2009 Property Assessment Review Panels for 37778 Galbraith (roll #08-48-338-500-0001845.000) as follows:
Roll No. 08-48-338-500-0001845.000:
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Land: |
$ |
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Class 8 - Recreational/Non Profit |
$ |
386,000 |
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Improvements: |
$ |
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Total Assessed Value: |
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$ |
1,945,300 |