Decision and Order
IN THE MATTER OF AN APPEAL PURSUANT TO S. 50 OF THE ASSESSMENT ACT
CONCERNING:
Margaret Robertson
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Assessor Of Area #01 - Capital
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Appeal No.: |
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Refer to as: |
Robertson et. al. v. Area 01 (2010 PAABBC 20091880) |
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Date of Decision: |
January 20, 2010 |
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Property: |
4815 Townsend Drive, District of Saanich (SD 63) |
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Heard: |
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Submissions: |
From the Appellant received November 17 & November 30, 2009 |
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From the Respondent received October 2 & November 27, 2009 |
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Board Panel: |
Shiela Toth, Panel Chair |
INTRODUCTION
[1] The property under appeal is a 1.67 acre lot improved with a single family residence (the Property). The residence was constructed in 1954 and is located 1/3 the distance from the street front. As well, there is a partially completed single family dwelling located approximately 2/3 from the street front.
[2] For the 2009 roll, the actual value of the property is the lower of the market value as of July 1, 2007 or July 1, 2008, in its condition as of October 31, 2008. In this case, the parties agree that the 2008 assessment value is the lower value.
[3] The Appellant, Mr. Robertson, states an assessed value of $568,000 is reasonable, considering extent of the completion of construction of the new home as of October 31, 2008 and the active demolition permit on the existing home.
[4] The Assessor requests the confirmation of the $813,000 assessment, based on an estimate of market value at $858,993.
Issue
[5] The issue is the market value for the Property, as of the assessment date of July 1, 2008, in its condition as of October 31, 2008. In this case the parties disagree on the market value and the impact of the demolition permit, and the contribution to the actual value of the partially completed home.
Facts
[6] Both parties use a direct sales comparison to analyse sales data and estimate a market value, assuming no home under the construction and no demolition permit. Then both parties estimate the impact of each on the estimated market value.
[7] The existing home was originally constructed in 1954 and has had several additions to get it to the present size of 1,611 square feet. As a result, the home lay out is not optimum and there is a mix of old and new mechanical systems. The home is subject to an active demolition permit dependent on the issuance of an occupancy permit for the new home. As of October 31, 2008, the new home had the foundation, subfloor, framing sheathing, and roofing completed.
Submissions and Analysis
Market Value of the Property assuming no new home and no demolition permit:
[8] Mr. Robertson submits 8 comparable sales ranging from $660,000 to $1,000,000 that sold between June 2007 and August 2008. He adjusts them for market fluctuations over time by analyzing data from the Victoria Real Estate Board. He adjusts two of the sales for a superior location but offers no market evidence for the value of the adjustment. Mr. Robertson adjusts the lots for size, shape and amenities, again without any market support. He also adjusts the residences for size on the basis of $90 per square foot of main floor, $50 per square foot of finished basement and $70 per square foot for second storey areas. He adjusts for quality and condition and outbuildings. He does not include any market backup for these adjustments.
[9] After applying the adjustments, the range of market value is $575,000 to $710,000. Mr. Robertson estimates a value of $635,000 for the Property from this range without any reasons why this value was chosen from the range. Mr. Robertson then calculates the average assessment to sales ratio (ASR) of the eight comparable properties (89.5%). He adjusts the market value by this ASR and concludes an assessment value of $568,000 (0.895 of $635,000) for the Property.
[10] ASR data is typically used to illustrate the consistency or inconsistency of assessments when equity is an issue. Equity as it applies to assessment is the consistency of assessment values of similar properties within a specific neighbourhood. The parties have not submitted arguments that the Property is inequitably assessed. Because there is no evidence that the average ASR of the selected comparable properties have any relationship to the assessment consistency of properties similar to the Property within the neighbourhood surrounding the Property, I do not accept the reasoning that the estimated market value should be adjusted by the average ASR.
[11] Ms. Denise Pollard, an appraiser for the Assessor, submits an appraisal using the direct sales comparison approach. She analyses 3 comparable properties that sold between June 2007 and August 2008, with a sale price range of $645,000 to $800,000. She adjusts the sale prices for time by using a MLS residential sales graph.
[12] Ms. Pollard also adjusts for differences in site size, site improvements and the size, age and quality of the homes on the comparable properties but does not include any support. After adjustments, the range of market value is $707,300 to $717,940. From this range, Ms. Pollard prefers the comparable sale at 4818 Townsend with the adjusted value of $717,940.
[13] The parties use 2 common comparables; 4865 Townsend and 4818 Townsend. Both are similar in lot size and location. They also sold within 2 months of each other, that is 29 June and 31 August, 2007. Both parties submitted good market data for time adjustments. For these reasons, I find 4865 Townsend and 4818 Townsend represent the best comparable properties.
[14] Both parties made diverse, unsupported adjustments for differences in improvements on the two comparables. The original sale price of $808,000 for 4865 Townsend was adjusted to $707,300 by the Assessor and $726,270 by the Appellant. The original sale price of $705,000 for 4818 Townsend was adjusted to $717,940 by the Assessor and $575,690 by the Appellant.
[15] The homes on both comparables were initially built around the same time as the one on the Property. However, the 4818 Townsend home is considerably larger (2,250 square feet compared to the Property’s 1,611 square feet) and has been substantially renovated. The parties are not in agreement as to how much to adjust for the size and superior renovations to 4818 Townsend.
[16] The home on 4865 Townsend is closer in size (1,478 square feet) and the parties show relative consistency in adjustments for the improvements. For these reasons, I find 4865 Townsend is the best indication of market value. Giving some weight to the lower range illustrated by 4818 Townsend and the preferred range of value represented by 4865 Townsend, I find the lower value of the range or $707,300 is a reasonable conclusion.
[17] I find $707,300 is a reasonable estimate of market value of the Property assuming no demolition permit in place and no new home under construction.
Value of the partially completed new home:
[18] Mr. Robertson submits the new home was less than 15% complete as of October 31, 2008. He states the building permit was for $375,000. Therefore, the value in place is 15% of that or $56,000. He also projects a 50% discount associated with the risk of a buyer taking over the project and values the incomplete structure at a maximum of $28,000.
[19] Mr. McMahon states the new home was 35% complete as of October 31, 2008. He bases this on a percentage cost breakdown table that the Assessor has used for calculating building completions on residential properties in BC since 1974. Mr. McMahon submits the building permit for the new home was for $405,000 and includes a copy of the document.
[20] Mr. McMahon uses 2008 custom built home comparable sales data to establish a market value of $191.59 per square foot for a 2008 custom home built in 2008. Using this value, he calculates a completed value for the new home at $643,359 and a current value at $225,176 or 35% complete.
[21] There is no evidence submitted to support a 15% completion. The 35% is based on an established table. I find the percentage cost breakdown table is the best evidence to establish the stage of completion for the new home because it is a consistent measure used for over 35 years. I accept that the building was 35% complete as of October 31, 2008.
[22] As for a value for the building, Mr. McMahon established the $191.59 square foot value based on a residual building value from a single improved property sale and two vacant property sales. He states the building permit value is a conservative minimal value based on a $125 square foot value and this value does not consider difference qualities of construction.
[23] I find no evidence to quantify or grade the quality of the new construction on the property. I find the building permit is specific to the property and something that a potential, prudent buyer would investigate. I find the value indicated by the building permit is the best evidence of the value for the partially completed home. I accept $405,000 as the building permit value because of the submitted documentation. Therefore, the value of the new construction becomes 35% of $405,000 or $141,750.
[24] Mr. McMahon submits a market analysis to establish that the market place does perceive a contributory value for partially completed structures. In contrast, Mr. Robertson submits a 50% discount associated with the risk of purchasing a partially completed structure. I find no evidence to support a discount on the value due to increased risk.
Impact of the demolition permit:
[25] Mr. Robertson submits the value of the existing home is impacted by the anticipated cost for its demolition. He estimates the cost for the demotion, based on previous project costs, at $30,000.
[26] Mr. McMahon submits a cost of $11,390 plus the cost of disconnecting the hydro based on a verbal quote from a contractor. Mr. McMahon also suggests an alternate use of the existing home may exist based on conversations with municipal office employees. He states, “any deviation from the demolition order would be subject to a new application for an alternate use of the building”.
[27] It is reasonable to assume that a demolition permit impacts market value. However, this impact on value is not readily apparent in market data. I find the cost of the actual demolition is a reasonable indication of the impact.
[28] The demolition estimate of $11,390 is dependent on the amount of concrete found and does not included disconnecting fees. The estimate of $30,000 is based on actual costs and Mr. Robertson’s experience. I find $30,000 is the most reasonable estimate of the impact of the demolition permit.
Conclusion
[29] The market value of the Property is the value unimpeded by the demolition permit and without the new construction plus the value of the new construction less the impact of the demolition permit. I have found the best indication of this unimpeded value is $707,300 or the lower value indicated by the 4865 Townsend. I have found the value of the new construction is 35% of the building permit or $141,750. I have accepted $30,000 as a reasonable estimate for the impact of the demolition permit.
[30] Therefore, I find a reasonable estimate of the market value for the Property in its condition as of October 31, 2008 is $819,050 ($707,300 + $141,750 - $30,000).
[31] Based on the estimated market value of $819,050, I find the current assessment at $813,000 is reasonable.
ORDER
[32] The Board confirms the decision of the 2009 Property Assessment Review Panel as follows:
Roll No. 01-63-309-49-3029-000:
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Land: |
$ |
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Improvements: |
$ |
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Total Assessed Value: |
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$ |