Decision and Order
IN THE MATTER OF AN APPEAL PURSUANT TO S. 50 OF THE ASSESSMENT ACT
CONCERNING:
AND
Assessor Of Area #01 - Capital
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Appeal No.: |
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Refer to as: |
McHattie v. Area 01 (2010 PAABBC 20091798) |
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Date of Decision: |
January 27, 2010 |
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Property: |
1590 Verling Avenue, District of Central Saanich |
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Heard: |
By Written Submissions, closing January 12, 2010 |
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Submissions: |
From the Appellant received October 23, November 20, December 23, |
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2009 and January 6, 2010 |
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From the Respondent received November 6, November 24, December 23, 2009 and January 12, 2010 |
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Board Panel: |
Shiela Toth, Panel Chair |
INTRODUCTION AND PRELIMINARY ISSUES
[1] This is an appeal from a decision of the 2009 Property Assessment Review Panel concerning a 3.71 acre vacant lot in the District of Central Saanich (the Property). The Property is assessed at $410,000.
[2] The Appellant, Olive McHattie, represented by Mr. Patrick Trelawny, contends the assessment is too high because it does not reflect the negative impact of the surrounding development and the lack of services to the Property. He suggests a market value of $370,000.
[3] The Respondent, the Assessor, submits the current assessment for the Property is reasonable based on a market value estimate of $415,000.
[4] The Economic Incentive and Stabilization Statutes Amendment Act 2008 (EISSAA) provides that for the 2009 roll the actual value of a property is the lower of its market value as of July 1, 2007 or July 1, 2008 in its condition as of October 31, 2008. Both parties submit July 1, 2007 is the appropriate valuation date. In other words, both parties agree that the Property’s actual value was lower as of July 1, 2007 than it was as of July 1, 2008.
[5] The Board determined the actual value of the Property as of July 1, 2007 to be $458,000 in an appeal from the 2008 assessment roll. The condition and use of the Property did not change between October 31, 2007 and October 31, 2008. I questioned whether the Board was res judicata with respect to a determination of actual value as of July 1, 2007 for the 2009 assessment roll and sought submissions from the parties.
Is the Board Res Judicata?
[6] The Assessor submits that the EISSAA overrides the common law rule that the principle of res judicata does not apply to successive property assessment appeals. The Appellant argues that it does not.
[7] The element of res judicata principally in issue here is whether the 2008 assessment appeal decided the same issue or question as this appeal. The EISSAA provides that actual value of a property for the 2009 roll is the lesser of its 2007 value and its 2008 value. The 2008 value is the market value of the property as of July 1, 2008 and the 2007 value is the market value of the property as of July 1, 2007. In the case of either valuation date, the actual value of the property is to be determined as if on the valuation date the property was in the physical condition it was in on October 31, 2008 and its permitted use as of October 31, 2008.
[8] In an appeal from the 2008 roll, the Assessment Act requires the Board to determine the actual value of a property as of July 1, 2007 with its condition and use as of October 31, 2007. I find that the determinations of actual value as of July 1, 2007 for the purposes of determining a 2008 or a 2009 assessment are not the same questions as one requires the determination assuming the condition and use of the property as of October 31, 2007, and the other assumes the condition and use of the property as of October 31, 2008.
[9] In this case, the parties agree that there was no change in the condition and use of the Property between October 31, 2007 and October 31, 2008. Further, neither party provides evidence of actual value as of July 1, 2008 and agree that the market value of the Property was lower on July 1, 2007 than it was on July 1, 2008. The Assessor argues that the operation of the EISSAA on the facts of this case in effect deems the 2009 value to be the same question that the Board already answered. Whether as a matter of evidence or agreement there is any change in a property’s condition or use as between the two dates, or whether as a matter of evidence or agreement the Board finds July 1, 2007 to be the appropriate valuation date, does not make the initial question or issue to be determined by the legislation the same. In the result, as a matter of evidence, the answers may be the same or they may not, but the questions are different.
[10] The Assessor argues that the intent of the EISSAA was to provide stability in assessments between the 2008 and 2009 assessment rolls. This may be so, but if the intent of the EISSAA was to take away the right of appeal from the 2009 assessment in the event of a previously determined 2008 appeal, in my view the legislation should say so expressly. The EISSAA does not amend or rescind the sections of the Assessment Act that give rise to a right of appeal. The assessment ultimately determines a tax obligation in a new year. The right to appeal an assessment that ultimately determines a separate tax obligation in a successive year should not be revoked by implication, but only with express language.
[11] As a final point, if the Assessor thought the Board’s determination of value as of July 1, 2007 in the 2008 appeal would be determinative of a 2009 appeal, one has to wonder why the Assessor did not assess the Property on the 2009 roll for $458,000. The Assessor assessed the Property for $498,000. The Review Panel lowered the assessment to $410,000. The Assessor now presents evidence to support a determination of market value as of July 1, 2007 of $415,000. This evidence is different from that presented in the 2008 appeal. In the absence of an express legislative provision deeming the Board’s determination of actual value as of July 1, 2007 in the 2008 appeal to be actual value as of July 1, 2007 for the purpose of the EISSAA, it seems unfair to the taxpayer that the Board must come to the same determination when presented with different evidence.
[12] I find that the Board is not res judicata with respect to the determination of the Property’s actual value as of July 1, 2007 assuming its condition and use as of October 31, 2008 for the purpose of the EISSAA and determining the appropriate assessed value of the Property for the 2009 roll.
Second Preliminary Issue: Admission of Rebuttal documents
[13] The Assessor objects to the Appellant’s rebuttal documents on the basis that the Affidavit and the Exhibits within it are new evidence. I find the objection has no basis and that the Affidavit from Helen Christian and supporting documents are responsive to the Assessor’s evidence.
Issue
[14] The issue is whether the assessed value reflects the actual value of the Property. 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. Both parties provide an estimate of market value for the Property as of July 1, 2007.
Facts
[15] The Property is a steeply sloping, rectangular lot situated in a largely rural area. It is heavily treed and surrounded mostly by single family acreage properties. The Property has no access road, no sewer or septic system, no water, and no electrical service. There is a right of way in favour of BC Hydro and hydro transmission lines running across the Property. There is a gravel extraction plant and municipal works yard adjacent to the northeast portion of the Property. Current zoning for the Property permits the development of a single family residential acreage and both parties accept this as the highest and best use for the Property.
EVIDENCE AND Submissions
Appellant
[16] Mr. Trelawny submits an appraisal report by Mr. Doersam, a certified residential appraiser with Baker and Osland Appraisals. Mr. Doersam adjusts serviced, comparable property sales to the Property, estimates a serviced market value per acre for the Property, then makes allowances for the cost of servicing the Property.
[17] Mr. Doersam considers 6 comparable sales that sold between June and November 2007. The properties are all vacant and range from 1.64 acres to 9.22 acres. All have road access, hydro and water, some have septic services. A summary of the comparable sales and the adjustments made by Mr. Doersam follow.
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Address |
Date of Sale & Time Adj. |
Sale Price |
Size (acres) |
Adjustments |
Adjusted Sale Price |
Adjusted Sale Price / acre |
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2270 Ridgedown |
June 2007 |
$465,000 |
2.0 |
Location/ Topography: - $116,250 |
$348,750 |
$174,375 |
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720 Tatlow Road |
June 2007 |
$805,000 |
9.22 |
Location/ Topography: - $80,500 |
$724,500 |
$78,579 |
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Lot B Benvenuto |
June 2007 |
$380,000 |
1.64 |
Location/ Topography - $114,000 |
$266,000 |
$162,195 |
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5140 Interurban
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Nov.2007 - $5,000 |
$749,000 |
6.98 |
Location/ Topography - $72,500 Development: - $24,000 |
$647,500 |
$92,765 |
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273 Prospect Lake |
Aug2007 |
$686,000 |
8.08 |
Development: -$5,000 |
$681,000 |
$84,282 |
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3530 Robb Place |
Sep2007 |
$350,000 |
3.70 |
Location/ Topography: $52,500 |
$402,500 |
$108,784 |
[18] The Appellant provides quotes for the cost of services. They include a quote of $90,977 for an access road, a quote of $38,850 for a 600 foot well and pump, a quote of $95,470 for access to hydro power, and a quote of $36,155 for the cost of a septic system.
[19] Mr. Doersam concludes a value for the Property if serviced is $130,000 per acre. His final estimate of a market value at $262,000 for the Property is as follows:
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3.71 acres @ $130,000 |
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482,300 |
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Less Road Access |
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$ |
90,977 |
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Less Hydro Service |
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95,470 |
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Less Water (650 foot well, not including a pump) |
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$ |
22,575 |
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Less Septic System (less engineering fee $25,000) |
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11,155 |
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Market Value (rounded) |
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262,000 |
[20] Mr. Trelawny argues the market value from this appraisal is relevant, however, he states if a value of $170,000 per acre for a serviced lot is accepted as per the 2008 Property Assessment Appeal Board decision and the 2009 Property Assessment Review Panel conclusions, the value for the Property would be $630,000, less a cost of servicing at $261,542, resulting in a market value (rounded) of $370,000. The value for services includes an additional cost to Mr. Doersam’s estimates for a pump for the water system at $15,500 and the engineering cost for the septic system at $25,000.
Respondent
[21] The Assessor submits an appraisal report by Mr. Mats Pearson, an appraiser with BCA. Mr. Pearson estimates the value of the Property using the direct comparison approach. Mr. Pearson bases his adjustment for time and size of the comparable properties on an analysis of market activity during the period. Mr. Pearson uses a Marshall and Swift costing manual estimate plus allowances for rock extraction and removal to estimate a cost of $60,000 to gain access to the Property. He uses an adjustment of $35,000 for water based on estimates for extending the existing municipal system or for drilling a 300 foot well. He estimates the cost of extending the hydro line to the Property at $25,000 based on a BC Hydro estimate. He states insufficient market data exists to allow for an adjustment for topography, location and view. He makes a subjective conclusion for these factors. Mr. Pearson does not specifically address the impact of the BC Hydro Line on the Property.
[22] The comparable sales and the adjustments used by Mr. Pearson are summarized below.
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Address |
Date of Sale & Time Adj. |
Sale Price |
Size (acres) & Adj. |
Location/ Topography |
Servicing Adj. |
Adjusted Sale Price |
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Lot A Benvenuto |
Jan 2006 $71,280 Motivation -$44,000 |
$440,000 |
2.44 $63,500 |
Somewhat superior, somewhat inferior |
-$120,000 |
$411,000 |
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Lot B Benvenuto |
June 2007 $3,800
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$380,000 |
1.65 $123,600 |
Somewhat superior, somewhat inferior |
-$120,000 |
$387,000 |
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2270 Ridgetown |
May 2007 $4,929 GST Adj. $27,900 |
$465,000 |
2.07 $82,000 |
Superior |
-$120,000 |
$460,000 |
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1617 McHattie |
Dec 2006 $31,525 Improved -$10,000 |
$495,000 |
2.01 $85,000 |
Somewhat Superior |
-$140,000 |
$461,000 |
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7391 Tomlinson |
Dec 2007 -$16,425 Improved -$60,500 |
$717,500 |
4.54 -$33,200 |
Superior |
-$120,000 |
$487,000 |
[23] Mr. Pearson concludes that Lot A and Lot B Benvenuto are neutral when the positive and negative attributes are weighed, and the other three properties are superior. He concludes a value of $415,000 for the Property.
Analysis
[24] Both parties have submitted an appraisal report using the direct sales comparison method to estimate the value of the Property. This method compares similar property sales to the subject and adjusts the sale prices for differences to the subject. The parties disagree on the adjustments necessary for the negative impacts to the Property, including the adjacent BC Hydro line, and the impact to the view and the noise from the municipal work yard and associated gravel pit.
[25] Mr. Doersam, on behalf of the Appellant, estimates a percentage adjustment for the negative impacts without supplying any analysis or explanation of how he decided upon the various percentages. Mr. Pearson does not adjust for the impact but makes a subjective judgment regarding the negative impacts in his conclusion. I find both methods equally unsatisfactory because neither appraiser has supplied market data to substantiate their subjective opinions.
[26] Reviewing the comparable properties proposed by Mr. Doersam, I note that the 720 Tatlow Road and 273 Prospect properties are 9.22 acres and 8.08 acres in size respectively. Mr. Doersam does not make any adjustment for the economics of scale in his adjustments. This appraisal principle acknowledges there is not a straight line relationship between larger size and unit value, rather the larger the size the lower the unit value. 3530 Robb Place is not located near the Property and has a large location adjustment. 5140 Interurban is also a larger acreage (6.98 acres) and is developed with an older home. I prefer the remaining two properties, 2270 Ridgedown and Lot B Benvenuto, because they are vacant serviced lots, closer in size and location to the Property, and having sold within a month of the valuation date.
[27] Reviewing the comparable properties proposed by Mr. Pearson, Lot A Benvenuto has a large adjustment due to a motivated sale. 1617 McHattie is a dated sale that sold in December 2006 and 7391 Tomlinson is an improved property with a residence. I prefer the remaining two properties, 2270 Ridgedown and Lot B Benvenuto, for the same reasons as above.
[28] Using Mr. Doersam’s adjustments, these two properties indicate a range of value for the Property as a serviced lot from $162,195 to $174,375. Mr. Pearson does not make any adjustments for the impact of the hydro line, the works plant or the topography within his adjustments for the Property as a serviced lot. Therefore, I find his estimate of market value is high.
[29] Mr. Trelawny submits market value for the Property is $170,000 per acre, a value accepted by a 2008 PAAB decision and the 2009 PARP decision.
[30] The indicated value per acre range of $162,195 to $174,375 is supported by market data. This per acre range results in a value range of $601,743 to $646,931 for the Property as a serviced lot, from which the cost of servicing must be deducted.
Road Access
[31] The Appellant estimates the cost of road access to be the combination of an average cost per foot for road construction ($30,000) plus an additional allowance ($30,000) for clearing and rock extraction. The Assessor includes a quote that is not specific to the Property that considers the requirements from central Saanich and BC Hydro. I prefer the specific quote of $90,977 provided by the Appellant rather than the estimate provided by Mr. Pearson.
Hydro electric power
[32] The Assessor relies on a cost estimate range of $20,000 - $30,000 from BC Hydro. This estimate is not specific to the Property and does not consider the topography, possible rock removal, and other factors. I prefer the quote submitted by the Appellant ($95,470) because it is specific to the Property.
Water
[33] The Appellant suggests an adjustment of $38,000 based on an approximate cost to drill a 650 foot well. Mr. Pearson suggests $35,000 based either on a drilled well or an extension of the existing municipal water system. I prefer the $35,000 estimate because it weighs the alternatives specific to the Property.
Sewer system
[34] The estimated market value range for the Property as a serviced lot is based upon the sales of two comparable properties that did not have an existing sewer system. Therefore, it is not necessary to adjust for the cost of installing a sewer system.
Conclusion
[35] The market value range for the Property becomes:
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Market Value (as serviced): |
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601,743 |
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$ |
646,931 |
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Less Road Access |
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$ |
<90,977> |
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Less Hydro |
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$ |
<95,470> |
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Less Water Service |
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$ |
<35,000> |
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Market Value |
$ |
380, 296 |
- |
$ |
425,484 |
[36] I prefer the lower end of the indicated range because it represents a comparable property that is similar to the Property in topography, and it has a negative impact due to a restrictive covenant. For this reason, I find the market value of the Property as of July 1, 2007 in its condition and with its permitted use as of October 31, 2008, is $380,000.
Equity
[37] Mr. Trelawny contends the Property is inequitably assessed at a value of $410,000. In order for a property to be considered inequitable, it must be assessed higher in relation to its actual value than similar properties within the same neighborhood.
[38] In this case, similar properties are not readily apparent because the Property is somewhat unique due to its lack of services and the negative impacts from the BC Hydro right of way and the public works plant. The assessed value for the Property has been discounted for these factors. I have no evidence that the resulting assessment is not equitable.
ORDER
[39] The Board orders the Assessor to amend the 2009 assessment roll as follows:
Roll No. 01-63-302-34-0202-040:
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FROM |
TO |
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Land: |
Class 1 - Residential |
$ |
$ |
380,000 |
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Total Assessed Value: |
$ |
$ |
380,000 |