Decision and Order
IN THE MATTER OF AN APPEAL PURSUANT TO S. 50 OF THE ASSESSMENT ACT
CONCERNING:
Weigh West Marine Resort Incorporated
AND
Assessor Of Area #04 - Central Vancouver Island
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Appeal No.: |
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Refer to as: |
Weigh West Marine Resort v. Area 04 (2010 PAABBC 20091467) |
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Date of Decision: |
January 8, 2010 |
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Property: |
643 Neilson Place, District of Tofino |
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Heard: |
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Submissions: |
From the Appellant, received April 29 & August 14, 2009 |
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From the Respondent, received September 24, October 8 and November 6, 2009 |
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Board Panel: |
Sheldon Seigel, Panel Chair |
INTRODUCTION
[1] The Property consists of an improved residential lot in the township of Tofino.
[2] The lot is irregular in shape and has frontage on Neilson Road. It is .47 acres and is improved with a 2,474 sq. ft. single-family residence. The residence has an 1,876 sq.ft. suite that is used as a dormitory. This suite consists of five bedrooms, two four-piece baths, a laundry/mud room, living room, dining room, and kitchen. There is also a self-contained 598 sq. ft. suite consisting of two bedrooms, a three-piece bath, kitchen, dining area, and living room. The use is permitted under the zoning bylaw and the District of Tofino Building department advised that the dwelling was built with appropriate permits. The improvement is architect designed and construction was completed in 2008.
[3] The current assessment of land and improvements is:
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Land |
$ |
274,000 |
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Improvements |
$ |
313,000 |
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Total assessment |
$ |
587,000 |
[4] The issue is whether the Property is assessed at actual value.
Evidence and FINDINGS
[5] Mr. Le Fevre, on behalf of the Appellant, Weigh West Marine Resort provides written submissions dated April 23, 2009 (received by the Board April 29, 2009) and August 13, 2009 (received by the Board August 14, 2009). These submissions include a floor plan of the improvement, a copy of the Property Assessment Review Panel decision notice, and two pages of written submissions. In those submissions, Mr. Le Fevre says that the total assessed value should be $498,000, for the following reasons:
Previous land sales in the same development include:
Mr. Le Fevre provided no documentation supporting these sales.
Mr. Le Fevre did not provide any material in support of any of these submissions.
Mr. Le Fevre did not provide any documentation to support his choice of cost per square foot.
Mr. Le Fevre did not indicate why he deemed the cost approach the most appropriate.
[6] The Assessor provides written submissions dated September 24, 2009 consisting of an appraisal report, authored by Bill Wilson and dated July 1, 2007, and October 8, 2009, consisting of a single page indicating that qualified appraisal and equity review has been provided and asking that the Board confirm the 2009 Roll. In addition, the Assessor provides further submissions dated November 6, 2009 that consist of a rebuttal of Mr. Le Fevre’s submissions.
[7] In the appraisal report, Mr. Wilson completes a highest and best use analysis and concludes that the highest and best use of the Property is as developed, as the current development is close to the maximum permitted development on the site and, therefore, brings close to the highest possible return to the land. Mr. Le Fevre does not contest this position, and this conclusion of highest and best use appears on its face to be reasonable. The Appraisal report includes both a cost approach and direct comparison approach to valuation.
Cost Approach:
[8] Mr. Wilson estimates the land value as if vacant by use of six comparable sales for each vacant lot. Two of those comparables are on Neilson Street, the same street as the Property, and are good matches. They are each vacant land and of similar size and quality. The adjustments required to compare them to the Property are small. Sale 1 is .44 acres in area and sold in February 2008 for $225,000. Sale 2 is .46 acres in area and sold in April 2007 for $265,000. To a lesser extent, the other four comparables support the appraised value of the property and the adjusted values and market prices of comparable sales 1 and 2. Mr. Wilson uses the two sales on Neilson Place as the best indicators of value for the property and chooses a value of $245,000 for the land component of this analysis.
[9] For the improvement value of the property Mr. Wilson uses the Value BC costing system and computes a market adjusted cost of $313,000 for the dwelling, decks, porch, and covered driveway, but he makes no allowance for depreciation for this newly completed dwelling. The appraiser contacted the contractor who built the improvements. The contractor quoted costs associated with the construction as $125 p.s.f. plus profit of 15% = $143.75 p.s.f. x 2,474 sq.ft. = $355,683. This is consistent with the $125 to $150 p.s.f. that the appraiser was quoted by real estate appraisers and builders for construction in this mid-island location, plus $15 p.s.f. for the deck, $25 p.s.f. for the covered porch, and $3,000 for the driveway.
[10] Mr. Wilson’s conclusion of total value by the cost approach for the land and improvements is:
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Dwelling |
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$ |
346,360 |
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Porch |
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$ |
3,125 |
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Decks |
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$ |
3,930 |
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Driveway |
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$ |
3,000 |
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Improvement Total |
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$ |
356,415 |
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Land as if vacant: |
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$ |
245,000 |
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Total value by Cost approach: |
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$ |
601,415 |
Direct Comparison Approach:
[11] Mr. Wilson uses three sales as comparables for the Direct Comparison Approach. He has difficulty finding good comparables in the small Tofino marketplace. The adjusted comparables result in a relatively wide range of sale prices of $480,000 to $650,000. No sales were found with a recently completed dwelling. He concludes that the value should be much higher than the $515,000 indicated by Sale 1, but below the $650,000 indicated by Sale 3. He chooses a value between the two sales but puts more reliance on Sale 3 due to the fact that it had extra accommodation, as does the Property. Mr. Wilson concludes a value of $610,000.
[12] Mr. Wilson then reconciles the two approaches. He says that the cost approach is not usually used for single-family residential properties as it is considered less reliable or secondary to the Direct Comparison Approach. Of course, the Direct Comparison Approach is only as reliable as the comparable Sales are similar to the Property.
Decision
[13] Mr. Wilson values the land and improvements separately in a cost approach valuation and the land and improvements as one in a direct comparison approach valuation. The appraisal report includes Mr. Wilson’s resume. I find that Mr. Wilson is qualified to give his opinion about the value of residential real estate lots in the Tofino area.
[14] Interestingly, the two methods of valuation utilized by Mr. Wilson, each in this instance with its weaknesses, produce values within about 2% of each other. Mr. Wilson chooses a value between them for the final estimate of market value of $605,000.
[15] The Assessor says that the assessed value is 97% of the appraised value and, therefore, the assessment is within acceptable standards of deviation.
[16] I find Mr. Le Fevre’s submissions fail to provide any persuasive evidence that the value of the Property is less than the current assessments as his submissions include assumptions not supported by evidence (“market trending down”, “a fair cost per square foot”, and the cost approach being most appropriate for valuing the property).
[17] In contrast, I find Mr. Wilson’s report to be in accordance with proper methodology for appraising residential real estate, and reasonable. Mr. Wilson recognizes the weaknesses of the data available to him (difficulty finding good comparables for the Direct Comparison Approach) and bases his conclusions on sensible deductions (more reliance on comparable sale #3 due to extra accommodation). He uses costing manuals and canvasses local builders in order to establish appropriate costs. His data is for the most part supported (he does not provide source data for his builders’ cost survey). I find that the analysis of two valuation methods undertaken by Mr. Wilson supports the current assessment, particularly as the resulting values are within a very small range. I, therefore, accept the appraisal report as providing a reasonable valuation of the Property.
ORDER
[18] The Board confirms the decision of the 2009 Property Assessment Review Panel as follows:
Roll No. 04-70-580-00104.014:
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Land: |
$ |
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Improvements: |
$ |
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Total Assessed Value: |
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$ |