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 No.: |
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Refer to as: |
Gateway West Properties Ltd. v. Area 08 (2009 PAABBC 20091888) |
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Date of Decision: |
January 5, 2010 |
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Property: |
657 Marine Drive, District of West Vancouver |
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Heard: |
By Written Submissions, closing November 6, 2009 |
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Submissions: |
From the Appellant, received October 23 & October 25, 2009 |
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From the Respondent, received October 21 & November 6, 2009 |
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Board Panel: |
Bruce Maitland, Panel Chair |
INTRODUCTION
[1] The appeal is from the decision of the 2009 Property Assessment Review Panel (PARP). The property that is the subject of the appeal is an office building with a small retail component located at 657 Marine Drive in the District of West Vancouver (the Property). The Review Panel confirmed the assessed value of the land at $3,222,000 and the improvements at $114,000, for a total assessed value for the Property of $3,436,000. In an appeal from the 2008 assessment, the Board determined the value of the property as of July 1, 2007 to be $3,436,000. Mr. Mau-Seng Lee, the Appellant’s representative, contends that the assessment is too high, as the market has declined from July 1, 2007 to July 1, 2008. The Assessor submits the 2009 assessed value of $3,436,000 should be confirmed. This submission is based on two estimates of value as of July 1, 2007 and July 1, 2008 prepared by Ms. Sarita Zugazaga, an appraiser with 14 years commercial appraisal experience with B.C. Assessment, and a member of the Appraisal Institute of Canada.
ISSUE
[2] The issue is: what is the actual value of the Property as of July 1, 2007 and as of July 1, 2008, the lesser value being the actual value for the 2009 taxation year. Section 24(2) of The Economic and Stabilization Statutes Amendment Act, 2008, states:
“Despite the Assessment Act, the actual value of a property for an assessment roll for the 2009 taxation year is the lesser of:
a) the 2007 value of the property, and
b) the 2008 value of the property”
FACTS
[3] The Property is comprised of two legal lots with a total area of 24,263 square feet. They are improved with a 14,190 sq. ft. wood frame building with office and retail space constructed in 1947, and a 35 stall asphalt paved parking lot. The improvements have been extensively renovated over the years. The zoning is C-2 that permits various commercial and residential uses. The Property falls within the Clyde Avenue East of Taylor Way Official Community Plan (OCP) that allows for sites over 20,000 sq. ft., a floor space ratio (FSR) of 1.75 times site coverage with the ability to bonus up to 2.0 FSR with specific types of development including residential care homes, rental accommodation, public parkland, community use facilities and congregate care. Redevelopment in the Property’s immediate neighbourhood includes residential condominiums and care homes. The Property has a Marine Drive frontage but cannot be accessed from Marine Drive.
EVIDENCE AND SUBMISSIONS
HIGHEST AND BEST USE:
[4] Mr. Lee, in his submission, does not directly address highest and best use, but does request use of the income approach due to the absence of sales in the neighbourhood. He argues the gas station next door would have to be purchased to get the 0.25 bonus floor space ratio and then be donated as parkland, which would make redevelopment uneconomical.
[5] I note the Property is 24,263 sq. ft. in area and the zoning permits the 0.25 FSR bonus on properties with an area of 20,000 sq. ft or greater. Thus no assembly is required to get the bonus FSR as long as the use conforms to allowable uses for the bonus.
[6] For the Assessor, Ms. Zugazaga determines the highest and best use is redevelopment to a residential condominium complex or care home, without need of assembly with an adjoining property. The Property is presently improved to an FSR of 0.58 while the outright FSR under current zoning is 1.75 or over three times the present developed FSR.
[7] Ms. Zugazaga provides an income approach based on a net income of $195,396 capitalized at 7% that indicates a value by the income approach of $2,790,000. Mr. Lee in his submission accepts a value by the income approach of $2,800,000.
[8] The present assessment is $3,436,000 and Mr. Lee argues for an assessment of $3,250,000. As both of the values exceed the Property’s capitalized income value of $2,790,000, I accept Ms. Zugazaga’s determination that highest and best use of the Property is residential redevelopment without consolidation.
MARKET VALUE:
[9] Mr. Lee’s submission on market value consists of a three page letter. As he did not find any sales in the area of the Property, he bases his appeal on newspaper articles, trade journals, institutional reports and conversations with relevant personnel. Based on the slow condominium sales next door to the Property, commercial vacancies, the property next door “offered below assessed value” and the slump in the commercial market in the United States, he argues that values have fallen from July 1, 2007 to July 1, 2008. He further argues, with the absence of actual sales in the neighbourhood, the income approach should be used, as it is the fairest, non-subjective and uncontroversial approach. Mr. Lee concludes a value of $3,250,000 is reasonable.
[10] However, Ms. Zugazaga, after determining the highest and best use is redevelopment, uses the cost approach to value the Property as of July 1, 2007. To determine land value, she analyzes four sales of commercially zoned property located on Marine Drive west of the Property, three in Ambleside and one in Caulfield. These sales adjusted for time and improvement value, indicate values ranging from $138 per square foot to $415 per square foot.
[11] In addition to the four sales Ms. Zugazaga provides three collapsed offers, one on the Property and the others on two contiguous parcels to the Property. The three offers adjusted for time and improvement value indicate land values from $203 per square foot to $306 per square foot with the adjusted Property land value of $280 per square foot.
[12] Ms. Zugazaga appears to have made a mistake in her time calculation. From five resales in North and West Vancouver she determines a 3% per month average price increase from July 2004 to November 2007. The three offers were made in November 2007. She adjusts the three offers by plus 21% or 7 months based on her 3% average monthly increase. Her valuation date is July 1, 2007, however, she has adjusted the three offers to July 1, 2008. As the offers occurred four months after the valuation date of July 1, 2007, the offers should have been reduced by 4 months time 3% = 12%. The offers time adjusted to July 1, 2007 indicate values ranging from $179 per square foot to $269 per square foot with the adjusted Property offer at $246 per square foot. I do note the four comparable sales were correctly time adjusted based on the 3% per month to July 1, 2007.
[13] Recognizing offers are only indictors of value, Ms. Zugazaga places the most weight on the comparable sales. She selects Sale No. 3 with an adjusted sale price of $256 per square foot as the best indictor of value, as it sold close to the valuation date (April 2008) and has the same zoning.
24,263 square feet X $256 = $6,211,328, rounded to $6,200,000
[14] To this, Ms. Zugazaga adds the depreciated building value of $100,000 to arrive at a market or actual value as of July 1, 2007 of $6,300,000.
[15] For a market value as of July 1, 2008, Ms. Zugazaga provides two sales, both located in North Vancouver, one on Capilano Road approximately one kilometre east of the Property and one on Marine Drive 1.5 kilometres east of the Property. Both of these sales have a similar maximum density (1.75 FSR) as the Property and both are large lots (Capilano Road 20,091 square feet, Marine Drive 35,129 square feet). The buildable square foot sale price for Capilano was $96.78 and the buildable square foot price for Marine Drive was $109.67. Ms. Zugazaga considers the Capilano Road sale the best indicator of value as it is located closest to the Property and is adversely affected by traffic, as is the Property.
[16] Based on the Capilano comparable sale, Ms. Zugazaga determines the appropriate buildable rate per square foot for the Property as of July 1, 2008 to be $95.
24,263 square feet X 1.75 FSR x $95 = $4,033,723, rounded to $4,033,000
[17] To this, she adds the depreciated building value of $114,000; value of subject Property as of July 1, 2008 = $4,147,000.
ANALYSIS
[18] Mr. Lee has provided no evidence of comparable sales to indicate values have decreased from July 1, 2007 to July 1, 2008, to substantiate a value of $3,250,000. The income method valuation of approximately $2,800,000 put forward by both parties is below Mr. Lee’s $3,250,000 valuation, as well as all of the Assessor’s 2007 and 2008 valuation. Therefore, the income method valuation is not applicable because the vacant land value exceeds the capitalized net income value.
[19] I note that Ms. Zugazaga’s submissions are confusing because the 2007 and 2008 values are inconsistent with the assertion that property values are rising between July 1, 2007 and July 1, 2008. However, as the issue before me is solely whether the July 1, 2007 market value is lower than the 2008 assessment on the roll, the fact that Ms. Zugazaga’s evidence on the July 1, 2007 value is inconsistent is not relevant.
[20] The 2008 assessment is $3,436,000 and the 2009 assessment is $3,436,000. The only market evidence I have for the 2009 assessment is Ms. Zugazaga’s two comparable sales of similar zoned property in North Vancouver that indicate a market value for the Property of $4,147,000. Mr. Lee is critical of Ms. Zugazaga’s use of sales from North Vancouver instead of West Vancouver but provides no comparable sales or contradictory evidence.
[21] There is no evidence that sales of similar zoned and located property in North Vancouver would be higher on a square foot or buildable basis. Based on Ms. Zugazaga’s description of West Vancouver in her appraisal, as a very affluent community, sales of similar properties to the Property in neighbouring but less affluent North Vancouver would indicate similar if not lower prices. I note Ms. Zugazaga has not upward adjusted her two North Vancouver comparables for location. I accept her evidence that the Capilano Road sale is the best indicator of value for July 1, 2008 as it is located within one kilometre of the Property, has similar zoning and like the Property is adversely affected by traffic.
CONCLUSION
[22] As there is no evidence of a material change in the improvements from October 31, 2007 to October 31, 2008, I find the July 1, 2008 market value of the Property was greater than the 2008 assessment of $3,436,000 reflecting the market value of the Property as of July 1, 2007. Thus under the terms of The Economic and Stabilization Statutes Amendment Act, 2008, the assessment for 2009 is correct, as it is the same as the 2008 assessment of $3,436,000.
ORDER
[23] The Board confirms the decision of the 2009 Property Assessment Review Panel as follows:
Roll No. 08-45-328-11-0115-000-000:
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Land: |
$ |
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Improvements: |
$ |
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Total Assessed Value: |
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$ |