Decision and Order
IN THE MATTER OF AN APPEAL PURSUANT TO S. 50 OF THE ASSESSMENT ACT
CONCERNING:
AND
Assessor Of Area #09 - Vancouver Sea To Sky Region
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Appeal No.: |
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Refer to as: |
Gaska v. Area 09 (2010 PAABBC 20091790) |
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Date of Decision: |
January 11, 2010 |
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Property: |
1825 Comox Street, City of Vancouver |
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Heard: |
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Submissions: |
From the Appellant received November 27 and December 7, 2009 |
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From the Respondent received December 3, 2009 |
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Board Panel: |
Rob Fraser, Panel Chair |
INTRODUCTION
[1] The property under appeal is known as the Shato Inn. It is a multi-suite building that began operation as the Shato Inn in 1974 and was incorporated as the Shato Inn Apartment Hotel Ltd. in 1979. It is located in the English Bay area of Vancouver.
[2] Currently, the Assessor has classified 10% of the land and improvements as residential to reflect the owner’s use and 90% as class 6 – business and other.
[3] Mr. Gaska, the builder and owner, appeals for the eleventh year and complains that, yet again, the Assessor has incorrectly classified the property and has incorrectly valued the property in terms of both market and equitable value. Once again, the Assessor asks the Board to confirm the current assessment.
Documents Considered:
[4] Appeal Management Results (“AMC”) letter, dated August 17, 2009;
[5] Appeal Management Results (“AMC”) letter, dated November 5, 2009;
[6] Evidence, argument on equity and classification, floor plans, rental schedule, and details of comparable properties submitted by Mr. Gaska, received on November 27, 2009;
[7] An appraisal report authored by Maarten Ene, an appraiser working for the Assessor of Area #09, received on December 3, 2009;
[8] One loose page titled “Written Submission: From BC Assessment” , no author identified, received December 3, 2009;
[9] Mr. Gaska’s response, received on December 7, 2009.
Preliminary Issue
[10] In his December 6, 2009 submission, Mr. Gaska complains that the Assessor’s submission was delivered after the deadline for production. He says he found it at his front door late on December 3, 2009.
[11] The appeal manager set out the dates for the production of submissions for an oral hearing during the first AMC, setting staggered submissions with the Assessor’s submission due on November 26, 2009. Subsequently, in the November 5, 2009 AMC, the appeal manager altered the format to a written submission hearing and amended the dates for submissions, changing the due date for the Assessor’s submission to December 4, 2009.
[12] I suspect Mr. Gaska has confused the first set of dates with the amended dates. Since Mr. Gaska received the Assessor’s submission on December 3, 2009, I find that the Assessor met the deadline set by the Board, and Mr. Gaska is incorrect when he alleges late delivery.
[13] Mr. Gaska raises a minor secondary preliminary issue, which is the correct size of the improvements saying that the City of Vancouver records a larger size than that calculated by himself and the Assessor. This is an issue for Mr. Gaska to pursue with the City and is beyond the Board’s jurisdiction.
Issues
[14] The issues in this appeal are first set out in the August 17, 2009 AMC results letter, where the appeal manager says:
There are three issues in the appeal:
i) equity based on a price per square foot of buildable area—the Appellant says that the comparables are assessed less than the subject, although BC Assessment says that the comparables are assessed as hotels;
ii) equity of the land – the Appellant says that equitable land value is $198 psf
iii) classification of units not being occupied should be residential. BC assessment says that the entire building is advertised by the Appellant as a hotel and the Appellant has no intention to use the property for long term tenants.
[15] As well, the appeal manager states that the parties agree that the assessed value is the actual value.
[16] In the first AMC, Mr. Gaska was represented by an agent, and in the second he appeared on his own. In the second AMC, he said he raised the same issues as in his previous (2008) appeal (Mike Gaska dba Shato Inn v. Area 09 (2008 PAABBC 20081472)). There is no statement of retraction of any of the issues identified in the first AMC, or a retraction of the agreement on actual value. In the 2008 decision, the issues are described as classification and market value based on the highest and best use. That decision notes these are the same issues the Board has considered in earlier appeals of the property for the years 2004 through 2007.
[17] Based on this information, I find that it is open to me to reach decisions on the actual value of the property, the equitable value of the property, and the correct classification.
Submissions
[18] In the one page submission of December 3, 2009, the Assessor asks the Board to confirm the decision of the 2009 Property Assessment Review Panel. The Assessor includes the land and improvement values identified by class, but refers to them as “Class 01 Residential” and identifies the class 6 improvements as land. Although this is wrong and confusing, Mr. Ene fortunately includes the correct assessment on Page 6 of his report, which I will accept as the basis for the Assessor’s confirmation request.
[19] In the paragraph following, the Assessor confuses the Appellant with the Respondent when stating that the information produced relates to the 2010 assessment.
[20] At the end of the submission the Assessor’s says, and I quote word for word:
The Subject property is a fully furnished hotel and there has been no evidence furnished with regards to any room set aside for non residential use, other than the space occupied by owners for personal use for the year preceding the 2009 assessment.
[21] I parse this statement to mean:
[22] At best, the second portion of this statement is very poorly crafted and the result of negligent proof reading or the Assessor is saying the use of the rooms is contrary to the use ascribed to them in the assessment. I am left in the position of trying to divine what the Assessor means, and again I fortunately find that there is sufficient information in Mr. Ene’s report to convince me that the Assessor is actually saying that the only portion of the property that is residential is the area occupied by the owners and the balance is set aside for non residential use.
[23] The only portions of this submission that make sense are the Assessor’s request for confirmation of the assessment (relying on Mr. Ene’s report), the Assessor’s contention that the property is a hotel, and the Assessor’s claim that the information in the Appellant’s (corrected from Respondent’s) submission is better directed to the 2010 than the 2009 assessment.
[24] The occasional typographical error is expected and easily corrected and forgiven but this goes beyond minor mistakes. Overall, I find the Assessor’s submission of December 3, 2009 unhelpful and poorly crafted.
Evidence of Actual Value:
[25] I have reviewed Mr. Gaska’s submission and I find nothing relevant to the actual value of the property. The only possible exception is his reference to the negative influences from neighbouring properties, but he provides no indication of the quantum of diminishment, if any. Mr. Ene, on page 19 of his report, makes reference to this and indicates the Assessor has considered this as a negative in valuing the land. Mr. Gaska’s submission does not provide me with reason to question the accuracy of the assessment, and in any case he, through his agent, agreed that the assessed value was the market value.
[26] The only evidence of the market value of the property is Mr. Ene’s report. He has produced a comprehensive appraisal report relying on the three traditional approaches to value, and concludes a value of $2,870,000 that is within 2% of the assessed value. He gives no weight to the cost approach, which I find is reasonable as it is so difficult to accurately measure the various forms of depreciation.
[27] Mr. Ene’s income and market analyses appear reasonable, and they bracket the assessed value that the parties agree is the market value. I have no reason to doubt the accuracy of his analyses, and accept them as supporting the agreement that the assessment is at actual value.
Evidence of Equitable Value:
[28] Mr. Ene’s report is silent on this issue, lacking evidence or argument that the assessed value is equitable.
[29] The Assessor’s submission of December 3, 2009 does not address the issue of equity, making no reference to this issue although raised in the AMCs and in Mr. Gaska’s submission.
[30] Mr. Gaska compares his assessment with the assessments of six properties. Three are self described as hotels, two are apartments and the third, a high-rise, may or may not operate as a hotel. It is not possible to tell from Mr. Gaska’s submission.
[31] Mr. Gaska provides the assessments of each, the total size of the improvement, the size of the rooms, the number of rooms, and an amount of ‘advance tax”. He also includes a statement for the Shato Inn, saying “assessed value $1,100 per room” and appears to use this as some sort of comparison with the other properties.
[32] Mr. Gaska provides no indication how the “assessed value per room” is useful in comparing one property with another. First of all, I cannot determine where the amount of $1,100 comes from. Possibly it relates to the amount of his property tax, since if I double his “advance tax” amount and divide by the number of rooms, I get $1,100. This may be his unit of comparison.
[33] Mr. Gaska provides a calculation for each of the other properties consistent with my speculation. However, he does not offer any reason how these amounts demonstrate an inequity, as he provides no explanation. Neither does he provide any alternate calculation of an equitable value.
[34] I presume he expects me to examine the array of values and arrive at the conclusion that his property is inequitably assessed. Certainly the value he calculates for his property is significantly higher than what he calculates for the other properties. However, I do not know if this measures equity in assessments or some other differences between the subject and the comparables. I do not know if the comparables he presents are the competitive set of similar properties or whether he has selected only those that support his view.
[35] Mr. Gaska may be correct and his property might be assessed inequitably with other similar properties in the area that form the competitive set. Without an analysis that sets out the similarities and the differences, and makes a reasonable attempt at accounting for the various factors that go into setting assessments, I cannot arbitrarily find a value that is different from the current assessment.
[36] Mr. Gaska’s evidence is simply not sufficient for me to conclude that the assessment of his property is not set consistently with others in the area. The assessments of his comparables demonstrate that there are differences, but equity does not mean equivalency. The test of equity is consistency in assessments, and Mr. Gaska provides nothing that is persuasive.
Classification evidence:
[37] The Assessor says the property, with the exception of the owners’ area, ought to be classified as class 6 – business and other because this area has the physical attributes of a hotel, has the amenities found in hotels, and has management consistent with the operation of a hotel or motel.
[38] As far as I can discern from Mr. Gaska’s submission, he demonstrates that few of his rooms are ever rented, and some are not rentable. He includes floor plans and an occupancy schedule.
[39] The occupancy records are not for the period relevant to this appeal, and the Assessor is correct in stating that they are applicable to the 2010 assessment and not for 2009.
[40] Mr. Gaska makes the point that his property changed from the Shato Inn in 1974 to the Shato Inn Apartment Hotel Ltd. in 1979. I find nothing turns on this distinction, since it is the characteristics and the use of the property that are probative of the correct classification and not the appellation applied by the owner.
[41] The only evidence presented by the Assessor that the property is a hotel and not something else is inferential and found in Mr. Ene’s report. He includes photographic evidence showing the property is signed as a hotel offering daily rates, has rooms that look like hotel rooms, and has a lobby with room keys. As well, Mr. Ene notes that Mr. Gaska has erected panels to conceal kitchens in some of the suites. Mr. Ene also included in appendix 5 excerpts from an accommodation guide and the results of an internet search, where the Shato Inn Hotel is listed.
Decision
[42] Considering this is the eleventh year Mr. Gaska has appealed this property, I would expect both parties to have better focused their evidence on the issues. In the initial AMC, the parties agreed on the actual value, and never distanced themselves from this agreement, yet the Assessor’s only direct evidence relates to the market value of the property.
[43] Classification and equity were identified early on as issues and never removed. I am disappointed that the Assessor does nothing other than make a cursory reference to classification and offers no evidence that the assessment is equitable.
[44] Mr. Gaska, in spite of having more experience before the Board than most other lay appellants and most of the staff of BC Assessment, continues to produce evidence that simply does not support his views on classification or equitable value. I take some comfort in his statement that he has ceased attempting to operate the property as a hotel, but I remain concerned that he might not have structured his affairs so as to attract residential classification for the total property.
[45] Actual value was not an issue but Mr. Ene produced an appraisal report that fully supports the 2009 assessed value. I accept that the current assessment is at actual value.
[46] The Assessor produced no evidence that the assessment is equitable, and I could not find anything in Mr. Gaska’s evidence that challenged in any meaningful way the fairness of the current assessment. His comparisons with other properties were just that, comparisons without conclusions and I would be committing an error in law to arbitrarily amend the assessment without an analysis of this data that leads to evidence of an inequity. Without any evidence to the contrary, I have no reason to question the fairness of the current assessment. Mr. Gaska’s comparisons with other properties do not provide a sufficient foundation to question and alter the assessment.
[47] Mr. Gaska contends that his property ought to be classified as residential, but offers no evidence that leads me to that conclusion. Based on the evidence, the property is presented to the public as a hotel limited to daily occupancy. It is advertised as a hotel, and it has features commonly found in hotels, such as a lobby. I have no evidence that any of the rooms are rented for long term residential use, or even that they are set aside for long term rental. Therefore, as a type of property, it is a hotel. Further, the use of the property suggests it is a hotel and is not used or set aside for long term residential use.
[48] The Prescribed Classes of Property Regulation (B.C. Reg 438/81) section 1.(a)(i) specifically excludes hotels or motels from residential classification. Since I have found the property is a hotel, both as a type of property and by the use of the property, it cannot be classified as residential. Therefore, other than the area recognized as occupied by the owners, the property is a hotel and is correctly classified as 06 – business and other.
[49] Based on Mr. Ene’s analysis, the highest and best use of this property is for long term residential rental. Mr. Gaska appears to have structured his business differently, and has made a choice to only offer daily rentals. His records indicate this is not a financially successful strategy, at least for the period of October 2008 to October 2009, but this is not sufficient to attract residential classification.
[50] In summary, the assessed value is at actual value, neither party produced evidence that questions the fairness of the assessment, and the property is a hotel with an owner’s residence and is correctly classified in the 2009 assessment.
ORDER
[51] The Board confirms the 2009 assessment roll as follows:
Roll No. 09-39-200-027-607-109-85-0000:
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Land: |
Class 1 - Residential |
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Class 6 - Business and Other |
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1,382,300 |
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Improvements: |
$ |
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Class 6 - Business and Other |
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1,165,700 |
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Total Assessed Value: |
$ |