Decision and Order
IN THE MATTER OF AN APPEAL PURSUANT TO S. 50 OF THE ASSESSMENT ACT
CONCERNING:
AND
Assessor Of Area #14 - Surrey/White Rock
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Appeal No.: |
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Refer to as: |
Chang v. Area 14, 2009 PAABBC 20092222) |
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Date of Decision: |
December 11, 2009 |
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Property: |
12674 88 Avenue, City of Surrey |
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Heard: |
Written submissions closing December 9, 2009 |
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Appearances: |
Da-Wei Chang, for the Appellant |
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Marie Highfield for the Assessor |
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Board Panel: |
Simmi K. Sandhu, Panel Chair |
INTRODUCTION
[1] The Appellant, Da-Wei Chang, appeals the 2009 assessment of his residential property at 12674 88 Avenue, in the City of Surrey (the “Property”), and says the decision of the Property Assessment Review Panel of $597,800 ($597,000 for land and $800 for improvements) is too high and inequitable with neighbouring properties.
THE PROPERTY
[2] The Property is a 1.441 acre property with a small residence built in 1947 that is in poor condition. The Property is zoned residential (RA) but is designated in the City’s Official Community Plan (OCP) as industrial (IL). The majority of the surrounding and adjacent properties are zoned industrial.
[3] The Property is assessed pursuant to section 19(8) of the Assessment Act, which provides that, despite the requirement that assessments be at actual or market value, properties that qualify under this section must be determined taking into consideration only the actual use of the land and improvements and not taking into account any other use. Therefore, the Property is valued for the purpose of the 2009 assessment as a residential property with a single family dwelling, rather its highest and best use as redevelopment for industrial use.
PRELIMINARY ISSUE
[4] During appeal management, Mr. Chang had requested the property valuation summaries (“PVS”) of other properties from the Assessor. He was instructed to attend the Assessor’s offices to obtain this information. He did not attend on that date but on another date and then instructed the Assessor to mail the PVS’ to his residence, which the Assessor did. At the hearing, Mr. Chang said he never received the PVS’. He attended the Assessor’s offices at other times but did not advise them that he had not received the PVS’. He requested an adjournment of the hearing. The adjournment was denied as I was not satisfied that Mr. Chang followed the original instructions in obtaining the PVS’ or that he made his best efforts to obtain the PVS’ prior to the hearing, in particular during the times he attended the Assessor’s offices. However, the PVS’ were provided to him during the hearing and he was given the opportunity to provide his written submissions pertaining to the PVS’ subsequent to the hearing, which he did. The Assessor has responded to those submissions.
THE EVIDENCE
[5] The Assessor tendered an appraisal report authored by Jovanee Sangdaan, a real estate appraiser (Exhibit No. 1). Mr. Sangdaan appraised the Property with a highest and best use as improved single family residential with no higher potential. He used the direct comparison approach to value the Property as of July 1, 2007, which valuation date the Assessor says produces a value lower than a value as of July 1, 2008.
[6] In his appraisal report, Mr. Sangdaan analyzed three sales of residential properties in the city of Surrey that occurred in June or July 2007. These three sale comparables ranged in size from 1.133 acres to .800 acres. Mr. Sangdaan made adjustments for time of sale (for comparable no. 2 that occurred on July 27, 2007), size, location, and quality of improvement. He determined an adjusted sales range of $530,164 to $659,577 and concluded a value for the Property at July 1, 2007 of $597,800.
[7] Mr. Chang says that the Property does not have redevelopment potential. He reviewed his unsuccessful attempts to rezone to an industrial use as per the designation in the OCP. As for the sale comparables used by Mr. Sangdaan, he says these properties are not comparable to his as they do not have restrictions on the use of the land in order to redevelop them, while the subject’s redevelopment is restricted. He says that he purchased the Property in order to rezone for industrial use, not to continue the residential use. Also, Mr. Chang argued that he cannot redevelop the Property for residential use either because in the OCP it is designated industrial. He did not have evidence to support this but says this is his “belief”. Mr. Sangdaan contradicted this and says that he can continue his residential use under the OCP as it is currently zoned residential, and he could redevelop the Property for residential use as long as the requirements of the current zoning were met.
[8] Due to the failure to rezone, Mr. Chang says that there is no buyer for this Property which should have minimal value. He says this is supported by the fact that in 2004, BC Hydro approached him to purchase the Property but they withdrew the offer after doing further research. Despite this, Mr. Chang, in his written submissions subsequent to the hearing, provided a letter from a realtor dated October 2009 advising of a client willing to make an offer at “top dollar”. No other details of this offer is provided. Due to the contradictory evidence provided, I am not satisfied that there is no buyer for this Property or that it should have minimal value.
[9] Mr. Chang submitted that the assessed value for the subject should be approximately $100,000/acre, or $144,100, which is based on the land value assessment of 8845 King George Highway.
[10] Mr. Chang also says that the subject’s assessment is inequitable compared to the assessments of six properties that are located near to the subject. At the hearing, he also mentioned the assessment of 8632 132 Street, which was never brought up by Mr. Chang prior to the hearing or in his documents because he did not want the Assessor to know that he would be using it. I determined that it is prejudicial to bring information to the hearing that is not disclosed as required and effectively “hidden” from the other side. As such, I will not take notice of the evidence relating to 8632 132 Street.
[11] As for the assessments of the other six properties, the Assessor explained the reasons for the differences with the subject. Two of them had useable areas that were much less than the subject’s due to setbacks, creeks, and rights of way that encumbered the lots. For example, 75% of the lot on 8620 128th Street was encumbered and rendered un-useable due to BC Hydro rights of way. 12738 88 Avenue also is encumbered and has only 0.7 acres’ of useable area. 8520 132 Street is zoned partially for church use and partially for residential, with most of the residential portion encumbered by a creek. The total useable area for that property is .37 acres which makes the residential land assessment for the useable area $950,000 per acre. Mr. Chang continued to dispute this and all of the Assessor’s explanations of the PVS’. 12772 88 Avenue is used for school/university purposes. 9077 132 Street has 650 square feet in area. 8835 King George is three times larger than the subject and is encumbered by a creek, therefore, the rate per acre would be less. Mr. Sangdaan explained the law of diminishing returns would apply to a much larger parcel, namely that as the size of the lot increases, the value per size unit decreases. This is the reason that 8835 King George has a lower assessed rate per acre than the subject.
DECISION
[12] For the 2009 assessment roll, properties are to be assessed at the lower of the value as of July 1, 2007 or July 1, 2008, in their state and condition of October 31, 2008 (Economic Incentive and Stabilization Statutes Amendment Act, 2008). There was no dispute that the appropriate valuation date for the Property’s 2009 assessment is July 1, 2007.
[13] Mr. Chang submits a value per acre for the Property of approximately $100,000 or less. However, he has not provided any market evidence in support, such as sales of similar properties that have occurred around the July 1, 2007 valuation date. Rather he uses a rough estimate based on the land assessment of 8835 King George Highway. However, this property is three times larger than the subject and as such is not comparable. I accept the common appraisal principle of diminishing returns applies, where the value per unit size decreases as the size increases.
[14] On the other hand, the Assessor has produced a market analysis in the form of an appraisal. I prefer to rely upon this evidence which sets out an analysis of the sales of three comparable properties with appropriate adjustments made to the sale properties to account for any differences. Although I would have preferred to see sales of properties that are surrounded by industrial properties, such as the subject, this evidence is the best evidence of market value before me. This analysis is based on the Property’s current use, which is residential with a single family dwelling. Mr. Chang makes much of the fact that he is unable to rezone the Property for industrial use as the basis for his argument that the assessment is too high. However, the Property is not valued on the basis of redevelopment potential or on industrial use but based on its current residential use as required by section 19(8) of the Act. The sale comparables used by Mr. Sangdaan are all properties that are residential with single family dwellings with no redevelopment potential. Therefore, the argument that the assessment is too high because Mr. Chang cannot redevelop, is not a valid one. That is not how the Property is being assessed.
[15] As for whether the Property is equitably assessed, Mr. Chang relies on the assessments of six properties. However, those six properties all are quite different from the subject, both in terms of size of useable area and in terms of use. I accept the Assessor’s explanations on why the land assessments of those six properties at a rate per acre are lower than the subject’s and why those properties are not comparable or similar to the subject. Mr. Chang does not accept the Assessor’s explanations of useable areas and size restrictions, however, he provides little evidence to contradict them.
CONCLUSION
[16] As I have little evidence to contradict or challenge the Assessor’s evidence, I accept the Assessor’s conclusions of value and find that the appropriate actual value for the 2009 assessment roll for the Property is $597,800 and that it is equitably assessed.
ORDER
[17] The Board confirms the decision of the 2009 Property Assessment Review Panel as follows:
Roll No. 14-36-326-6304-01002-3:
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Land: |
$ |
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Improvements: |
$ |
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Total Assessed Value: |
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$ |