Decision and Order
IN THE MATTER OF AN APPEAL PURSUANT TO S. 50 OF THE ASSESSMENT ACT
CONCERNING:
Cheryl Larsen
AND
Assessor Of Area #15 - Fraser Valley Office
|
Appeal No.: |
||
|
|
||
|
Refer to as: |
Larsen et al. v. Area 15 (2010 PAABBC 20101236) |
|
|
|
||
|
Date of Decision: |
August 10, 2010 |
|
|
|
||
|
Property: |
2593 Eagle Mountain Drive, District of Abbotsford |
|
|
|
||
|
Heard: |
||
|
|
||
|
Submissions: |
From the Appellant received July 12, 2010 |
|
|
From the Respondent received July 12 & July 27, 2010 |
||
|
|
||
|
Board Panel: |
Rosemary Barnes, Panel Chair |
|
INTRODUCTION
[1] The appeal is from the decision of the 2010 Property Assessment Review Panel (the Review Panel) with respect to the assessment of a vacant residential lot located at 2593 Eagle Mountain Drive in the District of Abbotsford, BC (the Property). The Review Panel determined the assessed value of the land at $319,000. The Appellants, Cheryl and Soren Larsen are the owners of the Property. They are represented in this appeal by Mr. Jim Rempel, a real estate salesperson who is primarily marketing lots in the development in which the Property is located. Mr. Rempel, on behalf of the owners, contends that the assessed value of the Property is too high and that the original purchase price of $275,600 (including GST) that was negotiated in October 2007 represents its fair market value as of July 1, 2009. The Assessor argues that the assessment is in the range of actual value and should be confirmed.
ISSUE
[2] The issue is the determination of the actual value of the Property. For the 2010 Roll, the actual value of the Property is the market value as of July 1, 2009, in its condition as of October 31, 2009.
DESCRIPTION OF THE PROPERTY
[3] The Property is located on Eagle Mountain Drive, within the Eagle Mountain Development in Abbotsford, BC. Eagle Mountain is considered an exclusive high end residential development within the Abbotsford area, featuring quality homes on view lots. The Property consists of a 6,105 square foot lot with a frontage of approximately 55 feet and a depth of approximately 111 feet. It slopes moderately from the northwest to the southeast and offers an unobstructed view of the Fraser Valley and Mt. Baker. The present owners purchased the Property in October 2007 (completing the sale in January 2008) for $275,625, inclusive of GST. It is zoned N2, single family residential and is serviced with the full range of municipal services.
EVIDENCE AND ANALYSIS
[4] The evidence before me consists of a written submission from Mr. Jim Rempel dated July 6, 2010. The Assessor’s submission consists of an appraisal report by Mr. Matthew Vogelaar dated July 9, 2010, followed by a written response to Mr. Rempel’s submission on July 27, 2010.
What is the actual value of the Property as of July 1, 2009?
[5] Mr. Vogelaar is an appraiser employed by BC Assessment. In his report, he uses the direct comparison approach to value the Property. His market evidence consists of four vacant land sales (inclusive of GST) ranging in price from $288,750 to $331,800.
[6] Mr. Vogelaar’s four comparables are all located within the same overall Eagle Mountain Development. He describes Sale No. 1 at 2746 Eagle Mountain Drive as similar to the Property with a slightly smaller amount of usable land due to its topography and a good, albeit, inferior view. It sold in September 2009 for $288,750. He says that Sale No. 2, located at 2676 Mahogany Drive, approximately one-half block from the Property, is slightly larger with a similar view as compared to the subject. It sold in October 2009 for $315,000. Mr. Vogelaar’s Sale No. 3 is located at 2636 Larkspur Court, approximately one block west of the Property and is 8,472 square feet with a full unobstructed view of the valley. It sold in November 2009 for $331,800, representing the high end of the sales range. He describes Sale No. 4 at 35628 Goodbrand Drive as a larger site backing onto a strata development and having no view. It sold in November 2009 for $304,500.
[7] Mr. Vogelaar contends that the market will recognize the presence, or absence, as well as the quality of views, offered to prospective buyers of vacant lots at Eagle Mountain. He gives as an example his comparable Sale No. 4, selling for $304,500, compared to Sale No. 2, selling for $315,000; indicating a difference of $10,500 or 3.4%. Similarly, Sale No. 1 can be paired with Sale No. 2, selling within the same time frame. He says these lots are similar in size (usable area), location and shape but different with regards to quality of view. The difference in price is $26,250, or 9%, mainly attributed to quality of view. However, Mr. Vogelaar states that there are not sufficient transactions of paired sales in the area to support a view adjustment to his comparables.
[8] Mr. Vogelaar explains that he does not apply a time of sale adjustment to his four comparables because his research indicates that market movement, either positive or negative, from July 1, 2009 to November 2009 was minimal, if any.
[9] Mr. Vogelaar’s comparables range in price from $288,750 to $331,800. Putting most weight on Sale No. 2, as being most similar, with supporting evidence from the other three sales, Mr. Vogelaar concludes a value for the Property as of July 1, 2009 at $315,000.
[10] Mr. Vogelaar provides a market movement analysis since the sale date of the Property in October 2007. He explains that his analysis of resold building lots within the Abbotsford area gives an indication of market movement for the 18 month time period since the Property sold. Mr. Vogelaar analyses five “re-sold” transactions to demonstrate an average monthly increase of 0.84% with a median of 0.82%. He states that an increase of 0.8% per month indicates a total market movement of 14.4% from the initial sale date of the Property in October 2007 to the valuation date of July 1, 2009. Mr. Vogelaar applies this rate of market movement to the Property’s sale price of $275,625 to indicate a value of $315,000 (rounded) as of July 1, 2009.
[11] Mr. Rempel is critical of Mr. Vogelaar’s sales evidence. He contends that the Property has the smallest lot coverage as compared to all of Mr. Vogelaar’s comparables. The usable yard is reduced due to a rock wall ingress on the rear lot line. Further, he notes that the view corridor is straight out the back with the side views being reduced by the houses located on each side of the Property.
[12] He says that Sale No. 1 ($288,750) is a reasonable comparable, but is higher up the mountain with a better view. In Mr. Rempel’s opinion, Sale No. 2 ($315,000), with a 270 degree view, is a vastly superior lot on a quieter street and in a more desirable location, also higher up the mountain. Mr. Rempel describes Sale No. 3 ($331,800) as a desirable cul de sac lot with a great view of valley and mountains and much larger building envelope as compared to the Property.
[13] Mr. Rempel contends that Sale No. 2 and No. 3 are not good comparables and were originally priced much higher than the Property. He refers to his included spreadsheet of Phase 5 Lots and submits that those lots shown as Lot 1, presently for sale for $275,000 plus GST, and Lot 3, for $265,000 plus GST, represent the most comparable lots as compared to the Property because they are similar in size and view corridor. He points out that these two lots were available at the same price in 2009 as they are presently.
[14] I have reviewed the spreadsheet of Phase 5 lots referred to by Mr. Rempel and note that none of the lots on the list, including Lot 1 and Lot 3, have any descriptions attached to them. There are no lot sizes and no indication of where they are located in the development, or what type of view they have as compared to the Property. I find that, without further information on these two lots in particular, I cannot give much weight to his evidence that they are similar to the Property in size and view corridor. Also, these lots have not yet sold and I note that a sale price for Lot 1 of $275,000, with GST attached, is $288,750.
[15] As part of his submission, Mr. Rempel provides the developer’s spreadsheets on sales and the price lists of all the lots sold and currently for sale on Eagle Mountain. They include Phase 4A, 4B and Phase 5 of the development. He points out that there has been no change in the pricing of the lots since 2007. Mr. Rempel contends that there has been no increase in lot prices on Eagle Mountain, as well as the rest of the real estate market in Abbotsford, since the original purchase date for the Property in October 2007.
[16] I notice that four of the lots set out on Mr. Rempel’s Phase 5 spreadsheet sold in October and November of 2009 for $275,000. These sales occurred near the valuation date of July 1, 2009. Again, there are no details or description of these lots provided so I am unable to ascertain whether or not they are similar to the Property. However, inclusive of GST, they would have sold for $288,750.
[17] Mr. Rempel provides a letter from the developer of Eagle Mountain which states that he has been selling the lots since 2007 and the prices that were set then have remained steady. He submits that there has been no increase in land values on Eagle Mountain since 2007. He says, in his opinion as the expert in the area, the value of the lot in question (the Property) is $265,000 plus taxes.
[18] Mr. Neufeldt, BC Assessment’s Senior Appraiser for the Fraser Valley Office, disagrees with Mr. Rempel’s contention that the market for vacant lots is unchanged from 2007 to the valuation date. He submits that Mr. Vogelaar’s appraisal report shows that the 2010 assessed value of the Property is supported by sales evidence in the City of Abbotsford and within close proximity to the subject.
[19] Referring to the spreadsheets of sales and listing price lists provided by Mr. Rempel, Mr. Neufeldt notes that the majority of the sales occurred approximately 2 years prior to the valuation date of July 1, 2009. He submits that Mr. Rempel fails to provide a time adjustment market sales analysis to establish that the market for vacant lots is unchanged from 2007 to July 1, 2009.
[20] I concur with Mr. Neufeldt on this point. Without some specific sales evidence or a market movement analysis, such as that provided by Mr. Vogelaar, I cannot accept Mr. Rempel’s contention that the market has not changed from the fall of 2007 to mid-July 2009.
[21] Mr. Neufeldt also points out that a majority of the sales were negotiated on a “bulk sale” basis, having the same possession, completion and closing date. In his opinion, these types of transfers would be considered as “exclusive” and not representative of market value for one individual purchased lot. He says that group transfers often give builders and construction companies greater buying power and the ability to negotiate a discount price for each of the number of lots purchased. Mr. Neufeldt states that the Assessor’s appraisal report uses four individual comparable sales negotiated separately within five months of the valuation date.
[22] Mr. Neufeldt refers to Mr. Rempel’s attachments of a Phase 4B buyer’s List, Phase 4B original lot prices and Phase 5 buyer’s list and notes that there is no physical data pertaining to the size, location, shape and dimensions of each lot. He states that there is no information as to where these lots are in comparison to the Property and the type of views, if any. He says that sales data is incomplete as it does not explain if GST was payable on any or all of these lots. Further, Mr. Neufeldt says that the buyers listed for many of the lots are not consistent with registered sales documentation at the Land Title Office. Therefore, BC Assessment cannot conclude if the buyers were bona fide parties to the transfer.
[23] Mr. Neufeldt submits that Mr. Rempel has not quantified his conclusion of value based upon proper market and comparability analysis, and has provided incomplete data and sales information that does not correlate with Land Title Office, whereas, the Assessor has completed a professional appraisal report analyzing and detailing comparable sales in relation to the Property and reconciling an indication of value that supports the current 2010 assessed value.
[24] Mr. Neufeldt provides an equity argument for the Property. He explains that there are two primary statistical measures used by BC Assessment to ensure quality in determining fair and equitable assessments. These are the median assessment to sales ratio (ASR) and the coefficient of dispersion (COD). The ASR is derived by dividing the actual value of a property by its selling price and expressing the result as a percentage. The COD measures how closely a group of numbers is clustered around its median. Low CODs indicate a high degree of uniformity and equity between properties.
[25] Mr. Neufeldt states that from April 1, 2009 to September 30, 2009, 76 sales took place in the eastern jurisdiction of the City of Abbotsford, of which 9 were vacant land sales. The median ASR was 96% and 100% for vacant, with a COD of 8.7% and 5.2% respectively. He concludes that equity is consistent for not only the subject’s neighbourhood but for the entire jurisdiction. Mr. Neufeldt asks the Board to confirm the assessed value at $319,000.
[26] Mr. Rempel states that, although BC Assessment says that there is equity of prices throughout the lots on Eagle Mountain, there are occasional anomalies in their assessed values. He says that, in his opinion, almost all of the lots are over assessed in Phase 4A, Phase 4B and Phase 5. He notes that he has the remaining available lots in Phase 5 listed for sale for at lower than their 2010 assessed values. Mr. Rempel asks the Board to reduce the assessed value of the Property to $275,600.
CONCLUSION
[27] Mr. Rempel submits that the value of the Property should be $275,600 which is the sale price, including GST, as of October 2007. He contends that there has been no increase in land values in the Eagle Mountain area, as well as in the rest of Abbotsford, since 2007. However, he does not provide any market movement analysis to convince me that this is so. Mr. Rempel provides only basic evidence of list prices and sales that have occurred within the development. His 2009 sales evidence is lacking in detail and he does not describe the characteristics such as the size of the lots, orientation and view as compared to the Property. Therefore, I place little weight on this evidence.
[28] The most convincing market evidence before me is that provided by Mr. Vogelaar. He analyzes four sales, all located in close proximity to the Property. He does not apply adjustments for differences. However, he provides a narrative explaining the comparability of each to the Property. He places most weight on Sale No. 2 with a sale price of $315,000, as being the most comparable, and concludes a value for the Property as of July 1, 2009 at $315,000.
[29] Mr. Neufeldt provides an equity analysis for the Property. Based on 76 sales, 9 of which were vacant, the median ASR was 96% for all 76 sales and 100% for the 9 vacant sales. Accepting the appraised value of $315,000 and applying the ASR of 100% for the vacant sales, I find that the actual value and equitable value of the Property as of July 1, 2009 is $315,000.
ORDER
[30] The Board orders the Assessor to amend the 2010 assessment roll as follows:
Roll No. 15-34-324-61340-0479-1:
|
|
|
FROM |
TO |
||
Land: |
Class 1 - Residential |
$ |
$ |
315,000 |
|
|
Total Assessed Value: |
$ |
$ |
315,000 |