Saskatchewan Municipal Board Assessment Appeals Committee

Appeal: 0263/2005 RESPONDENT: City of Saskatoon In the matter of an appeal to the Assessment Appeals Committee, Saskatchewan Municipal Board, by: GMRI Canada Inc. c/o Garry Coleman and Jesse Faith Deloitte & Touche LLP 900 – 2103 11th Avenue

Regina, Saskatchewan S4P 3Z8 respecting the assessment of: Parcel 135950586 2501 8th Street East Roll Number: 515428990 for the year 2005; BEFORE: David Wilkin, Panel Chairman

Robert L. Edwards, Member Felix Hoehn, Member Jenny Lai Yu, Member (Land Appeal) Cynthia J. Schwindt, Secretary

APPEARED FOR THE APPELLANT: Garry Coleman, Jesse Faith APPEARED FOR THE RESPONDENT: Terry Hegel

Darcy Huisman (Improvement Appeal) Lee Fuller (Improvement Appeal) Randy McKay (Land Appeal) Glen Neuert (Land Appeal) The improvement portion of this appeal was heard in Room 9.1, Sturdy Stone Centre, 122 3rd Avenue North, in Saskatoon, Saskatchewan, on January 25, 2006. The appeal was reconvened on February 13, 2006 in Room 9.3 of the Sturdy Stone Centre in order to hear the land portion of this appeal.

APPEAL 0263/2005 [Page 2]

This appeal is against the decision of the Board of Revision (the Board) for the City of Saskatoon, pursuant to section 216 of The Cities Act (the Act). ISSUES: (i) Did the Board err in its decision, whereby the Board dismissed the appeal

against the improvement assessment by upholding the downtown land rates that were used in the Market Adjustment Factor (MAF) calculation for the year 2005?

(ii) Did the Board err in its determination that a standard parcel size did not have

to be representative of the sales used in the land analysis nor land parcel sizes in the neighbourhood?

(iii) Did the Board err in maintaining the 115% Land Size Multiplier (LSM) curve

applied in the subject land value calculation? FACTS: (1) The property is legally described as Parcel 135950586, Roll Number

515428990, civically known as 2501 8th Street East in the City of Saskatoon. (2) The subject property is a 56,240.79 square foot parcel which is improved

with a masonry frame one storey restaurant building which was constructed in two parts. The first portion was constructed in 1974 and this portion has a wall height of 16 feet and a total area of 2,160 square feet. The second portion was constructed in 1981 with wall height of 14½ feet and a total area of 8,802 square feet. It is assessed as being a very good quality building.

As the property use is a restaurant, a MAF of 0.83 has been applied to the subject.

(3) The assessment appealed to the Board was $1,383,500 land fair value $1,064,000 improvement fair value.

The retroactive base date of municipal assessments for taxation purposes in the Province of Saskatchewan is June 30, 2002. For commercial buildings, the assessed value equals 100% of the fair value.

(4) The Board accepted a recommendation from the assessor to reduce the

fair value of this property from $2,447,500 to $2,343,900 in order to apply an effective age to both parts of the building of 1980 and correct the perimeter.

(5) The appeal before the Board and the Committee is against the valuation of

both the subject’s land and buildings.

APPEAL 0263/2005 [Page 3]

(6) The Committee heard the building portion of this appeal in conjunction with a

series of appeals starting with the file for Appeal 0273/2005. Thereafter, the parties to the appeal petitioned that all evidence and argument from Appeal 0209/2005 and Appeal 0273/2005 be carried forward to this appeal.

The Committee heard the land portion of this appeal in conjunction with a series of appeals starting with the file for Appeal 0230/2005. Thereafter, the parties to the appeal petitioned that all evidence and argument from Appeal 0230/2005 be carried forward to this appeal.

The Committee concurred with the above procedure. The parties advised that the issues were the same on all the appeals.

(7) The record of the Board for Appeal 0273/2005 includes:

a) Exhibit A1 - notice of appeal dated January 6, 2005 citing three grounds of appeal;

b) Exhibit B1 - letter from the Board ruling that grounds 2 and 3 are accepted as statements not grounds of appeal;

c) Exhibit A2 - 21 page written submission from the appellant dated April 1, 2005, and the following attached Appendices A through NN;

d) Exhibit R1 - a 30 page assessment report from the City of Saskatoon including an assessment notice and property record card;

e) Exhibit R2 - a further 94 page report from the City of Saskatoon regarding land analysis;

f) Exhibit R3 - a 13 page sales verification report including Appendices E through M;

g) An order of the Board to declare a portion of the respondent’s documents confidential;

h) An order to record the Board hearing requested by the appellant; i) Minutes of the Board; and, j) Decision of the Board, dated August 31, 2005.

(8) The record of the Board for Appeal 0230/2005 includes:

a) Exhibit A1 - notice of appeal to the Board, dated January 6, 2005; b) Exhibit B1 - February 14, 2005 letter to Mr. Garry Coleman from

Joanne Sproule advising that two grounds would not be accepted with a five page listing of properties attached entitled Deloitte & Touche Appeals - 2005;

c) Exhibit A2 - 15 page written submission from the appellant date

stamped received on May 20, 2005 with the following attached Appendices A through NN:

APPEAL 0263/2005 [Page 4]

- Appendix A: various 2005 appeal notices all dated January 6, 2005 and signed by Garry Coleman;

- Appendix B: 2002 Base Year Land Sales for Commercial Land, Commercial Land in Industrial Neighbourhoods, Institutional Land (M Zonings), and CN Automall Commercial Land;

- Appendix C: 2005 Commercial Map; - Appendix D: Land Sales Maps; - Appendix E: 8th Street East Maps; - Appendices F to H: photocopy of documents from the

Saskatchewan Assessment Manual (the Manual); - Appendix I: City of Saskatoon Assessment Report for Appeal No.

206/2002; - Appendix J: photocopy of excerpt from the Act; - Appendix K: photocopy from Meriam-Webster dictionary dated

April 1, 2005; - Appendices L to R: Retail – 2002 Base Year MAF Sales listing

and various property record cards for sales all dated November 29, 2004;

- Appendix S: Committee decision for Appeal 0287/2002; - Appendices T to W: property inventory cards for Agriplace,

Airport, Southwest and CN Industrial areas; - Appendix X: property record card for 8th Street Commercial dated

December 9, 2004; - Appendix Y: Saskatchewan Court of Appeal (the Court) decision

for The Cadillac Fairview Corporation Limited and The T. Eaton Company Limited v. The City of Saskatoon and Saskatchewan Assessment Management Agency;

- Appendix Z: the Court decision for City of Regina v. Harvard Developments Ltd. et al and Saskatchewan Assessment Management Agency;

- Appendix AA: Certificate of Title for Varsity Common Shopping Centre Ltd.;

- Appendix BB: 14 page listing titled 2005 Commercial MAF Sales - Handout Copy;

- Appendices CC to FF: various property inventory cards, corporation searches and land title documents;

- Appendix GG: warehouse sales in Neighbourhoods 30017 and 30023”

- Appendices HH to LL: repeat of Appendices T to X; - Appendix MM: property inventory card for Circle Drive; - Appendix NN: property record card and sales information for 3310

Fairlight Drive; d) Exhibit R1 - undated 31 page submission to the Board from the City

assessor with attached property inventory card dated January 20, 2005, 2005 amended assessment notice, various documents from the

APPEAL 0263/2005 [Page 5]

Manual, Locator Map for Neighbourhood 30100 and 2005 Commercial Map;

e) Exhibit R2 - additional addenda material to the Board, including [1] a 10 page submission titled 2002 Base Year Commercial Land (Excl CBD), [2] a 20 page submission titled 2002 Base Year Industrial and Auto Mall Land (Excl CBD), [3] a 10 page submission titled Base Land Rates and Land Size Adjustments and [4] a 20 page submission titled North & Hudson Bay Industrial - Land Rate and Size Adjustment;

f) Exhibit R3 - additional addenda material to the Board, including an additional copy of [1] and [3] from R2 and a six page submission titled 8th Street Land - Size Versus Per Square Foot Prices;

g) Exhibit R4 - sales verification for 2410 22nd Street West and 3310 Fairlight Drive;

h) Exhibit R5 - assessor’s recommendation for change in fair value as noted in fact (2);

i) Board confidentiality order dated May 30, 2005; j) Board order dated May 30, 2005 for recording of hearing; k) Transcript of evidence and proceedings (transcript) of the Board

hearing held on May 30 and May 31, 2005, prepared by C.V. Reporting Services Ltd;

l) Minutes of the Board, dated May 30, 2005; and, m) Decision of the Board dated August 24, 2005 for Appeal No. 411-2005.

(9) The Board dismissed the appeal of downtown land rates that affected the

calculation of the subject's MAF. It upheld the assessor's decisions relating to the inclusion or adjustment of individual sales. It also supported the assessor's stratification of the downtown into several neighbourhoods and the base land rates that the assessor had applied to those neighbourhoods. In particular, the Board stated that "the assessor has ably demonstrated, through sales analysis, that land values did indeed decrease as one moved east from the retail core." In rendering its decision for Appeal 0230/2005, the Board had concluded the following as it relates to the land issue raised for this appeal:

“... Since the assessor is at the mercy of the sales presented to him, his conclusions, with regard to the size of a standard parcel, will reflect only one reassessment cycle. Another cycle with different sales can be expected to generate a different conclusion. The Panel accepts the assessor’s definition and interpretation that the standard parcel size is a range or a point from which declining land prices is initially observed. That being the case, the assessor’s application of the 115% land size multiplier effectively adjusts the curve to fit the larger sale and the point at which the curve intersects the land size axis is estimated at approximately 150,000 sq. ft. ...

APPEAL 0263/2005 [Page 6]

The Panel believes that the assessor has exercised reasonable judgment and discretion in his determination that 150,000 sq. ft. is the standard parcel size of this neighborhood.”

(10) The decision of the Board for Appeal 0273/2005 was:

“In accordance with Section 210(1)(a) of The Cities Act the panel confirms the assessment. The appeal is dismissed.”

The decision of the Board for Appeal 0230/2005 was:

“The Panel accepts the recommendation presented by the Respondent that addresses Ground 2 and orders the fair value assessment be changed as noted below. All other aspects of the appeal are dismissed.”

The decision of the Board for Appeal 0263/2005 was:

“The Board accepts the assessor’s recommendation that the fair value of the subject property be reduced by $103,600, from $2,477,500 to $2,343,900. All other aspects of the appeal are dismissed.”

(11) The grounds of appeal to the Committee for Appeal 0273/2005 were:

“1. The Board erred by not referring to the Land Titles Act when making its decision.

2. The Board erred in its conclusion to exclude the

sale of 235 22nd Street East from the land rate calculation due to a registration date of January 8, 2004 being outside the sales window.

3. The Board erred in a finding of fact when it

found that the sale of 240 4th Avenue South was used to calculate the $23.50 base land rate.

4. The Board erred in its decision by stating that

through sales analysis, land values did indeed decrease as one moved east from the retail core.

5. The Board erred in its decision by stating the

sales of 414 & 416 Spadina were “what ifs” when the manual clearly allows the assessor to adjust improved sales in order to use them to develop land rates. These two sales should not be considered “what ifs” and should be used in the sales analysis relied upon to develop land rates and neighbourhoods.

6. The Board erred in its decision by stating there

was little support other than “wishing it were

APPEAL 0263/2005 [Page 7]

not so” when sales evidence and expert testimony clearly were introduced.

7. The Board erred in its decision when they decided

not to rely on the irrefutable testimony by the expert witnesses that were provided.”

The grounds of appeal to the Committee for Appeal 0230/2005 were:

“1. The Board erred in its definition of the standard

parcel size. 2. The Board erred in its interpretation of the role

of the standard parcel size and how it affects the land size multiplier.

3. The Board erred in its determination that size

should not be considered when developing the standard parcel size for a neighbourhood.

4. The Board erred in its determination that standard

parcel size should be taken from an alternative to the sales used to develop the base land rate.

5. The Board erred by not placing any weight, nor

relying upon the conclusions of the SMBAAC in appeal 287/2002.

6. The Board erred by not considering the number of

sufficient sales that represented the standard parcel size.

7. The Board erred by finding that a standard parcel

size that was significantly larger than the sales used to develop the base land was reliable as directed in section 2.2.3 of the manual.

8. The Board erred in its determination that there

were sufficient sales to develop a reliable 115% land size multiplier curve.”

(12) The Committee received written submissions from the appellant and the respondent.

LEGISLATION: The Cities Act:

“163 (d) “base date” means the date established by the agency for determining the value of property for the purpose of establishing assessment rolls for the year in which the valuation is to be effective and for each subsequent year preceding the year in which the next revaluation is to be effective;

164(1) All property in a city is subject to assessment.

APPEAL 0263/2005 [Page 8]

(2) An assessment must be prepared for an improvement whether or not the improvement is complete or capable of being used for its intended purpose.

165(1) The assessor shall prepare assessments for all property in the city.

(2) All property is to be assessed at its fair value as of the applicable base date. (3) The dominant and controlling factor in the assessment of property is equity. (4) The value at which any property is assessed is to bear a fair and just proportion to the value at which all similar property is assessed:

(a) in the city; and (b) in any school division situated wholly or partly in the city or in which the city is wholly or partly situated.

(5) In determining the value of any property, the assessor shall take into consideration and be guided by:

(a) any applicable formula, rule or principle set out in the assessment manual; and (b) any facts, conditions and circumstances of the property that may affect its value.

(6) For the purposes of subsection (5), the assessment shall reflect all the facts, conditions and circumstances of the property on January 1 of each year as if they had existed on the applicable base date.

(7) For the purposes of subsection (5), the agency may, in the assessment manual, establish alternate appraisal methods.

(8) A city may use an alternate appraisal method established pursuant to subsection (7) if:

(a) the alternate appraisal method is approved for use by order of the agency;

(b) the city meets the criteria, as set out in the assessment manual, to use the alternate appraisal method; and

(c) the council of the city has received a report from the assessor adopting the use of the alternate appraisal method within the city.

170(1) In determining the value of property, none of the assessor, the board of revision or the appeal board shall use or take into consideration any valuation technique or method of appraisal based on income or benefits unless the formulas, rules and principles respecting that valuation technique or method of appraisal are set out in the assessment manual.

APPEAL 0263/2005 [Page 9]

(2) For the purposes of subsection (1), the assessor, the board of revision or the appeal board shall only use or take into consideration a valuation technique or method of appraisal based on income or benefits in the manner permitted by and set out in the assessment manual.

197(1) An appeal of an assessment may only be taken by a person who:

(a) has an interest in any property affected by the valuation or classification of any property; and

(b) believes that an error has been made:

(i) in the valuation or classification of the property; or

(ii) in the preparation or content of the relevant assessment roll or assessment notice.

(2) If land has been assessed together with improvements on it, no person

shall base an appeal on:

(a) the valuation of land apart from the improvements to the land; or (b) the valuation of improvements apart from the land on which the improvements are situated.

(3) A city, other taxing authority or the agency may appeal an assessment to a board of revision on the grounds that an error has been made in:

(a) the valuation or classification of any property in the preparation of the relevant assessment roll or assessment notice; or (b) the content of the relevant assessment roll or assessment notice.

(4) The agency is to be made a party to an appeal if:

(a) the agency prepared the valuation or classification of any property being appealed; or (b) the appeal is by a city or other taxing authority.

(5) The appellant shall give a separate notice of appeal for each assessment being appealed. (6) A notice of appeal must be in writing in the form prescribed in regulations made by the minister and must:

(a) set out the specific grounds on which it is alleged that an error exists; (b) set out in summary form the particular facts supporting each ground of appeal; (c) if known, set out the change to the assessment roll that is requested by the appellant; (d) include a statement that:

APPEAL 0263/2005 [Page 10]

(i) the appellant and the respondent have discussed the appeal, specifying the date and outcome of that discussion, including the details of any facts or issues agreed to by the parties; or (ii) if the appellant and the respondent have not discussed the appeal, a statement to that effect specifying why no discussion was held; and

(e) include the mailing address of the appellant.

(7) An appellant may withdraw his or her appeal for any reason by notifying the secretary of the board of revision at least 15 days before the day on which the appeal is to be heard by the board of revision.

198(1) A notice of appeal must be filed, together with any fee set by the

council pursuant to section 196, with the secretary of the board of revision at the address shown on the assessment notice:

(a) within 30 days after the date on which the notice of assessment is mailed to the person; or (b) if no notice of assessment is mailed to the person, within 30 days after the later of.

(i) the date on which the notice of assessment is published pursuant to section 187; and (ii) the date on which the notice of a bylaw dispensing with the preparation of assessment notices is published pursuant to section 187.

(2) The appellant shall give a notice of appeal pursuant to this section by personal service, by registered mail or by ordinary mail. 209(1) On application made by an appellant appearing before it, a board of revision may, by order, grant leave to the appellant to amend his or her notice of appeal so as to add a new ground on which it is alleged that error exists. (2) An order made pursuant to subsection (1) may be made subject to any terms and conditions that the board of revision considers appropriate. (3) An order made pursuant to subsection (1) must be in writing.

210(3) Notwithstanding that the value at which any property has been assessed appears to be more or less than its fair value, the amount of the assessment may not be varied on appeal if the value at which it is assessed bears a fair and just proportion to the value at which all similar property is assessed:

(a) in the city; and

APPEAL 0263/2005 [Page 11]

(b) in any school division situated wholly or partly in the city or in which the city is wholly or partly situated.

216 Subject to subsection 196(5), any party to an appeal before a board of revision has a right of appeal to the appeal board:

(a) respecting a decision of a board of revision; and (b) against the omission, neglect or refusal of a board of revision to hear or decide an appeal

223(1) The appeal board shall not allow new evidence to be called on appeal unless it is satisfied that:

(a) through no fault of the person seeking to call the new evidence, the written materials and transcript mentioned in section 220 are incomplete, unclear or do not exist; (b) the board of revision has omitted, neglected or refused to make a decision; or (c) the person seeking to call the new evidence has established that relevant information has come to the person’s attention and that the information was not obtainable or discoverable by the person through the exercise of due diligence at the time of the board of revision hearing.

226(1) After hearing an appeal, the appeal board may:

(a) confirm the decision of the board of revision; or (b) modify the decision of the board of revision in order that:

(i) errors in and omissions from the assessment roll may be corrected; and (ii) an accurate, fair and equitable assessment for the land or improvements may be placed on the assessment roll.

(2) If the appeal board decides to modify the decision of the board of revision pursuant to subsection (1), the appeal board may adjust, either up or down, the assessment or change the classification of the property.

(3) Notwithstanding subsections (1) and (2), the appeal board shall not change the amount of an assessment if the value at which the property is assessed bears a fair and just proportion to the value at which all similar property is assessed:

(a) in the city; and (b) in any school division situated wholly or partly in the city or in which the city is wholly or partly situated.”

The Land Titles Act, 2000

APPEAL 0263/2005 [Page 12]

THE MANUAL (1998 BASE YEAR): Volume 1, Chapter 1, Document Number 1.2.1, page 1 (Date: 01/12/04):

“The fair value of urban land shall be determined using the sales comparison method by application of the following formula:

LV = (((R ±Au) x Af) x U)± Al

where: LV = fair value of land R = base land rate Au = unit value site adjustments Af = factored site adjustments Al = lump sum site adjustments U = number of land units.

The base land rate, site adjustments, and number of land units shall be determined in accordance with the valuation procedures in Chapter 2 - Urban Land.”

Volume 1, Chapter 2, Document Number 2.1.2, pages 1 and 2 (Date: 00/12/21):

“Application The sales comparison method shall be used to determine the base land rate of residential land; commercial land; industrial land; transportation, communication and utilities land; recreational and cultural land; and institutional land, with the exceptions of primary industrial land and railway roadway. Formulas, Rules and Principles The base land rate for a neighbourhood shall be the median sale price per unit of comparison of vacant land sales in the neighbourhood as determined by application of the following formula: ~

LR = SPCOwhere:

MP

LR = base land rate

~ SPCOMP

=

median sale price of vacant land sales

Base land rate neighbourhoods shall be determined in accordance with the valuation procedures in Chapter 1 - Formulas, Rules and Principles, Section 1.1.4 - Rules of Assessment, Location. Where the units of comparison for a neighbourhood is square feet or acres, and the sale price of larger parcels is less per unit of comparison than the sale price of smaller parcels, then the base land rate shall be the median sale price of the standard parcel for the neighbourhood. The

APPEAL 0263/2005 [Page 13]

standard parcel for the neighbourhood shall be determined in accordance with the size adjustment procedures in Chapter 2 - Urban Land, Section 2.2.3 - Site Adjustments, Size Adjustment. Calculation Procedure Sufficient Vacant Land Sales Where there are sufficient vacant land sales in the neighbourhood, the base land rate by the sales comparison method shall be determined by application of the following calculation procedure:

1. Identify vacant land parcels in the neighbourhood that are arm's length sales which are representative of the typical parcel in the neighbourhood.

2. Determine the units of comparison for the

neighbourhood.

3. Determine the sale price per unit of comparison for each vacant land sale:

i. Determine the vacant land sale price. ii. Determine the number of units of comparison. iii. Calculate the sale price per unit of

comparison by dividing the vacant land sale price by the number of units of comparison.

4. Calculate the base land rate for the

neighbourhood by selecting the median sale price per unit of comparison.

5. Test the accuracy of the base land rate in

accordance with the sale price analysis procedures in Chapter 1 - Formulas, Rules and Principles, Section 1.1.4 - Rules of Assessment, Location.” (Emphasis added)

Volume 1, Chapter 2, Document Number 2.2.1, page 1 (Date: 00/12/21):

“Site adjustments may be applied for characteristics such as depth, size, irregular shape, corner influence, location, infrastructure, environmental contamination, and other site adjustments. Formulas, Rules and Principles Site adjustments shall be used to account for variations in the value of individual land parcels that are attributable to characteristics specific to the individual parcel. Site adjustments shall be applied only when the parcel varies from the typical characteristics for the neighbourhood. When all of the parcels in the neighbourhood have similar site characteristics the value of the common features shall be reflected in the base land rate for the neighbourhood.” (Emphasis added)

Volume 1, Chapter 2, Document Number 2.2.3, page 1 (Date: 01/12/04):

APPEAL 0263/2005 [Page 14]

“Standard Parcel

The standard parcel may be either a specific size or a size range. Use comparable sales analysis to determine if the standard parcel is a specific size or a size range. When the standard parcel is a specific size, the standard size for determining the land size multiplier should be selected from the comparable sales that are closest to the typical size for the neighbourhood. When the standard parcel is a size range, the largest size for the standard parcel shall be used for determining the land size multiplier.” (Emphasis added)

THE MANUAL (2002 BASE YEAR): Volume 1, Chapter 1, Document Number 1.1.2, page 1 (Date: 03/11/14) Volume 1, Chapter 1, Document Number 1.1.4, page 1 (Date: 03/01/22) Volume 1, Chapter 1, Document Number 1.2.1, page 1 (Date: 03/11/14):

“The fair value of urban land shall be determined using the sales comparison method by application of the following formula:

LV = (((R ±Au) x Af) x U)± Al - Ac

where: LV = fair value of land R = base land rate Au = unit value site adjustments A = factored site adjustments fU = number of land units Al = lump sum site adjustments Ac = environmental contamination adjustment

The base land rate, site adjustments, and number of land units shall be determined in accordance with the valuation procedures in Chapter 2 - Urban Land. The environmental contamination adjustment shall be determined in accordance with the valuation procedures in Document 1.5.1 – Environmental Contamination.”

Volume 1, Chapter 2, Document Number 2.1.2, pages 1 and 2 (Date: 03/11/14): “Application

The sales comparison method shall be used to determine the base land rate of residential land; commercial land; industrial land; transportation, communication and utilities land; recreational and cultural land; and institutional land, with the exceptions of primary industrial land and railway roadway. Formulas, Rules and Principles

APPEAL 0263/2005 [Page 15]

The base land rate for a neighbourhood shall be the median sale price per unit of comparison of vacant land sales in the neighbourhood as determined by application of the following formula: ~

LR = SPCOMP where: LR = base land rate

~ SPCOMP

=

median sale price of vacant land sales

Base land rate neighbourhoods shall be determined in accordance with the valuation procedures in Chapter 1 - Formulas, Rules and Principles, Section 1.1.4 - Rules of Assessment, Location.

Where:

(a) the units of comparison for a neighbourhood is square feet or acres;

(b) the sale price of larger parcels is less per unit

of comparison than the sale price of smaller parcels; and

(c) there are sufficient land sales in the

neighbourhood that represent the standard parcel size to determine a reliable base land rate; or

(d) there are sufficient land sales in the

neighbourhood that represent the standard parcel size to determine a reliable base land rate after the number of sales are supplemented with land residual sales, land ratio sales, or demolition sales; or comparable neighbourhood sales are used as an alternative;

the base land rate shall be the median sale price per unit of comparison of these sales; ... Calculation Procedure Sufficient Vacant Land Sales Where there are sufficient vacant land sales in the neighbourhood, the base land rate by the sales comparison method shall be determined by application of the following calculation procedure:

1. Identify vacant land parcels in the neighbourhood that are arm's length sales which are representative of the typical parcel in the neighbourhood.

2. Determine the units of comparison for the

neighbourhood.

3. Determine the sale price per unit of comparison for each vacant land sale:

i. Determine the vacant land sale price.

APPEAL 0263/2005 [Page 16]

ii. Determine the number of units of comparison. iii. Calculate the sale price per unit of

comparison by dividing the vacant land sale price by the number of units of comparison.

4. Calculate the base land rate for the neighbourhood by selecting the median sale price per unit of comparison.

5. Test the accuracy of the base land rate in accordance with the sale price analysis procedures in Chapter 1 - Formulas, Rules and Principles, Section 1.1.4 - Rules of Assessment, Location.” (Emphasis added)

Volume 1, Chapter 2, Document Number 2.1.4, page 1 (Date: 03/01/22) Volume 1, Chapter 2, Document Number 2.2.1, page 1 (Date: 03/11/14):

“Site adjustments may be applied for characteristics such as depth, size, irregular shape, corner influence, location, infrastructure, environmental contamination, and other site adjustments. Formulas, Rules and Principles Site adjustments shall be used to account for variations in the value of individual land parcels that are attributable to characteristics specific to the individual parcel. Site adjustments shall be applied only when the parcel varies from the typical characteristics for the neighbourhood. When all of the parcels in the neighbourhood have similar site characteristics the value of the common features shall be reflected in the base land rate for the neighbourhood.” (Emphasis added)

Volume 1, Chapter 2, Document Number 2.2.3, page 1 (Date: 03/11/14):

“Application … The standard size parcel may be a specific size or a size range.”

APPEAL 0263/2005 [Page 17]

CASE LAW: The Saskatchewan Court of Appeal, in Cadillac Fairview Corporation Limited and The T. Eaton Company Limited v. The City of Saskatoon and Saskatchewan Assessment Management Agency, [2000] 11 W.W.R. 89

CONCLUSIONS AND REASONS:

[1] The Committee has received an appeal against the decision of the City of

Saskatoon Board of Revision, and on the basis of the presentations of the

appellant and respondent, must decide if the record shows that an error has

occurred. The role of the Committee is not to redo the hearing, nor to substitute

its view for that of the Board. Rather, the Committee is to review the evidence

from that hearing and determine whether the Board came to the proper

conclusion in rendering its decision. Should the Committee conclude that the

Board did not come to the proper conclusion based upon the evidence before it,

the Committee is then required to do what the Board ought to have done. The

onus is upon the appellant to demonstrate to the Committee where the Board

has erred.

BUILDING APPEAL:

[2] This portion of the subject appeal is against the downtown land rates that

were used in the restaurant MAF calculation for the year 2005. As agreed to by the

parties, these appeals are based on the arguments put forth in Appeal

0209/2005. All references in this decision refer to the record for that appeal.

[3] Paragraph 69 of the appellant’s argument to the Committee states: “The overlying issue with the land valuation is that the values are too low and that the premium neighbourhood, based on sales evidence and expert testimony, would indicate that the neighbourhood should incorporate more properties.”

[4] The appellant contends that the assessor made three errors and the

Board erred by agreeing with the assessor on the following points:

APPEAL 0263/2005 [Page 18]

a) The sale of 235 22nd Street East was excluded from the base land analysis because the registration date was after December 31, 2002.

b) The sale of 240 4th Avenue South was used in the wrong

neighbourhood to calculate the base land rate.

c) The sales of 414/416 Spadina Crescent should not be used to calculate the base land rate.

Background

[5] Evidence provided by the respondent on pages four and five of Exhibit R2

of the record describes the process used in determining the base land rates for

the Central Business District (CBD):

“Sales analysis was used to both refine and combine geographic neighbourhoods into market groups. The analysis showed that there were four distinct land market neighbourhoods. The retail core and retail fringe areas were combined into a single market neighbourhood. This was due, in large part, to a limited number of sales. ... The CBD periphery contains both “B” and “M” zoned land. The land value for the “M” land is lower than that of the full commercially zoned “B” land. ... We used sales from the beginning of 1996 to the end of 2002. The same time period was used for all types of multi family, institutional, commercial, industrial, and periphery land. ... There is also a requirement that base land rates be developed from “two or more sales” (Doc 1.1.6, Page 1). An added feature of analyzing land sales is the effect of site size on per unit prices. The per square foot price of land tends to decrease as the site size increases. This means that per square foot prices need to be studied for the influence of size, prior to determining the “typical” price of land in a market neighbourhood. In this context, the typical price means not only fully serviced sites, but also a size or size range where per square foot price are not influenced by site size.”

APPEAL 0263/2005 [Page 19]

[6] The Committee would note that the sales analysis for the CBD did not

have sufficient information to indicate a need for a LSM, however a 115% curve

which had been developed for a comparable neighbourhood was applied “giving

the benefit of the doubt“ to all properties in the CBD, with the exception of the

portions of Neighbourhood 30009 with M and DCD1 zoning.

Neighbourhoods 30010 and 30011 (CBD - Retail Core and Retail Fringe)

[7] The “Commercial Land – 2002 Base Year Land Sales” chart found at page

16 of Exhibit R2 indicated three sales were used to establish a base land rate in

neighbourhoods 30010 and 30011:

Address Sale Price

Sale Price Per Square Foot

Base Land Rate

214 1st Avenue South $67,500 $20.09 $23.50 225 22nd Street East $115,000 $23.53 $23.50 229/231 22nd Street East

$450,000 $25.12 $23.50

[8] The assessor further clarified at page nine that: “There is no indication of declining per unit prices up to the largest sale (17,911 sq ft). The base land rate is the median of all sales or $23.50. To give the benefit of the doubt, a size adjustment with a 115% curve and a standard parcel size of 20,000 sq ft will be made.”

Neighbourhood 30009 (CBD - Periphery)

[9] The “Commercial Land – 2002 Base Year Land Sales” chart found at page

17 of Exhibit R2 indicated three sales were used to establish a base land rate in

neighbourhood 30009 (periphery).

APPEAL 0263/2005 [Page 20]

Address Sale

Price Sale Price Per Square Foot

Base Land Rate

334 2nd Avenue North $165,000 $13.08 $13.80 316 4th Avenue North $290,000 $13.79 $13.80 240 4th Avenue South $660,000 $30.80 $13.80

The following sale was not used to determine a base land rate in neighbourhood

30009:

380 2nd Avenue North $435,000 $14.80 $13.80

[10] The assessor further clarified at page 10 that:

“There is no clear evidence of a size trend in the downtown periphery. One sale is not included in the graph; it was situated at 240 – 4th Ave South, contained 21,427 sq ft and sold at $30.80. This transaction is far out of context with the remaining sales. It is included in the base land rate calculation, but not considered in size determination. To give the benefit of the doubt, a size curve of 115% was used. This would start at 20,000 sq ft, similar to the retail core.” (Emphasis added)

[11] The 2005 Commercial Land - 2002 Base year Land Sales (Appendix B,

line 34) of the appellant's Exhibit A2 indicates that 240 4th Avenue South was

used to determine the base rate for neighbourhood 30009 but has a base rate of

$11.00. The Committee is assuming that the base rate shown was a

typographical error, and should have read $13.80.

Zoning

[12] As identified at pages 13 and 14 of Exhibit R2 the base rate for “M” zoned

property along Spadina Crescent in neighbourhood 30009 was calculated as

follows:

“In the M4 and DCDl zoned areas have a lower value than the less restricted zoning designations, so a value of 60% of the unrestricted zoned lands was applied. This factor was

APPEAL 0263/2005 [Page 21]

derived based on a comparison of sales “B” and “M” zoned parcels in similar locations. Detailed support for this is described below. “M” zoned and similar land is often situated near suburban centres, and frequently off busy arteries. This is likely due to the zoning designation that (usually) permits both limited commercial uses and residential. For commercial purposes, it is advantageous to be in a visible and central location. With respect to downtown land, sites with frontage on Spadina Crescent also benefit from a view of the park and river, as well as an element of prestige. The institutional land sales that have taken place are usually in developing (mainly residential) neighbourhoods. None of the “institutional” land sales occurred in high value commercial locations. For this reason, the sales are unable to capture a premium for locations on the most sought after commercial land. In order to address this, a comparison can be made between “M” zoned land and full commercial zoned land, in locations where both types have sold. There are four locations where both types of commercial land have sold. The details of the size-adjusted prices are:

Neighbourhood Size Range

# Comm Sales

Comm Median Fully Adj

Pr/SqFt

# Instit Sales

Instit Median

Size Adj Pr/SqFt

Instit vs. Comm Zoning

Confederation SC All 1 5.51 4 3.39 0.62

Lakewood SC All 1 8.44 4 4.67 0.55

Lawson Hts SC All 1 8.05 3 5.93 0.74

University Hts SC All 3 11.95 10 4.77 0.40

Median 0.58 ... It is reasonable to conclude that, on balance, M zoned sites sell for 60% of the value of full commercial in the same location. This factor can be applied in locations that lack institutional land sales, but possess full commercial sales. In the case of downtown, the base land rate for the “periphery” neighbourhood is $13.80. The “M” zoned sites in this area have a rate of 60% of that amount or $8.30. The $8.30 rate is reflective of “M” zoned values; therefore an “M” zoned size adjustment curve is appropriate. In this case, the comparable is the West, with a standard parcel size of 100,000 sq ft and a size adjustment curve of 130%.”

Neighbourhood 30012 (CBD - South)

[13] There was no information given by the respondent in the record to indicate

how the base land rate was arrived at for neighbourhood 30012. Appendix B of

Exhibit A2 provides the following clarification on the development of the base

land rate for this neighbourhood:

APPEAL 0263/2005 [Page 22]

Address Sale Price

Sale Price Per Square Foot

Base Land Rate

325 3rd Avenue South $46,000 $8.20 $11.00 348 2nd Avenue South $38,500 $10.98 $11.00 344 2nd Avenue South $50,000 $14.25 $11.00

[14] To summarize, the base land rates, LSM curves and standard parcel size

for the CBD neighbourhoods are as follows:

Neighbourhood Base Land Rate

LSM Standard Parcel Size

30010, 30011 $23.50 115% 20,000 square feet 30009 $13.80 115% 20,000 square feet 30012 $11.00 115% 20,000 square feet 30009 “M” $8.30 130% 100,000 square feet

Was the sale of 235 22nd Street East excluded from the base land analysis in error due to its registration date after December 31, 2002?

[15] This property sold in October, 2000 for $25.12 per square foot and as a

result was used in the sales analysis for the downtown core. It sold again in

January, 2002 for $33.50 per square foot but this sale was not used in the

analysis to determine a base land rate as the assessor determined that it had not

been registered at land titles before December 31, 2002.

[16] The appellant argued that the second sale was actually finalized in

December, 2002 and the new title was issued on January 8, 2003. Thus, the

sale should have been included in the sales analysis.

[17] The Manual states in Document Number 1.1.2, page 1 that:

“(c) “an arm’s length sale” means:

...(ii) registered in accordance with The Land Titles Act on or before December 31, 2002;”

APPEAL 0263/2005 [Page 23]

[18] The respondent took the position that registered and issued means one

and the same. The City of Saskatoon has used the same procedure for dating all

arm’s length sales within the time frame used in the valuation cycle.

[19] Exhibit R3 included copies of the titles for the above property showing the

“last amendment date” as 08 Jan 2003. It also showed the issued date as the

same.

[20] The Committee considers the following provisions of The Land Titles Act,

2000 (the LTA) to be relevant to the interpretation of whether the date of

issuance of the title is evidence of the registration date:

“2(1) In this Act:

(kk) “registered” means registered by the Registrar in the land titles registry;

26 Registration of a transfer or an interest is effective from the time assigned to it at the land titles registry. 46 An application for registration of a transfer must be made to the Registrar in the prescribed manner. 47(1) Subject to subsections (4) and (5), every registration of a transfer operates as an absolute transfer of title. (2) On receipt of an application for registration of a transfer that meets the requirements of section 46, the Registrar shall:

(a) issue one or more new titles in the name of the transferee or transferees; and (b) cancel the title or titles of the transferor.” (Emphasis added)

[21] It is apparent that section 47(2) of the LTA describes issuance of a new

title as the immediate consequence of the receipt of an application for registration

of a transfer made in the prescribed manner. Since there was no evidence of a

delay between the Registrar's receipt of the application for the transfer of the

property at 235 22nd Street East and the issuance of the title, it was reasonable to

assume that the Registrar complied with the requirement of the Act to issue the

APPEAL 0263/2005 [Page 24]

new title "on receipt of the application for registration." Accordingly, registration

occurred too late for the sale to qualify as an "arm's length sale." The Committee

also agrees with the respondent that it is most important that all arm’s length

sales be treated the same and on this point that means that the date issued is

used as the date of registration in all cases.

[22] The Committee finds that the appeals fail on this point and the sale dated

January 8, 2003 shall not be considered in the sales analysis for this valuation

cycle.

Was the sale of 240 4th Avenue South used in the wrong neighbourhood to calculate the base land rate, and further did the sale indicate that the core neighbourhood extends from 22nd Street to 20th Street and 1st Avenue to the River?

[23] This portion of the appellant’s argument focuses on the sale of 240 4th

Avenue South at $30.80 a square foot. He argued this sale indicates that the

core neighbourhood should encompass more properties. In his opinion it should

entail all properties between 20th Street and 22nd Street and run all the way to the

river. The appellant argued that the sale of this property at $30.80 per square

foot indicates that the value of land does not decrease as you get away from the

downtown core. He noted that both the assessor and the expert witness Ms. Kim

Maber testified that “the river would not be a detriment to land values”.

[24] The respondent replied that the assessment to sales ratio (ASR) study

provided in Exhibit R2, page 70, showed that the values did drop the closer you

got to the river: “The ASR statistics associated with each land rate area are: Base Land rate # Sales COD(ASR) Median ASR $11.00 16 49.1 0.97 $13.80 17 47.6 1.07 $23.50 8 42.7 1.04 Note that CODs are generally high downtown. Despite the high CODs the median ASRs for all three land rate groups are near

APPEAL 0263/2005 [Page 25]

1.00. This is an indication that the land rates and boundaries are reasonable. Changes to the existing boundaries or base land rates may negatively affect these realistic median ASRs. Given that the land portion of the total fair values for these three groups of sales averages 25% to 38%, any significant change in land values would have a noticeable impact on MAFs. Furthermore, it may also require division of the downtown into a number of MAF areas.”

[25] The Committee notes that this sale is used to calculate the base land rate

in neighbourhood 30009. The Board states that “a brief examination of page 17

of Exhibit R2 shows that the sale was indeed used”.

[26] Both the respondent and the expert for the appellant Ms. Kim Maber

testified that the sale was out of context with the other sales in the grouping.

Under cross-examination it was speculated that it might be the purchaser was

highly motivated because he owned the property next door.

[27] The Manual states in Document Number 2.1.2, page 1 that:

“The sales comparison method shall be used to determine the base land rate of residential land; commercial land; industrial land; transportation, communication and utilities land; recreational and cultural land; and institutional land, with the exceptions of primary industrial land and railway roadway. The base land rate for a neighbourhood shall be the median sale price per unit of comparison of vacant land sales in the neighbourhood as determined by application of the following formula: ~

LR = SPCOMP

where: LR = base land rate ~

SPCOMP = median sale price of vacant land sales

Base land rate neighbourhoods shall be determined in accordance with the valuation procedures in Chapter 1 - Formulas, Rules and Principles, Section 1.1.4 - Rules of Assessment, Location. Where:

APPEAL 0263/2005 [Page 26]

(a) the units of comparison for a neighbourhood is square feet or acres;

(b) the sale price of larger parcels is less per unit of comparison than the sale price of smaller parcels; and

(c) there are sufficient land sales in the neighbourhood that represent the standard parcel size to determine a reliable base land rate; or

(d) there are sufficient vacant land sales in the neighbourhood that represent the standard parcel size to determine a reliable base land rate after the number of sales are supplemented with land residual sales, land ratio sales, or demolition sales; or comparable neighbourhood sales are used as an alternative;

the base land rate shall be the median sale price per unit of comparison of these sales;”

[28] Document Number 1.1.4, page 1, of the Manual refers to the stratification

of neighbourhoods in part: “Location may influence sale price and shall be considered in the determination of the fair value of land and improvements. Stratification based on sale price analysis may be used to identify neighbourhoods and the market influences for each neighbourhood. The purpose of stratification is to ensure that valuations reflect the sales prices of properties with similar uses in the same geographic area. Stratification is the grouping of properties into homogeneous neighbourhoods. A homogeneous neighbourhood should reflect geographic areas subject to similar market influences, zoning and present use. A geographic area may include one or more municipalities or portions thereof. Urban land neighbourhoods should encompass an identifiable geographic area with similar situation attributes such as proximity to schools, shopping, transportation and other services. Residential and commercial building neighbourhoods should encompass an identifiable geographic area with similar situation attributes such as building classification, age and condition.” (Emphasis added)

[29] In short, if the assessor has sufficient sales that represent the standard

parcel size, the assessor is required by the Manual to calculate a base land rate

APPEAL 0263/2005 [Page 27]

based on the median sale price of those vacant land sales in each

neighbourhood.

[30] There is nothing in the Manual that states that the assessor must use

each and every sale in the array to establish a base land rate. On the contrary,

the Manual instructs the assessor to only use those sales that represent a

standard parcel size. This statement in the Manual can be interpreted as giving

the assessor the option to eliminate sales from the array used to calculate a base

land rate, if for nothing else at least for size.

[31] The Manual goes even further in Document Number 1.1.4 when allowing

the assessor a certain amount of discretion in establishing neighbourhoods when

it states: “Stratification based on sale price analysis may be used to identify neighbourhoods and the market influences for each neighbourhood.” (Emphasis added)

[32] The Manual then proceeds to require the assessor to take into account:

a) Sale prices of properties with similar uses in the same geographic area, and

b) Neighbourhoods subject to similar market influences, zoning and present use.

The Manual does not say that the sale prices in any given neighbourhood have

to be the same or in the same range but that the properties should have the

same general use and be subject to the same general market conditions.

[33] In the case before the Committee, the assessor has provided argument

and evidence that he stratified the CDB into four distinct neighbourhoods based

on similar market conditions. The core and fringe neighbourhoods experience

the strongest retail influences in the CBD. The periphery neighbourhood has a

lesser degree of influence from the retail core, and part of this neighbourhood

APPEAL 0263/2005 [Page 28]

has been adjusted for M and DCD1 zoning. The south neighbourhood has the

least degree of influence from the retail core.

[34] The Committee finds the sale at 240 4th Avenue South is out of context

with other sales in the neighbourhood. The Committee further finds that using

sales alone to establish neighbourhoods is a discretionary tool and is not a

sufficient basis to change the neighbourhood configuration for the CBD in

Saskatoon.

[35] The Committee finds that the Board did not err in retaining the sale of 240

4th Avenue South in neighbourhood 30009.

Was it an error to not use the sales of 414/416 Spadina Crescent to calculate the base land rate?

[36] 414/416 Spadina Crescent are two older houses situated immediately

north of the west end of the Broadway bridge. They were sold within the time

frame for $28.11 per square foot.

[37] The appellant contends that these sales are an indicator that the $8.30

base land rate used in neighbourhood 30009 “M” is too low. If these sales were

used in the analysis it would have been clear that values do not drop as you

progress farther away from the CBD retail core as the assessor claims.

[38] The respondent argued that the sales cannot be used to establish base

land rates as they are still occupied and being used as residential properties. In

order to use them in an analysis for any base land rate calculation the buildings

would have to be demolished.

[39] The Manual states in Document Number 2.1.2, page 1 in part, that the

base land rate shall be the median sale price per unit of comparison where:

APPEAL 0263/2005 [Page 29]

“(d) there are sufficient vacant land sales in the neighbourhood that represent the standard parcel size to determine a reliable base land rate after the number of sales are supplemented with land residual sales, land ratio sales, or demolition sales; or comparable neighbourhood sales are used as an alternative;” (Emphasis added)

[40] Further, Document Number 2.1.4, page 1 of the Manual identifies the

following criteria that must be met in order to use land residual sales to determine

the sale price of urban land:

“● vacant land sales in both the subject and comparable neighbourhoods are limited;

• there are sufficient improved sales in the subject neighbourhood; and

• the improvements are relatively new.” (Emphasis added)

[41] It is clear then that the Manual does allow the assessor to use land

residual sales and it is also clear that the use of such sales is at the discretion of

the assessor. It is his responsibility to gather the sales information, verify that the

sales are arm’s length, in the correct time frame, and to place the sales into the

proper categories to be analysed. It is also a requirement that the improvements

be relatively new. This is necessary in order to ensure that the replacement cost

new less depreciation (RCNLD) of the improvements is reflective of the

contributory value of the improvements within the sales transaction. In this case

the two sales may have been used to establish the residential MAF in the CBD

but no evidence or argument was put forward by either side that would indicate

what the sales were used for. Further, as both houses are old (effective ages of

1912 built) they do not meet the above noted requirement as they are not

“relatively new".

[42] The Board is quoted on page 14 of the decision as follows:

“Though the sale of these properties were not identified in the Notice of Appeal it was discussed briefly in Exhibit A.2 and at great length during cross examination. The Appellant put forward that it might have been used as a vacant land sale if the two buildings had been demolished. This was a

APPEAL 0263/2005 [Page 30]

specious argument which did not warrant the time it consumed.”

[43] The Committee finds that the Board did not err in finding that the argument

of the appellant, as it relates to this issue, had no merit.

Conclusion - CBD Land Rates

[44] The Committee finds:

a) The sale of 235 22nd Street East was properly excluded from the base land analysis because the registration date was after December 31, 2002.

b) The sale of 240 4th Avenue South was not used in the wrong neighbourhood to calculate the base land rate.

c) The sales of 414/416 Spadina Crescent should not be used to calculate the base land rate because they were improved sales.

[45] The appellant based this series of appeals on the premise that the sales

array used to determine the base land rate should be reviewed. The result of this

review was intended then to influence the MAF applied to the subject buildings.

As this first hurdle was not crossed and the Committee has decided the base

land rate is not to be changed, then it follows that there has been no error

demonstrated in the calculation of the MAF.

[46] The Committee finds that the Board did not err when it dismissed the

appeal against the MAF of the subject buildings.

LAND APPEAL:

[47] This portion of the subject appeal is against the standard parcel size of

150,000 square feet that was chosen by the assessor and whether the LSM of

115% that the assessor obtained from a comparable neighbourhood was

appropriate. As agreed to by the parties, these appeals are based on the

APPEAL 0263/2005 [Page 31]

arguments put forth in Appeal 0230/2005. All references in this section of the

decision refer to the record for that appeal.

Standard Size Parcel for the Neighbourhood

[48] The appellant submitted that the Board has erred in maintaining the

assessor’s incorrect interpretation of the Manual. According to the appellant, the

definition of the words “standard” and “typical” as used in the Manual have not

changed from the 1998 Base Year (prior Manual) to the 2002 Base Year (current

Manual) as suggested by the assessor. In support of this position the appellant

referenced the following 2002 submission made by the assessor as found at

pages10 and 11 of Appendix I in Exhibit A2:

“The 1998 base date Manual was revised by SAMA with much more specific instructions into which properties could be used in the Sales Comparison Method. There is now a calculation procedure, which in step 1 (Doc 2.1.2, Page 1 states:

“1. Identify vacant land parcels in the neighbourhood that are arm’s length sales which are representative of the typical parcel in the neighbourhood”.

In Document 2.2.1, Page 1 it more or less defines typical parcels by saying that:

“When all of the parcels in the neighbourhood have similar site characteristics the value of the common features shall be reflected in the base land rate for the neighbourhood”.

This strongly suggests that “typical” parcels have similar site characteristics which are commonly found in the neighbourhood. Among these site characteristics is size.”

[49] The appellant argued that this wording is identical to the wording found in

the current Manual. As this direction has clearly remained unchanged from the

prior Manual to the current Manual, one must question how the assessor can

now suggest that size is not a variable that is required to be considered in the

identification of a “typical” parcel. Further, the Board errs in supporting the

assessor’s changing definition of “typical” in finding the following:

APPEAL 0263/2005 [Page 32]

“The use of the term “typical parcel” or “typical size” was used extensively in the previous reassessment cycle and was interpreted by the SAAC as the typical size of all lots, sold and unsold, that could be found in a particular neighborhood. It is evident that the term “typical size” and its interpretation was troublesome in that the writers of the 2002 Base Year SAM have chosen to delete any reference to it. The Respondent now refers to “typical commercial parcels” as those that are fully serviced but lacking sidewalks. They are not located on through street such as Millar Avenue or Airport Drive as these locations carry a value premium that other sites do not. The size of the parcel is no longer considered within the term “typical” as size adjustments are specifically mandated elsewhere in the 2002 Base Year SAM.”

[50] According to the appellant, the foundation for the Board’s finding that the

term “typical size” has been removed from the Manual as its interpretation was

troublesome is an additional error. Clearly, the Manual continues to require the

identification of vacant land parcels in the neighbourhood that were arm’s length

sales, which were representative of the typical parcel in the neighbourhood.

[51] The assessor’s choice to establish the standard parcel size for this

neighbourhood at 150,000 square feet clearly was not representative of a typical

parcel in this neighbourhood. In fact, the appellant submitted the selected

standard parcel size was not even included in the size range for the

neighbourhood land sales that were used to establish the Base Land Rate (BLR).

This according to the appellant, is in direct violation of the direction as found in

Document Number 2.1.2 of the Manual which is clear in requiring that there be “.

. . sufficient land sales in the neighbourhood that represent the standard parcel

size to determine a reliable base land rate”.

[52] The appellant submitted that the assessor considered the use of two land

sales in the subject neighbourhood as sufficient to establish a reliable BLR. As

such he argued, in conformance with the requirements of the Manual, the two

sales used by the assessor to establish the BLR must by extension, represent

the standard parcel size. The two sales that the assessor relied upon are

identified at lines 24 and 25 of page 1, Appendix B of Exhibit A2. The site size of

these two sales was 28,756 and 31,600 square feet with the median size being

APPEAL 0263/2005 [Page 33]

30,178 square feet which, according to the appellant, was clearly more reflective

of a “typical” lot size in this neighbourhood than the 150,000 square foot parcel

chosen by the assessor.

[53] Further, according to the appellant, size is a circumstance that may affect

value and must be considered in the calculation of a parcel’s fair value. For

support of his position the appellant referenced Document Number 2.2.1 of the

Manual, which according to him, clearly identifies that size is a land characteristic

like infrastructure and location that may warrant an adjustment. The appellant

argued that the Board’s decision to accept the assessor’s position to not include

size as a variable included within the analysis of typical parcels in this

neighbourhood is in error.

[54] The appellant summarized his position on this issue by stating that the

150,000 square foot standard parcel size should be changed to 30,000 square

feet.

[55] The assessor submitted that the change to Document Number 2.2.3 in the

current Manual which occurred as a result of the removal of the following wording

from the prior Manual was significant:

“Use comparable sales analysis to determine if the standard parcel is a specific size or a size range. When the standard parcel is a specific size, the standard size for determining the land size multiplier should be selected from the comparable sales that are closest to the typical size for the neighbourhood. When the standard parcel is a size range, the largest size for the standard parcel shall be used for determining the land size multiplier.”

[56] According to the assessor, this change now allowed the use of solely

discrete variables (specific numerical values) such as infrastructure and location

in defining what a “typical” parcel in the neighbourhood would be. The assessor

noted that continuous variable property characteristics (based on measurement)

such as size, need not now be included in defining what a “typical” parcel is

within a neighbourhood. Therefore, for purposes of this analysis the assessor

APPEAL 0263/2005 [Page 34]

determined that a typical parcel in this neighbourhood was a parcel that was

equal to or less than 150,000 square feet.

[57] The assessor advised that this point was selected as it was the midpoint

between the second and largest vacant land sale found in the neighbourhood.

This point was established as the point at which the price per unit started to

decline. The assessor argued that there were economies of scale as size gets

larger and as this point becomes evident, that is where the split must occur.

[58] As noted earlier, all procedures necessary for determining land values are

identified within the urban land value calculation formulas, rules and principles as

found in Chapter 2 of the Manual. The Committee notes that from the prior

Manual to the current Manual the formula for calculating the BLR as found in

Document Number 2.1.2 has remained unchanged. Further, the formula for the

application of site adjustment factors as found in Document Number 2.2.1 has

remained virtually identical. The sole change to this formula has been the

addition of an adjustment to account for the potential that a site may be affected

by environmental contamination. Further, the calculation procedures for

determining the appropriate LSM has remained virtually identical and the size

adjustment formula has likewise, remained unchanged between Manuals.

[59] Document Number 2.2.1 of the Manual identifies a number of land

characteristics including depth, size, irregular shape, corner influence, location,

infrastructure, environmental contamination, and others which may require site

adjustment. It then identifies the formulas, rules and principles to be used to

determine whether a site adjustment should be applied. Assuming that there are

sufficient vacant land sales from within the neighbourhood, both the prior and the

current Manuals require that site adjustments relating to size, irregular shape,

location, infrastructure, and other site adjustments be determined by completing

a comparable sales analysis.

APPEAL 0263/2005 [Page 35]

[60] The Committee notes that the Manual continues to require that any

adjustment relating to, for example, infrastructure and or size, again assuming

firstly that there are sufficient vacant land sales, will be completed through a

comparable sales analysis. Nothing has changed in this regard from the prior to

the current Manual. Further, the Manual fails to direct or provide any guidance

on the separation of the potential site adjustment characteristics that it

references, into groupings of either discrete or continuous variables as the

assessor has done for completion of the subject analysis for the current

assessment.

[61] In considering all of the above, the Committee is cognizant of the following

guidance provided by the Court in rendering its decision for Cadillac Fairview

Corporation supra:

“[36] The word comparable is not defined in the manual, nor are the words compare, comparative, comparison or similar. We must take them to have their ordinary dictionary meaning, subject, of course, to the context in which they are used, that is, the surrounding words and the manual as a whole ... the use of words of such broad and general meaning confer upon the assessor a broad discretion in respect of determining whether buildings are comparable within the meaning of the manual.”

[62] The Committee notes that in establishing the applied BLR used for this

neighbourhood, the assessor chose to rely on the two vacant land sales that

were similar in size (28,756 and 31,600 square feet) and rejected the use of the

third available vacant land sale. According to the assessor’s Commercial Land -

2002 Base Year Land Sales - Handout Copy as found at page 1 of Appendix B to

Exhibit A2 (line 26) the sole reason this sale was rejected from the BLR

calculation was due to its size. The appellant argued that this is proof that the

assessor did in fact consider size in defining the characteristics that determined a

typical parcel in this neighbourhood.

[63] The Committee must agree with the appellant on this issue. In the

Committee’s view, the Manual is clear in stating on page 1 of Document Number

APPEAL 0263/2005 [Page 36]

2.1.2 that a reliable BLR can only be determined, through application of the sales

comparison method, by relying on sufficient land sales that are representative of

the standard parcel size.

[64] If a 150,000 square foot parcel was to be considered representative of a

standard parcel size range as contemplated in Document Number 2.2.3 of the

Manual, one must question why the standard parcel size range would not have

been expanded to include the 209,079 square foot sale of 1550 8th Street East?

The fact that the assessor chose not to use this vacant land sale to develop a

standard parcel size range for this neighbourhood supports a finding that the

Board did err in maintaining the assessor’s standard parcel size of 150,000

square feet.

[65] The Committee therefore finds that a standard parcel size of 150,000

square feet cannot be considered to be representative of the land sales used to

develop the BLR of 28,756 and 31,600 square feet. The BLR of $24.60 is

considered to be solely representative of a standard parcel size of 31,600 square

feet.

LSM

[66] In his written submissions to the Board and verbally at the Committee

hearing, the appellant argued that the assessor’s choice to select the 22nd Street

West land neighbourhood as a comparable neighbourhood to import the LSM

was in error. The appellant argued that the comparable neighbourhood chosen

by the assessor had a BLR of $9.10 per square foot compared to the subject’s

BLR of $24.60. Additionally, the standard parcel size for the subject

neighbourhood of either 150,000 square feet as chosen by the assessor or

30,600 as requested by the appellant, was significantly different than the 10,000

square foot standard parcel size applied in the comparable neighbourhood.

APPEAL 0263/2005 [Page 37]

[67] Further, the appellant noted that the five vacant land sales used to

develop the BLR in the assessor’s comparable neighbourhood were 3,245,

3,248, 6,493, 6,795 and 7,500 square feet in size. The BLR that the assessor

applied in the subject neighbourhood was calculated based on two vacant lot

sales that were four times larger than the largest sale from the imported

neighbourhood.

[68] The appellant argued that all of the above supports a finding that the

imported LSM cannot be considered reliable as required by Document Number

2.2.3 of the Manual. Therefore, as the LSM imported from the comparable

neighbourhood is unreliable then the only choice remaining is the application of

the 130% default LSM provided in the Manual.

[69] The assessor identified in his submission that the common characteristics

between the subject and the comparable land neighbourhoods were their arterial

location and commercial zoning. In order to be consistent with the methodology

used for the Idylwyld and Circle Drive commercial land neighbourhoods, a size

curve of 115% which was imported from the 22nd Street West commercial land

neighbourhood was deemed to be appropriate.

[70] The assessor noted that the three vacant land sales found within the

subject’s land neighbourhood did not support the application of an LSM.

According to the assessor, the observed trend of consistent sale prices per unit

may have been influenced by some recent notable large scale redevelopments in

the subject’s land neighbourhood such as the Varsity Common Shopping Centre

on the former Jubilee Ford site and London Drugs/Winners developments on the

former Sherwood Auto Group site. The assessor argued that in considering all of

the above and in order to give the 8th Street land neighbourhood the benefit of

the doubt, it was concluded that it would be appropriate to import the LSM from

the 22nd Street West land neighbourhood.

APPEAL 0263/2005 [Page 38]

[71] In deciding this issue the Committee concludes that the following guidance

as provided in Document Number 2.2.3 of the Manual is the relevant direction to

be considered.

“Application

When:

(a) land is valued on a square foot or acreage basis; and

(b) it is determined that the sale price of a larger parcel in a neighbourhood is less per unit than the sale price of smaller parcel;

then a land size multiplier will be applied to land parcels that are other than the standard size parcel.”

[72] All parties agree that there are three vacant land sales in the subject land

neighbourhood that meet the criteria of an “arm’s length sale” as identified at

page 1 of Document Number 1.1.2 of the Manual. In accepting this fact, the

Committee must conclude that neither the Board’s finding which supported the

assessor’s choice to select a LSM from a comparable neighbourhood, nor the

appellant’s requested application of the default LSM curve would be appropriate.

[73] The above direction is clear in stating that the application of a LSM to land

parcels other than the standard size parcel can only occur when it has been

determined that the sale price of a parcel is less than the sale price of a smaller

parcel. As identified in the Commercial Land – 2002 Base Year Land Sales

found in Appendix B to Exhibit A2, the fully adjusted sale price per square foot for

the available vacant land sales in the subject neighbourhood were $17.32,

$32.06 and $24.15 for parcel sizes of 28,756, 31,600 and 209,079 square feet,

respectively. This evidence supports a conclusion that within the subject land

neighbourhood there is in fact, no evidence of a difference in the sale price

between parcels less than one acre in size and parcels of almost five acres in

size.

APPEAL 0263/2005 [Page 39]

Conclusion – 8th Street East Land

[74] In considering all of the above the Committee finds firstly, that the Board

erred in maintaining the assessor’s selection of a standard parcel size of 150,000

square feet. As noted earlier, the BLR of $24.60 is clearly representative of a

standard parcel size of 31,600 square feet. Secondly, the Committee finds that

the Board erred in maintaining the assessor’s application of an imported LSM curve

of 115% as the vacant land sales indicate that application of a LSM in this land

neighbourhood for parcels less than 209,000 square feet is unwarranted.

[75] The size of the subject parcel is less than the 150,000 square foot standard

parcel size established by the assessor, and also falls below the threshold for the

application of a LSM considered appropriate by the Committee. Therefore, the

above findings will have no impact on the fair value as originally calculated.

DECISION:

For 2005, the appeal against the improvement assessment is dismissed. The

appeal against the land assessment is sustained; however, the fair value shall

remain as decided by the Board.

The filing fee will be refunded.

APPEAL 0263/2005 [Page 40]

DATED AT REGINA, Saskatchewan this

26th day of October, 2006.

SASKATCHEWAN MUNICIPAL BOARD Assessment Appeals Committee Per: _________________________ Wade Armstrong, Chairman Per: _________________________ Cynthia J. Schwindt, Secretary Robert L. Edwards and David Wilkin, for the Committee

_________________________ Robert L. Edwards, Member _________________________ David Wilkin, Member

I concur: _________________________ Jenny Lai Yu, Member _________________________ Felix P. Hoehn, Member