methodology guide- valuing grain elevators in ontario
TRANSCRIPT
August22,2016
TheMunicipalPropertyAssessmentCorporation(MPAC)isresponsibleforaccuratelyassessingandclassifyingpropertyinOntarioforthepurposesofmunicipalandeducationtaxes.
InOntario’sassessmentsystem,MPACassessesyourpropertyvalueeveryfouryears.Thisyear,MPACisupdatingthevalueofeverypropertyintheprovincetoreflectthelegislatedvaluationdateofJanuary1,2016.MPACiscommittedtoprovideOntariopropertyowners,municipalitiesandallitsstakeholderswiththebestpossibleservicethroughtransparency,predictabilityandaccuracyinvalues.Aspartofthiscommitment,MPAChasdefinedthreelevelsofdisclosureofinformationinsupportofitsdeliveryofthisyear’sassessmentupdate.ThisMethodologyGuideisthefirstlevelofinformationdisclosure.ThisguideprovidesanoverviewofthevaluationmethodologyundertakenbyMPACwhenassessinggrainelevatorsforthisyear’supdateensuringthemethodologyforvaluingthesepropertiesiswelldocumentedandinalignmentwithindustrystandards.
Propertyownerscanaccessadditionalinformationabouttheirownpropertiesthroughaboutmyproperty.ca.Logininformationforaboutmyproperty.caisprovidedoneachPropertyAssessmentNoticemailedthisyear.AdditionalinformationaboutMPACcanbeaccessedatmpac.ca.
AntoniWisniowskiPresidentandChiefAdministrativeOfficer
RoseMcLean,M.I.M.A.ChiefOperatingOfficer
TableofContents
1.0INTRODUCTION................................................................................................................4
1.1PROPERTIESCOVEREDBYTHISMETHODOLOGYGUIDE......................................................................4
1.2LEGISLATION.............................................................................................................................5
1.3CLASSIFICATION.........................................................................................................................6
1.4THEUSEOFTHISMETHODOLOGYGUIDE.......................................................................................7
1.5CONSULTATIONANDDISCLOSURE.................................................................................................7
2.0THEVALUATIONPROCESS.................................................................................................9
2.1OUTLINE..................................................................................................................................9
2.2APPROACH.............................................................................................................................10
2.3DATACOLLECTION...................................................................................................................10
2.4DATAANALYSIS.......................................................................................................................12
2.5VALUATION............................................................................................................................12
2.6VALIDATINGTHERESULTS..........................................................................................................12
3.0THEVALUATION..............................................................................................................13
3.1COSTAPPROACHOVERVIEW......................................................................................................13
3.2LANDVALUATION....................................................................................................................14
3.3BUILDINGANDSITEIMPROVEMENTS............................................................................................14
3.4ESTABLISHINGCOSTNEW..........................................................................................................15
3.5DEDUCTINGDEPRECIATION/OBSOLESCENCE..................................................................................15
3.6MARKETVALUECONCLUSION....................................................................................................16
3.7CURRENTVALUEASSESSMENT...................................................................................................16
3.8QUALITYCONTROL...................................................................................................................17
3.9CONCLUSION..........................................................................................................................17
APPENDIX..............................................................................................................................18
©MunicipalPropertyAssessmentCorporation2016Allrightsreserved 4
1.0Introduction
TheMunicipalPropertyAssessmentCorporation(MPAC)–mpac.ca–isresponsibleforaccuratelyassessingandclassifyingpropertyinOntarioforthepurposesofmunicipalandeducationtaxation.
InOntario,propertyassessmentsareupdatedonthebasisofafour-yearassessmentcycle.Thenextprovince-wideAssessmentUpdatewilltakeplacein2016,whenMPACwillupdatetheassessmentsofOntario’snearlyfivemillionpropertiestoreflectthelegislatedvaluationdateofJanuary1,2016.Assessmentsupdatedforthe2016baseyearareineffectforthe2017–2020propertytaxyears.Ontario’sassessmentphase-inprogramprescribesthatassessmentincreasesarephasedinoverafour-yearperiod.Anydecreasesinassessmentareappliedimmediately.
Itisimportanttoensurethatthevaluationmethodologyappliediscapableofprovidingarealisticestimateofcurrentvalueattherelevantvaluationdate,which,inturn,enablesallstakeholderstounderstandthevaluationprocessandhaveconfidenceinthefairnessandconsistencyofitsoutcome.
ThisMethodologyGuidehasbeenpreparedforthebenefitofMPACassessors,propertyownersandtheirrepresentatives,municipalitiesandtheirrepresentatives,AssessmentReviewBoardmembers,provincialofficials,andthegeneralpublic.
Thisguideoutlinesthevaluationprocesstobefollowedbyanassessor,includingstepsthatrequireappraisaljudgment.Itisincumbentupontheassessortomakeinformeddecisionsthroughoutthevaluationprocesswhenarrivingatestimatesincurrentvalue.
1.1PropertiesCoveredbyThisMethodologyGuide
ThisMethodologyGuideappliesspecificallytofederallylicensedgrainelevatorsinOntario,andisnotintendedtobeusedforelevatorsthatdonotrequirelicensingwiththeCanadianGrainCommission.
Agrainelevatorisessentiallyatowercontainingabucketelevatororapneumaticconveyor,whichtransportsgrainfromalowerlevelanddepositsitinasiloorotherstoragefacility.Inthecontextofthisguide,theterm"grainelevator"coverstheentireelevatorcomplex,includingreceivingandtestingoffices,weighbridges,storagefacilities,etc.
InCanada,theterm"grainelevator"isusedtorefertoaplacewherefarmerssellgrainintotheglobalgraindistributionsystemand/oraplacewherethegrainismovedintorailcarsorocean-
©MunicipalPropertyAssessmentCorporation2016Allrightsreserved 5
goingshipsfortransport.Specifically,thereareseveraltypesofgrainelevatorsunderCanadianlaw,definedintheCanadaGrainAct,Section2,asfollows:
• Primaryelevators(called"countryelevators"before1971)receivegraindirectlyfromproducersforstorage,orforwarding,orboth.
• Processelevators(called"millelevators"before1971)receiveandstoregrainfordirectmanufactureorprocessingintootherproducts.
• Terminalelevatorsreceivegrainonorafterofficialinspectionandweighing,andtheyclean,store,andtreatgrainbeforemovingitforward.
AllcompaniesoperatingterminalelevatorsinCanadamustbelicencedbytheCanadianGrainCommission,whichmaintainsalistofalllicencedcompaniescurrentlyoperatinginthecountry.
TherearemanytypesandsizesofgrainelevatorsinOntario,rangingfromverylargefacilitieswithover350,000tonnescapacitytosmallerfacilitieswithaslittleas10,000tonnescapacity.
ThefollowingMPACpropertycodesareusedtocategorizethevarioustypesofgrainelevatorsinOntario:
• 522Grainelevators–GreatLakeswaterway
• 523Grainhandling–Primaryelevators
• 525Processelevators
Terminalgrainelevatorsaregiventhepropertycode522.
Itshouldbenotedthatthesearegeneralguidelinesthatvarydependingonthespecificcircumstancesofaparticularproperty.
AnassessormayalsomakereferencetoadditionalMethodologyGuidesforpropertiesthatdonotfallpreciselywithinthedescriptionofoneofthepropertycodeslistedabove.
1.2Legislation
ThemainlegislationgoverningtheassessmentofpropertiesinOntarioforpropertytaxpurposesiscontainedintheAssessmentAct.1
1AssessmentAct,R.S.O1990,cA.31:https://www.ontario.ca/laws/statute/90a31.
©MunicipalPropertyAssessmentCorporation2016Allrightsreserved 6
TheActcontainsimportantdefinitionsandstatesthatallpropertyinOntarioisliabletoassessmentandtaxation,subjecttosomeexemptions.Section19(1)oftheActrequiresthatlandbeassessedatcurrentvalue,whichisdefinedtomean,inrelationtoland,“theamountofmoneythefeesimple,ifunencumbered,wouldrealizeifsoldatarm'slengthbyawillingsellertoawillingbuyer.”
Section17.1ofOntarioRegulation282/98definesa“grainelevator”tomean,“anelevatorusedtoreceive,store,clean,treatortransferfeedforlivestockorgrain.”2Section17.3oftheAssessmentActspecificallyprovidesthatSection33(1)oftheActdoesnotapplyforthe2012and2013taxationyears.Thismeansthatnoomittedassessmentsforgrainelevatorscanbemadeforthe2012or2013taxationyears.
1.3Classification
MPAC’sroleistoaccuratelyassessandclassifyallpropertiesinOntarioinaccordancewiththeAssessmentActandregulationsestablishedbytheGovernmentofOntario.
TheMinisterofFinancesignedOntarioRegulation257/14onDecember8,2014,toamendOntarioRegulation282/98byaddingsections17.1,17.2,17.3and44.2andrevokingsections6(2)4and14(2)3oftheregulation.
Priortothisamendment,Section6(2)4ofOntarioRegulation282/98specificallyprescribedthat“elevatorsusedtoreceive,store,clean,treatortransferfeedforlivestockorgrain”beplacedintheIndustrialPropertyClass.
Section17.2ofOntarioRegulation257/14nowprescribesthatagrainelevatoristobeincludedintheCommercialPropertyClass,subjecttocertainconditionsdescribedinparagraphs(2),(3),(4)and(6),whichwouldeitherincludethegrainelevatorintheFarmorResidentialPropertyClass.(Seetheappendix.)
Ifaportionofthepropertyisusedforotherpurposes,itmaybenecessarytovaluethosecomponentsseparatelyandsumthecomponentvaluestoachievethecorrecttotalcurrentvalue.Itmayalsobenecessarytoapportionthetotalvalueofthepropertybetweenthevarioususestoensurethattheappropriatetaxrateisappliedtotherelevantpartsoftheproperty.
2OntarioRegulation282/98,GENERAL:https://www.ontario.ca/laws/regulation/980282.
©MunicipalPropertyAssessmentCorporation2016Allrightsreserved 7
1.4TheUseofThisMethodologyGuide
ThisMethodologyGuideisintendedto:
• EnsureMPAC’sassessedvaluesforthesepropertiesarefair,accurate,predictableandtransparent.
• Providedirectiontoassessorsandclearexplanationstomunicipalities,taxpayersandAssessmentReviewBoardmembers.
• EnsurethatMPAC’smethodologyforvaluingthesepropertiesiswelldocumentedandalignswithindustrystandards.
• Explainthethoughtprocess/decision-makingprocessthatanassessorshouldundertaketoapplythevaluationmethodology.
• Ensureaconsistentapproachtovaluingthesepropertytypes.
• SupportMPACassessorsinconductingtheirduediligencein:
Ø applyingOntario’slegislationandregulationsØ adheringtoindustrystandardsformarketvaluationinamassappraisal
environment
ItshouldbenotedthatthisMethodologyGuideisnotintendedtobeasubstituteforanassessor’sjudgmentinarrivingatamarketvalue–basedassessment(i.e.,currentvalue)foraparticularproperty.However,giventhattheMethodologyGuideexplainsindustrystandardsforpropertyassessment,conformstovaluationindustrynorms,andadherestoprovinciallegislationandregulation,MPACassessorsareexpectedtofollowtheproceduresintheMethodologyGuideandbeabletoclearlyandsatisfactorilyjustifyanydeviationsfromit.
1.5ConsultationandDisclosure
MPACiscommittedtoprovidingmunicipalities,taxpayersandallitsstakeholderswiththebestpossibleservicethroughtransparency,predictabilityandaccuracy.Insupportofthiscommitment,MPAChasdefinedthreelevelsofdisclosureaspartofitsdeliveryofthe2016province-wideAssessmentUpdate.
• Level1–MethodologyGuidesexplaininghowMPACapproachedthevaluationofparticulartypesofproperty
©MunicipalPropertyAssessmentCorporation2016Allrightsreserved 8
• Level2–MarketValuationReportsexplaininghowthemethodologyoutlinedinLevel1hasbeenappliedatthesectorlevelforthepurposesofeachassessment
• Level3–PropertySpecificValuationInformationavailabletopropertytaxpayers,theirrepresentativesandmunicipalities
©MunicipalPropertyAssessmentCorporation2016Allrightsreserved 9
2.0TheValuationProcess
Thevaluationprocessalwaysbeginswithadeterminationofthehighestandbestuseofthesubjectproperty.
Anyrelianceuponthisguideismadeonlyaftertheassessorhasdeterminedthatthehighestandbestuseofthesubjectpropertyisthatofafederallylicensedgrainelevator.
Assessorsdeterminethevalueofapropertyusingoneofthreedifferentapproachestovalue:
• thedirect(sales)comparisonapproach
• theincomeapproach
• thecostapproach
2.1Outline
Inthedirect(sales)comparisonapproach,valueisindicatedbyrecentsalesofcomparablepropertiesinthemarket.Inconsideringanysalesevidence,itiscriticaltoensurethatthepropertysoldhasasimilaroridenticalhighestandbestuseasthepropertytobevalued.
Intheincomeapproach(or,moreaccurately,theincomecapitalizationapproach),valueisindicatedbyaproperty’srevenue-earningpower,basedonthecapitalizationofincome.Thismethodrequiresadetailedanalysisofbothincomeandexpenditure,bothforthepropertybeingvaluedandothersimilarpropertiesthatmayhavebeensold,inordertoascertaintheanticipatedrevenueandexpenses,alongwiththerelevantcapitalizationrate.
Inthecostapproach,valueisestimatedasthecurrentcostofreproducingorreplacingimprovementsoftheland(includingbuildings,structuresandothertaxablecomponents),lessanylossinvalueresultingfromdepreciation.Themarketvalueofthelandisthenadded.
Thisapproachseparatelyvaluesimprovementsandlandtoproduceacurrentvaluefortheproperty.Thecostapproachforgrainelevatorshasthefollowingmainstepsforgrainelevatorbuildingsandstructures:
1. Determinereproductioncostnew(RCN).
2. Determinephysicaldepreciation.
3. Determinefunctionalobsolescence.
©MunicipalPropertyAssessmentCorporation2016Allrightsreserved 10
4. Determineexternalobsolescence.
5. Determinenetimprovementvalue.
Theassessorthenfollowsthesamestepstodeterminethevalueoftheelevatorsiteimprovements(yardwork).
Finally,theassessordetermineslandvalueforthegrainelevatorcomplexandaddsthevaluesforotherpurposes(e.g.,excessland).Atthispoint,theassessorisreadytodeterminethecurrentvalueassessment.
2.2Approach
TherearethreemainphasesinthevaluationprocessusedbyMPAC:
• datacollection
• analysisofthedatacollected
• valuation
2.3DataCollection
Thedatarequiredforgrainelevatorvaluationscomefromanumberofsources:
• MPACconductsperiodicinspectionsofgrainelevators.
• MPACalsocollectsinformationaboutsalesandtransfersofgrainelevators.
• Thereareanumberofguidesandotherpublishedinformationaboutgrainelevatorsfromindustrysources,suchastheCanadianGrainCommissionandindustryandportauthoritywebsites.
MPACgenerallycollectsthefollowingtypesofdataforgrainelevators:
• landdata–includingcommercial,industrial,excesslandandotherland
• siteimprovementsdata–includinginteriorandexterioraccessroads,waterfrontfacilities,railfacilities,tunnelsandutilities(electrical,water,sewage,gas)
• buildingimprovementsdata–includingelevator,silos,workhouses,administrativeoffices,weighbridges,conveyors,walkways,workshops,securityfacilitiesandotherstoragefacilities
©MunicipalPropertyAssessmentCorporation2016Allrightsreserved 11
Thelandwillbemeasuredintermsofitssizeinacres.Buildingswillnormallybemeasuredinsquarefeet.Storagefacilitiesmaybemeasuredintermsof“bushelcapacity.”
Theassessorwillrecorddetailsnotonlyofthesizeandcapacityofthebuildingsandstructures,butalsotheirage,conditionanduse.
MPACwilleitherprepareaplanofthesiteandbuildingsorobtainonefromthesiteoperator.Thesiteplanwillidentifyallthedifferentbuildings,structuresandotherimprovementsbyareferencenumberforeaseofidentification.
Thesereferencenumberswillbeusedinthevaluationofthegrainelevatortoensurethatallpartsofthepropertyareproperlyincludedinthecurrentvalueassessment.
Confidentiality
Asoutlinedabove,itisimportanttobeawarethat,inordertoenableMPACtoproduceanaccuratevaluationofthepropertyconcerned,informationneedstobeobtainedfromavarietyofsources.
ThiswillincludeinformationfromMPAC’srecords,fromtheowneroroperatoroftheproperty,fromthemunicipalityinwhichthepropertyislocated,fromtheassessor’svisittotheproperty,andfromothersources.
AllstakeholdersinthepropertytaxsystemhaveaninterestinensuringthatthecurrentvalueprovidedbyMPACiscorrect;inordertoachievethis,itisnecessaryforallpartiestocooperateintheprovisionofinformation.
Itisappreciatedthatsomeoftheinformationoutlinedabovemaybeofacommerciallysensitivenature.MPACrecognizestheneedtoensurethatanyinformationprovidedtoitisproperlysafeguardedandonlyusedforthepurposeforwhichitissupplied.Assessorsmustappreciatethenatureofthisundertakingandensuredataistreatedaccordingly.
If,afteranappealhasbeenfiled,MPACreceivesarequestforthereleaseofactualincomeandexpenseinformation,orothersensitivecommercialproprietaryinformation,theusualpracticeistorequirethepersonseekingtheinformationtobringamotionbeforetheAssessmentReviewBoard(ARB),withnoticetothethirdparties,requestingthattheARBorderproductionoftherequestedinformation.ThereleaseofsuchinformationisatthediscretionoftheARBandcommonlyaccompaniedbyarequirementforconfidentiality.
TheAssessmentActoutlinesinsection53(2)thatdisclosedinformationmaybereleasedinlimitedcircumstances“(a)totheassessmentcorporationoranyauthorizedemployeeofthe
©MunicipalPropertyAssessmentCorporation2016Allrightsreserved 12
corporation;or(b)byanypersonbeingexaminedasawitnessinanassessmentappealorinaproceedingincourtinvolvinganassessmentmatter.”
2.4DataAnalysis
Havingcarriedoutthedatacollectionoutlinedpreviously,theassessorneedstoanalyzeitandreachaconclusionregardingtheappropriatevaluationmethodtouseandhowitshouldbeapplied.
Asalreadyindicated,forthepurposesofthisMethodologyGuide,itisassumedthattheassessorwillconcludethatthereisinsufficientevidenceavailabletoenableeitherthedirectcomparisonapproachorincomeapproachtobeadopted.Forthatreason,theassessorwillbeadoptingthecostapproachandusingthedatacollectedtoensurethatthecostapproachisproperlyapplied.
2.5Valuation
Havingundertakenthenecessarystepsoutlinedabove,theassessorshouldnowbeinapositiontoapplytheappropriatevaluationmodel.AdetailedwalkthroughofthevaluationprocessisincludedinSection3.
2.6ValidatingtheResults
Oncetheassessorhascompletedthevaluation,itisnecessarytocarryoutaseriesofcheckstoensurethatallrelevantpartsofthepropertyhavebeenincludedinthevaluation,therehasbeennodouble-countingofanyadjustmentsmadefordepreciation,theresultingvaluationhasbeencomparedwithanymarketevidencethatmaybeavailableinrelationtosimilarproperties,andthefinalvaluationisinlinewiththevaluationofothersimilarpropertiesinOntario.
©MunicipalPropertyAssessmentCorporation2016Allrightsreserved 13
3.0TheValuation
3.1CostApproachOverview
Thetheorybehindthecostapproachtovaluefollowstheprincipleofsubstitution:thevalueofapropertyisequaltotheamountitwouldcosttoreplaceitwithasubstituteofequalutility.
Therearetwomaintasksinestimatingmarketvalueusingthecostapproach:valuethelandandvaluetheimprovements.
ValuetheLand
Theestimateforthecurrentvalueofthelandisusuallyestablishedthroughanalysisofcomparablemarketsalesdata.
ValuetheImprovements
Avaluationofimprovementsincludesthefollowingsteps:
1. Collectthephysicalanddescriptivedataaboutthegrainelevator.Inspectthebuildings,structuresandotherimprovements,quantifyareas,noteconditionsandanalyzetheirutility.
2. Quantifythebuildingareasfromplansandlayouts,or,ifnecessary,duringthepropertyinspection.
3. UsingMPAC’sautomatedcostsystem(ACS),estimatethereproductioncostnewoftheassessableimprovementsasofthevaluationdate.
4. Deductfromreproductioncostnewvalueanamountreflectingallformsofdepreciation.Thismayinclude:
• physicaldeterioration(age-lifedepreciation)
• functionalobsolescence(curableandincurable)
• externalobsolescence(economicandlocationalobsolescence)
Theresultingvaluewillbeanestimateofthecontributionoftheimprovementstothemarketvalueofthesubject,depreciatedforallcauses.
©MunicipalPropertyAssessmentCorporation2016Allrightsreserved 14
FinalValue
Thesumoflandvalueplusdepreciatedimprovementvalueistheestimatedmarketvalueoftherealestateatthesubjectlocation.
3.2LandValuation
Essentialsourcesofinformationthatcanbeusedinthevaluationofgrainelevatorsinclude:assessmentrecords,municipalzoningbylaws,owners,realestateconsultantsandbrokers,realestatepublications,costmanuals(forsiteservicingcosts)andtitleregistrationoffices.Comparablesalesareutilizedindetermininglandvalueswheneverpossible.
Thefollowingtypesoflandusesmaybeassociatedwithafederallylicensedgrainelevatorsite:
• commercial
• industrial
• otheruse
• excessland
Theassessorwillnormallyassignaseparatevaluetoeachtypeoflanduse.
3.3BuildingandSiteImprovements
Variousbuildingandsiteimprovementsareessentialtothefunctioningofagrainelevator.Theymayinclude,butarenotlimitedto:
• elevator • walkways
• silos • workshops
• otherstoragefacilities • securityfacilities
• workhouses • washrooms
• administrativeoffices • canteen
• weighbridges • utilities(electrical,water,sewage,gas)
• conveyors • exterioraccessroads
©MunicipalPropertyAssessmentCorporation2016Allrightsreserved 15
• interioraccessroads • tunnels
• waterfrontfacilities • parking
• railfacilities
Theassessorwillobtainasmuchfactualinformationaspossibleaboutboththenatureoftheimprovementsandthewayinwhichtheyareused.Theassessorwilltalktotheoperatorofthegrainelevatortoobtainaproperunderstandingofthewayinwhichtheimprovementsareusedandtheirefficiency.
3.4EstablishingCostNew
Threeapproachescanbeusedtoestablishcostnew:
• historicalconstructioncost–actualcostsindexedtothevaluationdate,whichmaybeusefulforrelativelynewbuildingsorstructures(upto5to10years)
• reproductioncosttechniques–appliedinthevaluationofmostbuildingsorstructuresandobtainedfromcostmanualssuchastheAutomatedCostSystem(ACS)developedforMPAC
• replacementcosttechniques–maybeappliedwhenestimatingthecostofamodernfacilitythatisdifferenttotheexistinggrainelevatorandwhichmaybeusedinconnectionwithquantifyinganyfunctionalobsolescence
Dependingonthefunctionalutilityofthegrainelevatorinthemarket,theassessorwillselectthemostrelevantoptionforthesubjectproperty.Inmostcases,MPACwillusereproductioncostnew(RCN)asthestartingpointforthevaluation.
3.5DeductingDepreciation/Obsolescence
Depreciationmayincludephysicaldeteriorationduetoage,conditionand/oruseoftheproperty.Depreciationmayalsoincludeobsolescence.
Obsolescencereflectstheabnormaldepreciationthatarisesinsomepropertiesduetofunctionaland/orexternallygeneratedeconomicproblems.
Functionalobsolescencecanbetheresultofnumerousfactors,includingpoororoutdateddesigns,inadequateareas,excessoperatingcosts,etc.
©MunicipalPropertyAssessmentCorporation2016Allrightsreserved 16
Obsolescenceisnotrelatedtotheageofthepropertybuttoitsabilitytoadequatelyperformitsintendedfunctions.
Whendeterminingwhetherobsolescenceexistsinaproperty,theassessorasks:“Couldtheexistingfacilitybereplacedwithamoremodern,efficientsubstitute,andifso,whatwouldconstitutethismodernfacility?”
Knowledgeofcurrenttrendsandbuildingdesignsforgrainelevatorsisimportantinrecognizingobsolescence.Functionalobsolescencecanusuallyberecognizedthroughpoordesignandlayout,poororinferiorconstruction,unusedareasandtheexistenceofexcessoperatingcosts.
Externalobsolescenceresultsfromachangeofcircumstancesoutsidethecontrolofthegrainelevatoroperator.Thiscouldbealarge-scalefactorsuchaseconomicrecessionandachangeintheprice/valueofgrainoramorelocalizedfactorsuchasachangeinthelocaltransportationinfrastructure,whichmakesthelocationofthegrainelevatorlessattractiveandlessvaluable.
Thereareavarietyofmethodsthatcanbeusedtoquantifydepreciation.Thedetailofthesemethodsisnotappropriateforthisguide.However,whileitisimportanttoquantifyallaspectsofdepreciation,itisequallyimportantnottodoublecountforthesameaspectofdepreciationwhileusingthevariousapproaches.
Aftertheamountanddegreeofdepreciationhavebeendeterminedandquantified(ifany),theendresultshouldreflectthereproductioncostnewofthebuildingandsiteimprovementslessanydepreciation(RCNLD)foundinthepresentimprovements.
3.6MarketValueConclusion
Theassessoraddsthevalueofthelandtothevalueofthedepreciatedbuildingandsiteimprovementsinordertoproducethemarketvalueofthepropertybasedonthecostapproach.
3.7CurrentValueAssessment
Thefinalstepintheprocessistoconsolidateacurrentvalueassessmentfortheproperty.Oncethedeterminationofvalueusingthecostapproachhasbeencompleted,theassessorwillconsiderwhetherthereisanyothervalueintherealestatethathasnotbeencapturedbytheanalysis.
©MunicipalPropertyAssessmentCorporation2016Allrightsreserved 17
AddOtherComponentsofValue
Theremaybegrainelevatorswherethevalueisnotentirelycapturedbytheapplicationofthecostapproach.Forexample,theremaybeexcesslandavailablethathasnotbeenincludedinthevaluationofthegrainelevator.
ExcessLand
Excesslandislandthatissurplustocurrentneeds.Thevalueofexcesslanddependsonitslocationwithinthesiteandhowwellitsuitsfuturedevelopments.Suchsurpluslandwouldhavetobevaluedseparatelyandaddedtothecurrentvalueassessmentarrivedatforthegrainelevator.
Beforearrivingatanexcesslandconclusion,asiteinspectionisrequiredtoensurethatadditionaldevelopmentwouldbepossible.Thedeterminationofexcesslandinvolvesareviewofcurrentzoningbylawsaswellasthecurrentcoverageandconfigurationoftheproperty.Theratetobeappliedtovalueexcesslandistypicallyderivedusingmarketsalesstudiesofvacantlandsites.
3.8QualityControl
Havingarrivedatthevalueofthegrainelevatorthroughtheaboveprocess,theassessorwillchecktheoutcomeofthevaluationtoensurenoerrorshavebeenmadeandthatthevalueisinlinewiththevaluationofothersimilargrainelevatorsinOntario.
Comparisonsbetweencurrentvalueassessmentsofgrainelevatorsmaybemadebyreferenceto“bushelcapacity”or“metrictonnes,”takingintoaccountlocationalandotherdifferencesbetweentheproperties.
3.9Conclusion
ThisguidesetsouthowMPACassessorsapproachthevaluationofgrainelevatorsforpropertyassessmentpurposes.
Althoughitoutlinesthegeneralapproachadopted,itdoesnotreplacetheassessor’sjudgmentandtheremaybesomecaseswheretheassessoradoptsadifferentapproachforjustifiablereasons.
ForfurtherinformationaboutMPAC’srole,pleasevisitmpac.ca.
Appendix
O. Reg 257/14
Conditions Commercial Class Farm Property Class
Residential Property
Class
17.2(1) Grain Elevator on Land Valued under Section 19(1) of the As-sessment Act
XX
17.2(2) Grain Elevator on Land Valued under Section 19(5) of the As-sessment Act
• Exclusively used by the Farmer
FT Class (Ap-proved by OMA-FRA)
17.2(3) Grain Elevator on Land Valued under Section 19(5) of the As-sessment Act
• Exclusively used by the Farmer
RT Class (Not Approved by OMAFRA for the FT class)
17.2(4)17.2(5)
Grain Elevator on Land Valued under Section 19(5) of the As-sessment Act
• NOT Exclusively used by the Famer
% of total grain or feed not owned by the farmer
FT Class (Ap-proved by OMA-FRA)
17.2(6)17.2(7)
Grain Elevator on Land Valued under Section 19(5) of the As-sessment Act
• NOT Exclusively used by the Farmer
% of total grain or feed not owned by the farmer
RT Class (Not Approved by OMAFRA for the FT class)
© Municipal Property Assessment Corporation 2016 All rights reserved 18