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Saskatchewan Municipal Board Assessment Appeals Committee

Appeals: 2009-0164 to 2009-0171 RESPONDENT: City of Saskatoon In the matter of appeals to the Assessment Appeals Committee, Saskatchewan

Municipal Board, by:

Various (see Schedule A) c/o Steven Thair Brunsdon Junor Johnson Appraisals Ltd. #204 - 640 Broadway Avenue Saskatoon, Saskatchewan S7N 1A9

respecting the assessment of: See Schedule A for the year 2009; BEFORE: David Wilkin, Chairman

Gordon Hubbard, Member Leslie Sullivan, Member Jenny Lai Yu, Member

APPEARED FOR THE APPELLANT: Steven Thair Grace Muzyka APPEARED FOR THE RESPONDENT: Travis Horne Kirby Fesser These appeals were heard in the Large Conference Room, 3830 Thatcher Avenue, in Saskatoon, Saskatchewan, on September 30, 2010.

APPEALS 2009-0164 to 2009-0171 []

These appeals are against the decisions of the Board of Revision (the Board) for the City of Saskatoon pursuant to section 216 of The Cities Act (the Act). ISSUES: Did the Board err in revising the subject assessment for 2009 by: (i) Solely accepting the recommendation proposed by the assessor; (ii) Failing to adjust the premium coefficient applied to the walk-out basement;

and, (iii Failing to consider the significance of statistical measures to support the

validity of the valuation in meeting the market valuation standard? FACTS: (1) The subject property is civically known as 315 Bayview Crescent and is

located in the Briarwood Estates subdivision in the south east quadrant of the City of Saskatoon. This parcel is comprised of approximately 7.97 acres of land. The real estate under appeal includes eight ground-oriented, bare land condominium units.

(2) The Board received a notice of appeal from each condominium owner

against the 2009 assessment for the following properties:

Schedule A

Assessment Appeals

Committee Appeal Number

Unit # Roll Number

Date the Board of Revision received the

Notice of Appeal

Assessed Value

Taxable Assessment

2009-0164 22 525813120 April 20, 2009 $419,200 $293,440 2009-0165 26 525813140 April 17, 2009 $400,300 $280,210 2009-0166 31 525813165 April 8, 2009 $395,000 $276,500 2009-0167 37 525813195 April 14, 2009 $452,300 $316,610 2009-0168 38 525813200 April 20, 2009 $425,500 $297,850 2009-0169 39 525813205 April 16, 2009 $428,600 $300,020 2009-0170 40 525813210 April 16, 2009 $422,400 $295,680 2009-0171 41 525813215 April 20, 2009 $405,800 $284,060

(3) The Saskatchewan Municipal Board, Assessment Appeals Committee (the

Committee) heard this series of appeals starting with the file for Appeal 2009-0166. Thereafter, the parties to the appeal agreed that all evidence and argument be carried forward to the remaining seven appeals identified on Schedule A. The Committee concurred with this procedure.

APPEALS 2009-0164 to 2009-0171 []

(4) The amended assessed values and taxable assessments decided by the Board are as follows:

Assessment Appeals

Committee Appeal NumberRevised Assessed Value

Revised Taxable Assessment

2009-0164 $390,600 $273,420 2009-0165 $374,600 $262,220 2009-0166 $372,900 $261,030 2009-0167 $410,500 $287,350 2009-0168 $394,000 $275,800 2009-0169 $401,900 $281,330 2009-0170 $389,000 $272,300 2009-0171 $383,900 $268,730

The retroactive base date of municipal assessments for taxation purposes in the Province of Saskatchewan is June 30, 2006. As condominium properties, the percentage of value equals 70% of the assessed value.

(5) Two main grounds of appeal were identified by the agent to the Board:

(i) Walk-out basements are over-valued; and, (ii) The Quality Rating should be Average rather than Good.

There were minor grounds identified by each owner in the individual notices of appeal, but they were withdrawn during the hearing.

(6) The Board’s decision made references based on the record for Appeal

2009-0166 (Board Appeal 43-2009). The complete record to the Committee is found in Appeal 2009-0169 (Board Appeal 069-2009). The listing and sequence of the exhibits differed between these two files. For reasons of clarity, the record for these two appeals will be identified separately. The Committee will make reference based on the record in Appeal 2009-0169.

(7) The record of the Board for Appeal 2009-0169 includes:

a) Exhibit A1 - notice of appeal by the owner, Jim Radke dated April 9, 2009, received by the Board on April 16, 2009;

b) Exhibit A2 - 10 page brief of argument prepared by Steven Thair, agent for the owner, dated October 7, 2009;

c) Exhibit A3 - nine page second brief of argument by the agent, date stamped received by the Board on October 22, 2009 with the following attachments: field sheets for condo units #10, 13, 24, 32, and 42; and spread sheet titled: “2009 Recommendation for Change/315 Bayview Sales Recommendation Workup”;

d) Board’s confidentiality order dated October 27, 2009 declaring photographs and information respecting the interior of homes in Exhibit A4 as confidential;

APPEALS 2009-0164 to 2009-0171 []

e) Exhibit A4 - 16 page written submission with 74 page addenda attached, prepared by Grace Muzyka for the appellant, date stamped received by the Board on October 7, 2009;

f) Exhibit A5 - spread sheet titled “315 Bayview Crescent - Translation of the Assessor’s Recommendation”;

g) Exhibit R1 - 26 page submission of the assessor received by the Board on October 19, 2009 with pages 27 to 35 attached as Appendices A to F;

h) Confidentiality order by the Board dated October 27, 2009 declaring the sales information in Exhibit R2 as confidential;

i) Exhibit R2 - addendum to the Board date stamped as received by the Board on October 19, 2009 containing the 2009 Residential Assessment Review prepared by Brunsdon Junor Johnson Appraisals Ltd. for the City of Saskatoon dated January 6, 2009;

j) Exhibit R3 - two page spreadsheet titled “SALE_LIST_FOR 315BAYVIEW_WALKOUT-SEPO1_2009”;

k) Minutes of the Board dated October 27, 2009; and, l) Decision of the Board dated December 15, 2009.

(8) The Record of the Board for Appeal 2009-0166 includes:

a) Exhibit A1- notice of appeal by the owner, Norbert Georget dated April 5, 2009 received by the Board on April 8, 2009;

b) Exhibit A2 - two page letter with a spreadsheet by Norbert Georget dated May 22, 2009 identifying 10 issues to support the grounds of appeal;

c) Exhibit A3 - 10 page brief of argument prepared by Steven Thair, agent for the owner, dated October 7, 2009;

d) Exhibit A4 - nine page second brief of argument by the agent, date stamped received by the Board on October 22, 2009 with the following attachments: field sheets for condo units #10, 13, 24, 32, and 42; and spread sheet titled: “2009 Recommendation for Change/315 Bayview Sales Recommendation Workup”;

e) Board’s confidentiality order dated October 27, 2009 declaring photographs and information respecting the interior of homes in Exhibit A5 as confidential;

f) Exhibit A5 - 16 page written submission with 74 page addenda attached, prepared by Grace Muzyka for the appellant, date stamped received by the Board on October 7, 2009;

g) Exhibit A6 - spread sheet titled “315 Bayview Crescent - Translation of the Assessor’s Recommendation”;

h) Exhibit R1 - an undated 28 page submission of the assessor with pages 29 to 37 attached as Appendices A to F;

i) Confidentiality order by the Board dated October 27, 2009 declaring the sales information in Exhibit R2 as confidential;

APPEALS 2009-0164 to 2009-0171 []

j) Exhibit R2 - addendum to the Board date stamped as received by the Board on October 19, 2009 containing the 2009 Residential Assessment Review prepared by Brunsdon Junor Johnson Appraisals Ltd. for the City of Saskatoon dated January 6, 2009;

k) Exhibit R3- two page spreadsheet titled “SALE_LIST_FOR_315 BAYVIEW_WALKOUT_SEP01_2009”; l) Minutes of the Board dated October 27, 2009; and, m) Decision of the Board dated December 15, 2009.

(9) The decision of the Board found the following:

“The Panel rules that the 2009 assessment of the subject property be recalculated as per the recommendation of the Assessor changing the quality rating from “good” to “average” and applying a GEO adjustment of +$24,882. All other issues are denied.”

(10) The grounds of appeal to the Committee are:

“• The board erred when it changed the assessment to the assessor’s recommendation. ... the assessor recommended an entirely revamped assessment which introduced a GEO factor. This factor increases the assessments and has the effect of clawing back much of the reduction in assessment asked for by the appellant for the flawed quality rating.

• ... The error was that if a GEO was to be used in conjunction with a walk-out coefficient, then the board and the assessor both erred because the value of the GEO should be significantly higher and the value of the walk-out co-efficient could be significantly lower.

• In the same decision the board decided and clearly stated that no error by the assessor had been proved. It is contradictory to decide that no error was proved, and then change the assessment. It is a further contradiction under these circumstances to change the assessment to the assessor’s recommended method, yet at the same time say that the appellant’s arguments should fail because the assessment originally fell between 0.95 to 1.05.

...

• The board failed to understand the role of statistical testing, for instance, the use of ASRs

APPEALS 2009-0164 to 2009-0171 []

and CODs in determining whether the assessments were in error.

...

• The board erred when it relied on a review report of condominium assessments that the assessor had commissioned some time earlier. The scope of that report did not include the issues of this appeal and the conclusion of that report did not apply to the matters at hand.

• The board erred in law when it decided that sales of used units should not be analysed separately from sales of new units for the purposes of developing new coefficients. Specifically, the appellant provided cogent evidence for such a case, and the assessor provided none to the contrary...The assessor only testified as to the effect of age over a long period.

...

• The assessor’s and the board’s decision was patently unreasonable when it agreed with the assessor’s assertion that the increase in market value due to a walk-out basement was about $60,000 ($37.83/sq.ft. x 1,500 sq.ft. = $56,745). The accepted evidence was that the additional cost of building a walk-out was a few thousand dollars. If such were the case, most new ground oriented condominiums would be developed as walk-out basements to massively increase profit. That is not the case.

...

• The board erred in the conclusion it drew from the fact that the ASR’s for main floor view and non-view walks were similar. The similarity was due to the developer controlling price, rather than from free and open market transactions. The board erred in not accepting the appellant’s recommendation to split the sales into new and used units.

• The board erred when it decided that the Manual was relevant.”

The notice of appeal to the Committee was signed by Steven Thair, agent for the owners and was received by the Committee on January 15, 2010.

(11) The Committee received written submissions from the appellant and the

respondent marked as Exhibits AAC A1 and AAC R1.

APPEALS 2009-0164 to 2009-0171 []

LEGISLATION: The Cities Act:

“163 In this Part:

(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;

(f.1) “market valuation standard” means the standard achieved when the assessed value of property:

(i) is prepared using mass appraisal; (ii) is an estimate of the market value of the estate in fee simple in the property; (iii) reflects typical market conditions for similar properties; and (iv) meets quality assurance standards established by order of the agency;

(f.2) “market value” means the amount that a property should be expected to realize if the estate in fee simple in the property is sold in a competitive and open market by a willing seller to a willing buyer, each acting prudently and knowledgeably, and assuming that the amount is not affected by undue stimuli; (f.3) “mass appraisal” means the process of preparing assessments for a group of properties as of the base date using standard appraisal methods, employing common data and allowing for statistical testing; (f.4) “non-regulated property assessment” means an assessment for property other than a regulated property assessment;

164(1) All property in a city is subject to assessment. (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) An assessment shall be prepared for each property in the city using only mass appraisal. (2) All property is to be assessed as of the applicable base date. (3) The dominant and controlling factor in the assessment of property is equity.

APPEALS 2009-0164 to 2009-0171 []

(3.1) Each assessment must reflect the facts, conditions and circumstances affecting the property as at January 1 of each year as if those facts, conditions and circumstances existed on the applicable base date. (5) Equity in non-regulated property assessments is achieved by applying the market valuation standard so that the assessments bear a fair and just proportion to the market value of similar properties as of the applicable base date.

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.

200(2) If a party to an appeal other than the appellant intends to make use of any written materials on the hearing of the appeal, at least 10 days before the date set for the hearing the party shall:

(a) file a copy of the materials with the secretary of the board of revision; and (b) serve a copy of the materials on every other party to the appeal.

(4) At least 10 days before the date set for the appeal hearing, the assessor shall file with the secretary of the board of revision and serve a copy on all parties to the appeal:

(a) a complete assessment field sheet; and (b) a written explanation of how the assessment was determined.

201(1) Before providing information to the assessor or any other party to an appeal, the party that is to provide the information may:

(a) declare the information confidential; and (b) seek an undertaking of the other party that:

(i) all or some of the information provided is provided solely for the purpose of preparing an assessment or for an appeal hearing; and

(ii) no other use may be made of the information.

(2) Failure to provide an undertaking pursuant to subsection (1) forfeits the right of the other party to obtain the information being sought by any other process.

APPEALS 2009-0164 to 2009-0171 []

(3) No person who is required to comply with an undertaking given pursuant to this section shall fail to do so.

202(1) On the request of any party to an appeal, a board of revision, the appeal board or the Court of Appeal may make an order declaring all or any part of the information provided by that party to be confidential if the board of revision, the appeal board or the Court of Appeal determines that disclosure of that information on the hearing of the appeal could reasonably be expected to:

(a) result in financial loss or gain to the party or to any other person; (b) prejudice the competitive position of the party or of any other person; or (c) interfere with the contractual negotiations or other negotiations of the party or of any other person.

203(1) Boards of revision are not bound by the rules of evidence or any other law applicable to court proceedings and have power to determine the admissibility, relevance and weight of any evidence.” 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.”

MARKET VALUE ASSESSMENT IN SASKATCHEWAN HANDBOOK (THE HANDBOOK): Section A: Overview Introduction, Document 1.3.1 Market Valuation Standard, pages 5 and 6

CASE LAW: 959630 Alberta Inc. v. Regina ( City), [2010] SK CA 136, Docket 1630 Cadillac Fairview Corporation v. Saskatoon (City), [2000] 11 W.W.R. 89, 199 Sask. R. 72 (C.A.).

COMMITTEE DECISION: Appeal 2009-0089, Stockyards (Prince Albert) GP Ltd. v. City of Prince Albert

APPEALS 2009-0164 to 2009-0171 []

CONCLUSIONS AND REASONS:

[1] This Committee has received a series of appeals against decisions 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. 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.

[2] At the outset of the hearing, the Chairman commented on the last ground in

the notice of appeal to the Committee:

“The Board erred when it decided that the Manual was relevant.”

[3] The agent alleged that the Board erroneously adhered to the rigid “process”

oriented mindset of the previous assessment cycle when making its decision. This

was reflected on page 11 of the Board’s decision, the second bullet under the Rules

section cited as:

“• The proper assessment of property can be determined by applying the applicable formulas, rules and principles set forth in the Assessment Manual and by heeding those circumstances that are relevant to the determination of value in accordance with those formulas, rules and principles.”

[4] The Chairman commented that a similar issue relating to a board’s

reference to the Manual was previously brought forth by other agents in appeals for

2009. The Committee notes that it has already dealt with this concern in its

decision for Appeal 2009-0089, supra page 11 paragraph [14] where it found:

APPEALS 2009-0164 to 2009-0171 []

“Therefore, the Committee finds ... the specification of the rules should be changed to reflect those in effect for the 2009 revaluation. The standard of review for correctness is not a check for the step-by-step procedures set out for assessors and appraisers to follow. Tribunals must look to the appraisal practices chosen by the assessor and to consider if these have resulted in an equitable value.”

[5] The agent then proceeded to question the application of the GEO factor

developed and used in the assessor’s recommendation. He contended that the

Board erred when it assumed that the “appellant implicitly agreed to the GEO as

part of the solution.” During the Board’s hearing, the agent accepted the quality

rating change but never accepted the GEO application. According to the agent,

upon lowering the quality rating of the subject unit from Good to Average, the

assessor found the assessment to sales ratio (ASR) remained at an unacceptable

level. This compelled the assessor to use the GEO as a “fudge” factor to further

adjust the assessed values and bring the ASR to an acceptable level. At the same

time, the GEO application resulted in clawing back a portion of the recommended

reduction in assessment.

[6] The agent explained that typically, the assessor used the GEO factor to

account for certain “unnamed” factors that are unique to geographical locations.

The factor usually relates to a specific aspect of a property. For the subject case,

that factor was not identified by the assessor and it was not included as a ground of

appeal, thus the application of the GEO factor in conjunction with the recommended

quality adjustment was procedurally inappropriate.

[7] Upon questioning by the Committee, the agent clarified his position. He

stated that despite his “uneasiness” about the GEO application, it may be

warranted in this case to further improve on the ASR and coefficient of dispersion

(COD) for Briarwood Estates. Therefore, in submitting his analysis as presented in

Exhibit A5, the GEO factor was included as part of an alternative solution.

APPEALS 2009-0164 to 2009-0171 []

[8] The second contention by the agent relates to the premium coefficient of

$37.83 per square foot applied to the walk-out basement. The agent alleged that

the Board erred by neglecting to adjust this excessive premium, which is derived

using 73 sales of condominium units with walk-out basements in four complexes.

On pages 12 to 14 of Exhibit A4, the median ASRs relating to each of the four

complexes are identified as follows:

Number of Sales Complex Name Street Address Median ASR

5 The Summit La Ronge Road 1.10

4 (Subject) Briarwood Estates Bayview Crescent 1.09

25 Willows Cartwright Street/Terrace 1.00

39 Parkside View Heritage Crescent 0.99

[9] Based on the above, the agent argued that a separate grouping is

warranted. The combined nine sales from The Summit and subject complexes

showed median ASRs of 1.10 and 1.09 respectively, which in his view is outside

the acceptable range. The agent submitted that these two complexes are older

and lacked the premium view of the golf course and the park; therefore, they do not

warrant the premium for walk-out basement. On the other hand, the newer

complexes (Willows and Parkside View) with superior views met the desired levels

with median ASRs of 1.0 and 0.99 respectively, which supports a finding that the

premium for walk-out basements is acceptable in these complexes.

[10] The agent then proposed his first option of remedy was for the assessor to

re-run the Multiple Regression Analysis (MRA) model by re-stratifying the sales

from within the subject and the Summit complexes as “re-sales” and the sales of

the Willows and Parkside View complexes as “brand new” sales, then further re-

stratify the “re-sale” grouping into walk-outs and non-walk-outs to determine the

true effect of a walk-out basement on value for the older units.

[11] As further support for his claim that a separate stratification is warranted, the

agent presented on Table 4 of Page 12 in Exhibit A4, seven sales from within the

APPEALS 2009-0164 to 2009-0171 []

subject complex which occurred within the relevant time frame divided by sales of

units with walk-out basement and sales of units without walk-out basements:

BRIARWOOD ESTATE SALES

UNITS WITH WALK-OUT BASEMENT

Unit # Unit Area BSMT Area BSMT Dev Area Sale Date Sale Price Adj Price Adj Sale Price (Sq. Ft.) (Sq. Ft.) (Sq. Ft.) (per Sq. Ft.)

25 1,681 1,670 1,061 Sep 2004 $329,900 $396,903 $236.11 26 1,581 1,566 974 Sep 2006 $325,000 $315,575 $199.60 33 1,474 1,460 698 Aug 2005 $339,000 $371,781 $252.23 39 1,805 1,791 912 Nov 2005 $365,000 $389,711 $215.91

Median Sale Price/Sq. Ft. $226.01

UNITS WITHOUT WALK-OUT BASEMENT

Unit # Unit Area BSMT Area BSMT Dev Area Sale Date Sale Price Adj Price Adj Sale Price (Sq. Ft.) (Sq. Ft.) (Sq. Ft.) (per Sq. Ft.)

1 1,254 1,246 605 Mar 2004 $235,000 $296,359 $236.33 4 1,353 1,341 618 Jun 2005 $258,900 $288,932 $213.55 18 1,591 1,538 1,264 Jul 2004 $312,000 $381,389 $239.72

Median Sale Price/Sq. Ft. $236.33

[12] From the above, the agent stated that the median sale price per square foot

indicates that the feature of having a walk-out basement in the subject complex

yields a minimal value difference (approximately -5%). The sales of the non-walk-

out units have a higher median sale price per square foot. The agent concluded

that this is further evidence demonstrating the “unreasonableness” resulting from

the application of the walk-out premium which added $60,000 to the assessed

value of the units within the subject complex.

[13] As a second option of remedy, the agent presented an analysis in his Exhibit

A5, which is a further revision of the assessor’s recommendation. By using the

seven sales from within the subject complex as a separate grouping, the walk-out

coefficient was adjusted by 50% to $18.92 per square foot with an application of a

+$17,000 adjustment to the GEO factor. The agent proposed that this option

further improved the statistics from those reflecting the Board ordered assessment.

APPEALS 2009-0164 to 2009-0171 []

The ASR is closer to the desired level from 0.979 to 0.99 while the COD also

improves from 7.5% to 5.5%.

[14] The agent submits that the Board failed to place weight on the superior

statistical measures presented in his submission. Instead, the Board erroneously

relied on the graphical analysis of the assessor. The agent argued that the top

graph on page 18 of Exhibit R1 cannot be an accurate depiction of the effect of a

walk-out basement for the subject complex. He argued that the true effect of the

influence from the subject complex is buried among the majority of the sales plotted

from the newer, better quality complexes. Without applying the proper scale and

identifying the confidence interval, this graph, in his view, is misleading. The agent

put the reliability of the graphical evidence into further question when he pointed to

the bottom graph on page 16 of Exhibit R1 titled: “GR-CONDO ASR VS QUALITY.”

He stated that this graph was compiled prior to the assessor’s recommendation

which recognized that the quality rating is incorrect for the subject complex, yet no

bias or error was shown.

[15] In conclusion, the agent reiterated that the goal of the current valuation

system is for the assessed value to reflect market value. Therefore, despite the

assessor’s claim of his compliance to the process, his primary obligation is to meet

the legislative requirement that the assessed value is accurate and equitable.

[16] The assessor maintained that he has been diligent in investigating and

giving full consideration to the issues put forth by the agent. During the Board’s

hearing for this appeal, the agent’s main contention related to the fact that “view”

was the main factor affecting the value of a walk-out basement. The assessor

responded by preparing Exhibit R3 which is a spread sheet of all the condominium

sales with walk-out basements. This analysis supports a finding that “view” does

not influence the value. The median ASR for units with no view is 0.99 while

median ASR for units with a view is 1.0.

APPEALS 2009-0164 to 2009-0171 []

[17] The assessor claimed that the agent also did not take issue with the validity

of the graphical analysis during the Board’s hearing. The top graph on page 18 of

Exhibit R1 “GR-CONDO ASR VS WALKOUT BASEMENT” showed no bias when

the coefficient of $37.83 per square foot was applied.

[18] The assessor is opposed to the first option of remedy put forth by the agent

as in his view the stratification suggested by the agent of “brand new” vs “re-sale”

units is not justified. He argued first that the agent failed to provide objective

documentation to substantiate that the Parkside View and Willows complexes are

“brand new” units sold at a premium by the developer. Second, he did investigate

the “age” variable as shown by the top graph on page 15 of Exhibit R1. He noted

that when the slope of the line is horizontal there is no bias in the data. He argued

that the statistics identify that if there is a premium for brand new homes, the

market is not indicating it.

[19] The assessor then referred to his evidence on page 9 of Exhibit AAC R1 and

identified the statistical measures for the 73 sales:

73 Sales of Ground Oriented Condos with Walk-out Basement

ASR COD 1) Original Assessment 0.998 6.3% 2) Board Revised Assessment 1.000 5.9% 3) Agent’s Proposed Assessment 1.000 5.8%

[20] The assessor stated that the Act requires application of mass appraisal and

the Board revised assessment showed an ASR of 1.0 and a COD of 5.9%. He

noted that both of these statistical measurements are acceptable. When these

statistical measures are compared to those developed using the agent’s proposed

assessment, both measures are very close; therefore in his view, no change is

warranted. To meet the requirements of mass appraisal, the Act requires the

assessor employ common data and “allowing for statistical testing.” He submitted

APPEALS 2009-0164 to 2009-0171 []

his opinion that the Act does not require the assessor to allow for “statistical

measures.”

[21] The assessor maintained that the $37.83 per square foot coefficient is

derived appropriately through application of the MRA model. The $60,000 value

indicated reflects market value and the market perceived walk-out basement as a

valuable attribute. The assessor disagreed with the agent’s claim of

unreasonableness because the agent’s argument was based on cost as testified by

his witness, Mr. Olson, the developer of the subject complex.

[22] The assessor also disputed the validity of the agent’s second option of

remedy. This alternative solution proposed to reduce the coefficient by 50% then

further adjust the GEO by an additional $17,000. The assessor claimed that since

the agent did not use the MRA model to determine these values, they are

considered arbitrary and subjective. This methodology to “tighten” the statistical

measures is not appropriate because “slicing down” the sales sample is in violation

of the requirements of mass appraisal. If the assessor is to stratify a market area

on a block-by-block basis, then the method is approaching single property appraisal

techniques.

[23] The assessor maintained that the GEO application is necessary for the

subject complex because it is an adjustment for unique influences. It reflects

“something geographical occurring within Bayview”. The market is indicating that

there is a value associated with the influence and the GEO factor picks up that

unique influence. The assessor testified that the City has used the GEO concept in

other condominium developments such as the Sierras in Erindale. In that case, the

units were under-valued relative to sale prices, so the lump sum GEO resulting

from the analysis is applied. Instead of developing a new variable, the City chose

to use the GEO to maintain equity. The assessor stated that the application of the

GEO will cause assessments to increase for some other units in the subject

complex for 2010 but for 2009 no increase would be implemented.

APPEALS 2009-0164 to 2009-0171 []

[24] In closing, the assessor commented that the agent’s arguments focused too

much on market value and neglected the equity provisions as required by the Act.

He commented that section 165(3) is clear in stating that equity is the dominant and

controlling factor. The assessor’s recommended value meets the market valuation

standard by using the MRA model to identify and analyze the value influencing

characteristics, which resulted in an acceptable ASR and COD that reflects typical

market conditions. He argued that the assessed value bears a just and fair

proportion to similar properties, thus equity has been achieved and the Board was

correct in revising the assessment in accordance with the recommendation.

[25] For the reasons that follow, the Committee finds the Board did err in its

decision. The Committee accepts the agent’s proposed assessment derived from

the analysis in Exhibit A5 which considers the seven Briarwood Estates sales as

one neighbourhood, then adjusts the walk-out basement coefficient of $37.83 by

50% to $18.92 per square foot and applying the GEO factor through application of

an additional $17,000.

[26] The Committee finds this methodology is a further refinement of the

assessor’s recommendation. The MRA model remains intact without affecting the

variables. The assessor admitted that the influence is “unique” to the subject

complex; therefore, the GEO factor becomes necessary. The assessor was

specific in stating that the values from the Briarwood Estates sales showed the

existence of an influence and the complex deserves separate consideration. He

therefore stratified the seven sales to arrive at the recommended revised values to

the Board. Based on this testimony and evidence, the Committee does not accept

the position he submitted that further “slicing down” the available sales sample to

further “tighten” the ASR results would be a violation of the mass appraisal

requirements as expressed in the Act.

[27] Cadillac Fairview, supra, was clear in establishing that using one sale to

calculate a market adjustment factor was insufficient as the use of one sale could

APPEALS 2009-0164 to 2009-0171 []

not be statistically tested. The Committee notes that in this case, seven sales from

within the subject’s complex do not support the assessor’s position. The

Committee concludes that this is a sufficient group and should correctly be

considered in establishing the subject’s assessed value.

[28] In 959630 Alberta Inc. v. City of Regina, the Court commented on this

aspect on pages 5 and 6, paragraph [12] as:

“The method of valuation of property improvements for tax assessment purposes is one of “mass appraisal” which is a process of valuing the improvements of a group of properties using standard methods that allow for statistical testing (see: Cadillac Fairview at para. 34). The dominant and controlling factor in assessment of property is equity in the nature of comparative fairness (see: Cadillac Fairview, at para. 10, ...)”

[29] When the Committee referenced page 17 of the International Association of

Assessing Officers (IAAO) Text: Standard on Mass Appraisal of Real Property -

2008, neighborhood is defined as:

“(1) The environment of a subject property that has a direct and immediate effect on value. (2) A geographic area (in which there are typically fewer than several thousand properties) defined for some useful purpose, such as to ensure for later multiple regression modeling that the properties are homogeneous and share important location

characteristics.” (Committee emphasis)

[30] Keeping the above definition in mind, the Committee examined the agent’s

submission in the addenda of Exhibit A4. The photographs, maps and field sheets

of the units in the subject complex demonstrated similarities in physical attributes

such as design, size (building and basement areas), quality of construction and

year built. All the units are built on the same parcel sharing important locational

characteristics.

[31] Section A, Document 1.3.1, page 6 of the Handbook also provided guidance

in this regard as follows:

APPEALS 2009-0164 to 2009-0171 []

“Assessors gather information on properties that have sold and determine the ranges of sale prices in the marketplace. This statistical data is used as part of the process for calculating market value assessments. Sale price information helps to develop market value assessments. Assessments are calculated by analyzing the range of sale prices of groups of properties at a specific point in time. Several sales of similar properties are compared to determine typical market values of specific types of properties that have similar characteristics.” (Committee Emphasis)

[32] The grouping of the available sales from within Briarwood Estates fits the

definition of a homogeneous neighbourhood and the Committee finds this

stratification would not materially affect the stratification requirements of the MRA

model.

[33] In considering the second issue of excessiveness of the coefficient premium

for a walk-out basement, the Committee reviewed the agent’s evidence on Table 4

on page 12 of Exhibit A4. The median sale price per square foot showed minimal

value difference between the units with and without walk-out basements in the

subject neighbourhood. In fact, the units without walk-out basements were

purchased for a higher median sale price per square foot. This evidence

demonstrated that the characteristic of walk-out basement in the subject complex

did not have any positive impact on the per unit value. This evidence further

supports that the $37.83 per square foot walk-out basement coefficient derived

from the MRA model is not warranted.

[34] In dealing with the third contention section 163(f.3) of the Act is clear in its

requirement that statistical testing must occur in order to meet the market valuation

standard. The assessor provided the following groupings of statistical measures at

page 9 of Exhibit AAC R1:

APPEALS 2009-0164 to 2009-0171 []

4 Bayview Sales with Walk-out Basement


3 Bayview Sales without Walk-out Basement


7 Bayview Sales


[35] It is clear from the above statistical analysis that the ASR and COD from the

agent’s proposed assessment achieved better statistical measures than the Board

revised assessment.

[36] Assessment ratio studies are performed to determine appraisal accuracy

and equity. These studies are designed to measure the performance of assessors

to a defined standard. They also provide a test for the quality of the assessment

product as required by the Act. Having performed the statistical testing, the results

are shown in the form of statistical measures. These measures provide meaning

and weight to the data analyzed. These measures are also salient in substantiating

whether the quality standards that have been set, have been met. Two common

statistical measures typically used to consider quality standards for assessment

projects are the ASR and the COD.

APPEALS 2009-0164 to 2009-0171 []

[37] In Saskatchewan, the measure of central tendency normally used for

assessment purposes is the median, which is defined as the middle number of a

set or array of numbers. The median is used in assessment as it is far less

influenced by extremes than the average or mean. The Handbook refers to the

median as the “central tendency” that best reflects typical property

characteristics.

[38] The median ASR indicates the assessment level by examining the degree to

which assessments are performed based on the statutory requirement of market

value.

Original Assessment – 0.965 Board Revised Assessment – 0.979 Agent Proposed Assessment – 0.990

[39] The desired level for median ASR is 1.0. As shown by the assessor’s

grouping for the seven Briarwood Estates sales on page 9 of Exhibit AAC R1, the

agent’s proposed median ASR 0.990 is closer to the desired level of 1.0 than the

Board revised median ASR of 0.979.

[40] The second measure is for the uniformity of assessment using the COD. It

measures the relative spread or variability that individual sale ratios fall from the

typical. It is a measure of variability from the median value. A lower COD

indicates less variability thus closer to the typical, which equates to a higher level

of reliability.

Original Assessment – 12.9% Board’s Revised Assessment – 7.5% Agent Proposed Assessment – 5.5%

[41] The agent’s proposed analysis showed a median COD significantly

improved to a lower 5.5% when compared with the Board’s revised median COD

of 7.5%.

APPEALS 2009-0164 to 2009-0171 []

[42] To ensure that the assessment is equitable, the Committee noted that the

COD is now being recognized as one of the “customary measures” for equity in

the definition provided by the IAAO and the Saskatchewan Assessment

Management Agency Glossary in the Handbook as:

“Equity - Degree to which assessments bear a consistent relationship to market value. The COD and COV are customary measures.”

[43] For the above reasons, the Committee finds the Board did err in its

decision and the appellant is successful on all three issues.

DECISION:

These appeals are sustained. For 2009, the assessed values for the subject units

shall be revised by reducing the coefficient for a walk-out basement by 50% and

applying a GEO factor of an additional $17,000.

The filing fees shall be refunded.

APPEALS 2009-0164 to 2009-0171 []

DATED AT REGINA, Saskatchewan this

18th day of March, 2011. SASKATCHEWAN MUNICIPAL BOARD Assessment Appeals Committee

- original signed by - Per: _________________________ David Wilkin, Chairman

- original signed by - Per: _________________________ Cynthia J. Schwindt, Secretary

- original signed by -

Jenny Lai Yu, for the Committee

_________________________

I concur: - original signed by -

_________________________ Gordon Hubbard, Member

- original signed by -

_________________________ Leslie Sullivan, Member

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