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REAL PROPERTY TAX - Valuation of land - Business property

Tuesday, September 22, 2020 @ 6:11 AM  

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Appeal by the property owner from a decision of the Assessment Appeals Committee reinstating the 2017 original assessment of the appellant’s shopping mall. The assessed value of the mall nearly doubled in the 2017 assessment year and the appellant successfully appealed that assessment to the Board of Revision. The assessment was based on the income approach. In conducting the 2017 assessment, Saskatchewan Assessment Management Agency applied a capitalization rate that was developed for general commercial property in Moose Jaw based on the sales of 39 Moose Jaw income-producing properties of various types. There was only one Saskatchewan enclosed mall sale in the applicable time frame which was insufficient for the statistical analysis required to generate a capitalization rate. The application of the general capitalization rate, a rate substantially lower than the one that was employed in 2016, generated the 2017 assessed value placed on the mall. The Board of Revision concluded that the agency erred in applying the general rate to the mall because, by using non-comparable properties to calculate that rate, it failed to meet the market valuation standard. Since no evidence was tendered to allow the board to change the assessment, the board ordered the 2017 assessment to be the same as the 2016 assessment. The committee held that the board erred by ordering the assessed value from a previous assessment cycle to be placed on the mall. The committee saw the board’s decision in this regard as involving a failure to achieve equity. It found the general commercial property capitalization rate was properly determined and that equity was obtained by applying it to the mall.

HELD: Appeal allowed. The committee erred by applying the wrong test for equity. The committee applied the correct standard of review in relation to the factual question of whether the mall was comparable to the properties used to derive the capitalization rate used in its valuation. The committee did not misapprehend the meaning of the comparability concept. When the committee said, however, that the consistent application of the model to each of the comparable enclosed shopping centres achieved equity between those properties, it erred in law by failing to use the test for equity that was mandated by the Act applicable to the assessment of the mall which required the application of the market valuation standard.

TNC Mall Properties Holdings Inc. v. Moose Jaw (City), [2020] S.J. No. 301, Saskatchewan Court of Appeal, R.G. Richards C.J.S., G.R. Jackson and J.D. Kalmakoff JJ.A., August 12, 2020. Digest No. TLD-September212020003