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REAL PROPERTY TAX - Assessment - Methods - Valuation of land - Considerations - Methods of - Market value

Monday, May 29, 2017 @ 7:04 AM  


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Appeal by the City of St. Albert and the St. Albert Composite Assessment Review Board from a decision quashing the Board’s dismissal of complaints by the St. Albert Housing Society and Big Point Developments (Big Point). The complaints related to the City’s use of an income approach to determine the market value of 12 Nevada Place, a residential apartment complex containing 78 affordable housing units, for taxation purposes. Big Point was the developer of the complex. It received a capital grant from the Alberta government covering 65 per cent of the construction costs, and agreed to rent out units under market rent. After receiving the grant, the City transferred the land to Big Point for $1 and Big Point transferred title to 15 units in 12 Nevada Place to the Housing Society. The land transfer agreement referenced the provincial funding agreement in several places. The City’s assessor used the mass appraisal technique to estimate the value of 12 Nevada Place, primarily applying an income approach to value. To confirm the assessment value, the assessor also performed valuations using the cost approach and the direct comparison approach. Big Point and the Society complained, arguing that given the mandated cap on rents, the actual rents rather than market rates should have been used for the income calculation, to result in a much lower assessed value. They presented to the Board two appraisals used to determine the fair market value of individual units in 12 Nevada Place after the Housing Society decided to purchase them. The Board gave the appraisals little weight because they were not current, and rejected the argument that actual rents ought to be used for assessment purposes. The Board found that the limits imposed on rental rates were imposed by contract, by way of which Big Point received a capital grant. The management decision to restrict rents in exchange for the grant was not a proper consideration in estimating the value of the fee simple estate in the property, in the opinion of the Board. Big Point and the Society applied for judicial review of the Board’s decision. The judge found that the Board’s decision lacked justification and did not fall within a range of acceptable outcomes. She found that the Board’s rejection of the appraisals presented, because they were not prepared for assessment purposes, was unreasonable. The judge found it was unreasonable for the Board to conclude that the rent caps in the funding agreement did not impact market value, to characterize the funding agreement as akin to a financing agreement, and to conclude that the selling price of 12 Nevada Place would include the pro-rated balance of the remaining grant.

HELD: Appeal allowed. It was not open to the judge to substitute her view of the relevance of the appraisals presented to the Board for that of the Board, a highly specialized tribunal created to review decisions of assessors as to property valuation. It was not unreasonable for the Board to decide that Big Point and the Housing Society should pay property taxes based on fair market rents. The Board gave intelligible reasons for rejecting a seniors’ residence, with more extensive facilities than a regular apartment building, as comparable for 12 Nevada Place.

St. Albert Housing Society v. St. Albert (City), [2017] A.J. No. 427, Alberta Court of Appeal, C.A. Fraser C.J.A., P.A. Rowbotham and S.J. Greckol JJ.A., May 1, 2017. Digest No. TLD-May292017001