6.1 Sask Mun Board Appeals

?askafchewan Municipal Assessment Appeals Committee Board DETERMINATIONOF APPEALSUNDER Section 16 of The Municipal Board Act and Section 246 of The Municipalities Act and Section 216 of The Cities Act Appeal Numbers: AAC 2013-0154, 0088, 0120, and 0121 Date and Location: September 16, 2015 — Saskatoon, SK Various c/oAltus Group Limited Appellants —and— City of Martensville, Resort Village of Manitou Beach, and Town of Kindersley (as represented by the Saskatchewan Assessment Management Agency [SAMA]) Respondents APPEAREDFOR: The Appellant: Garry Coleman, Director Jesse Faith, Director The Respondents: No one appeared SAMA: Darwin Kanius, Manager Carrie Lalonde, Senior Market Commercial Appraiser HEARDBEFORE: John Eberl, Panel Chair Gord Androsoff, Member Lee Fuller, Member HollyMcFarlane, Observer APPEALSAAC 2013-0154, 0088, 0120, 0121 Page 2 INTRODUCTION: [1] The 2013 assessments and other information for the properties under appeal are: 2013 AAC Original Board's Appeal Roll Legal Assessed Assessed Assessed No. Municipality Number Description Owner Hotel Name Value Value 615400 City of BlockJ, Plan Saskatchewan 0154 Martensville 505022000 72514140 Ltd. Adobe Inn $1,528,600 $1,528,600 Resort Village of Lot 16, Block Manitou Manitou Manitou 13, Plan Springs Hotel Springs 0088 Beach 505017600 90533300 Inc. Resort $9,518,400 $7,875,700 Lot 1, Block Town of 103, Plan 994552 Kindersley 0120 Kindersley 4103010 84510204 N.W.T. Ltd. Inn $6,038,800 $5,841,000 Town of Lot 7, Block 994552 0121 Kindersley 14002070 2, Plan G776 N.W.T. Ltd. Nova Inn $2,568,100 $2,568,100 [2] The properties are non—regulated and classified as commercial. The Assessor used the income approach to value the properties. The properties are categorized as full—service hotels and valued using SAMA’sPrimary Accommodation Model. The capitalization (cap) rate used for full service hotels is 7.5% based on two sales (one is the Derrick Hotel). SAMAhas a separate cap rate for limited service hotels, also supported by two sales. [3] In the Board of Revision (the Board) appeals, Altus argued that the cap rate used to value all four properties was incorrectly calculated. The alleged cap rate error relates to the sale price of the Derrick Hotel in Estevan (ESTEV— 515214350) and its net operating income. The sale price and net operating income are components that determine the cap rate. There are also a number of property specific issues in the grounds to the Board. [4] The Board ruled against all appeal grounds with the exception of the number of rooms in Manitou Springs and Kindersley Inn. The Board ruled that Manitou Springs Resort had 94 rooms (not 102) and asked SAMA to recalculate the assessment on that basis resulting in an assessed value of $7,785,700. The Board also ruled the Kindersley lnn had 90 rooms (not 94), resulting in a revised assessment of $5,841,000. The Board upheld the original assessed values on the Adobe Inn and Nova Inn. APPEALSAAC 2013-0154, 0088, 0120, 0121 Page 3 [5] There are 12 grounds of appeal to the Committee. For the convenience of the parties, the Committee listed the grounds and indicated the properties they pertain to on a spreadsheet. The grounds are lettered A to L. Six are common to all four properties and relate to the Derrick Hotel market cap rate. Two grounds are also shared and allege that the Board's decision did not list all relevant facts and that reasons for the rulings were not sufficient. The remaining grounds are specific to each property. in essence, Altus alleges that the Board should have found in favour of all their original grounds. Altus asks the Committee to overturn all aspects of the Board's decisions with the exception of the revisions to the room counts. ISSUES: [6] a) Did the Board make a mistake by allowing the Derrick Hotel sale to remain in the array used to develop the cap rate? b) Did the Board fail to list relevant facts and provide sufficient reasons in their decision? DECISION: [7] a) The Board should have removed the Derrick Hotel sale from the sales array. b) The Board provided sufficient reasons in its decision. PROCEDURALMATTERS: Lead Appeal [8] The parties agreed the Committee would hear all appeals in one hearing starting with AAC 2013-0154, the Adobe Inn. The Committee would then hear the remaining appeals (0088, 0120, and 0121). The parties would indicate what information they wished to carry forward from the lead appeal and where the appeals differed. The Panel Chair advised that the Committee would issue one decision for all appeals. PRELIMINARYMATTERS: Court of Appeal Proceedings [9] At the Committee hearing, the Panel Chair stated that a common issue with all four appealed properties is the Derrick Hotel sale. The Committee has ruled on that sale in a City of Moose Jaw appeal (AAC2013-0130, 0128, 0137 and 0129). This Committee is of the view that the issues and evidence are substantially similar between AAC2013—O130 APPEALSAAC 2013-0154, 0088, 0120, 0121 Page 4 et al and these four appeals. SAMA filed an application for a leave to appeal the Committee's Moose Jaw decision to the Saskatchewan Court of Appeal. Given this, the Panel Chairasked the parties ifthere was merit in re»arguing the Derrick Hotel sale. [10] Altus asked for and was granted a short adjournment to consider the Committee's question. They agreed that that issue and the arguments were "essentially identical” between the four appeals and the Moose Jaw case. They are prepared to wait for the Court's decision. It does not make sense to re—argue the Derrick Hotel sale in this set of appeals. [11] SAMA agrees with Altus and the Committee that the issues are ’’virtually identical’’. The Court hearing on the leave application is scheduled for September 21, 2015. SAMA concurs that there is little use in re—arguing the Derrick Hotel sale in these appeals. [12] The Committee agrees with the parties. The Court has the final say on the Derrick Hotel sale. The Committee will await the Court's ruling and respond accordingly prior to releasing its decision. [13] The Court of Appeal (215 SKCA 123) denied SAMA’sleave application with written reasons on November 19, 2015. In the ruling, the Court upheld the Committee's and Board's decisions with regard to the Derrick Hotel sale. The Moose Jaw Board (Appeal 13C0080) concluded, ”... the sale of the Derrick hotel is not a qualified sale and must be removed from the sales used to determine a CAP rate for hotels.” The Moose Jaw Board went on to ask SAMA to recalculate the cap rate for full and limited service hotels. SAMA responded in a letter dated August 16, 2013. The median of the three remaining hotel sales (one full service and two limited service) was 10.9%. The median assessment to sales ratio (ASR)was 0.998 and coefficient of dispersion (ASR)at 14.71. As stated previously, the Committee upheld the Board's ruling in its appeals (AAC2013» 0130 et al). The appeal process has been exhausted with the Moose Jaw Board's ruling of a 10.9% cap rate being upheld. New Evidence [14] SAMA submitted appendices A to D as part of their submission to the Committee. Appendices B, C and D were not part of the Board record. Appendix A is a copy of the five page Derrick Hotel Contract of Purchase. The first page of the contract was included in SAMA’sBoard materials as Appendix F. [15] The Committee has the legislative authority to accept new evidence under The Municipalities Act (ss. 252-253), The Cities Act (ss. 222-223) and The Municipal Board Act SS 19884989, c M-23.2 (s. 20[7]—[8]). APPEALSAAC 2013-0154, 0088, 0120, 0121 Page 5 [16] SAMA states that the full sale contract was available one week before the Moose Jaw Board hearing, but that Board is reluctant to accept materials that are filed late. Appendices A and B are an "extension of the evidence” that was presented at the 2013 Saskatchewan Municipal Board appeal in Moose Jaw. SAMA claims that the Committee has accepted International Association of Assessing Officers (IAAO)standards (C and D) in the past. [17] Altus argues that appendices A to D are new evidence that relate to the Derrick Hotel sale. The limited circumstances under which the Committee can accept new evidence do not apply. SAMA had the opportunity to file this material prior to the Board hearing. In AAC 2013-0296, the Committee did not accept the IAAO materials when they were deemed as new evidence. [18] After hearing from the parties, the Committee recessed to decide on the inclusion of appendices A to D and related arguments in SAMA’s submission. The parties and the Committee agree that the Court of Appeal will address the Derrick Hotel sale. All of appendices A to D are not before the Court, nor were they evidence at the Board in these appeals. SAMA had the opportunity to provide the Board with this evidence. The Committee will not accept SAMA’sappendices A to D and related arguments. This decision was stated to the parties at the Committee hearing. Withdrawal and Retention of Grounds [19] The final preliminary matter brought forward by the Panel Chair was the process of addressing the remaining grounds. He asked Altus how they wished to proceed on grounds E and F relating to the Board including relevant facts and sufficient reasons in its decision. Altus decided not to provide argument on those grounds. The Panel Chair, however, stated the Committee's ruling would address those grounds.

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