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Turner Drake & Partners Ltd.
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# Friday, 16 November 2018


Happy GIS Week! 

 

We were working recently on an assignment in the Annapolis Valley, the land of orchards and sloping vineyards…and that got us thinking about the impact of elevation on land area.  Ultimately, the question is one of land value: inherent in the value of agricultural land is potential crop yield.  More land area equals more growing potential equals more value.  Where slopes are acceptable or even advantageous, they may serve double duty in that sloped land is larger than it seems.

 

Our Valuation Division’s MO is to maximise your property value…this is an Economic Intelligence Unit blog post, and this is GIS Week, so we’re going to geek out on how to ensure you’re counting all your land, using a GIS, a little high school math, and a fair bit of Pythagoras[i]

 

Pythagoras’ Theorem defines the relationship between the sides of a right triangle with the equation a² + b² = c².  Side “c” is the hypotenuse, and is always the longest of the three sides. 





For illustrative purposes, we created a convenient, perfectly rectangular, parcel.  It measures 500 x 1,150 m, for a total area of 575,000 m² (57.5 hectares).





That is: 

But the land comprising this parcel is sloped.  The contour lines added to the image below demonstrate the degree of the slope; on average, there is an elevation differential between the highest and lowest elevations of 140 m.  




Thus, the 500 m parcel dimension is effectively 519.2 m:



and the effective land area is 597,080 m² (59.7 ha.), a difference of 22,080 m² – over 2 hectares of extra space for crops! 

 

This is a highly simplified example of the impact of slope on land area.  There are many other factors to take into account, such as the tipping point between beneficial slopes and unusable inclines.  But in a world where “land: they’re not making any more of it,” holds true, the most informed decisions are the best ones.  Where a precise figure is required, you’ll need to call in a professional land surveyor.  But when an area scaled from a map is fit for purpose, using a GIS and a little high school math can yield a more useful number than you’d get from a regular map. 

 

P.S. a related fun fact was shared at Wednesday night’s Geomatics on the Town event (part of the 2018 Geomatics Atlantic Conference): tree planters space their seedlings at a certain distance from each other.  For one tree planter, this was the equivalent of 3 steps on flat ground, but on sloped terrain, it was 12 steps in order to leave sufficient room between trees! 



[i] Mainly for defining the relationship between the sides of a right triangle, but a little bit for first floating the idea that the Earth is a sphere...it comes into play in measuring distance.  There are two methods of measurement in a GIS, Cartesian and Spherical.  The Cartesian method calculates distance and areas based on data as projected onto a flat surface (like scaling from a paper map), while the Spherical method accounts for the curved surface of the Earth (like scaling on a globe).  The distances in this example were measured in MapInfo using the Spherical method.   




Alex Baird Allen is the Manager of Turner Drake's Economic Intelligence Unit, and has a high level of expertise and interest in GIS. If you'd like to reach Alex, call 902-429-1811 Ext.323 (HRM), 1-800-567-3033 (toll free), or email ABairdAllen@turnerdrake.com 
Friday, 16 November 2018 12:36:31 (Atlantic Standard Time, UTC-04:00)  #    -
Atlantic Canada | Economic Intelligence Unit | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island | Turner Drake
# Monday, 22 October 2018

 Why Hire a Commercial Broker? How a Commercial Broker Adds Value in Real Estate Transactions

There are ample online and offline resources available at your fingertips to help you purchase or sell a commercial property on your own – so why hire a broker? If you have the time, negotiating skills, real estate market information, and understand your target market and how to reach them, you don’t!

However, unless you can say yes to all of the above, here is how a commercial Broker adds value to your transaction:

1. Your time is valuable.  Letting a Broker do the heavy lifting and deal with “tire kickers” allows you to focus on your business.

2. Brokers have the contacts and resources to market your listing or find you a suitable property, ensuring all opportunities are uncovered.

3. Brokers understand your target market and how to reach them.

4. Brokers do not have an emotional attachment to the property or transaction.

5. Brokers are often members of local real estate associations, which can provide you with access/exposure to the MLS system in addition to their own websites, social media platforms, and databases.

6. Brokers have the inside track on market data, sales transactions, planning considerations and players in the market who are looking to purchase or sell commercial properties. They can help you determine a reasonable price and can help maximise market exposure.

7. Brokers know how to properly measure a building and collect the property information required, such as any material latent defects that must be disclosed in a transaction, which can avoid future lawsuits.

8. Brokers prepare Purchase & Sale Agreements, Counter Offers, etc. on your behalf, saving you from hiring a lawyer to assist with these items.

So, once you’ve decided to hire a commercial broker, how do you choose which broker/brokerage to represent you? The short answer is to simply hire the broker with whom you feel most comfortable. There are many excellent commercial brokers locally, so meet with a few, ask them questions, and choose the broker you feel will best represent you, and who understands your wants and needs. Each commercial broker has their own strengths; it is up to you to determine which one is the best fit for your organisation. 


As Senior Manager of our Brokerage Division, Ashley Urquhart assists both landlords and tenants meet their space requirements, and vendors and purchasers optimise their property portfolios. For more real estate brokerage advice, you can reach her at aurquhart@turnerdrake.com or 1 (800) 567-3033.

Monday, 22 October 2018 10:44:48 (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Brokerage | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island
# Tuesday, 09 October 2018

October 7th through 13th is Fire Prevention Week in Canada.  With firefighters in Nova Scotia responding to over 1,400 fire related incidents in 2016/2017, it is important to ensure that you have the resources in place to help tenants safely clear a property in the event of a fire.

The theme of this year’s Fire Prevention Week is “Look. Listen. Learn. Be aware. Fire can happen anywhere.”  The “learn” component of this year’s them refers to the need for everyone to learn two ways out of every room.  We can help.

Our LaserCAD® team is able to assist with “learning” by creating fire escape diagrams for your building.  We can add additional crucial details to your fire escape diagrams by including the locations of fire extinguishers, pull stations, hose cabinets, and emergency lighting, as well as clearly indicating escape routes.  These maps allow tenants to quickly identify an escape route and the location of fire safety equipment in the event of an emergency.  We can also customise the diagrams as needed, showing separate escape routes for each individual tenant space and noting any other relevant details, such as muster locations.

You may not be able to predict when a fire will occur, but you CAN plan for it.

For further information feel free to reach out to any one of our Lasercad® space measurement experts at (902)-429-1811 or toll free at 1-800-567-3033

Tuesday, 09 October 2018 11:24:57 (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Lasercad | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island
# Tuesday, 28 August 2018

It is a common misconception that a piece of real estate has a single value.  This is simply not true.  Determining which value is appropriate likely has the biggest impact on property value.

 

The Royal Institution of Chartered Surveyors’ Global Valuation Standards, specify six types of real estate value (Market, Rental, Equitable, Investment, Synergistic, and Liquidation). The Appraisal Institute (of America) has identified ten distinct, and valid, property valuation bases in common use in North America. Legislation, case law, and the purpose of the real estate assignment, result in many variations of these property valuation bases. Any conversation about valuing your property has to start therefore with an understanding of the purpose of the valuation assignment or you can end up with a conclusion which is worthless at best, or seriously misleading at worst.

 

Let’s discuss the two most common types of value.

 

Market Value (Highest and Best Use) is typically quoted and understood by many (including appraisers) to be the only type of value.  It is the highest price you would get for your property on a specific date, if it was offered for sale, properly marketed, and exposed for a sufficient period of time to alert and allow all potential purchasers to submit offers.  It assumes that both seller and buyer are knowledgeable of property values, that neither are under pressure to sell or buy, are typically motivated, and are each acting in their best interest. It assumes a cash purchase, or typical mortgage financing, in Canadian dollars. It also anticipates that the purchaser will be able to put the property to its “Highest and Best” use, which may for example, include redevelopment, if this will create a higher value than the existing use of the property.

 

But beware, Market Value is not the price you could expect to get if the purchaser (1) was an adjoining owner, (2) was undertaking a land assembly, (3) was a relative or business associate, (4) knew something that the vendor should have known but did not, (5) did not know something known to the vendor of which the purchaser should have been aware, (6) wanted a “vendor take back” mortgage, (7) intended to lease back the property to the vendor, (8) enjoyed a negotiating advantage because, for example, the vendor was in dire financial straits, … and so on.

 

I was recently contacted by an existing client looking to secure financing for their property located on the Halifax Peninsula.  Their property was improved with an older, single storey commercial building.  The underlying land was worth considerably more than the building and property under its current use.  After discussing the purpose of the assignment with the client and their bank, it became clear that the bank was interested in more than just the Market Value (Highest and Best Use) of the property in this instance.  The bank’s goal was to determine if the income generated by the property, under its current use, was sufficient to keep the lights on and pay the existing mortgage.  However, the bank also wanted to know what they could expect to sell the property for if they ended up taking possession of it and selling it on the open market. Effectively, the bank had two different goals which gave rise to two different values.

 

We completed a thorough analysis of the property and provided the owner, and their bank with two values (1) Market Value (Highest and Best Use), which in this case was for redevelopment of the property, and (2) Market Value (Value in Use) as it currently exists without regard to redevelopment potential.  Market Value (Value in Use) is similar to Market Value (Highest and Best Use) but is based on the assumption that your property could only be utilised for its existing purpose.   

 

Difference in Value

 

In this instance the difference in value was significant: $1.5 million (Market Value - Value in Use) versus $2.3 million (Market Value – Highest and Best Use).  Both values were included and supported in the report, allowing the bank to make an informed decision on lending.

 

 

Looking for explanations on the different types of values listed above?  Visit our Valuation and Advisory Services site https://www.turnerdrake.org/WhichValue for more information on the various types of values.
 

Nigel Turner, Vice President of our Valuation Division, can be reached at nigelturner@turnerdrake.com
Tuesday, 28 August 2018 17:06:03 (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island | Property Tax | Turner Drake  | Valuation
# Wednesday, 25 July 2018

The Halifax Regional Municipality is in the throes of moving its long awaited Centre Plan from draft to reality.  With the first package of draft policy and regulation released in late February, it’s come a long way from the high-level guiding document that Turner Drake assisted with in 2016. However, there is still a ways to go. As one might imagine, when replacing multiple planning policy and development regulation documents for the most dynamic and complex urban environment in Atlantic Canada, the devil is truly in the details.

One of the biggest details being grappled with is the deployment of density bonusing, which is principally designed as an affordable housing tool. Depending on what you read, the current framework may actually backfire by delivering no affordable housing and even drive up market-rate housing prices by suppressing supply, or it may be perfectly fine and a good replacement for present ad hoc negotiations which are falling short of the Centre Plan’s achievable outcomes. Either way it provides an opportunity to highlight the perks and pitfalls of this increasingly common strategy.

What is Density Bonusing?

Density bonusing is a planning policy tool whereby new development projects can access higher regulatory limits on built area in return for provision of some public benefit. In other words, trade height for amenities. It is sound in concept. The value of urban land (but not the buildings on it) is primarily driven by where it is located, and what can be done on it. Thus, it is value created by our collective society through the infrastructure and services provided to it, the legal framework that governs it, and the surrounding public and private activities which would make one desire a particular location over another. When local governments “add density” by increasing regulatory limits over what is currently anticipated by the market (i.e. already reflected in its price), they literally create additional land value out of thin air. In requiring a developer to provide public benefits for this added density, local governments are recapturing the value they created in the first place.

There is an obvious tension here in terms of why this ‘bonus’ density was not permitted in the first place, but in the messy world of city-building, ideological purity will always lose to practicality. Density bonusing thus becomes something akin to racketeering: nice development application you’ve got there… what say you give us some art and affordable housing, and maybe that shadow ain’t so bad anymore.

How Does it Work?

While it’s a clear win-win in concept, it can be complex in practice. There are four important factors that determine whether or not density bonusing works on a given site:

·         the value of the property as it exists today

·         the value of the land if purchased for redevelopment

·         the value created by adding bonus density

·         the value captured through required public benefits

It is important to note that all but the last factor on this list are determined by the real estate market. The value captured is set by the municipality, and is typically based on an estimation of the value of the bonus density. In HRM, the tradeoff of density for benefits is structured under a predefined framework. Other municipalities negotiate these arrangements on a case-specific basis, but this approach it generally used in far larger centres due to the complexity and sophistication involved.

Roughly speaking, development projects are feasible in areas where the market price for land exceeds the value of properties as currently developed.  Adding a density bonusing program to the mix will increase the redevelopment value, but also add a new cost in the form of requisite public benefits. On net, this is usually a positive value; these programs are designed to recapture only a portion of the value they create.

It should be apparent that density bonusing is not, in principle, a drag on development. In fact, a properly designed program should improve the feasibility of existing projects and even increase the total pool of viable projects where the net positive addition of value (bonus density minus benefit cost) actually tips the balance of feasibility. For all intents and purposes, this is indistinguishable from a basic upzoning.

Where Can It Go Wrong?

There are plenty of opportunities for density bonusing programs to go awry, but most are the usual pitfalls of any public policy. There needs to be a logical and efficient administration process. The program needs to be supported by accurate data so that its function lives up to its intent. Appropriate buffers needs to be left to account for secondary costs and added overhead created by the program itself. There needs to be additional mechanisms in place to deal with the outputs (this is an important topic of conversation in the Centre Plan context, in which the majority of benefit is supposed to be in the form of affordable housing while the municipality has no formal jurisdiction or established programming).

However, the fundamental issue of whether a density bonusing program works is the value relationship between what is proposed, and what exists today. Most of the debate and discussion in HRM has been focussed on aspects of the former: what is the best value capture rate to use, what is the right threshold for triggering the bonus requirements, what are the correct value assumptions? Important questions, but their answers are all derived from the latter issue, not determined in a vacuum.

At the scale of a city, form follows finance. Whether density bonusing is implemented or ignored by the private sector will ultimately depend on whether the total value of entitled and bonus density, less the cost of delivering it (development costs plus public benefit), is a sweeter deal than exists today. If a profit incentive exists, a badly designed program will still deliver. If a perfectly designed program equates to a downzoning, don’t count on anything happening until prices rise, or losses are written off.

How to Get it Right?

As municipal planning increasingly makes use of economic and market-based tools (and it should) it also needs to expand its understanding of the principles and systems that underpin them. Weight does need to be placed on the market conditions of the present given their influence on the future (to say nothing of the municipality’s complicity in forming them).

The traditional approach would state planning policies cannot be captive to past practices and existing conditions, otherwise change would never be possible. While this is true, it is not justification for being willfully ignorant either. Understanding the basic value relationship between today's conditions and those proposed under new policy is the key to understanding whether density bonusing, or any planning policy for that matter, will deliver on its promise.

Neil Lovitt, our Senior Manager of Planning & Economic Intelligence can be reached at 429-1811 ext. 349 (HRM), 1 (800) 567-3033 (toll free), or nlovitt@turnerdrake.com.

Wednesday, 25 July 2018 15:00:58 (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Economic Intelligence Unit | New Brunswick | Newfoundland & Labrador | Nova Scotia | Planning | Prince Edward Island
# Thursday, 07 June 2018

The Building Owners and Managers Association (BOMA) publishes measurement standards for office, industrial, retail, and mixed use spaces.  These measurement standards provide guidelines for measuring the area occupied by each tenant within a building and, when appropriate, allocating common spaces.

BOMA states that if a building contains a single occupancy type comprising 51% or more of the total building area, the corresponding standard should be used.  In other words, the building owner does not have the right to simply choose the standard that best serves their interests. Given the ubiquity of commercial buildings that can be used for both office and retail uses, particularly in suburban and rural areas, it is critical to understand the differences between these standards.

Boundary Condition

Where does my measure line extend to? One of the most important differences between the Retail and Office Standards is how the measure line differs for exterior enclosures.  The Gross Leasable Area of a retail building is measured to the outside face of the exterior walls.  Under the Office Standard the measure line for the exterior enclosure is the dominant portion of the inside finished surface. The dominant portion is the finished surface that comprises over 50% of the vertical height, measured from floor to ceiling (not exceeding 8 ft.).  This difference can be significant.  The illustration below shows how a unit measured to the Retail Standard (right) captures more area than a unit measured to the Office Standard (left) based on this condition:


Allocation of Common Area

Under the Office Standard, building owners can allocate to each tenant their proportionate share of common area. This process of “grossing-up” the tenant’s space means each unit has two areas: a Tenant Area (the space physically occupied by the tenant), as well as a Rentable Area (the Tenant Area plus a proportionate share of common space).  In a retail building this is not the case, as this Standard does not allow for the grossing up of common areas. Under the Retail Standard, Gross Leasable Area is simply the area designed for the exclusive use of an occupant with no share of common area.

Consider a hypothetical office unit with a Tenant Area of 1,250 ft.2 located within a building that contains three additional units of the same size and 200 ft.2 of common area.  Each unit comprises ¼ of the total Tenant Area, and is allocated 25% of the common area (25% x 200 ft.2 = 50 ft.2) making the Rentable Area of the unit 1,300 ft.2 (blue overlay on left side graphic below). If this were a retail building the Gross Leasable Area would be 1,322 ft.2 as this unit would simply be measured to the exterior face of all exterior walls, while excluding any allocation of building common areas (green overlay on right side graphic below).


These are just two of the many differences between the Retail and Office Standards. With a total of six BOMA Measurement Standards it is critical to verify that the correct standard has been applied to your building, and that your space has been certified to verify its accuracy.  

    
Mitchell Jones splits his time between Turner Drake's Lasercad® and Valuation Divisions.  For further information feel free to reach out to him, or any one of our space measurement experts at (902)-429-1811 or toll free at 1-800-567-3033
Thursday, 07 June 2018 14:33:58 (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Lasercad | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island | Turner Drake
# Friday, 09 February 2018

On February 5th, Scott Armour McCrea, CEO of The Armour Group, took to the airwaves to ridicule Alexandra Baird Allen, the Manager of our Economic Intelligence Unit … the cause of his angst, an earlier CBC radio interview with Alex on the results of a Halifax Central Business District (CBD) survey which revealed an office vacancy rate of 17.3%. Labelling her conclusions “manufactured hysteria” Mr. McCrea disparaged the survey results, questioned the competence of Alex, her survey team and Turner Drake … and ignited a gender war: “Mansplainer” was perhaps the most polite invective hurled in Mr. McCrea’s direction (we are keeping a list… it’s not pretty but quite informative… we might publish it). So what was it all about?

Scott Armour McCrea is a developer and a very important man, as he so informed the CBC, the largest private office landlord in the city. In sonorous tone and displaying gravitas befitting a man with gaze firmly fixed on his own navel, Mr. McCrea revealed that “no other real estate professional uses the Turner Drake data”.  In fact, he confided, no actual practitioner agrees with them!  He then proceeded to reveal why … the full Monty so to speak.

Turner Drake, Mr. McCrea intoned, is a minor player in the leasing field completing only 2% of leasing transactions while actual practitioners such as brokers CBRE, do 30% to 40% and publish their own survey. CBRE pegged market absorption at “about 300,000 ft.2 a year” stated Mr. McCrea, “not the 25,000 ft.2” calculated by Ms. Baird Allen. The Armour Group, Mr. McCrea’s company, did their own survey as well and estimated the vacancy rate at 13% to 14%. … and most vacancies were in buildings most people would “never, ever want to work in”. And the problem was exacerbated by the Province who were so concerned about saving taxpayers’ money, they insisted on consigning their employees to space that only the private sector would tolerate. But that, he confided, was about to change. The real reason though for the problem: “if there is a problem in Halifax and I am not suggesting there is”, was that the City was “under-demolished”.

So what are the (non-hysterical) facts?

Alex has been a valued colleague for twelve years, is a Chartered Surveyor and has a degree from the University of New Brunswick, a Diploma in Urban Land Economics from the University of British Columbia and an Advanced Diploma in Geographic Information Systems from the Centre of Geographic Sciences at Lawrencetown, one of the top three GIS institutes in Canada. She combines her work as Manager of our research group with her role as a mother of twins. We have never known her to engage in hysteria, manufactured or otherwise. The office surveys are, we believe, the most comprehensive conducted in Halifax and cover all rental buildings 5,000 ft.2 or larger. They are a structured survey using purpose designed survey instruments and software, deployed by a team of trained researchers. The survey to which Alex alluded in her CBC interview had a response rate of 89% (previously we have achieved 98% but this time a large landlord, The Armour Group, refused to participate). We do have human and programmatic error traps in place for quality control purposes but recognise that they are not yet infallible so seek to have as many eyes on the results as possible and offer the full survey to any participant who would like a copy. 40% take advantage. One such recipient, was kind enough to point out not one, but two errors, in our December 2016 Halifax office survey. We are not perfect, but we are transparent. We corrected the errors, reissued the survey, changed our software to catch similar human errors and published a correction, apology and thanks in our Spring 2017 Newsletter to the gentleman who had so diligently scrutinised the survey, Mr. McCrea.

Our Market Surveys are undertaken by a research team independent of our Brokerage Division. The volume of their lease transactions is therefore unrelated to the amount of research undertaken for the Market Survey.  In any event we cannot utilise data gathered by our Brokerage Division for the Market Surveys because that would be a breach of confidentiality.

The CBC interviews were focused on the Halifax CBD. Ms. Baird Allen’s data referred to the Halifax CBD. Mr. McCrea’s interview focused on the Halifax CBD… unfortunately the CBRE data he referred to did not. It pertained to the wider HRM metropolitan market. CBRE’s estimate of the vacancy rate for the Halifax CBD is very similar to our own (18.5% versus our 17.3%). A world away from the 13% to 14% cited by Mr. McCrea. CBRE’s vacancy rate for the entire HRM office market was 15.5% (we place it at 14.97%)… probably the source of Mr. McCrea’s confusion.  There will always be some differences between the Turner Drake and CBRE survey results, an important factor being that our survey does not just focus on larger buildings but covers some as small as 5,000 ft.2. Mr. McCrea’s comment that the “annual market demand was 300,000 ft.2  not the 25,000 ft.2 quoted by Turner Drake” was similarly erroneous. Alex’s figure of 25,000 ft.2 referred to the CBD, which, after all, was the subject of the CBC interview to which Mr. McCrea was responding. It was based on the average market absorption over the past five years. CBRE’s estimate of annual market absorption of 308,944 ft.2, referenced by Mr. McCrea, referred to the entire HRM market.

Mr. McCrea’s comment that most of the vacancies were in buildings that most people would “never, ever want to work in” does not accord with the facts. Class A buildings have an average vacancy of 21.8%.

We concur with Mr. McCrea that many office buildings will have to be demolished or repurposed, Alex pointed this out in her CBC interview. However 625,750 ft.2 of the 879,665 ft.2 of currently vacant space would have to be taken out of service to restore equilibrium to the downtown office market… the aggregate of the former Bank of Montreal tower, the former Royal Bank tower, Founders Square and … volunteers anyone? Oh but Mr. McCrea is adding another 125,000 ft.2 at Queen’s Marque… let’s see, what else for the wrecking ball…?

We politely pointed out to Mr. McCrea his confusion with the CBRE survey statistics and gave him the opportunity to rectify the error. He did not respond. As for the mansplainer moniker… nothing we can do about that... we trust he is not consigned to the couch. Probably have to make his own coffee from now on though.

For more information on mansplainer consult Wikipedia. For information on the office market in the Halifax CBD and lots of other areas in Atlantic Canada, contact Alex Baird Allen the (very calm) Manager of our Economic Intelligence Unit at 902-429-1811 Ext.323 (HRM), 1-800-567-3033 (toll free), or ABairdAllen@turnerdrake.com

Friday, 09 February 2018 13:58:02 (Atlantic Standard Time, UTC-04:00)  #    -
Atlantic Canada | Brokerage | Economic Intelligence Unit | Nova Scotia | Turner Drake
# Wednesday, 25 October 2017

Nova Scotia’s 2018 Preliminary Property Assessments are available on the Property Valuation Service Corporation (PVSC)’s website, and there is a brief window to discuss assessments with PVSC assessors prior to the assessment roll being finalized on December 1st.

Between now and then, the PVSC is encouraging property owners to discuss any errors or provide additional information which may have an impact on the value of their property. The benefits in taking advantage of this opportunity are:


1)     It provides a higher level of certainty in preparing tax budgets for the 2018 fiscal year (for both the owner, and the municipality).


2)     It provides property owners with an opportunity to address concerns with 2018 assessments outside of the formal appeal process, and before the values are finalized and inserted on the official assessment roll.


3)     Owners who are not satisfied with the results of pre-roll consultations can still file a formal appeal when official assessment notices are received in January.

 

Preliminary consultations are typically less formal and more timely (and thus cost effective) than an appeal.  This is especially so because at the “pre-roll” stage, assessors aren’t in the position of defending an assessment that has already been published.  The best time to address an assessment issue is before the problem becomes one.

 

The link to proposed 2018 assessment data is as follows: https://www.pvsc.ca/en/home/findanassessment/searchbyaan.aspx.  Preliminary 2018 assessments are publicly available; owners will need their Assessment Account Number and PIN Access Code (which can be found at the top-right hand corner of their 2017 Assessment Notice) to access the underlying valuation records.


 

Giselle Kakamousias is the Vice-President of Turner Drake’s Property Tax Division.  Her experience negotiating and appealing property assessments is extensive (don’t be fooled by the photo - her calculator is older than some of her colleagues): it is a wise property owner who follows her advice.  If you’d like more of it, she can be reached at (902) 429-1811 ext. 333 or gkakamousias@turnerdrake.com.

Wednesday, 25 October 2017 12:49:18 (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Nova Scotia | Property Tax | Turner Drake
# Friday, 18 August 2017

Of Heaven and Sea and Earth 

Please be suitably impressed by this photo: it has all three of a church, a lighthouse and a commercial heritage building


Five years ago, the Chronicle Herald reported that some of Nova Scotia’s churches were exploring the option of deregistering their buildings’ heritage status under the provincial Heritage Property Act.  Nova Scotia’s churches are often their town’s signature property, featuring architectural details ranging from elaborate stained glass windows to ceilings built by 19th century shipwrights using the same techniques used on the hulls of wooden ships.  But cultural and demographic shifts have reduced demand for churches in the province.  Dwindling congregations mean reduced budgets unable to cope with the high costs of maintaining and operating historic properties.  Deregistration is required for demolition, the only option some congregations saw in the face of financial realities: maintenance requirements outweighed the ability to keep these architectural gems standing.  Recent years have seen other churches amalgamate congregations, keeping and maintaining a single building while selling the rest off for (hopefully sympathetic) redevelopment.

Wolfville United Church as it was

A more literal beacon facing a similar threat of extinction is the Canadian lighthouse.  Changing technologies have rendered redundant their function, if not their cultural attraction.  In May 2008, Parliament passed the Heritage Lighthouse Protection Act, a bill to designate and preserve lighthouses of historic significance.  It took effect in May 2010, only to be followed in June by an announcement declaring almost all Canadian lighthouses surplus, no longer to be maintained by the Coast Guard.  Since then, community groups have become the champions of select historic lighthouses, while the rest, presumably, will suffer the same fate as many an unfortunate ship along our rocky coasts.  

Peggy’s Cove lighthouse, a likely survivor

The foregoing each illustrate the perils of functional obsolescence: when a building’s functionality no longer meets market demands only its cultural significance can protect it – and then only if a champion steps up, e.g. government, community group, or passionate property owner.  Urban heritage properties are particularly susceptible to rising functional obsolescence due to the high value of the land on which they sit: the financial rewards of redevelopment contrast starkly with the economic pitfalls of retaining and maintaining them. Demolition is tempting. 

This year we celebrate Canada 150.  With our history and heritage, for better or worse, on prominent display, we decided to turn our attention to the uphill battle faced by commercial heritage properties in Halifax.

Size Matters

Hemlines are the harbinger of stock prices.  Construction of the tallest skyscraper marks the dawn of recession.  Floorplates sound the death knell of heritage properties?  

Open concept office-in-waiting

Downtown heritage buildings in Atlantic Canada are at an inherent disadvantage versus modern construction because they are simply too small.  Even 30-year-old buildings are feeling the strain imposed by their new, more spacious contemporaries, whose design is able to accommodate demand for open concept offices.  In Halifax, total demand has yet to catch up with new supply. Rental rates are restricted and tenants can afford to move into the new buildings, leaving the last generation of Class A office space struggling to stay relevant – and occupied.  The trend is toward larger floorplates as companies are opting for large, open concept offices with collaborative workspaces and few individual offices.  Downtown Halifax doesn’t have a supply of unused historic warehouses with high ceilings and large floorplates ripe for conversion well suited to modern tastes. Instead, our heritage properties are mainly small buildings, 3-6 storeys high and with floor plates between 1,000 and 6,000 square feet (typically at the lower end of this range). 

Halifax has a few examples of what can be done to overcome this drawback.  Barrington Espace and the RBC Waterside Centre both maintained the façades of a number of adjacent heritage properties while completely overhauling their innards, joining the buildings within to allow for larger floorplates (Saint John’s CentreBeam Place is another example of where this technique was used successfully).  If done carefully, this can present a best of both worlds compromise.  If not, the result may be the Disneyfication of heritage: it looks about right, but there’s no soul.  Either way, it is not an option for detached heritage properties: they are left to find occupants happy with the original floorplates size.

Barrington Espace, RBC Waterside Centre, CentreBeam Place…thanks, Google Street View!

Finding a Fit

Heritage properties need a certain tenant.  The predominant competitor of the heritage office building is the home office: to attract a tenant away from this “free” space, a historic building must provide cachet and interest, and must find a tenant who wants (or needs) both as marketing tools for their business.  Heritage tenants are drawn from a pool of largely creative firms represented by public relations and marketing firms, IT companies, and (interestingly) employment recruiting agencies.  Often, these firms are start-ups; there is a symbiotic relationship between the two, with the heritage property providing an inspiring ambiance (and maybe cheap rent: see below), and the company providing income and life to the building.  What the heritage property has more trouble providing is a flexible workspace that can grow with the company.  When they become too large for their space, they must seek a larger floorplate in a more modern building.  There is a happy medium: mid-sized companies who could occupy an entire heritage property as a single tenant.  But in Atlantic Canada, most companies are either large or small, a by-product of provincial regulatory demands which force companies to “get large or go under” (Atlantic Canada is made up of four small provinces each with their own regulatory requirements for businesses: half the population and half the land area of any other province, but four times the regulations…but this is a topic for another day).         

The Champions

There are three classes of champions for heritage properties: passionate owners (hopefully with deep pockets), community groups who recognize the social benefit of maintaining our built heritage, and governments which either have a measure of both these characteristics or are open to the influence of those who do. 

Heritage property owners must appreciate the unique features of old buildings.  To quote one (you’ll never guess who), they “speak to you in a way new buildings don’t.  There is a sense of calm, a personality.  They have been there for centuries, and if the economics can work, they will be there long after you’ve turned to dust.”  Ah, the economics.  Heritage properties in Halifax do not attract a rental premium as they do in some larger cities, such as Toronto’s trendy Distillery District.  There may be a purchase premium, albeit not driven solely by heritage, but location as well, due to the prime situation some heritage properties enjoy by virtue of having gotten there first.  Halifax’s downtown is distinguished by its waterfront; heritage properties with a connection to it in particular may enjoy a purchase premium, provided this connection is maintained (pause now to be thankful for the public outcry that halted “Harbour Drive” before it started…and hopeful that the redevelopment of its first phase, the Cogswell Interchange, will be successful in repairing the fabric of the area). 

 

Toronto’s Distillery District, as modelled by a pair of junior TDPers

There is a social benefit to heritage properties, usually external to the site itself.  A 2011 study by Place Economics highlighted six areas of positive economic impact attributed to heritage preservation: jobs, property values, heritage tourism, environmental impact, social impact and downtown revitalization.  Heritage properties differentiate cities from one another, providing a unique draw to residents, visitors and immigrants alike.  The world’s most successful cities have vibrant heritage architecture, often interspersed with modern buildings.  Community groups recognize this and fight to preserve historic built environments, but it is often the building owners who fund these broader social benefits by bearing the increased costs of renovation and upkeep.  It is here that governments can play a vital role via heritage preservation policies, but they must take care that they get them right.       

Incentivise or incense?

Halifax Regional Municipality recently commissioned a study to investigate heritage incentives.  However structured, these are a means by which society as a whole, via taxes, can help pay for the social benefit of heritage properties.  Two of the largest pitfalls of which governments must be wary when enacting policies to protect heritage properties both involve the risk of (inadvertently) penalizing property owners. 

The first is the more obvious one, wherein the owner of a protected building is prevented from redeveloping a site to a more lucrative density, diminishing the ability to make money from the property and potentially its market value.  One avenue available to the city is to compensate the property owner for the diminished value by purchasing the air rights, i.e. the space above the building in which they would otherwise be allowed to build, but are prevented by heritage preservation policy.  This could be accomplished either directly, with the municipality retaining ownership of the air rights, or by opening the market for air rights trading, allowing heritage property owners to sell their air rights to developers of non-heritage sites to increase the allowable height on their sites.  (Yes, this has the potential to open another can of worms, but it’s a good theory if the policy is well thought out). 

The second potential pitfall lies in supporting some, but not all heritage properties; such as with the creation of a heritage preservation zone.  While those properties (and their owners) located within the zone stand to benefit from financial incentives offered by the municipality, any heritage properties outside the zone are placed at greater disadvantage.  Still competing against larger modern buildings, they are now on an uneven field against their direct (heritage) competition.  The supported properties have the money to modernize without deficit to their owners’ bottom line, while unsupported properties are further penalized physically and financially. 

For more on heritage rights and wrongs, don’t miss our Summer 2017 newsletter, coming soon to a mailbox near you.  If you are not already subscribed to this informative and gutsy publication, please get in touch with us at 902-429-1811 or tdp@turnerdrake.com.

Alexandra Baird Allen is the Manager of our Economic Intelligence Unit, a position which makes surprisingly good use of her liberal arts degree in history & cultural studies, as well as her expertise in GIS.  For more information on our Economic Intelligence Products, visit our website or contact Alex at 902-429-1811 ext. 323 or abairdallen@turnerdrake.com.

Friday, 18 August 2017 12:21:25 (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Brokerage | Economic Intelligence Unit | New Brunswick | Newfoundland & Labrador | Nova Scotia | Planning | Prince Edward Island | Property Tax | Turner Drake  | Valuation
# Monday, 08 May 2017


(Image via Global News)

Symptoms of an Election
In the run up to the now transpiring Nova Scotia provincial election, our governing party engaged in the time-honoured tradition of the spending announcement roadshow. A few million for a community centre here, a few million more for an overpass there, culminating finally in the double whammy of a new outpatient facility in suburban Halifax, and toll-free twinning of several sections of highway.

Unlike most spending announcements, the outpatient facility drew immediate criticism. While the highway twinning has started to attract some rightful critique, the patently foolish choice of locating a medical facility in the retail backlands of a dysfunctional industrial park was apparent to many; not the least of which being senior municipal staff who’d advised the Province of these issues months prior. Embarrassingly, the location is a miserable failure when measured against the Province’s own aging population action plan, Shift, which it had announced along with nearly $14 million in funding mere weeks before.

As an aside: of the opportunities for criticism of the outpatient location, and there are many, the purchase price of the land is not a fruitful one. Without the benefit of knowing the particular details of the deal, the $12.00/ft² paid by the Province for the raw land includes the cost to bring the site to a state of development-readiness. Land in this condition elsewhere in Bayers Lake has sold in the neighbourhood of $11.50/ft², so this is hardly the 12,000% markup insinuated by some reporters and rival politicians. (For future reference, comparing purchase price to assessed values for development land – or any real estate for that matter – can be extremely misleading. Media Types: if you’re looking for a real estate angle on a story, give me a call… I know some people.)

A Bad Prognosis if Left Untreated
So here’s the rub. Atlantic Canada, as we’ve described many times, is facing a serious demographic crunch that will constrain income tax revenue to the provinces, and property tax revenue to municipalities (in Nova Scotia, see Canso, Springhill, Hantsport, and Parrsboro for a preview). Given the scale of these trends, immigration is not likely to alleviate this difficulty. This means public investment utilises increasingly precious dollars; long gone is the time where we could rely on growth to overcome poor decisions.

Yet, public capital spending is and will remain one of the most significant factors in the trajectory of our communities. The provision and location of these facilities influences development trends for decades. A new medical facility is not just a site for convenient patient care. It is also a major employer, and consumer of both public and private services. It generates broader impacts; spinoffs that if harnessed properly can enhance the benefits of other facilities, strengthen neighbourhoods and local business, and mitigate future infrastructure costs. A newly twinned highway is not just a safety improvement for the travelling public, it is a half-billion dollars no longer available to be spent on other priorities. We’ve got to get serious, we’ve got to be scrappy, and we have to be careful to maximise the benefits our public spending generates. Opportunities of an equivalent scale from private-sector activity are few and far between.

By narrowly constraining their site selection study (I presume, as this information is also not publicly available), the government has perhaps saved money on the land for the outpatient facility, only to create far greater costs in the form of municipal servicing expenses, diminished economic spinoff, and foregone social benefits. This short-sightedness is not resigned only to our provincial overlords, municipalities large and small consistently miss opportunities to strengthen and improve neighbourhoods or commercial main streets. At best, we have a habit of placing community facilities in a location that only performs well on measures of land price and vehicular accessibility. At worst, it is directed by decades of parochial bickering and ends up in a location agreed to be equally terrible for everyone.


Nice wellness centre you have there, shame about the sidewalk.
(Image via Pictometry ©2015)

Prescription
As the highway twinning issue has shown, no “overwhelming public consensus” is going to emerge on any policy or funding choice other than those promising a free lunch. It is going to take political guts to lead the way: the decisions we need to make are pound-wise at the risk of appearing penny-foolish. Better analysis can help identify the optimal site selection and communicate the wisdom of that choice. A paltry million saved in cheap land will pale in comparison to full lifecycle costs of poorly located public infrastructure. The property taxes generated by that good natured economic development project might never recoup its initial cost. And increasingly, methods are available to help quantify and communicate the broad community and economy strengthening effects that government undertakings can create. A complete approach to site selection and capital project analysis in a time where each dollar counts is the difference between spending decisions that achieve lasting public value instead of fleeting public relations.


Remember, an ounce of prevention is worth a pound of cure, and we have the skills required to evaluate your options in the context they deserve. Neil Lovitt, our Senior Manager of Planning & Economic Intelligence can be reached at 429-1811 ext. 349 (HRM), 1 (800) 567-3033 (toll free), or nlovitt@turnerdrake.com.

Monday, 08 May 2017 10:29:39 (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Brokerage | Economic Intelligence Unit | New Brunswick | Newfoundland & Labrador | Nova Scotia | Planning | Prince Edward Island | Turner Drake
# Wednesday, 26 April 2017

Property tax is by far the most important source of revenue for municipalities in Canada, accounting for 49.5% of revenue in 2008 with an annual average growth rate of 1.6% (1988-2008). As reliance on property tax increases, so does the complexity of administering this regressive but necessary evil. Increased computing power in the mid-1960s prompted a shift towards automation of property tax systems, beginning with simple tasks and culminating in today’s fully automated assessment, notification, and payment systems. Modern Automated Valuation Models (AVMs) allow for rapid processing of data with minimised human-bias… but (and this is a large but) real estate appraisal is a nuanced trade: reducing the role of Appraiser to AVM Technician can have significant negative repercussions.

Service New Brunswick’s ongoing cleanup of their attempt at an AVM is a prospective case study in the dangers of a “hands-off” approach to the valuation process. Massive value errors were created by a computer-driven system with insufficient checks in place to alert users to suspicious results. When reviewed by human appraisers many of the shockingly incorrect valuations were easily overturned based on traditional market comparison valuation. Autopilot replaced the flight crew and actual appraisers are left cleaning up the crash, while their political and bureaucratic colleagues deal with the rightful public outcry.

While seemingly seductive, potential time and cost savings offered by an AVM should never mask the fact that, in order to operate successfully, an AVM must integrate human expertise throughout the valuation process. At Turner Drake the “A” in our in-house AVM stands for Accelerated to reflect the role that expert opinion plays in our two-stage computer-assisted mass appraisal model. Stage One combs through real property sales to select comparable properties based on locally relevant, value-defining attributes such as size, location, and design. Stage Two adjusts and weighs a unique set of comparable sales to create a market-based value estimate for each subject property in an assessment area. Throughout each stage of the model, a professional appraiser defines the selection criteria and adjustment values for comparable properties based on market evidence and local expertise. The model does the heavy lifting but certified appraisers evaluate and refine the results.



Outliers - which no system can avoid - can wreak havoc on the results of an AVM unequipped to handle the inherently diverse nature of real estate. It is critically important to flag potential outliers for review so the model can be adjusted for future assessments. During the initial rollout of an AVM model, refinement is time consuming but absolutely necessary for creating reliable, equitable assessments in successive years. In developing our Accelerated Valuation Model, we put the time in up front so the system flags out of the ordinary results, and the professional appraiser, made aware of the potential issue, is able to quickly and easily account for them.

In a Case Study of condominiums on the Halifax Peninsula, the Turner Drake AVM out-performed PVSC assessment values by a margin of up to 45%. That is, 86% of TDP value estimates were within 5% of an actual time-adjusted sale price versus PVSC’s 41% and 98% of TDP values were within 15% of actual sale price versus PVSC’s 84% in the same pool of properties. Our combination of custom programs and a traditional direct-comparison valuation can produce a list of unique comparables with adjustments for 1,000 properties in about two seconds.

Property tax administration systems are as diverse as the municipalities they serve and every region relies to a degree on the convenience of computers and automation. However, no matter the size or complexity of a property tax system it is important to follow best practices, and learn from the success - or failure - of others. When the pursuit of speed comes at the expense of quality there is a significant risk to the accuracy of valuations and the credibility of the property tax system as a whole.

For more information on how our AVM can benefit you, call James Stephens at 902-429-1811 ext. 346 or email jstephens@turnerdrake.com

Wednesday, 26 April 2017 10:21:10 (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Brokerage | Economic Intelligence Unit | New Brunswick | Newfoundland & Labrador | Nova Scotia | Planning | Prince Edward Island | Property Tax | Turner Drake  | Valuation
# Monday, 03 April 2017



Our Economic Intelligence Unit is always on the hunt for new data sources to bolster our maps and feed our spreadsheets: any good analysis begins with high quality data. The majority of our databases are populated with a wealth of information via a process of blood, sweat, and tears (though increasingly data is graciously released by provincial gatekeepers) and it could be that our next trove of valuable data is being cultivated on farms across the Maritimes. The movement of food from field to plate involves numerous stops along the agricultural supply chain and, when property tracked, that data can prove valuable for a host of analytical tasks.

The ability to track an item from Point A to B in a large-scale supply chain is known as traceability. The theory behind it is relevant in all aspects of our lives: be it an Amazon package or a donair pizza, consumers - and businesses - have discovered that real-time knowledge of where a product is, physically, at any point in time is a competitive advantage in terms of marketing and efficiency. Agriculture is no exception. Traceability is already in use as a health risk management tool: it allows for rapid response to health emergencies by identifying exactly where and when afflicted produce or livestock stopped along the supply chain. Efficiently pin-pointing sources of contamination (think E.coli outbreaks) and creating cost-effective responses, such as targeted treatments and recalls, are critical in a modern, globally connected agricultural sector.

In addition to the obvious benefits of using traceability from an epidemiology perspective, there is also major potential for economic spinoff benefits from tracking the movement of agricultural goods. At a recent gathering of Nova Scotian Agrologists, speaker Chris deWaal of Getaway Farm (of Seaport Market fame) touted the very real benefits of offering consumers the entire life history of their food as a competitive advantage over mass-produced “mystery meat.” The introduction of the “Trace My Catch” program for canned seafood provides an example of how seafood processors are embracing traceability as a marketing tool, and provides an indication of the feasibility of doing so. In a province with a growing love affair for all things local it is no surprise that demand for local meat and produce is on the rise.

Benefits beyond health and marketing can be opened with traced agricultural data. Used in conjunction with GIS, the location and density of animals, farms, stockyards, abattoirs, and processing facilities become inputs for site selection and trade area analysis and indicators of economic health in rural economies - an issue of pressing concern for many Nova Scotian communities.

Imagine opening a meat processing and distribution facility to feed growing demand for local, organic products while still maintaining capacity for foreign exports. A standard GIS-based site selection analysis would use static location data (suppliers, purchasers) with network data (highway, rail, sea) to build a short-list of potential development sites which minimize transportation costs for both inputs and outputs. Additional variables such as workforce availability, machinery and equipment suppliers, veterinary services, and property taxes can all be integrated with locational data to suit the needs of the processor. But a standard analysis does not take into account how many animals are produced by individual farms or the variability in production from year to year.

Traceability data can enhance GIS analysis by optimizing site selection so it is based on not just the density of farms within a trade area, but the capacity to bring high volumes of livestock (or produce) efficiently to market. Historic tracking data of individual animals could forecast future production including where livestock are ultimately processed and sold. A savvy processor would use this data to identify opportunities for expansion and generate reliable, defendable business projections.

The agricultural sector already collects traceability data for use in health risk management; leveraging that same wealth of data for marketing and day-to-day business operations is the logical next step. The agricultural sector is a ray of light in the gloom of rural Nova Scotia: according to Statistics Canada’s census, between 2006 and 2011, Nova Scotia was the only province in Canada to see an increase in the number of farms, total farm area, and number of farm operators. Should the 2016 census indicate continued growth, it will clearly indicate that it’s time for all players in the agricultural game to leverage their existing data infrastructure to gain a competitive advantage at home and abroad.

For more information on how spatial analysis can benefit your business, call James Stephens at 902-429-1811 ext. 346 or visit: Economic Intelligence Unit

Monday, 03 April 2017 10:02:51 (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Economic Intelligence Unit | New Brunswick | Newfoundland & Labrador | Nova Scotia | Planning | Prince Edward Island | Turner Drake  | Valuation
# Thursday, 02 March 2017



If you own property in New Brunswick your 2017 assessment notice is in the mail and is likely to hit your desk later this week. There will be some surprises this year. Apartment and camp ground owners… sorry! The number you are looking at isn’t a mistake… both were re-assessed this year... Before you call the Premier’s office, grab another cup of coffee and give me a call and I’ll share what I know so far!

We’ll be compiling some data over the next few days and will have some more insights on what has changed but until then there has been some talk of reforms to the New Brunswick property tax system of late and there is one important issue that hasn’t been brought up but should be.

Equity, Uniformity, Fairness – The Missing Link

Ignoring the process part of the system (which is largely a function of resources committed to it) and the “my tax bill is too high side of it” (which is a function of municipal spending), the assessment part of the system which is governed by the New Brunswick Assessment Act generally represents the gold standard in assessment. New Brunswick has a market value system, requires that values be updated annually, and has a current base date (January 1st of the current year) so taxes are allocated based on the most current economic conditions. There is however one glaring omission and that is a provision to allow owners to challenge their assessment on the grounds their assessment is higher than other properties.

How can this be? Certainly equity and fairness is something all stakeholders would want in a system of taxation. During question period on December 13th, the current government confirmed that they want a “system of taxes that is relevant, that is fair, that is progressive…” During the discussion the word “fair” was referenced six times along with the word “equitable”. Similarly in 2012 when reforms were last made to the Act, the White Paper that was published referenced fairness 25 times, and the word equitable 12 times.

If we go back further… much further… to 1963… The New Brunswick Royal Commission on Finance and Municipal Taxation chaired by Mr. Edward Byrne (Byrne Commission) set out its vision for an equitable system of property assessment:

“The accurate assessment of property is as difficult as any tax administration problem. And it is impossible to have equitable taxation without accurate assessment. A primary aim in levying any type of tax should be to treat similarly-situated taxpayers similarly … In order to accomplish this, all property must be valued on the same basis … The only satisfactory basis is market value. If there are variations among different properties in the ratio of the assessed value to the actual market value, the taxes imposed by applying a uniform rate will be inequitable. The owner of property with an assessment ratio that is higher than the ratio for another owner will bear an unjustly heavier burden.”*

Nonetheless, despite more than 50 years of consensus that a fair and uniform property tax system is in the public interest, New Brunswick is among the few jurisdictions in North America that doesn’t give tax payers the right to seek tax relief on the grounds that their assessment is not equitable with other properties.

How is this possible? This requires some speculation. Before the Province took over the assessment process from municipalities during the mid 1960s assessments were ad-hoc. Assessment Levels (the ratio of assessed value to market value) varied by municipality from 23% in York County to 102% in St Andrews and most municipalities had at least one piece of special legislation setting municipal taxes for its major tax payers. When the modern Act came into force, legislators intended to bring consistency to the process and required that:

“all real property shall be assessed at its real and true value as of January 1 of the year for which the assessment is made.”

It can be difficult to know the exact intent, but knowing that the legislature was seeking a fair system of taxation that would ensure that assessments were uniform within and across municipal units it stands to reason they were assuming that the Assessment Services Division would be able to consistently achieve an assessment level at 100% of market value across all municipal units. At the time, the Act also included a provision for owners to appeal other assessments in the municipality providing at least a partial remedy for owners assessed at levels higher than their neighbors.

Legislators may have felt these provisions would be sufficient to ensure an equitable assessment roll, however the task of assessing tens of thousands of properties isn’t an easy one particularly when it comes to commercial properties. It requires developing models for all the different types of properties and for all of the individual neighborhoods in the Province and it isn’t always easy to return an assessment roll where all of the properties are assessed at 100% of market value. In fact, looking at statistics contained in SNB’s annual report from 2006-2014, the commercial level of assessment provincially has ranged from a low of 89% in 2008 to a high of 93% in 2010. The practical implication of this is that a property owner assessed at 99% of market value has no remedy for a reduction despite all other properties being assessed on average, at 89% to 93% of market value. Even had the owner been willing to appeal all of the other commercial assessments in the municipal unit, that option was removed when the Act was amended in 2008.

In the past, the New Brunswick Court of the Queens Bench has ruled there is no remedy within the Act or at common law for owners to have their assessments reduced on the grounds their assessment is unfair relative to other properties. Rather than hoping the Court of Appeal will provide a remedy at some distant future date, lets ask the legislature to give assessors and the Assessment and Planning Appeal Board the tools to ensure tax payers truly have a fair and equitable property tax system when they review the Act this year.

* Excerpt taken from Report of the Auditor General - 2005


Written by Andre Pouliot, Vice President of our New Brunswick operations and Senior Manager of our Property Tax Division. For more information about our counselling services, feel free to contact Andre at (902) 429-1811 or apouliot@turnerdrake.com

Thursday, 02 March 2017 09:50:50 (Atlantic Standard Time, UTC-04:00)  #    -
Atlantic Canada | New Brunswick | Property Tax | Turner Drake
# Thursday, 16 February 2017



Finding Answers in the Bottle

Recently our Brokerage Division closed a deal that will see a mid-century commercial building transition from a hair salon to Halifax’s first cidery – a business dedicated to the production and enjoyment of hard ciders. It is the city’s newest addition to the burgeoning craft beverage industry, and by my count, the fifth such business within short walking distance of our head office. Thanks to double digit year-over-year growth in the industry, such businesses have been setting up shop throughout our region, but I have good reason to believe we at Turner Drake are working in the very nexus of Beer Oriented Development.

The craft beverage industry is booming throughout the continent evidently. However, BOD is a specific variant distinguished by integrating the production element the brewery, with the social gathering element of a retail/food service business, wrapping it all in a locally authentic brand identity and plunking it in walking distance to residential neighbourhoods. The term itself was apparently coined in the weary rust-belt city of Buffalo where a pattern of revitalisation lead by the craft brewing industry has been observed in neighbourhoods otherwise dogged by the Midwest’s manufacturing decline and hard hit by the Great Financial Crisis.

Back in our corner of North America, we can certainly attest to the healthy “third place” function of Beer Oriented Development. That is to say, in addition to the production itself, many businesses serve as a nexus for community development outside of the home and workplace. They are small enough operations to revitalise defunct or underused properties without the timeline and complexity of projects requiring land assembly. The size and design of the retail operation typically creates an enjoyable atmosphere and promotes interaction between customers (who are often neighbours). Where the sale and service activities are able to spill outside onto a patio or sidewalk café, they further add to the vitality and liveliness of the entire street. With seemingly endless groups of engineering school buddies (it’s always those engineers) keen to start their own sudsy venture, why do some areas see a flourish of BOD while others simply get an increase in breweries?

The Broken Window Fallacy

There’s a classic economic parable that goes something like this: A baker’s shop window is broken and he hires a glazer to repair it. Passersby observe the glazer at work and remark on the economic activity stimulated by the broken window. Meanwhile, the baker having spent his money on the window now postpones his plan to purchase a larger oven to increase his production. In this way, the passersby are mistaken about the benefit of a broken window because they consider only what they see, and not what they can’t see. That is, they do not consider the opportunity cost; the lost benefits that would have been generated by things that were prevented, often without conscious purpose, from ever happening in the first place.

We don’t often think about opportunity cost in planning. We like to have the initiative; there are no problems that can’t be fixed through the application of more regulation or better policy. In this mindset, it is sometimes easy to lose sight of the fact that many (perhaps even most) good things tend to happen on their own if we leave the space for it. Nevertheless, Halifax, like many Atlantic Canadian cities, does benefit from not having gone too far off the deep end when it comes to land use regulation… at least compared to standard practices west of our region. Consider the present (if outgoing) land use bylaw for the Halifax Peninsula area where residential land use is governed by 6 zones. Contrast that with London Ontario, a city of comparable population and municipal budget, where no less than 17 zones are needed just to regulate single detached housing! Clearly one approach provides more “regulatory space” than the other.

Six of One Ain’t Always a Half Dozen

London, like Halifax, is a university town with no shortage of thirsty students or courageous engineering buddies. Like Halifax, it has its own litany of recently launched microbreweries. And finally, like Halifax, London did not, and does, not specifically target or promote Beer Oriented Development. What London does have is its hyper specific approach to coding land use which classifies microbreweries as “Food, Tobacco, and Beverage Processing Industries” and among the 20+ flavours of commercial zoning, relegates such uses to the “General Industrial” areas of the city. In Halifax, some microbrewers also set up shop in the industrial areas, depending on their business model. However, Beer Oriented Development is mostly occurring under the General Business zone which allows – to paraphrase – basically any business that doesn’t create problems in the area.

The shocking result? All of London’s new microbreweries are segregated into soulless industrial parks. Sure, they’ve got a quality product, backed by the same witty, self-aware marketing, and most even have attached tasting rooms and offer brewery tours, but to access any of it you’ve got to drive out past electrical suppliers and find their docking bay among the other distributers and warehousers. So while both city economies are benefiting from growth in the craft beverage industry, only Halifax is gaining the additional benefits to neighbourhood revitalisation and contributions to a lively pedestrian atmosphere. These are not just intangible perks for urban hipsters. There is a hard dollar cost to London in terms of lost economics spinoffs and unrealised gains in property value, but that cost is the new oven, hidden behind a broken window.

The Future is Delicious

Beer Oriented Development is just a microcosm of a larger dynamic. No one was anticipating an explosion of craft brewing or the potential of BOD when the zoning codes were written twenty years ago, just as the codes we write today do not address a futuristic possibilities like the rise of distributed manufacturing, or an explosion of artificial intelligence. In truth, it’d be foolish if they did. In dealing with an ultimately unknowable future, it is basic human nature to play it safe; control what is knowable, and regulate the unexpected out of existence. The costs of this approach are easy to ignore because we are never fully aware of paying them. Yet, as Beer Oriented Development clearly demonstrates, there is a benefit, indeed a competitive advantage, to the city that sets itself up to embrace the unknowable future and capitalise on the unexpected.

Our Role

What can you build on your property? The answer to this is determined by interpreting the local planning policy and regulation. However these are living documents, and project timelines are often measured in years. Thus, it is essential to not only look at the present-day context, but peer into the future for additional opportunities. This is precisely why all our Planning Policy and Regulatory Review reports contain a Long-term Outlook section.

For a recent client, this feature paid dividends. For their property, the desired outcome would have required multiple amendments and the negotiation of a Development Agreement under present requirements; an expensive and risky process overall. However, by casting a wider gaze in our investigation, we identified an opportunity to pursue the same goals through a larger policy update the municipality was preparing to make. While this didn’t save our client any time, it lowered the risk, and greatly reduced the cost.

We’re finding our Planning Division lends vital assistance to our other areas of operation, improving the detail and delivery time of Valuation, Counselling, Economic Intelligence, Property Tax and Brokerage assignments. More importantly, it creates value for our clients, aiding with development projects big and small.



Whether you’re musing about options or working towards a clear goal, ask Neil Lovitt, our Planning Division Manager, how we can help: 1 (902) 429-1811 (HRM), 1 (800) 567-3033 (toll free), or nlovitt@turnerdrake.com

Thursday, 16 February 2017 12:26:42 (Atlantic Standard Time, UTC-04:00)  #    -
Atlantic Canada | Brokerage | Economic Intelligence Unit | New Brunswick | Newfoundland & Labrador | Nova Scotia | Planning | Prince Edward Island | Turner Drake
# Wednesday, 13 May 2015

I recently had the pleasure of presenting to the New Brunswick Association of Real Estate Appraisers (NBAREA) at their Annual General Meeting in Saint John, NB.  Working with Alexandra Baird Allen of our Economic Intelligence Unit, we took the room through an exploration of regional demographic trends and their influence on real estate values.  We illustrated that we are at the cusp of a demographic sea-change; things are going to be fundamentally different in the future from what we’ve seen in the past.  Be wary of making decisions based on past trends!

One of the hallmarks of this demographic transition is that it is impacting us faster than we think.  The stagnation and slow decline in population projection for Atlantic Canada is not the primary concern.  Rather, it’s the rapid change in population composition as a wave of boomers starts cresting over the age of retirement.  This increase in our population dependency ratio is happening much faster than the lethargic economic/demographic pace we are used to in Atlantic Canada.

Planning and Economics

In the second part of our presentation, I argued that the way we plan our communities needs to adapt.  To give us the best chance of success, our planning system needs to become more agile and responsive, more sophisticated in the use of fiscal analysis and tools, and offer more tangible involvement to our citizens.  I suggested that our approach to economic organisation holds some lessons for our approach to planning.

If you boil down planning and economics as social sciences, they’re really both about the same thing: making the best use of the resources we have to improve our overall conditions.  Planning talks about the disposition of land, economics talks about the transaction of goods and services.  Planning talks about the public good, economics talks about the welfare of society.

It’s really not surprising that they are so analogous since economies and communities themselves are similar.  Both are a complex system of numerous and interrelated actors, simultaneously pursuing their own independent goals.   The final outcome is the cumulative result of these individual behaviours; it emerges from the bottom-up.   Our approach to economic organisation, the free-market, is successful largely because it works with the nature of the problem; it uses price signals, subsidies and taxes to influence individual behaviour and leaves markets to allocate the resources accordingly to create emergent results.  However, in planning we still rely heavily on a coercive, centrally-organised approach that attempts to will a desired outcome into existence through policy and regulation.  As a result, planning is susceptible to fads, and risks failure when there is a disconnect between the ideas of decision-makers, and the realities of the complex community.

An Economics Approach to Planning

So how can planning emulate some of the most successful properties of our economic system to help us build communities that are resilient in an uncertain and resource-limited future?

(1)    Better Information

Markets allocate resources efficiently when provided with complete and accurate information. It’s the reason we have access to the accounting of publicly traded companies and protections against false advertising. Municipalities derive nearly all of their revenue from taxes and fees levied on private real estate. At the same time, nearly all their expenses are generated in providing services to the occupants of private real estate. Thus the location, use and form of land development (a domain over which they have nearly complete control) is central to a municipality’s sustainability, and their capacity to adapt to changing circumstances. Yet, where is the fiscal analysis in the plan-making or development approval process? Under present practice, municipalities are making long-lasting decisions with, at best, a vague idea of whether those choices enhance or undermine their long term viability.

As a result, our communities often find themselves in a self-made pyramid scheme, justifying present development on expectations of future growth, or suddenly collapsing when reality turns out different from the version that was supported by “accepted wisdom.”

(2)    Price Based Incentives

Markets allow the collective choices of individuals to find the optimal balance of supply and demand at a given price. Governments step in to influence this price when the market fails to account for negative and positive externalities. Municipalities are often challenged to encourage or control certain types of development in different locations. The typical approach to this is to implement static policy and regulations; boundaries and targets. These only work to the extent that they are congruent with the market-based needs of the development industry. Using price signals, such as development charges, more prolifically and accurately (marginal cost rather than average cost) works with the market to determine the optimal mix of development required to satisfy demand. Rather than creating rigid regulatory limits that exist outside of the context of land development economics (and which are prone to becoming out-of-date), affecting price allows the market to self-regulate without restricting choice.

(3)    Managing Change – Leveraging Self-Interest

How tall should a new building be? Depending on who you ask, there will be a multitude of correct answers, but if you ask the person who lives beside it, chances are they’ll say “no larger than my house.”

One of the most challenging aspects of planning is managing the process of neighbourhood change, and the public reaction to it. Environmental psychologists tell us that satisfaction with one’s neighbourhood is better than satisfaction with one’s socio-economic status as a predictor of overall life satisfaction. This sense of contentment with your residential environment can be effectively undermined by making you feel excluded from the forces affecting it, or feel a lack of personal investment in it. In essence, to rob you of your agency to exercise control over your interest in the neighbourhood.

In response, good planning often includes some form of public engagement. A process that treats the community with respect and offers opportunity for direct input goes a long way to engendering acceptance of change. However, this can be further improved through the addition of policy tools which translate change into direct local benefit. Adding policy tools like density bonusing or community amenity contributions allow a community to trade increased development on a site for direct funding of public benefits such as park space, public art etc. It is a way of ensuring new development has a wider direct benefit for the residents that have to accept it.

Going one step further, a governance mechanism that sees a fixed percentage of all property tax reserved for investment in the area it is collected according to resident’s priorities would transform the public’s relationship with change and new development. If we are going to ask the public to help guide the use, appearance and scale of development in their neighbourhood (and we should), the more of their skin in the game the better. “How tall should a new building be?” becomes a much different question if a neighbour can imagine what they might stand to gain, rather than only what they risk to lose.

 

For more on the impact of changing demographics on real estate values, please contact the Manager of our Planning Division Neil Lovitt at 1 (902) 429-1811 or  nlovitt@turnerdrake.com.

Wednesday, 13 May 2015 14:57:24 (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Planning
# Friday, 23 January 2015

A decades-long dispute between Halifax and the federal government over the value of the Halifax Citadel National Historic Site of Canada (Citadel) came to a head on January 15, 2015, when the Payment in Lieu of Taxes Dispute Advisory Panel (DAP) issued its advice on the Market Value of the Citadel.

Overlooking the city’s downtown core, the Citadel comprises 48 acres of land including a historic fortress.

The issue before the DAP was the Market Value of the Citadel for the 2013 assessment year. The parties agreed on the value of the improvements to the property, however argued the value of the underlying land. The 2013 published assessment of the land was $25,763,700.

At the hearing, Halifax submitted two reports based on a land value estimate derived from sales of land in the vicinity of the Citadel, conducted by the following parties:

1) Local assessor who valued the land at $51,000,000, and;

2) Private Property Tax Consultant Mark Turner of Turner Drake & Partners Ltd. who put the value at $68,214,000.

Public Works and Government Services Canada (PWGSC) commissioned an appraisal report by a local appraiser, in which the value of the site was based on a hypothetical subdivision on a portion of the property, as well as a value for land beneath the footprints of the existing improvements. The appraiser valued it at $12,160,000. PWGSC then submitted a separate document stating the value in the appraiser’s report should be further reduced by 70% to reflect use restrictions tied to the National Historic Site designation. The final value submitted by PWGSC was $3,648,000.

The panel made a number of findings in preparing its advice on the Market Value of the Citadel:

  • The role of the Minster is not merely to review the value attributed by the local assessing authority; however, that value does serve as an important reference point.
  • A Market Value estimate should be based on the current/existing use of the property without regard to potential or hypothetical alternate uses.
  • The slope and restrictive zoning compliment the intended “public purpose” for the property; thus, are not suitable grounds for a reduction in value.
  • Properly selected and adjusted sales comparables form an appropriate basis for determining a Market Value.
  • The restrictions places on the property by virtue of its status as a National Historic Site area not an appropriate basis for a reduction in value.

The result: the panel determined the Market Value that would be attributed by an assessment authority for the 2013 assessment year to be $41,222,000.

If you have any questions regarding the Halifax Citadel property tax dispute, you can reach Mark Turner at (902) 429-1811 or MarkTurner@TurnerDrake.com.

Friday, 23 January 2015 16:29:32 (Atlantic Standard Time, UTC-04:00)  #    -
Atlantic Canada | Property Tax
# Tuesday, 26 August 2014

The Ivany Report

The Nova Scotia Commission on Building our New Economy began its work in November 2012 at the behest of the then NDP Government.  The project nevertheless had all party support.  The Commission was chaired by Ray Ivany, President of Acadia University and included four other members the most prominent of whom was John Bragg, Founder and CEO, Oxford Group of Companies.  

During 2013 the Commission used 35 public meetings, a web site and the social media to gather opinions and gauge public and business angst across the province.  The Commission also relied on assistance from various government departments and private sector sources.  The Commission published its Report in February 2014.  It identified twin problems: (1) an aging and shrinking population, (2) very low rates of economic growth.  The Commission pointed out the “economy today is barely able to support our current standards of living and public services, and will be much less so going forward unless we reverse current trends.” 

The Conclusion

The Commission stakes the recovery on the private sector “the logic is inescapable, if the economy is to grow there must be more enterprises and the rates of business success and expansion have to improve significantly” … “the wider public needs to understand and support this imperative (growing the economy) by openly addressing attitudinal barriers to business development and entrepreneurship.”  But how do you accomplish this in a province where almost one third of the working population are government employees?  They are better paid than the private sector (40% higher in some cases), have pension plans that 99% of the remaining population cannot afford, and have entrenched job security.  The powerful civil service unions fiercely resist any attempt by the private sector to compete for “their” work.  Politicians quail before them, civil servants form a powerful voting block in a province with low voter turnout (2013—59%).  The mere whisper of a strike threat or “sick day walkout”, especially in critical areas such as health care or education, quickly brings the political establishment to heel.

The Commission confessed itself mystified as to why the province is lacking in entrepreneurs.  Whilst acknowledging that the province has produced some exceptional business leaders it enquired why “if the right foundations are in place in Nova Scotia, hasn’t the private sector “taken off”?  Why hasn’t this province seen comparable levels of business growth and diversification over the period as Ontario, Manitoba or British Columbia, to say nothing of less advantaged regions such as South Korea, Singapore and Brazil?  Why haven’t we had the positive population trends of similar sized provinces like Manitoba and Saskatchewan?”  

Well it could be the water … or perhaps it is something to do with the fact that, in an economy stifled by government, there is restricted opportunity for the private sector to compete, innovate and grow.  That’s certainly been our experience operating in Atlantic Canada for the past thirty eight years.  It is frequently necessary to purchase services from government agencies, municipal and provincial, because they have a monopoly.  Invariably the services are over priced, delivered reluctantly and are of poor quality.  Complaints are treated with distain or completely ignored.  There is a comfortable contempt for the general public; indifference is the governing principle.  

In most cases these same services could be provided much more efficiently by the private sector … but they are not allowed to compete.  A “circle the wagons” philosophy prevails.  The impact is to truncate the growth of the private sector whilst impairing its effectiveness.  To rub salt in the wound the public sector then uses taxpayer funds to compete for labour, offering compensation and pension benefits that the latter has to fund, but cannot afford.  In those cases where the public sector outsources work it does so by tender … using a process which is often opaque … or by “selective” sourcing (perhaps to blunt or eliminate criticism?).

The Solution

The Commission concluded that “Nova Scotia is today in the early stages of what may be a prolonged period of accelerating population loss and economic decline.  These negative prospects are not however, inevitable or irreversible”.  It refrained from offering a solution, other than indicating leadership was required coupled with a complete change in mindset.  

However the problems facing the Province, indeed all of the Maritime Provinces, are neither unique nor insoluble. They are in fact, very similar to those faced by the United Kingdom, Ireland and New Zealand three decades ago … and Greece Italy, Spain and Portugal today.  A sclerotic economy held to ransom by powerful public sector unions, a large portion of the workforce in government employ, and a weak private sector beholden to the public process.  Their recipe was to create an open, competitive economy by transferring decision making power from the politicians and civil service to informed and empowered consumers.  Unless there is radical … bold … reform the private sector will continue to splutter and the province will persist in its inexorable slide to financial collapse.  

On June 9th 2014 the Province of Nova Scotia appointed a panel to study the Ivany Report and make recommendations on ways of turning the economy around.  It is tempting to confuse process with progress:  only bold political action, or the lack of it, will determine whether the Ivany Report heralds Nova Scotia’s sunrise … or sunset.

For a précis of the Ivany Report and our own analysis of solutions that have worked elsewhere click on the link: 

www.turnerdrake.com/newsresearch/documents/SunriseorSunset.pdf.

Tuesday, 26 August 2014 16:28:55 (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada