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# Wednesday, October 23, 2019

I recently read an article by the CBC entitled “From sacred to secular: Canada set to lose 9,000 churches, warns national heritage group.”  The article discusses shrinking congregations as member’s age, move away or switch to new spiritual practices.  The article notes that in Eastern New Brunswick alone the Roman Catholic Archdiocese for example predicts that 20 of its 53 parishes will likely close if the congregations can’t find a way to generate more money.  With less money coming in and higher maintenance and operating costs churches face a challenging future.  

This article resonated with me on a professional level and personally as a member of a local church.  In the past few years our firm has been contacted by a number of churches, in particular church committees made up of congregation members.  These committees are assigned the unenvious task of exploring what to do with their beloved church as it faces the challenges of a shrinking congregation.

The common questions asked by committee members to aid in their decision making include:

  • Scenario #1: What is the value of the church as it currently operates?
  • Scenario #2: What is the value of the underlying land as a redevelopment?
  • Scenario #3: What if the church were sold for an adaptive re-use, what would it be worth?

Essentially the committees want to determine the Highest and Best Use of their property, with values determined for each scenario so they can be make an informed decision, and ultimately present it to their congregation. 

Churches serve a number of roles for their community.  Outside of Sunday church services and funerals they are used as polling stations, a place of refuge after disasters, a place for private and not-for-profit groups to meet, a venue for concerts, fundraiser dinners and suppers and a place for performing arts to operate out of.  While church layout and design elements vary between denominations the fundamental church layout is fairly consistent.  Typically it includes a large entrance lobby, a sanctuary, parlour, large multi-use hall together with a kitchen and a number of smaller rooms used for meetings and general storage.  They tend to have several large, wide-open areas with high ceilings together with a large number of smaller classrooms.  As a result of their special purpose design they are challenging to value.

Scenario #1 - determining the Market Value of a church as it currently operates may not be as hard as it sounds.  There are numerous examples of church properties that have sold to other congregations for continued use as a church. 

Scenario #2 – determining the value of the underlying land for redevelopment is more challenging.  Often times the property has an institutional zone assigned to it, reflecting its current use.  However, this doesn’t necessarily limit the property to its current use.  It can often be re-zoned and redeveloped for a more intensive use.  Exploring this scenario involves discussions with the local planning authority, and in the end professional judgement is needed.  In addition to re-zoning, heritage designation issues, service and utility easements on the parcel and demolition costs for the existing building must be explored and considered under this scenario.     

Scenario #3 considers the value of the church for an adaptive re-use.  This can certainly be the most challenging scenario to consider when determining value.  The question here is “does the existing building actually provide additional, measurable value?”  Older buildings often have a lot of character and heritage value.  However, the cost for repairs and maintenance for these older buildings can be substantial.  They typically have masonry exterior walls with decorative features that require a lot of maintenance.  Their walls are often load bearing, meaning they cannot be easily reconfigured for another type of use without substantial structural work.  In addition they typically sit on expensive land, located in more central downtown locations with increasing pressure on land values.  All of these things can point to demolition of the existing church to make way for a new development.  However, that’s not always the case.

Recently I completed an assignment for a registered heritage property in Halifax.  The Centre Plan envisioned a low-density residential use for the property.  However, Package A contained significant implications for the property as it contains policy applicable to registered heritage properties.  This general policy allows for consideration of new development via discretionary approval processes (a “Development Agreement”) rather than zoning.  The overarching goal of the municipality is to encourage the rehabilitation and retention of heritage buildings. In order to do this, they will support a significant amount of new development intensity on sites containing a heritage building, using this as a tool to create sufficient value that the required conservation measures can be accommodated within an economically feasible project. This opens the possibility for significant building height and floor area ratios, as well as consideration of other cost-savings, such as lower parking requirements.

In that instance, the cost involved with demolishing the existing building coupled with only low-density anticipated for the site meant that demolition of the building was not the best option.  Alternatively, retaining the existing structure, or a substantial portion of it under policy contained within Package A of the Centre Plan opened up the possibility for significant building height and floor area ratios, as well as consideration of other cost-savings, such as lower parking requirements.  This second option meant a higher value for the property.  In that instance the best option was retaining the existing building for an adaptive re-use as part of a larger development.

The take-away here is that valuing churches or special purpose properties is not a straightforward exercise.  With shrinking congregations and higher operating costs these types of assignments are becoming increasingly more common.  They can be complicated and require a team approach to valuing the property with assistance from planners with a solid understanding of the Centre Plan.

 

For more information on the valuation services we provide visit our Valuation and Advisory Services site https://www.turnerdrake.org.



Nigel Turner, Vice President of our Valuation Division, can be reached at nigelturner@turnerdrake.com

Wednesday, October 23, 2019 11:57:24 AM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island | Turner Drake  | Valuation
# Friday, October 4, 2019

On Wednesday September 4th, I had the pleasure of presenting before the Standing Committee on Law Amendments regarding the assessment and taxation of heavy industry in New Brunswick.  I was pleased to see such a high level of interest from Committee members in understanding how property tax assessments (which are based on market value) are calculated. 

Fair assessments start with accurate estimates of a property’s value.  In a market value assessment system, there are no “breaks” or “deals” for property owners.   Assessment professionals take their cues from the market and adjust their models so all assessments approximate market value.

Understanding the assessment system means understanding market value and the factors that influence it.  Most of us have a reasonable understanding of the factors that influence the value of our homes.  We understand that a strong housing market drives higher values for all houses.  We understand that a property with features that purchasers desire (e.g. great kitchen; open concept design; a finished basement) will have a higher value than one that lacks these features or is in a state of disrepair.   We understand “location, location, location”, and the benefit of being close to amenities like parks and schools, and the disadvantage of being located next to negative influences like landfills or flood zones.  

Although the market for heavy industrial properties is global as opposed to local, the factors that influence their value are not dissimilar.  When markets are strong (i.e. there is a balance between the number of buyers and sellers), values can be stable.  When markets are weak (there are more sellers than buyers), values will fall.  Individual facilities can become less appealing to buyers as they get older, or if the building design and layout will not accommodate the most efficient technology or process.  Location also applies.  Instead of proximity to parks and schools, ask if the facility is located close to its raw material, or close to where it sells its final product?  Does the location offer a competitive advantage or disadvantage in terms of the cost of inputs to production?

The 2013/2014 re-assessment of pulp and paper mills in New Brunswick generated questions from the Committee and provides an excellent case study for the factors that impact the market value of heavy industrial properties generally.  If you understand the factors that impact housing values, consider the following scenario. Imagine an older neighborhood with houses built up over a period of 100 years.  The market is poor, and there are significantly more sellers than buyers.  When you look up and down the streets, approximately 1/3rd of the houses are vacant and boarded up while they wait to be demolished.  Demand is weak generally, but the houses in this neighborhood are especially less appealing than newer houses because they are older and are lacking in amenities that purchasers require.  The purchasers themselves have concluded that it would be much less expensive to build a new house than to modernize the older structures. In fact, the houses are so functionally obsolete, there are builders constructing houses across town with all of the amenities purchasers demand for less than half the cost of reconstructing replicas of the homes in the older neighborhood.  

This was the state of the market for pulp and paper mills at the time of the reassessment.  Maritimers will recall closure of mills in Bathurst, Dalhousie, Miramichi, Brooklyn, and Port Hawkesbury; all but one were subsequently demolished.  Assessors and Appeal Boards in assessment jurisdictions across the country were tasked with coming up with an estimate of the market value of these assets. Many experts provided testimony, and Appeal Boards in contested hearings in Ontario ordered assessment reductions ranging from 60% to 75%.  It shouldn’t be surprising that experts tasked with determining the values of mills in our region came to similar conclusions. 

To be clear, the assessment process is about ensuring that assessments reflect market value, not about providing a “break” or a “deal” on property taxes.   

 

André Pouliot is a Senior Manager in the Property Tax Division at Turner Drake & Partners Ltd.  André holds professional designations in Valuation with the Appraisal Institute of Canada, Royal Institution of Chartered Surveyors and has more than 20 years of experience in the assessment and valuation of heavy industrial, commercial, and investment properties. 

 

Friday, October 4, 2019 9:18:44 AM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island | Property Tax | Turner Drake
# Wednesday, September 18, 2019

Photo Credit: iStock Photo AntonioGuillem

It comes like a bolt out of the blue; the municipality wants to purchase your property so that they can widen the highway. Often times they intend to seize just part of your property: that front yard you so carefully nurtured to provide a fragile barrier between your home and the busy street is destined to become another traffic lane. Many owners have received this type of letter, more will receive similar letters in the future (if not from the municipality then the province, federal government or any organisation with expropriation powers such as a water authority, power utility, Crown Corporation). Sometimes the purpose of the exercise may not be clear, other than the fact that your property, or part of it, is required for the public good. During our early days in business in the 1970s some provinces, such as Nova Scotia, did not always inform owners that they had taken title to their property… the unfortunate owner only discovered such was the case when they enquired why they were no longer getting a property tax bill! Often times, municipalities such as the City of Halifax, did not advise the owner that they required the property, or part of it, content to leave it to the appraisal firm to break the news when they arrived on site to conduct their inspection. (We fired the City of Halifax as a client after arriving on site to find the property owner had not been informed about the expropriation; his wife was dying of cancer in the bedroom). Legally this is still the case in many provinces in Atlantic Canada; the acquiring authority does not have to inform you that you no longer own your property for several months after they have filed the expropriation document (Nova Scotia 90 days, Prince Edward Island 60 days). Thankfully in practice, that at least has changed, but the unfortunate reality is that property owners rarely have legal grounds to prevent the authority from purchasing their property. In other countries, property owners have to be notified that their property is to be expropriated and have the right to object that the acquisition is not really required for the road widening, or other scheme that is its raison d’etre, or that the scheme itself is not required to serve the public good. But this avenue is rarely available in Canada, or indeed in North America. (In this Region, proposed expropriations under the Federal and New Brunswick Expropriation Acts are the exception that prove the rule. Each require the acquiring authority to notify the property owner before they expropriate and provide a public enquiry to hear objections. However the Federal Act is really window dressing, the public hearing a mechanism to “vent”; the New Brunswick Act however does require the Expropriation Advisory Officer to issue a decision as to the necessity for the expropriation and whether the scheme is consistent with the public interest. If your property is located in Nova Scotia, Newfoundland or Prince Edward Island you have no say in the matter at all!. Even if subsequent events disprove the “valid public use” test, owners have no right to recover their property (the ill-fated Mirabel Airport in Quebec is an example… the original owners, or their descendants, were eventually offered 300 hectares of the 38,800 hectares originally expropriated, but only after a long, bitter and very public fight). So what do you do when you receive “the letter”, particularly if it does not mention “expropriation” and is instead a civilised attempt to negotiate compensation before the municipality seizes your property by force?

 

We live in an age when most of us have lost faith in our institutions, the civil service, politicians and the private sector. That trust has been eroded over the past two decades by greed, politicians who no longer adhere to acceptable forms of behaviour, the shrill cacophony of social media seamlessly blending fact with fiction, and an emancipated Fourth Estate no longer able to defend the “little guy”. The adage “you can’t fight city hall” too often engenders a feeling of helplessness, particularly if the acquisition involves your family home, the sanctuary you hold inviolate; or your business, a livelihood born of blood, sweat and tears. Cheer up, not all is bad, the press and electronic media may no longer have the heft they once did, but you do have the protection of an excellent and independent judicial system. Why is that important? The letter you received from the acquiring authority may not have mentioned “expropriation”, and the words “judicial system” may raise the spectre of long and expensive litigation in which you, the little guy, are pitted against an acquiring authority with much deeper pockets. But bear with us. Even if your property has not yet been expropriated the negotiations will be framed by the Expropriation Act because the acquiring authority has to rely on it if they cannot reach a settlement with you by negotiation. Now, it has to be said, the Expropriation Acts do not represent the legal community’s finest hour. The Nova Scotia and New Brunswick Expropriation Acts, each appear to have been written in a hurry by somebody suffering from a hangover. The Newfoundland and Prince Edward Island Expropriation Acts have a distinct feudal flavour, drafted in the days when peasants lived in huts of mud and wattle, addressed their betters with a touch of forelock, eyes downcast and a mumbled “zur” (or that, at least, appears to have been the assumption of the persons drafting them). In fact the PEI Act doesn’t even attempt to lay out the framework for compensation, happily delegating it to the court system, undoubtedly in the pious hope that the judge would have a clue what it was all about, because the person drafting the legislation sure as hell didn’t! Only the Federal Expropriation Act can claim lucidity, and even it overlooks the fact that businesses occasionally occupy real estate and are adversely impacted if it is whipped away from under their feet. But, and this is the good news, none of this really matters very much because there are some good Expropriation Acts elsewhere and a body of case law and appraisal practice that have established well proven methodologies for identifying and calculating compensation. The courts have embraced the principle that, since expropriation is the exercise of police power by the state (or its surrogate), the benefit of the doubt lies with the unfortunate property owner and they have not been shy in ensuring that the latter does not suffer financial loss as a result.

 

Expropriation

 

So what is “Expropriation” and why should you care? Expropriation is the seizure of your property, or a part of it, by the government, or a body authorised by them, for public use or benefit. The bad news, as we have already mentioned, is that you cannot object to it unless you live in New Brunswick or the property is being acquired under the Federal Expropriation Act… the good news is that you are entitled to be fairly compensated for your loss. The initial approach from the acquiring authority advising you that they want to purchase part or all of your property will rarely mention the word “expropriation”. Whilst this may be an attempt to spare your feelings by appearing to be non-threatening you should be cautious. We no longer have a strong media but, as mentioned, we do have an excellent court system… and they are on your side. While you will probably never need to go to court you should avail yourself of the protection afforded by our judicial system. Your rights to fair and proper compensation are codified in the relevant Expropriation Act (sort of) but you will not be so protected unless (1) your property has been officially expropriated or (2) the acquiring authority has agreed in writing to proceed as though you had been expropriated i.e. that they will afford you all of the compensation you would have been entitled to under the Expropriation Act had your property been expropriated. So this is Step One, make sure that the acquiring authority is prepared to offer you all of the rights and privileges afforded by the Expropriation Act and get that commitment in writing. If they will not provide it, refuse to negotiate until they expropriate your property.

 

Compensation

 

It is a fundamental principle of Expropriation that the acquiring authority is required, as far as monetarily possible, to put you in the same position after the acquisition as you were before it. Most court decisions have interpreted that principle as giving you the benefit of the doubt, short of plundering the public purse. The federal and some provincial Expropriation Acts acknowledge that the negotiations are unevenly balanced in that the property owner faces an acquiring authority with much deeper pockets and resources. Some Expropriation Acts attempt to level that playing field by requiring that the acquiring authority be transparent in their calculations of compensation, and some give the property owner access to their own professional advice if they desire it, at the acquiring authority’s cost. The Federal Act unambiguously provides that the property owner is entitled to professional advice at the Fed’s cost, the Atlantic provinces are more parsimonious, sometimes offering it if the property owner wins in court (Nova Scotia, New Brunswick, Newfoundland), or not considering it worthy of mention (Prince Edward Island). Nova Scotia limits the amount they will pay in legal costs and appraisal fees, something they are now allowed to do in their Act, so the unfortunate property owner has to pick up the rest of the cost, or find a cheap lawyer or appraiser. A word of caution: the devil is in the details and some acquiring authorities do not play by the rules established by the relevant Expropriation Act, case law or appraisal practice. It is essential to have an understanding of your rights under the Act, the type of compensation and how it is calculated. Each province in Atlantic Canada has its own Expropriation Act and each municipality, or other body with expropriation powers, is governed by that Act. The federal government also has its own Expropriation Act. Broadly speaking the Acts are similar, in practice if not content, and the methodology for calculating compensation is identical even when it is not specified in the legislation.

 

Negotiations

 

The acquiring authority may employ their own staff to negotiate, or will contract it out to a firm such as ourselves (we also negotiate on behalf of property owners). Our article “Land Agency… a respectable profession” elsewhere in this Blog details our approach when we are representing the acquiring authority: you should expect nothing less. The act of expropriation, or its anticipation, obligates the acquiring authority to fairly compensate you for your loss and that means they must engage in “principled negotiation” rather than attempt to settle the compensation claim for the lowest amount. If you find that you are not comfortable negotiating, insist that the acquiring authority pay for your professional representation. Whether the Act specifically allows for it or not, it has been our experience that acquiring authorities want to reach agreement without the adverse publicity of a formal expropriation, much less the agony and expense of a court action. They recognise that some property owners need professional assistance and that this may facilitate an agreement. If the acquiring authority is attempting to negotiate compensation before they formally expropriate, particularly if your property comprises woodland or agricultural land, the acquiring authority may attempt to negotiate without commissioning an appraisal, using instead their knowledge of property values. There is nothing wrong with them so doing provided they are open and transparent about their compensation calculations and are able to validate them by reference to other property sales. However you can require that the acquiring authority provide you with a formal appraisal (they have to anyway if they formally expropriate) and you should insist on this if your property has buildings on it, is in an urban area, or if only part of your property is being acquired and the remainder is likely to be adversely impacted. Many Expropriation Acts (Federal, Nova Scotia, New Brunswick) require that the formal offer after expropriation has to be accompanied by an appraisal. The formal appraisal should meet, at a minimum, the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP) www.aicanada.ca/about-aic/cuspap/ . Frankly CUSPAP is not the most rigorous standard in the world, it is not specifically directed at expropriation, and most appraisers (like most lawyers) are not sufficiently familiar or skilled in recognising and computing the various Heads of Claim. Do not accept any appraisal tendered by the acquiring authority at face value. Research the author of the appraisal report on the internet and check his/her reputation with a trusted professional advisor to verify that they are experienced in expropriation work. At a minimum they should be an Accredited Appraiser of the Appraisal Institute of Canada or a Member of the Royal Institution of Chartered Surveyors (Valuation) but neither qualification guarantees that they are experienced and knowledgeable in expropriation. Do not assume that the acquiring authority has already done the research and has chosen their appraiser on the basis of merit; the Federal Government and some provinces do so, but other provinces and many municipalities, Halifax Regional Municipality for example, simply select an accredited appraiser on the basis of cheapest cost. Some acquiring authorities will instruct the appraiser to limit the types of compensation (Heads of Claim) they consider in the appraisal and although the omissions may be listed in the appraisal report their significance can easily be overlooked. The Province of New Brunswick Department of Transportation and Infrastructure, for example, instruct their appraisers to ignore Injurious Affection and Special Economic Advantage, items which often constitute the bulk of the loss suffered by the property owner.

 

Heads of Claim – A Hitch Hiker’s Guide

 

A governing spirit of expropriation, or the negotiations which preclude it, should be that the property owner (and tenant if the property is rented) will not suffer financial loss as the result of losing all, or part, of their property. You will not be compensated for emotional loss arising, for example, from the upheaval in your life. If you are a property owner the types of loss and accompanying compensation will fall under some, or all, of the following Heads of Claim:

 

(1) Market Value of the interest acquired in the property.

(a) “Market Value” is defined differently in the various Expropriation Acts but essentially is the amount of money you would get for your interest in the property if it was sold on the open market. For example, if you occupy and own the freehold (fee simple) interest in a residence which is acquired in its entirety by the municipality, your compensation will equal the sale price you would have achieved had you sold the property of your own free will through a real estate agent. This can cause a problem if the Market Value of your property is lower than that of other properties in the neighbourhood since the cash you receive will not be adequate to purchase a similar home. In that instance you are entitled to additional compensation under the “Home for a Home” head of claim (see below). Unfortunately you will not be compensated for any “special” value your property may have to the acquiring authority over and above its Market Value.

(b) If the municipality only takes part of your property (typically part of your front yard in the case of a road widening), you are entitled to the Market Value of that portion of your property. Obviously calculating Market Value is somewhat problematic since bits of front yards are not typically sold on the open market. Its value will therefore be based on the sale prices of comparable vacant lots expressed on a square foot or other unit basis. You are also entitled to the value of any improvements such as lawns, flower beds, bushes, etc. … but not the emotional value you may have invested in nurturing them. If fences and steps have to be demolished the acquiring authority has to replace them. Sometimes the loss of a front yard is so extreme it renders the home unsuitable for continued owner occupation; it may be uninhabitable or suitable only as transient accommodation such as short term rental. In that event the owner should be able to substantiate the acquiring authority purchasing the entire property. The “Home for a Home” provision may then be relevant.

 

(2) Home for a Home

(a) If the property is occupied by the owner, as opposed to being rented, as a family home, you will be entitled to additional compensation if the Market Value of the property is inadequate to purchase a similar home in the neighbourhood. In this event your compensation will be based on the Market Value of similar homes for sale in the neighbourhood. What happens if there are none for sale? Whilst the compensation does not require that you remain in the neighbourhood it does get a little tricky if you do not have that choice. In the unhappy event that substitutes are not available you would be entitled to be compensated for the Market Value of the next best alternative.

(b) If the property is rented, a cottage, or anything other than an owner occupied family home, your compensation is restricted to Market Value even if you cannot purchase a similar property with it. The acquisition will also trigger tax liabilities which you did not contemplate until you intended to sell the property. It is our view that the impact of paying those taxes now, rather than deferring them for the future, is a valid compensable item.

 

(3) Disturbance

(a) When a property owner is forced to move out of their home there will be moving expenses, as well as items such as drapes for the new home. The acquiring authority is required to compensate the owner for these items. If it is not practical to estimate these costs some Expropriation Acts (Federal and Nova Scotia) provide an allowance instead of up to 15% of the Market Value. The New Brunswick Expropriation Act allows, in addition to moving expenses, 5% of the market value of the residential portion expropriated, to compensate for the cost and inconvenience of finding another residence. The other Acts do not place any value on the unfortunate property owner’s time.

(b) If the property contains a business the occupant will suffer a variety of losses. If the business has to relocate it will incur a number of costs: new stationery, informing customers, staff overtime packing and unpacking, new signage, etc. as well as the cost of the move itself. Whether the business moves or not, profits will usually be adversely impacted by the road widening scheme and/or the relocation. Trade once lost to competitors may takes years to recapture, may even be lost forever. Whilst all of the foregoing is compensable some Acts provide that compensation for loss of goodwill, where the business has relocated, can be deferred for the earlier of a year (Nova Scotia) or nine months (New Brunswick) after the relocation, or for three years (Nova Scotia) or two years (New Brunswick) after the expropriation. It is not clear when the business can expect to be paid if it does not relocate, but given that it has to prove its loss one imagines that this would be twelve months (Nova Scotia), or nine months (New Brunswick) after the road widening scheme is complete. Thus a business can struggle to survive during and after the road widening but cannot claim for its loss until later. Whilst the acquiring authority can agree with the business owner to waive the deferment it is our experience that such is not normally the practice. Business loss (goodwill) is not specifically mentioned in the Federal, Newfoundland or Prince Edward Island Acts but is a compensable item.

 

(4) Injurious Affection

(a) Where only a portion of the property is acquired, a common situation with road widening schemes, the balance of the land may be reduced in value because (1) the remaining property is less useful since it is smaller, a more awkward shape, or is severed from the main parcel and/or (2) the construction or use of the road on the land acquired adversely impacts the value of the remaining property. For example, it may no longer be possible to park a vehicle on the land remaining because it is now too small or of the wrong configuration. A residential property without parking is less valuable than a house with a driveway. The construction of the widened highway may render access to the property more difficult if traffic increases. The increased noise and loss of privacy in the home which results from it being closer to the highway will reduce its value. Or take a farm cut in two by a new highway. The farmland on the other side of the new road, particularly if it is limited access highway, will be considerably less valuable because it is no longer as accessible from the farm buildings. Farm fields impacted by the new highway may no longer be of optimum size and shape; drainage may be adversely affected too. In our experience Injurious Affection usually represents the vast majority of the loss sustained by the property owner, especially in residential properties impacted by road widening. The accepted method of calculating Injurious Affection is the “Before and After” method. This methodology is codified in the Federal and Nova Scotia Expropriation Acts. The property is valued as it existed prior to the acquisition and commencement of the road widening (Before Value); and then valued again on the assumption that the road scheme is complete (After Value). The difference between the Before and After values, minus the Market Value of the land acquired, is the Injurious Affection. The New Brunswick Expropriation Act provides that a claim for Injurious Affection has to be made within one year after the damage was sustained, otherwise it is barred.

(b) For housekeeping purposes some Expropriation Acts include Disturbance under Injurious Affection. This has no impact, other than to confuse matters, unless the acquiring authority has directed their appraiser to ignore Injurious Affection (a common practice with the New Brunswick Department of Transportation and Infrastructure).

 

(5) Special Economic Advantage

(a) If the property is owner occupied i.e. not rented, the owner may be able to claim for any special economic advantage arising out of, or incidental to, their occupation of the property to the extent that they have not been compensated under the other Heads of Claim. For example, if you or a member of your family is disabled, and the home has been adapted to meet their requirements with ramps, grab bars, wider doorways and hallways, stair lifts etc. you will be able to claim for the cost of these improvements.

(b) The same conditions apply with commercial property that has been adapted to suite the unique requirements of the business. It applies as well to property that has additional value because of its location, such as a woodlot proximate to the owner’s mill.

(c) Special Economic Advantage is specifically mentioned in the Federal, Nova Scotia and New Brunswick Act.

 

(6) Special Purpose Properties

(a) Some properties do not normally sell on the open market; churches, schools, hospitals, religious and charitable institutions are examples. If the property being acquired falls into this category and the owner has to relocate, they can base their compensation claim on the reasonable cost of creating a similar property (technically known as “the cost of equivalent reinstatement”). Even though the buildings on the property they are vacating may be old, the claim for compensation can be based on the cost of building a new, otherwise identical structure, plus the cost of acquiring a replacement site…. though some Acts (Federal, New Brunswick) attempt to claw back some of the compensation if the owner has improved their position.

(b) The Federal Act, cognisant no doubt that we are meant to be a secular society and less fearful for their immortal soul than the Provinces, do not restrict the qualifying properties to religious institutions and instead embrace all properties that do not normally sell on the open market.

 

(7) Professional Fees

(a) The Federal Act provides that the acquiring authority pay the legal, appraisal and other costs reasonably incurred in ascertaining a claim for compensation. The onus is on the property owner to ensure that the costs are reasonably incurred, not that they are reasonable.

(b) The Nova Scotia Act provides that the owner is entitled to be paid the reasonable costs necessarily incurred in ascertaining a claim for compensation but this is only triggered by an application to the Nova Scotia Utility and Review Board after negotiations have failed. However in practice they are compensable up to the date the acquiring authority makes their Offer to Settle (just before the start of the Board hearing) and are not conditional on the property owner winning their case. Reimbursement of costs incurred after the Offer to Settle are conditional on the outcome of the hearing. The province has recently placed a limit on the fees it will reimburse for legal and appraisal advice. The property owner will now have to fund the difference, or find a cheap lawyer and appraiser.

(c) The New Brunswick Act makes no provision for the reimbursement of professional fees unless the matter proceeds to Court. Reimbursement may be dependent on the compensation award.

(d) The Newfoundland Act provides that professional fees are only paid for proceedings before the Board and they are conditional on the outcome of the hearing.

(e) The Prince Edward Island Act has yet to acknowledge the necessity for professional advice or its role in protecting property owners.

 

(8) Betterment

(a) Where only part of the property is being acquired, the remaining property may increase in value as a result of the scheme for which the property was purchased. For example, land may be purchased for a highway intersection, with the result that the land remaining after the acquisition increases in value because it has development potential for a service station, hotel, shopping centre or other commercial use. This increase in value, known as “Betterment”, has to be offset against the compensation. Depending on the Expropriation Act, Betterment may be offset against the (1) total compensation [Newfoundland and Prince Edward Island] or (2) the land remaining after the expropriation [Federal, Nova Scotia, New Brunswick].

 

(9) Factors Not To Be Taken Into Account

(a) Anticipated use by the scheme for which the property was expropriated.

(b) A value established by reference to a transaction which occurred after publication of the intention to expropriate, or the actual expropriation if there was no published intention to expropriate.

(c) Any increase or decrease in value resulting from anticipation of the expropriation.

(d) Any increase in value resulting from the property being utilised for an illegal use.

 

(10) Heads of Claim Have To Be Consistent

(a) The Market Value of the land acquired has to be based on its existing use value if the costs of relocating are to be allowed. For example, a property owner cannot claim for removal costs if he/she is basing the value of their property on the assumption that it could be redeveloped.

 

(11)  Payment of Compensation

(a)  Federal, Nova Scotia, New Brunswick, Acts - A “without prejudice” offer has to be made by the acquiring authority within 90 days of registration of the Notice of Expropriation. If the parties do not agree the compensation the Federal Act provides for payment of 100% of the offer of compensation; the Nova Scotia Act for 75% of the compensation (excluding business disturbance) and the New Brunswick Act 100% of the “Market Value” (other Heads of Claim such as Injurious Affection are excluded). This payment is “without prejudice” and the property owner is free to pursue his/her claim for additional compensation.

(b) Newfoundland – the property owner has to file a claim for compensation within the time limit specified in the Notice of Expropriation and where the parties do not agree on the amount the matter is sent to the Board to be “fixed”. Compensation is paid out within six months of the Board’s decision.

(c) Prince Edward Island – the property owner has to file a claim for compensation within six months of registration of the Notice of Expropriation “or in the case of land injuriously affected within six months of the injury”. Payment is only made after the parties agree on the amount.


Mike Turner is Chairman of Turner Drake & Partners Ltd. A fifty year veteran of expropriation on two continents he is still shocked at the cavalier attitude some acquiring authorities adopt when dealing with property owners. If you'd like more information about our expropriation services, feel free to contact Mike at (902) 429-1811 Ext. 312 or mturner@turnerdrake.com


Wednesday, September 18, 2019 1:47:53 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Counselling | Expropriation | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island
# Wednesday, July 24, 2019

What is building efficiency? and why is it becoming increasingly important for landlords, purchasers and tenants alike?

Building efficiency stems from a variety of factors, some of which are tied to the building envelope or overall operating systems (HVAC, lighting, etc.), while others are tied to design and layout.  Our Lasercad® team focuses on the latter and partners with building owners and managers to help analyse and optimise their building efficiency using the BOMA Standard Methods of Measurement.

Using a typical office building as an example, the ratio of a building’s Occupant Area to its Rentable Area will yield a gross-up or efficiency factor, where higher factors equal lower efficiency.  In other words—the larger the percentage of common area to tenant occupied area, the larger the gross-up, and thus less efficient the building.

Since common areas are proportionately allocated (“grossed up”) back to each tenant, they are a primary contributor to determining building efficiency.  Large common areas in a multi-tenant office or industrial building increase a tenant’s overall rent as a result of higher gross-up factors.  It’s a double whammy because tenants are also subjected to higher Common Area Maintenance (CAM) charges which are needed to service those common areas.  The results manifest themselves in a variety of ways—higher vacancy rates, lower net rents, reduced marketability.  The list goes on.  An inefficient building is less attractive to potential tenants as well as to buyers.

Optimising building efficiency is becoming more crucial as development restrictions evolve and building owners, managers and shareholders look to maximise their returns.  Whether it’s new construction, or the renovation of an existing building, the BOMA Standard Methods of Measurement have become an increasingly important input of the initial design phase, and more and more developers are seeking guidance and expertise from our knowledgeable staff.    

Below is an overview of two buildings we recently measured with common areas highlighted in blue.  123 Jones Drive has an excessive amount of common area, including a large lobby, washrooms and extensive hallways.  By contrast, 125 Jones Drive has approximately twice the footprint, yet has far less space taken up by common areas.  Our BOMA analysis revealed the impact of the vastly different layouts: 123 Jones Drive has a gross-up of approximately 30%, meaning their rent is based on 30% more space than they physically occupy (i.e. Floor Allocation Ratio: 1.30).  By contrast, 125 Jones Drive has a gross-up of only 9% (i.e. Floor Allocation Ratio: 1.09) therefore staking claim as the more efficient building.

If you’re interested in optimising your building’s efficiency using BOMA standards, please don’t hesitate to contact one of our analysts to discuss a few of our key strategies. Whether you’re in the preliminary design stages of new construction, or renovating an older building, optimising your space to yield the most efficient solution is our primary focus.

Patrick Mitchell is the Senior Manager of our Lasercad® Division and also highly involved in our Valuation Division.  For further information on how to maximise your property’s value through space certification please don’t hesitate to reach out. Patrick can be reached at pmitchell@turnerdrake.comor by phone at 902-429-1811. 

Wednesday, July 24, 2019 1:52:36 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Lasercad | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island | Turner Drake
# Monday, July 8, 2019


“How much? Get out!” (followed by the noise of a slamming door). Another day in the life of the hapless land agent, doing his level best to get the most for the least. At least that’s the common perception, but here at Turner Drake we approach things a little differently.  Our team of Land Agents follow the concept of “principled negotiation”, not positional bargaining.  And it works.  We are routinely retained to provide Land Agency services under contract to governments and corporations, who are increasingly out-sourcing this type of work to the private sector.  The projects we work on are large and small, involving anywhere from half a dozen to several hundred different property owners, and our mandate is simple: negotiate fair deals for the purchase of land interests to support infrastructure projects. Without upsetting anyone.

Roads and transmission lines are especially popular these days.  Seems we just can’t live without them. These are corridor acquisitions: mile after mile of trees and fields with the occasional home or business. All neighbours.  All savvy negotiators. And all deeply suspicious of strangers who turn up on the doorstep bearing gifts.  So our approach must respect that and we have developed a simple formula built around three principles:

Consistency

We can’t divulge offers and settlements to neighbours.  It’s a privacy thing.  But we expect that neighbours will talk as soon as we leave.  In fact we encourage it.  They can compare figures if they like, essentially testing our integrity to see if anyone got a better or worse deal than the others. And therein lies the challenge with corridor acquisitions.  Those at the end of the line must be treated the same as those at the beginning; those who settle quickly must be treated the same as those who hold out for more; those who shout must be treated the same as those who whisper. Sure, there are perfectly valid reasons for paying different amounts, but it can’t be arbitrary.  It must be explainable.  It must be credible.  And it must be fair.

Transparency

We go to great lengths to make sure landowners understand what is happening and what is going to happen. Large infrastructure projects will already have gone through a very public process by the time we get involved and many landowners will have attended open houses …. and perhaps already made their views known. But the regulatory framework for compensation and landowner’s rights under the law are usually a mystery.  We explain them.  Fully.  Our team of Land Agents are trained negotiators with the support of an entire team of in-house professionals to draw on.  So we don’t present take-it-or-leave-it offers. We explain how they are calculated, usually by reference to a base-line appraisal or a third party site-specific appraisal. All of which is revealed to the landowners so they too can see how the calculations are made.

Respect

It goes without saying but we’ll say it anyway. Every landowner has a story to tell and it is our job to listen.  Respectfully and with an open mind. Of course we don’t believe everything we hear, but invariably we will learn something from everyone just sitting around their kitchen table. Eating the free cookies. Most people just want their voice to be heard, and anyone who is being asked to give up their land against their wishes deserves to be heard. We call it respect. It builds trust and it leads to mutually agreeable results.  And that’s all we’re looking to achieve. Without drama.  Without the slamming of doors.


Lee Weatherby is the Vice President of our Counselling Division. If you'd like more information about our counselling services, feel free to contact Lee at (902) 429-1811 or lweatherby@turnerdrake.com
Monday, July 8, 2019 3:45:55 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Counselling | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island | Turner Drake
# Tuesday, June 11, 2019

Who’s Going to Live In All Those Houses? – A common refrain when there’s a lot of residential development, whether houses, apartments, or condos.  Demographic trends can help to answer the question after the fact, but more importantly, attention to demographic patterns ahead of developing can ensure that housing supply meets demand.  After all, once it’s built, housing supply is here for the long haul.  At the recent NSPDA and LPPANS conference, Turner Drake led a workshop examining how individual decisions feed into patterns in housing supply and demand.  Here’s a brief recap (granted, a Nova Scotia‑oriented recap, but many of the principles apply across Atlantic Canada).
 
The Life Cycle of Housing
A typical person will move around a bit in their lives, starting out in their parents’ house (or houses: if we can infer Canadian behaviours from American stats, the average person owns 4.5 to 5.5 houses in their lifetime), moving to a rental apartment before buying their own home(s).  Later in life, they may downsize back to an apartment (possibly a more luxurious one this time) or condo, and finally make their way to a seniors’ residence. 
 
In-demand housing stock is heavily dependent on the dominant age groups in any given area.  The primary drivers of rental apartment demand are 20-29 year-olds, and the 65-and-older cohort, though the latter is increasingly shifting to a 75-year-plus bracket, and the former arguably extends to above age 35.      


Source: Statistics Canada 2016 Census


The inverse is demand for owned housing, and the primary buyers are ages 25 through 45.  The 25-29/34 year-old age bracket falls into each of the renter and buyer categories: this is the first-time homebuyer age range, where we see the steepest increase in home-ownership rates.  The inference is that by age 45, buyers have bought their first home, possibly sold it and upsized to a larger family home, and here they stay for a prolonged period of time.


Age distribution in Nova Scotia (Source: Statistics Canada Population Estimates)



The graph above shows shrinkage in the brackets that include ages 20 through 45, but growth in the 65+ brackets.  Growth in the 55-64 year old bracket means that the latter will continue to expand as Baby Boomers age.  A 2018 Royal LePage survey of home buying intentions found that 42% of Atlantic Canadian Baby Boomers plan to downsize in retirement, with 23% intending to sell their homes and move to their secondary properties, i.e. to the cottage.  Thirty-two percent would consider buying a cottage in which to live in retirement.  The answer is probably no, but all this moving to the cottage raises the question of whether the province will see population ruralisation over the next few censuses, or whether the urbanisation of younger generations will continue in numbers sufficient to offset it?  The map below shows population change at the Dissemination Area level in Nova Scotia between the last two censuses: the concentration of purple (growth) in urban areas, in contrast with the pink and red (shrinkage) of the rural areas, indicates urbanisation.

Population change 2011-2016, Statistics Canada 2016 Census


Just 29% of Atlantic Canadian Baby Boomers would consider purchasing a condo, the lowest rate in the county.  Recall that the stat comes from a survey of home buying intentions…and recent trends have been for downsizers to opt for rental apartments over condominium apartments.  There is certainly incoming supply of apartment units: CMHC statistics on housing starts over the past few decades show a distinct shift from single-family construction to apartments:


…at least in Halifax:



…though the rest of Nova Scotia is a different story:



The breakdown of the same housing start data shows a distinct rental intention:



…which again is driven almost entirely by the Halifax pattern:



...while the rest of the province still shows a clear preference for offering options for home ownership, with very little constructed for either the rental or the condominium market:



On the demand side, the province appears largely influenced by the statistics for Halifax, with vacancy mirroring the same ups and downs over the past three decades, though vacancy is a bit tighter in the city (overall 2% in NS and 1.6% in Halifax in October 2018).  Demand is strong: vacancy rates have been falling since 2014, even as the inventory of rental units has been steadily increasing.



In the years ahead, expect continued growth in demand for higher density residential forms, especially of the rental variety.  This trend is driven by the Halifax market, and offers an appealing lifestyle (low maintenance, low commitment), combined with the option to live off the equity unlocked from the sale of the family home.  It is not far-fetched to extrapolate that demand for multi-unit rental apartments may also exist in smaller municipalities in the province, but that rural housing economics (lower housing prices but similar construction costs) have thus far constrained the supply side of the equation.   

 



Turner Drake & Partners’ Economic Intelligence Unit follows closely trends in real estate and the factors that can impact its value, from demographic patterns and preferences, to climate change.  Custom reports translate data into conclusions.  For more information on how we can assist you, please call or email Alexandra Baird Allen: 902-429-1811 x323 or abairdallen@turnerdrake.com.


Tuesday, June 11, 2019 12:25:44 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Economic Intelligence Unit | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island | Turner Drake
# Monday, April 15, 2019

Turner Drake started in 1976 with the mission to “provide solutions to real estate problems”. Initially we focused on valuation practice, but as real estate and its challenges have become more diverse, so too have we. Over the decades we’ve added complementary practice areas, expanding our perspective and deepening the expertise we could bring to the aid of our clients. Not long ago we once again ventured into new territory, adding a Planning Division. Rooted in the economic perspective that all our divisions share, our planning practice is unlike any other in Atlantic Canada.

Often we are called in to lend a hand on other Turner Drake assignments; bolstering property tax appeals, identifying implications for property valuation, or accurately reviewing development potential for brokerage clients. But we work most closely with our Economic Intelligence Unit, where our combination of GIS resources and expertise in the analysis of demographic, economic, and real estate market data have led us to some truly interesting planning assignments.  Working with a variety of both private and public sector clients, we’ve been involved in some of the largest planning and development projects in the Region. And some of the smallest. We’ve even picked up a few awards along the way. The challenges and outcomes are varied, but one thing is always common; an approach grounded in real estate economics.

Now, having just crossed the five-year milestone, we celebrate another; our first staff expansion. We put out the call shortly before the New Year: thanks to the many that applied, we are humbled by your interest in what we are trying to bring to the planning profession. So who is the new recruit ready to help us continue our success?    

Say Hello to the Newbie – Andrew Scanlan Dickie

Hello world, I’m Andrew – Turner Drake’s self-declared Newbie – here to share the story that is me; a story of adventure, intrigue, and spreadsheets. Yes, I’m that guy – the one who likes numbers just a little too much. I’m no mathematician, just a fanboy hoping to put my interests to use. I suppose that’s how I ended up here, but that will come.

My last names may throw you off, but I’m a born and bred Montrealer (I can feel the maritime Bruins and Leafs fans cringing). I decided to stay local for my first university degree, receiving a Bachelor of Commerce from McGill. I was young, inspired, and ready to take on the world. What does the mean? You got it – I went back to school, but this time away from home (sorry mom).

In Spring 2017, I graduated from Dalhousie University with a Masters of Planning degree. My short two years in Nova Scotia were nothing short of amazing; I met my soon to be wife, made amazing friends, and embraced the culture and lifestyle. But like many before me, I left to seek opportunities elsewhere.

Over the last two years I worked for a small-town municipal government in Ontario, wearing the many hats allotted to me and expanding my knowledge of planning policy. Don’t get me wrong, I loved it – but two things kept nagging at me: (1) Ontario’s got nothing on the Maritimes (there’s just something about the air here) and (2) my professional life was number deficient (ahem, nerd).

At the time, my partner and I were nestled in the suburbs. We had adopted a dog and enlisted the help of a real estate agent – we were getting pretty darn serious about putting down roots. So, one might say it was an 11th hour moment when the Planning Division opportunity for Turner Drake came up. I would say it was more an aligning of the stars; a chance to return to the place my partner and I hoped to call home and the lifestyle that comes with it, and an opportunity for me to develop both my business and planning expertise.

So here I am, ready to take on the world yet again and use my skills to contribute to the well-oiled machine that is Turner Drake. I’m chomping at the bit, so if you or your organisation are wondering how our expertise in development economics and real estate market analysis can enhance your planning process, just give us a call! Hint, hint, nudge, nudge – mandatory municipal planning strategies as part of the Nova Scotia Municipal Government Act are becoming a thing, so feel free to reach out about how that may affect you or how to explore that process. Alternatively, if you’re in Ontario and require some help navigating Ontario’s Planning Act, let me know!

To see how your project can benefit from our unique planning expertise, call Senior Manager Neil Lovitt at (902) 429-1811 or nlovitt@turnerdrake.com. We’ve got more horsepower than ever.

Monday, April 15, 2019 9:47:05 AM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | New Brunswick | Newfoundland & Labrador | Nova Scotia | Planning | Prince Edward Island | Turner Drake
# Friday, March 29, 2019

You are a tenant looking for commercial space to lease. You start your search by checking the local Kijiji ads and maybe check with a few colleagues when you realise that perhaps you are in over your head. One ad is asking for $14/ft.² net plus operating and taxes, while another is asking $3,500 per month gross. How do you compare these two rents?  

Or perhaps you are a new landlord, eager to fill up your new investment property and start making a return. You are not sure what to charge for rent, but you want to ensure that all of your operating expenses are recovered at the end of each operating year and you are not out of pocket for any expenses.

First, let’s summarise the rental terminology:

Net Rent: Often called “Base Rent”.  This is what you pay for the right to occupy a given space

Additional Rent: Often called “Common Area Maintenance (CAM) and Realty Taxes” or “Service Rent”:  This is the cost of operating a given space or property.  It includes such things as electricity, heat, garbage removal, snow clearing, etc.  It is typically paid for by the landlord and then recharged to the tenant on a per square foot basis.

Gross Rent: This is the sum of all rent paid (Net and Additional Rent).

In order to compare a net and gross lease, the rents must be converted to the same basis (ie: both must be compared on a per square foot basis, or both on a monthly rental basis).  For example: let’s say that a particular unit is 1,500 ft.2 and it is being offered at a Net Rent of $14/ft.² and CAM and Taxes of $11/ft.².  Converting this to a monthly rent is as follows:

 

($14/ft.² + $11/ft.²) X 1,500 ft.² = $37,500 annual or $3,125 per month.

 

Alternatively, if you are provided with a rental rate of $3,500 per month gross for a 1,500 ft.² space, converting this to a per square foot rent is as follows:

 

$3,500 per month X 12 = $42,000 per annum / 1,500 ft.² = $28.00/ft.²

 

Now that you know how to calculate and compare net and gross rental rates…which one is better?  A net lease or a gross lease?...well it depends which side of the lease you are standing on.  The main difference between a net and gross lease, comes down to who shoulders the risk of increasing operating costs.  Under a gross lease, a tenant has committed to a set amount of rent for the lease term.  If the operating costs increase during the term of that lease term, the landlord “eats” those costs, thereby cutting into his/her effective rent.  Under a net lease however, the Additional Rent charged for operating costs fluctuates throughout the term of the lease.  Since landlords are recharging the tenants for common area costs, any increases are simply passed on to the tenant.  Tenants may prefer a gross lease since it represents a steady and guaranteed rent, and no risk of increasing common area costs during the length of the lease.  Landlords on the other hand tend to prefer a net lease where there is a steady and guaranteed base rent, and any risk of increased expenses is simply passed along to the tenant.

Ashley Urquhart is the Senior Manager of our Brokerage Division.  She has a vast network of contacts and would be happy to assist you with all your leasing needs.  Feel free to contact Ashley at (902) 429-1811 or aurquhart@turnerdrake.com.

Friday, March 29, 2019 11:05:01 AM (Atlantic Standard Time, UTC-04:00)  #    -
Atlantic Canada | Brokerage | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island | Turner Drake
# Wednesday, January 23, 2019

Now is the time of year where many companies are cleaning house. Auditing departments are analysing and assessing inventory, and looking for ways to minimise losses – kicking off the New Year in stride!  Unfortunately, during this process many building owners and managers overlook the main driver of their revenue – the very square footage upon which leases are based.

It has become increasingly common for building owners and managers to rely on historical figures when selling or purchasing a property.  Many put their trust in building and unit sizes that have been carried forward for years, or even decades.  Considering building revenues and overall property values are directly correlated to building size, wouldn’t you want all of your ducks in a row before purchasing or selling a property?  In other words, when making an investment decision, why rely on areas that have not been certified?  

Space certification is more than just an independent, third party confirmation of the size of an existing space.  It can also be a crucial vehicle for unlocking additional property value.

Recently one of our clients was in the process of negotiating the purchase of a large multi-tenant industrial building.  The owner provided our client with the overall building area together with segregated unit areas.  The owner had openly stated the areas had not been measured in at least ten years and so prior to making his final investment decision, he engaged our Lasercad® team to verify the areas with a space certification of the building.  Once the tenant spaces were measured and the rentable areas calculated in accordance with the appropriate standard method of measurement, we came to an astounding conclusion.  Our space certification rendered a total rentable area which was more than 10% higher than the owner-provided areas!  The building area had been understated for the past 10 years (or more).  From an investment standpoint our client was floored.  Based on the current market rates for the area, the owner had been losing out on approximately $35,000 per year of additional revenue.  The potential revenues which could be realised from the previously understated building size played a major role in determining the overall value of this multi-tenant industrial building.

Although some building owners and managers may overlook the source of their building and unit sizes, many others have been pro-active in implementing space certification as a standard procedure - especially when making investment decisions.  Regardless of whether you are buying, selling, or leasing, it is essential to know where the underlying areas originate from.  The square footage of your building is typically the core revenue driver and often times, these areas are understated.  Now is the time to get a grip on your inventory and ensure you’re maximising its value.  

Patrick Mitchell is the Senior Manager of our Lasercad® Division and also highly involved in our Valuation Division.  For further information on how to maximise your property’s value through space certification please don’t hesitate to reach out. Patrick can be reached at pmitchell@turnerdrake.comor by phone at 902-429-1811.  

Wednesday, January 23, 2019 2:29:15 PM (Atlantic Standard Time, UTC-04:00)  #    -
Atlantic Canada | Lasercad | Valuation
# Thursday, December 13, 2018


Specific Claims are launched by a First Nation band against the Government of Canada for historic grievances, typically over issues like unfulfilled treaty obligations, loss of reserve lands and mishandled First Nation funds. The most common cases that cross our desk involve the sale of reserve lands by the government of the day without the Band’s consent, either because it was never surrendered by them or because it was invalidly surrendered.

The events are always historic and quite often pre-date Confederation – a time when settlers were actively seeking to establish themselves in the new world and the government of the day was eagerly trying to accommodate them through grants and leases of land.  And sometimes that happened to be unsurrendered reserve land.

Those readers with a penchant for all things historical will find interesting reading on the origins of these claims by researching King George III’s “Proclamation of 1763”, issued in those turbulent times of squabbling between the French and the British. It imposed a fiduciary duty of care on the Crown which endures to this day, and is enshrined in the Constitution Act of 1982.  Heady stuff.

Our involvement in these files begins when the historical research has been done and the claim has been accepted by the government for negotiation. The stage is then set for negotiations to begin over the amount of compensation that the FN should receive from the Government of Canada.

The structure within which these negotiations take place is laid out in federal government guidelines. The first, released in 1982, set out the policy on specific claims and established guidelines for the assessment of claims and negotiations. These were tweaked under successive governments but the fundamentals remain the same.  They can currently be found in the document entitled “Specific Claims Policy and Process Guide”, available online and currently (still) under review.

We have been actively engaged on claim files in the Maritime provinces since the company began over 40 years ago – impressive, but a mere blink of the eye within the context of the time periods actually covered by these types of claims. Our involvement occurs in one of two ways.

1.       As an independent Consultant, hired under a joint terms of reference to calculate the ingredients of the claim, which then forms the platform for negotiations between the parties.

2.       As a Technical Expert on behalf of the First Nation, advising their negotiation and legal team on the technical aspects of the claim, ensuring that the process follows the guidelines and that the FN receives the compensation it is due.

We have represented (or continue to represent in currently active claims) over half a dozen First Nations throughout NS and NB, usually in the role of Technical Expert.

The structure of a claim is set out in the guideline and usually there are two components, calculated separately but intrinsically linked through the historical record.

(1) Current Unimproved Market Value - Where a claimant band can establish that certain of its reserve lands were never lawfully surrendered, or otherwise taken under legal authority, the band shall be compensated either by the return of the lands or by the current unimproved value of the lands. A relatively straight forward process…..

(2) Historical Loss of Use - Compensation will include an amount based on the loss of use of the lands in question, where it can be established that the claimants did in fact suffer such a loss. This can include losses from timber, agriculture, minerals and aggregates, fishing rights, land rental losses and a myriad of other components.  A far from simple process, often involving experts from different fields … and forests. The claim clock begins when the lands where first taken – usually 100 years or more in the past.

The process is not a quick one. Reconstructing historical events – and placing a value on them - takes time and diligence.  This is no splash-and-dash appraisal job.  And rightly so because there is much at stake here. Claims typically run into the millions of dollars and the calculations behind them must withstand robust scrutiny by both sides.  The cost of righting past wrongs does not come cheaply – or quickly.


Lee Weatherby is the Vice President of our Counselling Division. If you'd like more information about our counselling services, feel free to contact Lee at (902) 429-1811 or lweatherby@turnerdrake.com
Thursday, December 13, 2018 10:43:20 AM (Atlantic Standard Time, UTC-04:00)  #    -
Atlantic Canada | Counselling | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island | Turner Drake
# Friday, November 16, 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, November 16, 2018 12:36:31 PM (Atlantic Standard Time, UTC-04:00)  #    -
Atlantic Canada | Economic Intelligence Unit | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island | Turner Drake
# Monday, October 22, 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, October 22, 2018 10:44:48 AM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Brokerage | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island
# Tuesday, October 9, 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, October 9, 2018 11:24:57 AM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Lasercad | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island
# Tuesday, August 28, 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, August 28, 2018 5:06:03 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island | Turner Drake  | Valuation
# Wednesday, July 25, 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, July 25, 2018 3:00:58 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | New Brunswick | Newfoundland & Labrador | Nova Scotia | Planning | Prince Edward Island
# Thursday, June 7, 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, June 7, 2018 2:33:58 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Lasercad | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island | Turner Drake
# Friday, February 9, 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, February 9, 2018 1:58:02 PM (Atlantic Standard Time, UTC-04:00)  #    -
Atlantic Canada | Economic Intelligence Unit | Nova Scotia | Turner Drake
# Wednesday, October 25, 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, October 25, 2017 12:49:18 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Nova Scotia | Property Tax | Turner Drake
# Friday, August 18, 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, August 18, 2017 12:21:25 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | New Brunswick | Newfoundland & Labrador | Nova Scotia | Planning | Prince Edward Island | Turner Drake
# Monday, May 8, 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, May 8, 2017 10:29:39 AM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | New Brunswick | Newfoundland & Labrador | Nova Scotia | Planning | Prince Edward Island | Turner Drake
# Wednesday, April 26, 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, April 26, 2017 10:21:10 AM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island | Property Tax | Turner Drake  | Valuation
# Monday, April 3, 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, April 3, 2017 10:02:51 AM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Economic Intelligence Unit | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island | Turner Drake
# Thursday, March 2, 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, March 2, 2017 9:50:50 AM (Atlantic Standard Time, UTC-04:00)  #    -
Atlantic Canada | New Brunswick | Property Tax | Turner Drake
# Thursday, February 16, 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, February 16, 2017 12:26:42 PM (Atlantic Standard Time, UTC-04:00)  #    -
Atlantic Canada | New Brunswick | Newfoundland & Labrador | Nova Scotia | Planning | Prince Edward Island | Turner Drake
# Wednesday, May 13, 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, May 13, 2015 2:57:24 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Planning
# Friday, January 23, 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, January 23, 2015 4:29:32 PM (Atlantic Standard Time, UTC-04:00)  #    -
Atlantic Canada | Property Tax
# Tuesday, August 26, 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, August 26, 2014 4:28:55 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada