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# Thursday, November 6, 2014

This month’s blog is dedicated to providing some simple advice to help you increase your chances of successfully resolving your assessment appeal and avoiding the dreaded “confirmation letter”.  Ironically, it is actually inspired by some terrible advice a prospective client relayed to me while describing the process he used to resolve his own appeals. 

First off, the disclaimers.  All appeals are not created equal and as a result there isn't a “one size fits all” approach to successfully resolve all appeals.  Second, some appeals are complex and warrant an equally complex strategy to resolve them, but since the overwhelming majority of assessment appeals get settled without necessitating a contested hearing and most cases don’t warrant bringing in one of TV’s top lawyers[1], let’s assume our goal is to resolve our appeal at the review stage.

What Not to Do

Let’s start with the strategy my prospective client was using.  I may be paraphrasing here but as I recall when he was explaining his strategy he proudly proclaimed “I don’t tell the assessor a darn thing!”.  Presumably, this advice was rooted in an inherent distrust of the local assessor but given that an appeal is initiated by the owner, and in most jurisdictions the onus is on the owner to prove an assessment is incorrect, this strategy is condemned to failure.  In order to make a decision to reduce an assessment, an assessor requires facts and issues to justify processing a change.  Although it’s possible that an assessor will unearth these facts on his own, an owner greatly increases his chance of succeeding if he can assist the assessor in his quest for new facts.

A Philosophy For Success

If you keep in mind that your assessment is based on a valuation model that is by necessity, developed to estimate the market values for thousands of properties, the path to success in an assessment appeal is to show why this model overstates your assessment.  At the most basic level you should ask yourself, what is unique or different about your property that detracts from its value and hasn't already been accounted for in the assessment?  Accordingly, step 1 is to request disclosure and get a copy of your assessment calculation and step 2, is to develop a list of facts or issues that were not previously accounted for.

  • Is a portion of the land encumbered by an easement, a rocky slope, or a swamp? 
  • Does one of your leases have a clause or clauses that make it less desirable than those typical of the market? 
  • Is your vacancy higher than the market and is there a reason for it? 
  • Is the property awkwardly configured in a manner that makes it less useful than most others?

The list of potential issues is endless but the only way an assessor will be able to incorporate them into the assessment is if they are brought to his or her attention.  Seasoned assessors will appreciate the transparency and although you’ll still have to resolve by how much the issue should detract from the value you’ll be well on your way to getting past the confirmation letter.   

____________________

[1] In a recent poll of the members of our Property Tax Team it seems we’d hire Suit’s Harvey Spector, Breaking Bad’s Saul Goodman, Law & Order’s Jack McCoy or the unbeatable Ben Matlock. I can only conclude that our tax team spans a few generations!  Like our Facebook page if you agree and post any that we might have missed! https://www.facebook.com/TurnerDrakeLtd  

Property Tax advice provided to you by André Pouliot, Senior Manager of Turner Drake's Property Tax Division and New Brunswick office. If you have any questions regarding property tax, feel free to contact André at 1 (800) 567-3033 or apouliot@turnerdrake.com.


Thursday, November 6, 2014 2:12:40 PM (Atlantic Standard Time, UTC-04:00)  #    -
Property Tax
# Wednesday, October 29, 2014


 

The Urban-Rural Balance

Among the strongest barriers to growth identified by the Ivany Report was Nova Scotia’s urban-rural dissonance. This is unfortunate because when it comes to the urbanisation rates of a population, the real divide exists in prosperity, not personality. As illustrated above, across 190 nations and city-states, urbanisation is a strong determinant of economic progress as measured by per capita GDP, and more importantly, social development by more holistic measures such as the UN Human Development Index. The UN determined in 2008 that humanity, for the first time, lived predominantly in urban areas. Given the link between increasing urbanisation and improvements in a host of vital societal characteristics, it is a big deal that the global population is majority urban.

It is important to note that in this context, “urban areas” is defined by Statistics Canada according to population size and density. It does not inform us about the type of built environment the urban population inhabits and it sets the bar for “urban” is very low. Thus we are not talking about city versus suburbs, or even city versus small town, but more the contrast between populations organized around even modestly sized communities, versus spread out in decentralised settlement patterns.

As the crossing of this global threshold is being driven by developing countries, we suspect the full impact of this milestone may be lost on most of us in the developed world. Canada for example has been a majority urban population since before the Great Depression. In fact, today 81% of our national population resides in urban areas. Though Canada is a highly urbanised country, it is also large and diverse; national averages tend to conceal substantial regional variations. Nova Scotia for example started out heavily rural like the rest of the country, but urbanised at a slower pace, reaching a majority decades later around the end of WWII. However, while the country as a whole continued to trend upward, Nova Scotia stayed roughly where it was. The 2011 Census puts its urban population at 57%; the story for the rest of Atlantic Canada is generally the same.

Now obviously quality of life outcomes are driven by numerous factors. Urbanisation is an inseparable part of progress, but still only a part. Additionally, economic prosperity itself drives urbanisation; an urbanising population is both a means and a result of progress. However these considerations do not diminish the fact that increased urbanisation is a key ingredient of positive economic development.  The chart at the opening illustrates this relationship superbly.  Continuing research affirms this it in both the economic histories of developed countries and the current transition underway in the developing world.  Notice the association is less clear between prosperity and total population.  When it comes to human capital, it’s not what you’ve got, but how you use it.

Our Urban Opportunity

By saying this, we are trying to illustrate the opportunity before us.  Urbanisation produces twin economic benefits; significantly improved resource consumption efficiency, and enhanced economic productivity.  The more urban our population, the cheaper and easier it is to provide high quality public services and infrastructure.  Simultaneously, the more productive our economy is, and the better our general welfare. Society doesn’t just get more, it gets more for less.

Yet, we have something of a neurosis when it comes to the topic. The Ivany Report specifically highlights ideological conflicts that fall along the urban-rural “fault line” as a barrier to positive unified action.  More locally, Halifax’s recent Regional Plan 5-Year review process offered numerous examples of conflict arising from the perception of one population group benefitting at the cost of the other.  This is the debate we are familiar with; one that confuses support for urbanisation with passing judgement on individuals, and one that is grounded in how the built environment evolves as populations urbanise.

However, for now the point is that we surely can agree that there is much to gain from a basic shift in our urban-rural balance.  At the very low end, achieving a minimum total population of 1000 people and a density of at least 400 people per square kilometre (“urban” as defined by StatsCan) is relatively easy and uncontroversial.

Looking at our standing relative to the rest of the country, we ought to recognize that Atlantic Canada has plenty of room to make these easy gains.  Even dramatic changes do not threaten to eradicate rural lifestyles for those who choose them.  We must also recognize that our own perception of urbanisation’s value is muted.  We have been shielded from the full brunt of our economic reality by the equalisation we receive from the larger and more urbanised population in the rest of the country.  We stand to benefit from urbanising, but it is difficult to build consensus around the idea because we exaggerate what we risk to lose, and underestimate what we stand to gain.

Conclusion

Regardless of where you live in the Maritimes, you should be concerned with our current rural-urban balance.  Adopting a vision for the region that is more urban is important if we are going to mount a serious attempt at meeting our economic and demographic challenges.  It should be something we can all agree on because:

  • Supporting urbanisation isn’t about choosing one segment of the population over the other; it’s about choosing prosperity over stagnation. 
  • If we totally ignore urbanisation, but are still successful in promoting economic development, it’s essentially guaranteed to happen anyway.
  • The current decline of rural areas means it is already happening, has been for the last few decades, and will likely continue in the event that we fail to achieve meaningful economic progress.

If urbanisation is going to continue either way, let’s make it happen for the right reasons, and make the most of it while we’re at it. Focusing policy and investment strategically around urban areas amplifies the return on our effort.  There is a great deal more we can do, but even engaging at this basic level will pay dividends.  Strengthened urban communities reduce our fiscal challenges and improve our economic competitiveness.  In turn, they support stable, vigorous rural communities.  Embracing that goal should not be a polarizing idea.

Neil Lovitt heads up our Planning Division and can be contacted at nlovitt@turnerdrake.com or 1 (800) 567-3033. For a deeper examination of urbanisation in Atlantic Canada, see his full article at the following link: http://www.turnerdrake.com/newsresearch/documents/Urbanisation-RESEARCH.pdf.

Population, Urbanization & Development (2011).jpg (105.4 KB)

Wednesday, October 29, 2014 8:47:16 AM (Atlantic Standard Time, UTC-04:00)  #    -
Planning
# Wednesday, August 27, 2014

For better or for worse, the real estate industry is known for using terrible euphemisms to describe space, but the truth that lies behind some clichés can be leveraged to your advantage when you are choosing a location for a new, expanding, or relocating business. 

Location, Location, Location

Real estate is intrinsically linked to physical space and yes, location is key.  But what makes one location great for a particular business may be the exact reason it is a terrible location for some other venture – being next to a main thoroughfare with easy access to the Trans-Canada highway is great for a shipping business, but less appropriate for a childcare centre.  The ideal location for some businesses is near other businesses of a similar nature (think groupings of clothing stores along certain roads or in malls), whereas others will do better if there’s a bit of distance between themselves and the next one (think convenience stores).  In terms of getting along well with your neighbours, the right location can be of more help than the proverbial good fence by avoiding the “not-in-my-backyard” scenario that incompatible land uses inevitably spur.

If You Build It, They Will Come

Businesses each have a specific target market…if you build it, they might come, but you could save yourself a lot of energy and marketing time if you just built it where they already are, or where they are headed anyway.  Demographic indicators, from age groups, gender proportions, daytime population, and indicators of wealth and income, all play a huge role in the success of a business – and the relative merits of one location over another.  The Greater Halifax Partnership has a great GIS tool for the properties in their database (http://halifax.zoomprospector.com/.  If you need something more customised and specific, or located outside of Halifax, we can help). 

Timing is Everything 

If you are looking to build a large development, you want to time it so that your project comes to market when demand is high, competing supply is low, and preferably as the economy is trending upwards.  Our recent Market Survey of office space in five of the major centres in Atlantic Canada highlights this: vacancy is pushing upward across Nova Scotia and New Brunswick.  See the results for yourself in the News & Research section of our website (www.turnerdrake.com/newsresearch/index.asp, then explore the Media Centre and Surveys tabs). 

All Over the Map

The beautiful thing about real estate is that because it has, by definition, a physical location, you can map it.  Then you can map other pertinent things around and relating to it, such as competing or complimentary businesses, roads, public transit stops, parks…you get the picture (or will, once you see it all on a map).  Demographic data can be plotted and aggregated for existing and potential locations.  This wealth of information can be analysed and studied in great detail or with a “quick & dirty” report, depending on how in depth you need the answer to the question “where?” to be, and the level of professional advice you require.  It really does pay to “look before you leap”…after all, “nothing in life is certain except death and taxes” but making an educated decision is better than “flying by the seat of your pants."

Wise words from Alexandra Baird Allen, Senior Manager of Turner Drake's Economic Intelligence Unit. If you're looking for the perfect location for your new, expanding or relocating business, give Alex a call at 1 (800) 567-3033 or email her at abairdallen@turnerdrake.com .

Wednesday, August 27, 2014 12:00:24 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Economic Intelligence Unit
# 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
# Thursday, August 7, 2014

No one wants to tell a client their space looks like a recent episode of Hoarders. However, it is essential to show a space in its best light to reduce the marketing exposure time and get the best price (rent) for your client.

Here are some tips to keep in mind when selling or leasing your space:

1. Clean Unit: There is nothing worse than walking through a cobweb, jumping back in fear that you have a spider crawling on your back, only to brush your good suit jacket up against a wall covered in gyproc dust. Tip: Take a duster and vacuum through the unit on a regular basis to ensure it is fresh and clean for each showing. 

2. Clean Washrooms: Believe it or not, people actually open the toilet cover while touring a space. Although pink is pretty, it is not so much when it comes in the form of a ring around a toilet bowl. Tip: Flush the toilet every few days to ensure the stagnant water does not leave a mark.

3. Fresh Paint: Let’s face it; some people cannot get passed the harvest gold paint! While it was modern in 1970, it is not anymore. Tip: Although it can be a bit of an investment, prime the walls (and ceiling if applicable) in a contemporary white colour. Not only will it enhance the appeal to potential tenants and purchasers, but it will help them envision their organisation’s color scheme and give the unit a fresh feeling

4. Flooring: Can you see the subfloor through the carpet? Are there multiple chips in the ceramic tile from accidentally dropping a heavy piece of equipment? Tip: If a good cleaning does nothing to improve the appearance of the flooring in the unit, I recommend removing it and leaving exposed concrete.

5. Garbage & Storage: While it is very tempting to use your vacant unit as a storage room for garbage, excess materials, for your own company etc… don’t. Tip: Leave the unit empty. It is hard for a potential tenant/purchaser to imagine themselves in a unit when it is full of clutter. Plus you will have to remove the garbage, excess material etc., for the incoming tenant/purchaser anyways so why move it twice.

6. Windows & Window Coverings: Do the blinds look as though they have been the latest victim of a cat attack? Are there finger prints, paint overspray or perhaps even a face print on the window? Tip: Ensure that the window panes are clean and only leave the window coverings up if they are in good condition.

7. Lighting: While it is tempting to turn the electricity off to a vacant unit, it is important to be able to see the space. Though we always bring a trusty flashlight, it can become a real safety issue for both the client and the agent touring the space if they have to feel their way around. Plus, it is not showing your space in its best “light”. Tip: Lights on! 

Advice given by Ashley Urquhart, Consultant in Turner Drake’s Brokerage Division and Manager of our Business Development Division. For more real estate brokerage advice, you can reach her at aurquhart@turnerdrake.com or 1 (800) 567-3033.
Thursday, August 7, 2014 12:04:36 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Brokerage
# Thursday, July 24, 2014

1. Steel-Toe Boots/Shoes: Many industrial sites require steel-toe boots or shoes, however; they are handy to have at any inspection site, just in case you don’t see that raised curb or camouflaged sprinkler head. Better to be safe than sorry!

2. Camera: A picture is worth a thousand words… and will save you a lot of writing!  A good quality camera can help you relive that inspection experience firsthand once you’re back at the office.

3. Flashlight: The last place you want to be is under the street, in a dust covered 200 year old room that you just saw on Ghost Hunters last weekend... only to find out that the lights don’t work. Tip: If you’re often in the dark, invest in a headlamp… stylish and practical!

4. Batteries: Useful to power electronic measuring devices and the above referenced camera and flashlight. These tools aren’t much help without the juice!

5.      Extra Writing Utensils: Once I jogged across the street to quickly snap a picture of an apartment building but when I got back to the building I could not find my pencil for the life of me. So I stepped outside and looked around… only to find my pencil crushed to bits in the middle of the road.  Not to worry though, my back-up pencil and I completed the job just fine!

I recommend placing all of your inspection gear in a plastic tote that can easily be moved between the office and the trunk of your car.  By keeping everything in one place you will never forget to pack that one item you so desperately end up needing. 

Happy Inspecting!

Advice given by Matthew Smith, Consultant in Turner Drake’s Counselling division and Manager of our St. John’s office. For more real estate counselling advice, you can reach him at msmith@turnerdrake.com or 1 (800) 567-3033.

Thursday, July 24, 2014 3:41:07 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Counselling
# Wednesday, January 22, 2014

On January 13th 2014 all property owners in Nova Scotia received their 2014  Assessment Notices. Over the past five years commercial assessments in the Halifax Regional Municipality (HRM) have risen by an average of 26%. Time to shoot the messanger? Not yet!

Property assessments are determined by the Property Valuation Services Corporation (PVSC), a "not for profit" entity controlled by the municipalities. However it is the latter who set the tax rates and they are the real villains of the piece. PVSC's assessments are based on Market Value: as values rise so do assessments. Tax rates therefore should fall....but they don't...studies carried out by our Property Tax Division show that municipal budgets expand instead, to take advantage of the increased assessments.

Take Halifax Regional Municipality for example. Over the past five years assessments have increased, on average, by the following amounts: Automobile Dealerships 29%; Apartments 28%; Industrial property 27%; Offices 26%; Hotels/Motels 10%...while tax rates have fallen by just 4%. That's right: 4%.

So where did all that extra money go...into additional or better services? Sadly not: over 60% of HRM's expenditures are consumed by staff salaries and pensions. And staff compensation increased by 82% between 2000 and 2010...during a period in which the cost of living increased by just 24%. In part this was because the municipality's staff complement continued to balloon. While competition was forcing the private sector to innovate...to do more with less...the public sector faced no such pressure. But largely it occurred because the average annual salary of their full time equivalent employees rose from $47,301 to $76,821, a rise of 62% over those ten years.

Municipalities have to face the facts: the next 10 years will not be a replication of the past decade. The Province's population is shrinking and aging: the ratio of working to non-working age population is declining rapidly. Some municipalies are now experiencing this reality but HRM has been buffered from it because of rural to urban migration. This will stop as rural areas are denuded of population. There is no evidence that HRM or other municipalities will take action until they face a Detroit type bankruptcy. It is up to property owners to minimise their exposure by ensuring their assessments are not excessive. Since commercial property owners often pay three times as much tax as their residential counterparts they should aggressively pursue an assessment appeal whenever the opportunity presents itself. They have until February 13th. to do so.

101123cow3pres.pdf (1.62 MB)
Wednesday, January 22, 2014 10:17:24 AM (Atlantic Standard Time, UTC-04:00)  #    -
Property Tax