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Turner Drake & Partners Ltd.
6182 North Street
Halifax, N.S.
B3K 1P5
Canada

Tel.: (902) 429-1811
Toll Free: (800) 567-3033
Fax.: (902) 429-1891

Suite 221
12 Smythe Street
Saint John, N.B.
E2L 5G5
Canada
Tel.: (506) 634-1811

Suite 11
109 Richmond Street
Charlottetown, P.E.
C1A 1H7
Canada
Tel.: (902) 368-1811

35 York Street
St. John's, N.L.
A1C 5M3
Canada
Tel.: (709) 722-1811

4th Floor
111 Queen Street East
Toronto, ON.
M5C 1S2
Tel.: (416) 504-1811

E-Mail: tdp@turnerdrake.com
Internet: www.turnerdrake.com

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# Thursday, June 2, 2016

For the past 20 years, Turner Drake has affirmed the importance of certified space measurement by providing Lasercad® services throughout the Atlantic Provinces and onwards to Ontario. Lasercad® is an essential tool in creating a more intimate understanding between building owners and managers and their buildings’ space inventory.

Lasercad® is a property measurement service which provides precise measurement and calculation of all building areas in accordance with the various industry Standard Methods of Measurement, including the Building Owners and Managers Association (BOMA). Whether you own or manage a small retail strip plaza, an industrial warehouse and fabrication facility or a large multi-level office building, BOMA has a standard for you. We comply with the rules and regulations set by these standards together with our own standard operating procedures to produce measurements with an accuracy of 1 cm, and a closing error of no more than 2%. Furthermore, Turner Drake is the only space measurement company in Atlantic Canada governed by a system certified to the international ISO 9001:2008 quality standard. When it comes to space measurement, we provide precise results in a timely manner: exercising regular calibration of laser equipment and ensuring on-site measurement within 1-2 days of your request.

Measuring an excess of 1.7 million square feet of space in the past year, we have been able to collaborate with a wide variety of clients; from small independent building owners to large commercial REIT’s, working in unison to help our clients properly allocate their space inventory and improve the efficiency of their buildings. With staggering vacancy rates it has become paramount for building owners and managers to not only allocate their space inventory properly, but to optimize the use of this space. Tenants have also become increasingly familiar with the BOMA Standard, requesting certified space measurements prior to accepting lease agreements. Our space certificates therefore provide accurate representation of each tenant space, creating piece of mind to prospective tenants while also creating value as key marketing material for building owners and managers.

In a recent audit of office buildings in Atlantic Canada, we discovered the average area represented in a lease was misstated by 10.1%. Such large discrepancies are typically a result of inaccurate measurements, space modifications on lease renewal that are not corrected in the new lease and the use of a non-standard or inappropriate method of measurement.

Let me tell you about a key aspect of the BOMA 2010 Office Standard Method of Measurement: using this standard requires careful consideration of the “dominant portion” when certifying the subject space. The dominant portion refers to the inside finished surface of a vertical exterior enclosure i.e. window glazing, painted gyproc, etc. To classify as a dominant portion, the finished surface must constitute 50% or more of the vertical dimension between the finished surface of the floor and the finished surface of the ceiling.

Here, you can see an area boundary using the BOMA 2010 Office Standard Method of Measurement. The blue area highlights the use of the dominant portion, a key aspect of this standard.



And here is an area boundary using a non-standard or inappropriate method of measurement.



Now, consider an older office building with 300 deep inset windows comprising roughly two ft2 of space along each windowsill. If these windows were indeed classified as the dominant portion, this would warrant an additional 600 ft2 of rentable space in which the building owner benefits! Your space inventory just increased by 600 ft2 without lifting a hammer!

Educating oneself with the appropriate Standard Methods of Measurement is vital to ensuring proper allocation of space inventory. Knowing your inventory and allocating it appropriately has proven to increase building efficiency and more importantly, increase earnings potential amongst building owners and managers alike.

Although certified space measurement is our specialty, our highly skilled and creative Lasercad® team also provide advice for space planning. We have worked with local developers, measuring portions of and/or entire buildings to provide As-built Plans for proposed renovations, including the virtual placement of demising walls to optimize tenant areas as required by the client. We also provide fire evacuation plans, site parking and layout plans and building mechanical and HVAC systems plans.

Your space is our primary concern, let our Lasercad® team quickly and accurately allocate your space inventory so you can get back to leasing that additional 600 ft2 you just gained. For additional information about these services please visit our website.



Written by Patrick Mitchell, Consultant in our Lasercad® Division. To learn more about Patrick, visit our Facebook page to see his Featured Consultant article.

Thursday, June 2, 2016 10:39:41 AM (Atlantic Daylight Time, UTC-03:00)  #    -
Lasercad
# Friday, May 13, 2016

Every year at this time, the Island welcomes the prospect of summer with an explosion of colour: yellow daffodils, orange tulips, green grass, blue skies and dancing waters. Less welcome is the annual burden heralded by flowering of the 2016 Assessment Notices. If you are a property owner, you should have received it by now. It was officially mailed on May 6th and you have 90 days in which to file an appeal or wear the consequences for the rest of the year. If your property is enrolled in our PAMSTM Property Tax Manager program, you can relax; we are already reviewing your assessment and will file an appeal if the opportunity exists to reduce your tax load. If your property is not yet PAMSTM protected, procrastinate not: you have work to do.

The legislated basis for your Year 2016 assessment is your property’s Market Value on January 1st, 2016. However, the Assessment Act also implicitly includes a “uniformity” provision hidden in the appeal process, so similar properties are required to have similar assessments. You should appeal your assessment if:

(1) Its Assessed Value > Market Value as of January 1st, 2016, or

(2) Its Assessed Value > Assessed Value of Similar Properties.

The first test is to estimate your property’s Market Value on January 1st, i.e. the price it would fetch had it been offered for sale during the last six months of 2015. Purchasers look to the future, but their expectations are usually coloured by recent history. So if, for example, you own a tourist related facility, your 2015 season will impact its value to the degree that it would influence potential purchasers for 2016 and beyond. The Market Value too is based on its anticipated selling price… not the price that would persuade you to dispose of the property.

In 2012, our Economic Intelligence Unit conducted a demographic study of Atlantic Canada for a national client. Their study utilised data from the 2001, 2006 and 2011 Statistics Canada censuses. The rate at which our regional population aged during that period is frightening; the rate at which it will age over the next ten years is terrifying. Last year, a government initiated study was released, which reviewed the changes to the economy resulting from that demographic change. The report studied Nova Scotia but its conclusions apply to all three Maritime Provinces. The report is not a happy read.

If you own a “lifestyle property,” e.g. motel, golf course, vineyard, restaurant, etc., past sales of similar properties may not be a reliable indicator of your property’s current Market Value. This type of property is usually owned by an owner operator, many of whom are now reaching retirement age. Unfortunately, the pool of prospective purchasers is shrinking rapidly as the entire population ages. Fewer purchasers translate into lower values. This is over and above any adverse impact resulting from declining tourist dollars as Americans in particular shun foreign travel.

If you own an office building in Charlottetown, you may be suffering from burdensome vacancy rates. Our most recent survey (December 2015) covered 100% of the rental stock and revealed an overall 15.69% vacancy rate… well above the sustainable economic rate and up from 10.4% from the previous year. Our survey of industrial space recorded an overall vacancy of 14.00%. If you own an office or industrial building, you should carefully consider if an appeal is warranted.

The provincial assessment authority sometimes assesses property at less than its Market Value to forestall appeals. There is an assumption by most property owners that they will not be able to successfully challenge an assessment if it is less than the property’s Market Value… even if the assessment is higher than those of similar properties. This is not the case. Buried in the appeal section of the provincial Real Property Assessment Act is the requirement that “the Minister shall demonstrate the uniformity of the assessment in relation to other assessments” (Section 28 [1]). Thus, albeit somewhat belatedly, does the Assessment Act acknowledge that similar properties should have similar assessments. Comparing commercial properties and their assessments can be a little tricky however, which is why we have built an Assessment Database for the entire province that allows us to conduct peer group comparisons… and quickly determine whether your property is uniformly assessed.

The Bottom Line: Fortune favours the brave.

Action Required: Call our PEI Tax Team members Mark Turner and André Pouliot at 902-368-1811 (Charlottetown) or toll free at 1-800-567-3033. Alternatively, you can email them at markturner@turnerdrake.com or apouliot@turnerdrake.com. Using our proprietary software CompuVal®, our PEI Assessment and Transactional Databases, and basic property information provided by yourself, they can usually determine in a five minute telephone conversation whether you should appeal. There is no charge for this service, nor will big men come to call.

Friday, May 13, 2016 3:41:46 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Prince Edward Island | Property Tax
# Thursday, May 5, 2016

Immigration into Canada is nothing new: the country admits an average of 253,875 immigrants each year. This number is responsible for almost two-thirds of the national population growth from 2005 to 2015. Based on a housing demand projection study conducted by the Canada Mortgage and Housing Corporation (CMHC), a 1% increase in immigrant population causes housing demand to rise by about 0.66%. However, the Maritime housing market is facing a projected decline in the coming years due to three interdependent facors: an aging and shrinking population, a dearth of immigration and very low rates of economic growth. This is not new information: alarms were given by various sources and it’s time to halt the slide.

History has proven that an aggressive immigration policy can help smooth the impact of an aging population (e.g. Ontario and Vancouver). It is not surprising, therefore, that increasing migration into the Maritimes is an effective way of addressing the adverse effects of our aging population. New immigrants will not only help increase the production of goods and services but will also directly increase the demand for housing.

Becoming a Maritime immigrant myself, I have a special interest in exploring the relationships between immigrant and housing trends in this region. I came to Canada in late 2012 as an international student and have seen several immigrants who decided to stay and purchase a house here. Many of them are below age 40, well-educated, and economically independent. Do they represent the majority immigrant group in the Maritime Region? I decided to dig into the data to find the answer.

The Maritime Immigration Trends

Immigrants comprise less than 6% of the Maritime Provinces’ total population, but 20.6% of the national population. Immigrant inflows to the Maritimes fluctuated dramatically from 1991 to 2006, however in the last decade, trends have been rising. This can be attributed to new policy initiatives (e.g. provincial nominee program, skilled worker express entry) aimed at attracting more immigrants to the Maritime region. From 2006 to 2011, the number of immigrants to PEI rose six-fold. Not surprisingly, employment growth in PEI caught up with the national average during the same period. Although this growth is from a small base, it still means the island is attracting more than twice as many immigrants compared to its share of the total population.




Maritime Immigrants: Countries of Origin and Demographic Profile

The United States and United Kingdom were the top two source countries of the Maritime immigrants during the 1980s. The position was taken over temporarily by some Middle Eastern countries (in the aftermath of the Gulf War) and China in the 1990s. In the last decade, the US and UK again became the top two sources of immigrants, but China and other Asian countries are listed among the top five.



The map above shows the percentage of the total population formed by Maritime immigrants in in 2015, along with the most common countries of origin. Immigration to the Maritimes is heavily slanted in favour of Halifax County (NS), Queens County (PE), Westmorland County (NB) and York County (NB). However, according to the immigration demographic profile report provided by the Atlantic Metropolis Centre, more than one-fifth of immigrants who arrived in the Maritimes from 2006 to 2011 declared their intended destinations to be outside a Census Metropolitan Area (CMA), which indicates the potential for allocating new immigrants to rural areas.

The age profile of immigrants in the Maritimes is dominated by the lower age group according to the most recently released Statistics Canada data. About 75% of immigrants who arrived from 2011 to 2015 were under age 45, and 7.5% were under age 25. The corresponding numbers for resident Maritimers aged under 45 and under 25 in 2015 were 44.3% and 14.7% respectively.

The Housing Situation and Needs of Immigrants

There have been many reports and studies exploring the current economic and population trends in the Maritime region: evidence shows Maritimers are now on the brink of an extended period of decline. The unavoidable aging trend is weakening the Maritime housing market and will continue to do so unless effective action is taken. The key to slowing down the aging trend is to be open to the outsiders by targeting and attracting skilled immigrants to the region.

In last month’s TDP trends, we explored the HRM residential house market tipping point. In the Atlantic Region, most first-time buyers are aged 25 to 34, followed by a small portion in the 35 to 59 group. Second-time buyers are also primarily aged 25 to 34. Finding suitable and affordable housing is an essential step in immigrant integration. With relatively lower housing prices (compared to Ontario and Vancouver), the Maritimes have advantages in attracting potential younger aged immigrant home buyers. Such a future can have only one outcome: reversed housing declines in demand for the aging population trend, which will boost the regional economy.



Written by Chen Shi, Consultant in our Economic Intelligence Unit. To learn more about Chen, visit our Facebook page to see her Featured Consultant article.

Thursday, May 5, 2016 9:56:23 AM (Atlantic Daylight Time, UTC-03:00)  #    -
Economic Intelligence Unit | New Brunswick | Nova Scotia | Prince Edward Island
# Friday, April 8, 2016

If you live in Nova Scotia, you may have noticed that the rate of job creation in the province has slowed during the past decade. Not only has this trend directly affected the job market, but it has also reduced activity in the resale market and in new housing construction. These effects on the housing market aren’t due to reduced supply, but instead are caused by a lack of demand.

The HRM population is aging. The number of 60+ year old residents is increasing rapidly in Nova Scotia and throughout the Atlantic provinces. Because of the aging population, fewer residents are buying single-dwelling homes, which is accelerating an already generally weakened regional housing market.

Additionally, in Atlantic Canada, only 35% of homebuyers are identified as first-time buyers (the majority of whom are aged 34 and under; see stats below from CAAMP), which is 10 percentage points below the national average. Out-migration of young people to other parts of the country is one major cause of this low percentage.

Based on the NSAR MLS® and Turner Drake in-house data, the most commonly purchased home in HRM is single-detached (more than 3,900 each year). More than half (64%) of those purchasing this type of home are typically second-time buyers. On the lower side of the market, there are approximately 878 purchases of semi-detached and row homes in HRM each year, about two-thirds of which are typically bought by first-time buyers.

According to statistics from the Canadian Association of Accredited Mortgage Professionals (CAAMP), most first-time and second-time Canadian homebuyers are aged 25-34. Subsequent buying is most often among those aged 50-59. Less than 2% of home purchases are made by those who are 70 years or older. Why does this matter? The bottom line is that as the population ages, more people are less likely to purchase first-time, second-time, or even subsequent homes.

As the majority of single-detached first-time buyers (aged 34 and under) and subsequent buyers (aged 50-59) reaches peak levels, expect the single-detached demand to level off, and then start to decline. The HRM population reached its peak levels of these age groups in last year. Therefore, housing market sales will continue to decline slowly throughout 2016 and in the next few years.

Click here to read more, including tables outlining the statistics discussed above. This topic was covered in detail in this month’s TDP Trends, a free service provided to decision makers with property portfolios in Atlantic Canada. Each month, it provides information on demographic, psychographic, migratory, income and wealth distribution, investment, technological, space utilisation, and other trends influencing property values now or in the future. TDP Trends are archived on the public area of our website.

Friday, April 8, 2016 4:59:10 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Nova Scotia
# Monday, April 4, 2016

The Real Estate Appraisal Profession is viewed in different ways by different people. Market value estimates are seen as everything from a financial assurance to a necessary evil. Personal views are typically reflective of the benefits or consequences of the end result; negative views are often the result of misinterpretation or confusion stemming from a lack of direct involvement in the process coupled with the absence of proper explanation. Unfortunately, this has led to several common misconceptions, or myths, about Real Estate Appraisal.

Myth 1: Real Estate Valuation is the same as Real Estate Appraisal

Real Estate Valuation and Real Estate Appraisal, although similar, are not analogous in nature and, contrary to popular belief, should not always be used interchangeably. The term Real Estate Appraisal is a more general term that covers a broad spectrum of value estimates. An appraisal can be anything from an estimate of price provided by a real estate agent to a written value estimate (report) provided to a financial institution by a certified appraiser. Real Estate Valuation, however, is a systematic process which provides an independent or impartial opinion of actual market value that frequently has full legal standing. It’s a complex process that can only be performed by professionally accredited individuals. Although it’s not common practise to point out the misuse of these terms to a potential client, I always like to capitalize on the opportunity to educate my audience and differentiate between the product being offered and the process involved.

Myth 2: Assessed Value = Current Market Value

Although most assessed values are purported to reflect market value, these figures are not necessarily current. For example, in Nova Scotia the assessed value of a property for the 2016 tax year is actually determined by the market value of the property at a base date of 1st January 2014, reflecting the state of the property as of 1st December 2015 (state date). As a result, the current market value of a property could in fact be significantly different than the Assessed Value.

Myth 3: Cost to build or renovate translates into Market Value

Although the cost approach is one of the three traditional methods of valuing real estate (see Myth 7), it is not without limitations. The cost approach can provide a reliable indicator of value for properties where the buildings are fairly generic, relatively new, and have very little depreciation. In this case, the building and improvements likely reflect newer construction trends and support the level of utility demanded by current market participants. However, this approach is less reliable when the building is older and begins to suffer from depreciation, or if the building is not of a typical design or style. The misconception here is that the cost to renovate will be recovered upon sale of the asset. Unfortunately, this is not always the case. In some instances, a retrofit does not necessarily add value to the property; it simply aligns the product with current demand or economic/functional requirements. Similarly, inflated costs due to atypical building designs are not always realized by the local market. In fact, the level of “uniqueness” can actually limit the pool of potential purchasers, therefore lengthening marketing times, and potentially decreasing the achievable value.

Myth 4: Market Value varies depending on who the report is prepared for

Market value is an impartial, unbiased opinion of value. The Appraiser/Valuer has no vested interest in the final outcome of the analysis, and therefore, the final figure should be the same no matter who commissions the report (i.e. borrower, lender, etc.).

Myth 5: A paying client can share a Valuation Report with anyone, and anyone can rely on it

A customer can share the results of a valuation with anyone they please, however the only individuals or organizations that may rely on the conclusions are expressly documented within the report.

Myth 6: A Property Valuation is the same as a building inspection

Although most valuations include an onsite examination of the subject, the Valuer’s task is to render an opinion of the market value for the property. A building inspection typically constitutes a structural survey of the building in order to determine the actual condition of the structure and its major components.

Myth 7: Market Value is based solely on comparable sales

There are three traditional approaches to valuing real estate: the Direct Comparison, the Cost Approach, and the Income Approach. Only the most appropriate combination of the three approaches is utilized in order to properly value a property.

1. The Cost Approach can provide a reliable indicator of value for properties that are fairly generic, relatively new, and have very little depreciation.

2. The Income Approach can provide a reliable indicator of value for properties which are acquired as investment vehicles. The value of the property is determined by its ability to generate revenue. This approach is less reliable when applied to properties which are not likely to be rented to a tenant.

3. The Direct Comparison Approach can provide a reliable indicator of value when comparable sales data are available. This approach is less reliable when sales data is sparse or when the various sales are not truly comparable to the subject thereby requiring extensive adjustments.



Written by Mark Farrow, Senior Consultant in our Valuation Division. For more information about our valuation services, feel free to contact Mark at (902) 429-1811 or MFarrow@turnerdrake.com.

Monday, April 4, 2016 10:31:10 AM (Atlantic Daylight Time, UTC-03:00)  #    -
Valuation
# Tuesday, March 29, 2016

The combined service of Turner Drake’s three most senior consultants is a staggering 110 years… and counting. Still swift of mind (if not of foot), they provide an unparalleled resource for our clients and give wise counsel to our own junior ranks. One of these senior consultants is Lee Weatherby, Vice President of our Counselling Division who is now well into his fourth decade of service with Turner Drake.

When Lee started with the company in 1981, we were operating nicely with cutting-edge typewriters, rotary-dial phones, and comfortable indoor plumbing. Already a veteran of the litigious world of expropriation, Lee was immediately able to share his training and experience with the local legal community. Over the years, he has worked alongside many lawyers, providing litigation support and forensic valuation advice. He has presented himself as an expert witness at countless trials, arbitrations, and mediation hearings, and while refusing to accept all the credit, it is worth noting that many of those who were once clients are now judges. And he was always nice to them.

Forensic valuation work is an invaluable tool when disputes arise. If you own real estate, you will have likely engaged with an irate tenant, landlord, insurance adjuster, assessor, or neighbour at one time or another. Any self-respecting lawyer will tell you that when serious disputes arise, negotiation is a far better solution than trial, and alternative dispute mechanisms are a happy middle ground for would-be combatants. Our own experience tells us that there are fewer litigants prepared to try their luck at trial, and for good reason. Inevitably, there will be some merit in both sides; when it comes to matters of real estate the challenge is to measure who has the best case and the best evidence to support it. The seasoned valuation expert will not only provide the underpinnings for your own case, but will also help to remove them from your opponent’s – presuming, of course, that your case is credible to start with. Exposing the frailties (and indeed the strengths) in your opponent will put you at a distinct advantage at the negotiating table, and greatly improve your chances of success should you decide to chance your luck at trial.

Thinking outside-the-box has long been a corporate philosophy within the halls of Turner Drake, and strategic thinking of one of the hallmarks of the Counselling Division. Challenging cases and unusual real estate assets are commonplace, and there aren’t many properties that Lee hasn’t encountered during his tenure with the company. He is never one to tire of the mundane, but tends to thrive on the more obscure challenges; from heavy water production plants to underwater burial grounds, from debunked bunkers of the cold war era to obsolete pulp and paper mills of the modern era. There is little that has not crossed his desk at one time or another and no challenge has ever been left unresolved. If you have a property that’s a real head scratcher, give Lee a call.




Lee Weatherby, Vice President of our Counselling Division. For more information about our counselling services, feel free to contact Lee at (902) 429-1811 or LWeatherby@TurnerDrake.com.
Tuesday, March 29, 2016 3:49:24 PM (Atlantic Standard Time, UTC-04:00)  #    -
Counselling
# Thursday, March 24, 2016

You have just seven days left to take action to reduce your property tax load this year. The 2016 Request for Review (Appeal) period runs out at midnight on March 31st. If your property is protected by our PAMS® Property Tax Manager program, rest assured, matters are well in hand; we have already reviewed your assessment and have taken action if the opportunity exists to reduce your realty assessment. If your property is not enrolled in PAMS®, roll up your sleeves and take some time to complete your review now!

If you own industrial, commercial, or investment (ICI) property, real estate taxes are undoubtedly your largest occupancy expense and account for approximately 40% to 50% of your total operating costs. If you haven’t renovated or altered your property, odds are your assessment has not increased significantly this year. Although this may be a pleasant surprise, the reality is simply that last year’s weaker real estate market did not provide the assessment office with a statistical basis for a larger increase. In fact, even when market values are increasing, property specific issues may warrant a reduction in your assessment. So, if you are aware of any property specific issues that negatively affect your property’s value, this is an excellent time to bring them to the attention of the assessor in an effort to have your assessment reduced!

The basis for your 2016 realty assessment, as mandated by the provincial Assessment Act, is the Real & True Value of your property on 1st January 2016 (the “base date”). When you review your assessment, make sure you apply the correct test. The Courts have held that Real & True Value equals market value but the devil is in the details. Market value is a reasoned estimate of a property’s value based upon a given set of assumptions. It can vary greatly depending upon the interest being valued and can only be consistently applied if the same assumptions are applied to all properties. These assumptions are not laid out in the Act. On the contrary, they represent a culmination of directives given by the Courts along with policies set by assessment authorities. The interest to be valued is the fee simple, not the leased fee or leasehold interest. Market value is not the value to its current owner, but to any owner. Some properties are so unique or specialised that there is effectively no market requiring a unique solution to the valuation problem.

If your primary area of expertise is not property tax, there are some basic tests you can apply to determine if you should request a review. Compare your assessment to similar properties in your municipality. If your assessment per unit (per ft.² for offices, warehouses, dealerships; per room for hotels and motels; per unit for apartments) exceeds those of similar properties, the assumptions used to assess your property may be different. You should also look at the circumstances that existed on the base date of assessment (1st January 2016) to determine if there are property specific issues that would afford you the opportunity to have your tax load reduced. Factors such as declining occupancy or utilisation, declining demand for your products, and environmental contamination must all be considered in striking your assessment.

The Bottom Line: It’s decision time. If you are in any doubt as to whether you are over-assessed, you should file a Request for Review.

Action Required: File a Request for a Review (Appeal) before midnight on March 31st or forever hold your peace. If you would like some (free) advice, please do not hesitate to call our New Brunswick Tax Team, André Pouliot or Chris Jobe, toll free at 1-800-567-3033 (634-1811 in Saint John).

Thursday, March 24, 2016 2:56:28 PM (Atlantic Standard Time, UTC-04:00)  #    -
New Brunswick | Property Tax
# Thursday, March 3, 2016

It’s that time of year when many Canadians are suffering from dry mouth, a stiff back, and a feeling of bewilderment and disbelief – otherwise known as “tax pain.” Residents and property owners in New Brunswick will be the next set of Canadians to experience these symptoms as their annual property assessment notice and tax bill was sent on March 1st.

The fabled “tax pain” experienced by property owners is all too real, but following these tips will help ease the pain of determining whether or not your property taxes are too high.

What is my Assessment Notice/Tax Bill?

The tax bill is composed of two elements: an assessed value and a tax rate. Service New Brunswick (SNB) calculates the assessed value based on market value: an estimate of what the property would sell for on the open market. The second element, the tax rate, is a combination of rates set by the provincial government and your local municipality. By multiplying these two elements together, you will get your annual property tax bill.

If you believe your property is overvalued when you look at your assessment notice and tax bill (and you experience any of the symptoms listed above), you have until March 31st to “seek treatment” and appeal to hopefully reduce your taxes.

What am I appealing? Is my property overvalued?

In New Brunswick, the first level of appeal is known as a Request for Review (RFR). When you file an RFR, you are challenging the assessed value of your property.

Determining if you are over-assessed can be a little tricky. It requires access to data on your property and on comparable properties. I have conducted property tax appeals all across the country and each province has the resources and technology available to assist in the collection of property information, with some provinces being more advanced than others. For example, several provinces (i.e. Nova Scotia, Ontario, British Columbia) offer online services that enable property owners to access their specific assessment calculations by inputting the associated property account and pin numbers located on their assessment notice/tax bill. Along with the assessment calculations, these provinces offer additional information including assessment history, sale prices, and mapping imagery all within the convenience of one website.

Unfortunately, New Brunswick is not yet offering a “one-stop-shop” service similar to other provinces to obtain assessment calculations and other information. This makes it difficult for property owners to determine if they are over-assessed because they do not know how their specific property value is calculated. Property owners can request their assessment calculations from SNB; however, these can be difficult to obtain during the appeal period as assessors are dealing with a large volume of paper work and inquiries.

Fortunately, there is no cost to appeal. So if you believe you are over-assessed and have not been able to obtain your assessment calculations, file an appeal before the end of the appeal period by completing the bottom portion of your assessment/tax notice and submitting it to SNB.

What resources are available to help determine if my New Brunswick property is overvalued?

Below are a few websites that are useful for gathering property information in New Brunswick:

1. Propertize.ca - Arguably the best resource when determining whether or not you are assessed fairly in New Brunswick. This website has no affiliation to SNB and was created by a local resident of New Brunswick who grew frustrated as historical assessment data was not being made readily available to the public. The website enables the user to search their assessment history as well as the assessment history and sales prices of neighbouring and comparable properties.

2. GeoNB Map Viewer - Operated by SNB, this website works by inputting a Parcel Identifier (PID) into the website search application enabling the property owner access to Geographic information. This information can assist in determining parcel shape, building outline, lot size, and other value-added applications. It is possible to use GeoNB without searching by PID, but it can be difficult to navigate and find the appropriate parcel. As well, the aerial imagery in some areas of the province are out-of-date or not available, so be careful when searching for comparable properties as some buildings may no longer exist or may have been renovated. Overall, this is a helpful website in gathering information to determine if your property is overvalued as parcels throughout the province are identified.

3. Property Online - Operated by SNB, this website has three search features: by Property Account Number (PAN), by PID and by location. The free version of this website does not offer much else in terms of information like the other sites above. However, the subscription-based website provides many more features including mortgage information, deeds, and site plans.

How can I use this information to determine if I am over-assessed?

By combining the information obtained from these resources you can get a sense of where your property falls in relation to neighbouring and comparable properties based on such things as:
• Percentage increase of assessment
• Assessment per ft2 of building
• Assessment per ft2 of lot size

Keep in mind that arguing your property is unfairly assessed in relation to your neighbours is not a sure-fire bet for a reduction, as there is no statutory requirement for assessments in New Brunswick to be uniform. Determining that your property might be over-assessed is the first step, but the assessor typically requires a proper position using one of the three approaches to value (Income, Cost, and Direct Comparison). In order to achieve a reduction, the assessor requires a proper inspection of the property, market data, and a list of facts and issues about the property that were not previously accounted for.



Written by Chris Jobe, Manager of our Property Tax Division. If you have any questions about your property tax assessment, feel free to contact Chris at (506) 634-1811 or CJobe@turnerdrake.com.

Thursday, March 3, 2016 10:30:38 AM (Atlantic Standard Time, UTC-04:00)  #    -
New Brunswick | Property Tax
# Wednesday, March 2, 2016

If you own property in New Brunswick, your 2016 assessment notice and tax bill is in the mail and will land on your desk within the next couple of days. It is dated the 1st of March, and unless your property is enrolled in our PAMS® Property Tax Manager program, you have work to do! You have just 30 days from the date your notice was mailed to review your assessment and decide if you will take action to reduce your tax burden this year.

New Brunswick tax payers are being asked to make additional sacrifices this year. The HST rate is increasing from 13% to 15%, reaching deep into consumers’ pockets and leaving businesses that rely on consumer spending with a smaller pie to compete for. The corporate income tax rate is on the rise and will increase from 12% to 14% (an increase of 16.7%) this year. The reward for these sacrifices is a budget deficit of $347 million this coming year, a provincial debt that will rise to $13.4 billion by the end of the fiscal year, and a projection of a balanced budget… in 2021! We’ve seen this movie before.

Do not despair! Opportunity knocks! Although it’s the tax man who reviews your self-assessment of your consumption and income taxes, the New Brunswick Assessment Act gives you the authority to review and provide your input on the tax man’s estimate of your property tax assessment.

The basis for your 2016 Realty Assessment, as mandated by the provincial Assessment Act, is the Real & True Value (a.k.a. market value) of your property on the 1st of January 2016 (the “base date”). Market value and “value to the owner” are not the same thing. Do not fall into the trap of asking yourself “at what price would I be willing to sell?” or in estimating your property’s value as an input to the going concern value of your business. Ask instead what others would be willing to pay if the property was offered for sale. Ignore value attributable to leases if your skill as an entrepreneur has allowed you to outperform the market in terms of rental and or vacancy rates and ignore the value of any speculative or hypothetical uses of the property.

Market value then is the first test: if your Realty Assessment exceeds your property’s market value on the 1st of January 2016, it is over-assessed and you should file an appeal. If not, try applying our unofficial uniformity test. While the New Brunswick Assessment Act does not contain a uniformity provision (i.e. require that assessments bear a fair relationship to one another), there are circumstances where assessors can be convinced that such should be the case. Multiply your property’s market value by the general level of assessment prevailing in your municipality. In our experience, these levels are usually in the range of 75% - 90%. If you’re still not sure, try comparing your assessment on a unitised basis to similar properties. If the resultant figure is less than your assessment or you are assessed at a higher rate than other properties you may be able to secure a tax reduction this year.

The Bottom Line: The Assessment Act empowers you to have a say in what your 2016 property taxes will be. Speak now or forever hold your peace!

Action Required: Review your 2016 assessment and file an appeal if there is an opportunity to reduce your assessment. Not sure? Contact our New Brunswick tax team, André Pouliot or Chris Jobe at (506) 634-1811 (Saint John) or 1-800-567-3033 (elsewhere).

Wednesday, March 2, 2016 11:08:32 AM (Atlantic Standard Time, UTC-04:00)  #    -
New Brunswick | Property Tax
# Friday, February 19, 2016

The Property Valuation Services Corporation (PVSC), formerly the provincial assessment department, is going boldly where it has gone before… demanding that property owners hoist themselves with their own petard. It is doubly ironic that property owners are required to pay for the cost of PVSC by way of a levy on their tax bill… and then are expected to do much of its work for it by downloading, printing and then completing its Income and Expense Questionnaires. While disregarding the request is poor strategy, completing it has its dangers too. PVSC will use the information it gleans from the Questionnaires to assess property for the 2017 taxation year. If your property is currently under-assessed, it is tempting to ignore the request in the hope that this happy circumstance will continue. Unfortunately, failing to file the Questionnaire can send a clear signal to PVSC that you think you are undervalued. Far from keeping you out of sight, it has the opposite effect. And it gets worse. In the absence of a completed Questionnaire, PVSC will use its own data, unimpeded by your property’s factual income and expenses, to calculate its assessment… and you will be left without recourse, as the penalty for failure to comply with the request will be loss of 2017 appeal rights. We recommend therefore that you complete and file the Questionnaire, but with your audience in mind. Comfortably cushioned from the vicissitudes of tenant selection, rental negotiation and collection, and things that burst in the night, PVSC will happily accept at face value your rental income, unless it appears to be too low… and gaily disregard expenses they consider to be above the norm. Do not expect them to empathise with your sweat and tears, services you undertake yourself to minimise costs, unless you monetise them. Nor should you expect increased maintenance costs - inherent, for example, in a single bedroom apartment building with a transient population - to strike an echoing chord. Expect PVSC to discount these as “outliers,” or your management and administration costs as “excessive,” unless you explain the nuances of revolving doors and are prepared to supply provenance. Tenant inducements and management efforts to maintain occupancy are concepts unfamiliar to the cozy world of PVSC. You will have to quantify them. If your building contains office, retail or industrial tenancies, be careful how you describe your leases; the subtleties of “net” versus “gross” lease terms may not be fully understood by PVSC.

Further complicating this year’s round of requests is the fact that it is being made almost a full fiscal quarter earlier than is customary. For 2016, and for the recent past, assessments reflect a property’s market value as of a date two years in the past (called the base date). In an effort to produce assessments that are more current, PVSC is shifting the base date to reflect market values one year in the past. This means that assessments provided to property owners in January 2017 will reflect a property’s market value as of January 1, 2016. With this shift comes a requirement to analyse income and expense information earlier in the year…so early, in fact, that owners with December year-ends may not yet have 2015 statements completed. Any owner in that predicament should provide the most recently-available information, because the PVSC has no legislative authority to extend the 30-day deadline.

The Bottom Line: Download the appropriate Questionnaire from the PVSC’s website at www.pvsc.ca. Complete it with caution; your responses may be misinterpreted. Return it to PVSC by 17th March.

Action Required: If your property is enrolled in our PAMS™ Property Tax Manager program, let us review your completed Questionnaire before you return it to PVSC. Our Lead Consultant assigned to protect your property will be pleased to provide you with assistance in completing the Questionnaire. If you are not yet a PAMS™ client, and would like assistance in completing the Questionnaire, please call our Nova Scotia Tax Team, Giselle Kakamousias, Mark Turner, or Greg Kerry at 1-800-567-3033 (902-429-1811 in HRM).

Friday, February 19, 2016 12:27:08 PM (Atlantic Standard Time, UTC-04:00)  #    -
Nova Scotia | Property Tax