|
|
|

COVID-19, despite months of rumblings that it might be on
its way, arrived rather abruptly on our doorstep. Collectively, we shifted from theoretical
preparations “in case” and “if” the virus impacted us directly, to many people
working from home, a transition that happened within days in some cases. Ready or not, here it came.
Now, just (“just”!) a couple of months later, the next
transition is upon us, as the economy reopens and we figure out, industry by
industry and company by company, what the new normal will look like. It’s a question on the minds of many, and one
my department has spent a fair bit of energy contemplating from our makeshift
at-home workstations (check out this
CBC article
for a peek at mine…kids and various home schooling accoutrements banished for
the deception of professional appearances).
The short answer is that it is too soon to tell, though there are
rumours and rumblings that work-from-home will continue for some people and/or
companies (demand for that may come from either end of the equation).
The longer answer is that major recessions usually result
in a sea change in how office space is utilised. After the 1990
recession, which coincided to a certain degree with the advent of cell phones
and the internet, there was a rise in “telecommuting”, some people working from
home, and “hot desking” where different people used the same desk at different
times of the day. Cubicles rose in
prominence over individual offices (as evidenced by every 90s movie that takes
place in an office). Post-2008 recession, the movement was to open
concept offices, with bullpen style areas where everyone has a laptop and a
cell phone and shares common space and/or works from home part of the
time. Each of these shifts, from individual offices to cubicles to
bullpens, equates to fewer square feet of office space per employee…which in
turn equates to lower costs for companies, for whom office space is often the
single largest expense after HR.
The logical next step in the continuum is an increase in
employees working from home, with an overall reduction in the amount of office
space leased. This could be driven by
employees who find they like shedding their commute and are productive at home
(and expect to be more so when schools and daycares reopen). It could also be mandated by employers who
find that cutting workplace expenses - from rents to coffee supplies - can come
without significant detriment to their business model.
There are some companies for whom this is a viable option,
but for others, it is not practical. Will
confidential meetings between lawyers and clients take place in lawyers’ basement
playrooms, or out in public at coffee shops? Unlikely. Further, many industries rely on the sharing
of ideas to innovate and problem solve.
The benefit of casual conversations and impromptu collaborative meetings
is worth the expense of working together in one location. So there will
remain demand for professional office space from certain sectors for a variety
of sound reasons. Worth noting, too, is the consideration that the pre-COVID
bullpen office set up has significant drawbacks until (unless) a vaccine
becomes available: shared space is not practical from a public health
perspective, and may redirect those who can’t realistically work from home long
term, to shift back to individual offices that ameliorate physical distancing. That is: more square feet of space per
employee.
And then the final elephant in the room is the total elimination
of demand for office space from companies which do not survive the economic
fallout of the pandemic. It is too soon
to measure how extensive this will be, but there certainly will be casualties
of a recession that may well be deep and prolonged.
So, coming full circle to the short answer: even with lots
of companies opting to return to offices, a decline in overall demand for
office space is certainly expected, probably over the next couple of
years. Because leases are typically signed on 3-5 year terms (or longer),
a “shadow” vacancy of leased-but-vacant space could surface first (i.e. space
for sublease), though if the original lessees can’t pay, the space is
effectively just vacant regardless of any contractual debt on it (distinguished
from, for example, a healthy company who chooses to move to a new office
building when they still have a year left on their lease). With increasing vacancy, landlords will opt
first for rental incentives to entice tenants to their space, and there will be
downward pressure on net rental rates.
Our June Market Survey is underway now…stay tuned in the coming months
for the early indicators of impacts on the market. 
Alex Baird Allen is the Manager of Turner Drake's Economic Intelligence Unit. If you'd like more information on market research or our semi-annual Market Survey, you can reach Alex at 902-429-1811 Ext.323 (HRM), 1-800-567-3033 (toll free), or email ABairdAllen@turnerdrake.com

No one
wants to own a “dirty” property; it is important to both Buyer and Seller that
they understand how a sale can be impacted by the discovery of contamination.
From the Seller’s standpoint, they may need to remediate the property prior to
selling. Remediation is costly and time consuming – it can take a year or
longer to test the soil and groundwater, adequately address the contamination, and
ensure that the site is fully remediated. The Seller will incur carrying costs,
such as property taxes, during the remediation.
There will
be other problems too, in addition to the time delay. The Buyer’s lender will rarely
finance a dirty property and will almost always require a Phase 1 environmental
assessment to confirm that it is not contaminated. In most cases it will be the
Buyer who commissions the Phase 1 report. This consists of historical research
of site… do past uses point to possible contamination from chemicals or
hydrocarbons?... was the property
previously used to house a gas station?... were manufacturing or service uses
such as dry cleaning, sand blasting (lead paint), etc. conducted on the
property?... The term “mad as a hatter” originates in the fact that hat
manufacturing utilised mercury as part of the process, with unfortunate
consequences for the participants. The Phase 1 audit will also investigate
existing and surrounding property uses that may have contaminated the site; for
example a bus depot whose leaking underground storage tanks have resulted in
contamination of the ground water and its concomitant migration into
surrounding “downstream” properties. It will also consider the building
materials used on site…. are the plaster, or ceiling tiles, likely to contain
asbestos; the fluorescent lights, PCBs; the paint, lead; what other horrors
lurk in the building structure? If anything suspicious comes out of this
research, the Phase 1 report will recommend a more invasive Phase 2
investigation requiring drilling or removal of building material for laboratory
investigation.
A Phase 1
report can cost anywhere between $1,200 and $3,000 for most small to medium
sized properties. Since a Phase 2 environmental assessment comprises soil and
ground water testing, more intrusive testing and the use of heavy equipment,
this study can easily cost over $20,000. Should the Phase 2 study identify
contaminants, the level of contamination and the intended use of the property
by the Buyer, will determine the degree of remediation required. If contaminants
exceed the maximum allowable level, the Department of Environment has to be
notified and they will issue an order to remediate the property within a
specified timeline.
Remediation
can be time consuming. Once the contaminated soil has been removed from the
property, an environmental consultant will set up “test events” whereby the
soil will be re-tested to confirm that the remediated property falls within the
specified guidelines. These test events usually occur once every three months
over a year long time period. However, if the groundwater below the property is
not static, the test events may register that it is “clean” during one test and
then show contamination at the next test event, as the groundwater migrates
back and forth.
The intended
use of property also determines the overall impact of the contamination and the
level of required remediation. For example, a former gas station site to be sold for apartment development requires
a higher level of remediation than a site to be utilised for industrial purposes….
properties intended for residential use are held to a higher environmental
standard than properties to be occupied for commercial uses.
Since the Seller
is in the chain of title they may be held liable for contamination after the
property has been sold… even though they may not be the source of the
contamination! This is why mortgagees, such as banks, will rarely foreclose
contaminated property… and why governments would be wise to avoid expropriating
pulp mills (Government of Newfoundland take note!). It is therefore to the
Seller’s advantage to establish the present extent of contamination (if any) to
safeguard themselves for the future. If a property is sold and is subsequently
discovered to be contaminated, the Seller will need to establish that it was “clean”
when they sold it, otherwise they could be held liable for the contamination
even if they did not cause it.
A Buyer is
similarly advised: If they purchase a property without undertaking the proper
environmental assessment to confirm that the property is “clean”, they are at
risk; they could be held liable for the contamination, even though they did not
cause it, and be ordered to remediate the site at significant cost. Unless the
Buyer is a risk seeker they should invest in hiring an environmental consultant
as part of their overall property purchase due diligence.
The moral
of this story? Don’t be penny wise and pound foolish! It matters not whether
you are a Buyer or Seller: a few thousand dollars spent on an environmental
audit can save you hundreds of thousands in potential remediation costs.

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. If you would like more information, please feel free to contact Ashley at (902) 429-1811 or aurquhart@turnerdrake.com.

As summer edges near, warm days
pull our minds and hearts outdoors - reminding us of the natural areas that
make Nova Scotia a beautiful place to live.
From the maple-dappled shores of the St. Marys River to the sweeping
rocky coastlines of Yarmouth’s Tusket Islands Nova Scotia has an abundance of
natural beauty spanning countless ecosystems.
These natural spaces from a web of protected and semi-protected
landscapes across the province ranging from provincial nature reserves to prime
agricultural lands protected in perpetuity from development beyond a plough’s
furrow.
Canada’s legal concept of
‘owning’ land, though heavily based in a euro-centric view culturally, does
provide tools to assist in the protection of our natural environment. Most of the time when someone purchases a
property what they are actually paying for is a registered legal interest in
the property which allows them to use it unencumbered by others (the “Fee
Simple” Interest). However, there are many ways to split up this interest and each
comes with a value reflecting what the interest holder can and cannot do on the
property. For example, by placing a
restrictive covenant on lands, or placing ownership with a land trust, it is
possible to prevent the spoilage of natural places.
Valuing a partial interest in
land is a critical step in protecting wild areas through the use of Land Trusts,
which are not-for-profit organisations dedicated to the protection and stewardship
of special places including rare species habitat, areas of historic cultural
significance, and precious agricultural land.
Sometimes these Land Trusts acquire property outright through donation
or purchase, and other times an interest is granted to the Land Trust as a
Conservation Easement which details what is – and is not – permissible activity
on the land. In this way, these Land
Trusts have steadily grown a network of protected places over the course of
many decades.
For many landowners, the decision
to donate land is driven by a love of nature or a desire for a lasting legacy. As an added incentive there can be tax breaks
associated with these ecological gifts – the value of which must be determined
by a professional appraiser. In this way
Turner Drake has played a quiet (but important) role in the protection of an
abundance of properties which ultimately contribute to Nova Scotia’s roster of important
wild places. We are fortunate that
through this process, we have walked across places few Nova Scotians have seen
or heard of, but which nonetheless provide safe haven for many plants and
animals.
The season for outdoor
exploration is here and given current restrictions in urban-based gatherings
Nova Scotians have a unique opportunity to explore their surroundings and
connect with their natural environment in a meaningful way. .png)
James Stephens is a consultant in our
Valuation Division and is heavily involved in the valuation of lands for the provincial
governments, private land owners, and land trusts including the Nova Scotia
Nature Trust, Nature Conservancy of Canada, Annapolis Valley Farmland Trust,
and the Island Nature Trust. For more information about our range of Valuation®
services, valuations for land donations, feel free to contact James at (902)
429-1811 or jstephens@turnerdrake.com
In light of ongoing coronavirus pandemic, we are writing to update you on how these recent events are affecting our work. Overall, you should know that Turner Drake & Partners Ltd. is adapting to the situation and we remain open and available to assist you with your real estate needs. The effort to slow the progression of COVID-19 is of critical importance, and we are proud to do our part. Turner Drake is following the most current recommendations and direction from the appropriate government authorities, and has taken steps to ensure the safety of our personnel and clients. This means we are conducting our operations in new ways, including implementing flexible and remote working options for staff, enacting stricter office cleaning and hygiene protocols, and practicing social distancing when staff are present in the office. It also means we are modifying our procedures for how we serve our clients, including minimizing in-person meetings, making greater use of teleconference and screen sharing systems for interactions, and working with you to implement proper sanitation and distancing practices when our work takes us to your site. The Client Area of our website allows you order new jobs, monitor the progress of existing assignments, and transfer large files through the Drop Box option (don’t worry—our Client Area has a password recovery tool if you have misplaced yours). If you do not yet have access to our Client Area, you can also order new jobs through the “Contact Us” portion of our website www.turnerdrake.com. If you would like to meet in person, please contact us in advance so we can make arrangements. Turner Drake’s mission is to help solve your real estate problems, and we will continue to live up to that while also rising to this public health challenge which demands action from us all. Our consultants are proactively contacting clients where these new practices will impact ongoing assignments, and we welcome any questions you may have currently, or in the future as this situation evolves. Thank you for your understanding and cooperation, and we promise to extend the same as all of us adjust to this unprecedented and rapidly changing situation. Best wishes and good health. |

Just
how important is proper fire safety planning?
In addition to potential loss of life and property damage, lack of
proper Fire Safety Plans can land you with a hefty fine…or even potential jail
time!
Section
2.8 of the National Fire Code of Canada states that any building required by
the National Building Code to have a fire alarm must also have an approved Fire
Safety Plan. Halifax Regional Municipality By-law F100 also states that, “Every
person who contravenes or fails to comply with these regulations or fails to
carry out an order made under these regulations, is guilty of an offence and is
liable on summary conviction, to a fine of not more than $5000, or in default
of payment of the fine, to imprisonment for a term not exceeding six months”.
Concerned?
Turner Drake’s Lasercad® Division can prepare two types of Fire Plans to help
manage your properties’ fire safety concerns: Fire Emergency Plans and Fire
Exit Plans.
Pictured
below are examples of both types of plans prepared for a local client. Fire
Emergency Plans provide a detailed layout of each floor in a building,
showing the location of all demising walls, doors, windows, plumbing fixtures,
etc. In addition to providing a detailed layout of the space, Fire Emergency
Plans indicate the precise location of all implements relevant to fire safety. The
lower ground floor of a Halifax Heritage Building pictured below illustrates
the exact location of all fire safety devices on the floor, such as Fire
Extinguishers, Smoke Detectors, Exit Signs, Pull Stations, etc. 
Fire Exit Plans are prepared to show the
general layout of a floor’s common area accessible to the general public, and indicate
key features necessary to ensure a safe evacuation in the event of a fire. Pictured
below is a Fire Exit plan prepared for the ground floor of the same
building. The plan clearly indicates the
location of the Fire Exit Plan, marked “You Are Here”. Additionally, it shows readers the location
of all Pull Stations in the event these must be activated to trigger the
building’s fire alarm. Most importantly, Fire Exit Plans guide readers to
safety via proper evacuation routes while also highlighting all emergency exits,
and applicable Muster Points for the assembly of building occupants at a safe
distance from the building. 
If your
building exceeds 3 storeys and does not currently have Fire Emergency or Fire
Exit Plans please give us a call. Our Lasercad® team would be happy to discuss
how we can help improve your building’s Fire Safety while also answering any
questions you may have regarding local safety requirements.
Andrew Savoy is a consultant in our Valuation Division and is heavily involved in many of our Lasercad® projects. For more information about our range of Lasercad® services, including Fire Safety Plans, feel free to contact Andrew at (902) 429-1811 or asavoy@turnerdrake.com

As a child I imagined
what it would be like to score a goal for the home team in a sold out
stadium. The deafening sound of tens of
thousands of fans celebrating my efforts was amazing. I still have a passion for sport, but by day,
my passion is property tax so I read with interest some recent reports on how a
handful of pro sports franchises significantly reduced their property tax
bills. The Montreal Canadians, San
Francisco 49ers and Carolina Panthers had their property tax bills slashed by 40%,
50% and 56% respectively. Chances are
your business doesn’t occupy a stadium, but there are tax lessons to be learned
for any businesses that owns or occupies a Special Purpose Property.
Special Purpose Properties
are properties that are designed in a way that makes them good for a single use. Some uses (like hotels) appeal to a broad
array of investors, but others appeal to a very limited market making them
difficult to value. Stadiums obviously fall
in this category but so do churches, schools, power plants, hospitals, and most
purpose built manufacturing facilities.
The most common method
for estimating the tax assessment of a limited market, special purpose property
is the cost approach. You start by
estimating how much it would cost to construct the improvements, deduct
allowances for all forms of depreciation and then you add the land value. Simple enough. So how is it possible that Bank of America
Stadium (the home of the Carolina Panthers) can have estimates of its value ranging
from $87m to $472m?
It’s because valuation
experts will differ in how they account for “all forms of depreciation”. Physical depreciation is readily understood,
however properties can also suffer from functional and/or external
depreciation. Although a stadium, pulp mill, food processing plant, church or
hospital may have been meticulously maintained, it may be subject to
significant amounts of functional and external depreciation if its
configuration is sub-optimal, if it is poorly located, or if the economic
prospects for which it was built have deteriorated in some way- all of which
are grounds for a reduction in its assessed value.
The Bell Centre in
Montreal opened in 1996. It cost roughly
$240m to construct (roughly $485m today).
The land is currently assessed at just over $50m and the total assessment
now stands at $167m. This implies a
total depreciation from all causes of approximately 75%. Only a small amount (+/-1/3rd) of this relates to physical
depreciation as stadiums can have very long physical lives. Anfield, Old Trafford, Fenway Park, and
Wrigley Field are all more than 100 years old so the key to accurately
estimating the total depreciation in a stadium (or any other special purpose
property) is in identifying and quantifying functional and external
depreciation. Unfortunately there aren’t any tables an assessor can use to
estimate these forms of depreciation. It
requires an understanding of why the property was configured the way it is, how
it would be configured were it to be re-built from scratch, and an
understanding of the location and economic factors that apply to the use it was
designed for.
During my career, consulting
on behalf of taxpayers I’ve often heard the argument from assessing authorities
“the owner is using it for the purpose in which it was built” and/or “the
business is very successful” which leads to the question “how can there be
significant functional and/or external depreciation.” In the Panthers case it’s
true the stadium was being used for the purpose in which it was built. It’s true that the business is viable (David
Tepper acquired the Panthers including the stadium for $2.2b in 2018) but those
are the wrong questions. The right
question is “would the business be worth more if it had the right stadium in the right location?”
The right stadium might
have more seats, more private boxes, more places to sell advertising and might cost
less to operate. It might also be built
in a location to make commuting easier so more fans buy tickets and spend more
on concessions while they are at the game.
The same concepts hold true for any special purpose property. A church located distant from its parishioners,
a school with declining enrolment, a power plant compelled to use high priced
coal, and a poorly configured manufacturing plant located too distant from its
markets or its raw materials can all suffer from functional and/or economic
depreciation.
2020 property
assessment notices are rolling out across Canada (New Brunswick is up
next!). If you own or occupy a special
purpose property, make sure you ask the right questions when you decide if it’s
time to request a review this year. .jpg) Andre Pouliot is Vice President of our New Brunswick operations and Senior Manager of our Property Tax Division. For more information about our property tax services, feel free to contact Andre at (902) 429-1811 or apouliot@turnerdrake.com
CMHC has just released its annual rental market survey data,
and the results are concerning for the Halifax Regional Municipality. After 2018’s
record low vacancy, we’ve been eagerly waiting to see whether supply or demand
would win the race this past year as both construction and population growth
continue their fevered pace. Unfortunately for renters, it looks like demand
has again won. With new supply undershooting by 280 units over the year, the
overall vacancy rate has now plummeted from 1.6% to a new record low of 1.0% in
2019.
While the challenge of finding an apartment is stressful
enough, unfortunately for renters the bad news doesn’t stop there. Vacancy
rates are a leading indicator for rental rates, and this year’s results show
the first hard evidence that tight market conditions are translating into price
increases within the existing rental stock. Once the competition for limited
available units heats up, price increases kick in as the market begins
rationing too little supply among too much demand. While the statistics of overall
average or median rents have been on the rise for a number of years, this has
largely been driven by the addition of new, more expensive buildings to the
rental pool. Yearly increases in existing buildings were muted, proceeding at
around 2% per year even in record-setting 2018. However, thanks to the knock-on
effects of that year’s diminutive vacancy rate, same-building rents in 2019 show
an increase of 3.8%. This is nearly double the historical average, and the
largest single-year increase on record. The 2019 vacancy rate of 1.0% therefore
does not bode well for renters in this year to come. Things are going to get
worse before they have a chance to get better!
On that note, what is it going to take for things to get
better? Despite record-levels of construction in the purpose-built rental
sector, the market supply is not growing fast enough to meet demand (hence the
reduction in vacancy). Based on average figures for the last 3 years, the
period where population growth has driven vacancy below its typical range, the
calculations are humbling. HRM would need to increase the supply growth rate by
about 13%, delivering an extra 230 units per year, just to stabilise the
vacancy rate and keep up with the growth in demand. Of course, holding vacancy
at 1% won’t help with prices. In order to return the market to a reasonable 3%
vacancy rate, there would have to be a further increase of 23%, another 410
units per year, and this would have to be sustained for the next 3 years in
order to get back to balanced market territory. 
Multiunit starts were up in 2019, but only by 15%. This is
an industry already at record activity levels and it strains to push the pace
further. Additionally, provincial level data is suggesting HRM’s population growth
may still be accelerating. As a result, odds are that a sufficient increase in
the growth of rental supply is not about to materialise in the short term to
provide relief.
So what solace can we offer? Well, it’s not much to take to
the bank, but we may be seeing the start of demand-side trends that could help
blow off some pressure. Much of the population growth pressure is driven by new
people arriving in the city from elsewhere in the province, county, and world.
Having a few years under their belt now, not-quite-so-recent migrants and
non-permanent residents could start to flow out of the rental sector. Having found
their feet, these groups may look to transition into the homeownership market
as they seek to become more established (or, in the case of international
students, simply move away as their studies conclude). Of course, there are
also domestic trends to consider as well, and while rental demand growth from
downsizing boomers is unlikely to relent, an increasing number of millennials are
aging into their prime home buying years.
Often lost in the rental housing conversation is the fact
that despite the frenzy of apartment construction, HRM has actually not built
very much housing in the last few years overall. Unlike other Canadian cities
where a surge of rental construction has come only after owner-occupied markets
launched out of financial reach, HRM’s rental supply is the first preference
for many. This means rental housing has been voraciously consumed at the same time that homebuilders have struggled to find demand for their available lots. As a result, the explosion of apartment construction has been largely offset by a drop in subdivision development. 
Perhaps things are turning around, however. This past year may
have heralded disappointment for renters, but it provided encouragement for
owners; price action in the resale market showed strength that we haven’t seen
since the early 2010s, and with it came an uptick in new construction activity
as well. Is this evidence that some of HRM’s recent population growth is
starting to flow from the rental sector into ownership? 

This would certainly be good news for the homebuilding industry, which has been a shadow of itself for several years. It would also be good news for those still in the rental market, as a revived owner-occupied market would ease pressure on rentals by siphoning off some of the housing demand. Further, reactivating the idle resources in the homebuilding sector is an easier means of increasing the growth rate in total housing supply than hoping for the multiunit sector to conjure up a significant escalation in their maxed out production levels.
[1][2].jpg)
Turner Drake is engaged in
Housing Needs Analyses from coast to coast. To see how your community can
benefit from the unique expertise of our Planning and Economic Intelligence
team, call Vice President Neil Lovitt at (902) 429-1811 or nlovitt@turnerdrake.com.

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

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. .jpg)
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.
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
|
|
|