Wal Mart & Canadian Tire Appeals Denied
Robert Thomas
After years of battle, the Court of Appeal has decided not to re-open the 2013 and 2014 property tax cases between the City of Moose Jaw and retailers WalMart and Canadian Tire.
In a written decision involving an appeal argued July 12, 2017, Justice J.A Ottenbreit ruled against allowing appeals by either side in the dispute. The decision involved the two retailers' property tax assessments for 2013 and 2014, in multiple cities, including Moose Jaw, represented by the Saskatchewan Assessment Management Agency (SAMA).
Justice Ottenbreit gave extensive analysis as to why both leaves to appeal were denied.
SAMA’s appeal was dismissed based upon a Rothman’s Test. A Rothman’s Test was developed as part of case law and determines if a case has sufficient merit and sufficient importance to be granted leave to appeal. Case law in the Canadian legal context is part of British Common Law, where prior cases set legal precedents.
"Based on the criteria set in the Rothman’s Test, I am satisfied none of the grounds of appeal have merit. All are destined to fail,” Justice Ottenbreit wrote in dismissing SAMA’s leave to seek appeal.
WalMart and Canadian Tire appealed on the basis there was a lack of jurisdiction based upon case law. Their leave to appeal was likewise denied.
“The fundamental complaint of WalMart is really one of comparability, or the lack of it. Comparability is a factual issue and not a legal one. Accordingly, its proposed ground fails on this basis alone. However, I am also satisfied, apart from this, that there is insufficient merit in this ground,” the Justice wrote.
The entire case relied upon how the assessment was arrived upon.
SAMA used an Income Approach to arrive at the assessed property value for property tax purposes. The Income Approach also referred to as the “rental income approach” is where properties are valued not on what income they earn but rather how much they can be or are rented for.
While both big box retailers successfully argued in earlier decisions due to dissimilarities SAMA used in their formula meant the Cost Approach should have been used. The Cost Approach is where properties are assessed at the cost of constructing a new building, the land value minus depreciation.
In their assessment process, SAMA looked at rental valuations for 1521 various rental properties in Moose Jaw, Estevan, Weyburn and Yorkton, with the largest properties being the Sobey’s stores in Moose Jaw and Estevan. SAMA included no rental income for big box retailers in the formula they eventually used to set the assessment values for WalMart and Canadian Tire.
The assessment value for property taxes is a valuation of the property. The assessment is then multiplied by a provincially established mill rate factor and then multiplied by the mill rate set by local councils to arrive at the final property tax bill.
Properties are reassessed every four years for property tax purposes. It should be noted 2013 was a reassessment year.
Council received a report regarding what was viewed as a large number of successful property assessment appeals especially from properties in the commercial class.
SEE RELATED – Reassessment Causes Appeal Surge
SAMA’s appeal was based on how the committee had erred by ruling the income approach was flawed and therefore the cost approach was to be used.
In the Moose Jaw WalMart case, SAMA set the value at $11,215,900 in 2013 and 2014 using an Income Approach – while the local Board of Revision used a Cost Approach to reduce the assessment value to $9,718,100 for 2013 and $7,916,000 in 2014.
In an appeal to the Saskatchewan Municipal Board – Assessment Appeals Committee, WalMart had their assessed value further reduced to $6,872,800 in both 2013 and 2014.
In their July 27, 2016 decision, the Assessment Appeals Committee wrote “In the Moose Jaw appeals, the Board was not mistaken in finding the cost approach should apply, but made a mistake in its calculation of the assessed values using the cost approach.”
The two cases had council members in Executive Committee stating that some commercial property owners are using “deep pockets” to fund appeals. The Committee also stated they would be meeting with SAMA to determine why there were so many successful property assessment appeals, especially for commercial properties.
Councillor Scott McMann had said he did not think it was fair that the burden of successful appeals be borne by other commercial property owners.
“It’s not fair that commercial A pays for commercial B,” Coun McMann stated in an earlier Executive Committee meeting establishing a shared approach to property taxes.
SEE RELATED – Tax Policy Established
Moose Jaw had a tax policy whereby a certain percentage of taxes is raised by all property owners in that property type class. For commercial properties the overall tax burden is approximately 20 percent of all property taxes collected.
Additionally, the City had applied a five percent surcharge to all commercial properties to cover successful commercial property tax appeals.
It is unknown if Council has in fact met with SAMA to discuss the high number of successful appeals and if they have what took place.
EDITOR’S NOTE - Although the story is highly technical in nature we at MJ Independent strive to dig deeper where we are able to in an effort to give readers a greater understanding of the issues which effect the City.