December 4, 2019

Thank you for your November 26th letter, regarding resolution POP 2-19M. Your letter will be brought forward for review and discussion at the December 13, 2019 Board of Directors meeting and we will follow-up with you in early January 2020.

Irwin Blank – CEO of Saskatchewan Assessment Management Agency

June 19, 2023

SAMA first received a copy of this resolution following the November 13-14, 2019 SARM midterm convention. The resolution requested that SARM lobby for changes to SAMA’s application of the income approach to value assessment methodology, to better reflect the cost of investment as well as the current market value of property. The resolution was sponsored by the Rural Municipality of Weyburn (RM 67).

Administration prepared a report for the December 13, 2019 SAMA Board meeting. This report included additional information for the SAMA Board on the background for this resolution. SAMA contacted the Reeve for RM 67 and learned that although the resolution speaks to problems with the application of the income approach for all commercial properties in rural municipalities, it stemmed from concerns with the assessment of a single commercial property in their RM.

The property in question was the subject of a contentious property appeal where the assessment was reduced significantly for 2017 at the Board of Revision from $3.2M to $1.8M, only to have the original assessment reinstated and increased back to $3.2M based on a decision of the Saskatchewan Municipal Board (SMB). Hence, a large fluctuation in the assessed value for this property caused concerns with the stability of the income approach to value. By extension there were likely concerns that similar instability could occur for other properties and rural municipalities where the income approach to value was used.

Following receipt of the resolution in 2019, SAMA’s Technical Standards and Policy (TS&P) division undertook a review of the property in question in RM 67. The following steps were taken to address the resolution:

• TS&P Quality Coordination Review of the Property– A review of the subject property was conducted by TS&P’s Manager of Quality Coordination. This review concluded that the property’s assessment was based on an income approach valuation model that included 260 warehouse rents, including 41 from the Weyburn market area and 13 rents from RM 67. The income approach was found to be the appropriate methodology to value this property given there was adequate market data. The income approach based assessment was also upheld by the SMB.

• Recommendation to Update Physical Data for the Subject Property– The Quality Coordination review found that there was a need to correct some of the physical data on this property for 2020. A physical inspection was subsequently conducted, and this resulted in a -22% reduction in the assessment for missing floor, interior portions, and plumbing. This resulted in an assessment reduction for this property in 2020 from $3.2M to $2.5M.

• Improve Communications with the Rural Municipality– Based on the findings of TS&P’s review, SAMA’s Weyburn Region contacted RM 67 to notify them of the results of the inspection and the recommended course of action. SAMA provided feedback regarding plans to correct the property for 2020 and also offered to meet with the RM council at the time, but they were busy and declined. The income approach model was retained and fine tuned for the 2021 revaluation and the subject property has not been appealed since. The Weyburn Region plans to offer to meet with the RM 67 council to preview their new assessments for the 2025 revaluation.

SAMA trusts we have taken the necessary steps to address this resolution and that the underlying problem with the property in question in RM 67 has been resolved. At the same time, we are sensitive to the need for SAMA to better communicate with rural municipal councils and SARM, regarding the future use of the income approach to value.

SAMA’s Assessment Services Division is planning to offer a preview of preliminary 2025 assessments to rural municipalities in high value areas surrounding larger urban municipalities, particularly in areas where the income approach to value has been utilized. This preview will include the use of GIS assessment trend maps where possible to further assist councils in understanding assessment changes. SAMA will also strive to use future educational opportunities with SARM and other stakeholders to provide additional information on the use of the income approach to value for mass appraisal purposes.

Shaun Cooney – Chief Assessment Governance Officer, Technical Standards and Policy, Saskatchewan Assessment Management Agency