Mike Howell, Vancouver Courier
Published: Wednesday, May 05, 2010

Last year Concord Pacific paid $4,347 in taxes on False Creek property.

Mayor Gregor Robertson says the city should not appeal the $400,000 assessed value of a nine-acre waterfront property in Northeast False Creek.

Robertson said an appeal to B.C. Assessment over the value of the land between Carrall Street and the Telus World of Science parking lot would likely end up costing the city money in a court battle. "The city relies on the assessment authority to establish the value and they wouldn't have established a value they didn't think could be successfully defended in court," Robertson told the Courier. "For the city, the cost of taking this to court would far exceed any additional taxes that might be won through a long expensive legal challenge."

The mayor's comments were related to the Courier's April 30 cover story which revealed the surprisingly low assessed value of the nine-acre property owned by Concord Pacific Developments Inc. The previous nine years, the value of the land was assessed at $192,000 and included an additional three acres until Concord Pacific subdivided the property last year. The developer paid $4,347 in taxes on the property in 2009.

"On face value, people are surprised but there must be a strong rationale for it or B.C. Assessment wouldn't set that level," said Robertson, noting he wasn't aware of the land's value until reading the Courier's story. A memo issued Wednesday from the city's finance department to the mayor, city councillors and senior staff supported Robertson's view not to appeal the assessment.

The memo, obtained by the Courier, was from the city's director of finance, Patrice Impey, and Grace Cheng, the city's manager of financial policy and projects. "Despite the public perception on the value of this property, staff is not certain what legal basis the city would argue in any appeal," the memo said. "In any case, the deadlines for appealing this value for 2010 have passed."

The percentage of successful appeals on property assessment has been low relative to the size of the assessment base, the memo added. A deal Concord Pacific reached with the city in 1990 calls for the land to be developed into a park. The land is covered in blacktop and been used over the years for the Molson Indy, Cirque de Soleil and, most recently, pavilions and Molson Hockey House during the 2010 Winter Games.

Concord has made millions of dollars from leasing the land, including $1.3 million from the Quebec government, which set up the Maison du Quebec on the property during the Games. The memo points out assessing value does not consider any "temporary uses and revenues" generated from the site "as long as the use is not predominant and does not form the highest and best use for the property."

The memo said the park will cost up to $20 million to build and be turned over to the city. The assessed value of the land was based on its current zoning and complex legal arrangements between the city and Concord Pacific, the memo said.

"From an assessment perspective, the property is highly encumbered with very limited use and development potential," the memo said. The memo didn't explain why a 7.5 acre property owned by the city four blocks east of the Concord site on Malkin Avenue was assessed at $18.5 million this year.
It, too, will be developed into a park.
mhowell@vancourier.com

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Editor's note: the text of a May 5, 2010 memo to city council from Patrice Impey, director of finance, and Grace Cheng, manager of financial policy and projects, is reprinted below:

On April 30, Vancouver Courier published an article on the undeveloped site in the North East False Creek area owned by Concord Pacific. The article raised a number of concerns with regards to land assessment and taxation, and why the City has not appealed.

Over the past two days, staff has received and responded to various inquiries from the Mayor and some Councillors on the subject matter. This memo attempts to provide further clarifications on a number of issues: respective jurisdiction of BC Assessment and the City; general assessment principles; specific circumstances applicable to the subject property; and staff position on whether or not to appeal.

Assessment and classification of real properties in BC is within the Assessment Authority's legislative mandate. The City does not undertake assessments; it relies on the values established by BCA in accordance with the Assessment Act and appropriate principles of valuation. There are over 185,000 folios on the City's assessment roll. It is not the City's standard practice nor within its expertise to review and challenge the valuations provided by BCA and assessment methodologies for each folio.

Generally speaking, BCA would not establish a property value if it does not have reasonable certainty that the value, as well as the methodology based on which the value is established, would stand in the court of law. In fact, the percentage of successful appeals on property assessment has been low relative to the size of the assessment base.

With respect to the subject property (assessed value: 2009 - $192,000, 2010 - $400,000), BCA's assessment was primarily based on its current zoning and the complex legal arrangements between the City and Concord related to the entire Concord site. These agreements obligate Concord to deliver a park on the subject site at an estimated cost of $17M to $20M and then turn it over to the City. From an assessment perspective, the property is highly encumbered with very limited use and development potential. In other words, any "fair market value" for this site would have to take into consideration the $17M to $20M outstanding obligations.

Factoring in legal encumbrances in the valuation of a property is standard assessment practice in BC. The same principles are applied to all property in the province. Similar circumstances were applied to Woodward's prior to its redevelopment. Some examples of legal encumbrances include: no development covenant, option to purchase by the City, developer required to donate density, restricted use as non-market housing, etc.

In establishing the property value, the Assessment Act and standard assessment practice do not take into consideration any temporary uses (like Cirque or the Olympics) and revenues generated from these uses on site during the year as long as the use is not predominant and does not form the highest and best use for the property. Pursuant to the Assessment Act, the Concord property has had no commercial uses as of October 31, 2009 when "actual use" for assessment purposes is determined.

Despite the public perception on the value of this property, staff is not certain what legal basis the City would argue in any appeal. In any case, the deadlines for appealing this value for 2010 have passed. A third party has filed an appeal because it believes the value is too low, based primarily on the arguments outlined in the Courier article. The appeal will be handled by the Property Assessment Review Board and any adjustments to the value will be decided by the Board.

Should you have any questions, please do not hesitate to contact either of us. Thank you.