Insti-News | Winter 2024

INSTI-NEWS WINTER 2024

NEW YEAR, NEW GROWTH

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IMA | INSTI-NEWS

IN THIS ISSUE 03

STAY CONNECTED

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THE IMA 2024-2027 STRATEGIC PLAN A FOCUSED PATH FORWARD

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TAKE FIVE WITH THE IMA Pierre-Luc Pelletier, A.I.M.A. & Scott Powell, AMAA, M.I.M.A.

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PRESIDENT’S REPORT Janice HunterDesjarlais, M.I.M.A.

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MEMBER ELEVATIONS

ATLANTIC CANADA ASSESSMENT: JURISDICTIONAL UPDATE

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Nicole McAninch A.I.M.A., A.I.C. Candidate

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ERRORS WITHIN THE APPELLANT'S CONTROL

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ACCREDITATION COMMITTEE UPDATE

Mark Doble, M.I.M.A.

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HIGHEST AND BEST USE Charles Johnstone, FRICS, AACI, M.I.M.A.

VIRTUAL CANADIAN ASSESSORS SUMMIT – EXCELLENCE THROUGH COLLABORATION

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DISTRICT NEWS Amy Raycroft, M.I.M.A., Jane Sokol-Kennedy, A.I.M.A., Mark Linquist, M.I.M.A., Bill O’Connor, M.I.M.A., Janice Sooley, A.I.M.A.

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EXECUTIVE DIRECTOR UPDATE Ejona Balashi B.A., CMP, SFC

IMA ANNOUNCEMENTS

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RETAIL ANALYSIS WITH LIMITED OBSERVATIONS Amanda Blundell, MRICS & Lee May, M.I.M.A., CAE.

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IMA 2024 SPONSORS

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IMA | INSTI-NEWS

WINTER 2024 ISSUE

Insti-News is published by the Institute of Municipal Assessors with assistance from the Communications Services Committee. Chaired by: Cathy Ranieri Sweenie, Affiliate Any opinions or recommendations expressed in this issue are those of the contributors and do not necessarily reflect the views of the IMA.

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Interested in submitting an article? Have a great idea for a hot topic? Make your submission to communications@theima.ca. Be sure to put “Insti-News Submission” in the subject line or contact the IMA office by phone to discuss.

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CONTACT

Institute of Municipal Assessors

16 Industrial Parkway South, Aurora, Ontario, L4G 0R4 905-884-1959 1-877-877-8703 info@theima.ca

STAY CONNECTED https://theima.ca/

@the_ima1957

@theima.ca

Institute of Municipal Assessors

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PRESIDENT’S REPORT Happy 2024 to all our IMA community members! 2023 was a busy year for many of us in the industry, so I hope you had a chance to fully enjoy the holiday break with family and friends, and have come back refreshed and ready to tackle this new year.

Here at the IMA, we are starting this new year by sharpening our focus on our core goal – to advance the interests, education and professional competence of all our members, across the country and the industry.

You will see this same focus to look forward, tackle challenges head on and make the most of opportunities in this Winter Edition of InstiNews, aptly titled “New Year, New Growth“. You will find these pages filled with jurisdictional updates, celebrations of members’ achievements and news from our Accreditation Committee and our Districts.

You will find an excellent analysis on how small everyday challenges, like spelling, can have a major impact, in our “Errors within the Appellant’s Control” article and have the opportunity to take a fulsome dive into “Retail Analysis with Limited Observations”.

We are also kicking off this edition by sharing more about our IMA 2024-2027 Strategic Plan. Designed with input from members and stakeholders across the country and industry, the Strategic Plan will allow our organization to be laser focused and optimize our resources so we can best serve you, our members and industry partners.

We will continue to focus on ensuring our educational offerings are best in class, while ensuring you, our members, have the support you need to uphold the highest ethical standards, and we will always advocate for the value of your A.I.M.A. Designation and M.I.M.A. Accreditation.

I will leave you with a reminder – the IMA is your association. Reach out to share your challenges and successes. Join us in District meetings and committees. Proudly display the four letters behind your name.

I look forward to continuing to connect with you across the country in upcoming district events, the IMA/AAA Virtual Summit and our upcoming in-person Conference in Niagara-on-the-Lake.

Janice Hunter-Desjarlais, M.I.M.A. IMA President

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EXECUTIVE DIRECTOR UPDATE To our IMA members and community partners, welcome to the first Insti-News edition of 2024! I hope you have had a productive beginning to any new goals and endeavours you are tackling this year.

We were thrilled to close 2023 with an incredible highlight – the very first across Canada IMA Districts’ Meeting. On December 5th, Districts 1, 5, 6, 7 and 10 came together to offer our members a unique opportunity for collaboration and learning.

The event was a resounding success, with 209 member and non-member registrants. I want to take a moment to say a huge Thank You to our District Executives and their ongoing commitment to supporting our members with bestin-class professional development.

Keep an eye out for our upcoming virtual and in person District Meetings. You can always find details on our website – theima.ca/events.

Since our last update, and thanks to our strategic partnerships and focus on collaboration, we were able to offer high value CPD topics to near 150 registrants via our IMA/IPTI webinars. We have more topics available monthly listed in this edition and via the IMA website.

On the topic of collaboration, together with the Alberta Assessors’ Association, we are thrilled to be able to offer the very first Virtual Canadian Assessors’ Summit, on March 6th & 7th. Appropriately titled “Excellence Through Collaboration”, this first of its kind industry event, will bring together industry experts from across the country. I am thrilled to say that CPD recognition for the event has been granted, not just by the IMA and AAA, from AIC, IAAO, SAAA and AAOM. We are working with the LSO and RICS to obtain CPD recognition from those bodies also. We will focus this event on Highest and Best Use, Data Gathering and Release, and Dispute Resolution. I invite you to follow along on social media and email as we continue to share details about our speakers and topics.

We are also hard at work with our dedicated conference committee volunteers, putting together an agenda for our inperson conference in Niagara-on-the-Lake, on June 9th to June 11th. Registration details will be made available soon.

You will find in further pages in this edition, a celebration of our members that have recently obtained their A.I.M.A. and M.I.M.A. A huge congratulations to these members for all their hard work and dedication to their professional growth. We are proud to have you! I wanted to also say Welcome to the newest affiliate members that have joined us these last few months from across the country. We wish you the best of luck on your educational journey and are looking forward to celebrating your achievements in future editions.

I will leave you with a quote from one of my favorite authors “Get excited about the future. The past won’t mind”. I am thankful for all that we have accomplished together in 2023, and excited for what we have ahead in 2024.

Ejona Balashi B.A., CMP, SFC IMA Executive Director

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THE IMA 2024-2027 STRATEGIC PLAN A FOCUSED PATH FORWARD We have been fortunate, at the IMA, to have had a strong strategic plan driving our work from 2020 to 2023 - focused on the pillars of Education, Growth, Leadership and Strong Governance. With guidance from our Board of Directors, the IMA team was able to achieve many of the goals outlined in the plan.

As we wrapped up 2023, the Board of Directors and the IMA team took on a thorough process of analysis to inform our next 2024-2027 Strategic Plan. Among other activities, we gathered insights from our members from across the country via our annual membership surveys, dove in deeper in one-on-one conversations with stakeholders and engaged in fulsome SWOT and Environmental analyses. The focus throughout these planning exercises was on addressing one key question – How can we best serve our diverse membership, in a way that advances their interests, education and professional needs.

I believe that with the 2024-2027 Strategic Plan, we are doing just that. We will continue to focus on the 4 core pillars of Education, Growth, Leadership and Governance, which are crucially important to an educational professional association like ours, while boldly tackling projects that will serve our current and new members.

Among others, you will find a few new large-scale initiatives in this iteration of the strategic plan that were inspired by conversations with members. Our educational review and update will ensure our content and designations continue to be industry leaders and address the day-to-day learning needs and professional challenges of our members. Our mentorship program will allow us to leverage our community of experts to optimize knowledge sharing and support new professionals as they enter the field. Our strategic partnerships, across the country and industry, will increase the recognition of your A.I.M.A and M.I.M.A designations while strengthening the identity of the Canadian Assessor. And we will continue to provide best-in-class Continued Professional Development in accessible, engaging, and innovative ways.

Finally, we are looking forward to supporting new IMA communities as they grow in New Brunswick, Nova Scotia and across Canada.

A Strategic Plan should be a living, breathing document that we can all leverage to best serve the association. The Board of Directors and the IMA team will use this document to focus our work and efforts and continue to best serve our members.

I invite you to explore the plan via our website – https://theima.ca/page/AboutUs or review the PDF. As usual, please feel free to reach out to me for your thoughts and suggestions, at ebalashi@theima.ca.

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ATLANTIC CANADA ASSESSMENT: JURISDICTIONAL UPDATE Nicole McAninch A.I.M.A., A.I.C. Candidate Introduction: Property assessment plays a crucial role in determining property taxes and ensuring fair distribution of tax burdens among property owners. In Atlantic Canada, the provinces of New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island each have their own systems for property assessment. This jurisdictional update provides a summary of the current state of property assessment in Atlantic Canada.

New Brunswick: In New Brunswick, property assessments are conducted by Service New Brunswick on an annual basis. Changes are underway in an effort to the modernize property assessment system in New Brunswick. Notably, effective 2025, we are looking at a proposed amendment to the base date legislation. Historically, this is the only jurisdiction where the base date is January 1st of the effective taxation year, however this legislation is about to change, whereby the base date for the 2025 tax year will be set to Jan 1, 2024. Theoretically, this change should provide for a higher level of accuracy in values as the assessment authority should have a greater opportunity to gather and analyze data in preparation of the roll. With this, Service New Brunswick will no longer be issuing assessment notices in October, and all property assessment notices were mailed out to owners on January 15th, 2024This reassessment amounts to an overall assessment base increase of $8.4 billion across the province.

New Brunswick is also unique in that it is the only jurisdiction that continues to work without a legislated equity provision, inherently creating a lack of fairness for rate payers in the province. While there appears to be no plan to add such provisions, this is a topic of discussion among stakeholders.

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The 2022 implementation of the Spike Protection Mechanism (SMP), designed to mitigate the impact of market value increases on non-residential property assessments has been approved for 2024. The program effectively caps the taxable assessment of property at a 10% increase over the previous years’ value. SPM has been in place for qualifying owner-occupied properties since 2013. In 2022, the government introduced a temporary tax relief program mimicking the SPM for 4+ unit apartments and nonresidential properties, with the same exceptions, for 2022 and 2023 tax years. The program was extended and expanded in 2024 to include all properties. For all 3 years this was/will be processed as a tax credit to qualifying property owners. This 3-year temporary program was not legislated.

A permanent expansion of the existing SPM was legislated in December 2023, effective for the 2025 tax year. The expansion will continue with the same 10% cap premise on all qualifying properties, which excludes those with legislated or regulated values.

It will also continue to exclude new construction, major renovation, and recent sales.

Essentially, it broadens the existing program to all properties. In years where non-residential tax rates have increased, as municipalities now have the authority to set non-residential tax ratios anywhere between 1.4 - 1.7 times the residential rate; resulting in increased rates in many jurisdictions, the SPM mechanism ensures that property assessments do not reflect the full extent of market spikes. In an economy that has seen a strong post pandemic resurgence and increased rates, this is a welcome tax mitigation tool for rate payers across the province where values in recent years have seen spikes well beyond the 10% mark in most classes.

Nova Scotia: Property assessments in Nova Scotia are established and maintained by the Property Valuation Services Corporation (PVSC). Property assessments are conducted annually. 2024 property assessments have a Jan. 1, 2023, base date and reflect steady upward market activity across the province, a trend that started in 2021 during the COVID-19 pandemic. The total residential assessment roll, including market and new growth and taxable and exempt accounts, increased 19.6% over last year. Commercially, business and industrial parks continued to see significant market growth.

The total commercial assessment roll increased by 9.32% over last year. All 647,470 property owners in Nova Scotia were sent a 2024 property assessment notice on January 8th and have 31 days to submit an appeal. A notable change to tax policy is Halifax Regional Municipality’s (HRM) introduction of a tiered commercial tax which seeks to redistribute the tax burden for business owners in five different geographical zones.

Newfoundland and Labrador: Newfoundland and Labrador's property assessment is managed by two separate assessment authorities. The City of St. John’s thorough it’s Assessment Division for all properties located in the City of St. John’s on a 2-year cycle and the Municipal Assessment Agency (MAA) for clients throughout the Province that utilize the property tax system on an annual cycle.

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It is important to note that property tax is not currently mandatory in the Province of Newfoundland & Labrador. Clients may opt into the property tax system or opt out.

The City of St John’s just published their values for the upcoming 2024-2025 taxation cycle with the base date being 2 years prior to the taxation year, at January 1, 2022. For the remainder of the province, the market values are set by MAA at January 1 of every calendar year. Notices are mailed out in June of each year, if a ratepayer wishes to appeal their assessment, they must do so within 60 days from the date printed on their assessment notice.

Prince Edward Island: In Prince Edward Island, property assessments are conducted by the provincial government’s Taxation and Property Records division. The taxable value assessment is the assessment used to determine annual property taxes.

Owner-occupied residential properties are eligible for the owner-occupied residential assessment program.

This program serves to protect Islanders from significant year-over-year assessment increases by capping the taxable value assessment to increase in the Consumer Price Index (CPI), or 5%, whichever is lower. Under the owneroccupied residential assessment program, the taxable value assessment will not exceed the market value assessment.

For all property other than owner-occupied residential property, the taxable value assessment is the market value assessment. Year over Year assessment increases here remain low, with most appeal results generated from an equity standpoint.

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MEMBERSHIP ELEVATIONS THE IMA WOULD LIKE TO CONGRATULATE THE RECENTLY ELEVATED AND NEWLY APPOINTED MEMBERS! AFFILIATE MEMBERS

NAME

Shannon Auby Kyla Bell Nairk Chawchian Gabriel Cormier William Fiander Elizabeth Gray Patrick Herrington Steven Jacob Peter Kleimann Sankalp Kumar Brittney Lahey-Baldwin Theneshkar Maheswaran Kevin Maves Jacob Murphy Chudi Ngwuluka Kate Roberts Patricia O’Neill Robert Patterson Rhiya Singh Kelly Smith

COMPANY

Property Valuations Services Corporation City of Greater Sudbury MPAC Kitchener Service New Brunswick Property Valuations Services Corporation Infrastructure Ontario Service New Brunswick Infrastructure Ontario Property Valuations Services Corporation Property Valuations Services Corporation Property Valuations Services Corporation City of London RPS Real Property Solutions Property Valuations Services Corporation Property Valuations Services Corporation Property Valuations Services Corporation Region of Peel MPAC Richmond Hill Public Services Procurement Canada MAA St. John’s

A.I.M.A. MEMBERS

NAME

Pamod Alawattage Trevor Ferrier Melissa Gannon Alexandru Hariton Chentao (Nick) Hu Youri Kim Lisa Lee Aidan Mailer Sam Mitukiewicz Pierre-Luc Pelletier Adam Rizzuto David Rose Salma Sedigh Vardeep Shina Braeden Sowden Kenneth Tan Adam Travis Dwayne Vey

COMPANY

MPAC Toronto MPAC Kingston MPAC Ottawa MPAC Toronto Property Valuations Services Corporation MPAC Mississauga MPAC Richmond Hill MPAC Toronto MPAC Kitchener Service New Brunswick MPAC Hamilton MPAC Barrie MPAC Pickering MPAC Mississauga MPAC Hamilton MPAC Richmond Hill Property Valuations Services Corporation MAA St. John’s

M.I.M.A. MEMBERS

NAME

COMPANY

Matthew Butler Andrew Doble Atika Hintzen Nicole LaFrance

MPAC London MPAC North Bay MPAC Barrie MPAC Barrie MPAC Toronto

Lauren Luo

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TAKE 5 WITH THE IMA Pierre-Luc Pelletier, A.I.M.A.

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Where do you work and what is your current role?

I am a residential assessor (Residential Assessor II) for Property Assessment Services at Service New Brunswick (SNB). This role entails assessing properties at a “fair” market value using the direct comparison approach.

What prompted you to get involved with the IMA? Prior to my tenure at SNB, the educational prerequisites for my role predominantly favored obtaining an AACI designation. During our (my first) annual Assessor School conference, my esteemed colleague, Francois Gallant, introduced the IMA as a viable alternative—an educational trajectory specialized in assessment, distinct from the “typical” appraisal courses offered at UBC. Recognizing this program as a novel opportunity to refine my assessment skills and attain a professional designation without the prerequisite of a bachelor’s degree, I committed to the IMA coursework progressively. Subsequently, I successfully achieved my A.I.M.A. Designation and currently, I am pursuing my M.I.M.A. Accreditation. On a supplementary note, I have recently become a member of the IMA Membership Committee, aiming to enhance the visibility of IMA within New Brunswick and advocate for the IMA as a compelling educational avenue for all new assessors New Brunswick.

How has being a member positively impacted your career?

The specialized education and accreditation offered by the IMA have refined my assessment skills, positioning me as a more adept professional. Engaging with the IMA community has broadened my network and offered insights into industry best practices. This combined skill enhancement and expanded network have played a pivotal role in my career development, empowering me to navigate professional challenges with increased confidence and expertise.

What would you tell your younger self just starting in the industry?

I would advise my younger self to recognize and assert my value in the industry. Despite lacking a bachelor’s degree, my background in building sciences provides a solid foundation for a career in assessment, and the IMA provides the support I need to fulfill my career needs.

What are your goals for the future?

My aspirations are rooted in my educational background (construction management engineering technology). I aim to eventually attain a managerial position in Property Assessment Services, and I am confident that with the right training and dedication, I can achieve this goal. To get there, my initial steps will involve acquiring an M.I.M.A. Accreditation and potentially gaining practical experience in non-residential assessment.

IMA | INSTI-NEWS

Scott Powell, AMAA, M.I.M.A.

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Where do you work and what is your current role?

I work at Ryan ULC in Calgary, Alberta. My current position is the Director, Team Lead for Property Tax. What prompted you to get involved with the IMA? As the two biggest Canadian Associations for assessment professionals, the Alberta Assessors’ Association (AAA) and the Institue of Municipal Assessors (IMA), had begun collaborating on a number of initiatives back in 2018/2019. I was a member on the joint committee tasked with addressing labour mobility and got to meet a number of the IMA executive team members.

Also, in 2019 I started a new job with a property tax consulting firm out of Ontario.

Having both exposure to the strong presence of the IMA in Ontario, and to the assessment/ property tax industry in Ontario, made it a perfect time for me to get more involved with the IMA directly.

How has being a member positively impacted your career?

I think that professional associations like the IMA offer many benefits to their members, but there are three that stand out from my perspective. The first is education – the quality and quantity of the offerings provided by the IMA not only ensures my expertise as an assessment practitioner, but it validates our profession by ensuring that we have the tools to be experts in our field. The second is networking – it is so easy to be stuck in our jobs talking to the same people every day. Having opportunities to interact with others, to witness the true scope of our industry, and the diversity of our membership, has been so valuable in broadening my horizons. Finally, and perhaps most importantly, is the recognition of the IMA as a reputable association. Having my M.I.M.A. Accreditation, having a code of ethics and standards of practice to which I adhere, it has brought legitimacy and confidence to the work I do.

What would you tell your younger self just starting in the industry?

Never say never. Be open to new ideas and to new opportunities, take risks, and embrace change. Rarely do we regret the things in life that we do, rather we regret the things we don’t do.

What are your goals for the future?

For 2024 and beyond I have two key goals. The first is to support the development of the next leaders and inspire the next volunteers who will guide our profession. Both in the workforce, and in volunteer opportunities (like the IMA), we need to think about succession planning. There is a lot of labour turnover coming to the assessment and property tax industry in the next decade and I want to help prepare those who want to lead in the future.

The second is advocacy. I feel that I’ve reached a point in my career where I am both capable and motivated to advocate for improvements to the fundamentals of our profession. Whether it is through legislative change, tax reform, professional education, I feel inspired to improve things for future professionals.

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Errors within the Appellant’s Control Mark Doble, M.I.M.A. The importance of correct spelling and syntax are highlighted by an October 2023 Property Assessment Appeal Board (British Columbia) decision denying the leave application for 18 properties owned by Telus Communications.

Due to a misspelling of an email address, Telus failed to properly file the appeals to the Property Assessment Review Panel (Review Panel), which is the first stage of appeal in BC. In the original appeal, Telus seeks to challenge B.C. Assessment’s application of a form of exemption forcing Telus to pay property tax as a percentage of gross revenues from wireless customers rather than a rate tied to the assessed value of the specific property.

However when a new employee for the communications giant mistakenly included an extra “e” in the suffix of the email address of the Review Panel, a finding was made that the appellant, TELUS Communications Inc failed to file a timely notice of complaint to the Property Assessment Review Panel (“Review Panel”) as required by section 33(2) of the Act. In short, Telus sought to reinstate the appeals on the basis that the failure to file the complaints to the Review Panel was due to circumstances beyond their control.

After considering the facts presented by the appellant (BC Assessment took no position in this matter.) along with related case law, the Property Assessment Appeal Board found that the circumstances were not beyond the owner’s control and could have been reasonably avoided. In Paragraph 21, the Board writes: [21] In these appeals, the error was, with some scrutiny, identifiable by the Appellant on documents controlled by the Appellant. Had the Appellant’s employees reviewed the delivery address, the error in the email address would have been identified in a timely manner and could have been corrected. In other words, these were circumstances that, with reasonable effort could have been avoided and therefore were not circumstances beyond the owner’s control.

(TELUS Communications Inc v. Area 08 et al., 2023 PAABBC 20234230) According to a recent CBC News report, Telus Communications Inc is appealing to the next level which is the BC Supreme Court in the hopes of reversing this decision.

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ACCREDITATION COMMITTEE UPDATE The Accreditation Committee has been hard at work in 2023, with 30 members earning their A.I.M.A. and 23 members earning their M.I.M.A. via the regular path. We also have over 30 members moving through this year’s cohort of the Fast Track Designation Program, with final Interviews being scheduled for M.I.M.A. candidates in the next few weeks. The Committee has continued to provide quick support and problem solving to candidates in special circumstances.

With support from the IMA Board of Directors, the Accreditation Committee also took on review of the interview process, to ensure it best reflects the knowledge needs of the M.I.M.A. The results were a re-focus, among others, on case law, ethics and assessment methodologies, while ensuring the process continues to be streamlined for candidates. All M.I.M.A. interview candidates can find updated information on the interview in their student portal.

The Committee is continuously gathering feedback and data to best inform the paths ahead for our Regular Designation Path and the Fast Track Designation Program. Please reach out to info@theima.ca for your thoughts and suggestions.

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HIGHEST AND BEST USE Charles Johnstone, FRICS, AACI, M.I.M.A.

Highest and Best Use is like family, it is foundational but often overlooked. Whether creating a mass appraisal for assessment purposes or completing a single property appraisal report for an assessment appeal, determining the highest and best use of a property, or a group of properties, is critical, as the highest and best use (HABU) determines what properties are comparable and therefore suitable for inclusion in the dataset for analysis. An error in determining the HABU will almost certainly result in an erroneous estimate of value.

Over the past 20 years there has been an evolution in the definition of HABU away from the most profitable use legally permissible to what is the most probable use that a property will be put to as of the valuation day? The Appraisal of Real Estate 4th Canadian Edition states “the most probable use is the basis for determining the most probable selling price of a property.” Just as the definition of market value has evolved from the highest price to the most probable price, so too has the definition of HABU evolved from the most profitable use to the most probable use.

What does this mean and what impact will the evolution of the HABU definition have on Assessment practitioners? Charles and Haydn Johnstone will introduce the latest definition of Highest and Best Use, explore the challenges of defining HABU, identify emerging trends, and describe some of the pitfalls from a mass appraisal perspective using case studies from across Canada.

Join the Institute of Municipal Assessors (IMA) and the Alberta Assessors’ Association as they present the first Canadian Assessors Summit - Excellence Through Collaboration on March 6th & 7 Highest & Best Use will be the focus of the first day of the Summit, you’ll hear from Charles Johnstone, FRICS, AACI, M.I.M.A. and Haydn Johnstone, AACI, P.App, as they introduce the latest definition of Highest and Best Use! Followed by a panel discussion where where Carlos Resendes, M.I.M.A., IMA’s 1st Vice-President, will guide top leaders in the industry through a discussion about the differences and similarities they see in both HABU and Current Use. Register on the IMA website today!

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VIRTUAL CANADIAN ASSESSORS SUMMIT – EXCELLENCE THROUGH COLLABORATION In January of 2023, the Institute of Municipal Assessors (IMA) & the Alberta Assessors’ Association (AAA) celebrated their achievements towards standardization of the Assessment profession in Canada. They proudly announced the IMA’s M.I.M.A. Accreditation and AAA’s AMAA Designation are transferable and transportable. This recognition was given with the intent to unify and support the profession’s continued growth.

To further this collaboration and to contribute to the shared goal of elevating the identity of the Canadian Assessor, the IMA and AAA are now coming together to host the first ever, Candian Assessors Summit – Excellence Through Collaboration.

This virtual event, on March 6 & 7, 2024, will be the first of its kind for the Canadian Valuation industry. Our goal is to inspire and support valuation professionals nationwide to come together, tackle shared industry obstacles and to focus on collaboration over competition.

With top industry leaders coming to speak over two days the event will provide 7.0 Learning CPD Credits for those who attend. Three main themes and topics will be covered: • • •

Highest and Best Use Data Gathering and Release Dispute Resolution

Whether it be via panel discussion or presentation, this event promises to have something for everyone to take away, learn, and will leave the audience feeling a renewed sense of community.

7.0 Learning CPD Credits will be granted from the following associations for attending the entire event: • • • • • •

Institute of Municipal Assessors (IMA) Alberta Assessors’ Association (AAA) Appraisal Institute of Canada (AIC) Saskatchewan Assessment Appraisers’ Association (SAAA) International Association of Assessing Officers (IAAO) Law Society of Ontario (LSO) members can add their hours to the ‘Substantive Hours’ with the LSO

Association of Assessing Officers of Manitoba (AAOM) will grant 12 recertification credits for attending the entire event.

Join the IMA and AAA teams this March 6 & 7 as we delve into these highly anticipated topics and provide meaningful content to assessment professionals across Canada, register today on the IMA website.

Don’t miss out on significant savings with Early Bird pricing. Secure your spot today!

Canadian Assessors Summit Sponsors: DIAMOND SPONSOR:

SILVER SPONSOR

BRONZE SPONSOR:

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RETAIL ANALYSIS WITH LIMITED OBSERVATIONS Amanda Blundell, MRICS & Lee May, M.I.M.A., CAE. Lee May, M.I.M.A., CAE, Manager of Research & Advisory Services and Amanda Blundell, MRICS, Manager of Valuation, Research & Advisory Services at MPAC, delivered an insightful session on Retail Analysis with Limited Observations during the combined District Meeting. We had the opportunity to catch up with them and gain further insights into this intriguing topic. *AB = Amanda Blundell *LM = Lee May 1. You define the subject market area (Town of Lindsay) as a “tertiary market.”

Can you please outline the market characteristics that lead you to this definition?

What aspects of this community factor into this?

LM: Real estate markets can be defined as primary, secondary or tertiary. These labels are primarily a reflection of population density which drives other aspects such as the cost of land, availability of public infrastructure and other amenities. For example, in the context of Ontario, I consider the census metropolitan areas of Toronto and Ottawa to be primary markets at more than one million people each, with a higher cost of living, access to many services and conveniences including multifaceted public transit systems. Conversely, a tertiary market can be defined as less than 100,000 people or fewer depending on your basis for comparison.

2. It is accurate to say that the subject property represents the only Regional Mall in the entire Town of Lindsay and in fact the City of Kawartha Lakes. It is also an enclosed mall that was originally constructed in the 1970s and expanded through the late 1980s. However, it no longer contains the anchor tenants (Zellers/Target & a major supermarket) This is uncharacteristic of most malls. Is it fair to say that the traditional Regional Malls of the previous century have become somewhat obsolete? How have these properties typically adapted to this changing environment? And how do these changes impact the Risk and Investment Profile?

LM: The retail sector is constantly evolving and consequently the utility and demand for traditional retail properties evolves as well. Recent commentary from DBRS Morningstar (Canadian Enclosed Malls—Better Than Resilient, Nov 3, 2023) stated that “the enclosed shopping mall remains an integral retail format for Canadian mall operators from a long-term strategic and

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growth perspective” and “the Canadian regional mall space remains, largely healthy, with significant opportunity for growth”.

In recent years, investors in the regional mall space have recognized the need to invest in their assets to boost revenues and unlock mixed-use density in their expansive parking lots to meet the demand for housing fueled by population growth through migration. Many of these projects will take years before they are fully realized yet the apparent strategy in this changing environment is to intensify regional mall sites to satisfy demand for residential uses and ensure that the retail anchoring these sites and serving the denser population maintains both its relevance and value.

AB: With respect to risk and the investment profile, both institutional and private investors continue to purchase regional mall sites but only those with specific investment strategies based on asset type and available capital. Some investors are acquiring malls in secondary and tertiary markets to diversify and establish a presence in new markets while others have initiated multi-year mixed-use development plans. In either case, there may be different elements of risk to continue to carry an asset in the portfolio versus divesting into a more stable class or market.

3. Let’s talk about the Capitalization Rate. First, can you outline the various techniques for determining Capitalization Rates?

LM: Capitalization rates can be estimated using several different techniques, which depend on the quantity and quality of available data. Overall capitalization rates express the relationship between a single year’s (projected, actual, or stabilized) income and the total price or value of the property. Implicit in the overall capitalization rate is the return of and return on investment as well as the investor’s perception of risk and anticipated future income.

In the interest of full disclosure, I will preface that over the course of my assessment career, I have only used the more direct forms of capitalization, which are the comparable sales and gross income multiplier methods of capitalization, in a professional capacity. I personally have used the remaining “indirect” capitalization techniques for academic purposes only.

The most common techniques for deriving capitalization rates are: Comparable sales (net operating income (NOI) ÷ sale price = capitalization rate)

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The strongest method is using comparable sales from the marketplace; it is simple, easy to understand and is used by market participants. It is not good at dealing with complex income streams with irregular cash flows and the results can be difficult to reconcile when the risk profile and durability of net operating income varies between comparables.

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Band of investment, mortgage and equity components When market data (i.e. comparable sales) is scarce, an assessor can attempt to use an alternative technique using mortgage-equity analysis such as the band of investment method. This method recognizes the different rates attributable to components of a capital investment which are the typical mortgage terms and equity requirements for an incomeproducing property. This method recognizes both aspects of an investment which are the lender’s requirements for

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perceived risk and the equity investor’s requirements for a return of their investment.

The data required to support this technique comprises: loan-to-value ratios, mortgage constants and equity dividend rates. Some of the inputs can be tricky to obtain however valuators can develop the necessary supporting documentation through market research and interviews with mortgage brokers, underwriters, or bankers.

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Band of investment, land and building components This method is similar to the mortgage and equity band of investment method however the physical components (land and building) of the property are used instead of the risk/return requirements of the investment. Weighted rates for the land and building are estimated, assuming that they can be developed from residual analysis of improved properties and are calculated separately.

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(Effective) Gross income multipliers (Sale Price ÷ PGI/EGI = GIM/EGIM Gross income multipliers (GIMs) are derived from sales of properties that were - or theoretically could have been - rented at time of sale. The ratio of a sale price to the anticipated or projected annual potential or effective gross income for the year following the sale is the gross income multiplier. It is important to acknowledge that multipliers are the mathematical inverse of capitalization rates, which is why they are still considered a capitalization technique.

For example, a capitalization rate of 5% is equivalent to a net income multiplier of 20 (where 1 ÷ 0.05 = 20), and 8.5% equals a 12.5 multiplication factor (where 1 ÷ 0.08 = 12.5).

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Debt coverage ratio (DCR = NOI ÷ debt service) This is the ratio of the net operating income to the annual mortgage debt service requirements of an investment (principal and interest) and measures the ability of a property to meet its loan obligations out of its net operating income. The higher the DCR, the riskier the loan may be.

To derive an overall capitalization rate using this method, the DCR can be multiplied by the mortgage capitalization rate and the loan to value ratio (see band of investment – mortgage-equity).

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Yield capitalization (Discounted Cash Flow) Unlike the previous techniques, this capitalization method derives a yield capitalization rate (as opposed to an overall capitalization rate). Yield capitalization is more complex than direct capitalization and requires that the valuator selects a projection period in which they forecast all revenues including a reversion (if any). They must then choose an appropriate yield or discount rate and convert the cash flows into a present value by discounting each year’s return or applying an overall rate. This capitalization method is optimized for properties that are not operating at market rent and terms – essentially, properties with unstable revenue generation such as those undergoing a leaseup period.

3.a I am surprised at the reference to Gross Income Multipliers. Do we still use these? And can you give me an example as to when and where you would use one?

LM: Gross income multipliers (GIMs) are direct capitalization techniques that are not as commonly used as they used to be however, they can be useful to compare the income-producing potential of properties. Since multipliers are the mathematical inverse of capitalization rates, they are equally sensitive in their derivation from sales and application to income to estimate a capital value.

In theory, GIMs can be used to estimate the value of any income-producing asset, however it is important to note that a valuator using a GIM to estimate values for a competitive set of properties must ensure that they are using a consistent income level - either potential or effective gross (rental) income - and that their properties have very similar operating expense ratios. It is for these reasons that GIMs are most often used for smaller, homogenous, income-producing properties such as multi-unit residential apartments (plexes) and motels since income and expenses can be easily compared and adjusted, if necessary.

3.b (Assuming the Subject Property has not sold recently) Do you look at other retail property sales within the subject community (even though these sales bear limited resemblance to the subject property)? What other considerations will you take into account when developing an appropriate Cap Rate for a unique property such as this?

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AB: The analytical process should start at the macro level, which may include industrial and residential properties to narrow the quantity of observations through stratification. Where observations are scarce, it may be necessary to test out several options to draw similarities from, for example, the retail plazas in the area sell quite frequently, therefore, this is my benchmark for the area. Consider other micro level attributes such as transit, entertainment, development potential, interest rates, as part of the analysis and result. For unique properties, good practice is to follow the market, economy, and the 10-year bond yield and cap rate spreads.

4. Will you use actual vacancy rates and expense ratios (and if so, how many years will you consider) or do you look at the rates and ratios of similar properties in other similar vicinities or do you utilize a combination of both?

LM: Ideally, I have the required property income and expense information required for the valuation assignment, which I am hypothesizing to be a retrospective opinion of value with a valuation date that is at least 1-2 years in the past. In this case I will first measure the subject’s actual vacancy rates and expense ratios over a period of 3-5 years, centered around the valuation date. If I have additional years of data, I will look at the overall performance history to understand the subject’s NOI performance pattern over time.

Next, or in the absence of subject property data, I will use comparable property data over the same period – 3-5 years with the valuation date in the middle – to either compare the subject’s actual performance to that of competing properties or establish market rates to apply to the subject.

5. Once you have completed your valuation, how do you test and validate?

LM: Once I have established my opinion of value, I test different attributes of the valuation equation against similar properties and what comparable sales I have available. For example, I will test each of the levels of income (potential, effective, net) as ratios against both actual and estimated income data to ensure consistency and identify any outcomes where valuations may differ due to legislative obligations.

AB: In the absence of sufficient sales for a particular asset type, we are not able to use assessment to sale ratios (ASRs) as a benchmark of a successful valuation, therefore we need to rely upon several tests of the valuation inputs along the way.

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DISTRICT NEWS Amy Raycroft, M.I.M.A.

Jane Sokol-Kennedy, A.I.M.A.

Mark Lindquist, M.I.M.A.

Bill O’Connor, M.I.M.A.

Janice Sooley, A.I.M.A.

On December 5th, 2023, Districts 1, 5, 6, 7, & 10 joined forces to host the IMA’s first Cross-Canada Combined District Meeting. We caught up with the District Executives who planned and executed the event and gained insights into why it was important.

1. What inspired your District’s to join forces to do the IMA’s first Cross-Canada Combined District meeting?

“District 7 has been combining forces with fellow Districts since the pandemic and has had enormous success in terms of attendance and content delivery. The opportunity was presented to deliver a meeting that covered areas across Canada.

We felt that this was a fantastic opportunity to collaborate with areas outside of Ontario and deliver content that was relevant to all members regardless of their geography. This was an opportunity to be a leader and bring our members together to deliver content that matters to all IMA members, and more importantly create a sense of community across Canada. I was honored to host this first ever across Canada meeting and to have the opportunity to strengthen our membership and share timely relevant content that was well received by attendees.” says Amy Raycroft, District Chair for IMA District 7. Amy was the powerhouse behind this new initiative and led the coordination of this meeting.

Jane Sokol-Kennedy, District Director for District 1, agreed and mentioned, “who would not want to be involved in the first ever cross Canada meeting. I loved the idea of joining in and being part of this event. I also thought it would be interesting as there was the potential for topics and speakers that would be different that the ones we had thought of for our previous meetings. It would be a chance to meet members from other Districts and forge a relationship for future collaborations.

Lastly, it was also a chance to have members of District 1 obtain any CPD credits they needed for the Cycle 5 which ends March 31, 2024.”

District 10’s new District Director, Janice Sooley echoed this comment and added, “...Unfortunately, District 10’s in-person meeting was postponed until the fall of 2024. This collaboration by hosting an online Districts’ meeting was a terrific opportunity to provide members with an avenue to acquire the learning credits needed for the CPD Cycle 5 end.”

The District 5 Executive Team also noted that, “The larger combined meeting committee between the Districts opened a much larger possible idea pool for meeting materials, as well as a much larger selection of speakers with a wider range of subjects and content.”

Mark Lindquist, District Director from District 6 says... “The main factor was a chance to give our District membership a chance to access a varied agenda with speakers providing content that was applicable not just to our District, but to the assessment and valuation industry. We have been combining forces with Districts 5 & 7 for the past few meetings which has proved to be a real “team effort” but by expanding to include even more Districts, it gave an opportunity to learn from more varied experiences and see what might be top of mind in other parts of Canada.”

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2. What were some of the take aways from the Combined District meeting you think the wider IMA audience would be interested in?

Amy says, “The ability to network with fellow Districts was invaluable, and the collaboration between professionals across Canada was a unique experience that allowed us to bring learning hours to our membership in terms of CPD hours. This is always a top-of-mind initiative when we create content for members. The virtual option allowed our Districts to bring quality presenters to speak on matters that are affecting us in the industry across Canada.

This experience allowed for exposure and reinforcement of why it is important to seek accreditation and take pride in being a professional in the Assessment Industry.”

For District 10, Janice noted, “We have learned how effective a meeting of this magnitude was and learned that it was very achievable no matter where we were joining from! It also gave us an understanding of whether the topics were related to assessments in our District, some were beneficial to our learning. Knowledge is power!”

From District 1’s perspective, Jane agreed and mentioned, “the main takeaway for District 1 was, that although we are divided out into Districts, we really have no boundaries when it comes to holding meetings and planning events. Virtual meeting options allow us to come together regardless of our physical location. This means that more people share the task of finding speakers and thinking of topics to share with our members. Also, most meetings offer a follow-up survey, so it is important for our members to realize that we do look at their feedback and take their suggestions into consideration. The goal always is to have meetings that are informative, interesting, and engaging.”

Bill O’Connor, IMA Director from District 5 noted his team echoed these comments, ‘The combined District meeting provided a much larger scope of the interests of the District members, such as the possible issues dealing with Assessment across Ontario and the Eastern provinces. Providing a wider range of topics, representing the Assessment related industry (i.e., MPAC, Tax Agent/Representatives and Municipalities).

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For District 6, Mark agreed that “the takeaway for the District Directors was planning the agenda and securing speakers, this showed the collaboration and networking capabilities of the IMA when we work together. He continued that, ‘The takeaways for the wider IMA audience included learning that we face the same issues in valuation across the country and that by meeting virtually, it opens the options for members as far as meeting attendance and the potential to choose a meeting that provides new learning experiences for them. Not to mention more options for CPD hours!”

3. What is your District focused on for the upcoming year?

District 7 will be focused on continuing to be a leader and look for opportunities to broaden our exposure and educate our membership. They will be looking at hosting an in-person meeting in the Spring and will explore joining forces to experience a Hybrid meeting format. They are inspired by our membership and want to continue to deliver quality content along with being an ambassador on the benefits of being a member of the IMA. District 10 will be focusing on an in-person meeting this coming fall and hopefully start the planning process early to secure a venue, accommodations, and speakers. The recruitment of new members will always be a priority to help broaden their membership.

District 1 wants to ensure that they hold at least two meetings per year for their members. They would like to hold a virtual one in the Spring, as the weather in their area can be a bit temperamental. They would like to hold an in-person meeting for their Fall event. As they have recently held elections for their District, the focus will be on coming together as an Executive Team, and planning meetings based on feedback from our members regarding speakers, topics and virtual vs. in-person.

They are also going to try and focus on ensuring that any new employees at their workplace are made aware of the IMA and what it is, including the benefits of being a member.

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District 5 will focus on continuing to provide members with more meaningful content, and like many of the other Districts, will continue to be an ambassador for being an IMA member.

District 6 echoed these comments and concluded that their focus will be to provide more meaningful learning opportunities for their members as they begin a new educational cycle. This includes continuing to partner with some of the other Districts to provide a virtual meeting option, while at the same time looking at the viability of bringing District 6 back together for the first time since the pandemic. Mark noted, “the key is to ensure we are providing timely and worthwhile content to our members that continues to show that the IMA is a leader in valuation education.”

All Districts are looking at the opportunities to offer in person meetings to allow our members to best connect with each other and grow their professional networks, while maintaining the accessibility and convenience of online meetings. Stay tuned for more!

UPCOMING DISTRICT MEETINGS •

Districts 8 & 9 will host a virtual session on February 28th, register via the IMA website and review the agenda today.

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Districts 3 & 4 will host an in-person meeting on May 8th. The meeting will take place in Venu Event Space, 2800 Hwy 7, Vaughan ON, L4K 1W8. Stay tuned for more updates in the coming weeks.

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IMA ANNOUNCEMENTS SAVE THE DATE | 65th Annual Conference: Collaborating for Growth: Unlocking the Power of Shared Knowledge 65th Annual Conference will be held in the White Oaks Conference Resort & Spa, in Niagara-on-the-Lake from June 9th – 11th.

Mark your calendar as this event promises to be a great way to connect and network with colleagues from across the industry, while diving into the top issues that impact the profession in 2024.

IMA/IPTI WEBINAR SERIES The IMA continues its partnership with IPTI. We are halfway through the 2023-24 series with 6 webinars left! Register on the IMA website today and earn CPD Credits.

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Development Land – Assessment Valuation Challenges | February 15, 2024 Assessment Equity and Valuation – Which Takes Precedent? | February 22, 2024 Assessment Valuation of the Multi Residential Properties | March 21, 2024 Developing Cap Rates | April 17, 2024 Valuation of Care Homes | May 15, 2024 Valuation of Excess Land and Surplus Land | June 20, 2024

CPD Cycle 5 CPD Cycle 5 ends on March 31, 2024. As outlined in the CPD Policy, A.I.M.A. Designated Members must complete 16 qualifying hours per Cycle, while M.I.M.A. Accredited Members must complete 20 hours. Visit the IMA’s Calendar of Events to see all the ways you can earn those CPD Credits before the deadline.

Did you know, if you’ve already acquired all CPD Cycle 5 hours, any hours obtained from January 2024 onward can be carried forward to CPF Cycle 6!

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IMA SPONSORS THANK YOU TO THE FOLLOWING SPONSORS, WHOSE GENEROUS DONATIONS SUPPORTED THE IMA SCHOLARSHIP FUND

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SUPPORT THE NEXT GENERATION OF PROPERTY ASSESSMENT PROFESSIONALS WITH A TAXDEDUCTIBLE DONATION TO THE IMA SCHOLARSHIP FUND. LEARN MORE ABOUT THE AWARDS AND VIEW PAST RECIPIENTS HERE

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INSTITUTE OF MUNICIPAL ASSESSORS | JANUARY 2024