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HomeMy WebLinkAbout2003-12-02 Council Minutes• • KNEEHILL COUNTY 2003 ASSESSMENT REVIEW BOARD — December 2, 2003 The 2003 Assessment Review Board of the municipality of Kneehill County was held at the Kneehill County office, 232 Main Street, Three Hills Alberta on Tuesday December 2, 2003, commencing at 9 00 A.M The following were present Assessment Review Board Members Carol Calhoun, Jerry Wittstock, and Murray Woods Complainants Saskatchewan Wheat Pool/Aggro Grain Represented by Randall Worthington — Deloitte Touche Respondent Kneehill County Represented by Frank Grills Assessor Terry Nash, Clerk of the Court Mr Woods then reviewed the procedure of the Assessment Review Board, including the Order of Presentation, a copy of which was distributed to all the appellants (a copy of which is attached and forming part of these minutes) Mr Woods advised the Board that Assessment Notices were mailed on May 26, 2003, and the Board had until October 23 2003, to render a decision Mr Woods further advised the Board had 150 days to render a decision from the date of mailing of any revised notices sent after May 26 2003 as specified under the MGA Section 305 1 Ministerial Order No L 108/03 has been issued the Minister of Municipal Affairs which grants an extension to December 22, 2003 for Kneehill County's assessment review board to make its decision on 2003 complaints Mr Woods reconvened the Assessment Review Board meeting from November 6"', 2003 at 9 00 A.M It should be noted the "Order of Presentation" was followed for the appeal presentations 1 Roll #4264100 Plan 4264100 Block 1 Agpro Grain Management Services Ltd Mr Woods outlined the hearing process and asked whether there were any preliminary matters that needed to be dealt with9 Mr Woods asked Mr Worthington and Mr Grills if there was any objection to the validity of the proceedings or to any of the members sitting on the board9 Mr Worthington asked if the members of the Assessment Review Board were Councillors for the municipality? Mr Worthington raised a concern with County Councillors as the employers of the County Assessor hearing the appeal Mr Woods responded that it is well within the legislation for Councillors to sit on the Assessment Review Board They are required to make fair and impartial decisions based only on the evidence put before the board during the hearing and would not be acting as Councillors Mr Worthington s concern would be noted, but the hearing would proceed BACKGROUND High throughput grain terminals are replacing traditional grain elevators in Alberta. Municipal Affairs procedures for Grain Terminal Assessment are unclear They encourages assessors and industry stakeholders to `work together to determine the appropriate breakdown based on the guidelines" ISSUES 1 The costs for the grain elevator have been incorrectly allocated between M&E and B&S Page 1 e KNEEHILL COUNTY 2003 ASSESSMENT REVIEW BOARD — December 2, 2003 90% of grain processed by the terminal is cleaned, dried if required and blended to export standard Grain going into the terminal is something entirely different coming out A process has taken place, therefore M&E must be part of the operation 2 The facility suffers from economic obsolescence, obsolescence that has not been recognized in the calculation of the current assessment The elevator has a designed capacity to handle an annual grain volume of 395 000 tonnes The actual annual average capacity over the last two crop cycles is 38% of designed capacity Poor crops and federal regulations have led to the shortfall in achieving the maximum thru put 3 The facility suffers from functional depreciation depreciation that has not been recognized in the calculation of the current assessment 4 The outbuildings have been calculated incorrectly The anhydrous tank is on a skid with no degree of affixation to the land The tank is personal property and therefore exempt from assessment LEGISLATION Part 1 Standards of Assessment Regulation 289/99 Definitions 2(b) "machinery and equipment" means materials, devices, fittings installations, appliances, apparatus and tanks other than tanks used exclusively for storage, including supporting foundations and footings and any other thing prescribed by the Minister that forms an integral part of an operation unit intended for or used in (i) manufacturing (ii) processing, whether or not the materials, devices fittings, installations, appliances, apparatus, tanks, foundations footings or other things are affixed to land in such a manner that they would be transferred without special mention by a transfer or sale of the land Valuation standard for machinery and equipment 7(1) The valuation standard for machinery and equipment is that calculated in accordance with the procedures referred to in subsection (2) (2) In preparing an assessment for machinery and equipment, the assessor must follow the procedures set out in the Alberta Machinery and Equipment Assessment Ministers Guidelines established and maintained by the Department of Municipal Affairs as amended from time to time Municipal Government Act 1(n) `market value" means the amount that a property as defined in 284(1)(r) might be expected to realize if it is sold on the open market by a willing seller to a willing buyer 284 (1)(1) "machinery and equipment" has the meaning given to it in the regulations, 284 (1)(r) "property' means (i) a parcel of land, (u) an improvement, or (iii) a parcel of land and the improvement to it, 284 (1)0) "improvement means a structure anything attached or secured to a structure, that would be transferred without special mention by a transfer or sale of the structure, 289 (2) Each assessment must reflect (a) the characteristics and physical condition of the property on December 31 of the year prior to the year in which the tax is imposed under Part 10 in respect of the property, and Page 2 C7 • KNEEHILL COUNTY 2003 ASSESSMENT REVIEW BOARD — December 2, 2003 (b) the valuation standard set out in the regulations for that property SUMMARY OF THE APPELLANTS POSITION Requesting change of allocation between building & structures and machinery & equipment to 10% and 90% respectively Additional depreciation to the facility to recognize the super adequacy and economic failure of the building Removal of the anhydrous tank and fence. Reduction of total assessment to 4,329 050 RESPONDENT Mr Worthington raised an objection to the information distributed by the Assessor to the Board at the meeting Rules and regulations require that information must be provided to the Assessment Review Board 21 days prior to the hearing Mr Woods delivered the Boards decision that the contents of the Assessors package of information would not be heard In consideration of this decision Mr Grills requested that the Board confirm the assessment The presiding officer delivered the decision of the board to concur with the recommendation of the assessor that there be no assessment changes to roll number 4264100 Reasons for Decision. At the beginning of the Review Board Hearing the Assessment Review Board (ARB) was notified that regardless of the outcome, the decision would be appealed to the Municipal Government Board (MGB) The respondent had failed to meet a deadline for exchange of information. The ARB had to decide whether to delay the process by recessing to allow the exchange of information or rendering a decision and allowing the appeal to be filed. The ARB chose to render a decision including reasons and concerns to be forwarded to the MGB The assessment for 2002 with regard to the allocation between B & S and M & E is reported to be based on a negotiated agreement between the assessors and the owners The assessment for 2002 was used to set the assessment for 2003 This negotiated settlement appears to have ignored the guidelines as set out by Alberta Municipal Affairs (MA) This is troublesome to the ARB MA chose to issue guidelines which leave much room for interpretation rather than regulations which would have given more direction to the assessment community MA guideline suggests a split of 75% B & S and 25% M & E yet in 2002 the assessors and the Company reached an agreement on an assessed value which ignored those guidelines Because of the movement from the original guideline, the question remains if the 75 25 split was not correct, what is? The ARB believes that a decision as to what a fair split between B & S and M & E is appropriate will be based on a definition of processing Unfortunately the regulations give no interpretation leaving assessors and ARB to interpret the word processing for themselves The ARB considered what had changed from the traditional elevator as compared to the new facilities This ARB would support the guidelines as set out by MA on BR90 (December 11 2000) Cleaning and drying have been added to the high throughput from the traditional elevator These functions could in some ways be loosely defined as processing meaning something removed from the grain. In the newer high throughput elevators the blending function s remain the same as the traditional elevator This function does not even loosely fit the definition of processing but rather is Grain in grain out. This indicates that the assessment of facilities should remain the same for the high throughput elevator as it is for the traditional elevator other than the cleaning and drying functions The Board does not accept the argument that substantial depreciation should be applied as the facility has not operated at capacity over the past two years There is no firm evidence that the facility was overbuilt for what it does If the facility is in fact operating at less than capacity this could be due to many reasons including the last three years being drought years and/or poor management of the facility The Complainant's Agent presented evidence indicating that one facility the Complainant had owned was sold because the Complainant had built it assuming the surrounding farmers would deliver to them. The farmers chose to deliver elsewhere There is no proof that the same management was not applied to the Trochu Page 3 11 • KNEEHILL COUNTY 2003 ASSESSMENT REVIEW BOARD — December 2 2003 facility The ARB does not believe a poor business plan would be a reason for reducing an assessment based on functional obsolescence. 3 The ARB refects the argument that the Anhydrous tank should not be assessed. MA Guideline BR90 (December 11 2000) page 3 clearly indicates all free standing warehouse structures and tanks are to be assessed as buildings and structures 4 The issue of whether the Condo bin units should be exempt from assessment was raised at this ARB hearing The ARB did not rule on this matter but clearly guidance is needed. MA guideline BR90 (December 11, 2000) indicates condominium storage bins are to be assessed as B & S The agent for AgPro indicates that the condos are leased to farmers The ARB does not believe the leasing of a portion of the storage to a farmer makes the elevator an exempt farm building any more than the leasing of a safety deposit box to a farmer makes a Bank an exempt farm building. The ARB questions why the condo storage bins are not assessed when by all appearances they should be T) Ti C Te