1. Edmonton Composite Assessment Review Board
Citation: Colliers International Realty Advisors Inc. for Luxor Land Ltd. v The City of
Edmonton, 2016 ECARB 01356
Assessment Roll Number: 10087396
Municipal Address: 10818 Jasper Avenue NW
Assessment Type: Annual New
2016 Assessment: $85,923,500
Between:
Colliers International Realty Advisors Inc. for Luxor Land Ltd.
Complainant
and
The City of Edmonton, Assessment and Taxation Branch
Respondent
DECISION OF
Shannon Boyer, Presiding Officer
Jack Jones, Board Member
Jasbeer Singh, Board Member
Procedural Matters
[1] The Board stated that it had no bias with respect to this file. The parties stated that they
had no objection to the Board’s composition.
[2] The witnesses were either sworn in or affirmed at the request of the Respondent’s
counsel.
[3] The parties agreed that evidence regarding vacancy rate would be carried forward from
the hearing in Roll 2702538.
Background
[4] The subject property (subject) is a high rise office building known as the Intact Building.
Constructed in 1991 and located in the Government district of Edmonton, it is classified by the
City of Edmonton as a Class BB office building and assessed on the income approach to value
using a capitalization rate of 6.25%. The total building area of 233,160 square feet (sf) includes
214,679 sf of office space, 4,372 sf of CRU 1,001 to 3,000 sf, 3,568 sf of CRU- 3,001 to 5,000,
10,541 sf of CRU > 10,001 sf, 161 underground parking stalls and 24 surface parking stalls.
1

2. Issues
[5] Is the 2016 assessment of the subject property at $85,923,500 correct?
Position of the Complainant
[6] The Complainant challenged the 2016 assessment of the subject property based on the
correctness of :
1) The application of a 5% vacancy rate.
2) The application of a 6.25% capitalization (cap) rate.
[7] In support of a requested revision to the vacancy rate from the assessed value of 5% to
10%, the Complainant presented a graph representing historic vacancy data from two sources,
Colliers and Avison Young. At the valuation date the Avison Young vacancy rate for “B’ class
office space was 17.1% and Collier’s was 10.92% with an average of 14.01%.
[8] The Complainant argued that the 5% vacancy rate utilized by the Respondent in the
assessment had been developed through a flawed analysis. Specifically, the study included owner
occupied properties, which had little or no vacancy and do not compete on the market. The study
also excluded chronically vacant properties, therefore skewing the vacancy study results
downward and not truly representing the market.
[9] The Complainant also presented a 2014 CARB decision in support of revising the
vacancy rate based on utilizing third party data.
[10] In rebuttal, the Complainant presented the Respondent’s vacancy study revised to exclude
owner occupied buildings and to include the chronically vacant properties. The revised
calculations resulted in averaged vacancy rates of 8.3% to 14.3%. It was argued that this further
supports the requested revised vacancy rate of 10%.
[11] In support of a requested revision to the cap rate from 6.25% to 6.75% the Complainant
presented the 2016 valuation rates used by the City of Edmonton to show that all other “B” class
buildings (BH & BL) have a 6.75% cap rate whereas the 6.25% rate applied to the subject has
been used for “A” class buildings (AH & AL). Since the subject is a “B” class building with
fewer amenities than an “A” class building, it should be afforded the higher cap rate.
[12] In summary, the Complainant requested the assessment components for vacancy and cap
rate be revised to 10% and 6.75% respectively, and that the total assessment be reduced from
$85,923,500 to $73,511,000.
Position of the Respondent
[13] The Respondent outlined the mass appraisal methodology used in assessing office
buildings, focusing in particular on the development of vacancy allowances and cap rates, in the
development of typical market rents in determining market value. The Respondent noted that a
property that experiences a vacancy greater than 10% for three consecutive years is considered as
chronically vacant and a stabilized vacancy rate is applied based on a scale from 10 to 30%. The
2

3. Respondent also elaborated on the building classification criteria surrounding the subject's BB
classification.
[14] In support of a typical 5% vacancy rate, the Respondent provided a vacancy study of all
“B” class buildings in the downtown inventory. The average vacancy was 7.19% and the median
was 0%. Chronically vacancy properties are considered atypical and are excluded from the study
because vacancy is not due to typical market conditions, but due to circumstances such as
extensive renovations, upgrades, management issues, and obsolescence, which set them apart
from the rest of the rental inventory.
[15] The Respondent critiqued the Complainant’s use of third party data to determine a
vacancy rate because the data may exclude owner occupied properties and include chronically
vacant properties and new properties that may be on the market in the near future but are not
necessarily available as of the valuation date. Using these parameters, the vacancy rate may be
inflated. Each data source also has a different reference inventory and different criteria as to
building sizes in their analysis.
[16] The Respondent also presented a fairness and equity chart to illustrate that a 5% vacancy
rate had been applied to all downtown “BB” office buildings, except those categorized as
chronically vacant.
[17] The Respondent referenced a 2015 CARB decision concerning vacancy rates and the use
of third party data.
[18] In support of a 6.25% cap rate for the subject property the Respondent noted that
buildings in the BB class have typically undergone extensive retrofitting, making them more
desirable and thus exhibiting less risk as illustrated by the subject’s average vacancy over the last
three years of only 2.15%. The main variance between “BB” and lower end “A” buildings is
size.
[19] To further illustrate this point the Respondent provided third party data noting that two
sources rated the subject as a class “A” property. Marketing information concerning the subject’s
properties amenities was also presented.
[20] The Respondent’s fairness and equity chart also indicated that all “BB” office space in
the downtown inventory had been assessed with a 6.25% cap rate.
[21] In summary, the Respondent requested the 2016 assessment of the subject property be
confirmed at $85,923,500.
Decision
[22] The decision of the Board is to confirm the 2016 assessment of the subject property at
$85,923,500.
Reasons for the Decision
[23] The Board is not convinced by the Complainant’s evidence that the typical rate in the
Government District exceeds 5%.
3

4. [24] The parties disagree whether owner occupied properties and chronically vacant properties
should be used to determine typical vacancy rates. The Complainant did not present evidence to
support the argument that properties in the Respondent’s study with a 0.00% vacancy rate are
owner occupied. The Complainant did not present evidence to establish that the assessment is
incorrect because the Respondent included owner occupied properties and excluding properties
deemed to be chronically vacant, in their methodology to determine the typical vacancy rate.
[25] The Board finds that the most accurate analysis regarding vacancy allowance was
presented by the Respondent because it included the vacancy data from a wide array of buildings
similar to the subject, in the same market area as the subject.
[26] The Board placed less weight on the Complainant’s third party vacancy analysis as there
was a significant variance in the results (17.10% vs 10.92%), it included space available for
sublease as well as property available for lease in the future (property under construction).
Further, the analysis used physically vacant space, rather than contractually vacant space. In
addition each source had a different property data base, different criteria and different property
classification methods than those utilized by each other as well as by the Respondent.
[27] The Board determined that the 5% vacancy allowance applied within the 2016
assessment is an accurate representation of the typical market place for the subject’s building
classification and location.
[28] With respect to the cap rate, the Board noted that the Complainant did not provide any
market support for a revision and relied on an equity argument, implying that the assessed cap
rate was inequitable, as it was the same rate applied to some “A” class buildings.
[29] The Board finds that a 6.25% cap rate is equitable when compared to other properties that
shared the subject’s “BB” building classification and location. The Respondent demonstrated
that the “BB” classification of the subject was on the borderline with the lower end “A”
properties, so the fact that they share a cap rate is reasonable.
[30] The Board finds that the 2016 assessment of the subject property at $85,923,500 is fair
and equitable.
Heard August 31, 2016.
Dated this 14th
day of September, 2016, at the City of Edmonton, Alberta.
_________________________________
Shannon Boyer, Presiding Officer
4

5. Appearances:
Stephen Cook, Colliers International
for the Complainant
Andrel Wisdom, Assessor, City of Edmonton
Cameron Ashmore, Counsel
for the Respondent
This decision may be appealed to the Court of Queen’s Bench on a question of law or
jurisdiction, pursuant to Section 470(1) of the Municipal Government Act, RSA 2000, c M-26.
5

6. Appendix
Legislation
The Municipal Government Act, RSA 2000, c M-26, reads:
s 1(1)(n) “market value” means the amount that a property, as defined in section
284(1)(r), might be expected to realize if it is sold on the open market by a willing seller
to a willing buyer;
s 467(1) An assessment review board may, with respect to any matter referred to in
section 460(5), make a change to an assessment roll or tax roll or decide that no change is
required.
s 467(3) An assessment review board must not alter any assessment that is fair and
equitable, taking into consideration
(a) the valuation and other standards set out in the regulations,
(b) the procedures set out in the regulations, and
(c) the assessments of similar property or businesses in the same municipality.
Exhibits
C-1 Complainant Brief (56 pages)
C-2 Rebuttal (6 pages)
R-1 Assessment Brief (82 pages)
6