Law Times

Law Times • June 28, 2010 FOCUS PAGE 15 Golf courses seeking millions in tax reductions Settlement involving Glen Abbey could be template for resolving 3,000 appeals BY GLENN KAUTH Law Times in property tax reductions pending the outcome of a tax appeal test case between the Municipal Property Assess- ment Corp. and the owners of the storied Glen Abbey club in Oakville, Ont. Th e issue dates back 10 years, U when Ontario switched to a sys- tem of current value assessment in order to have more regular updates of property values for tax purposes. Jeff Calderwood, executive director of the Na- tional Golf Course Owners As- sociation Canada (NGCOA), notes there are roughly 3,000 outstanding appeals of MPAC's assessments. Th at's because golf courses typically challenge MPAC's valuation each time it makes a determination, mean- ing individual businesses will have multiple cases ongoing. Th e matters are at various stages, with many of them before the Assess- ment Review Board (ARB). "Th at's a big issue when you look at an industry as small as ours," Calderwood tells Law Times. Th e issue reached a crescendo last week when MPAC and Clu- bLink Corp., the owner of Glen Abbey along with several other golf clubs around the province, reached an agreement on the company's properties. "We op- timistically report that there has been a signifi cant develop- ment in the ARB litigation of the Glen Abbey assessment ap- peal for ClubLink and MPAC," the NGCOA reported on its web site last week. "Th e ARB hearings have been suspended pending a negotiated agree- ment (MPAC and ClubLink) as to the value of the assessment of Glen Abbey and other On- tario properties. Should there be a fair and equitable fi nal agreement between MPAC and ClubLink, upon analysis the NGCOA Canada will advise its recommendations for outstand- ing disputes of MPAC's assess- ment values." Th e issue at the heart of the matter centres on MPAC's methodology for valuing golf courses for property tax pur- poses. Paul Campbell, MPAC's senior valuation manager for industrial and special proper- ties, tells Law Times the histori- cal approach was to assess the land value plus improvements, such as a clubhouse or other facilities. But years ago, as the new current value regime was coming into play, authorities noticed that, based on sales ac- tivity, many properties were un- dervalued, he notes. Th at real- ization prompted a switch to an income approach, fi rst through what's called a green-fees mul- tiplier and then through a pro forma valuation based on net operating income. Th at's the p to 700 Ontario golf courses could be eligible for millions measure MPAC has used for the last three assessments, ac- cording to Campbell. While the NGCOA has been involved with the matter, Calderwood says various golf courses have been fi ling their challenges to MPAC's assess- ments individually. Th e change in valuation methodology re- sulted in big tax increases for golf clubs, he adds, noting a central issue is how to remove the business enterprise value — meaning the operation's worth beyond simply the property itself — from the assessment. Th e idea is to isolate only the property's value, he points out. Th e current value assessment regime aims to determine the amount a property would sell for in an open market through an arm's-length transaction be- tween willing buyers and sell- ers. In the ClubLink case, the ARB has adjourned the matter to allow the parties to continue working on the agreement, which could form a template for resolving other fi les. "If we can come to some sort of agreement . . . it could be the catalyst to move it forward," Campbell says. Some cases have settled over the years, but Campbell says there's been no standard as- sessment reduction for the golf course properties involved. "Each golf course has its own circumstances, and we feel it's appropriate to refl ect that," he adds, noting companies may have diff erent cost scenarios, such as how they pay for water on their courses, that can aff ect D&D_June14_10.indd 1 Ontario Assessment Legislation Consulting Editors: Jack Allen Walker, Q.C. and Andy Anstett This annual consolidation includes: • • • • and regulations • and regulations … and more Perfectbound • 800 pp. • Published each May • On subscription $73 • P/C 0836140000 One time purchase $83 • P/C 0836010000 • ISSN 1198-3612 • Multiple copy discounts available Ontario Municipal Legislation Consulting Editor: Quinto M. Annibale This latest edition contains: • • Regulations under the • - Includes 18 regulations , S.O. 2001, c. 25 • Regulations under the - Includes 16 regulations Perfectbound • 862 pp. • Published each April • On subscription $71 • P/C 0809140000 ● One time purchase $81 • P/C 0809010000 • ISSN 1915-8173 • Multiple copy discounts available Ontario Planning Legislation Consulting Editor: Bruce Engell Inside the 2010 Edition you'll find: • the completely updated • a table of contents listing all section and regulations with subject and page numbers to speed your access to the material • a detailed legislative history of the Act and regulations Perfectbound • 306 pp. • Published each April • On subscription $61 • P/C 0812140000 One time purchase $71 • P/C 0812010000 • ISSN 1910-3689 • Multiple copy discounts available 6/7/10 11:57:55 AM Municipal Legislation titles their operating income. At the same time, munici- palities have a role to play in the outcome of any negotia- tions. Any assessment reduc- tion would aff ect their revenues and possibly the tax balance between golf course properties and other land uses, meaning they likely would have some- thing to say about the disposi- tion of the appeals. Calderwood, however, says he's optimistic the ClubLink matter will help resolve the issue. "I think we're very near the end," he says. "It's a 10-year, long- standing issue." LT For a 30-day, no-risk evaluation call: 1.800.565.6967 LT0628 Canada Law Book is a Division of The Cartwright Group Ltd. Prices subject to change without notice, to applicable taxes and shipping & handling. CA111 (LT 1-3x4).indd 1 www.lawtimesnews.com 6/23/10 11:07:28 AM Municipal of Privacy Freedom Act of Information and Protection Assessment Judicial Legislation Review Act Procedure 2006 Act, Municipal Affairs Act Act City of Toronto Act, Municipal 2006 Act, City 2001 of Toronto Act, Municipal 2006 Act, 2001 Planning Act

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