For better viewing and download, please contact me at pws_60628@hotmail.com

[b]Copyright ©2009 Paul Salim[/b]

[b]Abstract[/b]
In Banff Trail, the City of Calgary's assessment method is not the only assessment method available to assess residential properties. This manuscript shows that my assessment method is superior to the City of Calgary's assessment method for 127 residential properties in Banff Trail for 2009 taxation year. Therefore, all 2009 assessments in Banff Trail should be made with my assessment method which replaces the City Hall's assessment method.


[b]Introduction[/b]
On March 23, 2009, there was a hearing with File #47954 at ARB for my property assessment. There was an unfinished business during the ARB hearing in which I was disallowed by the ARB's judge chairman to present evidences on my assessment method vs the City of Calgary's assessment method for 127 properties in Banff Trail. The judge chairman argued that the evidences were "new evidences" and not allowed to be presented. However, how could they be "new evidences" when they were submitted at least one week prior to the ARB hearing (that is, on March 16, 2009 the "new evidences" were presented to ARB and the City of Calgary's assessor, and on March 13, 2009 to the City of Calgary's assessor)? One of the reasons I am presenting this manuscript is to show that there is another assessment method that is competitive (and even superior) to the City of Calgary's assessment method to assess residential properties in Banff Trail. Hereinafter, the City of Calgary will be referred to as the City Hall (so, the City of Calgary's assessment method will be referred to as the City Hall's assessment method). This manuscript is also written to dismiss allegation against me that I went to the ARB hearing just because I had an assessment method that produced a result different from the City Hall's. If I were like that, you could call me Dumb! But, I am smarter than that, and I went to the ARB hearing because I had an assessment method that was proven superior to the City Hall's assessment method as presented in this manuscript but unfairly disallowed to be presented on March 23, 2009 by the ARB's judge chairman.


[b]My Assessment Method[/b]
My assessment method is described in detail in Salim (2009). Hereinafter, the method will be referred to as Salim (2009)'s assessment method and is presented in Eq.(1) below:

Market value of a property in Valuation Year = (1 + Cf) * Market value of the property in Reference Year * ( Market value of comparables in Valuation Year / Market value of comparables in Reference Year) ....................................(1)
where: Cf = a correction factor specific to the property (note: by default, Cf = 0; but more accurate results require Cf other than zero).

Example 1 below shows how to use Eq.(1) in property assessment.

[u]Example 1 – Roll Number 043059401[/u]
Question: Find the market value of Roll #043059401 in 2008 valuation year (or 2009 taxation year).
Answer:
The following data are obtained from Natyshen (2006):
1. Roll #043059401 is a residential property located on 2644 Capitol Hill Cr NW (Calgary) or in Banff Trail.
2. It was sold in open market with the sale price of $284,000 on August 11, 2004. So, the reference year in Eq.(1) is chosen to be 2004, and the market value of this property in the reference year is $284,000.
Market values of comparables have been recorded and published by CREB. Table 1 shows residential sales in Banff Trail (the community in which Roll #043059401 is located).

Table 1. Residential Sales in Banff Trail (District 415)

Valuation Year Number of Sales Average Price Source
($)
2008 26 534,188 CREB (2008)
2007 64 552,164 CREB (2007)
2006 63 486,894 CREB (2006)
2005 73 338,009 CREB (2005)
2004 56 294,824 CREB (2004)

For this calculation, Cf = 0. If all the numbers are substituted into Eq.(1), the following result will be obtained:
Market value of Roll #043059401 in 2008 = (1 + 0) * $284,000 * $534,188/$294,824 = $514,576 which differs only by 2.00% from $504,500 generated by the City Hall.


[b]Salim (2009)'s Assessment Method vs the City Hall's Assessment Method[/b]
Data from the City Hall’s Residential Sales for Banff Trail (the City of Calgary, 2008) were downloaded from the City Hall’s website. The data were analyzed using the City Hall’s and Salim (2009)’s assessment methods. For Salim (2009)’s assessment method, Eq.(1) is used to calculate the 2009 assessment values with Cf = 0. Results for the two assessment methods are summarized in Table 2.

Table 2. Comparison between the City Hall’s & Salim (2009)’s Assessment Methods for 127 Sold Properties in Banff Trail

Sale # Properties The City Hall’s Salim (2009)’s Source
Year MASR COD MASR COD
2008 13 0.970 7.031 1.011 0.590 ARB2009.xls/2008 Banff Trail
2007 85 1.007 6.778 0.994 2.805 ARB2009.xls/2007 Banff Trail
2006 29 0.984 5.254 1.018 0.054 ARB2009.xls/2006 Banff Trail

Table 2 contains two important parameters, MASR and COD, as described in “Municipal Government Act, Alberta Regulation 220/2004: Matters Relating to Assessment and Taxation Regulation” shown below:
[i]Quality Standard
10 (2) In preparing an assessment for property, the assessor must have regard to the quality standards required by subsection (3) and must follow the procedures set out in the Assessment Quality Minister’s Guidelines.
10 (3) The following quality standards must be met in the preparation of assessment of property:
(a) for any stratum, property containing 1,2 or 3 dwelling units must have the MASR of 0.950 – 1.050 and the COD of 0 – 15.0,
(b) the assessment level for residential property must be 1.000.[/i]

Table 2 shows that,
1. based on the above regulation, both the City Hall’s and Salim (2009)’s assessment methods produce MASRs and CODs that comply with the quality standard in Alberta Regulation 220/2004,
2. although, examination on MASR shows that both the City Hall’s and Salim (2009)’s assessment methods look alike, examination on COD shows that the two methods are different as explained in the following paragraph.
COD measures how closely the individual ASRs are grouped around MASR and reflects the level of uniformity in the assessment of real property within community. The closer the COD is to 0, the greater the uniformity of the ASRs is. The more closely the ASRs are grouped around MASR, the more equitable the property assessment is, since properties are assessed at more similar rates. Let us examine Table 2. For, 2008 sale year, the City Hall's COD is 7.031, while Salim (2009)'s COD is 0.590; so, which assessment method produces the smaller COD?; the answer is Salim (2009)'s. For, 2007 sale year, the City Hall's COD is 6.778, while Salim (2009)'s COD is 2.805; so, which assessment method produces the smaller COD?; the answer is Salim (2009)'s. For, 2006 sale year, the City Hall's COD is 5.254, while Salim (2009)'s COD is 0.054; so, which assessment method produces the smaller COD?; the answer is Salim (2009)'s. Because Salim (2009)’s assessment method consistently produces less CODs than the City Hall’s for the 127 properties in Banff Trail, the former is superior to the latter in term of uniformity.


[b]Conclusion[/b]
In Banff Trail, Salim (2009)'s assessment method is proven superior to the City Hall's assessment method for 127 residential properties for 2009 taxation year. Consequently, all 2009 assessments in Banff Trail should be made with Salim (2009)'s assessment method which replaces the City Hall's assessment method.


[b]Nomenclature[/b]
Adjusted Sale price = sale price that has been adjusted by the City of Calgary to reflect real estate conditions as of the Valuation Date of July 1, 2008
ARB = The City of Calgary Assessment Review Board
ASR = Assessment-to-Sales Ratio = Assessment Value/Adjusted Sale Price
COD = Coefficient of Dispersion = AVERAGE(|ASR^i/MASR-1|*100%,i=1,2,3,..N) >=0
CREB = Calgary Real Estate Board
Eq. = equation
MASR = Median Assessment-to-Sales Ratio = MEDIAN(ASR^i,i=1,2,3,..N)
N = number of data
Valuation Year = Taxation Year - 1


[b]Literature Cited[/b]
The City of Calgary. “Residential Sales, July 2006 – June 2008 (Excluding Condominiums), Banff Trail”, 15th December 2008.
CREB. 2004 District Statistics – Year Summary 2004.
CREB. 2005 District Statistics – Year Summary 2005.
CREB. 2006 District Statistics – Year Summary 2006.
CREB. YTD 2007 – Single Family – Community Statistics.
CREB. YTD 2008 – Single Family – Community Statistics.
Natyshen, R. “Assessment Brief”, File Number 25235, the City of Calgary – Assessment Business Unit #8002, 9th June 2006.
Salim, P.H. “Complaint: The Municipal Government of Calgary Uses a Double Standard That Leads To The Continuous Production of Garbage for Roll #0xxxxxx00”, January 2009.