Executive Summary: Key Legal and Evidentiary Issues

• The dispute concerned the City of Saskatoon's inclusion of 275 Kensington Boulevard in a sales array to determine the capitalization rate for property tax assessments.

• Property owners argued the building functioned more like an office than a retail property and should be excluded from the retail array.

• The Board of Revision and the Assessment Appeals Committee found that the City acted within its discretion based on available evidence.

• The Saskatchewan Court of Appeal ruled there was insufficient evidence to displace the presumption that the property was properly classified.

• Precedent from CP Reit was distinguished on the basis that stronger evidence had been provided in that case regarding office use.

• The appeal was dismissed, confirming the City's assessment methodology as valid and equitable under the Cities Act.

Background and property assessment dispute
GWL Realty Advisors Inc., acting as agent for a group of property owners in Saskatoon, appealed municipal tax assessments for 45 commercial and industrial properties for the 2022 tax year. The City of Saskatoon had used the income approach to value these properties, applying a median capitalization rate of 5.63% derived from seven comparable sales, including the sale of a property at 275 Kensington Boulevard. The owners objected to this property's inclusion, claiming it was not truly comparable because it functioned as an office building rather than a retail property.

Arguments regarding 275 Kensington
The subject property, 275 Kensington Boulevard, houses a Conexus Credit Union branch and offices for Thrive Wealth Management. The property owners, through their former agent Altus Group, argued that it was predominantly office space and not a retail building, and that including it in the sales array distorted the capitalization rate. They maintained that excluding it would raise the cap rate to 5.67%, resulting in lower assessed values for their properties.

Findings at the Board and Committee levels
The City maintained that 275 Kensington was correctly classified as retail based on its function as a bank branch in a suburban area, and not as a downtown head office. The Board of Revision sided with the City, citing the Saskatchewan Court of Appeal’s guidance in CP Reit but finding that the property at issue did not meet the same criteria as a head office requiring reclassification. The Saskatchewan Municipal Board’s Assessment Appeals Committee upheld this conclusion, agreeing that the City had discretion in its classification and had applied it reasonably.

Court of Appeal review and analysis
The appeal to the Saskatchewan Court of Appeal raised questions of law: whether the Committee misinterpreted the CP Reit decision and whether it misapplied the equity test under section 165(5) of the Cities Act. The Court found no legal error. It distinguished the CP Reit case, emphasizing that unlike in CP Reit, the property owners in this case provided limited and non-definitive evidence. The photographs and brief descriptions lacked detail about how much of the building was used for office versus retail purposes, and failed to explain the significance of the building’s use or layout.

The Court also noted that the capitalization rate for 275 Kensington was not an outlier in the array, further supporting its comparability. The City had consistently applied its classification approach, and the owners failed to rebut the presumption of correctness in the assessment. The Committee’s decision was found to be within its jurisdiction and supported by the evidence on record.

Final outcome
The Saskatchewan Court of Appeal dismissed the appeal with costs awarded to the City of Saskatoon. The Court concluded that the inclusion of 275 Kensington in the sales array was not based on legal error, and the evidence presented by the appellants did not warrant its removal. The assessment methodology used by the City was upheld as reasonable and compliant with legislative and jurisprudential standards.