MRAT extends the guidance provided by Part 9 of the MGA.  Note that MRAT is to expire on September 20, 2009.  [MRAT, section 29]

In the context of hotels and motels, the valuation standard for a parcel of land and the improvements on the parcel is market value [See sections 4, 5 and 6 of MRAT].  Section 2 of MRAT directs that an assessment based on market value must:

• be prepared using mass appraisal;
• be an estimate of value of the fee simple estate in the property;  and
• reflect typical market conditions for properties similar to that property.

Section 2 is important and at first glance perhaps contradictory.  On the one hand, a hotel or motel must be valued using mass appraisal.  Subsection 1(k) of MRAT defines “mass appraisal” as “. . . the process of preparing assessments for a group of properties using standard methods and common data and allowing for statistical testing.”  The potential difficulty is the reference to “common data” in the definition particularly in the application of the Income Approach.  The valuation of hotel and motel properties through the Income Approach involves a stabilization of income and expenses for the subject property.  While this might be achieved by relying upon industry averages for commercial accommodation facilities, it has been recognized in appraisal circles and some jurisdictions in Canada that each commercial accommodation property is unique and reliance should therefore be placed on the performance of the subject property rather than industry averages unless the actual performance in one way or another is demonstrably an aberration.¹ The Alberta Municipal Government Board (“MGB”) is aware of this challenge and it has discussed the subject at length in its hotel and motel appeal decisions.

¹ See for example British Columbia (Assessor of Area No. 09 – Vancouver) v. Bramalea Ltd., [1995] B.C.J. No. 2616 (QL) (B.C.S.C.)and [1996] B.C.J. No. 249 (QL) (B.C.S.C.);  affirmed [1997] B.C.J. No. 918 (QL) (B.C.C.A.