Land and Specialized property assessments
Land and specialized property assessments
As required by provincial legislation, a property assessment reflects the market value of property on July 1 of the year prior (valuation date) and the physical condition and characteristics of property as of December 31. Market value is the amount a property might be expected to realize if it sold on the open market by a willing seller to a willing buyer. Note that some property types, such as farmland, are subject to standards other than market value.
What is vacant non-residential land?
Vacant non-residential land is a parcel of land that currently has no buildings or structures on site. These parcels typically have industrial or commercial land uses.
How is vacant non-residential land assessed?
Non-residential vacant land is assessed by comparing one property to other comparable properties that have sold; this is called the sales comparison approach.
Factors that influence the value of non-residential vacant land include:
For more information, please see Land Market Trends report.
What is a recreational property?
Recreational properties include, but are not limited to:
- Parks, green spaces, playgrounds and reserves
- Cultural buildings (e.g., theatres, museums, libraries)
- Nature exhibits (e.g., planetariums and zoos)
- Indoor and outdoor sport facilities
- Exhibition grounds (e.g., Stampede grounds)
How are recreational properties assessed?
Recreational properties are typically valued using the cost approach to value, which adds the cost of land to the cost of construction and subtracts the depreciated value to equal the final assessed value. This approach is used for properties that are unique, purpose-built, or have limited market data to lend comparability.
The Marshall and Swift Cost Estimator, which is widely used by the appraisal industry to provide construction cost estimates, is used to value the improvements (buildings or structures) on the property and added to the value of the land. The sales comparison approach is used to develop the land rates.
What is an accommodation property?
An accommodation property is a property that offers lodging, meals, and other services to the public.
Accommodation properties located in similar locations are compared together (e.g., Hotels in the downtown and Beltline areas are not compared with hotels located in suburban areas). Accommodation properties, for assessment purposes, are further classified into three hotel sub-property types:
There are also several different space types that can exist within an accommodation property:
How are accommodation properties assessed?
Accommodation properties are typically assessed using the income approach to value, which estimates the value of a property based on the income it generates. This approach to assessing accommodation properties is unique as it is based on the property’s specific financial performance over a 3-year timeframe.
- Each year The City of Calgary requests income and expense data from all hotel and motel operations through the Assessment Request for Information (ARFI) process.
- The information requested includes a summary of all sources of revenue as well as various expense items.
- The income and expense data is used to derive the assessed value.
The data reported from each property is stabilized using a weighting of:
- 50 percent for the most recent year
- 30 percent for the preceding year
- 20 percent for the last year
A net income for each property is determined based on the stabilized income subject to normalization of typical expenses. The net income is adjusted to remove the business interest of the hotel creating a net income to real estate. The net income to real estate is capitalized to determine a final assessed value.
For more information, please see Accommodation Market Trends report.
What is the Airport?
The Calgary International Airport is a large, diverse and complex parcel located in Calgary's northeast quadrant.
How is the Airport assessed?
Three approaches to value are used for airport properties based on ownership. Each ownership type is assessed using the following approaches.
|Ownership type||Value approaches|
|Ownership type: Calgary Airport Authority Property*||Value approaches: Sales, income and cost|
|Ownership type: Land tenants*||Value approaches: Sales, income and cost|
|Ownership type: Terminal tenants||Value approaches: Income|
*Properties located within the secured perimeter are valued using the cost approach to value, as these buildings are not accessible to the general public and are unable to trade on the open market. The cost approach adds the cost of land to the cost of construction and subtracts the depreciated value to equal the final assessed value.
Vacant land is valued using the sales comparison approach to value, which relies upon sales of similar properties in the real estate market.
Industrial, office and retail portions of the property are typically valued using the income approach to value, which estimates the value of a property based on the income it generates.
Factors affecting the income valuation of airport terminal tenants include:
- Location – number of sites within the airport and where they are physically located.
- Size – area leased in square feet.
- Type of space – retail, food court, office, counter, car rental and storage.
What is a golf course property?
A golf course is an area of land developed for golf, with a series of 9 or 18 holes each including a tee, fairway, green, rough, and hazards.
How are golf courses assessed?
Golf courses are typically valued using the cost approach to value, which adds the cost of land to the cost of construction and subtracts the depreciated value to equal the final assessed value. This approach is used for properties that are unique, purpose-built, or have limited market data to lend comparability.
The main factors in golf course valuations are:
- Course development (e.g., slope rating, length of course, number of sand traps)
- Physical improvements (e.g., club house, maintenance shops).
The Marshall and Swift Cost Estimator, which is widely used by the appraisal industry to provide construction cost estimates, is used to value the improvements (buildings or structures) on the property and added to the cost value of the land. The sales comparison approach is used to develop the land rates.
Golf course location is not a factor in the valuation.
What is an institutional property?
Institutional properties include, but are not limited to:
- Government services buildings (e.g., fire stations, libraries, public works)
- Churches and religious structures
How are institutional properties assessed?
Institutional properties are typically valued using the cost approach to value, which adds the cost of land to the cost of construction and subtracts the depreciated value to equal the final assessed value. The Marshall and Swift Cost Estimator, which is widely used by the appraisal industry to provide construction cost estimates, is used to value the improvements (buildings or structures) on the property and added to the value of the land. The sales comparison approach is used to develop the land rates.
What is farmland?
Under Alberta Regulation 203/2017 (Matters Relating to Assessment and Taxation Regulation) of the Municipal Government Act, a "farming operation” means the raising, production and sale of agricultural products and includes:
- Horticulture, aviculture, apiculture and aquaculture,
- The raising, production and sale of (A) horses, cattle, bison, sheep, swine, goats or other livestock, (B) fur-bearing animals raised in captivity, (C) domestic cervids within the meaning of the Domestic Cervid Industry Regulation (AR 188/2014), or (D) domestic camelids,
- The planting, growing and sale of sod and
- An operation on a parcel of land for which a woodland management plan has been approved by the Woodlot Association of Alberta or a forester registered under Regulated Forestry Profession Act for the production of timber primarily marketed as whole logs, seed cones or Christmas trees, but does not include any operation or activity on land that has been stripped for the purposes of, or in a manner that leaves the land more suitable for, future development.
How is farmland assessed?
Farmland assessments are regulated by the Municipal Government Act which is the law governing all municipalities in Alberta. The valuation standard for farmland assessments is agricultural use value.
- Land that has qualified for farm status will be assessed at a regulated rate, which has been established by the province, and will not be assessed at market value.
- There are certain conditions under the legislation (Matters Relating to Assessment and Taxation (MRAT)) that, if met or are applicable to a particular property, may initiate the incorporation of a portion of the land to be assessed at market value.
How to apply for farmland status
To apply for farmland status:
- An Assessment Request for Information (ARFI) must be completed and submitted.
- Land previously assessed as farmland will receive a farmland ARFI each year.
- Land not previously assessed as farmland may qualify as farmland for the next taxation year if the owner completes a farmland ARFI, depending on the information submitted.
- Note that submission of a farmland ARFI does not guarantee farmland status.
Parcel Size: The parcel size directly influences the associated land value of the property. This is typically measured in square feet or acres.
Land Use: The land use bylaw determines what can be built on a parcel of land. This directly impacts the value of non-residential land.
Influences: To capture the unique characteristics of each parcel, we apply various adjustments to account for nearby influences. These adjustments may add or subtract value from the base land rate. Examples of these influences include (but are not limited to):
- Environmental concerns
Motel: Motels are typically one to three storey buildings with inside or outside entrances to the units and easily accessible parking. The standard units typically include a sleeping room and bathroom with similar decor and design throughout the structure. Common areas are limited as are the amenities offered to guests.
Hotel - limited service: Limited-service hotels typically offer no-frills rooms at modest prices. They are typically multi- storey establishments with interior entrances but containing fewer rooms than full-service hotels. A variety of guest unit styles are offered. However, public areas including food and beverage facilities, pools and spas are usually limited.
Hotel - full service: Full-service hotels provide a variety of guest unit styles, meeting rooms, spacious public areas, and a wide variety of facilities including on-site restaurants, lounges, fitness centres, pools, spas, business centres, shops and parking. Overall, the amenities and services offered to guests typically exceed that of limited-service hotels and motels.
Office: Space that is utilized or intended for typical office use.
Retail: Space that is utilized or intended for typical retail use.
Enclosed parking stalls: Parking located on the ground level and higher in a parking structure that has full or partial protection from the outside elements.
Accommodation: Space that is utilized primarily for lodging purposes.
Pad site: A stand-alone building separate from the hotel located on the same parcel, often with different tenants from the hotel operator.