Tribunals Ontario
Tribunaux décisionnels Ontario
Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE: March 14, 2022
Assessed Person(s): Canadian Niagara Hotels Inc.
Appellant(s): Canadian Niagara Hotels Inc.; Robert Agopian
Respondent(s): Municipal Property Assessment Corporation Region 18
Respondent(s): City of Niagara Falls
Property Location(s): 5685 Falls Avenue
Municipality(ies): City of Niagara Falls
Roll Number(s): 2725-030-002-04000-0000
Appeal Number(s): See Schedule A
Taxation Year(s): See Schedule A
Hearing Event No.: 760064
Legislative Authority: Section 33 and 40 of the Assessment Act, R.S.O. 1990, c. A.31
APPEARANCES:
Parties
Counsel
Canadian Niagara Hotels Inc. and Robert Agopian
Mark Blidner
Municipal Property Assessment Corporation
Francis X. Shea
City of Niagara Falls
John L. O’Kane
REQUEST FOR: An order for disclosure
HEARD: February 15, 2022 in writing
ADJUDICATOR(S): Carly Stringer, Member
MOTION DECISION
OVERVIEW
1The City of Niagara Falls (the “City”) is responding to appeals filed with the Assessment Review Board (the “Board”) by Canadian Niagara Hotels Inc. (the “Appellant”) with respect to the assessments of 5685 Falls Avenue in Niagara Falls (the “Subject Property”) for the 2015 to 2021 taxation years.
2The City has brought this motion seeking an Order for disclosure pursuant to Rule 45 of the Board’s Rules of Practice and Procedure (“Rules”). The City seeks the disclosure outlined in Attachment 1 (“Disclosure Requests”) from both the Appellant and the Municipal Property Assessment Corporation (“MPAC”), the other respondent in the proceeding.
3The Appellant opposes the motion.
4MPAC does not object to the City’s Disclosure Requests. However, given the Appellant’s opposition, MPAC will not disclose documents in its possession until so ordered by the Board.
Result
5For the reasons that follow, the Board grants the City’s motion for disclosure in part. The Board’s specific disposition for each Disclosure Request is set out in the Board’s findings below. The Board will grant an extension to the Schedule of Events (“SOE”) to accommodate this motion and its outcome.
BACKGROUND
The Subject Property
6The Subject Property is a six-storey parking garage with a rooftop water park. The parking garage was constructed in 1996 and the water park was added in 2005. The parking lot and waterpark are open to the public. The parking lot also serves the nearby Casino Niagara, while both the parking lot and waterpark serve surrounding hotels.
The Returned Assessments
7MPAC originally returned assessments on the parking garage component of the Subject Property for 2015 and 2016 taxation at $4,099,000 and for 2017 taxation at $3,324,000. Subsequently, MPAC issued omitted assessments for the Subject Property to add in the value of the waterpark component of the Subject Property as follows:
2015
2016
2017
Garage $4,099,000
Garage $4,099,000 (CT)
Garage $3,324,000 (CT)
Waterpark $15,317,000
Waterpark $15,317,000
Waterpark $14,989,000
Total $19,416,000
Total $19,416,000
Total $18,313,000
8MPAC originally returned assessments on the Subject Property for 2018 to 2021 taxation at $42,328,000 as follows:
2018
2019
2020
2021
Garage $27,340,00
Garage $27,340,00
Garage $27,340,00
Garage $27,340,00
Waterpark 14,988,000
Waterpark 14,988,000
Waterpark 14,988,000
Waterpark 14,988,000
Total $42,328,000
Total $42,328,000
Total $42,328,000
Total $42,328,000
9MPAC delivered a Notice of Higher Assessment on February 8, 2019, seeking an increase for the 2017, 2018 and 2019 taxation years, as follows:
2017
2018
2019
Garage $27,340,000
Garage $33,339,00
Garage $33,339,00
Waterpark 14,988,000
Waterpark 14,988,000
Waterpark 14,988,000
Total $42,328,000
48,327,000
48,327,000
10For all tax years under appeal, MPAC valued the parking garage component using the income approach, and valued the waterpark portion using the cost approach.
The Subject Appeals
11The Appellant has appealed on the basis that the assessed values are too high. The Appellant seeks current value assessments of $4,099,000 for the 2015 and 2016 taxation years, and current value assessments of $3,324,000 for the 2017 to 2021 taxation years. The Appellant takes the position that both portions of the Subject Property should be valued using the income approach.
12The Appellant’s Statement of Issues asserts that MPAC erred in the valuation of the Subject Property, as follows:
“By failing to reflect that the [Subject P]roperty services and serves as an amenity to the adjacent hotel and casino properties, that are owned by the same entities as the [S]ubject [P]roperty”;
“By failing to reflect that the waterpark serves as an amenity to the surrounding hotels and that the preponderance of revenue generated by the waterpark, is captured in the valuation of the adjacent hotels in their respective valuations”;
“By failing to reflect that the waterpark is not financially viable in the absence of customers sourced from the adjoining hotels owned by the same entities”;
“By failing to reflect that the parking garage was built for the adjoining Casino Niagara (owned by the same entity), that the casino operator has a first call on all parking spaces, at no additional charge beyond the rent paid for the Casino premises, so that the value of the parking garage is already captured in the valuation of the adjacent Casino Niagara”; and
“By failing to reflect that the combined [S]ubject [P]roperty, being the waterpark and parking garage, are not financially viable independent of the amenities/service that they provide to the adjacent hotels and Casino.”
13The Appellant further submits in its SOI that “a prospective purchaser of the [S]ubject [P]roperty would conclude that, in the absence of customers being provided by the adjacent hotels and casino, the [S]ubject [P]roprety has no independent financial viability.”
14The Appellant has also provided a Statement of Evidence and Analysis from its expert. This report includes the following information on page 4:
The current improvements are based upon fulfilling a contractual agreement dating back to the mid 1990s to satisfy the then parking needs of Casino Niagara when it was the only game around. These contractual agreements remain and were last renewed in a June 11, 2019 licencing agreement between the Casino operator and Canadian Niagara Hotels that provide the Casino with the first right to the parking spaces in the parking garage without charge. The “value” of the parking garage is therefore largely captured in the current value of the Casino as that property could not function without parking. The subject property parking garage also serves the surrounding hotels and generates revenue from this as well as day parking. Like the parking garage, the water park is a feature used by the nearby hotels to sell rooms including water park passes as part of a package.
15The Appellant’s expert also opines at page 6 of the Statement of Evidence and Analysis that the Subject Property as a “stand alone entity is not financially feasible and therefore is not improved to its highest and best use.”
16The City has adopted MPAC’s valuations for all taxation years under appeal, as well as MPAC’s Notices of Higher Assessment.
ANALYSIS
Preliminary Matters
17The City asked the Board to schedule this disclosure motion by filing an Expedited Board Direction Form (“EBDF”) with the Board.
18The Appellant submits that, on this motion, the City has expanded on the scope of disclosure it sought in its EBDF. The Appellant submits that this motion should be dismissed in its entirety, however submits in the alternative that the City should be restricted to seeking disclosure of the items raised in its EBDF.
19The Board does not accept this submission. In this instance, the City’s EBDF asked the Board to schedule a disclosure motion, not decide the issue of disclosure. The EBDF requires the submitting party to “provide a brief summary of the relevant background information” relating to the request. It does not require a party to exhaustively outline its legal position on the underlying motion – that function is served by the Notice of Motion and submissions on the motion. Accordingly, the Board does not restrict the City to seeking disclosure of only those items identified in its EBDF.
Motion for Disclosure
Applicable Law
20Rule 45 requires that all parties provide a copy of “…all relevant documents in their possession, control or power to all other parties in the proceeding, except for privileged documents.”
21In determining whether to order disclosure in accordance with Rule 45, the Board applies a two-part test. First, the Board considers whether the information sought is relevant to the issues in dispute. Second, the Board considers whether ordering disclosure is proportionate to the issues in dispute: see Metro Ontario Inc. v Municipal Property Assessment Corporation, Region 13, 2019 CanLII 47974 (ON ARB) (“Metro”), supra at paragraph 11.
22The Board confirmed in Toyota Motor Manufacturing Canada Inc. v Municipal Property Assessment Corporation, 2020 CanLII 77938 (ON ARB) (“Toyota”) at paragraph 13 that “the test for relevance really comes down to whether or not the production of documents requested relates to the issues in dispute. If so, they are relevant.”
23In consultation with stakeholder representatives, the Board has developed and issued a Guideline entitled Disclosure Requirements for General and Summary Proceedings (“Disclosure Guideline”). This Disclosure Guideline includes a Disclosure Schedule Appendix A and B (“Disclosure Schedule”) which sets out a non-exhaustive list of the types of disclosure that are generally accepted as relevant to the various issues that get raised in appeals before the Board.
24Relevance is not the only criteria that the Board will consider when determining whether a document should be disclosed. Rule 4 of the Board’s Rules provides “[t]hese Rules shall be applied in a manner proportionate to the importance and complexity of the issues in a proceeding and with a view to resolving appeals within the assessment cycle.”
25Therefore, the requirement to disclose relevant documents must also be applied in a proportionate manner. As noted by the Board in Toyota, supra at paragraph 15,
In making this determination it is necessary for the Board to consider the competing interests of non-disclosure and, excessive disclosure which may unreasonably increase the cost in a particular case and delay the final resolution of the matter on its merits.
26Although the Rules do not include specific criteria to assess proportionality, the Board has previously applied the criteria enumerated in Rule 29.2.03(1) and (2) of Ontario’s Rules of Civil Procedure: Walmart, supra at paragraph 18. This is considered a non-exhaustive list and other criteria may be considered on a case-by-case basis.
27For each Disclosure Request, the Board will apply the above-noted test for relevance and proportionality.
Disclosure Request No. 1 - Details on any revenue sharing, cost sharing or discounting arrangements of the Subject Property with any or all of the four hotels which make up the Fallsview Waterpark Resort (Clifton Victoria Inn at the Falls, Crowne Plaza Hotel, Sheraton on the Falls, Skyline Inn) and also for Casino Niagara.
Submissions
28The City submits that the Appellant has put in issue that waterpark revenue is captured in the valuation of the adjacent hotels and the Appellant’s expert has asserted that the waterpark is not financially feasible as a standalone structure. The City submits that it is implicit in the pleading and evidence that a revenue-sharing, and cost or discount arrangements, exist among the four commonly owned hotels and with Casino Niagara. The City submits that without this information, its expert will not have all relevant information and it will be prejudiced in making full answer and defence to the Appellant’s case.
29The Appellant has not organized its submissions to be responsive to each Disclosure Request. That said, the Appellant’s submissions that are germane to Disclosure Request No. 1 are as follows:
The Appellant submits that since the City is relying upon the replacement cost approach to valuation of the waterpark, it is unable to establish that the information it is seeking for the Subject Properties or the adjacent hotels or the third properties are relevant to the issues in dispute.
The Appellant further submits that the City has not established that the information sought in relation to the adjacent hotels is germane to the valuation of the parking garage. The Appellant submits that the only relevant information for the purpose of valuing the parking garage is the financial performance of the garage, as evidenced by the income and expense statements relied on by its expert and already produced to MPAC and the City.
The Appellant submits that the City has failed to establish that any of the information it is seeking would ultimately be probative at a hearing, and hence disclosure would not be proportionate.
Findings
30The Board does not accept the Appellant’s submission that the City has failed to prove relevance simply because the City does not rely on an income approach in valuing the waterpark. Relevance really comes down to whether or not the disclosure of documents relates to the issues in dispute more broadly – not just the issues advanced by the party seeking disclosure.
31In this instance, the Appellant has put the income approach in issue in relation to the waterpark, which is sufficient. Further, the Appellant has explicitly put in issue that the waterpark and parking garage serves the surrounding hotels; that the preponderance of revenues generated are captured in the valuation of the adjacent hotels; that the Subject Property operates at a loss; that the Subject Property’s current use is not its highest and best use; and that the Subject Property has no financial viability without the adjacent hotels and casino. The Appellant’s expert has provided evidence in relation to the Appellant’s Income and Expense Statements, which include references to “discount” arrangements.
32Further, the City relies on the income approach in valuing the parking lot. The Board accepts the evidence from the City’s expert that he requires this information to conduct his valuation assignment, including evaluating the evidence provided by the Appellant’s expert.
33In all of these circumstances, the Board finds the items requested as part of Disclosure Request No. 1 are relevant.
34With respect to proportionality, the Board does not accept that the City has failed to prove proportionality because it has not shown that the information requested would be probative at a hearing. There are various items to consider when determining the proportionality of a disclosure request, and whether or not a document would be probative at a hearing is not determinative. In this instance, the Board finds the City has satisfied it that Disclosure Request No. 1 is proportionate in light of the following:
The City has limited its request to the years impacting the valuation dates of January 1, 2012 and January 1, 2016.
The City is requesting disclosure that is in either MPAC or the Appellant’s possession, power and control. The City is not asking for disclosure from unrelated third parties, and the information requested is tailored to the Subject Property’s operations.
There is no evidence before the Board to suggest that the time required to produce this information would be unreasonable; that the expense would be unjustified; that answering the request would cause undue prejudice; or that it would result in an excessive volume of documents.
35The Board is satisfied that Disclosure Request No. 1 is relevant and proportionate. The Board grants Disclosure Request No. 1.
Disclosure Request No. 2 - A copy of the leases and/or licensing agreements between the Casino operator and CNHI.
Submissions:
36The City submits that the Appellant has put in issue that parking garage revenue is captured in the valuation of the adjacent hotels. The City further submits that the Appellant’s expert has asserted that the parking garage has several distinct revenue lines, being Casino Niagara, the adjoining hotels, and day parking. The City submits that implicit in the pleadings and evidence is that lease/licensing agreements between the Appellant and the Casino operator impact the revenues and costs of the parking garage.
37As noted above, the Appellant has not organized its submissions to be responsive to each Disclosure Request. The Appellant’s submissions that are germane to Disclosure Request No. 2 are the same as Disclosure Request No. 1.
Findings
38The Board finds that Disclosure Request No. 2 is relevant because:
The Appellant’s evidence and position is that the current improvements are based on a contract from the mid-90s to address Casino Niagara’s parking needs, and that the contractual obligations were last renewed in a June 11, 2019 licensing agreement between the Casino Operator and the Appellant.
The Appellant’s evidence and position is that the “value” of the parking garage is therefore largely captured in the current value of the Casino as that property could not function without parking.
The nature of the agreement between the Appellant and Casino Niagara as a user of the parking garage is relevant to inputs of the income approach, particularly in relation to income.
39Overall, the Appellant has put the licensing agreement between it and the Casino Operator in issue, and as such it is relevant.
40With respect to proportionality, the City has not narrowed its request to reflect only copies of the leases and/or licensing agreements between the Casino operator and the Appellant relating to the Subject Property. While the Board is not required to narrow the scope of any disclosure requests and it is incumbent on the parties to word their requests appropriately, the Board is prepared to read into Disclosure Request No. 2 that it only relates to any leases and/or licensing agreements between the Casino operator and the Appellant relating to the Subject Property. With this amendment, and in the absence of any evidence regarding the time required to answer this request, the volume of documents, undue prejudice, or any similar factors, the Board finds the City has satisfied it that Disclosure Request No. 2 is proportionate.
41In this regard, the Board grants Disclosure Request No. 2 as amended.
Disclosure Request No. 3 - For each of the years, the activity log(s) for the parking garage, indicating how many vehicles are parked by day (or week or month). This would include and be broken down by “off the street” parking, hotel parking including valet parking, and parking from the Casino.
Submissions
42The City submits that the Appellant has pleaded that the parking garage was built for the adjoining Casino Niagara and that the parking garage is an “amenity to the adjacent hotel and casino properties, that are owned by the same entities as the subject property”. The Appellant’s expert also states that the parking garage serves the surrounding hotels and generates revenue from this as well as day parking. The Appellant has taken the income approach to calculating current value. The City submits that the logs of parking activity from the several sources of revenue will be required to develop an accurate estimate of Potential Gross Income and Effective Gross Income of the parking garage.
43As noted above, the Appellant has not divided its submissions in relation to each Disclosure Request. The Appellant’s submissions in relation to Disclosure Request No. 1 apply. Further, the Appellant submits that the actual revenue achieved by the parking garage as analyzed over five years is the overriding data to be used in any valuation, not what a posted rate might be at any particular point in time.
Findings
44As noted above, the income approach is in issue. While the Appellant may have provided some income and expense information, that does not make other income and expense information suddenly irrelevant. The Board accepts the City’s evidence from its expert that information regarding how many vehicles are parked by day (or week or month) will inform the inputs to the income approach, including Potential Gross Income and Effective Gross Income, allowing the City’s expert to determine if the Appellant’s expert has understated components in its income approach valuation. In these circumstances, the Board finds that the items requested as Disclosure Request No. 3 are relevant.
45With respect to proportionality, the City has narrowed its request to the years at issue. There is no evidence from the Appellant regarding the time required; the expense; undue prejudice; or volume of documents. Accordingly, the Board finds the request is reasonable and proportionate.
46Accordingly, the Board grants Disclosure Request No. 3.
Disclosure Request No. 4: For each of the years, the parking rates charged, including charges for the public, hotel, and valet parking.
Submissions
47The City repeats the same submissions it made in relation to Disclosure Request No. 3.
48The Appellant has not divided its submissions in relation to each Disclosure Request. However, the Appellant’s submissions in relation toDisclosure Request No. 3 apply.
Findings
49The Board repeats and relies upon its findings in relation to Disclosure Request No. 3.
50The Board grants Disclosure Request No. 4
Disclosure Request No. 5: For the years 2014, 2015 and 2016, financial statements (income statement, statement of cash flows, and balance sheets) for the CNHI Group, including a breakdown showing how the revenues and expenses are allocated between the subject and associated properties.
Submissions
51The City submits that the Appellant has put in issue the financial viability of the Subject Property independent of the value the Subject Property provides to the hotels and casino. The City submits that implicit in this pleading is the financial and operational interdependence of the Subject Property and the hotels/casino.
52The Appellant submits that the 25 or more corporate entities that comprise the CNHI Group are not parties to the subject appeals and any requests for disclosure of financial information by the CNHI Group must fail on that basis alone, as the Board has no jurisdiction to make a disclosure order against them. The Appellant submits the City has failed to establish a nexus between the business operations of these various entities, that include non-related retail operations, restaurants, specialty shops, other hotels in other jurisdictions, rental properties, etc., as being relevant to the valuation of the Subject Property.
Findings
53The City has broadly requested disclosure relating to the “CNHI Group” and “associated properties.” The “CNHI Group” is not a party to this appeal. The City has not provided sufficient evidence for the Board to understand the relationship between the Appellant and the “CNHI Group”, if any. Further, the City has not sufficient itemized the “associated properties” so that the Board can properly understand the scope of the request. In the circumstances, the Board finds that Disclosure Request No. 5 is too broadly worded and is not proportionate.
54The Board does not grant Disclosure Request No. 5.
CONCLUSION
55The Board finds that Disclosure Request No. 1, 2 (as amended), 3 and 4 are relevant and proportionate to the issues in dispute. The Board finds that Disclosure Request No. 5 is not proportionate.
ORDER
56The motion for disclosure is granted, in part, and the Board orders the Appellant and MPAC to disclose as follows in relation to documents for the 2012 CVA cycle (2010, 2011, 2012, 2013, 2014, 2015 and 2016 taxation years) and the 2016 CVA cycle (2017, 2018 and 2019 taxation years):
In relation to Disclosure Request No. 1, the Appellant and MPAC are required to disclose details on any revenue sharing, cost sharing or discounting arrangements of the Subject Property with any or all of the four hotels which make up the Fallsview Waterpark Resort (Clifton Victoria Inn at the Falls, Crowne Plaza Hotel, Sheraton on the Falls, Skyline Inn) and also for Casino Niagara, to the extent that information is within their possession, power and control.
In relation to Disclosure Request No. 2, the Appellant and MPAC are required to disclose a copy of the leases and/or licensing agreements between the Casino operator and the Appellant relating to the Subject Property, to the extent that information is within their possession, power and control.
In relation to Disclosure Request No. 3, the Appellant and MPAC are required to disclose, for each of the years, the activity log(s) for the parking garage, indicating how many vehicles are parked by day (or week or month), to the extent that information is within their possession, power and control. This would include and be broken down by “off the street” parking, hotel parking including valet parking, and parking from the Casino.
In relation to Disclosure Request No. 4, the Appellant and MPAC are required to disclose, for each of the years, the parking rates charged, including charges for the public, hotel, and valet parking, to the extent that information is within their possession, power and control.
57The Appellant and MPAC are directed to provide this disclosure no later than 30 days after the issuance of this motion decision.
58The Schedule of Events requires an adjustment to accommodate this motion and its outcome, although the parties have not provided the Board with any proposed timelines. Accordingly, the Board orders that the due date for MPAC to provide its Statement of Response and any additional supporting disclosure is extended to 60 days after the Appellant has complied with its disclosure obligations in accordance with this motion decision. All other subsequent due dates are to be adjusted accordingly. The Board’s Case Coordinator will advise the parties of the specific due dates.
"Carly Stringer"
CARLY STRINGER
MEMBER
Assessment Review Board
Website: www.tribunalsontario.ca/arb
Attachment 1
Disclosure Requests
The City seeks an order for disclosure of the following documents for the 2012 CVA cycle (2010, 2011, 2012, 2013, 2014, 2015 and 2016 taxation years) and the 2016 CVA cycle (2017, 2018 and 2019 taxation years):
Disclosure Request No. 1: Details on any revenue sharing, cost sharing or discounting arrangements of the Subject Property with any or all of the four hotels which make up the Fallsview Waterpark Resort (Clifton Victoria Inn at the Falls, Crowne Plaza Hotel, Sheraton on the Falls, Skyline Inn) and also for Casino Niagara.
Disclosure Request No. 2: A copy of the leases and/or licensing agreements between the Casino operator and CNHI.
Disclosure Request No. 3: For each of the years, the activity log(s) for the parking garage, indicating how many vehicles are parked by day (or week or month). This would include and be broken down by “off the street” parking, hotel parking including valet parking, and parking from the Casino.
Disclosure Request No. 4: For each of the years, the parking rates charged, including charges for the public, hotel, and valet parking.
Disclosure Request No. 5: For the years 2014, 2015 and 2016, financial statements (income statement, statement of cash flows, and balance sheets) for the CNHI Group, including a breakdown showing how the revenues and expenses are allocated between the subject and associated properties.
Schedule A