Contamination of Kamloops property not a reason to reduce its assessed value, panel rules

Kamloops, B.C., is seen from the CTV News Vancouver drone on May 23, 2022.

The owners of a one-acre property in downtown Kamloops that has been home to an automotive service garage since the 1970s have had their efforts to reduce the property's assessed value due to contamination on the site rejected.

Warrington PCI Management, Dundee Realty Management Corporation and Whiterock Real Estate Investment Trust brought their case to B.C.'s Property Assessment Appeal Board, arguing that the property's assessed values dating back to 2012 were all too high.

The central reason for the appeal, as laid out in a lengthy decision issued by a PAAB panel last week, was the owners' desire to sell the property for its maximum value and honour the wishes of former owner Milan Ilich, who died in 2011. 

According to the property owners, attempts were made to sell the property from 2009 to 2011, but those attempts fell through because of the site's contamination.

The property is located at 690 Lansdowne St. and is currently leased to Fountain Tire.

From the 1920s until the 1970s, the property was operated by Canadian Pacific Railway. During that time, it was contaminated with "a petroleum hydrocarbon plume" caused by "above-ground or from underground fuel storage tanks," according to the decision.

The owners have been working to remediate the contamination and obtain a Certificate of Compliance (CoC) from the provincial Environment Ministry, the thinking being that doing so will make the property more valuable to prospective buyers.

In the meantime, the assessment appeal sought to account for the cost of remediation and the contamination's effect on buyers' willingness to purchase the property by reducing its assessed value.

The owners and the provincial assessor for the Kamloops area agreed on nearly all of the facts of the case, according to the panel's decision, but they reached different conclusions about how – or if – the contamination should change the value of the property.

The assessor argued that because the parties agree that a service garage is the highest and best use for the property, and because that use is not impaired by the contamination, there was no reason to discount the assessed value of the property.

Further, the assessor argued that obtaining a CoC was a choice the owners were making, not a requirement, and therefore should not factor into the assessment.

The panel agreed with this perspective, writing in its decision that the owners had not been ordered to remediate the site, and that remediation was not necessary to continue the current use, which is the property's highest and best.

"The fact that the 2011 attempts to sell the subject (property) failed because the purchaser at that time required a CoC and one could not be obtained, does not indicate that other purchasers would require a CoC," the panel wrote in its decision.

"It also does not take away from the fact that the subject (property) has value to the owner in its current use."