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Appeal No. VA02/2/070 AN BINSE LUACHÁLA Bundoran Cineplex Limited APPELLANT RE: Cinema at Map Reference: 3A Drumacrin, Bundoran Urban, County
Donegal B E F O R E JUDGMENT OF THE VALUATION TRIBUNAL By Notice of Appeal dated the 23 April 2002, the appellant
against the determination of the Commissioner of Valuation in fixing
a rateable valuation of €457.11 on above described relevant property. In accordance with the Rules of the Tribunal, the parties had prior to the commencement of the hearing exchanged their précis of evidence and submitted the same to this Tribunal. At the oral hearing both valuers having taken the oath, adopted their précis as being their evidence in chief. Property Location Description Valuation History Agreed Floor Area Gross Internal Appellant's Case Because of the competition from other cinemas in the surrounding area he felt that in order to create an impact he had to do more than build a four-screen cinema. He felt that the business in Bundoran was very seasonal with July and August being their peak period as well as Easter and October Bank Holiday weekends. In order to cope with peak times, he made the decision to build a Cineplex in order to impress the Film Companies so as to get top class product so that they could function. He claimed that at present they were making a loss every night. He also stated that the repayments were arranged on a percentage scale and therefore they would not lose as much money during the winter months. In reply to Mr. Hickey regarding the location of the cinema, Mr O'Connell stated the site of the cinema was formerly a railway station which had been disused since the 1950s, had been a holiday car park in the 1970s and had fallen into disrepair. As the property adjoined his family property, it was in his interest to develop it. In doing this he had to construct two new roads by agreement with the County Council because it is totally off the main thoroughfare and is the only commercial property in the area. Mr Hickey asked Mr O'Connell to comment on the respondent's three comparisons. With regard to the cinema in Cavan, Mr O Connell stated that as it was located in the middle of a busy town beside Dunnes Stores and because the building is constructed with several units for letting within the building, it would have an all year round business. In regard to Letterkenny, this cinema is the main tenant in a big new development in the centre of the town. The town also has a third level facility and it was his view that Letterkenny's turnover would be five times that of Bundoran. With regard to the Sligo cinema, he stated that this opened as a seven-screen cinema and such was the demand that it now had twelve screens which indicates the business they are doing. He replied to Mr Hickey regarding an interview which he had given to "The Donegal Democrat" on the 31/01/02, wherein he stated that his six screen Cineplex was going from strength to strength ( a copy of which attached to Mr Hicks précis). Mr. O'Connell claimed he would always give a favourable response to publicity. He stated that he would disagree with Mr Hicks' interpretation of Bundoran being the Mecca of the North West. Under cross-examination by Counsel for the respondent, Mr O'Connell stated that he would be prepared to make his accounts available for the subject property if requested. With regard to the number of seats, Mr O'Connell said there were 950 seats. However, he felt that because the valuer was using a sq.m. basis of valuation for this property and not seat numbers, seat numbers were not important. He stated that because of the poor location of the cinema, he was unable to compete with other amenities in prime locations in the town. In reply to the Chairman as to the basis for Mr O'Connell's assertion that the numbers attending Letterkenny cinema would be five times that attending Bundoran, Mr O'Connell replied that the population of Letterkenny was five times that of Bundoran and in logic he felt that the cinema going public would reflect this differential. He said that this was his opinion rather than a scientific fact. Mr O'Connell said that the article in "The Donegal Democrat" was publicity for his business and he was going to give the best impression possible. Mr Alan McMillan, adopted his précis as his evidence and commented on the premises and area as follows: • He stated that Bundoran is a well-known tourist
destination and business is, therefore, highly seasonal. Sligo(Gaiety) is valued (1998/4 Revision - €546)
as follows: The nearest rival Cineplex to Sligo is Castlebar (80km) or Longford (90km). In contrast, Bundoran with its restricted hinterland faces competition from Ballyshannon (8km) and Enniskillen (42km). He stated that the phenomenon of Cineplex's has been confined to the densely populated suburban areas, major cities and significant provincial town centre locations, often with designation available. He said that either way there are usually complimentary facilities either offered or available adjacent. Bundoran is the exception to this model and, he submitted, must be distinguished on that account. To support his determination, he gave in tabular form
an analysis of four cinemas [Sligo @ €67.50psm, Letterkenny @ €63.50psm,
Lifford @ €40.20psm and Monaghan @ €46.37psm]. In reply to
Mr. Hickey regarding Sligo Cineplex as a comparison, Mr McMillan stated
that geographically it was one of the cinemas closest to Bundoran but
that it had a vastly superior market because of location and population.
With regard to Letterkenny, which he stated was the fastest growing
town in the country, this again has a superior location and a much larger
customer base. Regarding Lifford, this cinema serves Strabane (population
approx. 15,000)which again increases its customer base substantially
and it is not seasonal. Monaghan has a smaller ground floor area but
a much larger customer base, also benefiting from a cross border trade.
The Respondent's Evidence With regard to the seasonal nature of Bundoran, he said that Bundoran gets a huge boost in the summer and he said it was one of the nightlife capitals of Donegal with a six-fold increase in population during the summer months. This was instanced by the fact that Bundoran has eight hotels and several caravan parks and guesthouses. Commenting on a Bundoran web site, he stated that according to the web site the population increases to 20,000 during the summer. Regarding the location of the Cineplex, he stated that
it was normal for a cinema not to be on the high street, that it has
easy access and fronts the new town centre car park which is free. Mr Hicks replied to Ms Quinn as to whether he could stand over his claim that there was a differential of 11% and 6% between the valuation of properties in Letterkenny and the valuation placed on similar properties in Bundoran. He stated that he was very familiar with this area, having valued more than forty premises in Bundoran and hundreds in Letterkenny and also the other towns mentioned. He stated that there were also three Tribunal decisions on properties in Bundoran and all those supported his view that there is a difference of about 10% between Bundoran and Letterkenny on similar properties. He stated that having given this case a lot of consideration, he had come to the opinion that Letterkenny was the best comparison because it was a stand alone cinema on its own site as against a building which shares space or is attached to other properties as the others are. The only difference is that Letterkenny has its own car park and that he had conceded that this car park should be valued separately. He accepted that the value put on car spaces by Mr Mc Millan was reasonable and he would accept and re- analyse his figures on that basis. With regard to his three comparisons and the comparisons
of Mr Mc Millan, he stated that there was a wide range in valuations
and because of this divergence, he felt that the best comparison was
Letterkenny and he felt that a level of €60 psm was the correct
figure for Bundoran. Under cross examination by Mr Hickey he agreed
that Bundoran would not benefit from passing trade but that people went
there for leisure reasons. Mr Hicks stated that he understood that all
the hotels remain open during the winter months which he felt was an
indication that business was carried on during the winter. However he
was unable to deny Mr O'Connell's claim that three Hotels closed Monday
to Friday in winter and that one closed completely until March. With regard to Lifford, Mr Hicks said that from his knowledge
of the town it was very poor from a business point of view, that a derelict
site remained uncleared following a hotel fire some years ago and that
he had never found any property to rent in the town. Regarding Monaghan
cinema, Mr Hicks stated it was very hard to come to any conclusion about
that. He stated that Mr McMillan seemed very sure about floor area,
lay out and design of Monaghan at this stage but that no such information
was produced to the Commissioner. He said that it was not appropriate
to produce such evidence now when it was not given at the time the valuation
was assessed several years ago. In reply to the Chairman, Mr Hicks stated
that he would not agree with Mr Mc Millan that 48sq.m of the first floor
was void. He felt it was very usable space. The Tribunal considers that business in Bundoran is highly seasonal, that the town has no adjacent complimentary facilities and that the lack of passing trade leaves the property concerned at a disadvantage when compared to other cinemas. However, the Tribunal is also aware of the huge increase in population during the summer months that brings its own benefits. The Tribunal in assessing the valuation has included all the area on the first floor as usable space as per the respondent's analysis of the rateable valuation. The Tribunal therefore, having regard to these factors, determines the rateable valuation on the subject property as follows: 1462 sq.m @ €50 per sq.m = €73,100 R.V. = €381.55 Say €380 |