|
Appeal No. VA97/5/001 AN BINSE LUACHÁLA Edmond & Mary Murphy APPELLANT RE: Licensed Hotel at Lot No. (5 to 8), O'Brien's Place,
B E F O R E JUDGMENT OF THE VALUATION TRIBUNAL By Notice of Appeal dated the 29th day of July 1997 the Appellant appealed against the determination of the Commissioner of Valuation in fixing a rateable valuation of £350 on the above described hereditament. The grounds of appeal as set out in the said Notice are: "1. In comparison to other similar properties and having regard
to the NAV we consider the RV to be excessive. This appeal proceeded by way of an oral hearing which took place in Cork on the 28th January 1998, was adjourned to and recommenced in Dublin on the 16th February 1998. Mr. Nicholas J. McAuliffe ARICS, of Kenneally McAuliffe Rating Consultants and Mr. Gerard O'Mahony, Deloitte & Touche Chartered Accountants appeared on behalf of the Appellants with Mr. Terence Dineen, District Valuer in the Valuation Office appeared on behalf of the Commissioner. In accordance with practice and as required by the Rules of this Tribunal, the parties, prior to the commencement of the hearing had exchanged their précis of evidence and had submitted the same to us. Having taken the oath each Valuer adopted as his evidence in chief his précis. Mr. O'Mahony also having taken the oath dealt with the accounts. From the evidence so tendered the following facts either agreed or as found emerged as being material to this appeal. 1. The property is situated on the south-west side of the town on the N25 to Cork and is within the built up area of the town of Youghal. It comprises a terrace of four 4 storey and part 3 storey Victorian buildings developed over the years as a single entity hotel. The property has been upgraded and refurbished in recent time some of which was ongoing on the date of valuation and a single storey function room has been added to the rear. There is a certain amount of onsite car parking. 2. The accommodation comprises:- Ground Floor First Floor Second Floor The gross floor area is 29,755 sq.ft. including 5,700 sq.ft. on the
third floor. The grading is two star. There is a hotel licence only. 3. The subject appeal to this Tribunal is against the result of a first appeal decision of the Commissioner of Valuation which issued on 24th July 1997 affirming the rateable valuation of £350. 4. Mr. McAuliffe on behalf of the Appellant proposed two bases for his estimation of the net annual value i.e. capital value basis and a turnover basis. In the former he utilised the book value of the property which was incorrectly stated in his précis as £475,000 and was corrected to £464,000 as at the 31st December 1996. This he decapitalised by way of a 7% yield. The resulting figure was reduced by 15% to bring it back to 1988 values and then applying the common factor of 0.5% producing a rateable valuation of £141. On the turnover basis he took the average of the turnover for the years
ended the 31st December 1994, 1995 and 1996 at £548,048 and applied
a net profit to this of 18% - thus giving £105,138. He assumed that
50% was available for rent giving an NAV of £52,564 reduced by 15%
to bring it back to 1988 values that is £44,678 and applied the
fraction of 0.5% to produce an RV of £223. He then averaged the
two figures of rateable valuation and proposed the mean of £182.
(i) The Devonshire Arms Hotel, Youghal - a two-star 25 bedroom hotel
with a rateable valuation of £113 revised in 1988 but not on an
NAV basis. 5. Mr. O'Mahony from Deloitte and Touche, Chartered Accountants spoke to the accounts as included in Mr. McAuliffe's précis. When asked by Mr. Dineen how he instructed Valuers to value hotels he responded that whilst he often gave instructions to value hotels he never gave any instructions on the method to be applied as that was the business of the Valuer. He commented that Valuers always sought the accounts. 6. Mr. Dineen based his NAV on the comparative method applying a rate of £2.35 psf to the gross area of the hotel of 29,755 sq.ft. giving an NAV of £69,924.25 with the agreed fraction of 0.5% giving £349.63. Say RV £350. He argued that the accounts method was not totally appropriate in this
case as the turnover figures particularly when averaged did not reflect
the premises as improved but rather covered the years prior to or during
which improvements were being carried out. (i) Central Hotel Mallow - VA95/1/054 (ii) Hibernian Hotel, Mallow (iii) Hazel Hotel, Thurles (iv) Midleton Park, Hotel (v) Bay View Hotel, Ballycotton 7. Determination 1. Any rent reserved In light of the evidence adduced it is clear that Youghal, while perhaps at the moment enjoying some resurgence, has suffered serious decline in recent years particularly in the tourist industry. The premises comprise old Victorian buildings adapted as a hotel and while extensively renovated in recent years by the present owner nevertheless because of the nature of the construction of the buildings the hereditament will be expensive to maintain, adapt and develop on an ongoing basis. There is no rent reserved in this case. Mr. Dineen has estimated an NAV based on comparisons drawn from the analysis of rateable valuations of other hotels. The majority of the hotels used as comparisons however are in busy market towns with all year round business other than the Bay View Hotel in Ballycotton which is a modern hotel but closed in the winter. The turnover of the subject premises has been provided but it must be acknowledged that it reflects periods either prior to or during the course of the renovations and probably does not fully reflect as yet, the business that can be generated by the improved premises. Mr. McAuliffe's use of the book value of the premises as a base to derive an NAV is in our opinion seriously flawed as it represents only the purchase price of the property and additions over the years. The property has never been revalued for the accounts and therefore the net book value may or may not equate to the market value of the property. However in fairness Mr. McAuliffe when asked did provide an opinion of the market value at the 31st December 1996 in the sum of £550,000. Mr. McAuliffe's decapitalisation of the capital value at 7% appears low in light of the risk of such an undertaking and the nature of the building. Having regard to the foregoing and the evidence adduced by the parties the Tribunal determines the rateable valuation at £290 calculated using the methods as follows; Turnover to the year ended 31/12/96 £739,436 Alternatively:- Say £290.
|