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Appeal No. VA07/3/070
AN BINSE LUACHÁLA Irish Nightclubs & Leisure Ltd. APPELLANT RE: Discotheque, Licensed Shop, Night Club at Lot No:
1.2.2b (Discotheque), B E F O R E JUDGMENT OF THE VALUATION TRIBUNAL By Notice of Appeal dated the 15th day of August, 2007 the appellant appealed against the determination of the Commissioner of Valuation in fixing a rateable valuation of €700.00 on the above described relevant property. The grounds of Appeal as set out in the Notice of Appeal are: "On the basis that the RV as assessed is excessive & inequitable and not in accordance with the established tone of the list. The RV is totally at variance with the relative worth of the property when it is fairly compared with similar establishments locally." The appeal proceeded by way of an oral hearing, which took place in the Offices of the Valuation Tribunal, Ormond House, Ormond Quay, Dublin 7, on the 24th day of October, 2007. The appellant was represented by Mr. Eamonn Halpin, BSc. (Surveying), MRICS, MIAVI, of Eamonn Halpin & Co. Ltd. Mr. Halpin introduced his client, Mrs. Mezzalie McGarry. The respondent was represented by Mr. Bríain Ó'Floinn, a District Valuer in the Valuation Office. In accordance with the Rules of the Tribunal, the parties had exchanged their respective précis of evidence prior to the commencement of the hearing and submitted same to this Tribunal. At the oral hearing, both parties, having taken the oath, adopted their précis as being their evidence-in-chief. This evidence was supplemented by additional evidence given either directly or via cross-examination. From the evidence so tendered, the following emerged as being the facts relevant and material to this appeal. At issue The Property The building is located fronting onto Kempten Promenade adjacent to the river in Sligo town. Tenure Services Areas Ground Floor Valuation History
Appellant's Case 1. The club trades just one night per week for various reasons. Mr. Halpin provided the Tribunal with two comparison properties, as noted above, which were common comparisons with the respondent: namely Comparison No. 1 - Envy Nightclub and No. 2 - Toffs. In addition, he offered a third comparison property, a nightclub in the basement of the Adelaide licensed premises and restaurant, which is again located in Sligo, adjacent to the Tesco Car Park at Wine Street. The details of the foregoing were set out on page 7 of his précis, attached at Appendix 1 hereto. Mr. Halpin, in calculating the net annual value of the subject, applied a rate per sq. metre of €109.34 on the nightclub only area of the ground floor, which he calculated at 402.7 sq. metres, and a rate of €54.68 on the nightclub only area of the first floor, which he calculated at 394.48 sq. metres. He then added the different rates for the ground floor entrance and cloakroom, the wash-up area, the mezzanine store, the mezzanine over the cloakroom, and the store, all as set out on page 9 of his précis, which had been revised, corrected and re-submitted by him at date of hearing, attached at Appendix 2 to this judgment. The foregoing exercise resulted in a net annual value on the subject premises, [but excluding toilet areas and stairs] of €72,615, producing a RV figure of €363. Mr. Halpin then reduced this figure to €330 to reflect the "tone of the list". Contending that the Commissioner had erred by establishing an RV of €700 and that the approach adopted by the Revision Officer to calculate the net annual value and resultant RV was flawed and unfair to the appellant, Mr. Halpin reminded the Tribunal of the issues that led to a decision by the appellant to operate The Velvet Rooms nightclub for one night of the week only. He stressed that the target market is one of mature adults seeking a high level of comfort and entertainment in a safe and up-market environment, furnished, fitted and decorated to the highest of standards. Cross-examination by Mr. Ó'Floinn 1. The nature, location and fit-out of the three comparisons cited by
him; In replying to these questions Mr. Halpin steadfastly argued that the
Commissioner and the Revision Officer had erred by not following section
49 of the Valuation Act, 2001 and then by failing to adopt the "tone
of the list" established in the rating authority area from properties
whose values were on the Valuation List at date of revision. Respondent's Case He also recounted from his précis section 48(1), (2) & (3) and section 49(1) & (2)(b) of the Valuation Act, 2001 and then referring to previous agreements and comparisons made to recently revised comparable properties in the Sligo area, outlined two bases adopted by him to reach a rateable valuation figure of €700 as certified by the Commissioner on the subject property. His first method followed an approach to determine the net annual value
adjusted to 1988 levels by reference to the turnover achieved in the cloakroom,
on beverages, and admissions receipts, as set out on page 7 of his précis,
and concluding with a calculated net annual value of €155,250. This
resulted in an RV figure of €776, which Mr. Ó'Floinn then
revised down to €700 having regard to comparables cited by him. The foregoing capital cost approach, he declared, was supported by the Tribunal decision in VA97/2/009 - Ulster Bank (Terenure Road East). These aforementioned methods and calculations, as set out on page 7 and 8 of his précis, are attached hereto as Appendix 3. Mr. Ó'Floinn then addressed the comparisons set out in section 5 of his précis, Appendix 4 hereto, namely Toffs with an RV of €431.71 (originally IR£340), and The Belfry with an RV of €126.97, both taken together as one comparison property. Describing them as a discotheque, snooker rooms, restaurant and bar, with a capacity for 1,200 persons, Mr. Ó'Floinn indicated that Toffs was last valued in 1999, following First Appeal, the basis of which, set out in summary in his précis, established the net annual value by adopting a rate per square metre approach. He also referred to an alternative analysis calculated by the Appeal Valuer, based on the turnover method for the bar, lounge and disco, adjusted to 1988, with an add back for the restaurant and functions areas. The resultant proposed RV amounted to a figure of €524 at the time. However, Mr Ó'Floinn advised that the Valuer at that time proposed the adoption of the foregoing lower RV. Mr Ó'Floinn summarised similar approaches adopted in 1988 on The Belfry which has since been integrated under the combined name of Toffs, but stated that the RV remained set on revision. Referring to his second comparison, Envy nightclub with a capacity of 1,000 persons, he stated that the changes which led to the Revision of 2005 were considered insignificant and, accordingly, the RV established in 1994 remained unchanged at €330. However, in reviewing the history and file notes, Mr Ó'Floinn indicated that, at the time the Revision Valuer first looked at passing rent and expenditures incurred by the tenant on improvements to that premises, 50% of which was apportioned to structure and the remainder to fittings. These were then decapitalised over a twenty-five year period at a rate of 10% pa. The resultant figure was then added to the rent, producing a net annual value which, by applying the reduction factor of 0.5%, resulted in an RV of €672.96. Mr. Ó'Floinn then indicated that the Revision Valuer at the time carried out a second valuation exercise on the property by reference to a rate per square metre applying to four areas within the premises, which produced a proposed RV of €253.95. However, the Valuer then concluded that no change was necessary to the existing RV of €330 at the time. Cross-examination by Mr. Halpin Mr. Halpin also disputed and challenged the Rental Gross figures outlined by Mr. Ó'Floinn in his submission on Envy nightclub. Concluding remarks Postscript to Hearing Findings 1. The total area, agreed by both parties, of the subject relevant property is 1,119.91 sq. metres. 2. Agreement between the parties was not found on the total area to be considered for rating purposes. 3. The appellant valued 956.79 sq. metres. as the total area of the premises to be valued, having excluded the two smoking areas of 86.54 sq. metres and 41.99 sq. metres, and three "disputed" areas of 9.75, 12.45 and 12.39 sq. metres. The respondent valued the entire floor area of 1,119.91 sq. metres. 4. Mr. Halpin adopted an approach to valuation by reference to a rate per square metre to calculate net annual value and then computed an RV of €375, reduced to €330 to reflect his view of the 'tone of the list'. 5. The respondent did not apply a rate per square metre to determine the net annual value, and declared an RV of €770, reduced to €700, having regard to comparables outlined in his précis of evidence. 6. Mr. Halpin's calculations relied upon a range of five levels of rate per square metre, ranging from €27.34 in the mezzanine areas to €109.34 per square metre in the nightclub areas. 7. The rates per square metre on the common comparison of the Envy club varied between the parties in their submissions, and such differences were not explained, or how such rates were arrived at. 8. Conversely, the rates of €101.57 and €10 per square metre applied on the bar/nightclub and kitchen area respectively of the common comparison property known as Toffs, were agreed by both parties, but these rates per sq. metre did not compare with those employed by Mr. Halpin in his submission made on the subject property. 9. The Commissioner used two approaches to establish net annual value of the relevant property, firstly, a turnover method, which indicated an RV of €770, reduced as noted above to €700, and secondly, a capital cost method which indicated an appropriate RV of €823.29, but also reduced to an RV of €700. Both methodologies appear to be at odds with the Commissioner's own comparisons which appear to have been finally valued on a rate per square metre basis, notwithstanding rateable valuations appearing to have been calculated by different methods in some cases, but not adopted. 10. The appellant's methodology is considered in this case to be consistent with the requirements of section 49 of the Valuation Act, 2001, and the 'tone of the list'. However, the Tribunal believes that the expenditures made on tenant improvements should be reflected in the applicable rate per square metre levels. 11. The Commissioner's methodologies are considered unsafe because none of the comparisons were finally valued on either the turnover or capital cost method as noted earlier. Both Toffs and the Belfry had their RV initially based on turnover, but then the Revision Officer adopted a rate per square metre calculation. At the Envy nightclub, the rent and tenant improvements were considered by the Revision Officer and resulted in an RV of €672.96, whereas a rate per square metre approach resulted in a calculated RV of €253.95, but a final RV of €330 was finally adopted. 12. This Tribunal is mindful of the decisions taken in VA06/2/045 - Orange Tree Ltd., and VA06/3/015 & 016, VA06/3/018 & 019 - Carphone Warehouse, Denholme Ltd, Power Leisure PLC, & Hickeys Pharmacy Limited. and concurs with the conclusions adopted therein with regard to the interpretation of section 49 of the Valuation Act, 2001, and the considerations given to the 'tone of the list'. 13. The Tribunal does not agree to the exclusion of the smoking areas and/or disputed areas (A), (B) & (C) as contended for by the appellant, and accordingly considers the area to be valued for rating purposes as a total of 1,119.91 square metres. Determination 1,119.91 metres @ €94 per square metre = NAV €105,271.54 And the Tribunal so determines.
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