Tim Hortons founder spent up to $10 million a year to subsidize his luxury hotel in Nova Scotia
How do you value a property when there is no other like it?
It’s at the heart of a dispute between the Fox Harb’r Resort on the Northumberland Strait and Nova Scotia tax assessors.
The owners say a $19.9 million valuation used for property tax purposes is far too high given the complex’s huge losses, which run into the millions every year.
“The appraisal does not correctly reflect market value as of the prescribed date,” said Fox Harb’r Development Ltd. in its latest appeal, filed this week with the Nova Scotia Utility and Review Board.
The resort is not happy with the reduction in its 2020 assessment issued by the Nova Scotia Assessment Appeal Tribunal last month.
The court dropped the valuation from $21 million to $19.9 million, but still well above the $5.7 million that Fox Harb’r Development said it was worth.
Fox Harb’r synonymous with luxury
The 401-hectare gated resort has become synonymous with luxury in Nova Scotia since it opened in 2000.
The magnificent facility includes a championship golf course, marina, private jet runway and hangar, vineyard, stables and pheasant sanctuary.
Ron Joyce, the billionaire co-founder of coffeehouse and fast-food chain Tim Hortons, developed the resort near his hometown of Tatamagouche.
Records from the tax dispute reveal that until his death in 2019, Joyce underwrote operating losses, which peaked at $8 million to $10 million a year.
His heirs’ managers reduced the losses to $1.5 million to $2 million a year, according to evidence filed on appeal.
To break even, they are building new homes and planning a 48-unit development.
A community asset, not an investment
Fox Harb’r says Joyce built the resort as a legacy and community asset, not an investment.
Jeff Cuzner, director of commercial property tax at real estate services firm CBRE, filed a report on behalf of Fox Harb’r’s appeal, saying no potential buyer “would ever consider reproducing the subject matter as ‘it is, given its location and tax performance’.
“Subject location is inferior…Fox Harb’r is located in a remote area with no population center or amenities,” Cuzner wrote.
The owners argued that, as the station has never generated a profit and is dependent on annual grants from the owners to operate, “its value cannot be accurately estimated by its revenues”.
They said a fairer estimate should be based on the sale value of eight other golf properties with accommodations in Nova Scotia and Prince Edward Island.
Fox Harb’r said the most comparable properties were Glen Arbor in Halifax, valued at $91,705 per hole, and Crowbush in Prince Edward Island at $158,000 per hole. Using this metric, Fox Harb’r golf courses and equipment are worth $125,000 per hole or $3.375 million. He valued the Founder’s Lodge at $1.6 million.
Fox Harb’r ‘unmatched’ in NS
The Director of Valuation of the Property Valuation Services Corporation (PVSC) rejected this approach.
The Crown corporation, which sets property assessment in Nova Scotia, said no other golf property compares to Fox Harb’r.
“In addition to having accommodations unmatched by any other golf facility in the province, Fox Harb’r includes many amenities that none of the other properties can offer,” PVSC attorney Robert Andrews said during of the court appeal.
He valued the resort as a single entity, but used different methods – accommodations were valued by income, while golf course costs were valued by cost, the lodge and property lots were assessed by direct comparison.
In its appeal to the Public Utilities and Review Board, Fox Harb’r said that “the values assigned to all components of the appraisal are too high and inconsistent with market value and the provisions of the law on Evaluation”.
“The valuation was incorrectly weighted against an income approach and failed to consider a direct comparison valuation which would be a relevant basis for reaching the appropriate value. The valuation was based on the premise that the property was unique and gave it more weight than the actual market value on which it should have been based,” Fox Harb’r attorney Michael L Ryan said in the appeal filed with the Nova Scotia Utility and Review. Board, released November 1.
Important to Cumberland County
Property Valuation Services declined to comment saying it will defend the valuation before regulators.
Fox Harb’r did not respond to a request for comment.
In September 2022 Insight In a podcast interview with Huddle, a Maritime trade publication, Fox Harb’r president Kevin Toth declined to discuss the amount of taxes paid to the local municipality saying “we’re in a bit of a dispute with them right now “.
He said the resort spends $7 million a year on goods and services in Nova Scotia and has invested more than $125 million in the development of the resort. It operates its own water and sewer system and maintains the roads on the property.
Cumberland County Mayor Murray Scott said the resort draws people from around the world to the area “for a variety of reasons, some own property, some come for services, some come for the golf game.”
“Fox Harb’r is a big part of Cumberland County in terms of the assessed value of this property, in terms of what that means for taxes for the municipality, no doubt,” he said. “This is very important to Cumberland County.”