Classification of Stratified Self-Storage Units Last Document Review Date: September 29, 2014 Last Legal Review Date: March 2, 2012 TABLE OF CONTENTS Introduction... 2 Executive Summary... 2 Resources... 3 Case Law... 3 Compliance Checklist... 4 Legal Direction... 5 General... 5 Appendix A: Frequently Asked Questions... 6 Business Rules Classification of Stratified Self-Storage Units 1
INTRODUCTION This document applies to all stratified self-storage units owned by an individual or company and used to store items. This document does not apply to non-stratified self-storage facilities wholly owned by one person or group of persons, where the self-storage units are leased to individuals or companies for the storage of items. This document does not apply to strata facilities owned in bulk by a single owner or group of owners. EXECUTIVE SUMMARY This document provides information on consistent classification of stratified self-storage units that are owneroccupied. Self-storage facilities have attributes of both retail and industrial properties. According to the Appraisal Institute publication, market analysis and valuation of self-storage facilities, these properties can be referred to as: o Mini-warehouses o Mini-storage o Mini-storage warehouses o Self-service storage o Self-storage (most common name) o Self-storage mini-warehouses Stated Case 302 (B.C.C.A.), the Court of Appeal confirmed that individual strata units (used for accommodation purposes) must be classified separately and in accordance with their use, not the nature of their ownership. Accordingly, stratified self-storage units should also be classified individually, in accordance with their use. Business Rules Classification of Stratified Self-Storage Units 2
RESOURCES Case Law Correll, Richard. Market Analysis and Valuation of Self- Storage Facilities. Appraisal Institute. Chicago. 2003. Assessor of Area #01 Saanich - Capital v. Hardt, J. & S. (1990), Stated Case 302 (B.C.C.A.). Assessor of Area #08 North Shore/Squamish Valley v. Mrazek (1999, PAAB, dated December 2, 1999). Business Rules Classification of Stratified Self-Storage Units 3
COMPLIANCE CHECKLIST The following is a list of items that must be completed in order to be considered compliant with this document: 1. Stratified self-storage units should be classified individually, in accordance with their use. 2. A stratified self-storage unit must be classified in either Class 1 residential, Class 5 light industry, or Class 6 business and other based on the unit's predominant use (stored contents). 3. If the use cannot be determined the unit should be placed in Class 6 until the use can be confirmed. Business Rules Classification of Stratified Self-Storage Units 4
LEGAL DIRECTION General In the context of stratified self-storage facilities, there are three likely classifications to be considered: Class 1, Class 5, and Class 6. To classify stratified self-storage properties based on stored contents, follow the information below: 1. Class 1: Stratified self-storage units currently in Class 1 are assumed to contain contents for personal use, though that assumption should be confirmed (i.e., every year) by telephoning the operator of the stratified self-storage facility. If there is a transfer of ownership of a unit in Class 1, a staff member from the field office should inquire with the new owner regarding the use of the storage unit. If, under new ownership, the nature of use is personal, the unit should remain in Class 1. If the unit is used for business purposes, it should be classified in Class 6. 2. Class 6: Any stratified self-storage unit should be placed in Class 6 if no information is available on the use of the unit. The unit should remain in Class 6 until the exact nature of use is made known to the assessor. Whenever a sale occurs, a staff member from the field office should inquire as to the use of the unit and re-classify or split-classify the unit based on that use. 3. Class 5: Whenever a sale occurs, a staff member from the field office should inquire as to the use of the unit and reclassify or split-classify the unit based that use. The unit should be classified in Class 5 if the use of the unit falls within the definition of Class 5, according to the Prescribed Classes of Property Regulation. TIP Evidence can be collected either through inspections or appeals that may alter the classification. Business Rules Classification of Stratified Self-Storage Units 5
APPENDIX A: FREQUENTLY ASKED QUESTIONS Question 1. Answer Question 2. Answer If an item (e.g., a lawn mower) is stored within a storage unit and the use of the item is unknown (i.e., it is not known whether the owner of the storage unit uses the item for business purposes or for personal use), how is the unit to be classified? Attempt to determine whether the owner of the stratified selfstorage unit is in a business that would require the use of the item (e.g., a landscaping business). If the owner uses the item in connection with that business, and the predominant use of the storage unit is for the storage of business-related items, then it would be appropriate for the unit to be in Class 6. If the owner has no business involvement with the item, and the predominant use of the storage unit is for personal use, then Class 1 would be appropriate. If the use of the item stored is unknown, the storage unit should be classified as Class 6 until the exact nature of the use or storage is made known to the assessor. If a lawn mower is stored within a storage unit and the use of lawn mower is known to be a combination of business and personal use, how is the unit to be classified? When stratified self-storage units are used to hold items used for a combination of purposes, classification should be based on the predominant use of the strata unit. Business Rules Classification of Stratified Self-Storage Units 6