Assessment Review Board

Commission de révision de l’évaluation foncière

File No: ID 120132 Region Number: 18 Municipality: Town of Fort Erie Roll Number: 2703-020-020-08200-0000 Hearing Number: 535653 Appeal Numbers: 1821280, 1914241, 1982286, 2030547, 2339730, 2687492 and 2918331

In the matter of Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended, and in the matter of appeals with respect to taxation years 2006, 2007, 2008, 2009, 2010, 2011 and 2012 on premises known municipally as Thomson Road.

BETWEEN: Delta Bingo Inc. Linda Romak Assessed Person/ Appellant

• and -

The Municipal Property Assessment Corporation, Region No. 18 and the Town of Fort Erie Respondents

APPEARING: D. Fleet - Counsel for the Assessed Person/Appellant S. Douglas - Counsel for the Municipal Property Assessment Corporation J. O’Kane - Counsel for the Municipality

INTERIM DECISION OF THE ASSESSMENT REVIEW BOARD delivered by: A. LaRegina and J. Wyger

1These appeals came before the Assessment Review Board (“Board”) on July 29, 30 and 31, 2013 in the Town of Fort Erie.

INTRODUCTION

2Delta Bingo Inc. (“Delta”) is the owner of 31.45 acres of vacant land, of which approximately 25 acres is commercially zoned and just over 6 acres is zoned Open Space. The parcel is within the urban boundary of the Town of Fort Erie (“the Town”), adjacent to a supermarket and the Queen Elizabeth Way (“QEW”). It was vacant and un-used up until 2006, when Delta engaged a local farmer to begin farming the land. From late 2006 through to 2012, the farmer worked the land with varying degrees of success and in some years removed crops of hay or soybeans. These activities ceased in 2013 due to a Court Order obtained by the Town on the grounds that farming was not a permitted use. The Municipal Property Assessment Corporation (“MPAC”) has the lands classified as commercial and assessed at values ranging from $2,264,000 through $3,373,000 during the years in question. The commercial property class is supported by the Town. Delta seeks a classification and valuation under s. 19.(5) of the Assessment Act (“Act”) on the grounds that from 2007 through 2012, the lands constituted “farm lands used only for farm purposes” leading to a substantially lower assessed value. All three counsel agreed that this threshold issue needs to be addressed first, as there is agreement on the per acre value to be assigned if the Board finds that s. 19.(5) applies. If some or all of the lands do not qualify, then the hearing will be re-convened in order to hear the evidence and submissions on the value of the lands as predominantly commercial vacant.

ISSUE

3There are as many as four questions to be answered:

1. Were the activities of the farmer sufficient to characterize the land as being used only for farm purposes? If not, then the land fails to qualify under s. 19.(5) for the special valuation, and the hearing will re-convene to hear evidence on the commercial vacant value. If so, then the second question must be addressed.

2. Is the use only for farm purposes sufficient by itself to qualify under s. 19.(5), or must the land also be determined to be “farm lands” based on other considerations? If use for farm purposes alone is sufficient, then the lands qualify under s. 19.(5) for valuation at farm rates. If not, then the third question must be answered.

3. Do the subject lands constitute “farm lands” based on other factors and considerations, independent of them being farmed? If not, then the property fails to qualify under s. 19.(5), even though used for farm purposes. If so, then the fourth question requires an answer.

4. What portion of the lands was “farm lands used only for farm purposes” in each taxation year?

INTERIM DECISION

1. The activities of the farmer were sufficient to characterize the land as being used only for farm purposes.

2. The use only for farm purposes is by itself not sufficient to qualify under s. 19.(5). The lands must also be capable of being characterized as “farm lands” based on other factors.

3. The Board finds that the subject lands were “farm lands” based on other factors and considerations as set out herein.

4. The lands that are determined to be both “farm lands” and to have been “used only for farm purposes” for the 2007 through 2011 taxation years are comprised of 26.45 acres, and for the 2012 taxation year are comprised of 31.45 acres. None of the land qualifies under s. 19.(5) for the 2006 tax year.

REASONS FOR INTERIM DECISION

The Legislation

4Section 19.(1) of the Act states:

19.(1) Assessment based on current value. – The assessment of land shall be based on its current value.

5Section 1 of the Act defines “current value” as:

“current value” means, in relation to land, the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer.

6Section 19.2(1)2 states:

19.2(1) Valuation days – Subject to subsection (5), the day as of which land is valued for a taxation year is determined as follows:

1. For the 2006, 2007 and 2008 taxation years, land is valued as of January 1, 2005.

2. For the period consisting of the four taxation years from 2009 to 2012, land is valued as of January 1, 2008.

3. For each subsequent period consisting of four consecutive taxation years, land is valued as of January 1 of the year preceding the first of those four taxation years.

7Section 19.(5) states:

19.(5) Farm lands and buildings. – For the purposes of determining the current value of farm lands used only for farm purposes by the owner or used only for farm purposes by a tenant of the owner and buildings thereon used solely for farm purposes, including the residence of the owner or tenant and of the owner’s or tenant’s employees and their families on the farm lands,

(a) consideration shall be given to the current value of the lands and buildings for farm purposes only;

(b) consideration shall not be given to sales of lands and buildings to persons whose principal occupation is other than farming; and

(c) the Minister may, by regulation, define “farm lands” and “farm purposes”.

8Section 19.(5.3) states:

19.(5.3) - Not necessary that use be permitted - It is not necessary, for subsection (5) to apply to farm land used only for farm purposes, that the use be permitted under municipal zoning by-laws.

Delta’s Position

9Counsel for Delta, David Fleet advanced the position that a bona fide local farmer, Frank Muileboom, made all necessary efforts to bring the land into production during the years 2007 through 2012. He cleared the lands with a bushhog, sprayed for weeds, ploughed, disked, harrowed, seeded, fertilized and otherwise tended the crops. He was able to harvest crops in several years and not in others, due to the weather and not for lack of trying. Mr. Fleet provided jurisprudence to support his argument that zoning, illegality, motivation, size of the lands, economic feasibility, history and surrounding uses are not determinants of whether the lands were “farm lands used only for farm purposes”. He maintained that the consideration under s. 19.(5) is use-driven and the use of the lands for farming purposes is the only relevant determinant.

The Town’s Position

10John O’Kane, counsel for the Town, asserted that the lands did not qualify under s. 19.(5) of the Act on the grounds that even though they may have been used for farm purposes during some of the years in question, that alone did not constitute them as “farm lands”. He submitted that the phrase “farm lands used only for farm purposes” is a two part test and that the first part, “farm land” is neither defined nor determined by the second part of the phrase referencing the use only for farm purposes.

11Mr. O’Kane provided case law and the opinion of an agrologist, Sean Colville, to support the proposition that many factors and considerations go into the determination of whether lands can be characterized as “farm lands” beyond merely the use. He submitted that the intent, scheme and purpose of s. 19.(5), was to maintain existing farms in production for as long as possible, not to be an incentive to create “new” farms, especially within established urban areas, simply to get a tax break.

MPAC’s Position

12Shawn Douglas counsel for MPAC, expressed her client’s acceptance of “assessment farming” as a legitimate enterprise, even where it is not legally permitted by zoning. She asserted that planning, zoning, economic viability and size of the parcel are not determinative of whether a property should receive the benefit of a s. 19.(5) valuation. Ms. Douglas did not characterize the section as a two part test, but urged the Board to consider the presumption against “surplusage”. That principle proposes that there are no surplus words in legislation, but that every word is meaningful. She submitted that this means the word “farm” as a qualifier to “lands” means it is there for a reason and consideration should be given to the agrologist’s criterion. She supported the Town’s position that the intent of the section is to maintain existing farms and not to apply to new farming operations.

13Ms. Douglas maintained that whether land is being used for farm purposes requires evidence of farming activity over a period of time. She raised concerns that there appeared to be little time devoted to the farming purpose in some of the years, and submitted that if the Board found that there was a farming use, an apportionment is required since not all of the acreage was cultivated in all of the years under appeal.

Issue 1 - Use of Lands only for Farm Purposes

14This factual issue must be considered first, because if the activities did not qualify as use of the lands only for farm purposes, the Board would not be required to deal with the legal and interpretive issues of whether the test is one part or two parts, or whether the lands could otherwise be described as “farm lands” or not. The use for farm purposes is clearly the key element of the s. 19.(5) test.

Farming Evidence

15Mr. Muileboom, a local farmer for many years, gave affidavit and oral testimony on the activities he carried out on the subject lands. He described the property in 2006 as being a vacant lot collecting paper and cardboard that were blowing over from the nearby Wal-Mart and NoFrills, and as having bush that required clearing. He commenced clearing the land with a bush hog, and ploughing what he could in the fall of 2006. In spring, summer and fall of 2007, he removed stones, disked, fertilized, planted seeds, harrowed and bush hogged some more. There was no hay crop in 2007 because, he testified, it takes two years to establish. In 2008 he planted approximately 23 acres because the remainder, largely to the west and north-west was too wet, but he was unable to harvest any crop of hay due to the weather.

16By 2009, Mr. Muileboom harvested a hay crop twice and sold the bales to a local equestrian facility, while making plans to bulldoze some ditches to improve drainage, and clear an additional five acres for cropping. He was unable to get a hay crop harvested in 2010 due to rain, and made plans to switch to soybeans. He succeeded in seeding, fertilizing, harvesting and selling a 23 acre soybean crop in 2011 and by 2012 Mr. Muileboom had 28 of the 31.45 acres producing a marketable soybean crop. An injunction brought by the Town stopped all farming activity in 2013.

17Photographs were presented that show farm machinery working the lands, as well as rows of raked hay and fully grown soybeans that are clearly the results of farming the lands. There was no issue between the parties that Mr. Muileboom was a bona fide farmer and the Board found him to be credible witness. The Board is persuaded that Mr. Muileboom made all necessary efforts to clear and cultivate as much of the subject lands as was possible in every year. The fact that, at some point, Mr. Muileboom put up a sign advertising his availability for lot clearing does not alter the Board’s finding that the lands were being used only for farm purposes.

18Ms. Douglas advised that MPAC requires evidence of farming activity over a period of time. Its concern is that the s. 19.(5) valuation not be extended to “pretend” farms. Indeed running a plough or a disc or a harrow over land may look like farming, but by itself it is not, because it cannot result in a crop. The evidence showed that farming activity with the goal of harvesting a crop requires the investment of time and resources into seeding, fertilizing and otherwise tending to an actual crop. While harvesting a crop is certainly a strong indicator of a farming activity, the Board finds that it is not determinative, given the vagaries of the agricultural business and the influence of weather. Farmers who are forced to collect on crop insurance for a failed crop, are not any less farming due to that occasional failure.

19Mr. Muileboom’s efforts in planting seeds produced a crop in each of the years 2007 through 2012. In some years he successfully harvested crops and in others he did not. The Board finds that he did clearly establish a pattern of continuous farming activity on the lands throughout that time period, and that those activities constituted use of the lands only for farm purposes.

Issue 2 – “Farms Lands” Independent from Farm Use

Presumption against Surplusage

20This question of statutory interpretation arises from the legislature placing the adjective “farm” in front of the phrase “lands used only for farm purposes”. It is arguable that if use for farming was the only determinant, as Mr. Fleet asserts, that the phrase “lands used only for farm purposes” would stand alone and not require the descriptor “farm” to qualify it. Mr. O’Kane and Ms. Douglas contended that such surplusage is counter to the rules of statutory interpretation and that the term “farm lands” is presumed to mean something. Mr. O’Kane’s position was that s. 19.(5) provides a two part test requiring that lands must be capable of being described as “farm lands”, in addition to passing the test of being “used only for farm purposes”. Ms. Douglas disagreed with the characterization of a two part test, but insisted that all the words in the phrase are presumed to mean something and so the Board must consider whether the Delta lands are “farm lands”, whatever that means.

21There is logic in the proposition that if use were the only determinant, then the phrase “lands used only for farm purposes” would have sufficed to serve the purpose. The qualifier of “farm” ahead of “lands” appears to at least add another element to the test, if not a second test, that there is more than just farm use that is required to characterize lands as “farm lands”. Intuitively it is somewhat difficult to envision why lands might be characterized as “farm lands” that are not actually used for farming. Ms. Douglas, a veteran of the farm issue going back decades, noted with some weariness, that the legislature has seen fit not to provide a definition of “farm lands”, leaving the Board to interpret the phrase each time the issue re-appears. The Board turns to the case law for guidance on what constitutes “farm lands”.

Case Law

22Counsel referred to numerous cases on the interpretation of s. 19.(5) culminating in the landmark case of Slough Estates Canada Ltd. v. Ontario (Regional Assessment Commissioner, Region No. 15) [2000] S.C.C.A. No. 265, (“Slough”). The Board has reviewed the cases that might offer some assistance:

23North York (City) v. Ontario (Reg Assessment Commr Reg 10) – [1981] O.J. No. 275 (Ontario Supreme Court) - by any reasonable test and common sense, substantial acreage under commercial cultivation are farm lands whether that use is lawful or not, and a colour of right to farm may result from an existing legal non-conforming use status.

24Ontario (County Assessor) v. Runnymede Inv Corp Ltd [1965] O.J. No. 1125 (Ontario Court of Appeal) - farming use created in 1964 on vacant land zoned industrial and not previously farmed found to be “farm lands used only for farm purposes”.

25City of Mississauga v. Horseshoe Developments Inc. 1980 Ontario Municipal Board (“OMB”) (unreported) - test for “farm lands” does not depend on acreage, potential or likelihood of future use, but on use of lands at time the assessment is made.

26Curtis Chicks Ltd. v. Municipal Property Assessment Corp., Region No. 6, 18 and 20 [2004] O.A.R.B.D. No. 190 - farming uses that are not located in farm areas can qualify as being “farm lands used only for farm purposes”.

27In the matter of appeals by Doug Taylor OMB File A8301584 and A8302149 (unreported) - introduces the concept of land that is “farmable” but that is not actively farmed because of problems recovering it to sustainable farming and so is not entitled to a farm assessment.

28Dome Petroleum Limited et al v. Regional Assessment Commissioner Region No. 27 [1992] O.M.B.D. No. 1261 (“Dome”) - in determining whether lands are farm lands used only for farm purposes, all of the factors which distinguish such properties should be examined, including history of use and intensity of surrounding uses.

29Amoco Canada Petroleum Company v. (Reg Assessment Commr, Reg 27) [1994] O.J. No. 1525 (“Amoco”) - land that had never been farmed, surrounded by non-agricultural uses and both zoned and used for industrial purposes, is not “farm lands used only for farm purposes” because the zoning is determinative.

30Slough Estates Canada Ltd. et al v. Regional Assessment Commissioner, Region No. 15 (2000) 2000 CanLII 5705 (ON CA), 48 OR (3d) 84 (Ont. C.A.) - zoning is not determinative, but it is not entirely irrelevant to whether lands are “farm lands”.

Slough Estates

31The Court of Appeal in Slough, supra, considered the issue of what constitutes “farm lands used only for farm purposes” and reviewed many of the cases mentioned. In particular it disapproved of the Divisional Court conclusion in Amoco, supra, (“Dome/Amoco”) that the industrial zoning in that case was determinative because that use was the only permitted use. In Slough, supra, the Court held that whether lands qualify as farm lands is a question of fact, and that zoning may not be entirely irrelevant. The Court was aware of the (then new) s. 19.(5.3) when it made these observations. Zoning was still one circumstance, along with other factors such as the use of surrounding lands and the general nature of the locality that should be considered in determining whether lands are “farm lands”.

32The Court endorsed the common sense approach of County Court Judge Sweet in Roman Catholic Episcopal Corp. (Hamilton) v. Stoney Creek (Town) [1970] O.J. No. 1449; 1970 CanLII 282 (ON HCJ), [1970] 2 O.R. 304 (“Roman Catholic”), that an assessor should not treat as farm lands, a parcel of vacant land at the corner of King and Yonge Streets because the owner planted it with tomatoes.

33The Court of Appeal noted other factors that were weighed by the OMB in Slough, supra: (i) that the land displayed the physical characteristics of land used for agricultural purposes at different stages of the farming cycle; and (ii) that the farmers were bona fide farmers, farming numerous other parcels.

Dome/Amoco

34Before the OMB the Amoco, supra, case was titled Dome Petroleum v. Regional Assessment Commissioner, Region No. 27 [1992] O.M.B.D. No. 1261 (“Dome/Amoco”). Mr. O’Kane disputed Mr. Fleet’s assertion that the Divisional Court decision in Dome/Amoco, supra, was overruled by the Court of Appeal in Slough, supra. He pointed out that the Court approved the statement of the Divisional Court in Amoco, supra, that the OMB in that case did not hold that land zoned industrial could never qualify as farm land but rather the OMB took into account all of the circumstances before it. The OMB in Dome/Amoco, supra, took into consideration such factors as soil capability, type and intensity of surrounding uses, and the history of farming use on the subject lands. The OMB in that case ruled out the size of the property or the ownership as relevant factors. This panel agrees that the only part of Dome/Amoco, supra, that was overruled was the conclusion that zoning is determinative of the issue, hence it is still instructive to consider the other factors set out by the OMB in that case when considering the issue of farm lands.

35To summarize the considerations set out by the OMB in Slough, supra, and Dome/Amoco, supra, and endorsed by the Court of Appeal:

• Physical Characteristics of a Farm

• Bona Fide Farmer

• Soil Capability

• Surrounding Uses

• History of Uses

36In a review of these two decisions, from the OMB level through the Divisional Court, to the Court of Appeal, it is evident to this Board that the law as it currently stands holds that there are two elements to the determination of whether lands can qualify as “farm lands used only for farm purposes.” The Court of Appeal has approved the proposition that while the use of the lands for farming remains a predominant determinant, other factors such as those listed must be considered in order to characterize lands as “farm lands” in the first instance.

Issue 3: Were the lands owned by Delta “farm lands” based on other factors and considerations?

37The Board has concluded that the Delta lands were “farm lands” using the ordinary and grammatical meaning of that term, having regard to the jurisprudence and to the intent, purpose and scheme of s. 19.(5) of the Act. The Board considered the testimony of the Town’s two witnesses, but was not persuaded that they considered the meaning of “farm lands” using the same criteria.

Town Planning Witness

38Mr. O’Kane called Kira Dolch, a land use planner with the City to give evidence that the highway commercial and open space zoning of the Delta lands allowed for uses catering to the travelling public, and that farming is not a permitted use. Farming within the urban boundary is only permitted if it is a legal non-conforming use that pre-dates the 1976 by-law. She described the zoning on the subject lands as including a hold on any commercial use until there is sufficient downstream sewer capacity. In the Board’s view Ms. Dolch’s views on the characterization of the subject property are exclusively based on a planning and zoning context, and not an assessment context.

Expert Agrologist Opinion

39Mr. Colville was called as the City’s second witness. He was qualified by the Board as an expert in agrology and soil science. His mandate was to provide an opinion on whether the Delta lands are “farm lands”. In Mr. Colville’s professional opinion, the Delta lands cannot be characterized as “farm lands” because:

1. Farm land is comprised of large, contiguous parcels in rural areas where the use is acceptable and permitted. Farming within the urban boundary is generally considered to be an incompatible use.

2. The soils are marginal for higher value field crops such as soybeans or corn. As agriculture is not a permitted use, it is not a suitable location to make long-term investments in tile drainage to improve the soil productivity.

3. The surrounding area is dominated by urban uses and no other agricultural uses were observed within a one kilometer radius.

4. Past, present and future use of the lands and surrounding lands, indicate that the Delta lands ceased to be farmed decades ago, and will be used for commercial purposes in the future.

5. The use in the recent past for farming does not make the Delta lands “farm lands”. Farm land is commonly used for agricultural purposes, but that is only one factor in the consideration and is not determinative.

40Mr. Fleet noted that most of the considerations that Mr. Colville described appeared related in some way to the legality of the farming use. He highlighted Mr. Colville’s written conclusions that commence with “Farm lands are areas where agricultural activities are permitted…” Small isolated properties within the urban area are not considered farm land “unless they have been specifically zoned for agricultural purposes.” He further concluded that the Delta lands are “urban lands zoned for commercial uses” and that a farming use “constitutes a non-legal, non-conforming land use.”

Section 19.(5.3) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html)

41Mr. Fleet referred Mr. Colville to s. 19.(5.3) of the Act, which provides that “it is not necessary, for subsection (5) to apply to farm land used only for farm purposes, that the use be permitted under municipal zoning by-laws.” Mr. Colville was unaware of this provision, but asserted that the zoning alone is not determinative. He conceded that:

1. His opinion was not based on consideration of s. 19.(5) or s. 19.(5.3) of the Act, and

2. He is not qualified to interpret the Act.

42The Board agrees with Mr. Fleet that Mr. Colville focused on the planning aspects and his analysis was heavily influenced by the future and legal uses of the lands. The Board accepts Mr. Colville’s opinion, that in the planning and development world, the subject lands would not be considered farm lands. However Mr. Colville’s definition of what constitutes “farm lands” may not coincide directly with the ordinary meaning of the term for assessment purposes.

43Classification under the Act is almost exclusively use-driven. The Board is persuaded by the case-law that in defining “farm lands”, the past use of land and certainly the current use are much more important than the legal use or the future use. Section 19.(5.3) clearly codified the line of cases that held that the legality of the farm use was not a major factor, while it is a prime consideration in Mr. Colville’s analysis. The Board will employ Mr. Colville’s other considerations as far the Courts have endorsed them in Slough, supra and Dome/Amoco, supra, but does not accept his opinion that the lands are not “farm lands” for the purposes of this appeal.

Consideration 1 – Size of Parcel

44Ms. Douglas provided the Board with MPAC’s considered response to the farm issue. MPAC accepts that “assessment farming” is legitimate even though it is not lawful, and that motivation, economic viability, and size or isolation of a parcel are not determinative of whether a property can be characterized as “farm lands”. These positions are derived from the accumulated case-law and the Board agrees that those are not factors for consideration in the determination of “farm lands”. Mr. Colville’s criterion that farm land is composed only of large, contiguous parcels is not supported by the assessment jurisprudence.

Consideration 2 – Soil Capability

45The quality of the soil and its capability to support crops is a factor named by Mr. Colville and referred to by the OMB in Dome/Amoco, supra. Certainly, this would seem to necessarily be a prime consideration, since lands that have never produced crops in the past, and remain incapable, never were, and never can be “farm lands”. This factor alone should eliminate “pretend” farming of Class 7 or 8 lands for example, because there would be no reasonable prospect of producing any crop. It is unlikely such lands were ever farmed in the past.

46Mr. Colville disparaged the subject lands as marginal at best. Mr. Muileboom, the farmer, testified that all the farm land around Fort Erie was similar in quality, but they farmed it just the same. Evidence was also adduced that the subject lands were part of a working farm that had cultivated crops prior to 1940. It appears that the lands were always “farmable”, but not always farmed. This evidence, together with the fact that Mr. Muileboom was able to produce some substantial hay and soybean crops, persuades the Board that it meets the criteria of having soil of sufficient crop-producing quality and cannot be eliminated as “farm lands” based on this criterion.

Consideration 3 – Use/Intensification of Surrounding Lands

47Another consideration set out by Mr. Colville and referenced in the case-law is the use of surrounding lands, and Mr. Colville’s view that the Delta lands were within the “urban area” and its farm use being incompatible with the surrounding non-farm uses. The suggestion is that the farm use just does not look right inside the Town’s urban boundary, and is incompatible with the surrounding stores and other urban uses. However Delta’s principal, Duncan Cameron, described other lands being farmed in the urban area, including some horse farms, and included the Fort Erie Racetrack nearby, as well as some cultivated acreage across the road from the Town Hall where this hearing was held.

48While a Wal-Mart and a NoFrills grocery store exist on one boundary, there is vacant land and a major highway bordering to the north and west. The photographs in evidence show a relatively wide open vista not uncommon in places across the province where big box stores butt up against the rural landscape. There is certainly not the intensification of other uses on all sides as in the extreme example of the tomato garden at Yonge and King Street. There is no evidence that any of the neighbours complained to the Town about the incompatibility or nuisance of the farming on the Delta lands.

49The Board notes also that the concept of “assessment farming” implies farming that is different from “normal” farming, by reason not only of its motivation, but also of the seemingly incongruent location of a farming activity in “non-farming” areas, as the motivation to farm would not be questioned out in the countryside. If assessment farming is legitimate, one should not be surprised to see farming along the edges of the “‘rural/urban interface” to use the Town’s terminology, even inside the nominal “urban” boundary.

50The Board notes in the same passage from Roman Catholic, supra quoted approvingly by the Court of Appeal that along with zoning:

the development for residential purposes to the extent that it now exists in their vicinity, are not items to be taken into consideration in determining whether or not these lands come within the category of lands dealt with in S. 35(3) [now s. 19(5)].

51The Board would not go so far as to suggest that the non-farm uses in the vicinity are not to be taken into consideration, but in the case of the Delta lands, finds that those surrounding uses are a minor consideration.

Consideration 4 – Past, Present and Future Use of Lands

52The Board has already found that the future commercial use of the Delta lands is intrinsically tied to the zoning, which because of a holding provision in the zoning by-law currently does not permit that use. Mr. Colville states that the Delta lands ceased to be farmed decades ago, and yet the Board considers that fact to be a more important indicator of how to describe it for assessment purposes, than what speculative use the lands might be put to sometime in the future. Its history as a farm and the recent proof that it can still produce crops certainly permits a description of the subject property as “farmable” lands. The Board is of the view that “farmable lands” and “farm lands” may be a distinction without a difference, where such lands have never been put to any other use.

Consideration 5 - Recent Farming Use

53Mr. Colville maintained that the recent use of the lands by Mr. Muileboom for agriculture is just one factor in considering whether the lands are “farm lands” and not determinative. The Board finds that such use certainly meets the tests set out by the OMB in Slough, supra:

(i) that the land displayed the physical characteristics of land used for agricultural purposes at different stages of the farming cycle; and

(ii) that the farmer was a bona fide farmer, farming numerous other parcels.

54The Board has already determined that farm use alone is not conclusive, however it must be considered a major factor, particularly where lands had been farmed historically, and other considerations are met.

55The Board is puzzled by the scenario whereby lands might be considered “farm lands” but are not being farmed currently, which must be possible if “farm lands” can exist independent of a use “only for farm purposes.” Mr. Colville says that farm lands are “commonly” used for agricultural purposes. This implies that they are occasionally not so used. So lands might display all of the indicia set out by Mr. Colville, but not be farmed. The Board queries whether such lands producing no crops at all are more worthy of the description “farm lands” in the ordinary sense, than a field that is actually producing soybeans. The Board deduces that such unfarmed “farm lands” must at least have a historical claim to having been farmed at some time in its past.

56After reviewing Mr. Colville’s five considerations, the Board is persuaded that the subject lands cannot be ruled out as “farm lands” on the basis of those criteria.

Maintaining Farm Lands in Production

57Ms. Douglas and Mr. O’Kane maintain that the many decades that the Delta lands were not being farmed rules it out from consideration as farm lands. They submitted that the recent farming was an attempt to “create” farm lands, and that the well understood policy behind s. 19.(5) is only to “maintain” or “preserve” farm lands in production as long as possible.

58The Board questions whether it is fair to characterize it as creating a farm, when the land was a farm in the past and has never been used for anything else. The Divisional Court in Dome/Amoco, supra, noted in that case that “The land itself had not been previously farmed.” Indeed, the OMB distinguished this from other Dome lands, which were correctly assessed as farm, and that “were originally farms”. An active industrial use was established on the Dome/Amoco, supra, property for some decades, so it is clear that commencing farming activities there would truly be “creating” farm lands. The OMB concluded that the lands did not qualify for s. 19.(5) treatment.

59In Slough, supra, the Court of Appeal stated: “Historically, the lands had been farmed…” In terms of hiatus, those lands were not used for farming from 1987 to 1992, a period of five years. There was however, no conversion to another use during that time period. The Court of Appeal appeared either unconcerned that “farm lands” were “created” from vacant, unused lands, or implicitly accepted that a five year hiatus did not offend the concept of maintaining or preserving farmland in production.

60It is difficult to see how a provision geared to keeping as much farm land as possible in production can be interpreted to prohibit attempts to return lands that were once farmed, back to productive farm use. Despite the amount of time that has passed, the Board does not view the Delta farming activities as the creation of new farm lands, but rather the rehabilitation of the previous and only productive use, which was farming.

Common Sense

61The Court of Appeal in Slough, supra, approvingly referred twice to a reference of County Court Judge Sweet in Roman Catholic, supra, who commented on considerations such as zoning, surrounding land use, and the general nature of the locality as considerations. Refuting the hypothesis that farm use is the sole determinant, the learned judge employed the technique of reductio ad absurdum in suggesting an extreme example:

Certainly common sense would impel an assessor not to treat as farm lands, a parcel of vacant land at the corner of King and Yonge Street, in Toronto or at the corner of King and James Street in Hamilton, merely because the owner, for whatever reason, may have decided to plant it in tomatoes.

62Mr. O’Kane compared the subject property to the downtown tomato patch. If the Board were to place the lands on a common sense continuum from the acceptable in Slough, supra, to the absurd tomato patch at Yonge and King, we would place it much closer to the Slough farm lands. The lands in Slough, supra, were much further along the development scale, being “permit ready”, while the Delta lands are evidently years away from having the sewer capacity to allow any developed use.

63The Board considers it instructive to determine just what it is about a vegetable garden at Yonge and King being considered farm land that is so absurd and offensive to common sense. Two factors come immediately to mind:

(i) The land at Yonge and King was never farm lands, or if it was, that era is well beyond living memory.

(ii) A field of tomatoes at Yonge and King would be a clear and obvious change of use from the intensely non-agricultural permitted uses that have spanned decades, if not centuries.

64The Board derives two common sense criteria to avoid such an absurdity. To be considered “farm lands”:

(i) lands must have historically been farmed at some time in the past; and

(ii) those historically farmed lands have never been converted to any other use.

(i) Historical Farm Lands

65This first criterion is generally endorsed throughout the case law. It is one of the considerations set out by the OMB in Amoco/Dome, supra, and is intrinsically tied to the capability of the soil to produce crops, as lands that were once farmed would possess such capability. Lands that have never been farmed such as in Dome/Amoco, supra, or presumably at Yonge and King would not meet the policy parameters of maintaining farm land in production, as they never were in production. Lands that were once capable of producing crops at least have a legitimate claim of having once deserved being called “farm lands”. The Board finds it reasonable to infer that lands that remain capable of producing crops, or are still “farmable” are still best described as “farm lands” until they are clearly something else entirely, like “industrial, commercial, or residential lands”. By the ordinary meaning of these terms, and the assessment context of use and not zoning governing definitions, the subject lands are more correctly still described as “farm lands” than any of the other classifications available.

(ii) Intervening Uses

66Vacant lands that were historically farmed, and remain “farmable”, do not offend the intent and purpose of maintaining or preserving farm lands when efforts are made to re-start the farming activity after some inactivity. Whether the farming inactivity is measured in years (Slough, supra) or decades (Delta) or centuries (Yonge and King) does not matter. The Court of appeal did not set five years as a maximum allowable hiatus, and the Board does not need to set an arbitrary number of years that historical farm land can remain idle and still retain its characterization as “farm lands”.

67A very clear delineation in time is provided when the lands are converted to another use. Eventually farm land on the edge of urban sprawl is converted to a higher and better use, usually defined by its zoning. It is reasonable to conclude that such lands cease to be farm lands, when the use is actually converted to such other purpose. In the Board’s view of past and present use being the best indicators, it is not only the past use that makes it “farm land”, it is the lack of any other intervening use that allows it to retain that description for assessment purposes.

68Attempting to farm lands that have been developed and legally used in compliance with zoning by-laws such as the industrial use in Dome/Amoco, supra, is “creating” new farm land, and not preserving or maintaining existing “farm land”. The case-law and s. 19.(5.3) direct that a change in the zoning does not affect whether lands are “farm lands” for assessment purposes, but a change in the actual use in compliance with that zoning should irrevocably remove the characterization of the lands as “farm lands”.

“Farm Lands”

69After consideration of the statute, the jurisprudence, the rules of statutory interpretation, the intent, scheme and purpose of the Act, the Board interprets the term “farm lands” to mean:

70Lands that have in the past been used only for farm purposes, are currently capable of being used only for farm purposes, and even though zoned for other uses, have never been used for other than farm purposes.

71This interpretation has the practical, common sense effect of permitting an assessor to make a determination under s. 19.(5) with readily available information and without the assistance of an agrologist. It incorporates the key factors and considerations set out in the case law, all of which should be considered as questions of fact in each individual case. In the case of the subject property, those considerations and the Board’s interpretation of the meaning of “farm lands” leads to the conclusion that the subject lands are in fact “farm lands”. The use of those farm lands “only for farm purposes” completes the test set out in s. 19.(5) for valuation pursuant to that provision.

Context, Scheme, Intent, Purpose of Section 19.(5)

72The Board has interpreted the ordinary meaning of “farm land” in its context within the phrase “farm land used only for farm purposes”. The next step in statutory interpretation is a step back to take an overview of whether that interpretation leading to the conclusion that the lands qualify under s. 19.(5), is harmonious with the intent, scheme and purpose of the legislation, in order to avoid an absurd result. The primary intent and purpose of s. 19.(5) of maintaining or preserving farm land in production for as long as possible is not offended by the Delta farming activity, as the Board has determined that it does not constitute “creating” farm land.

73The overview should also ensure that the interpretation does not end in an absurd result. Mr. O’Kane commenced his submissions by pointing out to the Board that a farm assessment for the Delta lands would be only 1% of the assessment as returned for commercial vacant. The Board understands how the Town might perceive this as an unfair or even absurd result. It submits that this valuable piece of land should pay much more in taxes than a farm assessment would provide. The Board thinks it reasonable to ask why it is more fair to make Delta pay taxes on the basis of a speculative commercial use that is currently prohibited, than to pay taxes on the basis of an actual farm use that is currently prohibited.

74Delta is entitled by law to the farm assessment discount if it meets the requirements of s. 19.(5), which it has. The Town is entitled by law to prevent this and could have exercised its remedy to stop the farming much earlier in the process. It did stop the farming use by 2013, returning the land to its previous unproductive state, which was its right pursuant to the Planning Act. However the Board queries which is the more absurd result:

1. That the re-claimed farm land continues to produce food until such time as the sewer capacity is built, or

2. That the field sit idle as unproductive scrubland while waiting for the commercial hold to be removed.

75The Board concludes that the productive farming use did not offend the intent or purpose or spirit of s. 19.(5) of the Act.

Issue 4: What portion and for which years does Section 19.(5) apply?

Portion of Lands Subject to Section 19.(5)

76Mr. Fleet made the point that if 28 acres was farm land, and was the maximal usage for cultivation, it was unlikely that the remaining land-locked three acres would have any commercial value at all, and that it should not be severed from the farm. The Board agrees that the three acres remaining in 2012 was not capable of being cultivated because it was low and wet or had trees on it, or supported the farm use by drainage.

77Counsel provided several cases that support the proposition that areas like this on farms are nevertheless still farmlands:

A. City of Mississauga v. Dixieland Developments Inc. (1995) 33 OMBR 152 (OMB)… - hilly areas and areas bordering the tree line which were uncultivated were still part of the farm lands.

B. Ontario Regional Assessment Commissioner, Region No. 13 v. McConnell, 1981 CarswellOnt 1450 (A.R.B.), 12 O.M.B.R 212 - portions of a farm that are not amenable to the usual farming activities but are used for no other purpose should not be severed from the overall farm for the purposes of assessment.

C. Koren v. Municipal Property Assessment Corp., Region No. 14 [2002] O.A.R.B.D. No. 446 - a portion of farm that is seventeen acres of untillable swamp determined to be Class 6 farm land.

D. Esam Construction Ltd. v. Municipal Property Assessment Corp., No. 23 [2003] O.A.R.B.D. No. 114 - classifying five acres of bush as multi-residential is a “back door” attempt to assess based on zoning; “not necessary that every part of a farm be under cultivation for the entire farm to be classed as farm lands.”

E. Knightley v. Municipal Property Assessment Corp., Region No. 23 (2012) 73 O.M.B.R. 13 (A.R.B) - uncultivated swale land, drainage ditches and one acre bush lot that supports the farming activity is part of the farm.

78The reasoning in these cases is persuasive and applicable to the three acres of the lands that remained uncultivated through all the taxation years. The use of this acreage is related to the farming activities of Mr. Muileboom who made legitimate attempts to cultivate as much of it as possible, and had succeeded in 2012 to make maximal usage of the lands.

79The evidence is clear however, that Mr. Muileboom cultivated only 23 acres from the 2007 through 2011 taxation years. The five extra acres cleared for 2012 was as a result of a survey that showed that these five acres were owned by Delta and were available to be cultivated. For those years, the five acres were farmable, and could be characterized as “farm lands”, however they were not “used only for farm purposes” during that time, because the farmer was unaware they were Delta property. Those five acres do not qualify for s. 19.(5) treatment until 2012, when they were cultivated.

Taxation Years

80The Board concludes that for the 2006 taxation year, the lands do not qualify for valuation pursuant to s. 19.(5) of the Act. The evidence showed that Mr. Muileboom had commenced clearing and ploughing the lands before the return of the roll in late 2006, so that the lands could qualify for the 2007 taxation year. He followed up in early 2007 with good faith efforts to plant and produce a crop. The Board determines that the seeding and tending to the crop in that year and each year thereafter was sufficient to qualify as a use for a farming purpose, even though a successful harvest was not always attained in each year. The Board finds that the 31.45 acres, less the undiscovered 5 acres for a total of 26.45 acres, were farm lands used only for farm purposes in 2007, 2008, 2009, 2010 and 2011. The full 31.45 acres was farmed to its maximum potential in 2012, and the whole parcel qualifies for s. 19.(5) valuation in that year.

CONCLUSION

81The three parties agreed on the farm rates to apply in the event the Board made this determination. Because the lands are split between either Class 2 or Class 5 farm lands, the Board is unable to determine the correct farm rate to apply for the 2007 through 2012 taxation years. Based on the evidence before us, we cannot determine the split between those classes for the 26.45 acres to be valued under s. 19.(5). If the parties are unable to resolve this issue, then the Board will reconvene with notice to hear further evidence on the issue.

82The whole 31.45 acres for 2006 and 5 acres for the 2007 through 2011 years remains to be valued as commercial vacant. Those matters are adjourned to a date when the hearing can be re-convened to hear evidence on the commercial valuation of those lands.

83The parties are directed to take appropriate steps to determine the appropriate assessed values and apportionment in each taxation year within 90 days of the date of the release of this decision and to submit those values to the Board for inclusion in its final decision following the hearing into the commercial valuation.

“J. Wyger” J. Wyger Member

“A. LaRegina” A. LaRegina Member

/lp

INTERIM DECISION RELEASED ON: October 30, 2013