Assessment Review Board
Commission de révision de l’évaluation foncière
File No: WR 120290 Region Number: 18 Municipality: Town of Fort Erie Roll Number: 2703-020-019-03900-0000 Hearing Number: 542062 Appeal Numbers: 2925970 and 2935870
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 year 2012 on premises known municipally as 575 Garrison Road.
BETWEEN:
575 Garrison Road Inc. David Kompson Assessed Person/Property Owner/Appellant
- and -
Town of Fort Erie Appellant
- and -
The Municipal Property Assessment Corporation, Region No. 18 and the Town of Fort Erie Respondents
APPEARING:
R. Ford-King - Agent for the Assessed Person/Appellant, David Kompson (Kingmont Consulting Professional Corporation) J. Mercier - for the Municipal Property Assessment Corporation V. Gowans - Agent for the Appellant, Town of Fort Erie (MTE Paralegal Professional) H. Chamberlain - Representative for the Respondent, Town of Fort Erie G. Corney - Representative for the Respondent, Town of Fort Erie
DECISION OF THE ASSESSMENT REVIEW BOARD delivered by:
R.D. Butterworth and A. Castel
1These appeals came before the Assessment Review Board (“Board”) on August 7, 2013 in the Town of Fort Erie.
ISSUE
2The Board has two appeals before it. Both appeals relate to the 2012 taxation year, but the history of the 2011 taxation year assessment is also important.
3For taxation year 2011 the assessment was returned at $1,173,000. The property owner/assessed person appealed and/or requested reconsideration (“RfR”) pursuant to s. 39.1 of the Assessment Act (“Act”) which caused the Municipal Property Assessment Corporation (“MPAC”) to review the assessment and resulted in Minutes of Settlement (“MOS”) under s. 39.1 of the Act reducing the assessment to $630,000. The MOS were signed by the property owner/assessed person, MPAC and the Town of Fort Erie (“the Municipality”). The assessment for 2011 was reduced accordingly.
4For taxation year 2012 the assessment was also returned at $1,173,000. The property owner/assessed person requested reconsideration pursuant to s. 39.1 of the Act which caused MPAC to again prepare MOS under s. 39.1 of the Act reducing the assessment to $630,000. The MOS was signed by the property owner/assessed person and by MPAC. The Municipality refused to sign the MOS. Helen Chamberlain, the Municipal Treasurer, testified that she felt she had been misled by an official at MPAC.
5One appeal is under s. 39.1(11) which states:
39.1(11) Objection to settlement – The following rules apply if the municipality or the Minister, as the case may be, objects to the settlement:
The municipality or the Minister, as the case may be, may appeal to the Assessment Review Board within 90 days after receiving notice of the settlement.
Section 40 applies, with necessary modifications, as though the assessment roll had been changed to reflect the settlement and the municipality or the Minister appealed the change.
6The second appeal is made by the assessed person/property owner pursuant to s. 40 of the Act. He appeals the assessment as being too high.
7The property was sold in 2010 for $525,000. The validity of this sale is not contested. All parties agree that the property was sold at arm’s length by a willing seller to a willing buyer as contemplated in s. 1 of the Act, which defines “current value.”
8The Municipality, represented by Victoria Gowans, takes the position that the assessment as returned in the amount of $1,173,000 reflects a correct and equitable current value as of the legislated valuation day, January 1, 2008.
9The property owner/assessed person, represented by Robert Ford-King and MPAC, represented by Johanne Mercier, take the position that $525,000 reflects the correct current value of the subject property.
10The property owner/assessed person also takes the position that equity only becomes relevant if the assessment (or current value) should be reduced to achieve equity and that the Municipality’s position, that an increased current value to achieve equity, is not supported by the Act.
DECISION
11The Board is required by s. 44.3 (a) and (b) of the Act to:
a. determine the current value of the land; and
b. have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the land.
The Board finds that the current value of the land is $525,000. The Board also finds that the current value as found above is equitable and no further adjustment is required.
12The assessment is reduced from $1,173,000 to $525,000 for the 2012 taxation year.
13Mr. Ford-King made an application for an award of costs in favour of the property owner/assessed person and against the Municipality. The Board finds that the actions of the Municipality were either unreasonable, frivolous, vexatious, or in bad faith as required by Rule 133 of the Board’s Rules of Practice and Procedure (“Rules”) effective April 2, 2013.
14Should the property owner/assessed person wish to pursue costs, the Board will receive written submissions in regard to an appropriate award in accordance with Rules 133 to 139 inclusive.
REASONS FOR DECISION
Subject Property
15Ms. Mercier described the subject property as a site of 8.28 acres of vacant land located at 575 Garrison Road in the Town of Fort Erie. The zoning on record is C-3 Commercial. The property is in the Commercial Property Class. No issue was raised regarding classification.
16For the 2012 taxation year, the assessment of the subject property, based on sales, was returned at $1,173,000. The methodology consists of sales (Exhibit 3) that are sorted by region and population. An adjustment of 0.61 is used for size and a rate per acre is developed. Ms. Mercier testified that the original assessment was determined in error and that the correct assessment, based upon MPAC’s vacant land tables of $125,000 with the adjustment of 0.61 for size is (8.28 x $125,000 x 0.61) $631,000 (rounded). Immediately upon discovering the error during the 2011 RfR process, she corrected the error and drafted MOS.
The Legislation
17For taxation year 2012, in determining the value at which land shall be assessed, the Board must have regard to the following provisions of the Act.
18Section 19.(1) states:
19.(1) Assessment based on current value. – The assessment of land shall be based on its current value.
19Section 1 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.
20Section 19.2(1) states:
19.2(1) Valuation days. – Subject to subsection (5)1, the day as of which land is valued for a taxation year is determined as follows:
- For the period consisting of the four taxation years from 2009 to 2012, land is valued as of January 1, 2008.
21Section 39.1(11) states:
39.1(11) Objection to settlement – The following rules apply if the municipality or the Minister, as the case may be, objects to the settlement:
The municipality or the Minister, as the case may be, may appeal to the Assessment Review Board within 90 days after receiving notice of the settlement.
Section 40 applies, with necessary modifications, as though the assessment roll had been changed to reflect the settlement and the municipality or the Minister appealed the change.
22Section 44.(3) states:
44.(3) Same, 2009 and subsequent years. – For 2009 and subsequent taxation years, in determining the value at which any land shall be assessed, the Board shall,
(a) determine the current value of the land; and
(b) have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land.
23Section 40.(17) states:
40.(17) Burden of proof. – For 2009 and subsequent taxation years, where value is a ground of appeal, the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.
Position of MPAC
24Ms. Mercier testified that for taxation year 2011, the current value assessment was reduced from $1,173,000 to $630,000 by MOS which were signed by all parties.
25For taxation year 2012, MPAC carried the reduction forward since the appeal had not been deemed. MOS were prepared (Exhibit 1) reducing the value from $1,173,000 to $630,000, and were signed by the property owner/assessed person but were rejected by the Municipality.
26When the 2010 sale of the property was brought to her attention, MPAC changed its position regarding current value and now takes the position that the sale of the subject property for $525,000 provides the best evidence of the current value of the subject property irrespective of its 2010 date which is over two years after the legislated valuation day, January 1, 2008.
27Ms. Mercier explained that the supply of land in Fort Erie is high while the demand for this type of acreage – 8.28 acres – is very low. Sales are rare. Moreover, because of the low demand and high supply, the market has been relatively “flat” in this area, with the result that time adjustments for sales prices from the date of sale to the valuation day are unwarranted.
28Ms. Mercier testified that it was virtually impossible to test whether the subject property has been equitably assessed because of the limited number of transactions that occurred in Fort Erie during 2008 or close to the valuation day. Only three sales of commercial acreage were used.
29Because the direction in the Act is only to reduce for equity, Ms. Mercier, having reviewed the Municipality’s evidence as disclosed in advance of the hearing, is satisfied that no reduction of the recommended current value of $525,000 is necessary.
30During cross-examination, Ms. Mercier testified that:
- she had no knowledge whether the 2011 reduction to $630,000 was in respect of contamination;
- the 2010 sale of $525,000 of the subject property was not time-adjusted;
- the chemical plant building was demolished and the land offered for sale;
- the land was on the open market for 15 years;
- the best evidence of current value is the sale of the subject property which occurred in 2010;
- she has thoroughly investigated the sale and is satisfied that it satisfies the definition of “current value” as found in the Act and provides a very accurate test of the market price for a sale at arm’s length by a willing seller to a willing buyer.
31Ms. Mercier explained that the supply of land in Fort Erie is high while the demand for this type of acreage – 8.28 acres – is very low. Sales are rare.
Position of the Municipality
(a) Victoria Gowans
32Ms. Gowans, representing the Municipality, submitted Exhibit 4, a letter, dated June 7, 2013, formally objecting to the MOS made under s. 39.1 of the Act together with a copy of the MOS signed by MPAC and by Kingmont Consulting on behalf of the appellant. The document is also signed by the Municipality under the “objection” heading.
33To assist in determining the current value of the subject property, Ms. Gowans provided extracts of the pertinent legislation and stressed that it is the belief of the Municipality that the assessment be confirmed as returned on January 1, 2008, for $1,173,000.
34Ms. Gowans testified that the sale of the subject property, which occurred on August 4, 2010, is considered to be too far removed from the valuation day of January 1, 2008. She relies instead on the assessments of the following comparable properties within the area of the subject property, with the same property code, tax class and zoning;
| Address | Site Area Acres | Assessment 2008 | Rate/Acre |
|---|---|---|---|
| (1) Walden Road | 2.09 | 230,000 | 113,875 |
| (2) Thompson Road | 3.31 | 678,000 | 204,883 |
| (3) Thompson Road | 7.30 | 1,284,000 | 175,890 |
| Average Rate/Acre | 164,866 | ||
| Median Rate/Acre | 175,890 | ||
| Subject Property | 8.28 | 1,173,000 | 144,666 |
35Ms. Gowans testified that Comparable 3, with a site of 7.3 acres, is the most similar to the subject property and that the returned assessment of the subject property falls within the range of the comparables and should be confirmed at $1,173,000.
36Included in the Municipality’s evidence is a report from the Ministry of the Environment (“MOE”), dated January 12, 2005, regarding the site condition. The certification date for the record of the site condition is November 13, 2003.
(b) Helen Chamberlain, Director of Financial Services and Treasurer, Town of Fort Erie
37Ms. Gowans called Ms. Chamberlain who testified that:
- the appeal is in response to the MOS prepared under s. 39.(1) of the Act which the Municipality refused to sign;
- the lands had been contaminated as a result of its previous use and suffered a reputation (commonly known as “stigma”) as being contaminated;
- the MOS for 2011 were signed by the Municipality because of the stigma attached to the site;
- the clearance from the MOE signifies that the land can be used as commercial;
- the Municipality realized, after the MOS was prepared, that the site had been cleaned;
- the property located on Thompson Road, covering a site of 7.30 acres, is sufficiently similar and is assessed at $1,284,000.
Position of the Assessed Person/Property Owner
(a) Robert Ford-King
38Mr. Ford-King testified that the subject property was acquired for $525,000 on August 4, 2010 from Arkena Canada Inc., a chemical company.
39The property had been listed with various real estate brokers for more than 15 years, without success, due to the stigma attached to the historical chemical processing and storage use that occurred on the site from 1929 to 1989 when equipment and the tanks were removed. The listing brokers were all respected as being well qualified to sell property of the nature of the subject property. There seems little doubt that the 15 year attempt to sell may be described as a “best efforts” attempt.
40MOS were signed by all parties for the 2011 taxation year reducing the assessment from $1,173,000 to $630,000.
41It is the property owner’s position, and Mr. Ford-King’s opinion that the 2010 sale of the subject property of $525,000 is the best evidence of value even as at January 1, 2008, because:
- the 15 year history of listings demonstrates genuine and active attempts to sell;
- the relatively “flat” market for properties of this nature with little or no increase in prices provides a perfect sale price example, fully in accord with the definition of “current value” in s. 1 of the Act;
- the historical use and associated stigma may have affected the marketability of the property prior to MOE approval of the subject property for its current use, but had no effect on the 2010 sale price.
42To support his position that the assessment as returned for the subject property is outrageously high, two comparables of commercially zoned vacant land are offered. They have the following particulars:
| Address | Lot Area (Acres) | Assessment ($) | Date of Sale | Sale Amount ($) | Assessment/Acre (Rounded) |
|---|---|---|---|---|---|
| Subject Property 575 Garrison Road | 8.27 | 1,173,000 | 08/2010 | 525,000 | 141,840 |
| 644 Garrison Road | 6.45 | 497,000 | 77,000 | ||
| 427 Garrison Road | 6.01 | 471,000 | 78,000 |
43Applying the average assessed value per acre ($77,500) for the two comparable properties to the subject property yields a value of (8.27 x $77,500) $641,000. Considering that the subject property is larger than both properties, the recommended assessment of $630,000 would be considered equitable.
44The assessment for the 2013 taxation year, based on a January 1, 2012 valuation day was returned at $630,000 and is not under appeal.
(b) Andrew Kompson
45Mr. Ford King called Mr. Kompson, who testified that:
- he has a controlling interest in the property;
- that April 2014 will represent the conclusion of 20 years of successful experience in developing commercial real estate in Fort Erie;
- he has developed 150,000 square feet of commercial real estate in Fort Erie and is considered among the most active commercial developers in the area with a high degree of expertise;
- the activity for commercial real estate in Fort Erie may be described as stagnant;
- he received notice of the subject parcel of land in May 2005;
- by 2005 the property was approved by MOE for the uses permitted in the zoning by-law;
- the reputation for property contamination had no influence on the price he paid for the subject property.
46Mr. Kompson observed that all of the similar properties presented by the municipality are superior to the subject property because:
- they are adjacent or close to existing shopping centers with “infilling” opportunities;
- they are adjacent, or have superior exposure to, major roads as contrasted to the subject property on a back road with no such exposure;
- they all have exposure to a Queen Elizabeth Way (“QEW”) exchange, and high visibility from the QEW.
47In his view, none of the similar properties is comparable to the subject property because of all of the locational advantages they enjoy and the positive impact on potential market price.
48Mr. Kompson testified that while there is risk, he is expecting some rejuvenation of the commercial real estate market in the next five to 10 years.
49During his testimony, Mr. Kompson expressed a desire for a continued strong relationship with the Municipality and its officials, with the hope that this issue not have a deleterious effect on that relationship.
50In cross-examination, Mr. Kompson testified that he has not decided how or when the subject property will be developed.
Summations
51In summary, Ms. Mercier stated that:
- the only reliable evidence of current value before the Board is the 2010 sale value of the subject property;
- the sale price of $525,000 is the best evidence and represents current value for taxation year 2012;
- there is little or no evidence on equity because a proper equity analysis requires property sales which are lacking in the local market.
52Ms. Gowans stated that:
- the sale of the subject property is too far removed from the legislated valuation day to provide reliable evidence of current value;
- the assessment of the subject property at $1,173,000 is equitable;
- no appeal was filed for 2013;
- residential property cannot be built on the site nor can farming take place.
53Mr. Ford-King stated that:
- the assessment for 644 Garrison Road had been reduced;
- while Ms. Gowans had suggested that the sale of the subject property was too far removed from January 1, 2008, she presented no evidence to support her opinion;
- the Municipality had presented no market evidence;
- there is no evidence before the Board to support a requirement for a time adjustment;
- the best evidence before the Board is the 2010 sale of the subject property, at $525,000.
54Mr. Ford-King then made submissions in support of an award of costs in favour of the assessed person/property owner and against the Municipality. He submitted that the Municipality had presented absolutely no market evidence, even though the Act in s. 19.1 and 44.(3)(b) make it clear that assessment is based upon current value and that equity adjustments are only directed to be reduced to achieve equity. He expressed a view that the actions of the Municipality are unreasonable, frivolous, vexatious, or in bad faith as contemplated in Rule 138 and encouraged the Board to consider an award of costs.
ANALYSIS AND CONCLUSION
Burden of Proof
55The Board finds that MPAC has satisfied the burden of proof as to the correctness of the recommended current value of the land. This transfers to the Municipality (in this case) the onus of proving that the recommended current value is incorrect or inequitable, or both. The evidence and submissions of the Municipality fall profoundly short of achieving either benchmark.
Current Value
56The Board finds that the correct current value of the property is $525,000.
57Of the jurisprudence submitted by Mr. Ford-King, the case of Viva v. Ontario Property Assessment Corporation, Region No. 10 [2001] O.J. No. 273, is helpful. It is among the first court decisions after the Act changed its focus to current value and the decision of the court accentuated the importance of an actual sale of the subject property. At page 3, Meehan, J. (speaking for the majority) stated:
… a recent free sale of the subject property is generally accepted as the best means of establishing the market value of that property.” “Other methods of estimating market value and are only hypothetical and indirect means of getting into the market value and are obviously less valuable than an actual recent free sale of the subject property.
58The Board is persuaded by the sale price in August 2010. Although the sale occurred two years and eight months following the January 1, 2008 valuation day, all witnesses having knowledge of the market, except Ms. Gowans, testified that prices remained relatively stagnant during that period, thereby providing an almost “text book” fit with the criteria set out in s. 19.(1) and the definition of current value in s. 1.
59Ms. Gowans asks the Board to reject this sale as being too far removed from the valuation day, yet provides not a shred of valid market evidence to support her request or evidence in support of a contrary conclusion.
60The evidence and submissions of the Municipality consisted entirely of evidence of the assessments of what the Municipality considers to be similar property in the vicinity. There may be other circumstances where evidence of this nature may be accepted as evidence of current value because s. 19 does direct that assessments be based on current value; but not in the present circumstance and surely not when the subject property has sold recently in a stagnant market.
61Ms. Gowans’ opinion that the sale is too far removed from the valuation day is rejected.
Equity
62The Board finds that the property is unique. The Board is confident that the current value, as determined above, does not require an adjustment to achieve equity.
63The similar properties proposed by the Municipality are simply not similar. They are all situated in vastly superior positions from a market perspective. They are situated adjacent or close to existing shopping centres on major roads and even enjoy exposure to the QEW as contrasted to the subject property on a back road and without any such commercial advantages.
64Section 44.(3)(b) is quite clear that the Board should:
…adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land. (emphasis added)
There is no direction in the Act to increase an assessment to achieve equity.
Costs
65Rule 133 states in part:
- Application, Scope of Costs Awards and Procedure for Request for Costs – Where a party believes that another party in the proceeding before the Board has acted unreasonably, frivolously, vexatiously, or in bad faith, that party may make a request to the Board for costs at the end of a hearing event.
Mr. Ford-King made a request for costs in his closing submissions.
66The position of the Municipality, in the Board’s view, amounts to an abuse of the power vested in it by s. 39.1 of the Act. When power of this nature is vested in any public body, the expectation must be that the power will be reasonably exercised; yet the Municipality’s intransigence was not supported by any reliable evidence to support its position.
67By taking, and steadfastly maintaining, its position, the Municipality has put itself, the assessed person and MPAC to the significant cost of this hearing. Moreover, the Municipality has placed itself in a position of receiving a lower tax revenue for taxation year 2012 than the taxes based upon an assessed value of $630,000, which (the Board infers) was an acceptable assessment to the other parties.
68The Board agrees with Mr. Ford-King that these actions are sufficient to constitute grounds for an award of costs against the Municipality in favour of the assessed person/appellant. During her testimony, Ms. Chamberlain mentioned that she felt she had been misled by an MPAC official, who was not present. Had it been significant, the Municipality could have requested a summons from the Board to require the attendance of that person at the hearing. The Municipality did not do so. In the Board’s view, it is inappropriate to punish the assessed person because someone feels misled by a person at MPAC.
69The Board is mindful of Mr. Kompson’s desire for a continued strong relationship with the Municipality and its officials, and his hope that this issue not have a deleterious effect on that relationship. The Board will entertain Mr. Ford-King’s application for costs only after he consults with his client, receives appropriate instructions and files written submissions.
Conclusion
70The assessment of the subject property is reduced from $1,173,000 to $525,000 for the 2012 taxation year.
“R. D. Butterworth” R.D. Butterworth Vice-Chair
“A. Castel” A. Castel Member
/ci