Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE:
April 9, 2015
FILE NO.:
WR 127486
Assessed Person(s):
Steffanie Gareau
Appellant(s):
Steffanie Gareau
Respondent(s):
Municipal Property Assessment Corporation (“MPAC”) Region 17
Respondent(s):
Township of Muskoka Lakes
Property Location(s):
1150 Roberts Bay Road Unit 2
Municipality(ies):
Township of Muskoka Lakes
Roll Number(s):
4453-040-002-03600-0000
Appeal Number(s):
2989938, 2995659, 2991244, 3023304 and 3088232 (deemed 2015)
Taxation Year(s):
2013, 2014 (and deemed 2015)
Hearing Event No.
569374
Legislative Authority:
Sections 32, 34 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended
ARB Case Name:
WR 127486
Heard:
September 4, 2014 in Port Carling, Ontario
APPEARANCES:
Parties
Counsel+/Representative
Steffanie Gareau
Paul Gareau and Allan Holmes
MPAC
Pam Mulligan and David Zhao
Township of Muskoka Lakes
No one appeared
DECISION OF THE BOARD DELIVERED BY DAN WEAGANT
INTRODUCTION
1The subject property fronts onto Lake Joseph in Muskoka Lakes Township. It is occupied by a cottage of approximately 2,500 square feet (“sq. ft.”) in size that was constructed in 2012 and 2013. The land comprises an area of approximately 3.81 acres with a lake frontage of 740 feet and an effective frontage applied by MPAC of 565 feet. The subject property was assembled by adding a portion of an adjoining lot to enlarge the subject roll number.
2The property is bisected by a pronounced ridge, roughly parallel to the shore line that effectively creates two distinct areas; the lower section adjacent to Lake Joseph where the cottage is situated, and an upper section that provides access to the property by way of a private road that is approximately 20 feet higher in elevation than the waterfront.
3For the 2013 taxation year, MPAC returned a value of $2,503,000 for the land portion of the property. Subsequent to the Appellant filing a Request for Reconsideration, a full site inspection was conducted by MPAC and a recommendation was advanced that reduced the current value of the land portion to $1,898,000. For the 2014 taxation year, MPAC added the value of the buildings completed in 2013, of $878,000, to the recommended land value and returned a total value of $2,776,000.
4There are four appeals made by the Appellant including appeals of adjustments made by MPAC under s. 32 and s. 34 of the Assessment Act (“Act”) that was meant to include the new cottage that was completed in 2013. At the outset of the hearing, the parties agreed that there is no issue with regard to the value of the buildings on the site. As a result, the Appellant withdrew the appeals under s. 32 and s. 34. The parties further agreed that the issue at hand is the current value of the land portion of the subject property only.
5The Assessment Review Board (“Board”) must determine two things in these appeals. Firstly, the Board must determine, based on the evidence at the hearing, what the current value of the land portion of the subject property is, as of January 1, 2012, the valuation date for the 2013 and 2014 taxation years. Secondly, the Board must determine, having reference to the assessments of similar properties in the vicinity, if the assessment of the subject property should be reduced further to be equitable.
DECISION
6The Board finds that the current value of the property at 1150 Roberts Bay Road Unit 2 is $1,898,000 for the 2013 taxation year. As the Appellant withdrew the appeals under s. 32 and s. 34 for the 2013 taxation year, the agreed-to value of the buildings of $878,000 is added to the value of the land determined for the 2013 taxation year. The Board finds that the value of the subject property for the 2014 taxation year is $2,776,000. The Board also finds that there is no evidence before it to suggest that the assessment of the subject should be reduced further to make it equitable with that of similar properties in the vicinity.
7Accordingly, the assessment for the subject property is reduced, from $2,503,000 to $1,898,000 for the 2013 taxation year and is confirmed at $2,776,000 for the 2014 taxation year.
Legislation
8In considering this appeal, the Board must consider s. 1, s. 19.(1), s. 19.(2) and s. 44.(3) of the Act.
“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.
10Section 19.(1) of the Act states
19.(1) Assessment based on current value. – The assessment of land shall be based on its current value.
11Section 19.2(1) of the Act 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.
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.
12Section 44.(3) of the Act 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.
REASONS FOR DECISION
MPAC’S Evidence
13Pam Mulligan is a Property Valuation Analyst and represents MPAC in these appeals. Ms. Mulligan testified that to determine the current value of the subject property she undertook two processes. Firstly, in preparation for this hearing and as a result of her site inspection the originally returned land value of the subject property of $2,503,000 was reduced to $1,898,000. This reduction resulted from adjustments made to reflect the following:
A change in the exposure of the land from North to East.
A reduction in the length of the effective water frontage.
A reduction to reflect the difficulty in access to the land over a private road that must traverse the ridge that exists on the property.
A recognition that a portion of the property is considered to be swamp.
Ms. Mulligan testified that these amendments combined to lower the current value of the land portion of the subject property.
14Ms. Mulligan’s second process involved the preparation of a valuation study, taking the direct comparison approach to value, which Ms. Mulligan testified is the most common approach to value undertaken by MPAC for this type of property. Ms. Mulligan compared the land portion of the subject property to six other properties that sold in proximity to the valuation date, with sales dates ranging from August 2009 through November 2012. According to Ms. Mulligan, each of the six sale values in her analysis were adjusted for price changes over time, by applying a Time Adjustment Factor (“TAF”). This TAF is derived from a trend analysis generated from 73 sales of similar properties that took place from January 2009 through November 2012. By applying the TAFs for each comparable property’s sale value the resultant values can be compared as though they all took place of the valuation day. The details of Ms. Mulligan’s six comparable properties and the subject property are summarized in Table A.
Table A
Subject property
Sale A – Watt Conc. 12
Sale B – 1032 Redwood Road
Sale C – 1061 Unit 1 Roberts Bay Road
Sale D – Medora Conc. 5
Sale E – 64 Lookout Point Road
Sale F – 2B Crayfish Point Road
Sale Price / Date
N/A
$1,200,000
$1,015,000
$1,316,250
$1,100,000
$2,350,000
$3,050,000
TAS Price
N/A
$1,262,745
$990,718
$1,206,239
$1,137,522
$2,554,262
$2,851,790
Frontage (Feet)
740
435
340
465
210
406
667
Effective Frontage (Feet)
565
435
340
407
210
406
667
Site Area
3.81 acres
8.56 acres
15.44 acres
2.29 acres
1.70 acres
7.96 acres
3.53 acres
Site Access
seasonal
seasonal
seasonal
seasonal
seasonal
municipal road
seasonal
Swamp
11-50%
No
51-75%
Exposure
East
N/A
North
North
South
West
Topography
Slight slope
N/A
Slight slope
Level
Slight slope
15Ms. Mulligan’s opinion is that Comparables A, B, C and D are inferior to the subject property in terms of value, while Comparable E is relatively comparable and Comparable F is superior in value. She testified that the current value of the subject property is between $1,262,000 (the highest value of the inferior properties) and $2,852,790 (the value of the superior property).
16To support her opinion, Ms. Mulligan testified as follows:
In comparison to the subject property, Sale A has a shorter effective waterfront, is larger than the subject property, faces in a north west direction, with the waterfront heavily vegetated and has a rocky shoreline. Sale A has a ridge on the property similar to the subject property and is similarly accessed by a seasonal road.
Sale B has substantially less effective waterfront and faces north. Sale B is larger than the subject property but most of the land is swampy with frontage on Highway 118. The shoreline of Sale B is comprised of solid, sloping rock.
Sale C also has less effective frontage that the subject property and is somewhat smaller in overall size. Sale C has a northern exposure and is also accessed by a seasonal road.
Sale D has a frontage of less than half of the subject property and is approximately 2 acres smaller. It has a southern exposure with a “somewhat” rocky shoreline and is accessed by a seasonal road.
Sale E has a narrower lake frontage than the subject property and is larger in area. The waterfront is sharply sloped with a single rocky point. It has a northwest exposure and similar to the subject property, has access by right of way to a public road.
Sale F has a larger waterfront and is similar in overall lot size. It has a premium west exposure on Lake Joseph. The shoreline has a combination of large sloping rocks with some large boulders near the water’s edge. Like the subject property, Sale F has a dock in connection with a boat house along with a secondary dock in another location.
17Ms. Mulligan concludes that her findings demonstrate that the recommended current value of $1,898,000 is reasonable in that she has made appropriate reductions from the returned value and that the recommended value falls within the range indicated by her sales analysis.
18With respect to equity, Ms. Mulligan compared the Time Adjusted Sale (“TAS”) value of 50 similar properties in the vicinity with their respective assessed values. The result of this equity study is a median assessment to TAS value of 0.99. According to Ms. Mulligan, this median assessment to sale ratio (“ASR”) indicates that similar properties in the vicinity are very slightly under-assessed in comparison to their time adjusted sale values. She added that, according to the International Association of Assessing Officers (IAAO) standards, residential studies of this kind that result in an ASR of between 0.90 and 1.10 should be considered accurate enough not to require any further adjustment for the purposes of making an assessment equitable with the assessments of similar properties in the vicinity. Ms. Mulligan added that MPAC uses a more stringent range of 0.95 to 1.05 for residential properties, and the findings of her study fall within the range in either case.
Appellant’s Evidence
19Paul Gareau and Allan Holmes represent the Appellant, Steffanie Gareau in these appeals, with Mr. Holmes acting as advocate. Mr. Holmes took Mr. Gareau through the history of the property and Mr. Gareau explained that, owing to site constraints including the property’s physical limitations and those imposed by the municipal zoning by-law, the Appellant sought to increase the frontage of the property to permit the construction of a two-storey boathouse. Mr. Gareau testified that the zoning by-law requires a certain frontage to support the construction of a two-storey boathouse and the original property did not have sufficient frontage for that purpose. The Appellant made an application for consent to sever a portion of a neighbouring property and add it to the original subject property to provide for the adequate water frontage to permit the two-storey boathouse. The consent was granted and the result was the addition of a parcel of land measuring approximately 320 along the water and 30 to 60 feet wide.
20Mr. Gareau also described the limitations on the subject property with respect to fish habitat. Regulations require certain setbacks from identified fish habitat on Lake Joseph and the habitat in proximity to the subject property allow only two locations for a dock. The first location is in front of the newly constructed cottage and the second has been installed in conjunction with the boathouse. The locations of fish habitat required the boat house to be a significant distance from the cottage and that is why the severance applied for provided for such a long waterfront strip.
21Except for the utility it provides in permitting the construction of the two storey boathouse on the lands, it is Mr. Gareau’s view that the strip of land added by the consent should add no value to the subject property.
22In addition to Mr. Gareau’s evidence, Mr. Holmes submitted Exhibit 2 which includes a table that compares a wide range of property characteristics that the Appellant believes are important in determining the current value of cottage lands in the Lake Joseph and Lake Muskoka area. Mr. Holmes cites six properties for comparison; two of which, 1032 Redwood Road and 1061 Unit 1 Roberts Bay Road, are also cited in MPAC’s analysis.
23Mr. Holmes and Mr. Gareau are of the opinion that differing exposures, views, and waterfront characteristics have an impact on property values in this market. They compare the exposure of the subject property with the exposure of the six properties in their comparison analysis. However, they were not able to make a direct link between the variable values represented by differing directions of exposure to the subject property.
24Exhibit 2 states that its findings are relevant with respect to equity of assessment. Mr. Holmes compares the assessment of the subject property to the 2013 assessments of his six comparables which range from $983,000 to $1,487,707. It is his assertion that each of the six comparables are superior in value to the subject property and that the assessment of the subject property should be reduced to an amount that is less than all six. Mr. Holmes quantifies his opinion of the correct assessment at $955,575. However, there is no direct, quantifiable link made in Exhibit 2 between the variables cited and the appropriate reduction in value submitted by Mr. Holmes.
Board’s Analysis
Current Value
25The disagreement between the parties can be summarized as one of valuation of the strip of land that was added to the original property to provide for the construction of the two storey boathouse. MPAC has recommended a current value of $1,898,000 for the entire parcel. In Ms. Mulligan’s valuation report, she cites the TAS value of six comparable properties. The sale value per foot of frontage of these six comparable sales ranges from $2,594 to $6,291 with a median of $3,595. In reviewing the map details of each of the comparable properties, the Board notes than none of the six has a strip of land that compares to that existing on the subject property. This is not surprising as the configuration of the subject property is unique. It is also an important distinction of the subject property as both parties agreed that lake frontage is an important driver of property value in this market. However, as Mr. Gareau pointed out, not all frontage should be valued equally. It is clear to the Board that the 320 feet of frontage represented by the added strip is much different than the rest of the frontage of the subject property and that of the 10 total properties in evidence used as comparable by the Parties.
26To make some meaningful use of the median sale value per foot of frontage, it is reasonable to apply that value to the subject property prior to the addition of the strip of land added by consent. In applying the median value of $3,595 to the original 420 foot frontage, the result is $1,509,000, which would indicate that the value attributed to the strip of land by MPAC in their recommendation is $388,100 or $1,212 per foot of frontage or approximately 34% of the value of the frontage per foot of the original portion of the property.
27It is important to note that the Appellant was not able, through cross-examination, to impugn or refute the findings of Ms. Mulligan’s valuation study. Through direct testimony from Mr. Gareau, the Board heard that it was his opinion that the strip of land has very limited utility and thus little or no value. The Board does not agree. The addition of the strip of land provided for the construction of a two storey boathouse that was desirable for the Appellant to have. This demonstrates clearly that the strip of land does have value.
28With respect to the specific issue of direction of exposure, the Appellant believes that the subject property, with an exposure to the north east should have a reduction applied when that exposure is compared to western or south western exposures. While they were not able to quantify what this adjustment should be, the Board is satisfied that MPAC, through the adjustments made by Ms. Mulligan, accounted for the difference in value owing to the subject property’s northeast exposure. Ms. Mulligan testified that the recommended value of 1,898,000 included a reduction for exposure to the north east and that northern exposures are generally granted a 20% reduction for this variable.
29The Appellants did not advance a specific value for the property as a whole or for the original property and the strip of land separately. Their evidence focussed on the differences between the subject property and four properties in addition to the six proffered by Ms. Mulligan in her study. In the absence of direct evidence to the contrary, the Board finds that the best evidence of current value is that of MPAC. The value recommended by MPAC includes a reasonable value for the original parcel, based on the median value per foot of frontage of MPAC’s comparable properties, plus an additional amount of frontage at a significant discount for the added strip. This is consistent with the Appellant’s position that the strip of land has a lesser value that the original property. The Board finds that the current value of the subject property is $1,898,000 as recommended by MPAC.
Equity of Assessment
30In their submission with respect to equity of assessment, Mr. Holmes made a much more fulsome argument with respect to the assessment of the subject property. His table of comparable properties provides a wide range of variables to consider, including such things as views, direction of view, character of the waterfront, the values represented in the various neighborhoods represented by his comparables and even the ability of the subject property and the comparable properties with respect to their ability to support a tennis court.
31Under cross-examination, Mr. Holmes testified that three of the six comparables used in his analysis, #1, #2 and #6 have existing cottages constructed on them and as a result, the values he reports for the land portion are derived from the Property Assessment Detail report for each. The Board finds that the land value portion of developed lands are not suitably comparable in this case as the property under appeal was vacant. Accordingly, the Board disregards these three properties for the purpose of determining equitable assessment as they are not suitable similar to the subject property.
32The three remaining properties in Mr. Holmes’ analysis vary in lake frontage, from 340 feet to 732 feet, with assessed values ranging from $983,000 to $1,487,707. The per-front foot assessed values of these three properties are $2,917 for 1153 Roberts Bay Road, $2,891 for 1032 Redwood Drive and $1,997 for 1061 Roberts Bay Road. Of the three only 1053 Roberts Bay Road was not also cited by MPAC. Mr. Holmes did not have a sale value for 1053 Roberts Bay Road and for the purposes of determining equity of assessment, this property is of limited value.
33By contrast, MPAC’s equity analysis provides the 2012 assessed value of 50 properties and compares them with their corresponding TAS value. The Board finds that the MPAC analysis has its own shortcomings. Firstly, the table of similar properties only includes one of the six properties put forward in their analysis for the purposes of determining current value. Secondly, and more importantly, the equity analysis includes 22 properties that are included in property code 100, whereas the subject property carries property code 110 – vacant residential / recreational land on water. However, when the 22 properties with property code 100 are removed from the analysis, the Board notes that the resultant median is still 0.99 which is consistent with MPAC’s findings. Accordingly, for the purposes of determining the equity of the assessment of the subject property, the Board finds that the best evidence is that of MPAC.
DECISION
34The Board finds that the current value of the property at 1150 Roberts Bay Road Unit 2 is $1,898,000 for the 2013 taxation year. As the Appellant withdrew the appeals under s. 32 and s. 34 for the 2013 taxation year, the agreed-to value of the buildings of $878,000 is added to the value of the land determined for the 2013 taxation year. The Board finds that the value of the subject property for the 2014 taxation year is $2,776,000. The Board also finds that there is no evidence before it to suggest that the assessment of the subject should be reduced further to make it equitable with that of similar properties in the vicinity.
35Accordingly, the assessment for the subject property is reduced, from $2,503,000 to $1,898,000 for the 2013 taxation year and is confirmed at $2,776,000 for the 2014 taxation year. The 2014 finding is deemed for the 2015 taxation year.
2015 DEEMED APPEAL
36An appeal for the 2014 taxation year is presently before the Board. Section 40.(26) provides that the appellant is deemed to have made the same appeal for the subsequent taxation year if the appeal is not finally disposed of before March 31 of the subsequent taxation year. The Board has not disposed of the 2014 appeal before March 31, 2015. For that reason, this decision also applies to the 2015 taxation year.
37Section 40.(26) of the Act directs:
Deemed appeals, 2009 and subsequent years
For 2009 and subsequent taxation years, an appellant shall be deemed to have brought the same appeal in respect of a property,
(a) in relation to the assessments under sections 32, 33 and 34 for the year; and
(b) in relation to the assessment, including assessments under sections 32, 33 and 34, for a subsequent taxation year to which the same general reassessment applies, if the appeal is not finally disposed of before March 31 of the subsequent taxation year or, if an assessment has been made under section 32, 33 or 34, before the 90th day after the notice of assessment was mailed.
“Dan Weagant”
DAN WEAGANT
MEMBER
Assessment Review Board
A constituent tribunal of Environment and Land Tribunals Ontario
Website: www.elto.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248