David Robertson McLeod v. Municipal Property Assessment Corporation, 2015 CanLII 24125

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: April 30, 2015 FILE NO.: WR 128386 Assessed Person(s): David Robertson McLeod and Dorothy Viola McLeod Appellant(s): David Robertson McLeod Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region 19, City of Hamilton Property Location(s): 7 Church Street Municipality(ies): City of Hamilton Roll Number(s): 2518-003-040-22000-0000 Appeal Number(s): 2998767, 3024668 and 3089128 (deemed 2015) Taxation Year(s): 2013, 2014 (and deemed 2015) Hearing Event No.: 568844 Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended ARB Case Name: WR 128386 Heard: October 21, 2015 in Hamilton, Ontario

APPEARANCES:

Parties	Representative
D. R McLeod and D. V. McLeod	R. Baranowski
MPAC	W. Somerville and J. Wilson
City of Hamilton	No one appeared

DECISION OF THE BOARD DELIVERED BY CRISTINA MARQUES

ISSUE

1The subject property is a single-family detached dwelling, first tier on water, located on Lake Ontario. Built in 1939 it was renovated with a "C" renovation code in 1990, for an effective year built of 1972 and a quality rating of 7. The total building area is 2,745 square feet. There is an outdoor pool, an attached garage, and a small shed. The lot has a frontage of 132.2 feet, a depth of 391.88 feet, and an effective site area of 1.19 acres.

2For taxation years 2013 and 2014 the assessment was returned pursuant to the Assessment Act ("Act") at $965,000.

3William Somerville, appearing as advocate for MPAC takes the position that the assessments as returned reflect correct current value and should be confirmed.

4Robert Baranowski, appearing as the representative and witness for the Appellant, takes the position that the MPAC's data is incorrect because the property does not have a basement, and that assessments for the subject property are too high. He also argues that based on his Assessment to Sales Ratio ("ASR") analysis, the property is over-assessed, and seeks an assessed value of $635,000.

5The Assessment Review Board ("Board") must determine if the assessments for 2013 and 2014 taxation years reflect correct current value as of the legislated valuation day, January 1, 2012, and if they are equitable, having reference to the assessments of similar lands in the vicinity.

Decision

6The Board finds that the correct current value of the property is $965,000.

7The Board also finds that an assessment at the current value as found is equitable with the assessments of similar lands in the vicinity hence no reduction is required to achieve equity.

8The assessment is confirmed at $965,000.

REASONS FOR DECISION

9The Board must have regard to s. 1, 19.(1), 19.2(1), 40.(17), 40.(19), 44.(3)(a) and (b), and 45 of the Act when determining whether or not the assessment under appeal is correct.

10Section 1 of the Act defines current value as follows:

"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.

11Section 19.(1) of the Act states:

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

12Section 19.2(1) of the Act provides:

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.

13Section 40.(17) of the Act 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.

14Section 40.(19) of the Act states:

40.(19) Board to make determination. – After hearing the evidence and the submissions of the parties, the Board shall determine the matter.

15Sections 44.(3)(a) and (b) of the Act state:

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.

16Section 45 of the Act states:

45. Powers and functions of the Assessment Review Board. – Upon an appeal with respect to an assessment, the Assessment Review Board may review the assessment and, for the purposes of the review, has all the powers and functions of the assessment corporation in making an assessment, determination or decision under this Act, and any assessment, determination or decision made on review by the Assessment Review Board shall be deemed to be an assessment, determination or decision of the assessment corporation and has the same force and effect.

Current Value – Evidence and Analysis

MPAC's Position

17Jason Wilson, who testified for MPAC, presented Exhibit 1 consisting of an MPAC report which included:

• location and current value study map;
• photograph of the subject property;
• property profile;
• current value study with eight comparable sales;
• time-adjustment factors table;
• sales for price changes over time schedule;
• equity analysis studies.

18He submitted that the time adjusted sale prices of eight comparables provide a range of likely values for the subject property between $573,212 and $1,028,951. Because the assessment as returned at $965,000 falls within this range of probable sale values, he submits that it is reflective of current value as required by s. 19.(1) of the Act.

19Details of each property on Current Value Study are summarized in Table 1:

Table 1

Address	Assessment	Sale Date	Sale/Time Adjusted Sale ($)	Building Size (sq. ft.)	Lot Size/ (acres)	Year Built
Subject Property 7 Church Street	965,000	n/a	n/a	2,745	132 x 392/ 1.11	1939
Sale A 6 Falcon Road	n/a	Jan.-2010	540,000/ 585,515	Vacant Land	99 x 250/ 0.44
Sale B 92 Seabreeze Crescent	n/a	June-2010	550,000/ 573,212	Vacant Land	88 x 223/ 0.45
Sale C 518 Glover Road	n/a	Jan.-2010	900,00/ 975,859	Vacant Land	242 x 248/ 0.98
Sale D 23 Lakeview Drive	836,000	April-2010	975,000/ 1,028,951	2,457	100 x 294/ 0.67	2002
Sale E 23 Church Street	898,000	April-2011	815,000/ 828,528	3,917	50 x 335/ 0.49	1910
Sale F 25 Church Street	626,000	July-2012	850,000/ 815,831	2,714	50 x 328/ 0.43	1953
Sale G 49 Church Street	676,000	May-2012	728,000/ 710,420	3,902	50 x 248/ 0.28	1971
Sale H 59 Church Street	645,000	Nov.-2011	616,000/ 622,034	3,253	50 x 215/ 0.28	1921

20Mr. Wilson testified that the suggested comparables are considered by MPAC to be similar to the subject property on the basis of location, size and quality. He relied on these sales to determine whether properties are assessed at or close to their current values, and indicated that the direct sale comparison approach accurately reflects the value of the property. The assessor gave details on MPAC's analysis of sales in the neighbourhood of the subject property between January 2010 and December 2012, and stated that the area experienced an overall increase of 19.98% in real estate market. Time Adjustment Factors ("TAF") for each month during the study period were provided together with the data for the 360 sales analyzed.

21The Board rejects as good comparables MPAC's suggested sales A, B and C. These are vacant land sales, in the Board's view not comparable to the subject property. It is reasonable to consider built on properties will have added value on the open market.

Appellant's Position

22Mr. Baranowski filed Exhibit 2 consisting of the Appellant's issues and calculations, and a list of 14 suggested comparable properties, which he submits are similar to the subject property, and demonstrate that the subject property is over-assessed.

23Details of each property on Current Value Study are summarized in Table 2:

Table 2

Address	Assessment	Sale Date	Sale/ Time Adjusted Sale ($)	Building Size (sq. ft.)	Lot Size/ (acres)	Year Built
Sale 1 23 Church	898,000	Apr.-2011	815,000/ 828,528	3,917	50 x 335/ 0.49	1910
Sale 2 21 Church	1,055,000	No valid sale		4,897	68 x 364/ 0.52	1983
Sale 3 25 Church	626,000	July-2012	850,000/ 815,831	2,714	50 x 328/ 0.43	1953
Sale 4 31 Church	777,000	No valid sale		3,240	50 x 308/ 0.40	1986
Sale 5 43 Church	706,000	Apr.-2013	799,900/ n/a	3,163	50 x 268/ 0.35	1930
Sale 6 49 Church	676,000	May-2012	728,000/ 710,420	3,902	50 x 248/ 0.28	1971
Sale 7 51 Church	747,000	No valid sale		3,440	50 x 242/ 0.32	1977
Sale 8 53 Church	622,000	No valid sale		2,889	50 x 253/ n/a	1931
Sale 9 57 Church	790,000	No valid sale		3,426	50 x 221/ 0.3	1988
Sale 10 59 Church	645,000	Sep.-2011	616,000/ 622,034	3,253	50 x 215/ 0.28	1921
Sale 11 19 Lakegate	792,000	No valid sale		2,910	52 x 219/ 0.25	1983
Sale 12 11 Lakegate	924,000	Apr.-2011	901,000/ 916,317	3,272	62 x 211/ 0.3	1985
Sale 13 13 Lakegate	1,069,000	No valid sale		3,925	53 x 254/ 0.31	2011
Sale 14 11 Church	951,000	No valid sale		3,887	100 x 351/ 0.8	1956

24Mr. Baranowski submitted that the best evidence of current value is the sales on Church Street. He testified that these sales indicate that properties on the same street as the subject property are selling for values noticeably lower than their assessments. He urged the Board to reduce the assessment of the subject property to $635,000.

25The Appellant's suggested comparable Sales 2, 4, 7, 8, 9, 11, 13 and 14 have no valid sales. As for Sale 5 the Board was not provided with time adjustment factors. For those reasons these nine properties are rejected by Board as good comparables.

Board's Analysis of Current Value

26The best indicator of current value is an arm's length and market-tested sale of the subject property on the valuation date, January 1, 2012, or close to it. Since the subject property did not sell, the Board relies upon the sale of similar properties in the vicinity on or close to the valuation day.

27The Board finds the following six properties, presented as evidence by both parties, acceptable comparables, as summarized in Table 3:

Table 3

Address	Time Adjusted Sale ($)	TAS per sq. ft. of waterfront ($)
23 Lakeview Drive	1,028,951	10,289.51
23 Church Street	828,528	16,570.56
25 Church Street	815,831	16,316.62
49 Church Street	710,420	14,208.40
59 Church Street	622,034	12,440.68
11 Lakegate	916,317	14,831.94

28When the Board analyses the six acceptable sales, it observes that they are all similar to the subject property in the sense they are all waterfront properties in the same general vicinity on lake Ontario, and that they are all built-on properties.

29The time adjusted sale price for the seven properties ranges between $622,034 and $1,028,951. The assessment of the subject property as returned at $965,000 is within this range.

30Another logical way to determine the correct current value with the evidence before the Board is to determine a value per linear foot of waterfront, based upon the time adjusted sale prices. In this case the range is between $10,289.51 and $16,570.56 per linear foot of waterfront. The subject property's current value assessment at $7,310.60 per linear foot of waterfront is considerably below this range.

31Mr. Baranowski has not adequately demonstrated that the current value for his property is incorrect. As for his suggestion that his property should be assessed at $635,000; the Board is satisfied that the evidence does not lead it to that conclusion. The current value assessment of the subject property at $965,000 is supported by the sales evidence, including vacant lots that sold for similar values.

32The Board finds that the correct current value of the subject property is $965,000.

Equity Analysis

33Section 44.(3)(b) mandates and directs that after determining current value, the Board shall have reference to the value at which similar lands in the vicinity are assessed. The ASR is a tool often used in determining if an equity adjustment is required. The ASR is determined by dividing the assessment as returned with the time adjusted sale price. An ASR falling below 1.0 is an indication that MPAC's valuation methodology may be resulting in assessments below values determined in the market place. Conversely, an ASR greater than 1.0 is an indication that MPAC's valuation methodology may be resulting in assessments above values determined in the market place.

34Mr. Baranowski argued that properties located on Church Street and Lakegate show, streets in the vicinity, have an average assessment per square foot of $231, and requested that accordingly, the Board should give the same consideration to the subject property.

35The five valid sales on Church Street and Lakegate have a median ASR of 1 an indication that MPAC is achieving values similar to those determined in the marketplace.

36MPAC relied on the sales of 30 properties to determine whether properties are assessed at or close to their current values, as listed in the Equity analysis of Exhibit 1. The median ASR for the sold properties is 0.98, which is within MPAC's acceptable range of ASRs between 0.95-1.05. This result satisfies the Board that generally speaking, MPAC's valuation methodology is achieving values similar to those determined in the marketplace, and no further equitable adjustment is warranted.

CONCLUSION

37The assessment is confirmed at $965,000 for the 2013 and 2014 taxation years.

2015 DEEMED APPEAL

38An 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.

39Section 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.