Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: May 1, 2015

FILE NO.: WR 129941

Assessed Person(s): Joan Elizabeth Shaw and George Earl Shaw

Appellant(s): Joan Shaw and Earl Shaw

Respondent(s): Municipal Property Assessment Corporation (“MPAC”), Region 5

Respondent(s): Central Frontenac Township

Property Location(s): 1066 Sparks Lane

Municipality(ies): Central Frontenac Township

Roll Number(s): 1039-040-030-05050

Appeal Number(s): 3018294 and 3073057 (deemed 2015)

Taxation Year(s): 2014 (and deemed 2015)

Hearing Event No. 576950

Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

ARB Case Name: WR 129941

Held: January 16, 2015, Sharbot Lake, Ontario

APPEARANCES:

Parties	Counsel^+/Representative
E. Shaw	H. MacGregor
MPAC	E. Corsi
Central Frontenac Township	No one appeared

DECISION OF THE BOARD DELIVERED BY ANDREW E. FENUS

INTRODUCTION

1The appeal before the Assessment Review Board (“Board”) is an appeal by Earl Shaw in respect of the assessment of the residential property at 1066 Sparks Lane, Central Frontenac Township (“subject property”) for the 2014 taxation year.

2The subject property is situated on Chippego Lake. It is a two-storey single-family detached seasonal/recreational residence on water resting on a site area of 17.73 acres, with an effective water frontage of 278.70 feet. The shoreline is rocky and shallow and the lot is assessed as having between 11% to 25% swamp. The subject property was built in 2013 and has three bedrooms and a total building area of 1,558 square feet. It has a northern exposure. The secondary structure on the lot is a uninsulated barn built in 2013 with an area of 1,920 square feet.

3The assessment as returned for the valuation day, January 1, 2012, is $457,000.

DECISION

4The Board finds that the current value to be $454,000. for the 2014 taxation year.

5[5] The Board finds that the assessment should be reduced below current value to make it equitable with assessments of similar lands in the vicinity. The Board orders the assessment be reduced from $457,000 to $395,000 for the 2014 taxation year.

Case for MPAC

6Emily Corsi filed a valuation report and equity analysis for the subject property. This consists of a photograph and a property profile of the subject property, an MPAC property report highlighting the subject property with four comparable sale properties (with photographs) located in the same township, a market study with a chart of time- adjustment factors for all sale comparables, a market analysis map, and an equity analysis of some 30 sales indicating a median assessment to sale ratio (“ASR”) of 0.97. [Exhibit 1]. Ms. Corsi submitted that of these 30 sales, sixteen are waterfront properties with a median ASR of 0.95.

7Ms. Corsi testified that the house on the subject property has been recently constructed and an inspection of the property took place in September 2014. Consequently, the building area for the purposes of assessment was revised from its original plan of 1,864 square feet to 1,558 square feet. Ms. Corsi recommended that the assessment for the subject property be reduced to $433,000 in consideration of the smaller building area. Ms. Corsi acknowledged that 11% to 25% of the property is considered swamp, but testified that his fact has been taken into consideration by MPAC in assessing the subject property.

8Ms. Corsi testified that the current value of the subject property was determined using the direct sales comparison approach to value. Ms. Corsi stated that it was difficult to find comparable sales in the vicinity. Four sale comparables were submitted:

9Sale A, located at 1070 West Shore Lane, is considered to be a relatively comparable property which was built 40 years earlier than the subject property, with a renovation taking place in 2009. The building area is 2,252 square feet with three bedrooms, but unlike the subject property, it has a finished basement (1,156 square feet). The lot size (0.91 acres), water frontage (210 feet), and garage (709 square feet) are smaller. The shoreline is rocky and deep with exposure to the East. The property was sold for $485,000 in May 2010: it has a time adjusted sale price of $506,921. The current value assessment (CVA) is $466,000.

10Sale B, 1404 Dwyer Lane, is considered to be an inferior property located on the same lake as the subject property. The one storey two-bedroom structure was built in 2002. Its building area is 912 square feet with a finished basement of 836 square and a detached garage of 600 square feet. The structures are situated on a lot size of 1.02 acres. It has water frontage of 168 feet. The topography lists a cliff on the lot. The shoreline is rocky and the exposure is to the East. The property was sold for $299,000 in June 2010: it has a time adjusted sale price of $311,077. The current value assessment (CVA) is $307,000.

11Sale C, located at Blackburn Lane, is considered to be a relatively comparable property which was built in 1991. The building area is 2,148 square feet with three bedrooms, but unlike the subject property, it has a finished basement (1,000 square feet). The lot size (11.02 acres), water frontage (270 feet), and shed (205 square feet) are close to those of the subject property. The shoreline is rocky and deep and the exposure is to the West. The property was sold for $420,600 in June 2008: it has a time adjusted sale price of $566,010. The current value assessment (CVA) is $521,000.

12Sale D, located at 1070 West Shore Lane, is considered to be a relatively comparable property which was built around the same time as the subject property, in 2011. The building area is 1,387 square feet with one bedroom. The lot size (1.43 acres) and water frontage (185 feet) are smaller. It has no garage. The topography lists a steep slope and its shoreline is shallow with exposure to the West. The property was sold for $500,000 in October 2013: it has a time adjusted sale price of $465,000. The current value assessment (CVA) is $303,000.

13Ms. Corsi submitted that the market value of the subject property falls within the range of the three relatively comparable sales, Sale A, C, and D. The time adjusted sale amounts range, from a low of $465,000 (Sale D) to a high of $566,010 (the most comparable property, Sale C). She submits that the recommended assessment of the subject property of $433,000 is reasonable.

Case for the Appellant

14Mr. MacGregor filed four sale advertisements of properties being sold in Central & South Frontenac area. The presentation of each of these comparables list their respective “asking prices” and the following: one page of descriptive information, a coloured view of the front of the building, a full page of a mosaic of up to 18 small illustrations of the property, another full page view of an aspect of the property, a Google map reproduction of the location of the property. [Exhibit 2].

15Mr. MacGegor testified that all these properties are “on the market at present” and they are being offered for sale at the listed prices by a willing seller. According to Mr. MacGregor the “asking price may not be the actual price of delivery. It is usually less in such transactions.” He further added that these asking prices are the market value ceiling prices of these comparables.

16Mr. MacGregor submitted the following four properties for consideration:

• 1034 Simmins Lane East, South Frontenac. Asking price is $349,900.00
• 1037 Oak Lane, Central Frontenac. Asking price is $255,000.00
• 79 West Shore Lane, South Frontenac. Asking prtice is $299,999.00
• 1057 Island View Lane, Central Frontenac. Asking price is $369,000.000

17Mr. MacGregor also testified that an easement traversed the property, but could not offer any specific details as to the nature of the easement. Ms. Corsi stated that MPAC was not aware of such an easement on the property.

18Mr. Shaw, an appellant and spouse of the owner testified that his property is not worth the assessed value of $457,000, let alone MPAC’s recommendation of $433,000. He feels singled out by MPAC and believes that MPAC was over zealous in assessing his property and that the methodology employed by MPAC was not based on the real market values in the vicinity. He submits that this is evidenced by the asking prices of the comparables submitted by Mr. MacGregor.

Relevant Legislation

19For the 2013 and 2014 taxation years, in determining the value at which land shall be assessed the Board must have regard to the following provisions of the Act:

20Section 1 Definitions:

“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.

21Section 19.(1) of the Act states:

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

22Section 19.2(1)2 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:

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.

23Section 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.

24Section 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.

25Section 44.(3) of the Act states:

44.(3) Same, 2009 and subsequent year. – 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.

Board Deliberations and Findings

26The first task for the Board is to determine the current value of the subject property as required by s. 44.(3)(a) and 19.(1) of the Act.

27The best test of current value is an arm’s length and market-tested sale of the subject property on valuation day, January 1, 2012 or close to it. If, as in this case, no such transaction took place, the next best measure of current value is arm’s length and market tested sales of comparable properties in the same market and vicinity on or close to the valuation day.

28MPAC introduced into evidence 4 sales comparables and the Appellant did not introduce any. Instead, the Appellant filed sale advertisements for 4 properties. These comparables did not list a definitive sale price or a current value assessment (CVA) for each of these properties. The Board cannot justifiably use these “asking prices” due to their speculative nature. These are not sales: the “asking prices” are invitations to willing buyers to make offers. They cannot be considered to be “ceilings” either because prevailing market conditions and situation change over time and place. The “asking prices” offer no probative value to the Board in making a determination of current value.

29With respect to the easement issue raised by Appellant’s representative, the Board cannot make a finding due to the lack of information regarding its nature or its impact on the valuation of the assessment as returned for the subject property.

30The Board accepts the MPAC sale comparables as the best evidence to determine the current value because they are in the same vicinity of the subject property, and they are available among the paucity of comparable properties in the vicinity.

31The Board looks for common bases or parameters on which each sale comparable can be reasonably compared to the subject property. The common determinant, in this case, the total area of the building, is used to arrive at a current value. This is reasonable because residential sales are driven essentially by house size. Consequently, the Board will calculate a “sale price per square foot” amount by dividing the selling price of each sale comparable by its respective total building area. The average amount for the five sale comparables is calculated and applied to the total building area of the subject property. This will produce the estimated current value for the subject property.

32The Board has used the adjusted sales prices of sale comparables in order to determine the current value.

33The data for the calculations are the set out in the table below:

Property	Assessment	Adjusted Sale Price	ASR	Total Area (Square Feet)	Price/Sq. Ft.	Assessment/sq. ft.
Sale A	$466,000	$506,921	0.92	2,252	$225.10	$206.93
Sale B	$307,000	$311,077	0.99	912	$341.09	$336.62
Sale C	$521,000	$566,010	0.92	2,148	$263.51	$242.55
Sale D	$303,000	$465,000	0.65	1,387	$335.26	$218.46
Subject Property	$457,000 $433,000			1,558	$293.32 $277.92
AVERAGE SALES ONLY			0.87		$291.24	$251.14

34The Board calculates the “average sale price per square foot” amount for the comparables to be $291.24. When this amount is applied to the total house area of the subject property (1,558 square feet), it yields a value $453,751 (rounded to $454,000).

35The Board has de novo jurisdiction. It has used the method listed above to calculate the current value of the subject property based upon the best evidence submitted by the parties. The Board considers the recommendation by MPAC that the assessment be reduced to $433,000 to be an inducement to settle the appeal. Based upon the Board’s calculations, the Board finds that the current value of the subject property is $454,000.

36The second task for the Board is to determine whether an assessment at the current value of the subject property is equitable given other the assessments of similar lands in the vicinity. This is required by s. 44.(3)(b) of the Act.

37The Board finds that the evidence supports the conclusion that the assessment of the subject property should be reduced below its current value to make it equitable with the assessments of similar lands in the vicinity.

38The Board has used the best evidence submitted by the parties to determine the proper assessment of the subject property. In this instance the assessments of the four sales submitted by MPAC are more germane to determining an equity reduction since these sales are MPAC’s evidence to support its current value as returned in the amount of $457,000. Using an “assessment to sales ratio” (ASR) approach, the Board has calculated that the average ASR for the four sale comparables is 0.87. All of the sales comparable sold for more than their assessments.

39The Board has calculated that the assessment for the subject property as adjusted for equity is $394,763 ($453,751 times 0.87). This is rounded to $395,000.).

CONCLUSION

40The current value of the subject property is $454,000.

41The assessment of the subject property is reduced below its current value to make it equitable with the assessments of similar lands in the vicinity. Accordingly the assessment is reduced from $457,000 to $395,000 for the 2014 taxation year.

2015 DEEMED APPEAL

42An 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.

43Section 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.

Footnotes

1. 1Subsection 5 permits the Minister to prescribe a different valuation day. A different day has not been prescribed.