Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: May 12, 2015

FILE NO.: WR 127036

Assessed Person(s): Janine Selwa Cheeseman

Appellant(s): Janine Cheeseman

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 16

Respondent(s): Tiny Township

Property Location(s): 780 Sandy Bay Road

Municipality(ies): Tiny Township

Roll Number(s): 4368-000-014-47500-0000

Appeal Number(s): 2997518 and 3022924 (deemed 2014)

Taxation Year(s): 2013 (and deemed 2014)

Hearing Event No. 561719

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

ARB Case Name: WR 127036

Heard: August 6, 2014 in Perkinsfield, Ontario

APPEARANCES:

Parties

Counsel+/Representative

Janine Chesseman

Self-represented

MPAC

A. Parker

Tiny Township

No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING AND TYRONE D. SKANES

INTRODUCTION

1This appeal came before the Assessment Review Board (“Board”) in the Town of Perkinsfield in Tiny Township on August 6, 2014.

FACTS

2The subject property, 780 Sandy Bay Road, is a 30.4 acre parcel of land having frontage on Georgian Bay of 1,540 feet. For the 2013 and 2014 taxation years the assessment of the property is apportioned between the managed forests property class, assessed at $259,500 and the residential property class, assessed at $800,500 for a total returned assessment of $1,060,000.

ISSUE

3The Appellants do not seek to contest the assessment of the residential portion of this property. At issue is the correct assessment of the managed forests portion of the assessed value.

4The Board must determine:

• What is the current value of the managed forest portion of the subject property?

• What is the current value of the subject property?

• Is the assessed value of the subject property equitable in relation to the assessed values of similar properties in the vicinity?

DECISION

5The Board determines that the current value of the subject property is $866,800 as at the valuation day, January 1, 2012. This value is apportioned between the residential property portion of the subject property at a value of $800,500 and the managed forests property portion of the property, at a value of $66,300 (rounded).

6The Board finds that the evidence does not support a conclusion that the current value of the property as determined above requires an equity reduction.

7Accordingly, the assessment of the subject property is reduced for the 2013 and 2014 taxation years to $866,800, apportioned as to the residential property class $800,500 and as to the managed forests property class $66,300.

REASONS FOR THE DECISION

Determination of Current Value

8Section 44.(3)(a) of the Assessment Act (“Act”) requires the Board to first “determine the current value of the land”. The definition of “current value” is contained in s. 1 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.”

9Section 19 of the Act states:

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

10The subject property contains a portion of managed forest lands. The following legislation applies to the valuation of this property class for 2013 and subsequent years:

11Section 19.(5.2) provides:

Conservation land, managed forests. – The current value of land that is conservation land as defined in the regulations or land in the managed forests property class shall be based only on the current use of the land and not other uses to which the land could be put.

12Section 19.(5.2.1) provides:

Current value of managed forests. – Despite subsection (5.2) and any other provision of this Act, the Minister may, by regulation, provide that the current value of the land in the managed forests property class shall be determined in accordance with the regulations.

13Ontario Regulation 282/98, s. 32.2(1) as amended, sets out the rules respecting

the assessment of current value where the parcel contains both managed forests and another property class. It provides:

32.1 (1) The current value of land in the managed forests property class shall be determined as follows for the 2013 and subsequent taxation years:

1. Determine the value of the land in accordance with subsection 19 (5.2) of the Act.

2. Determine the value of the land in accordance with subsection (2).

3. If the value determined under paragraph 1 is less than the value determined under paragraph 2, the current value of the land is the value determined under paragraph 1.

4. If the value determined under paragraph 2 is less than 31 per cent of the value determined under paragraph 1, the current value of the land is the amount calculated by multiplying the value determined under paragraph 1 by 0.31.

5. In any other case, the current value of the land is the value determined under paragraph 2. O. Reg. 656/05, s. 1; O. Reg. 394/08, s. 2; O. Reg. 339/12, s. 1.

(2) For the purposes of paragraph 2 of subsection (1), the value of the land is determined as follows:

1. Determine whether the geographic area in which the land is located is listed in Column 2 of Table 1 to Part IX.1 of this Regulation. If it is, take the step described in paragraph 2. If it is not, take the steps described in paragraphs 4 and 5.

2. If the geographic area is listed in Column 2 of Table 1, determine whether the land band for the land, as assigned by the assessment corporation, is listed in Column 3 of Table 1 for the applicable geographic area. If it is, take the steps described in paragraphs 3 and 5. If it is not, take the steps described in paragraphs 4 and 5.

3. For land located in a geographic area listed in Column 2 of Table 1 and assigned to a land band listed in Column 3 of Table 1, identify the applicable value per acre of the land as set out in Column 4 of Table 1.

4. For any other land, identify the applicable value per acre of the land as set out in Column 2 of Table 2 to Part IX.1 of this Regulation using the land band assigned to the land by the assessment corporation.

5. The value of the land is calculated by multiplying the applicable value per acre of the land by the acreage. O. Reg. 656/05, s. 1; O. Reg. 101/09, s. 1.

(3) In this section,

“land band” means a geographic area in which similar farm properties sell for similar prices, as determined by the assessment corporation under subsection 19 (5) of the Act. O. Reg. 656/05, s. 1.

32.2 (1) This section applies if a parcel of land contains both land in the managed forests property class and land in another property class. O. Reg. 656/05, s. 1.

(2) The current value of the land shall be determined as follows for the 2013 and subsequent taxation years:

1. Determine the current value of the land in the managed forests property class under subsection 19 (5.2) of the Act.

2. Determine the current value of the land in the managed forests property class under section 32.1 of this Regulation.

3. Subtract the amount determined under paragraph 2 from the amount determined under paragraph 1. If the amount determined under paragraph 2 is greater than the amount determined under paragraph 1, the amount calculated under this paragraph is deemed to be zero.

4. Subtract the amount calculated under paragraph 3 from the current value of the entire parcel of land.

5. The amount calculated under paragraph 4 is the current value of the land. O. Reg. 656/05, s. 1; O. Reg. 394/08, s. 3; O. Reg. 339/12, s. 2.

14The best measure of current value is an arm’s length and market-tested sale of the subject property on or close to the valuation day of January 1, 2012. If no such transaction took place, a further measure of current value is derived from the arm’s length and market-tested sales of comparable properties in the same vicinity and market. This measure acts as a benchmark and gauge of the correctness of the assessed value of the land.

15Because the subject property includes a portion of managed forest lands, special provisions govern the calculation of the current value of this portion of the property. Section 19.(5.2) provides specifically that property within the managed forests class shall be assessed based on the “current use of the land” and “not other uses to which the land could be put.” This legislation does not limit potential future use, but while the property remains in the managed forests class, it is subject to the advantageous assessment rules set out above.

16Evidence for MPAC was given by Adam Parker, a Property Valuation Analyst. Much of the preliminary work on the assessment was carried out by Ralph Bradley of MPAC, and Mr. Bradley assisted Mr. Parker during the hearing. Mr. Parker filed three exhibits with the Board as follows:

17Exhibit 1: An e-mail from Ralph Bradley of MPAC to Janine Cheeseman, dated July 16, 2014, containing comparable property reports, the Property Profile for 780 Sandy Bay Road, and the Property Assessment Details (“PAD”) for the subject property.

18Exhibit 2: An e-mail from Ralph Bradley of MPAC to Janine Cheeseman, dated July 28, 2014, containing a comparable property report; PAD for the subject property for 2013 and 2014; PAD for the subject property “as it should have been for 2013 and 2014” and a memo setting out MPAC’s interpretation of the applicable legislation governing the assessment of managed forest properties in the case of the subject property.

19Exhibit 3: Map of Subject in relation to Comparables.

20Mr. Parker explained that the valuation of the managed forests portion of the subject property had been amended in 2006 following an appeal to the Board and a decision of Member P. Andrews: Cheeseman v. Municipal Property Assessment Corp. [2006], O.A.R.B.D. No. 390, dated October 23, 2006. The reduction in value ordered by the Board has been carried forward through subsequent taxation years until now. Mr. Parker determined that, in his opinion, the Regulation change effective for 2013 required a reassessment using the current version of O. Reg. 282/98 as amended. The reassessment resulted in an increase in the assessment for the managed forests portion of the land.

21Mr. Parker testified that, in determining the current value of the property, prior to carrying out the specific provisions applicable to the managed forests portion of the property, MPAC referred to the assessed values of two comparable properties in the immediate neighbourhood of the subject property. The properties are located on either side of the subject; they are 679 Sandy Bay Road and 670 Sandy Bay Road. Mr. Parker used the neighbouring properties to demonstrate the breakdown between the residential and managed forest portions of the assessments. The Board rejects the comparison with neighbouring properties because these properties are quite different, and more importantly, neither property had been sold on or near the valuation day (January 1, 2012).

22Mr. Parker then introduced other properties without sales that he wished to use to verify the assessment of the subject property. These examples were taken from outside of Tiny Township, but were located in Simcoe County, and included managed forests properties combined with seasonal residences on water. Again, this evidence was rejected for the reasons that no current sales information was provided and very little information was given respecting the proportional assessment for the managed forest sections of these properties in contrast to the residential portions.

23Mr. Parker further testified that, prior to the calculation of the managed forest provisions, the assessment of the current value of the subject property had been assessed at $1,820,000. The assessed value of the residential portion, at $800,500, is not being contested by the Appellants, but the managed forests portion, calculated by MPAC to be $288,000 following all adjustments, is disputed.

24In Exhibit 2-11, MPAC has set out the calculation based on the land value of $1,069,558. First, the value is reduced by 10% in respect of a right-of-way over the land used by other cottagers to access their properties. This results in a land value of $962,602, which, when divided by 30.4 acres, resulted in a value of $31,664 per acre. Multiplying this amount by 29.4 acres of managed forest resulted in a current value of the managed forest portion of the property in the amount of $930,900 (rounded).

25Mr. Parker then interpreted s. 32.1 and s. 32.2 of O. Reg. 282/98 to determine the assessment for the managed forest portion of the property, an area of 29.4 acres. He concluded that the regulation sets out parameters governing the calculation of the managed forest value. Applying the legislation, Mr. Parker determined that the proper calculation was to use 31% of the current value (called the “floor value” by MPAC) where the rate set out in Table 1 (“Managed Forest Values by Geographic Area and Land Band”) fell below the “floor value”. Thirty-one percent of the “floor value” was $288,000, later changed to $259,000. The value of the managed forest portion of the land using Table 1 was $66,000. Mr. Parker concluded that the higher of the two values was the appropriate value.

26Evidence for the Appellant was given by Janine Cheeseman. Ms. Cheeseman concentrated her evidence on comparing the values of her property with the values of the neighbouring properties. The Board finds that this evidence is not material to the issue which is to apply the Regulation in determining the appropriate value of the managed forest section of the land.

27Ms. Cheeseman also provided the Board with a copy of the previous decision by the Board on the same issue in 2006, as noted above, and pointed out that the evidence given at that hearing is identical with evidence given by MPAC today, with the exception of the values which have changed over time.

Analysis

28Since 2006, Regulation 282/98 to the Act has been amended, but the substance respecting the treatment of managed forests is the same. The procedure is identical to the procedure available in 2006, with the exception that the values in Table 1 have increased.

29The first requirement is to determine the current value of the property. Under s. 19(5.2) of the Act, while the managed forests portion of the land should be assessed at its current value, that current value is based only on the use to which the land is currently put and not on other uses to which the land could be put. In this case, no evidence was presented which led to any value for the managed forests portion of the land other than the value prescribed by s. 32.1 of O. Reg. 282/98. The value is based on the prescribed “land band”, contained in Table 1 of O. Reg. 292/98. The prescribed value is to be used in all cases other than where the value of the property as determined under s. 19(5.2) is less than the “prescribed value” or where 31% of the value as determined under s. 19(5.2) is greater than the prescribed value. Section 32.2(2) of the Regulation applies specifically to the case where a parcel of land contains land in both the Managed Forests Property Class and another property class. It is clear from s. 32.2(2) that the same advantageous provisions apply to the determination of current value of the managed forests portion of those lands as would apply to other managed forests land.

30The Board does not accept the determination by MPAC that, the current value of the entire parcel is $1,820,000 prior to the adjustments for a right-of-way and the managed forest. MPAC determined that the value of the residential portion of the property would be assessed at $800,500, and then assessed the value of the remaining 29.4 acres of managed forest as $930,900. It is clear that this means of assessment implies a current value based on current use as a waterfront recreational property. The Board finds that the determination of value of the managed forest portion of the land is clearly specified by s. 19 (5.2): it “shall be based only on the current use of the land and not other uses to which the land could be put.” In this case, the only evidence before the Board confirms that the only use of the subject portion of the land is as a managed forest.

31The Board calculates the value as per sub-paragraphs 1 through 5 of s. 32.2 (2) of the Regulation. Using Table 1 of the Regulation, which sets out the value of land band 1602 as $2,256 per acre. Section 32.(2)5 provides that “the value of the land is calculated by multiplying the applicable value per acre of land by the acreage”. Multiplying this value by 29.4 acres results in a value of $66,326.40 or $66,300 (rounded). This is the “value determined under paragraph 2”.

32Section 32.2 (2)5 provides as follows: “The amount calculated under paragraph 4 is the current value of the land.” Because the value is not less than 31 % of the value determined under paragraph 1, the value need not be multiplied by 0.31 as set out in paragraph 4, s. 32.1(1).

33The value of the managed forests portion of the land, when added to the residential portion of the land, results in a total current value of $866,800.

Equity

34Section 44.(3)(b) of the Act mandates that the Board shall:

(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.

35The objective of the Act is to ensure that every parcel of land be assessed at the correct current value. The Regulations work with the provisions of the Act and assist in the interpretation and application of those provisions. In the case of managed forests properties, O. Reg. 282/98 contains specific rules that both determine eligibility for inclusion in this property class the method of assessment. Part V.1 “Assessment of the Managed Forests Property Class and Related Land” sets out the provisions for the determination of current value for managed forests and also for situations where the parcel contains both managed forests and another property class.

36Where the current value is determined using Table 1, the vicinity would include any properties in the land band in which the subject property is located. Because the current value per acre is set out by Regulation, no adjustment on the ground of equity would be required.

CONCLUSION

37The Board determines that the current value of the subject property is $866,800 as at the valuation day, January 1, 2012. This value is apportioned between the residential portion of the subject property, at a value of $800,500, and the managed forest portion of the property, at a value of $66,300 (rounded).

38The Board finds that the evidence does not support a conclusion that the current value of the property as determined above requires reduction in order to make the assessed value equitable with the assessments of similar properties in the vicinity.

39Accordingly, the assessment of the subject property is reduced, for the 2013 and 2014 taxation years, to $866,800 apportioned as to the residential property class $800,500 and as to the managed forests property class $66,300.