Gerry Brulotte v. Municipal Property Assessment Corporation, 2015 CanLII 40079

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

ISSUE DATE: July 6, 2015 FILE NO.: WR 129636

Assessed Person(s): Gerry Brulotte Appellant(s): Gerry Brulotte Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 23 Respondent(s): City of London

Property Location(s): 1750 Crumlin Road Municipality(ies): City of London Roll Number(s): 3936-090-310-00100-0424 Appeal Number(s): 3000308 and 3090896 (deemed) Taxation Year(s): 2014 (and deemed 2015) Hearing Event No.: 570057

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

Heard: November 18, 2014 in London, Ontario

APPEARANCES:

Parties	Counsel+/Representative
Gerry Brulotte	Self-represented
MPAC	Stephen Davis
City of London	No one appeared

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1The subject property comprises 360 acres and lies within the area operated by the London Airport Authority (“LAA”) and is owned by the Crown. The subject lands are leased to the Appellant, Gerry Brulotte, who farms the acreage which is made up of several parcels throughout the overall LAA lands.

2In his opening submission, Stephen Davis, on behalf of MPAC cited s.18(1) of the Assessment Act (“Act”), R.S.O. 1990, c.A.31, as amended, which states that:

(a) the tenant of land owned by the Crown shall be assessed in respect of the land as though the tenant were the owner if rent or any valuable consideration is paid in respect of the land; and

(b) an owner of land in which the Crown has an interest shall be assessed in respect of the land as though a person other than the Crown held the Crown’s interest.

3Mr. Davis submits that, owing to s. 18(1), the subject lands are assessed to the tenant, Gerry Brulotte.

4Mr. Davis further submits that s. 18(1) applies as the Appellant pays rent under an agreement with the LAA that allows him to make use of the land for agricultural purposes. While Mr. Brulotte indicated that he didn’t think it was fair to have to pay taxes on land he doesn’t own, he acknowledges the application of s. 18(1) and the parties agree that the issue to be determined at the hearing is the current value of the subject property as of January 1, 2012; the valuation date stipulated in the Act for the 2014 and deemed 2015 taxation years.

5MPAC returned a value of $3,186,000 in the Farm Tax Class for the 2014 taxation year and Mr. Davis believes this value is reasonable and correct. Mr. Brulotte believes this value is too high.

6The Board must determine two things in this appeal. Firstly, the Board must decide from the evidence at the hearing, what the current value of the subject property is, as of the valuation date. Secondly, the Board must determine whether an assessment at current value is equitable with the assessments of similar lands in the vicinity.

DECISION

7The Board finds that the current value of the subject property is $3,186,000. The Board also finds that the evidence does not support the conclusion that the current value requires a further adjustment under s. 44(3)(b) of the Act, in order to make it equitable with that of similar lands in the vicinity.

8Accordingly, the assessment of the subject property at 1750 Crumlin Road is confirmed at $3,186,000 in the Farm Tax Class for the 2014 taxation year. This result is deemed for the 2015 taxation year.

The Legislation

9In making its determination, the Board must consider s. 3.(1)1, s.18.(1), s.19.(1), s.19.2(1) and s. 40.(1) of the Act.

10Section 3.(1) 1 of the Act states:

3. (1) Property assessable and taxable, exemptions. – All real property in Ontario is liable to assessment and taxation, subject to the following exemptions from taxation:

4. Crown Lands. – Land owned by Canada or any Province.

11Section 18.(1) of the Act states:

18. (1) Assessment of Crown lands. – Despite paragraph 1 of subsection 3 (1),

(c) the tenant of land owned by the Crown shall be assessed in respect of the land as though the tenant were the owner if rent or any valuable consideration is paid in respect of the land; and

(d) an owner of land in which the Crown has an interest shall be assessed in respect of the land as though a person other than the Crown held the Crown’s interest.

12Section 19.(1) of the Act states:

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

13Section 19.2(1) of the Act states:

Valuation days

19.2 (1) 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.

14Section 40.(1) of the Act states:

Appeal to Assessment Review Board

40. (1) Any person, including a municipality, a school board or, in the case of land in non-municipal territory, the Minister, may appeal in writing to the Assessment Review Board,

(a) on the basis that,

(i) the current value of the person’s land or another person’s land is incorrect,

(ii) the person or another person was wrongly placed on or omitted from the assessment roll,

(iii) the person or another person was wrongly placed on or omitted from the roll in respect of school support,

(iv) the classification of the person’s land or another person’s land is incorrect, or

(v) for land, portions of which are in different classes of real property, the determination of the share of the value of the land that is attributable to each class is incorrect; or

(b) on such other basis as the Minister may prescribe

MPAC’S Evidence

15In determining the current value of the subject property, Mr. Davis used the direct comparison approach, whereby the sales of comparable properties are used to determine a range of value within which the subject property might reasonably lie. In completing his analysis, Mr. Davis started with four properties in close proximity to the LAA lands that sold between December 2010 and July 2013 and are used for farm purposes. Mr. Davis explained that three of these comparable property sales included farm buildings and that for the purposes of his valuation study, the values attributed to the building portions of the assessments were removed for comparison with the subject property.

16The comparable sale values range from $13,426 to $18,657 per acre, with a median value of $17,337. Three of the four properties are tiled and one is not. Mr. Davis noted that in his opinion, tiling allows for better drainage and therefore better agricultural production which generally leads to a higher value than lands that are not tiled.

17Mr. Davis also considered sales of agricultural properties farther afield. He selected seven additional properties that lie outside of the City of London, within the neighbouring municipality, but still in close proximity to the subject property. These seven properties are farm lands used for farm purposes and were valued the same way by Mr. Davis as the original four properties in his study with per acre sale values ranging from $6,473 to $39,220, with a median value of $15,446. He explained that five of these additional comparable properties are tiled, while two are not. The details of the properties used by Mr. Davis are summarized in Table A.

TABLE A

Roll Number	Sale Date	Size (farm land only) in acres	Class	Sale Value (farm land only) $	Sale Value per Acre	Tiled?
3936-090-310-08400-0000	July 2013	32.16	1	600,000	18,657	No
-10500	April 2013	88.38	1	1,186,000	13,426	No
-11100	December 2010	25.00	1	401,400	16,056	Yes
-11102	June 2013	2.75	1	51,200	18,618	No
3926-000-010-07400-0000	March 2013	82.89	1	1,280,300	15,446	Yes
-07700	April 2008	97.90	1	1,287,600	13,152	Yes
-07701	May 2011	37.00	1	954,392	25,794	Yes
3926-031-010-12700-0000	October 2011	10.66	1	240,600	22,570	No
-28700	October 2008	60.33	1	390,500	6,473	Yes
-30400	March 2013	93.00	1	1,115,300	11,992	Partial
3936-031-020-15100-0000	April 2012	20.00	1	784,400	39,220	No

18Mr. Davis pointed out that the returned value of the subject property is $3,186,000, representing a value of $8,850 per acre, which is approximately one half of the value reflected by the median per acre value of the comparable sales in his analysis. Mr. Davis considers the subject property to be Class 1 farmland for the purpose of valuation and all of the comparable properties he used are Class 1 lands as well. He testified that the production of the property demonstrate that it is Class 1.

19He further testified that MPAC recognizes the operational restrictions that apply to the subject that do not apply to the comparable properties including time of entry/ access, the size of the individual fields, obstructions in the form of airport infrastructure, inconsistent drainage, restrictions on crop height and the unpredictability of such things as heightened security alerts that impact access to the property for farm operations.

20To account for these unusual operational restrictions, Mr. Davis reduced the value that would have normally been returned to the $8,850 figure, which he testifies is equivalent to what the value of Class 2 land would be. Mr. Davis concluded that since the returned value is far below the value of Class 1 land, it is reasonable and therefore correct.

Appellant’s Evidence

21Mr. Brulotte testified that he entered into an agreement with the LAA in 1995 on 150 of the 360 acres he currently farms. This agreement was expanded in 1997 to include the additional 210 acres. The subject property is actually farmed as approximately 15 different parcels, distinguished by their location, the presence of runways and restrictions in crop height imposed by the LAA. These parcels range in size from six acres to over 70 acres.

22Since he initiated farming activity on the subject property, Mr. Brulotte indicated that he had made several improvements to drainage and clearing stones from the land to maximize its production. He estimated the he had spent approximately $200,000 on tiling approximately 60% of the land to promote better drainage. He also spent significant time clearing stones over the last 10-12 years to increase the production of the land.

23Mr. Brulotte testified that, in addition to the physical restrictions on the subject property for agricultural use, there are operational restrictions that have an impact on the value of the land for agricultural use. Some areas have restrictions with respect to the growing height of crops near runways. He indicated that there are seven separate gates that he is to use from time to time to enter the property and each has a separate key. He must use these separate gates for separate fields within the subject property to avoid traversing runways and other areas with restrictions on farm machinery.

24In addition, Mr. Brulotte described the process he must follow to gain entry, which can vary greatly due to time of day, time of year and changing security levels. He submitted that he is at the mercy of the LAA security department, resulting in unpredictable access which in turn makes the land less valuable in his opinion.

25Mr. Brulotte concluded his submission by indicating that he pays $120 per acre for rent, totaling $43,200 annually.

Analysis

26This is clearly a unique case of farm use on airport lands, which is not a common occurrence. The issue for the Appellant is two-fold. Mr. Brulotte does not believe that he should pay taxes on land he doesn’t own. To his credit, he recognizes that s.18 of the Act applies and that the law, in this case must prevail. It was his wish that his objection nonetheless be part of the record. The Board complies with this request herewith.

27The second issue is that of current value, and that is the issue the Board must determine. The Board has the evidence of Mr. Davis who took some care in providing eleven comparable property sales to arrive at a range of value attributable to the subject property. Mr. Davis further reduced the indicated value to reflect the operational challenges of the subject property. While his reduction by approximately 50% from the value indicated by his comparison approach is somewhat arbitrary, it is the only evidence of current value before the Board. Mr. Brulotte did not refute the findings in Mr. Davis’ report. In considering Mr. Brulotte’s evidence with respect to the cost to add drainage tiles to improve the productivity of the land, the Board finds that this cost would only make the land more valuable and not less valuable as a result.

28Accordingly, the Board finds that the current value of the subject property is $3,186,000, being the value returned by MPAC.

29Neither Party advanced an argument with respect to equity of assessment. The Board notes that the value returned by MPAC was drastically reduced from the land value indicated by their valuation study for Class 1 agricultural lands. The Board is satisfied that no further reduction is necessary for the purposes of equity.

DECISION

30The Board finds that the current value of the subject property is $3,186,000. The Board also finds that the evidence does not support the conclusion that the current value requires a further adjustment under s. 44(3)(b) of the Act, in order to make it equitable with that of similar lands in the vicinity.

31Accordingly, the assessment of the subject property at 1750 Crumlin Road is confirmed at $3,186,000 in the Farm Tax Class for the 2014 taxation year.

32This result is deemed for the deemed 2015 taxation year.

2015 DEEMED APPEAL

33An 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.

34Section 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.