Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: August 10, 2015

FILE NO.: WR 133237

Assessed Person(s): Rematex Developments Ltd

Appellant(s): Rematex Construction, Rejean Lalonde

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 01

Respondent(s): Township of Alfred and Plantagenet

Property Location(s): 3071 Concession 3 Plantagenet

Municipality(ies): Township of Alfred and Plantagenet

Roll Number(s): 0231-020-002-10100-0000

Appeal Number(s): 3070279, 3002636, 3000706, 3000707, 3000708, 3000705, 3000709 and 3000710

Taxation Year(s): 2012, 2013, 2014 and 2015

Hearing Event No.: 590833

Legislative Authority: Section 33 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: July 3, 2015 in Casselman, Ontario

APPEARANCES:

Parties	Counsel+/Representative
Rematex Developments Ltd	G. Lucas
MPAC	B. Longtin
Township of Alfred and Plantagenet	No one appeared

DECISION OF THE BOARD DELIVERED BY JACQUES LAFLAMME

INTRODUCTION

1The subject property consists of a 46.49 acre commercially zoned site improved with a frame building. Part of the building is used as a shop/storage (6,000 square feet) and the other section used as office (1,800 square feet). The property was built in 2012 by the present owner, a building contractor and is the sole occupant of the property. The shop/storage area has a height of 14 feet and the office area has a height of 10 feet. All parties agree with the land value, building classification, areas, heights, depreciation and the property tax class.

2The January 1, 2012 current value for the subject property is $604,000. This value is used for the 2013, 2014 and 2015 tax years.

3The January 1, 2008 current value for the subject property is $540,000. This value is used to calculate the omitted assessments for the 2012 tax year.

ISSUE

4The sole issue for the Board to determine is whether the Indirect Cost Charges (“ICC”) as applied as a percentage of the direct costs and part of the cost approach to valuation is reasonable.

DECISION

5The Assessment Review Board confirms the January 1, 2012 current value of $604,000 and the January 1, 2008 current value of $540,000.

REASONS FOR DECISION

Position of MPAC

6At the beginning of the hearing, both the assessor, Bruce Longtin and the representative for the appellant, Glen Lucas indicated to the Board that no evidence for the 2008 current value would be submitted. The parties want the decision arrived at on the ICC relating to the 2012 current value automatically applied to the 2008 current value. The cost approach to valuation was used to value this property. MPAC’s position is that the total current value is under appeal and not only one specific component of the cost approach.

[7] Mr. Longtin submitted two exhibits to the Board:

• Exhibit #1 contains the cost approach, land and building value breakdown, pictures of the subject property as well as the nine comparables, a map showing the location of the properties and a chart detailing MPAC’s current value per square foot of what Mr. Longtin deems to be comparable properties.
• Exhibit # 2 is an internal MPAC memo listing the various costs that are deemed to be included in the application of the “indirect cost charges”.

8Mr. Longtin listed nine properties with the accompanying 2012 current values. Mr. Longtin divided the net building values by the respective building square footage to come up with the median square foot value of $74.06 for the comparable buildings. The actual current value per square foot of the building for the subject property is $ 65.51. Mr. Longtin’s calculations do not include any of the mezzanine areas.

Of the nine comparables, four have actually sold. The sale dates range from May 2007 to March 2013.

Position of Appellant

[9] Mr. Lucas, a tax agent with Property Tax Services represented the owner. Mr. Lucas did not offer any comparables to the Board. He stated that the assessor should include all mezzanine areas in the overall building square foot calculations for MPAC’s comparables. Mr. Lucas pointed out that the building height for eight of the nine comparables were on average 20% higher than the subject. This difference he stated should be taken into consideration. Mr. Lucas also objected to some of the comparables because they were on a major road such as Highway 7.

10Mr Lucas submitted exhibit #3 to the Board. This exhibit contained the actual costs of the “indirect costs charges” for the subject property. He stated that they indicated that the 33% charge applied for the indirect cost charges by MPAC to the costing of the building was too high and unreasonable.

11Mr. Lucas then submitted exhibit #4 which is a recalculation of the 2012 current value using actual costs of the “indirect cost charges” for the subject property. Mr. Lucas estimates the 2012 current value to be $474,347.

12Mr Lalonde , the owner, informed the Board that he had had an appraisal done of the property as of June 2012. The value was $475,000 but no appraisal was submitted to the Board.

The Legislation

13The following provisions of the Assessment Act (“Act”) instruct the Board in appeals of this nature.

14Section 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.

15Section 19.(1) of the Act states:

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

16Section 33. (1) of the Act states:

33.(1) Change re land omitted from tax roll – The following rules apply if land liable to assessment has been in whole or in part omitted from the tax roll for the current year or for all or part of either or both of the last two preceding years, and no taxes have been levied for the assessment omitted:

1. The assessment corporation shall make any assessment necessary to correct the omission.

2. If the land is located in a municipality, the clerk of the municipality shall alter the tax roll upon receiving notice of the change, and the municipality shall levy and collect the taxes that would have been payable if the assessment had not been omitted.

3. If the land is located in non-municipal territory, the Minister shall alter the tax roll upon receiving notice of the change, and shall collect the taxes that would have been payable if the assessment had not been omitted.

17Section 44.(3)(a) and (b) 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.

18Section 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.

19Section 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.

The Board’s Analysis - Current Value

[20] Under the Act the Board is required to do three things:

1. Find the current value of the property;
2. Make reference to the value of which similar lands in the vicinity are assessed;
3. Adjust the assessment of the subject property if the adjustment will result in a reduction in the assessment.

21The Cost approach to valuation is used on this property as is the case for all similar type properties. The Board has stated at the beginning of the hearing that it does not conduct a forensic detailed analysis of each individual cost component. It is however the Board’s duty to look at the sum of all the parts used in arriving at a current value.

22This current value must then be compared against actual sales in the neighborhood to gage the accuracy of the valuation approach.

23The best evidence of current value would be a sale on the subject property if the sale met the definition of current value on or near the valuation day. When no such sale occurs, the Board looks to the sale of similar properties in the vicinity to determine current value.

24In the present case, MPAC presented nine properties that they considered comparable to the subject property.

25The Board accepts Mr. Lucas argument that the mezzanine areas should be included in the calculation of building value on a per square foot basis. The Board had asked the assessor during the hearing for all mezzanine areas for the nine comparables. The Board recalculated the building values which included the mezzanine areas in the overall areas. The median building value on a per square foot value for all nine comparables is $69.48. The subject property building is assessed at $62.92.

26Mr. Lucas made the argument that the building height of comparables should be similar if they are to be true comparables. The Board agrees.

27There is only one comparable that sold close to the base year of valuation which is January 1, 2012. The other three sold comparables have a sale date range of May 2007 to June 2010. The Board was not given any tools to adjust these sales for time such as “time adjustment factors”.

28The Board finds that the most comparable property is comparable #1. This property is close by, on a rural County Road, one storey only with the exact same building height as the subject property, same age and with an actual sale. The sale date is March, 2013. The assessor has stated that values had not increased significantly since the base year of January 1, 2012. The property sold for $81.03 per square foot of buiding. Although Mr. Lucas and Mr. Lalonde indicated that there had been a previous “power of sale” on this property, no evidence was submitted. The assesor indicated to the Board that a sales investigation was carried out on the 2013 sale and that the sale was determined to be a bona fide sale. No evidence was produced to contradict the assessor.

29Based on this sale and the median building value of the nine comparables the Board confirms the current value for both the 2008 and the 2012 base years.

Equity

30The Board had reference to the assessments of similar properties in evidence to try to discern if the current value determined is fair and equitable relative to those assessed values. The Board requires evidence that many similar properties are assessed at a lower level than the subject in order to warrant an equity adjustment under s. 44.(3)(b). The one sale that is used by the Board indicates an assessment to sale ratio of .95.The nine MPAC comparables demonstrated that this property is assessed at less than the average similar type property. The subject being assessed at $62.92 versus the median value of $69.48 for the comparables indicates that no adjustment is necessary.

CONCLUSION

31The assessment is confirmed at $604,000 for the January 1, 2012 base year and at $540,000 for the January 1, 2008 base year. All section 33 omitted assessments and dates confirmed as returned.