Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: August 18, 2015

FILE NO.: WR 133286

Assessed Person(s): Beverley Alberta Brill

Appellant(s): Peter Brill and Beverley Brill

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 7

Respondent(s): Township of Algonquin Highlands

Property Location(s): 1390 Last Turn Lane

Municipality(ies): Township of Algonquin Highlands

Roll Number(s): 4621 030 000 30800 0000

Appeal Number(s): 3043182 and 3073589

Taxation Year(s): 2014 and 2015

Hearing Event No. 580949

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

Heard: June 22, 2015 in Minden, Ontario

APPEARANCES:

Parties	Counsel+/Representative
Beverley Brill Peter Bill	Self-represented
MPAC	M. Hennessey
Township of Algonquin Highlands	No one appeared

DECISION OF THE BOARD DELIVERED BY JOSEPH WYGER

INTRODUCTION

1The subject cottage on Troutspawn Lake has a visually pleasing log cabin aesthetic, making it the “nicest” property on the lake. The owners, Beverley and Peter Brill point out numerous deficiencies that they suggest would affect its sale value. One side of the very small lot is a swamp. There is no basement, shower or tub. At a total structure size close to 700 square feet (“sq. ft.”), which includes the 10 inch thick log walls, the single bedroom barely has room for a bed. The Brill’s have been on the lake for many decades, and know many of the properties and owners there. Their concern is largely about the seeming inequity of their paying among the highest taxes for what is one of the smallest structures on the smallest waterfront on their lake. They are certain that their property is not as superior as the assessor suggests. The assessor rates the property at Quality 6, which is a full quality class higher than any other property in the vicinity. The issue is to determine whether that differential is warranted, and the effect on current value.

DECISION

2The current value of the subject cottage property is $280,000. Following a reference to the assessments of other similar lands in the vicinity, an adjustment is warranted to set the assessment at a more equitable value of $268,000.

REASONS FOR DECISION

Facts

3The subject property is a one-bedroom, seasonal/recreational dwelling, built in 1967 and situated on 130 feet of waterfront on Troutspawn Lake in the Township of Algonquin Highlands. MPAC measures it as having 812 sq. ft., together with a 516 sq. ft. detached garage. Mr. Brill measured the interior to be 713 sq. ft., which includes a 107 sq. ft. open loft. The structure is rated a quality class 6 in average condition. The assessment as returned is $291,000 for the 2014 taxation year and $289,000 for the 2015 taxation year.

Legislation

4Section 19 of the Assessment Act (“Act”) states:

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.

5Section 44 of the Act states:

44.(1) Assessment may be open upon appeal. – Upon an appeal on any ground against an assessment, the Assessment Review Board or court, as the case may be, may reopen the whole question of the assessment so that omissions from, or errors in the assessment roll may be corrected, and the amount for which the assessment should be made, and the person or persons who should be assessed therefore may be placed upon the roll, and if necessary the assessment roll, even if returned as finally revised, may be opened so as to make it correct in accordance with the findings made on appeal.

MPAC’s Position and Evidence

6The assessor Maria Hennessey presented her report including four comparable cottages in support of her contention that the returned assessment of $289,000 for the 2012 base year was correct. She placed emphasis on the subject property being an “elite” cottage with great curb appeal.

7Two of Ms. Hennessey’s comparables were on the same lake while the other two were on nearby Crown Lake. They varied widely in terms of lot and structure sizes and year of construction. The quality classes ranged from 3 to 5. The time-adjusted sale values ranged from $143,628 to $283,374. Ms. Hennessey highlighted 1420 Last Turn Lane and 2059 Crown Lake Road as being most comparable to the Brill property. With sales at $281,621 and $283,374 respectively, her opinion was that the subject property’s assessed value, being in the same general range, was correct.

8For equity she provided an analysis of 30 sales with a spread of ASR’s from .73 to 1.79, with the median value of 1.05 leading to her assertion that assessments were reflecting sale prices well enough to be equitable

Appellant’s Position and Evidence

9Beverley and Peter Brill advanced the position that their property was clearly over-assessed compared to their neighbours on Troutspawn Lake. Mr. Brill took issue with MPAC’s measurement, providing a detailed sketch showing only 606 sq. ft. of living area on the first floor. He described his cottage as “tiny” and had interior photos that showed a cramped two piece washroom and a bedroom that could fit only a bed. The logs that give the property such curb appeal are very thick and made from weak, cracking Balsam Fir, a material that is very susceptible to carpenter ants and rotting, as verified by several photographs.

10Mr. Brill described his lot as the smallest acreage on the lake, with the next smallest being 53% larger than his. His property has a north exposure and a swamp along the whole west property line. He prepared several detailed analyses for this hearing. On one he compared his lot to seven comparables received from MPAC that include the four presented at the hearing by Ms. Hennessey and three on other nearby lakes. His analysis concluded that the seven “on average have 20% more frontage, 34% more depth, 102% more site area and 2.3% more building area;” and “they are collectively assessed at an average of $69,386 (24%) less than the Brill property”

11Mr. Brill also prepared an analysis of assessment values of seven other properties, all on Troutspawn Lake, including the assessor’s comparable at 1420 Last Turn Lane. His conclusions were that the “average Troutspawn Lake property has 78.5% more frontage, 51.6% more depth, 207% more acreage and 55.7% larger building size….with 10% less assessment.”

12Mr. Brill had information on all 41 properties on Troutspawn Lake. He appeared to have personal knowledge of many of them and their owners, having summered there for many decades. There were no other sales on Troutspawn other than the two provided by Ms. Hennessey. Although Mr. Brill ventured the opinion that his property would not likely sell for over $250,000, his case appeared more rooted in the perceived inequity of everyone else having “more of everything but much less taxes”

Analysis – Current Value

13I reviewed Ms. Hennessey’s analysis of her four comparable properties. The quality 3, 412 sq. ft. cabin at 1199 Grist Mill Lane is so clearly inferior to the subject cottage, that the only inference to draw is that the Brill property is much more valuable than the $143,628 that the comparable sold for. The other three are closer in structure size and of reasonably similar vintage. The cottages at 4120 Last Turn Lane and 2059 Crown Lake Road enjoy substantially more waterfront with 225 and 200 ft. respectively, and both sold for very near the subject’s assessed value. Ms. Hennessey contended that the Brill cottage was of a better quality class, and that this offset the lesser amount of lakefront.

14Mr. Brill has a keen intellect and an encyclopedic knowledge of the properties on and around his lake. He did not strike me as an individual seeking to gain some unwarranted advantage, but rather as a seasoned ratepayer who knows his taxes are higher than what is fair. Given Mr. and Mrs. Brill’s evidence, and viewing the photographs of the deficiencies, I am persuaded that its aesthetic appeal is over-stated relative to the 4.5 and 5 quality class ratings of the two comparables numbered 4120 and 2059, that Ms. Hennessey determined to be “relatively comparable”. The largest component of value in waterfront property is the size and quality of the waterfront. The evidence showed that the structures on both 4120 Last Turn Lane and 2059 Crown Lake Road were of only marginally inferior quality, but had significantly better lakefront than the Brill cottage. It may be that MPAC’s model is not quite recognizing the full value of additional waterfront beyond a base lot, as the ASRs of these two properties at .53 and .82 are well below the values assigned by the marketplace.

15The waterfront of the third comparable at 2057 Crown Lake Road at 110 feet, was much closer to the subject. A renovation and addition in 1995 to bring it to 1,054 square feet plus a basement with some finished area, gives it significantly more living area than the Brill cottage. The quality 5 rating again leads Ms. Hennessey to conclude that this comparable is inferior. I conclude that based on Mr. Brill’s descriptions, sketches and photographs, that the Brill cottage is over-rated at quality class 6 and agree with his notation that the “Value of the Brill cottage is artificially enhanced by ‘Quality category’ assigned”. The Brill cottage is not appreciably superior in quality to the three acceptable comparable properties. I would rate the Brill property as overall only superior to 2057 Crown Lake Rd which had a time-adjusted sale at $229,631 and as slightly inferior to the other two with sales at $281,621 and $283,374. I conclude that the Brill cottage likely could have sold for just below the sale prices of those two and so my best estimate of the correct current value is $280,000.

Analysis – Equity

16Mr. Brill’s main argument was that other people have properties that have much more than he has, but they are generally paying less taxes. His analysis and argument were in fact a position that his assessed value was not equitable with the assessments of similar lands in the vicinity. As a property owner, he points to the assessments of other properties that appear to be superior but have lower assessments. He cited the 1,724 sq. ft. cottage with over 500 ft. of waterfront at 1128 Last Turn Lane that is assessed at only $281,000 as a particularly egregious example. The 1,172 sq. ft. cottage on 165 ft. of lakefront at 1048 Last Turn Lane was modern and of better quality, but only assessed at $273,000. The 1,319 sq. ft. cottage on 160 ft. of waterfront at 1219 Grist Mill Lane was “spectacular” but assessed at only $281,000.

17Ms. Hennessey answered that all of these properties were of varying quality classes just below 6, and that explains why one of the smallest structures on the smallest waterfront is assessed among the highest. Besides, the ASR of 1.05 is a complete answer and in MPAC’s view, the only permissible evidence to determine inequity. It is understandable how property owners take a different view, as does this Board. Having already determined that the property appears to have a subjective application of a slightly too high quality class rating, I conclude from referring to the assessments of those similar lands presented by Mr. Brill, that a current value of $280,000 for one of the smallest structures on the smallest waterfront still appears to be inequitably high. I will now analyse the assessor’s ASR/equity analysis to determine whether there is a statistically meaningful ASR to measure and correct that inequity.

18Ms. Hennessey presented an equity study of thirty sales of similar lands within 12 km of the Brill cottage. She reported a median assessment to sale ratio (ASR) of 1.05 which is within the generally accepted tolerances, to infer that MPAC’s model is reflecting sale values quite well in this vicinity. It is interesting to note that only 6 of the 30 properties actually fall within the acceptable range of .95 to 1.05. The report describes the Coefficient of Dispersion (“COD”) as “the average percentage deviation of all the individual ratios from the median ratio” and that for recreational waterfront properties, that deviation should not exceed 20%. Ms. Hennessey calculated the COD for her equity analysis at 20.4% right on the edge of being statistically useful (or useless).

19The ASR’s range as far and wide as .73 to 1.79. The report states: “Extreme ratios (i.e. outliers) have been removed from the equity analysis to prevent them from unduly influencing the calculated level of appraisal.” Evidently one of those outliers is one of the assessor’s most comparable properties at 2059 Crown Land Road, which is assessed at only .53 of its time-adjusted sale price. Quaere why a ratio that is 47% low is excluded as an outlier, while the two ratios at the upper end which are 59% and 79 % above the ideal of one are included?

20Removing those two ASRs from the upper end would bring the COD below 20% and result in a median ASR of .99. If one adds the .53 ASR to the lower end for a more balanced spread of ASRs from .53 to 1.48 the resulting median is .96. These numbers are still within the acceptable range, however it is illustrative of how the selection of a couple of “outliers” for exclusion or inclusion can result in a nine point swing in the median ASR and move it from above one which means one thing, to below one which means the opposite thing. The ease with which the median ASR can be massaged within and presumably without the acceptable range provides an effective tool in discouraging equity adjustments. I think it illustrates the danger of relying on the typically widely divergent ASRs in cottage country to the exclusion of other methods of discerning inequity.

21One good current value comparable has an ASR of .53. The other two good current value comparables at 1420 and 2057 have ASRs of .82 and .88 respectively. These figures might suggest that the assessments of the most similar properties in the immediate neighbourhood that are comparable enough for a current value analysis, are substantially below sale values, rather than 5% higher on average as implied by MPAC’s equity analysis. However, three ASRs is slim evidence on which to draw any inference on how the assessment model is reflecting sale prices in general. In this case, however it is clear that the equity study with 30 ASRs is also of dubious value for that task. I prefer the ASR of .96 derived from the balanced list of 29 ASRs that includes the four current value comparables and excludes the two outliers on the high side. While this ASR normally is within the tolerable range, I conclude that given all the other evidence of inequity, an equity adjustment is warranted. Applying the ASR of .96 to the current value of $280,000 results in an equitable value of $268,000 rounded.

22As a further check, I have considered how this figure fits on the scale of assessments of properties on the inferior to superior continuum. While $268,000 is still considerably higher than the assessed values of all four of the current value comparables, it at least now resides below the assessed values of the much larger cottages of slightly inferior quality, on much larger waterfronts. I conclude this to be a more fair and equitable division of the tax burden in this vicinity than either the returned value or the new current value. The assessment is reduced from $291,000 to $268,000 for the 2014 and the assessment is reduced from $289,000 to $268,000 2015 taxation year.