2961 Thunder Bay Road Inc. v. Municipal Property Assessment Corporation, 2015 CanLII 55739

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 4, 2015

FILE NO.: WR 131937

Assessed Person(s): 2961 Thunder Bay Road Inc.

Appellant(s): 2961 Thunder Bay Road Inc. and William Fairl

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 18

Respondent(s): Town of Fort Erie

Property Location(s): 2961 Thunder Bay Road

Municipality(ies): Town of Fort Erie

Roll Number(s): 2703-020-010-11200-0000

Appeal Number(s): 3044749, 3098327, 3098328 and 3098329 (deemed 2014 and 2015)

Taxation Year(s): 2013 (and deemed 2014 and 2015)

Hearing Event No.: 581443

Legislative Authority: Sections 34 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

ARB Case Name: WR 131937

Heard: April 2, 2015 in Fort Erie, Ontario

APPEARANCES:

Parties	Counsel+/Representative
W. Fairl	Self-represented
MPAC	S. McRoberts
Town of Fort Erie	G. Corney

DECISION OF THE BOARD DELIVERED BY ROBERT STEINBERG

Preliminary Matter

1At the beginning of the hearing the parties brought to the attention of the Board that, in additional to the taxation year 2013 appeal currently before the Board, there are outstanding appeal for a s. 34 supplementary assessment and deemed appeals for taxation years 2014 and 2015.

2At the request of the parties the Board added to the docket the s. 34 supplementary assessment in the amount of $647,000, effective May 1, 2013, and the deemed assessments for the taxation years 2014 and 2015 in the amount of $1,460,000 (after demolition of the garage).

INTRODUCTION

3The subject property is a waterfront property located at 2961 Thunder Bay Road. The lot has an effective frontage of 100 feet and an effective lot size of 2.30 acres and is improved with a 4,570 square feet (“sq. ft.”) structure used as a single-family dwelling.

4The subject property is assessed at $818,000 for the 2013 taxation year.

5Sheryl McRoberts appeared as a witness for MPAC.

6Ms. McRoberts takes the position that the assessment as returned, of $818,000 is correct as is the supplementary assessment effective May 10, 2013 of $647,000.

7Ms. McRoberts submitted Exhibit 1 which included six comparable waterfront properties in the vicinity of the subject property and concludes that these comparable sales as adjusted for time at a rate of 9.46% over the time period from January 1, 2009 to December 31, 2012 support a CVA for the subject property of $1,465,000.

8William Fairl, the Appellant raises four issues namely:

• A retroactive increase in assessment from January 2008 to January 2012 makes no senses as there were no improvements to the cottage.

• He submits a U.S. study that weighs the cost of renovations as compared to their return in market value in disputing his $520,000 building permit.

• The increase of $647,000 for the rebuilding and renovations in 2013 is excessive which results in a unrealistic CVA of $1,465,000.

• In 10 out of the 11 cases similar properties in the vicinity are over-assessed.

9The Board must determine the current value of the subject property for the 2013, 2014 and 2015 taxation years. The Board must also determine whether the assessment is equitable, having reference to the assessments of similar lands in the vicinity.

10Section 34.(1) of the Act states that:

34.(1) Supplementary assessments to be added to collector’s roll. – If, after notices of assessment have been given under section 31 and before the last day of the taxation year for which taxes are levied on the assessment referred to in the notices,

(a) an increase in value occurs which results from the erection, alteration, enlargement or improvement of any building, structure, machinery, equipment or fixture or any portion thereof that commences to be used for any purpose;

the assessor may make the further assessments that may be necessary to reflect the change.

DECISION

11The assessment of the subject property as of January 1, 2012, for the 2014 and 2015 taxation years, is reduced from $1,460,000 to $1,295,000.

12The assessment of the subject property for the 2013 taxation year is confirmed at $818,000.

13The assessment of the supplementary assessment is reduced from $647,000 to $477,000 and the effective date of the supplementary assessment is confirmed as May 10, 2013.

REASONS FOR DECISION

Legislation

14In determining the value at which land shall be assessed, the Board must have regard to the following provisions of the Act.

15Section 1 of the Act states:

“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.

16Section 19.(1) of the Act states:

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

17In determining the value at which any land shall be assessed, s. 44.(3)(a) and (b) of the Act requires the Board to do two things:

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.

Current Value

18The Board’s first task is to determine the current value of the subject property.

19The best indicator of current value is an arm’s length and market-tested sale of the subject property on the valuation day, January 1, 2012, or close to it. The subject property did sell in September 2011 for $969,000.

20Mr. Fairl explained his purchase of the property as in part an emotional issue in that part of the reason he wanted this property is that it was in close proximity to his sister's cottage. He had been looking for a property in this area for six years. Also he stated that that he regretted the purchase ever since due to the following factors. The septic system failed and had to be replaced and several of the floor joists had been sawn through and the property was going to be difficult to rehabilitate with this the structure damage. These items were not apparent from the home inspection that he had done prior to the purchase. He therefore decided to demolish all of the structure except 750 to 800 sq. ft. and rebuild a new structure of 3,800 sq. ft. for a total building area of 4,570 sq. ft.

21The effective date related to the occupation of the new structure under s. 34 of the Act is May 10, 2013. There is no dispute between the parties as to the effective date.

22The Board understands that on the surface the purchase price of $969,000 just a few months prior to the base year and the resulting building permit for $520,000 indicates a total investment of $1,489,000, however it does in the Board’s mind support the total CVA of $1,465,000 or the s. 34 increase of $647,000. The condition of the property following the demolition, a large new garage, renovations, new addition, and landscaping is what must be considered in their totality for the Board to arrive at the CVA and the s. 34 increase. The Appellant has indicated that his construction cost for the approximately 3,800 sq. ft. was 120 per sq. ft. or approximately $456,000. The Board understands that the two components added together do not reflect the correct market value of the subject property.

23Ms. McRoberts provides the Board with MPAC’s Current Value Study in Appendix A, Exhibit 1 the sales of six suggested comparable properties that sold between June 2009 and August 2012. The adjusted sale prices of the comparables range from $977,316 to $1,451,279.

24Mr. Fairl provides the Board with an additional 11 suggested comparable properties in the vicinity of his property which sold between 2012 and 2014 along with the CVA for each property. None of the specifics characteristics such as age, lot size, building size etc. are provided. He then goes on to calculate the average sale price to average CVA and after eliminating one outlier at 3261 Thunder Bay Road he arrives at a figure that the 10 properties are assessed at 12.5% higher than the CVA.

25Ms. McRoberts explains that Sales A, C, E and F are considered the most comparable to the subject property. Only Comparable E has a similar water frontage of 115 feet compared to the subject property’s 100 feet, although the lot is approximately one half acre smaller in size. The other three comparables Sale A has 200 feet of water frontage, Sale C 174.84 feet and 150 feet for Comparable F.

26The most appropriate method of valuation of waterfront properties is based on the rate per front foot of the land. However this presumes that the improvements of the suggested comparable properties are similar in nature. In this case the improvements of Comparables A, B and D of MPAC’s comparables bear little similarity to the subject property as the sq. ft. areas of the improvements are Sale A at 2,946 sq. ft., Sale B at 1,745 sq. ft. and Sale D at 2,677 sq. ft. all being substantially smaller than the subject property. Comparable C at 1843 McDonald Drive is in the same municipality, Comparable E and F are in a different municipality but have smaller size total floor areas of 3,578 sq. ft. and 3,783 sq. ft.

27The Board rejects Comparables A, B and D as they are substantially smaller improvements. MPAC provides three other comparables being C, E and F which appear to be most similar to the subject as to the improvements. However Comparable E sold in June 2009 and is farthest from the valuation date of January 1, 2012. In addition Sale E although it has a similar frontage as the subject property has approximately a half acre smaller lot. For these reasons the Board considers that Comparables C and F are the best comparables for the Board to consider.

28Accordingly the Board finds that the best evidence of the current value of the subject property is the sale of MPAC’s comparables C and F.

29Comparables A, C, E, and F are considered by the MPAC as relatively comparable. The Board in its analysis does not consider Comparable A as the improvements are substantially smaller than the subject property and the effective frontage is twice that of the subject. The Board is also not relying on Comparable E as the sale date is two and half years prior to the valuation date.

30The Board considers the two best comparables presented by MPAC as Sales C and F the floor areas of the improvements are closest to the subject property. Sale C has sale date of August 2012 and Sale F has a sale date of April 2011. The Board in arriving at its decision has divided the total square footage of these two comparables into their adjusted selling prices as follows. Sale C adjusted selling price is $1,350,233 with an area of 4,374 sq. ft. for a rate per sq. ft. of $308.69. Sale F adjusted selling price is $977,316 with an area of 3,783 sq. ft. for a rate per sq. ft. of $258.34 the average of these two selling prices per square foot is $283.15 applied to the subject properties area of 4,570 sq. ft. equals $1,293,995 or rounded to $1,294,000 as the CVA as of January 1, 2012.

31In that the CVA on the roll as of January 1, 2012 is $818,000 the difference of $1,294,000 minus $818,000 is $476,000 which is the amount to be attributed to the s. 34.

32Mr. Fairl's first issue relates to the retroactive increases in assessment of the subject property. The Appellant provides to the Board assessment notice indicating a total property value of $818,000. A second notice shows an increase of $647,000 effective May 10, 2013. A third notice shows the CVA as of January 1, 2012 $1,460,000. All the notices show the 2008 revised CVA. The Board has only to determine the correct Jan 1, 2012 CVA and also to apply the amount applicable in regard to the s. 34 appeal from the date of May 10, 2013. The first notice indicates the current CVA before any changes were made, and the other notices have correspondence attached indicating the changes made to the property after August 16, 2013 and October 13, 2013. What is not clear to the Board is the additional notice and is relying only the date of the s. 34 appeal retroactive to May 10, 2013. Conflicting evidence of MPAC and the Appellant as to the amount of floor area that was demolished of the structure, prior to the building of what amounts to almost a complete new structure may be the explanation for the second notice. What is clear is that a substantial part of the structure was demolished and a large new structure was built, partially on the same foot print as the area demolished. The Board in trying to clarify the difference asked the parties as to what they considered the floor area of the new cottage with MPAC stating 2,800 sq. ft. and the Appellant approximately 3,800 sq. ft.

33Mr. Fairl’s second issue relates to the U.S. study that gives an opinion on the cost of construction of renovations/rehabilitation of residential structures compared to the amount of increase in market value. This study is general in nature, from a U.S. remodeling periodical and offers no assistance to the Board in determining the increase in CVA of the subject property.

34Mr. Fairl’s third issue relates to the increase of $647,000 from the original CVA for a total CVA of $1,465,000 which is the basis of this appeal. The Appellant’s explanation is that he did not understand the original increase but asks the Board to arrive at a correct CVA and applying the difference from the assessment of $818,000 after consideration of the impact of the demolition and new construction.

35Mr. Fairl’s fourth issue is related to the sales he entered into evidence indicating that in 10 out of 11 cases the CVA exceeded the selling prices. All of the properties are in Fort Erie sold between 2010 and 2014 and when he removed the one outlier it indicated a difference of 12.5% and applying this to his assessment arrived at a value of $1,277,000.

36The Board does not place any weight on the evidence of the Appellant related to the U.S. remodeling study and his conclusions as the over assessment of other properties in the vicinity of his property.

37The Board therefore has insufficient information from the Appellant to arrive at a different CVA as the cost of construction and the change in market value are not clearly in the Appellant’s evidence.

38The Appellants evidence as to the CVA of 10 properties in the immediate vicinity of the subject indicate an over assessment of 12.5%. However MPAC’s evidence of the price change over time looks at 600 properties from 2009 to 2012 which they use to support their CVA.

DECISION

Equity Analysis

39For 2009 and subsequent years, s. 44.(3)(b) of the Act places an additional duty upon the Board once the current value has been determined.

40Section 44.(3)(b) states that the Board shall…”have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it more equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land.”

41Board finds that there is no evidence before it leading to the conclusion that the current value of the subject property requires a further adjustment in accordance with s. 44.(3)(b) of the Act.

CONCLUSION

42The assessment of the subject property as of January 1, 2012, for the 2014 and 2015 taxation years, is reduced from $1,460,000 to $1,295,000.

43The assessment of the subject property for the 2013 taxation year is confirmed at $818,000.

44The assessment of the supplementary assessment is reduced from $647,000 to $477,000 and the effective date of the supplementary assessment is confirmed as May 10, 2013.

2014 AND 2015 DEEMED APPEALS

45An appeal for the 2013 taxation year is presently before the Board. Subsection 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 2013 appeal before March 31, 2014 and the Board has not disposed of the 2014 appeal before March 31, 2015. For that reason, this decision also applies to the 2014 and 2015 taxation years.

46Section 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.