Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 15, 2015

FILE NO.: WR 133138

Assessed Person(s): Angela Sgambelluri and The Estate of Joseph Sgambelluri

Appellant(s): Angela Sgambelluri

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

Respondent(s): Town of Lincoln

Property Location(s): 4670 Durham Road

Municipality(ies): Town of Lincoln

Roll Number(s): 2622-020-001-20500-0000

Appeal Number(s): 3036201, 3036200 and 3088583

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

Hearing Event No.: 584639

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

Heard: June 15, 2015 in Smithville, Ontario and on July 15, 2015 by Telephone Conference

APPEARANCES:

Parties	Counsel+/Representative
Angela Sgambelluri	Self-represented
MPAC	Sheryl McRoberts
Town of Lincoln	Connie Marshall

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS

INTRODUCTION

1The subject property has an effective site area of 27.71 acres and is located a short distance south of the Queen Elizabeth Way in the Town of Lincoln, on the border of Grimsby. It is an irregularly shaped lot that abuts both Durham Road and King Street.

2The returned assessed value of the subject property is $831,000 for the 2013, 2014 and 2015 taxation years. This value was apportioned as follows:

• Commercial Tax Class - $273,500

• Farm Tax Class - $416,900

• Residential Tax Class - $140,600

3During an inspection of the property in preparation for this hearing, MPAC determined that the property’s use is not reflected in the assessment as returned. As a result on April 24, 2015 MPAC served a Special Notice under Rule 30 of the Assessment Review Board’s (“Board’s”) Rules of Practice and Procedure (“Rules”), seeking a higher assessment of $976,000 and a change in property tax class apportioned as follows:

• Commercial Tax Class - $135,353

• Farm Tax Class - $51,598

• Residential Tax Class - $147,970

• Commercial Excess Land Tax Class $640,779

4The Appellant, Joseph Sgambelluri, passed away in September 2014 and the property was transferred to his wife, Angela Sgambelluri.

5Mrs. Sgambelluri, representing herself and her husband’s estate, takes the position that the amended apportionment sought by MPAC is incorrect; that the majority of the land should remain in the Farm Tax Class and that a contamination issue has reduced the market value of the subject property.

6From the evidence presented at the hearing, the Board must determine the current value of the subject property as of the valuation day of January 1, 2012 and whether the assessment of the subject property should be reduced to make it equitable with that of similar properties in the vicinity.

7Connie Marshal of MTE Paralegal represented the Town of Lincoln, however, she did not take an active role in the hearing.

DECISION

8The Board finds that the current value of the subject property for the 2013, 2014 and 2015 taxation years is $789,000 (rounded) apportioned as follows:

• Commercial Tax Class - $100,000

• Farm Tax Class - $52,000

• Residential Tax Class - $148,000

• Commercial Excess Land Tax Class $489,000

9No adjustment is required for the purpose of equity.

10Accordingly, the assessment of the subject property is reduced from $831,000 to $789,000 (rounded) apportioned as follows:

• Commercial Tax Class - $100,000

• Farm Tax Class - $52,000

• Residential Tax Class - $148,000

• Commercial Excess Land Tax Class $489,000

REASONS FOR DECISION

Preliminary Issue

11At the commencement of the hearing Sheryl McRoberts advised the Board that the Appellant, Angela Sgambelluri, had disclosed her evidence in less than the 21 days specified in the Board’s Rules (Rule 45). However, Ms. McRoberts was raising no objection and was prepared to proceed with the hearing.

12The hearing was continued by telephone conference on July 15, 2015 to clarify MPAC’s supporting evidence. Sheryl McRoberts, Angela Sgambelluri and her son, Tony Sgambelluri attended.

Legislation

13In determining the value at which land shall be assessed, the Board must have regard to the following provisions of the Assessment Act (“Act”):

14Section 19.(1) of the Act states:

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

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 19.3 of the Act states:

19.3 Classification day. – The day as of which land shall be classified for a taxation year is June 30 of the previous year.

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

18Land is to be assessed at its current value. Current value is defined as the amount of money a property would sell for in an open market sale on the valuation day. For the purpose of these appeals, the valuation day is January 1, 2012.

19The assessment as returned of $831,000 includes $273,500 in the Commercial Property Class, $416,900 in the Farm Property Class and $140,600 in the Residential Property Class. In March 2015 a contamination issue was disclosed to MPAC which led to an inspection on March 6, 2015.

20From the inspection, MPAC determined that the property is being used differently than what is reflected in the returned assessment. Ms. McRoberts position is that there is much less farmed land and that the majority of the land, 24.46 acres, defaults into the commercial tax class.

21The Appellant owns Ridgeview Garden Centre, located on the abutting property at 5699 King Street. This business overflows onto the subject property. On the subject property there is a 400 square foot storage building that Ms. McRoberts assessed as commercial as it is used in conjunction with the business. Hardscaping materials and firewood are also available for sale on the subject property. There is a tenanted residence with .25 of an acre and its value remains relatively static. However, Ms. McRoberts estimates that only three acres of the property are farmed and the remaining 24.46 acres are used for the landscape business as the owners are “excavating top soil for retail use”. The Town of Lincoln’s current zoning for this land is industrial (IN-7). As a result, Ms. McRoberts valued the 24.46 acres as industrial land pursuant to the zoning but assessed them in the commercial tax class pursuant to their use.

22On April 24, 2015, MPAC served notice to the Appellant, the Town and the Board under the Board’s Rule 30 seeking a change in property class to a class with a higher tax rate and an assessment that would result in a higher assessment than returned. The assessment sought is $976,000 (rounded) with $135,353 in the Commercial Property Class, $51,598 in the Farm Property Class, $147,970 in the Residential Property Class, and $640,779 in the Excess Commercial Property Class.

23In support of the increased assessment, Ms. McRoberts presented costing data for the residence and storage building along with four sales.

24The first sale, 8 Iroquois Trail, Grimsby, is located mere metres from the subject property. It has 1.06 acres and was a vacant industrial lot when it sold for $350,000 in August 2011.

25The second sale, Bartlett Road, Beamsville (Roll 2622-010-002-05800) is located east of the subject property. It has 11.84 acres and was a vacant industrial zoned lot when it sold for $750,000 in September 2011.

26The third sale, Tops Drive, Grimsby (Roll 2615-020-021-00750) is located west of the subject property. It has 5.78 acres and is assessed in the vacant industrial I tax class. It sold for $1,381,420 in December 2014.

27The fourth sale, also on Tops Drive (Roll 2615-020-021-00725) has 5.31 acres and the same assessment class and sold for $1,603,000 in 2014.

28Mrs. Sgambelluri argues that Grimsby land values are higher than Lincoln and therefore should not be compared to the subject property. The Board concurs with regard to the two properties on Tops Drive due to their distance from the subject property. However, 8 Iroquois Trail is a stone’s throw from the subject property. In considering the lot sizes of both this sale and the second sale in comparison with the subject property, these first two sales indicate to the Board that the subject property is likely not over-assessed at $977,000.

29MPAC has valued the 400 square foot building at $7,715 in the commercial tax class using its automated costing system. Mrs. Sgambelluri takes the position that this building has less value than MPAC allocated in its ACS calculations. It is constructed of two 20-foot metal-framed storage containers with no foundation, whereas MPAC’s ACS data includes the value of a foundation. It has an exterior cladding to match the garden centre but is not wood framed as MPAC suggests. The Sgambelluri’s explained that it is used for storage; one half for the farm market and the other for cold storage. She argues that the value should be divided between the commercial and farm classes and that its replacement value is $6,000. The Board accepts the Sgambelluri’s testimony of the use and estimated replacement value.

30Mrs. Sgambelluri argues that the contamination issue has diminished the value of the subject property and it should not be compared to properties that do not share the same issue. I agree. However Mrs. Sgambelluri did not present any supporting evidence for this argument. At the hearing Mrs. Sgambelluri struck me as an intelligent and knowledgeable business owner. She testified that the property has not been exposed to the market. However, one might expect that the valuation would have been addressed in her husband’s estate and during the years of dealing with the contamination issue. I received no suggested comparable properties other than those presented by MPAC. The only information I received regarding the contamination’s effect on value was from MPAC which will be addressed later in these reasons.

31Mrs. Sgambelluri argues that in 1998 they applied to the Board and received a decision allocating most of the land to the farm tax class and that the use has not changed since then. She submits that her husband’s intent was to farm the land but was delayed in doing so because of the contamination and the Ministry of Environment (“MOE”) order. She states that if the $100,000 deposit held by the MOE is released in 2020, she intends to use it to begin farming the land (See Paragraph 35 below). In the mean time they have been carrying out other ‘agricultural activities’ to supply their roadside farm market. At the hearing I advised Ms. Sgambelluri that I am not bound by a previous Board decision. Nor would I determine a current value based upon a use that may occur some time in the future but is not a current use.

32The use or non-use of a portion of land is relevant to the classification, more so than the zoning. Classification must be determined with regard to the function of the portion under consideration. The property class for a particular portion of land is to be determined by the actual use of a property at the classification date of June 30 in the year before the applicable taxation year. The regulations (Ontario Regulations 282/98) establish the criteria attributable to each class and stipulate that a property will default into the commercial class if it fails to meet the tests outlined for the other property classes.

33A portion of the subject property has a contamination issue. However, the uncontested evidence is that the majority of the land is not actively farmed and soil is being removed for the purpose of commercial retailing. I agree with Ms. McRoberts that the 24.46 acres has a default classification of commercial and I accept her recommendation that it be placed in the excess commercial land class. The best evidence received as to the current value of the 24.46 acres is MPAC’s valuation of $633,223 which was derived from their valuation model. The Board received no other evidence such as sales or assessments of similarly used lands or contaminated lands.

34Based on the evidence presented, I find that the current value of the subject property, before considering the contamination, is $974,285 apportioned as follows:

• Commercial Tax Class - $130,638, (which includes $127,638 for the land and $3,000 for one half of the storage structure)

• Farm Tax Class - $54,898 (which includes $51,898 for the three acres of farmland and $3,000 for the second half of the storage structure)

• Residential Tax Class - $147,970

• Commercial Excess Land Tax Class $640,779

Contamination of the Land

35The subject property had been used as a shale quarry for the manufacture of clay bricks and agricultural drainage tiles. The Appellant’s husband, Joseph Sgambelluri, purchased the abandoned quarry around 1980 intending to farm the land. He obtained fill, which the MOE later determined was contaminated. The MOE then issued an Order against the property. The Appellant was required to complete Phase I and Phase II environmental site assessments, install wells for testing, hire an MOE approved company to conduct regular testing and the Appellant paid a $100,000 deposit to MOE which Mrs. Sgambelluri hopes will be returned in 2020 when she can apply to have the Order removed. The cost of the testing is approximately $22,800 per year.

36Ms. Sgambelluri argues that the land cannot be used for anything but farming due to the MOE order, that it cannot be used for commercial or industrial purposes until the order is lifted. I was not provided with a copy of this order. In reviewing all of the evidence and arguments received regarding this issue, I find that without supporting evidence I cannot give Ms. Sgambelluri’s testimony much weight. I am satisfied, based upon the testimony and evidence received, that the 24.46 acres are not farmed, is not residential and is not industrial and so it defaults into the commercial land class. I accept MPAC’s recommendation that it be placed in the Commercial Excess Land Class.

37Based upon the contamination cost information provided by the appellant to MPAC, the amount of which decreases each year, MPAC recommends the following reductions:

Table 1

Taxation Year	Commercial Portion Deduction	Excess Commercial Portion Deduction	Total Deduction
2013	31,000	151,400	182,400
2014	27,200	132,400	159,600
2015	23,300	113,500	136,800

38The Board accepts MPAC’s recommendation to reduce the current value to reflect the cost of the contamination (see Table 1). However, because I am determining the current value as of the valuation day of January 1, 2012 I will use the deductions closest to that date. Therefore, in consideration of the contamination issue, the current value is reduced from $974,000 to $789,000 (rounded) allocated as follows:

• Commercial Tax Class is $99,638 ($130,638 – $31,000) rounded to $100,000.

• Farm Tax Class - $51,598 rounded to $52,000.

• Residential Tax Class - $147,970 rounded to $148,000.

• Commercial Excess Land Tax Class $489,379 ($640,779 – $151,400) rounded to $489,000.

Equity

39The Act requires the Board to lower an assessment below its current value if such an adjustment is required to make the assessment equitable with the assessments of similar properties in the vicinity.

40Section 44.(3)(b) of the Act 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 equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of land."

41The Board has not been presented with any evidence to suggest that the current value of the subject property of $789,000 requires a further adjustment in accordance with s. 44.(3)(b) of the Act.

2015 DEEMED APPEAL

42An 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.

43Section 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.