Tracy van Leemput and Joseph van Leemput v. Municipal Property Assessment Corporation, 2015 CanLII 64850

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

October 9, 2015

FILE NO.:

WR 134639

Assessed Person(s):

Tracy van Leemput and Joseph van Leemput

Appellant(s):

Tracy van Leemput and Joseph van Leemput

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”)

Region 18

Respondent(s):

Town of Fort Erie

Property Location(s):

3295 Switch Road

Municipality(ies):

Town of Fort Erie

Roll Number(s):

2703-040-055-26830-0000

Appeal Number(s):

3067861 and 3088431

Taxation Year(s):

2014 and 2015

Hearing Event No.

597734

Legislative Authority:

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

Heard:

September 3, 2015 in Fort Erie, Ontario

APPEARANCES:

Parties

Counsel+/Representative

Tracy van Leemput

Self-represented

MPAC

Sheryl McRoberts

Town of Fort Erie

No one appeared

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS

INTRODUCTION

1The subject property is improved with a single family home. The Appellants purchased a 1.24-acre lot and began building a home on the lot in 2013. They moved into the home in February 2014. The Municipal Property Assessment Corporation (“MPAC”) issued a supplementary assessment notice for the home in June 2014, effective February 24, 2014.

2The Appellant is challenging the supplementary assessment notice for 2014 and the assessment as returned for the 2015 taxation year. The Board has deemed an appeal on behalf of the Appellants for the 2015 taxation year.

3Sheryl McRoberts, representing MPAC, submits that MPAC received a Request for Reconsideration (“RFR”) for the 2015 taxation year. She argues that the appeal for the 2014 taxation year is invalid because an RFR was not made, as required by s. 39.1 of the Act, for 2014.

4MPAC takes the position that the assessment as returned of $482,000 for the 2015 taxation year is at current value and equitable.

5From the evidence presented at the hearing, the Board must determine

a. The validity of the 2014 appeal,

b. The current value of the subject property as of the valuation day of January 1, 2012 and

c. Whether the assessment of the subject property should be reduced to make it equitable with that of similar properties in the vicinity.

DECISION

6The 2014 taxation year appeal is dismissed. The current value of the subject property is $416,000 for the 2015 taxation year. No adjustment is required for the purpose of equity. Accordingly, the assessment of the subject property is reduced from $482,000 to $416,000 for the 2015 taxation year.

REASONS FOR DECISION

2014 Taxation Year, Supplementary Assessment

7At the commencement of the hearing, Ms. McRoberts brought a motion to dismiss the 2014 taxation year appeal. She testified that MPAC had issued a Property Assessment Change Notice (“PACN”) in June 2014 effective February 24, 2014 to reflect the completion of the new house, valued at $425,000. MPAC, on their PACN, provided a deadline of October 23, 2014 to file an RFR if they wished to challenge this supplementary assessment but none was received.

8At the hearing the Appellant, Tracy van Leemput, agreed that she is challenging the supplementary assessment notice or PACN.

9On an administrative note, the Board created an appeal under s.40 of the Act for the 2014 taxation year based upon the appeal form received. Subsequently, the Board deemed a s.40 appeal for the 2015 taxation year.

10At the hearing, Ms. van Leemput submitted copies of the 2015 RFR, the supplementary assessment PACN and the 2015 Property Assessment Notice (PAN) (Exhibits 2, 3 and 4, respectively).

11Ms. van Leemput did not dispute Ms. McRoberts’ above testimony. She testified that on receipt of the PACN she called MPAC more than once to discuss the supplementary notice and that during these discussions she submits that MPAC staff did not explain that the increase in assessed value of $425,000 was for the house only (i.e. that it did not include the value of the land) or advise her about the deadline to file an RFR. The Board notes that the deadline for filing the RFR is set out in the PACN, Exhibit 3. In November, after the deadline for filing an RFR had passed, she received the 2015 PAN indicating that MPAC has assessed the value of her property, for land and improvements, at $482,000.

12She argues that despite her discussions with MPAC staff she did not fully understand the process or that the supplementary assessment PACN was for the building only and, therefore, did not appreciate the impact of the PACN until the November notice was received. She had further discussions the MPAC staff after which she filed an RFR.

13Ms. McRoberts explained that the RFR forms on MPAC’s website are automatically populated with the eligible taxation year. The RFR (Exhibit 2) indicates a taxation year for 2015. The RFR did not result in any changes to the assessment as returned.

14The Appellants then filed an appeal with the Assessment Review Board (“the Board”). However, on the form, they entered 2014 for the taxation year under appeal rather than the eligible 2015.

15Section 39.1(3) of the Act provides that a person who has received a supplementary assessment may request the assessment corporation to reconsider the assessment within 90 days of the mailing date of the notice of assessment or March 31 of the taxation year, whichever is later.

16Section 40.(3) of the Act provides that a precondition for an appeal of a residential property is that an RFR must be made within the time required.

17Section 40.(4) of the Act provides that:

40.(4) Extenuating circumstances. -- If, in the Board’s opinion, there are extenuating circumstances explaining why a request for reconsideration in respect of a property was not made within the time required under section 39.1 by a person who was required to do so as a precondition of appeal under subsection (3), the Board may, on an application by the person during the taxation year, extend the deadline for making a request under that section. 2008, c. 7, Sched. A, s. 11.

18The Board empathises with the Appellants, as, in reading the PACN, it is unclear that the “Increase in assessed value” is not the total assessed value. The Board is of the opinion that the Appellant took reasonable steps to understand the PACN and would have filed the RFR within the 90 days, had she fully understood the notice. However, the Board finds that it does not have authority to extend the time for filing the RfR in this instance. The request to extend the time to file an RFR was not made until the hearing date of September 3, 2015. Section 40.(4) of the Act provides that the Board may extend time only during the taxation year, which in this case is 2014. Accordingly, the Board finds that the Appellants failed to file an RFR for the February 24, 2014 supplementary assessment within the prescribed 90 days and did not request an extension of time to do so during the taxation year.

19While the Board believes there may have been sufficient reason to grant an extension of time to file an RFR for the supplementary assessment, it can only do so during the 2014 taxation year. Accordingly, because a valid RFR must be made as a precondition of an appeal and none was made the Board dismisses the appeal for the 2014 taxation year.

2015 Taxation Year Appeal

Legislation

20In determining the value at which land shall be assessed, the Board must have regard to the following provisions of the Assessment Act (“Act”):

21Section 19.(1) of the Act states:

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

22Section 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.

23In 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.

Evidence, Arguments and Analysis

24The subject property is located in the Southwestern Ontario Town of Fort Erie in the Stevensville area. It is part of former farmland that was recently subdivided into rural residential lots.

25The lot measures 1.24 acres and is improved with a single family, two-storey home, the building of which was completed for occupancy in February 2014. The home has 2,782 square feet (“sq. ft.”) with 1,355 sq. ft. on the fist floor and 1,427 on the second floor. There is an unfinished basement measuring 1,431 sq. ft. The home has two and a half bathrooms, forced air heating, central air conditioning and an attached garage of 553 sq. ft. MPAC has allocated a year built date of 2013. MPAC considers the subject property to be rural residential.

26The assessment as returned for the 2015 taxation year is $482,000 in the residential taxation class.

27MPAC determined the current value of the subject property using a multiple regression model. Ms. McRoberts presented six time-adjusted sales to support the assessment as returned. She argues that three are inferior to the subject property and three are relatively comparable. Ms. McRoberts’ position is that two of the sales, 1235 and 1437 Ridge Road North, are the most comparable to the subject property and because they both sold in 2012, the sales required minimal time adjustments which are $463,674 and $495,938, respectively. She argues that when she accounts for the differences in age and total living area between the subject property and her suggested comparables, she estimates that the market value of the subject property lies within the range of these two sales.

28Ms. van Leemput expressed frustration that MPAC has not provided her with sufficient information as to how the assessment was determined and that no direct comparable sales were presented. She argues that five of the sales, all located on Ridge Road North, are too far from the subject property and the sixth sale is inferior to the subject property.

29Ms. McRoberts responded that there is an absence of sales of similar properties in the immediate vicinity of the subject property and the criteria she used to select supporting sales were those which occurred closest to the January 1, 2012 valuation day, are rural and residential.

30Ms. van Leemput argues that the most comparable of MPAC’s sales is 1275 Ridge Road North because the two residences differ by only 12 sq. ft. Ms. McRoberts responded that she did not rely on this sale because it occurred in 2009, far from the valuation day, and more recent sales are available. However, Ms. McRoberts was able to time adjust the sale from 2009 to the valuation day.

31Ms. van Leemput, in response to Ms. McRoberts’ assertion that older properties have lower values due to depreciation, argues that older properties, especially those in the vicinity that were built in the last decade or so, should have higher values than her property. She has not yet finished and decorated the interior or landscaped the exterior. Ms. McRoberts’ photographic evidence in Exhibit 1d shows that her comparables are landscaped and most have paved driveways. Ms. van Leemput’s photographic evidence of the subject property, found in Exhibit 7, shows a ‘suburban’ design of a builder’s home with little landscaping and a gravel driveway.

32In reviewing Ms. McRoberts’ suggested comparables, I agree with Ms. van Leemput that 1275 Ridge Road North is comparable to the subject property. It has 2,770 square feet of building area, one acre of land, three bathrooms, forced air heating, central air conditioning and a 500 sq. ft. attached garage. It is superior to the subject in improvements and basement size (1,969 sq. ft.). Ms. McRoberts takes the position that it is inferior to the subject based on the age of the house, which was built in 2005. It sold in August 2009 for $401,000. Ms. McRoberts time adjusted the sale to the valuation day at $416,443.

33Of the two properties Ms. McRoberts prefers, I find that neither is as similar to the subject property as 1275 Ridge Road North. The first, 1235 Ridge Road North, is much older, having been built in 1850, and renovated in 2008. It is dissimilar to the subject property in that it has hot water heating, no central air conditioning, a partial basement (only 400 sq. ft.), a smaller house size (2,360 sq. ft.) and a 144 sq. ft. shed. It is similar in that it has 1.11 acres, two and a half bathrooms and a 600 sq. ft. attached garage. It sold in September 2012 for $472,500 with a time adjusted sale price of $463,674.

34The second property, 1437 Ridge Road North, has a larger lot (1.55 acres) with a smaller building area (2,240 sq. ft.) and a partially finished basement. It is similar in that it has two and a half bathrooms, forced air heating and central air conditioning and a 560 sq. ft. attached garage.

35The photographic evidence for these two properties (Exhibit 1d) shows that 1235 Ridge Road North has an 1850’s period exterior with extensive landscaping and a white picket fence and 1437 Ridge Road North has the austere appearance of an industrial or farm building, rather than a residence. I am of the opinion that because the uniqueness of these two properties will attract a very particular market, one that is not likely interested in a builder’s model, and their lack of similarities to the subject property, they are not directly comparable to the subject property.

36Ms. van Leemput presented data on at least 32 properties. I have reviewed this data and, for the purpose of determine current value, I have disregarded those that do not have sales or open market sales.

37Furthermore, the following sales do not assist me in determining the subject property’s current value because they are not directly comparable:

a. 2774 Shagbark and 3300 Switch are classified as farmland.

b. 225 Windmill is classified as a cottage (seasonal/recreational dwelling)

c. 3231 Cedar includes a bed and breakfast business, a home, a cottage, a tennis court and an enclosed swimming pool.

d. 67 Windmill Point, 3000 Dominion, 2995 Dominion, 4945 Garrison and 2475 Ott are bungalows.

381930 MacDonald sold in June 2015 for $453,000. It has a much larger lot size (3.08 acres) and an older (1981) and smaller building (2,104 sq. ft.). The MLS listing (Exhibit 6) shows it has municipal water, a gas fireplace, a workshop, a lake view, a fully finished basement and the interior has been updated. Although this sale occurred some distance from the valuation day, it suggests that the subject property would not sell for more than $453,000.

39741 Niagara sold in April 2015 for $419,000. It has a much smaller lot size (0.5 acres), an older home built in 1910 and is heated with hot water. It has a similar building area of 2,578 sq. ft. The MLS listing (Exhibit 6) indicates it has a ‘severed water lot’ and river views and is considered to be in an urban location. Based on the above, I do not find this to be comparable to the subject property.

401944 Pound sold in October 2014 for $365,000. It has a much smaller lot (0.44 acres) and a smaller home (2,265 sq. ft.) built in 2003. The sizes and age indicate it is inferior to the subject and, therefore, the subject property would likely sell for more than $365,000.

412230 Dominion sold in August 2015 for $389,000. It has a lot size of 2.23 acres and a smaller home (2,265 sq. ft.) built in 2003. The MLS listing photograph (Exhibit 6) shows that the house is somewhat similar in design to the subject property. It is also similar to the subject in that it is in a rural location, has central air conditioning and forced air heating however it has municipal water supply. Because the residence is smaller and older than the subject property, the subject property would likely sell for more than $389,000.

424025 West Main sold in September 2014 for $484,000. It has a smaller lot (0.75 acres) and the home is larger (2,992 sq. ft with 1,642 sq. ft. in the basement, 876 sq. ft. of which is finished) and older, built in 1926. It is not comparable to the subject property.

431981 Townline sold in December 2010 for $249,000. It has a smaller lot (0.69 acres) and a smaller home (1,433 sq. ft.). It is not comparable to the subject property.

44Ms. van Leemput presented data and a photograph for 477 Carrie Avenue (Exhibits 7 and 8) which, she submits, is the same builder’s plan as the subject property. The lot size is approximately 1/6th the size of the subject property’s at 7,334 sq. ft. and the residence is slightly smaller at 2,684 sq. ft. Unlike the subject property it has an urban location, municipal utilities and a paved driveway. It was assessed at $356,000. No sales data was presented. Ms. van Leemput questions the accuracy of MPAC’s divergent assessments for these two properties. She argues that 477 Carrie Avenue is superior to the subject in its location, services and finishes and that the subject property’s assessment should be similar to this property. The two properties are similar but not identical. It may be possible that the superior lot size of subject property might equal the value of the comparable’s amenities. However, I was given insufficient evidence to draw that conclusion. In any case, without an open market sale I cannot give this property much weight in determining the subject property’s current value. An assessment, which may not accurately reflect a property’s current value, does not lead me to conclude that the subject property’s assessment exceeds its current value.

45The Act requires MPAC to return the assessment of a property at its current value. The multiple regression model employed by MPAC to assess residential properties is a sales comparison approach to value that is used for mass appraisal. The Appellants are challenging the correctness of the assessment, which was determined by MPAC’s system of mass appraisal.

46The best comparable presented was 1275 Ridge Road which has a time adjusted sale price of $416,443. The difference in age between this property and the subject property is likely offset by the improvements and the size of the basements. The sales of the other relatively similar properties suggest that the subject property’s current value likely exceeds $389,000 but would likely not exceed $453,000. These sales were not time adjusted and occurred too far from the valuation day to provide anything other than a range of values.

47Based on the evidence presented, I find that the current value of the subject property is $416,000 for the 2015 taxation year.

Equity

48The 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.

49Section 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.” In order to make this determination, the assessments must be compared to the sale values and those assessments.

50Ms. van Leemput’s main argument was that MPAC is not assessing properties accurately. She submitted a lengthy list of properties along with MLS listings and MPAC property data (Exhibits 5, 6 and 8) pointing to the assessments of other properties that appear to be superior but have lower assessments or simply assessments that vary from the MLS or market values. At the hearing I explained that MLS list prices carry little weight and that executed sale prices were preferred. For example, she compared the list price ($489,000) to the assessment ($373,000) for 1930 MacDonald. However this property sold for considerably less at $453,000 in June 2015.

51Ms. van Leemput’s evidence included 10 sales of single-family detached homes in the residential class (I disregarded any properties classified as farm land or seasonal/recreational because I don’t consider them similar to the subject property). Eight of the ten properties sold between September 2014 and August 2015. The assessments are valued at January 1, 2012. The sale prices are both above and below the assessments with the majority having sale prices which exceed the assessments. However, because the sales occurred so far from the valuation day, without more data I cannot rely on them for the purpose of determining equity. For example, had any improvements occurred between the time the properties were assessed and the dates of the sales? What changes were occurring in the market between the valuation day and the sale dates?

52Two of the sales occurred closer to the valuation day. 1981 Townline Road sold in December 2010 for $249,000 and is assessed at $267,000. The property is located approximately two kilometres from the subject property. Using MPAC’s time adjustment factors, I time-adjusted the sale to $253,000 as at the valuation day. This indicates that the assessment is 6% higher than the market value. 4945 Garrison sold in May 2011 for $365,000, the time adjusted sale price is $402,500. It is assessed at $323,000 for a variance of 20% below the market value. This property is located approximately 14km from the subject property. These two sales do not provide me with sufficient data to make a determination on equity. One assessment is below and one is above the market values, one property is located a fair distance from the subject property and, therefore, may be in a different market.

53Ms. McRoberts presented an equity analysis of 30 sales within 1.12 kilometres from the subject property. These sales occurred between January 2009 and December 2012 and were time-adjusted to the January 1, 2012 valuation day. The assessment to sale ratios (“ASR”) range from 0.70 to 1.24. She reported a median ASR of 0.99 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 15 of the 30 properties actually fall within the acceptable range of 0.95 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 residential properties, that deviation should not exceed 15%. Ms. McRoberts calculated the COD for her equity analysis at 9.2%, and argued that a low COD implies equitable assessments.

54The ASR is a measure of whether MPAC’s mass appraisal model is working well in the vicinity of the subject property. The ASR’s range from 0.70 to 1.24. Adding the Appellants’ two sales to this study, even though they are beyond the 1.12km from the subject property, does not change the findings that the median ASR is very near 1.00. In conclusion, the parties’ evidence does not lead me to conclude that MPAC is tending to either over or under assess similar lands in the vicinity.

CONCLUSION

55In conclusion, the current value of the subject property is reduced from $482,000 to $416,000 for the 2015 taxation year.

56No adjustment is required for the purpose of equity.