Hopper v. Municipal Property Assessment Corporation, 2015 CanLII 78965

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: November 25, 2015

FILE NO.: WR 135988

Assessed Person(s): Stuart Edward Hopper, John Charles Hopper

Appellant(s): Stuart Hopper, John Hopper

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 28

Respondent(s): City of North Bay

Property Location(s): 134 Silver Lady Lane

Municipality(ies): City of North Bay

Roll Number(s): 4844-050-069-14800-0000

Appeal Number(s): 2997534, 3029422 and 3093154 (deemed 2015)

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

Hearing Event No. 602345

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

Heard: October 29, 2015 in North Bay, Ontario

APPEARANCES:

Parties	Counsel+/Representative
Stuart Hopper John Hopper	Donald Young
MPAC	Brittany Kee John Hyatt
City of North Bay	Lisa Beaulieu

DECISION OF THE BOARD DELIVERED BY ANTHONY LaREGINA

INTRODUCTION

1The appeals before the Assessment Review Board (“Board”) were filed by the Assessed Persons/Appellants, Stuart Hopper and John Hopper in respect to the returned assessment of $362,000 for the 2013 taxation year and $320,000 for the 2014 and 2015 deemed taxation years for the subject property, 134 Silver Lady Lane in the City of North Bay.

ISSUES

2Brittany Kee and John Hyatt representing MPAC introduced five sales of comparable properties all located on Trout Lake of which one is located on Silver Lady Lane and in the remaining four on Anita Avenue, a neighboring street. The range of adjusted sale values for the five was between $267,201 and $394,171. Mr. Hyatt concluded that the assessed value of $320,000 is within the range of comparable sales and therefore reasonably valued. Ms. Kee in her summation, requested that the Board reduce the assessment from $362,000 to $320,000 for the 2013 taxation year and confirm the assessment at $320,000 for the 2014 (and deemed 2015) taxation years.

3Both Ms. Kee and Mr. Hyatt acknowledged that there had been contamination on the property but have no way of quantifying the impact on value and therefore cannot make any downward adjustment to the current value for the contamination issues.

4Donald Young, representing the Appellants took the position that MPAC is being unreasonable in requesting phase 1, 2 and 3 studies of the contamination as well as a qualified engineers report as this would be very costly to the property owner. Furthermore, all the information is in the hands of the insurance company who is currently doing the remediation on the property. Mr. Young claims that the tenants on the property were evacuated May 12, 2012, the day of the formaldehyde spill and the property remains vacant to this date while the remediation continues. Mr. Young concludes that the property as it stands today is not marketable and therefore has no market value. Mr. Young requests that the Board reduce the assessment of the subject property to zero until the remediation is complete and the property can be occupied.

5The Board has to decide:

• Whether the returned assessment of $362,000 for 2013 and $320,000 for the 2014 taxation years is at current value as of the January 1, 2012 valuation date; and if the 2015 taxation year should be deemed.

• Whether the current value is equitable with the assessments of similar lands in the vicinity.

DECISION

6The Board finds the current value of the subject property to be $320,000 for the 2013 and 2014 taxation years and deemed for the 2015 taxation year.

7The Board also finds that the current value as determined above requires no additional downward adjustment to make it equitable with the assessments of similar properties in the vicinity.

REASONS FOR DECISION

Legislation

8The Board must have regard to s. 1, s. 19. (1), s. 19.2(1), s. 40. (17), s. 40. (19), s. 40.(26) and s. 44.(3) (a) and (b) of the Assessment Act (“Act”) when determining whether or not the assessment under appeal is correct.

9Section 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.

10Section 19.(1) of the Act states:

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

11Section 19.2(1) of the Act provides:

19. 2(1) Valuation days. – Subject to subsection (5)¹, the day as of which land is valued for a taxation year is determined as follows:

20. 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.

12Section 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.

13Section 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.

14Section 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.

15Section 44.(3)(a) and (b) of the Act state:

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.

Subject Property

16The subject property, a one-storey single family detached homes located at 134 Silver Lady Lane on Trout Lake in the City of North Bay. It was built in 1972 with approximately 864 square feet of total building area on the main floor and 864 square feet in the basement of which 747 square feet is finished space. MPAC has estimated the quality of construction at 6.0. The subject lot has an effective frontage of 96.59 feet on water and an effective depth of 208.17 feet. The subject property is divided into two pieces with Silver Lady Lane and a Highway 63 dividing the property. The description of the subject property was agreed to by Mr. Young as properly reflecting the characteristics described by MPAC.

Current Value - Evidence and Analysis

17Ms. Kee represented MPAC at the hearing. She filed Exhibit 1 in support of the assessment as returned. Exhibit 1 is a Valuation Report of the subject property which includes the Property Profile, a Map of the vicinity identifying the location of the subject property and the comparable sales, Comparable Sales Chart, Price Change over Time Analysis to determine time adjustment factors, Equity Analysis and photo of the subject property. Ms. Kee called on Mr. Hyatt, Property Valuation Analyst to testify in respect to the property valuation at 134 Silver Lady Lane.

18Mr. Hyatt began by describing the property and then presented the following chart of five comparable sales to support the direct sales approach to value.

19Details of Mr. Hyatt’s “Comparable Sales Chart” is summarized in Table 1.

Table 1

Feature	134 Silver Lady Lane	190 Silver Lady Lane	231 Anita Avenue	275 Anita Avenue	385 Anita Avenue	517 Anita Avenue
CVA $	320,000	325,000	318,000	242,000	351,000	280,000
Sale Amount $		330,000	355,000	270,000	372,000	300,000
Sale Date		2014/09	2010/03	2012/09	2009/07	2010/06
Adj. Sale Amount	n/a	368,998	267,204	394,171	309,807
Effective Frontage	96.59	86.73	80.00	40.00	40.00	68.00
Effective Depth	208.17	215.00	160.00	150.00	123.00	159.00
Effective Site Area	18,295	22,215	12,632	6,098	4,791	6,098
Year Build	1972	1950	1958	1990	2003	1999
Quality	6	5	5	4	5	4
Build Area	864	981	711	791	998	813
Basement Area	864	528	711	n/a	620	297
Comparability to Subject		Relatively Comparable	Inferior	Inferior	Inferior	Inferior

20Mr. Hyatt concluded that the best comparable to the subject property was 190 Silver Lady Lane and the assessed amount of the subject property was well within the adjusted sale range of all five comparable properties demonstrating that the assessment should be confirmed at $320,000.

21Mr. Hyatt also admits that he is aware that the property has been contaminated by a formaldehyde spill in 2012 but has received no documentation from the Appellants to support an adjustment in current value for remediation of the spill.

Appellants’ Position presented by Mr. Young

22Mr. Young presented Exhibit 3 into evidence which included;

1. MPAC’s data requirements for properties with contamination issues,
2. Newspaper articles relating to spill and remediation efforts,
3. Hand sketch of location of spill in relation to the subject property,
4. Letter from John Severino from City of North Bay to Don Young,
5. Series of emails between Brent Belzac of EFI Global and Don Young,
6. Letter from Brent Belzac, Senior Project Manager, Bob Harrison, Regional Manager and Bruce Campbell, Senior Professional Geoscientist all of EFI Global to MPAC.
7. Letter from Morland Real Estate Appraisals Ltd.

23May 21, 2012 a transport truck spilled 40,000 litres of formaldehyde solution adjacent to the subject property resulting from an accident which also killed the driver.

24The accident caused the tank to rupture and the formaldehyde to spill and flow through the subject property and into the lake.

25On the day of the accident the fire department, City and Ministry of the Environment were involved in evacuating all the residents on the street.

26Over a number of weeks after the spill, the residents were slowly allowed to return to their properties except for the subject property which still remains vacant.

27Mr. S. Hopper, the Appellant, currently lives next door to the subject at 130 Silver Lady Lane and was allowed to return approximately six weeks after the spill.

28The insurance company representing the trucking company hired EFI Global to undertake the project of assessing the effects of the spill and conducting all remediation work. Mr. Young claims that they have spent in excess of $5,000,000 to date and are still not complete.

29Twenty four wells have been drilled on the subject property and 30 on the road at the site of the accident and to this date they still remain in place.

30Mr. Young claims that the work was scheduled to be completed this fall but to date, it has not been completed.

31Mr. S. Hopper has filed a legal action against the responsible parties.

32Mr. Young claims that he has asked EFI global for information relating to cost to cure for the purposes of the assessment appeal but has been advised to work through Mr. Hopper’s legal counsel.

33EFI Global explains in the letter to MPAC that given the events relating to the spill the property at 134 Silver Lady Lane still remains vacant and is considered to be impracticable for occupancy.

34The insurance company involved in the remediation has agreed to compensate the property owner for loss of income on 134 Silver Lady Lane.

35Property owner is losing $2,200 per month of income with no compensation to date.

36The property owner pays between $5,000 and $6,000 of taxes per year on the property.

MPAC’s Summation

37Ms. Kee submitted that the evidence presented by MPAC supports a current value of $320,000. Based on the equity study also presented by MPAC showing a median ASR of 0.995 Ms. Kee submits further that there should be no further adjustment to make it equitable with the assessment of similar properties in the vicinity and therefore requests that the Board reduce the assessment from $362,000 to $320,000 for the 2013 taxation year and confirm the assessment at $320,000 for 2014 (and deemed 2015) taxation years.

38Ms. Kee presented the case between Bergez v. Municipal Property Assessment Corp., Region No. 19. [2007] O.A.R.B.D. No. 101 (“Bergez”) citing that in that case Member Ian Bernie determined that no adjustment to current value was warranted because there was no quantitative evidence provided to make the adjustment for the impact of a methane gas problem. Ms. Kee submits that no quantitative evidence was provided by Mr. Young to substantiate the impact of the formaldehyde spill and therefore no adjustment should be made in this case as well.

39Ms. Kee also presented two cases related to the stigma of a contamination on current value, Bliss v. Municipal Property Assessment Corp., Region No. 17 [2014] O.A.R.B.D. No. 514 (“Bliss”) and McNally v. Municipal Property Assessment Corp., Region No. 16. [2008] O.A.R.B.D. No. 27 (“McNally”). Both state that no quantitative evidence was presented to determine the monetary impact related to stigma and that no adjustment to current value was made. Ms. Kee submitted that in this case, Mr. Young provided no evidence to substantiate stigma and therefore no adjustment should be made to current value.

Appellants’ Summation

40Mr. Young submitted that MPAC is being very unreasonable in requesting phase 1, 2 and 3 studies when the property owner is not undertaking the remediation. There is no question that a spill occurred on May 12, 2012 and that the property still remains vacant with no tenant. The property owner continues to pay between $5,000 and $6,000 of property tax and cannot use the property. It is Mr. Young’s opinion that since the day of the spill the property has no value and that the assessment should be zero until the remediation is complete. Mr. Young argues that MPAC is going above and beyond to maintain an inflated value and that common sense should prevail. Mr. Young requests that the Board reduce the assessment from $320,000 to zero.

The Board's Analysis and Decision

41The thrust of the Act is to rely on current value as the basis for assessed value. 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.”

42The best evidence of current value is the sale of the subject property on or close to the valuation day of January 1, 2012. If, as in this case, no such sale occurred the sales of similar properties in the vicinity will be considered to establish current value of the subject property.

43The only sales evidence submitted to the Board in support of current value are the comparable sales provided by MPAC. When analyzing those sales the Board is in agreement with Mr. Hyatt that while the sales are not identical to the subject property they are similar in nature, in close proximity and all located on Trout Lake. The assessment of the subject property falls within the range of time adjusted sale values of the comparable properties which demonstrates that the assessment of the subject property in relation to the comparable sales is reasonable. Furthermore, the assessment of the subject property is $10,000 dollars less than the sales value of 190 Silver Lady Lane which MPAC believes and the Board concurs is the most comparable to the subject property.

44Mr. Young agrees with the current value of $320,000 for the subject property assuming the formaldehyde spill did not occur.

45All parties are in agreement that the formaldehyde spill occurred and that 24 wells have been drilled on the subject property for the purposes of injecting hydrogen peroxide into the ground neutralizing the effects of the formaldehyde in the ground water.

46All residents in the area have returned to their homes except for the subject property.

47According to the letter supplied by EFI Global to MPAC dated November 5, 2013, the access route to the property is in poor condition and therefore restricted to four wheel drive vehicles making it not practical to occupy. There is nothing in the letter stating that it cannot be occupied because of environmental concerns relating to the formaldehyde. The letter also states that the insurance company has agreed to pay Mr. Hopper for the loss of income relating to the loss rental of the subject property.

48Mr. Severino, the Director of Environmental Services, stated in his letter that the air quality is fine for all residents but the only outstanding issue as of May 6, 2013 is the quality of potable water on the subject property.

49Mr. Tom Stone, from Morland Real Estate and Appraisals Ltd, opined that the stigma of a site catastrophe would affect the marketability and therefore the value of the of the subject property.

50Unfortunately Mr. Young did not provide the Board with any evidence to substantiate or quantify the impact of the spill on current value of the subject property. Furthermore, other than Mr. Young and Mr. Stone’s opinions the Board has received no evidence to substantiate that the market value should be zero during the remediation phase. While the Board is sympathetic to Mr. Hopper’s situation, it has no quantitative evidence to make a downward adjustment to current value. Therefore, the Board will set the current value at $320,000 for the 2013 and 2014 (and deemed 2015) taxation years.

51In reviewing the case law the panel agrees with Member Bernie in the Bergez. decision that the impact on value relating to an environmental concern should be quantified so that a downward adjustment can be made. The Bliss and McNally decisions were submitted in relation to stigma. Once again, the Board is in agreement that quantitative evidence must be provided relating to stigma in order to reduce the current value.

Equity Analysis

52Section 44. (3)(b) mandates and directs that after determining current value, the Board shall have reference to the value at which similar lands in the vicinity are assessed. The Assessment to Sale Ratio (“ASR”) is a tool often used to determine if a reduction in the assessment below current value is required to make an assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the time-adjusted sale price.

53While the burden of proof respecting current value rests with MPAC, and its evidence in that respect has been found to be determinative, the burden of proof respecting the s. 44.(3)(b) equity requirement rests with the Appellants.

54Mr. Hyatt submitted an equity analysis as part of Exhibit 1 indicating that the median assessment to sales ratio is 0.995 based on 36 sales of similar properties in the vicinity, 31 sales in the equity analysis plus five sales which he used in his current value study.

55For the purposes of s. 44.(3)(b), based on the equity analysis provided by MPAC, the Board finds that the current value, as determined above, does not require any further adjustment to make it equitable with the assessments of similar lands in the vicinity.

CONCLUSION

56The Board finds that the assessment should be reduced from $362,000 to $320,000 for the 2013 taxation year and confirmed at $320,000 for the 2014 and deemed 2015 taxation years.

2015 DEEMED APPEAL

57An 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.

Footnotes

1. 1Subsection 5 permits the Minister to prescribe a different valuation day. A different day has not been prescribed.