Kenneth John Kendall v. Municipal Property Assessment Corporation, 2015 CanLII 78967

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: November 24, 2015

FILE NO.: WR 135537

Assessed Person(s): Kenneth John Kendall

Appellant(s): Kenneth John Kendall

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

Respondent(s): City of North Bay

Property Location(s): 1077 Premier Road

Municipality(ies): City of North Bay

Roll Number(s): 4844-040-061-06800-0000

Appeal Number(s): 3043529 and 3093083 (deemed 2015)

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

Hearing Event No. 597850

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

Heard: September 30, 2015 in North Bay, Ontario

APPEARANCES:

Parties

Counsel+/Representative

K. Kendall

Self-Represented

MPAC

J. Hyatt

City of North Bay

L. Beaulieu

DECISION OF THE BOARD DELIVERED BY NICOLL PLUMSTEAD

ISSUE

1John Hyatt appeared on behalf of MPAC to defend the assessment of 1077 Premier Road which was returned at $196,000 for the 2014 and 2015 taxation years.

2Mr. Hyatt describes the subject property on Lake Nipissing as “a cottage-type rental property” and Assessed Person/Appellant Kenneth Kendall describes it as “a run-down building with a great tenant.” The building is in poor condition and if the property were sold, Mr. Kendall’s opinion is that it would be demolished. He seeks a value “in the range of $150,000,” testifying that this is “far more realistic than MPAC’s $196,000” (Exhibit 2, p. 1). From his study of MPAC’s and his own choices of sales in preparation for the hearing, he argues that MPAC is “over by 25-30%.”

3Lisa Beaulieu appeared for the City of North Bay as an observer, and did not make submissions on their behalf.

4The Board must determine whether MPAC’s value of $196,000 reflects the correct current value of the subject property as of the legislated valuation day of January 1, 2012, and whether it is equitably assessed vis-à-vis the assessments of similar lands in the vicinity.

DECISION

5In determining the amount of the assessment, the Assessment Act, R.S.O 1990, c. A.31, as amended (“Act”), requires the Board to arrive at two conclusions:

1. Section 44.(3)(a) requires the Board to “determine the current value of the land.” The Board finds that the current value is $165,000.

2. Section 44.(3)(b) requires the Board to “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.” The Board finds that the current value of $165,000 is equitable with that of similar lands in the vicinity, and an adjustment is not required.

6The assessment of the subject property is reduced from $196,000 to $165,000 for the 2014 and deemed 2015 taxation years.

REASONS FOR DECISION

The Subject Property

7The subject property is a single family detached on water located at 1077 Premier Road on Lake Nipissing in the West Ferris area of the City of North Bay. MPAC determined the property’s current value using the direct sales comparison approach to value. It is classified as residential (“RT”), and there is no issue with regard to its classification (Exhibit 1, p. 1). There is an effective frontage of 36.00 feet, an effective depth of 153.48 feet and an effective site area of 5,525.28 square feet. The 621-square-foot one-storey dwelling, whose quality class (“QC”) is 4.0, was built in 1948. On Appendix A of MPAC’s Exhibit 1, it is described as being in “Fair” condition, but Mr. Kendall argues that its condition is poor, and Mr. Hyatt agrees. The property has no other structures.

Position of MPAC

8Mr. Hyatt provides Exhibit 1, a Valuation Report which includes exterior photographs of the subject property and four suggested sales comparables, a scattergram depicting sale to assessment ratios over time, a time adjustment factors table (“TAF”), one appendix and an Equity Analysis.

9Appendix A is a Market Analysis (with locational map) which estimates the current value of the subject property using 2009, 2010, 2011 and 2012 sales of four suggested comparable properties in the same W01 homogeneous neighbourhood (“HNBHD”) as the subject property.

10In its effort to adjust sale dates to the valuation day of January 1, 2012, MPAC determines time adjustments by comparing the sale prices and assessments of 480 properties in the subject property’s neighbourhood and adjacent neighbourhoods from January 2009 to December 2012. From this data, monthly time adjustment factors (“TAFs”) are established for this 48-month time period and are provided in Table 1. Appendix B, which includes data for the 480 properties, normally accompanies the scattergram and Table 1; it is not included in MPAC’s evidence.

11MPAC’s Equity Analysis (with locational map) compares assessments to time adjusted sale prices of 30 “residential properties within 0.58 kilometre of the subject property” between June 2009 and September 2012. MPAC calls this an Assessment to Sale Ratio (“ASR”) study.

Position of the Appellant

12Mr. Kendall’s Exhibit 1, a package of evidence and submissions, includes his own suggested comparable property sales as well as comments on why he feels MPAC’s suggested comparables are not good comparables to 1077 Premier Road. The Board will address these in its current value analysis.

13The Appellant’s Real Estate Summary Chart of average sale prices of homes in the North Bay Multiple Listing trading area, with percentage changes from 2000 to 2013, is not helpful to the Board in its deliberations; it gives this submission little weight.

Relevant Legislation

14In determining the assessment, the Board is governed by the following sections 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.

17Section 19.2(1) of the 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.

18Section 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.

19Section 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.

20Section 44.(3) of the Act states:

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.

The Board’s Analysis

Determination of Current Value

21The initial task for the Board is to use the best evidence available to determine the current value of the property in accordance with s. 1, 19.(1) and 44.(3)(a) of the Act. In its current value deliberations, the Board relies on sales of comparable properties. Assessed values of properties are dealt with in the equity section of the decision. The Board finds that the current value is $165,000.

22Mr. Kendall presents sales of three properties. One is a close neighbor at 1051 Premier Road and it sold in August 2013; another, at 949 Premier Road, sold in 2015. Both of these are rejected by the Board, because their sales are too far removed from the valuation day of January 1, 2012 to be reflective of the market at that time. If these are arm’s length sales, they could possibly be used during the next reassessment cycle.

23The Appellant’s suggested comparable at 52 Sunset Boulevard (Property 1) sold in June 2010 for $195,000 and is time adjusted by the Board using MPAC’s TAF of 1.029 to $200,655. Mr. Hyatt testified that this was an estate sale, but provided no evidence that precludes the Board from considering it. The time adjusted sales for MPAC’s four suggested comparables (Sales A, B, C, D) range from $223,561 to $304,900. The five sales from the parties all have MAC’s property code 313 (single family detached on water), all are on Lake Nipissing and all are in the same W01 HNBHD.

24In his September 9, 2015 letter to MPAC, Mr. Kendall states his belief that “the comparable properties used by MPAC are not representative of the property I am appealing” (Exhibit 2). The Board is of the same opinion, and rejects Sales B, C and D as being directly comparable to the subject property because their larger lot areas are 6969.60, 6,098.40 and 11,761.20 square feet respectively, vis-à-vis the 5,525.28-square-foot subject lot. The subject QC 4.0 (in Fair or Poor condition) 621-square-foot dwelling was built in 1948, and has not had a renovation; the QC 5.0 (all in Average condition) Sales B, C and D much larger dwellings (955, 932 and 975 square feet respectively) were built in 1948 (renovation in 1995), 1958 (renovation in 1994) and 1960 (no renovation, but a lot size almost double that of the subject, and a building total area one-and-one-half times the size of the subject). Each of Sales B, C and D has a sandy shoreline versus the rocky shoreline of 1077 Premier Road, and each of the three has a detached garage, an amenity which the subject property does not enjoy.

25While it appears at first glance that MPAC’s Sale A is directly comparable to the subject property, with both parties agreeing it is the “most” or “reasonably” comparable, the Board disagrees, because the 5,525-square-foot subject lot area is 26.84% larger than the 4,356 square foot Sale A lot area and its 36.00 foot water frontage is 36.88% larger than the 26.30 foot frontage of Sale A. The subject dwelling was built in 1948, and Sale A in 1933; although both properties have QC 4.0 dwellings, with the subject being in Fair or Poor condition and Sale A in Average condition, the subject has not had a renovation and Sale A had a renovation/addition in 2009. The 843 square foot building total area of Sale A is significantly larger than that of the subject, at 621 square feet. Sale A has a detached garage and a sandy shoreline, unlike the subject property.

26Finally, the Board rejects the appellant’s Property 1 as being directly comparable to 1077 Premier Road, for the following reasons: its lot area is significantly smaller than that of the subject lot (3,049.20 versus 5,535.28 square feet), the dwelling, built in 1947, was renovated in 1992, and has a QC of 5.0. At 680 square feet, the building total area is approximately 10% larger than the subject dwelling.

27To assist it in determining the correct current value of the subject property, the Board turns to a useful tool to compare properties that have a number of similar attributes - residential, waterfront, similar market and vicinity – but are dissimilar in a number of key attributes that prevent direct comparison such as Quality Class, lot and building sizes: the Assessment to Sale Ratio (“ASR”). This tool acts as a check upon the MPAC valuation model to determine whether the model is tending to either overvalue or undervalue residential properties in a vicinity. The ASR is determined by dividing the assessed value of a property by its sale price or time adjusted sale price. It permits the Board to compare assessed values as determined by MPAC with values achieved in the marketplace. An ASR greater than 1.00 is an indication that MPAC’s model may be producing values greater than those demonstrated in the marketplace. An ASR of less than 1.00 would indicate that the model may be producing values less than those demonstrated in the marketplace.

28The Board is satisfied that the five sales submitted by the parties, which occurred within a reasonable time frame of the January 1, 2012 valuation day (in 2009, 2010, 2011 and 2012) are sufficient for its current value analysis; it calculates that the time adjusted ASRs for the five sales are 1.19, 0.97, 1.27, 0.97 and 1.31, with the median being 1.19. The Board finds that applying the median ASR of 1.19 to the assessed value of the subject property is in furtherance of seeking a likely sale value (that is, current value in accordance with the Act). The Board determines that the current value of the subject property is ($196,000 ÷ 1.19 rounded) $165,000.

Equity with Similar Lands in the Vicinity

29The Act was amended in 2009 to require the Board to lower an assessment below current value if required to make the assessment equitable with the assessments of similar properties in the vicinity.

30Under s. 44.(3)(b) of the Act, the Board’s task is not to determine the overall accuracy of MPAC’s model, but to determine how it has performed with regard to similar property in the vicinity and to reduce the assessment if necessary.

31MPAC’s Equity Analysis provides a 1.00 median time adjusted ASR for 30 residential properties within 0.58 kilometre of the subject property, an indication that MPAC’s methodology is resulting in a very close match between assessed and market values in the subject vicinity. The Board notes that none of the sales submitted by the parties is included in the Equity Analysis. As the Board has adjusted for the over-assessment as described in the current value section above, and adjustments under s. 44.(3)(b) are made only when MPAC’s methodology results in under-assessments, it follows that no further adjustment for equity is warranted.

CONCLUSION

32The Board reduces the assessment of the subject property from $196,000 to $165,000 for the 2014 and deemed 2015 taxation years.

2015 DEEMED APPEAL

33An 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.

34Section 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.