Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: December 4, 2015

FILE NO.: WR 135538

Assessed Person(s): George Edwin Wilson and Beth Colleen Wilson

Appellant(s): George Edwin Wilson

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

Respondent(s): City of North Bay

Property Location(s): 171 West Peninsula Road

Municipality(ies): City of North Bay

Roll Number(s): 4844-050-068-07600-0000

Appeal Number(s): 3047127 and 3093242 (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
George Edwin Wilson	Self-represented
MPAC	John Hyatt
City of North Bay	Lisa Beaulieu

DECISION OF THE BOARD DELIVERED BY NICOLL PLUMSTEAD

INTRODUCTION

1John Hyatt, representing MPAC, informed the Assessment Review Board (“Board”) that the assessment returned for 2014 was $467,000, but that during the Request for Reconsideration (“RfR”) process, MPAC recommended, and is defending, a 2014 taxation year assessment of $431,000, the property’s value at the time of sale. The s. 39.1 Minutes of Settlement (“MOS”) were rejected by appellant George Wilson. To reflect a 244-square-foot addition/renovation to the property after its sale to Mr. and Ms. Wilson, MPAC returned, and is defending, a value of $467,000 for 2015 (Exhibit 1, p. 1).

2Mr. Wilson purchased the subject property in May 2012, for $450,000 (time adjusted by MPAC to $440,293). He testifies that he “was fully aware that we were paying a significantly higher price than the property was worth,” but because of stressful personal circumstances, he and his wife concluded the arm’s length purchase. He feels that a “fair assessment value for our home would be in the area of $385,000 to $400,000” (Exhibit 2, p. 6 and 7).

3The Board must determine the correct and equitable value of the subject property for the 2014 and deemed 2015 taxation years.

DECISION

4In 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 $431,000 for 2014 and $467,000 for 2015.

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 values are not equitable, and an adjustment is required.

5The assessment of the subject property is reduced from $467,000 to $414,000 for the 2014 taxation year and from $467,000 to $448,000 for the 2015 taxation year.

REASONS FOR DECISION

The Subject Property

6The subject property is a single-family detached on water, located at 171 West Peninsula Road on Trout Lake in the City of North Bay. The property’s current value was determined 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). The property has an effective frontage of 120 feet, an effective depth of 127.50 feet and an effective site area of 15,681.60 square feet (approximately 1/3 acre). The one-storey dwelling was built in 1973 and has a quality class (“QC”) of 6.5. According to MPAC’s records, the building total area and basement area were both 1,197 square feet prior to the addition/renovation referred to above, and 1,441 square feet afterward. On pages 3 and 4 of Exhibit 2, Mr. Wilson depicts a basement area of 1,141 square feet. With no evidence adduced to support this figure, the Board accepts MPAC’s Ontario-wide method of calculating square footage via exterior measurements. It is the evidence of both parties that 650 square feet of the basement area are finished. There are no secondary structures.

Relevant Legislation

7In determining the assessment, the Board is governed by the following sections of the Act:

8Section 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.

9Section 19.(1) of the Act states:

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

10Section 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.

11Section 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.

12Section 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.

13Section 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 Deliberations

Determination of Current Value

14The 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 of 171 West Peninsula Road is $431,000 for 2014 and $467,000 for 2015.

15Mr. Hyatt submits Exhibit 1, a Valuation Report which includes exterior photographs of the subject property and of MPAC’s eight suggested sales comparables, two appendices and an Equity Analysis.

16Appendix A is a Market Analysis (with locational map) which estimates the current value of the subject property using 2010, 2011 and 2012 sales of eight suggested comparable properties on Trout Lake and in the same W30 homogeneous neighbourhood (“HNBHD”) as the subject property.

17Appendix B depicts Sales for Price Changes Over Time; in 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 (“TAF”) are established for this 48-month time period and are provided in Table 1.

18MPAC’s Equity Analysis depicts 30 sales of residential properties “within 1.85 kilometers of the subject property” between April 2009 and August 2012.

19In Exhibit 2, Mr. Wilson submits his issues and reasons for appealing his assessment.

20On p. 4, he provides his comments (several of which the Board agrees with, and will discuss further below) on MPAC’s suggested sales comparables.

21Parties may bring to the hearing evidence of their own choosing, and on p. 3, Mr. Wilson provides the assessments of 12 properties which he considers comparable to his; their attributes cause him to conclude that his assessment is too high and should be lowered. One of the properties, at 251 Viceroy Road, is also MPAC’s Sale F. Mr. Hyatt informed the Board that three other properties had sales during the relevant time period for Mr. Wilson’s appeal. They are properties 53, 69 and 87 on MPAC’s Appendix B. Using MPAC’s TAFs described above, the Board time adjusted the sales to January 1, 2012. 235 West Peninsula Road sold in August 2009 for a time adjusted price of $451,938; 400 Shorewood Road sold for $480,000 in January 2012 (no time adjustment needed); 135 Viceroy Road sold for $454,464 (time adjusted) in May 2009.

22The Board has 11 sales to consider: eight from MPAC (Sale F at 251 Viceroy Road was also provided on Mr. Wilson’s comparables), and three from Mr. Wilson. It rejects 10 of them as good comparables to 171 West Peninsula Road for the following reasons.

23MPAC’s Sales A, D, E, G and H all have significantly larger lot areas and secondary structures (which latter the subject property does not enjoy) and all except Sale G have newer years of construction and/or renovation years. Sale G has a lot area nearly double the size of the subject lot. The Board rejects the three sales from Mr. Wilson’s comparable properties because of their newer years of construction, 1980 and 2004 (both with larger lot and building) and 2012 (with comparable lot area but significantly larger building size and finished basement area).

24It also rejects MPAC’s Sale C because although its age and lot and building areas are comparable to those of the subject property, it has a QC of 7.0, five bedrooms and a finished basement area of 1,075 square feet, vis-à-vis 6.5, two and 650 square feet respectively for the subject property. The Board does not consider MPAC’s Sale F as directly comparable because it was built in 1999 (versus 1973), it has a larger building total area with a finished basement area twice as large as the appellant’s dwelling, and it, unlike the subject property, has a detached garage.

25To assist it in determining the current value of the subject property, the best evidence the Board has is the market sale of the subject property four months after the valuation day, in May 2012 (MPAC’s Sale B on its Appendix A). It sold for $450,000, time adjusted by MPAC to $440,293, and the Board finds that this is the current value of 171 West Peninsula Road. However, the Board accepts the RfR adjustment MPAC made to the assessment, which resulted in a recommendation of $431,000 for 2014. It does not appear that the subject property is over-assessed at $431,000, nor does the evidence presented by both parties point to the $385,000 to $400,000 value which the appellant seeks for the subject property.

26Additionally, receiving no measurable evidence to the contrary, the Board accepts MPAC’s current value of $467,000 for 2015, which reflects an additional $36,000 for the addition/renovation made after the property’s 2012 purchase by Mr. Wilson.

27The Board gives little weight to the five waterfront property listings Mr. Wilson submits as “very similar to our property.” It is his hope “that they will be helpful in setting a fair assessment value for our home” (Exhibit 2, p. 7). The Board must rely on sales, not listings, to determine current value. Sales generally reflect “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,” as required by the definition found in s. 1 and stated above. Listings do not.

Equity with Similar Lands in the Vicinity

28The Act was amended for taxation years beginning with 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.

29Systems of mass appraisal do not generate accurate current values for every property. The Assessment to Sale Ratio (“ASR”) permits the Board to compare the assessed values determined by MPAC with values achieved in the marketplace. The ASR is determined by dividing the assessed value of a property by its sale price or time adjusted sale price. An ASR greater than 1.00 would indicate that MPAC’s model may be producing values greater than those demonstrated in the marketplace. Conversely, an ASR less than 1.00 would indicate that the model may be producing values lower than those of the marketplace.

30In this case, MPAC’s Equity Analysis provides a 0.99 median time adjusted ASR for 30 residential properties within 1.85 kilometers of the subject property. The Board notes that 20 of the 30 sales (two-thirds) are outside MPAC’s preferred 0.95 – 1.05 median range of the International Association of Assessing Officers (“IAAO”) Standard on Ratio Studies, an indication that these 20 properties may not have been assessed at their current values. In addition, MPAC and IAAO standards call for Coefficients of Dispersion (“CODs”) of not more than 15 for residential properties. The COD measures the average percentage deviation of all the individual ratios from the median ratio; low CODs imply equitable assessments. The COD for this Equity Analysis is 79.2%. For these reasons, the Board gives MPAC’s Equity Analysis little weight.

31Under 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. For the reasons stated above, the Board has found that the preferred sales comparables submitted by the parties are not directly comparable to the subject property, but for an equity analysis, the properties are valued by MPAC using the same methodology, and the Board accepts them as being of the same general nature, function and character as the subject property.

32In analyzing equity, the Board is satisfied that the 11 sales provided by the parties provide a sufficient number of properties. The Board calculates time adjusted ASRs of 0.96, 0.98, 0.98, 0.95, 0.96, 0.85, 0.90, 0.94, 0.91, 1.00 and 1.03, with the median being 0.96, an indication that in the subject vicinity MPAC’s methodology is resulting in assessments that are approximately 4% lower than values expressed in the marketplace.

33The Board recognizes that a fundamental principle of Ontario assessment law is that property is to be assessed at a level that has the same ratio between its assessment and market value as similar properties in the vicinity. The Board’s equity conclusion reflects this principle. It applies equity reductions to the property’s current values as follows: from $431,000 to ($431,000 x 0.96 rounded) $414,000 for the 2014 taxation year; from $467,000 to ($467,000 x 0.96 rounded) $448,000 for the 2015 deemed taxation year.

CONCLUSION

34The Board reduces the assessment of 171 West Peninsula Road from $467,000 to $414,000 for the 2014 taxation year and from $467,000 to $448,000 for the deemed 2015 taxation year.

2015 DEEMED APPEAL

35An 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.

36Section 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.