Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: December 8, 2015

FILE NO.: WR 135387

Assessed Person(s): Ontario Ministry of Natural Resources

Appellant(s): Fellowship Wilderness Camp

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 5

Respondent(s): Township of Addington Highlands

Property Location(s): Trout Lake Road

Municipality(ies): Township of Addington Highlands

Roll Number(s): 1134-060-010-13811-0000

Appeal Number(s): 3052032 and 3073127

Taxation Year(s): 2014 and 2015

Hearing Event No.: 596836

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

Heard: September 21, 2015 in Flinton, Ontario

APPEARANCES:

Parties	Counsel+/Representative
MPAC	Roxanne Poulain / Travis Merkley
Fellowship Wilderness Camp	Stu Burkholder
Township of Addington Highlands	No one appeared

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1The subject property is comprised of a 2,343 square foot (sq. ft.), one and one-half-storey cottage structure on 1.99 acres of land with frontage of 325 feet on Trout Lake in the Township of Addington Highlands. The cottage was constructed in 1991 and consists of five bedrooms, one bathroom and a common living /dining area. The building is heated by a wood stove.

2MPAC attended the site in July 2014 and confirmed the measurements and data used to determine the current value of the property, including an allowance to account for a portion of the upper level of the structure that is unfinished.

3The property is leased from the Ministry of Natural Resources (“MNR”) by the Fellowship Wilderness Camp (“FWC”). The FWC is described as a religious organization that uses the property to further its pursuits of fellowship and counselling of youth and adult members of the multiple inter-denominational organizations that contribute to the maintenance and operation of the property.

4At the outset of the hearing, the parties jointly submitted that the FWC is a charitable organization and that an investigation is currently underway to determine if its pursuits fall within the criteria set out in s. 3 of the Assessment Act (“Act”), whereby the property might be considered exempt from taxation as a result of FWC’s charitable and /or religious status. The parties acknowledged that the issue of exemption from taxation is not within the jurisdiction of the Board, but rather than wait until this issue is resolved, the parties agreed to proceed to hearing to determine the issue of current value.

5MPAC has returned a value of $145,000 for the 2014 taxation year and $228,000 for the 2015 taxation year. A recommendation was presented by MPAC that reduces the 2015 value to $145,000, consistent with the value returned for the 2014 taxation year. The Appellant argued that since the property is leased from the MNR under a ‘Land Use Permit’ and is restricted in its use accordingly, the current value should reflect this restriction in use. The Appellant believes the property has no value but would be satisfied with a reduction in value from that recommended by MPAC to $65,500 which is the value determined by the Board for the 2009 taxation year in a decision dated May 27, 2010.

6The Board must determine two things in these appeals. Firstly, the Board must decide on the current value of the property for the 2014 and 2015 taxation years, based on the valuation date applicable to these years of January 1, 2012. Secondly, once the current value is determined, the Board must also determine if, when reference is made to the assessments of similar properties in the vicinity, the assessment of the subject property should be reduced to make it equitable.

7In addition, the Board must consider s. 1 of the Assessment Act which defines ‘current value’ for the purposes of determining the value of the subject property for the 2014 and 2015 taxation years. The Board must also consider s. 18 of the Act which states that a tenant of land owned by the Crown shall be assessed in respect of the land as though the tenant were the owner if rent or any other valuable consideration is paid in respect of the land.

MPAC’s EVIDENCE

8MPAC has assessed the subject property using the direct comparison approach to value, whereby the sale values of comparable properties are used to determine the value of the subject property. Mr. Merkley looked at four properties that sold between October 2008 and November 2014. All four properties have frontage on similarly sized lakes in the region. To account for price changes over time, Mr. Merkley determined a Time Adjusted Sale (“TAS”) value for each sale. The purpose of the TAS is to determine a value for each comparable property that takes into account the difference between the sale date and the valuation date so their sale values can be compared directly, as though they all sold on the valuation date of January 1, 2012. The time adjustment factors (“TAF”s) applied to the four comparable sales were determined from the sales of 480 residential properties that sold between January 2009 and December 2012.

9Sale A has a larger waterfront than the subject property and a lot area of 5.86 acres with a single storey structure of 667 sq. ft. The TAS value of Sale A is $81,917. MPAC considers Sale A to be inferior in value to the subject property. Sale B also has a larger waterfront, 36.65 acres of land and a single storey structure measuring 929 sq. ft. The TAS price of Sale B is $118,188. MPAC also considers Sale B to be inferior to the subject property. Sale C sold in 2014 with a TAS price of $248,300. It has 1,400 feet of waterfront, 80 acres of land and a single storey structure of 896 sq. ft. Sale C is considered by Mr. Merkley to be superior in value as compared to the subject property. Sale D has a waterfront of 110 feet, 2.52 acres of land and a structure of 570 sq. ft. The TAS value of Sale D is $119,941. MPAC considers Sale D to be inferior to the subject property.

10Mr. Merkley summarized his findings by indicating that when all of the differences between the comparable properties and the subject property are taken into account, a range of value between $118,188 and $248,300 is indicated. His opinion is that the recommended value of $145,000 for the subject property is therefore reasonable and correct.

11With respect to the equity of assessment represented by his opinion of current value, Mr. Merkley considered 30 sales of similar properties in the vicinity of the subject property that sold between February 2009 and November 2012. By comparing the assessments of these 30 properties to their TAS values he determined an ‘assessment to sale ratio’ (“ASR”) for each. The ASR for the 30 properties in his equity study range from 0.62 to 1.78 with a median of 1.02. According to Mr. Merkley this median ASR falls between the range of 0.95 and 1.05 which is determined by MPAC and the International Association of Assessing Officers (“IAAO”) as being an indication of equitable assessment for similar lands in the vicinity of the subject property.

12Mr. Merkley acknowledged that the subject property is on land that is used under a land use permit from the MNR, meaning that it falls within the definition of Crown Land. Mr. Merkley cited s. 18 of the Act whereby leased land that is owned by the Crown shall be assessed and that assessment falls to the lessee as though the lessee owned the subject lands.

13Under cross examination, Mr. Merkley also acknowledged that none of the comparable properties in his valuation study or the properties in his equity study are on Crown Land. His opinion is that since the ‘encumbrance’ on the subject property represented by the land use permit is effectively a lease from the Crown, s. 18 of the Act applies, stressing that this section stipulates that these lands shall be assessed.

Appellant’s Evidence

14Mr. Burkholder submitted three exhibits to support his case for lower assessment. The first, Exhibit 2 is a Notice of Decision from the Board, referring to an appeal of the assessment for the 2009 taxation year, where the Board found that the subject property’s value was reduced from $97,000 to $65,500, suggesting that this panel has a precedent to guide its decision for the 2014 and 2015 taxations years.

15Secondly, Exhibit 3 is a letter from MNR outlining the history of the Land Use Permit issued by the Ministry and which is currently in place. The letter stipulates that the lease is subject to certain restrictions, the most important of which is the continued use of the land as a ‘church recreation camp’ and that any transfer of the land use permit would be restricted to similar organizations for similar purposes. The letter is specific in that the lease cannot be transferred to a person or persons for use as a private recreation camp.

16Lastly, Mr. Burkholder submitted a copy of the land use permit (Exhibit 4) which indicates the annual fee of $600 plus HST, along with a list of 13 terms and conditions under which the permit applies.

17Mr. Burkholder called three witnesses to testify as to the condition and use of the subject property. The Board found them all to be highly credible, with obvious close personal experience with the operation and maintenance of the property as a recreational camp. The Board is satisfied that their combined testimony provides an accurate description of the property as follows:

• The property is in ‘fair’ condition;
• The property undergoes regular maintenance and small improvement projects, the purposes of which are to provide a common task for those who attend the various fellowship events that occur there; and
• The nature of the use is clearly contemplated in the land use permit issued by the MNR.

18Mr. Burkholder submitted that the definition of ‘current value’ in the Act does not apply to the subject property. 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. His main point is that, since the property is by definition ‘encumbered’ by the MNR Land Use Permit, any comparison to other properties that can be bought and sold on the open market is not a suitable method to determine the current value of the subject property. Mr. Burkholder further submitted that the only means of transfer would be to a similar organization, which in his view would have the same financial restrictions as FWC and therefore would not constitute a meaningful value for the purposes of determining current value.

Analysis

19The first issue for the Board to determine is the nature of the land use permit, its characterization as an ‘encumbrance’ by the Appellant, and the use of the land by FWC under a land use permit on Crown land. Mr. Burkholder rightly points out that the subject property, in its present form of use is ‘encumbered’ by the permit issued by the MNR. Further the land is encumbered, from FWC’s point of view because they do not own the land. There is no dispute between the parties that the subject land is Crown land. The Board finds that the ‘encumbrance’ identified by the Appellant is in fact a fundamental characteristic of the use of Crown land. Further, the Board finds that this nature of encumbrance is contemplated by the Act, specifically in s. 18.(1) which states:

Assessment of Crown Lands – Despite paragraph 1 of subsection 3(1),

(a) The tenant of land owned by the Crown shall be assessed in respect of the land as though the tenant were the owner if rent or any valuable consideration is paid in respect of the land; and

(b) An owner of land in which the crown has an interest shall be assessed in respect of the land as though a person other than the Crown held the Crown’s interest.

20The Board finds that the terms and conditions of the Land Use Permit for the subject property, issued by MNR includes a fee which constitutes ‘rent or any valuable consideration’. Accordingly, the Board finds that the FWC shall be assessed in respect of the land as though they were the owner.

21With respect to the current value of the subject property, the Board has the evidence of MPAC which makes its determination of current value based on comparisons of the subject property with four sales of comparable properties. In order for a property to be comparable for this purpose, it needn’t be identical; it only needs to be sufficiently similar to make reasonable adjustments to demonstrate comparability with the subject property.

22In Mr. Merkley’s submissions, no specific adjustments were made for the value of land versus value of buildings. Accordingly, the Board disregards Sales B and C of MPAC’s evidence as properties of 36.65 acres and 80 acres respectively are not suitable comparable to the subject property which has 1.99 acres. The Board is left with Sales A and D with TAS values of $122 and $210 per sq. ft. of building area respectively. If the average of these two per sq. ft. values ($166) is applied to the subject building of 2,343 sq. ft. the resulting value is $388,938, which is far above the value recommended by MPAC. The Board recognizes that properties of this type have widely varying values that are determined by condition, location, size and age.

23The Appellant suggests an appropriate current value is $65,500; equivalent to the value determined by the Board for the 2009 taxation year. While the Board does not disregard this evidence entirely, it notes that this finding is based on the January 1, 2008 valuation date and not the January 1, 2012 valuation date which applies to the 2014 and 2015 taxation years under appeal.

24Even though the valuation recommended by MPAC is far below the value suggested by comparison to comparable sale values in the area, the Board is satisfied that the value recommended by MPAC is reasonable in the circumstances, as it is higher than the TAS values for Sales A and D, which through the evidence submitted are clearly inferior in value to the improvements to the subject property This determination by MPAC was not refuted by the Appellant. Accordingly, the Board finds the current value of the subject property to be $145,000 as recommended by MPAC.

25With respect to equity of assessment, the Board has the findings of MPAC in its equity study, which according to Mr. Merkley, indicates that similar properties assessed in the vicinity are assessed in accordance with current values determined by sales. MPAC’s finding on equity was not refuted by the Appellant. Accordingly, the Board finds that there is no evidence before it to suggest a reduction in assessment of the subject property is required for it to be equitable with that of similar properties in the vicinity.

DECISION

26The Board finds that the current value of the property located at Trout Lake Road is $145,000. The Board also finds there is no evidence before it to require a reduction in assessment for the purposes of equity.

27Accordingly, the assessment of the subject property is confirmed for the 2014 taxation year at $145,000. The assessment of the subject property is reduced, from $228,000 to $145,000 for the 2015 taxation year.