Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: December 10, 2015

FILE NO.: WR 134788

Assessed Person(s): James Gregg Agnew and Shelley Anne Agnew

Appellant(s): James Gregg Agnew and Shelley Anne Agnew

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 32

Respondent(s): Town of Kenora

Property Location(s): 10 Foresty Bay, Unit 201

Municipality(ies): Town of Kenora

Roll Number(s): 6016-010-002-03808-0000

Appeal Number(s): 3049378, 3049873 and 3093791 (deemed 2015)

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

Hearing Event No. 599674

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

Heard: August 20, 2015 in Kenora, Ontario

APPEARANCES:

Parties	Counsel+/Representative
James Gregg Agnew and Shelley Anne Agnew	D. Betker
MPAC	C. Steiner
Town of Kenora	M. Saunders and M. Shaw

DECISION OF THE BOARD DELIVERED BY SUBUOLA AWOLERI AND ANTHONY LaREGINA

INTRODUCTION

1The appeals before the Assessment Review Board (“Board”) are filed by the Assessed Persons/Appellants, Shelley Anne and James Gregg Agnew in respect to the returned assessments of $623,000 for the subject property in the Town of Kenora for 2013 and 2014 taxation years.

ISSUE

2The subject property is a residential condominium. This unit is part of Registered KSCP12 Headwaters Condo built in 2010. This unit is located on the main level and has a total building area of 2,024 square feet (“sq. ft.”) with a 264 sq. ft. terrace/patio. This unit has one indoor parking stall, one outdoor parking stall and one storage locker.

3For taxation years 2013 and 2014 the assessment was returned at $623,000. The current value assessment was determined by MPAC’s Direct Sales Comparison Approach.

4Mr. Betker, representing the Appellants took the position that the assessment is too high and urged the Board to consider a value of $584,000 (rounded), which is the February 2012 purchase price excluding Harmonized Sales Tax (“HST”).

5The Town of Kenora was represented by M. Saunders and M. Shaw.

6The Board has to decide:

• Whether the returned assessments of $623,000 for 2013 and 2014 taxation years for the subject property is at current value as of the valuation date January 1, 2012; and

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

DECISION

7The Board finds the current value of the property for the 2013 and 2014 taxation years to be $584,000 (rounded).

8The Board also finds that the assessment at current value is equitable with the assessments of similar lands in the vicinity; hence no further reduction is required to achieve equity.

9The Board orders that the assessment be reduced from $623,000 to $584,000 for the 2013 and 2014 taxation years and deemed for the 2015 taxation year.

REASONS FOR DECISION

Legislation

10The Board must have regard to s. 1, 19.(1), 19.2(1), 40.(17), 40.(19), 44.(3)(a) and (b) of the Assessment Act (“Act”) when determining whether or not the assessment under appeal is correct.

11Section 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.

12Section 19.(1) of the Act states:

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

13Section 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:

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.

14Section 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.

15Section 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.

16Section 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.

Current Value - Evidence and Analysis

MPAC’s Position

17Carlene Steiner, the assessor from MPAC in support of the assessment as returned presented Exhibit 1. Exhibit 1 is a Valuation Report of the subject property and other units which are also under appeal. This includes a Market Analysis Map, Property Profile of the subject property and a chart of all sales and assessments of the subject property and other units.

18In Appendix A, Exhibit 1, Ms. Steiner provides the property profile of 11 properties. Property 1 is Unit 5 at 605 Bay Road and the remaining 10 properties are units within the Forestry Bay complex. Ms. Steiner indicates that this property is situated in a different condominium complex and is similar to Forestry Bay complex because it is also located on Lake of the Woods and has a boat slip to access the lake. She asserts that the only inferior attribute for this unit is its age as it was built in 2006. This unit was sold in July 2013 for $649,900 and has a total building area of 2,011 sq. ft. No further information is provided regarding the amenities and upgrades in this unit.

19In Appendix B, Exhibit 1, Ms. Steiner further provides, an analysis of the 10 units at 10 Forestry Bay including the subject property, and in this analysis, defended her current value assessment based on median sales value per square footage of these eight units which sold. The eight units which sold were all builder sales leaving two units which have been listed since 2010 and still remain vacant.

20In Appendix C, Exhibit 1, Ms. Steiner provides a detailed report of the purchase price, amenities and upgrades of the 10 units at Forestry Bay complex.

21No time adjustment factors were provided.

22Details of Ms. Steiner’s analysis on current value study is summarized in Table 1 below:

Table 1

Unit- Building Total Area	Date of Sale	Purchase Price ($)	Assessment	ASR	Price per sq. ft.($)	Value @ 309.99 per sq. ft. ($)	Value @326.86 per sq. ft. ($)
Subject property 101 - 1,845 sq. ft.	May 2012	570,847	576,000	1.01	309.40	571,931	603,056
102 - 1,338 sq. ft.	June 2012	474,424	442,000	0.93	354.57	414,766	437,338
103 - 1,845 sq. ft.	July 2015	485,840	576,000	1.19	263.32	571,931	603,056
201 - 2,024 sq. ft.	May 2012	583,922	623,000	1.07	288.49	627,419	661,564
202 - 1,338 sq. ft.	May 2012	488,499	442,000	0.90	365.09	414,766	437,338
203			623,000			627,419	661,564
Penthouse- 2,271 sq. ft.	May 2012	778,314	688,000	0.88	342.71	703,987
301 - 2,024 sq. ft.	June 2012	661,582	623,000	0.94	326.86	627,419	661,564
302 – 1,338 sq. ft.	May 2012	464,506	442,000	0.95	229.49	414,766	437,338
303 - 2,024 sq. ft.			623,000			627,419	661,564

23Using Table 1, Ms. Steiner derived the median and average for the above sales. This analysis can be seen in Table 2 below:

Table 2

Median not including 2015 sale	0.94	$326.86
Median Including 2015 Sale	0.94	$318.13
Average not including 2015 Sale	0.95	$316.66
Average including the 2015 Sale	0.98	$309.99

24Ms. Steiner further submits that using the median sale per square foot of $326.86 not including the 2015 sale, the current value is $661,564, which is above current value assessment of $623,000 for the subject property. Consequently, she argues that the current value assessment for the subject property is reasonable and therefore she would not recommend a change in the assessed value at $623,000.

25Under cross-examination, Ms. Steiner admitted that she was unsure if there was an inspection of the subject property prior to assessment.

26Mr. Betker challenged Ms. Steiner’s analysis of sale value per square foot arguing that all the units in Appendix A (Table 1 above) have different amenities with different sizes consequently, MPAC’s analysis of sale value per square foot is skewed.

27Ms. Steiner defended her analysis by submitting that MPAC does not value some of the amenities, that it is all tied into the quality of the unit, in which they are valued.

Appellant’s Position

28In Mr. Betker’s Statement of Issues, he argues that the best indication of value for the subject property is the purchase price on February 3, 2012 for $583,922.12 rounded to $584,000 (excluding HST).

29Mr. Betker submits that there are three units in this building with similar square footage of 2,024 sq. ft. The three units are known as the Tamarack units. Unit 203 was listed in 2010 for $557,388 and is still vacant. Unit 301 sold for $628,318.28 in September 2011. He advised the Board that this unit (301) included close to $44,000 upgrades. Unit 303 was listed for $575,120 in 2010 and is still vacant. He also advised the Board that Unit 303 had an offer in June 2014 for $450,000 which was countered at $500,000 and was rejected.

30Mr. Betker submits that the condominium project in total has not performed as anticipated. That since the start of construction in 2009, there are still two vacant units for sale. The original sale prices were high compared to what the market is today for the units. He further confirmed this fact by stating that Unit 103 sold in July 2015 for $40,000 less than the 2010 listing price and Unit 303 was offered $75,000 less than the 2010 listing price.

31He further states that the subject property assessment increased by 33.4%, while a comparable condominium complex at 5 Bay Road had an average increase of 13.17% from 2012 to 2013 and that the average increase in assessment for residential properties in Kenora was 6.9%.

32Mr. Betker submits that the best indication of January 1, 2012 market value of the subject property is the February 2012 purchase price of $584,000 (rounded).

The Board's Analysis and Decision

33The 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.”

34The best evidence of current value is the sale of the subject property on or close to the valuation day of January 1, 2012. In this case, the subject property sold on February 3, 2012, this sale is very close the valuation date of January 1, 2012.

35The only sales evidence submitted to the Board in support of current value are the comparable sales provided by MPAC.

36Mr. Betker has provided no additional comparable sales to those entered by MPAC.

37The Board is in agreement with Mr. Betker that the subject building is a new unique building that appears to be struggling in the marketplace considering that two units are still vacant after five years on the market. The Board is also in agreement with Mr. Betker that the one unit that sold at 5 Bay Road is part of an established condominium project and should not be considered to establish the current value of the subject property. Furthermore, we have no detail on the extra upgrades at 5 Bay Road in order to compare to the subject property.

38In the absence of any other open market sales the Board will therefore consider the builder sales presented by MPAC in the subject building at 10 Forestry Bay to establish current value of the subject property.

39When analyzing MPAC’s sales at 10 Forestry Bay, the Board is in agreement with Mr. Betker that the analysis by Ms. Steiner utilizing sales values per square foot is skewed. In calculating value per square foot, properties must be similar in size and quality including similar amenities and upgrades. In this case, the evidence clearly shows that the units used in the analysis have different building area and different amenities and upgrades. The Board will therefore reject the analysis presented by Ms. Steiner applying the median value per square foot from all the sales to each of the units for the purposes of establishing the current value.

40The Board agrees with Mr. Betker that the actual sale of each unit is the best indicator of current value if the sale occurs fairly close to the valuation date of January 1, 2012. The subject property sold in February 2012 and the purchase price was $583,922. The Board will therefore set the current value at $584,000 (rounded).

Equity Analysis

41Section 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 Sales 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 sale price.

42While 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 s. 44.(3)(b)’s equity requirement rests with the Appellant.

43MPAC provided eight sales of properties in the same building as the subject property which also included a 2015 sale indicating a median ASR of 0.94. The Board concludes that this sample is too small to provide a meaningful market with respect to equity. Therefore based on insufficient evidence the Board will make no further adjustment to the current value for equity purposes.

CONCLUSION

44The Board finds that the assessment should be reduced from $623,000 to $584,000, for the 2013 and 2014 taxation years and deemed for 2015 taxation year.

2015 DEEMED APPEAL

45An 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.

46Section 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.

Footnotes

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