Robert W. Norman and Wendy E. Norman v. Municipal Property Assessment Corporation, 2015 CanLII 86923

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: December 22, 2015

FILE NO.: WR 136386

Assessed Person(s): Robert W. Norman and Wendy E. Norman

Appellant(s): Robert W. Norman and Wendy E. Norman

Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region 02

Respondent(s): Township of Leeds and the Thousand Islands

Property Location(s): 341 Hill Island East

Municipality(ies): Township of Leeds and the Thousand Islands

Roll Number(s): 0812-812-025-36400-0000

Appeal Number(s): 3049893 and 3070452

Taxation Year(s): 2014 and 2015

Hearing Event No. 602742

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

Heard: November 9, 2015 in Landsdowne, Ontario

APPEARANCES:

Parties	Representative
Robert W. Norman and Wendy E. Norman	Self-represented
MPAC	Jamie Van Winckle
Township of Leeds and Thousand Islands	No one appeared

MEMORANDUM OF ORAL DECISION DELIVERED BY JACQUES LAFLAMME ON NOVEMBER 9, 2015

INTRODUCTION

1The subject waterfront property consists of four buildings located on the St. Lawrence River in the heart of the Thousand Islands. More precisely, the subject property is located on the east side of Hill Island and is accessed by water only. MPAC described the buildings on the subject property as follows:

• Building 1, the main building, is a one-storey seasonal/recreational dwelling with a living area of 1,345 square feet, built in 1953, Quality Class 4.5, average condition, no heating, one fireplace, one bath and three bedrooms.
• Building 2 is a secondary "cabin" on site which has 553 square feet of living area, one 3 piece bathroom, small kitchen, Quality Class 3.0 and was also built in 1953.
• Building 3 is a 1,341 square foot boathouse built in 1953.
• Building 4 is a 120 square foot shed which has not been valued.

2The January 1, 2012 returned assessment for the subject property was $467,000. This value was used for the 2014 and the 2015 taxation years.

ISSUE

3The issue for the Assessment Review Board ("Board") to determine is the current value of the property as of January 1, 2012.

DECISION

4The Board reduces the January 1, 2012 current value from $467,000 to $383,000 for the 2014 and 2015 taxation years.

REASONS FOR DECISION

Position of MPAC

5At the beginning of the hearing, the assessor, Jamie Van Winckle, informed the Board that he had made a recommendation to the owners, to reduce the current value from $467,000 to $401,000 based on a change to the main building quality classification and a further market equity analysis. Ms. Norman, one of the owners, did not accept the recommendation and the hearing continued.

6Mr. Van Winckle submitted two exhibits to the Board:

• Exhibit 1 contains pictures of the subject property, a property profile, a time adjustment study, maps, five comparables and an equity analysis.
• Exhibit 2 is a document produced by MPAC outlining the characteristics of the quality of construction classifications (3.0 to 5.0) for residential buildings.

7Mr. Van Winckle presented what he considered to be five comparables with accompanying sales data for the Board's consideration. All are on the St. Lawrence River. These sales, the assessor stated, "will serve to test the reasonableness of the current value assessment of the subject property." He stated and submitted the 300 sales of waterfront properties that formed part of his study indicated that the "waterfront house/cottage" values increased approximately 10.1% between January 2010 and June 2012 time frame in the subject property's vicinity. Mr. Van Winckle's valuation report also contained an equity analysis using 30 sales of residential properties. He compared the assessments to the adjusted selling price and determined that the median "assessment to sale ratio" was 0.99. He went on to say "this tells me that current value assessments are reflective of sales prices in the vicinity."

Position of Appellants

8Wendy Norman's report prepared for this appeal stated that the January 1, 2008 current value was $208,000 and had been increased to $467,000 for the January 1, 2012 current value. This in her opinion was unreasonable. When asked why the increase, the assessor Mr. Van Winckle replied that the property had been incorrectly assessed for the 2008 base year. He informed Ms. Norman that the increase in value, apart from the market value increase for all properties during this time frame, was due to the two cottages being changed from "fair" to "average" condition and the quality class on the secondary cottage changed from 2.0 to 4.0. Ms. Norman gave several reasons why she thought that the condition of the properties should remain in the "fair" category. Ms. Norman stated that when it came to the quality of construction classification, the assessor should take note amongst other things that "both cottages have, for the most part, no interior finishes on the inside of the stud walls, and where there is finishing material on that side, it is either to keep out the elements (exterior walls) or to provide privacy in the bedrooms and bathroom." Ms. Norman compared her cottages quality of construction to 20 other properties which for the most part were classed lower than hers.

9Ms. Norman and Mr. Norman informed the Board that they did not have a well and were drawing water directly from the St. Lawrence River. It was also noted that this property, being on an island, is water access only. Ms. Norman stated that sales of island properties are down significantly in this area.

10The Normans also stated that there was a noise factor that should be considered in the valuation and that "considerations earned by us during appeals in 1998 and 2004 are still relevant..."

11Ms. Norman presented one comparable only for the Board to consider. The Normans want the Board to reduce the current value to $300,000.

The Legislation

12The following provisions of the Assessment Act ("Act") instruct the Board in appeals of this nature.

13Section 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.

14Section 19.(1) of the Act states:

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

15Section 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.

16Section 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.

17Section 44.(3)(a) and (b) 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 - Current Value

18Under the Act the Board is required to do three things:

1. Find the current value of the property.
2. Make reference to the value of which similar lands in the vicinity are assessed.
3. Adjust the assessment of the subject property if the adjustment will result in a reduction in the assessment.

19The Board will address the issues as presented by the appellants.

20The first issue is the "condition" of the cottages. The Board looked at the report submitted by Ms. Norman. It is clear that the structures received enough maintenance to warrant an "average" condition for structures built in 1953 and not renovated. The Board notes from Ms. Norman's report on page 2 "... we do try to do enough maintenance on the buildings to keep them structurally sound and to prevent water damage to the exteriors from the elements. When speaking of the windows, on page 2, "... if a window frame is rotten, we would replace the window unit. This is very basic maintenance but it's not upgrading the condition of the building." For the exterior siding on both cottages, on page 3, "only where this wood has totally rotted away, have we replaced it with similar design and quality of materials." The bathroom in the secondary cottage was changed recently, on page 4, "This shower was recently changed from metal frame to fiberglass..." On page 5, "The only significant changes to the cottages from 1994 until 2015 include: renovation of kitchen..., replacement of floor and windows in the front porch..., renovation of the bathroom in guest cottage..., replacement of the wooden patio doors on the main cottage..." For all these reasons the Board is satisfied that the "average" condition label is correct.

21The quality classes as revised by the assessor, Class 4.5 for the main cottage and a revised Class 3.0 for the secondary cottage are confirmed as being appropriate for these buildings. This is based on the finishes as they exist and compared to in Exhibit 3. Ms. Norman supplied photos of the unfinished walls in the bedrooms of the main cottage. During cross-examination, Ms. Norman admitted that the walls in the living room, kitchen and bathroom are finished but had no pictures for the Board. Exhibit 3 indicates that all walls should be finished for this quality classification. The Board will allow a 15% reduction to the value of the main cottage as an unfinished allowance. Both parties have agreed that a value of $118,880 has been calculated by MPAC for the main cottage. The Board will reduce the value by ($118,800 x 15%) = $18,000. Although the 15% allowance is not based on any scientific calculation, the Board deems it to be fair.

22Ms. Norman claimed that there should be an allowance given because of excessive boat noise on the river. No evidence was presented to support or quantify this claim.

23The best evidence of current value would be a sale on the subject property if the sale met the definition of current value on or near the valuation day. When no such sale occurs, the Board looks to the sale of similar properties in the vicinity to determine current value.

24MPAC presented five properties that it considered comparable to the subject property. The Board examined the characteristics of MPAC's comparables and finds that they are not good comparables and consequently, the Board will not use them in its analysis. The Board's reasons are listed below:

• Sale "A", 60 Grenadier Island, property sold for $717,758 adjusted sale price ("adj. s. p."), June 2011. Although similar in lot frontage and house size, the house was renovated in 1987 and the assessor has indicated that it is a superior property. The sale amount would certainly confirm that.
• Sale "B", 1 Island 108, property sold for $432,086 (adj. s. p.), November 2011. This is a single owner for the whole island. The structure was built in 1995 versus 1953 for the subject. There are no secondary structures, no boathouse. This property is too dissimilar for comparison.
• Sale "C", 30 Tremont PA Island, property sold for $298,954 (adj. s. p.), October 2010. This property has only 118 feet of waterfrontage versus 400 feet for the subject property. The structure was built in 1900 and renovated in 1990. This property is too dissimilar.
• Sale "D", 184 Hill Island East, property sold for $373,441(adj. s. p.), May 2010. Although this a neighbouring property on the same island, the waterfrontage is only 150 feet versus 400 feet for the subject property. The structure is less than half the size of the subject property and has no secondary structures. The assessor has indicated that it is inferior to the subject property and the Board agrees.
• Sale "E", 319 Downie Island, property sold for $377,422 (adj. s. p.), May 2011. This property is on a different island with a waterfrontage of only 110 feet versus 400 feet for the subject property. The smaller structure was built in 1972 versus 1953 for the subject property. It has a sandy shoreline versus a rocky shoreline for the subject property. There are no secondary structures.

25The Board now turns it's attention to the only comparable property submitted by Ms. Norman.

26Sale 1, 263 Hill Island East, property sold for $172,500 in June 2010. This is a one-and-half-storey structure, 1,072 square feet, with an attached garage, shed and a two-storey workshop.

27Ms. Norman indicated in her presentation that, in fact, the workshop has living quarters in it. The assessor was not unaware of this. The assessor stated that the sale was suspect, not indicative of market value and the fact that it sold for less than half the assessed value was telling of an uninformed seller. This is the reason he said for not using the sale in his analysis.

28The Board is puzzled by the fact that Ms. Norman would use a neighbouring property that sold for $172,500 as a comparable, calls it an "excellent comparable" but yet asks the Board to reduce the subject property to $300,000. The comparable property does not seem to fit the request for a $300,000 value, whether based on selling price or the physical attributes. The Board will not use it in it's analysis as it finds that it is too dissimilar to the subject property.

29The Board is left with no comparables to use in it's determination of current value. The Board however takes comfort when it looks at MPAC's Sale "D", 184 Hill Island. There was no dispute as to the validity of this sale. If this neighbouring property, on the same island, same shoreline, with substantially smaller waterfrontage, smaller cottage and no secondary structures sells for $373,441 then it is not unreasonable to accept MPAC's recommended value of $401,000 for the subject property.

30The Board accepts the recommended value of $401,000 and will adjust it by $18,000 for the lack of interior finish.

31The Board will reduce the current value to $383,000.

Equity

32The Board had reference to the assessments of similar properties in evidence to try to discern if the current value determined is fair and equitable relative to those assessed values. The Board requires evidence that many similar properties are assessed at a lower level than the subject property in order to warrant an equity adjustment under s. 44.(3)(b). The 28 sales submitted to the Board by MPAC indicate an assessment to sale ratio of 0.99. This indicates that no adjustment is necessary.

CONCLUSION

33The assessment is reduced to $383,000 for the January 1, 2012 base year.