Sgambelluri v Municipal Property Assessment Corporation, Region 18, 2015 OARB minicounsel 111

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: August 6, 2015

FILE NO.: WR 133137

Assessed Person(s): Angela Sgambelluri

Appellant(s): Angela Sgambelluri

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 18

Respondent(s): Town of Lincoln

Property Location(s): 5699 King Street

Municipality(ies): Town of Lincoln

Roll Number(s): 2622-020-001-32700-0000

Appeal Number(s): 3036119, 3036120 and 3088401 (deemed 2015)

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

Hearing Event No. 584639 and 596158

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

Heard: June 15, 2015 in Smithville, Ontario and on July 15, 2015 by a Telephone Conference

APPEARANCES:

Parties

Counsel+/Representative

Angela Sgambelluri

Self-represented

MPAC

Sheryl McRoberts

Town of Lincoln

Constance Marshall

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS

INTRODUCTION

1The subject property is improved with a retail garden centre and the majority of the land is farmed.

2During an inspection of the subject property, in preparation for this hearing, MPAC determined that the property’s use and condition is not reflected in the assessment as returned. As a result on April 24, 2015 MPAC served a Special Notice under the Assessment Review Board’s (“Board”) Rule 30, seeking a higher assessment.

3Angela Sgambelluri, the appellant, takes the position that the amended apportionment sought by MPAC is incorrect, that MPAC has allocated too much value to the commercial tax class and insufficient value in the farm tax class.

4From the evidence presented at the hearing, the Board must determine the current value of the subject property as of the valuation day of January 1, 2012 and whether the assessment of the subject property should be reduced to make it equitable with that of similar properties in the vicinity.

5Constance Marshall of MTE Paralegal represented the Town of Lincoln however she did not take an active role in the hearing.

DECISION

6The Board finds that the current value of the subject property for the 2013, 2014 and 2015 taxation years is $918,000 apportioned as follows:

• Commercial Tax Class - $451,500

• Farm Tax Class - $466,500

7No adjustment is required for the purpose of equity.

8Accordingly, the assessments of the subject property is increased from $583,000 to $918,000 apportioned as follows:

• Commercial Tax Class - $451,500

• Farm Tax Class - $466,500

REASONS FOR DECISION

Preliminary Issue

9At the commencement of the hearing Sheryl McRoberts advised the Board that the appellant, Ms. Sgambelluri, had disclosed her evidence in less than the 21 days specified in the Board’s Rules of Practice and Procedure (Rule 45). However, Ms. McRoberts was raising no objection and was prepared to proceed with the hearing.

10The hearing was continued by telephone conference on July 15, 2015 to clarify MPAC’s supporting evidence. Ms. McRoberts, Ms. Sgambelluri and her son, Tony Sgambelluri attended.

Legislation

11In determining the value at which land shall be assessed, the Board must have regard to the following provisions of the Assessment Act (“Act”):

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

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

13Section 1 of the Assessment 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.

14In determining the value at which any land shall be assessed, s. 44.(3)(a) and (b) of the Assessment Act requires the Board to do two things:

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.

Evidence, Arguments and Analysis

15The subject property is located a short distance south of the Queen Elizabeth Way in the Town of Lincoln, on the border of Grimsby. It has an irregularly shaped lot with an effective area of 15 acres. The appellant and her family conduct their retail business, Ridgeview Garden Centre, from the subject property and, to a lesser extent, from the abutting property, 4670 Durham Road.

16MPAC utilized the cost approach to value. The assessment as returned of $583,000 was allocated as follows:

• $332,900 in the Commercial Property Class and

• $250,100 in the Farm Property Class.

17On March 6, 2015 MPAC inspected the subject property and determined that the assessment as returned does not reflect the actual apportionment between the farm and commercial tax classes based on use. As a result, on April 24, 2015 MPAC served a Special Notice under the Board’s Rule 30, seeking a higher assessment of $918,000 and a change in value as follows:

• $533,600 in the Commercial Property Tax Class and

• $384,400 in the Farm Property Tax Class

18At the July 15, 2015 hearing event MPAC’s representative, Ms. McRoberts, explained that she had miscalculated the apportionment and the apportioned values MPAC is seeking are:

• $488,500 in the Commercial Property Tax Class and

• $429,500 in the Farm Property Tax Class

Zoning

19The Town of Lincoln’s current zoning for this land is industrial (IN-7). Ms. McRoberts argued that farming is not a supported use. However the zoning does support the garden centre.

20The use or non-use of a portion of land is relevant to the classification, more so than the zoning. Classification must be determined with regard to the function of the portion under consideration. Ontario Regulation 282/98 prescribes the property classes. The property class for a particular portion of land is to be determined by the actual use of a property at the classification date of June 30 in the year before the applicable taxation year. Potential use and zoning are not factors. The regulations establish the criteria attributable to each class and stipulate that a property will default into the commercial class if it fails to meet the tests outlined for the other property classes.

21I find that the subject property is correctly assessed in the farm and commercial property tax classes for the 2013, 2014 and 2015 taxation years.

Apportionment

22The subject property is improved with four buildings. The first, a 2,416 square foot retail store, built in 1994, is valued at $115,595 in the commercial tax class. Attached to the retail building is the second building with 6,085 square feet which is used for both retail and farm storage. MPAC has valued this building at $211,817 and has divided the value equally between the commercial class and the farmland class. The third building is an office space measuring 400 square feet. It is attached to the first two buildings and is valued at $3,910 in the commercial tax class. The fourth building measures 9,100 square feet and is an unheated storage building built in 2009 and valued at $146,422. The value of this building is also divided evenly between the commercial and farmland tax classes. Of the 15 acres, 1.67 acres has been valued in the commercial tax class for a total value of $189,905. The remaining 13.33 acres has been valued as farmland with 12 acres at the Class 1 farmland rate for a total value of $228,072 and 1.33 acres in the Class 2 farmland rate for a total value of $22,972.

23Ms. McRoberts testified that during her inspection of the subject property she found that some of the retail area had been assessed as farmland. While she split the use of buildings two and four equally between the farm and commercial tax classes, she feels it is a generous allocation as most of the storage and retail space was, at the time of her inspection, being used for commercial purposes. She testified that the second building was used to store some farm crops (apples) but the majority of the area was used for commercial storage.

24Ms. Sgambelluri testified that second building is used for receiving and packing and is vacant from December through February. When MPAC inspected the property it was March and in use again. Ms. Sgambelluri argues it should be assessed at 25% commercial and 75% farm.

25Based on the evidence received, I accept MPAC’s allocation. I received insufficient evidence from the appellant to support an allocation of 75% in the farm class.

26Ms. Sgambelluri testified that the fourth building is unheated and un-insulated. It is used to store farm equipment from December through February. In March through to May it stores the garden delivery trucks and skids of retail materials. From June through November it is used for the farm only to store equipment and as an area to service the equipment and for the storage of chemicals. Ms. Sgambelluri argues that this fourth building should be assessed with 25% in the commercial tax class and 75% in the farm tax class to reflect the use.

27I accept Ms. Sgambelluri’s testimony that the fourth building is used for farm purposes 75% of the year. Therefore, I have re-apportioned the value of this building ($146,422) placing 25% or $36,605 in the commercial tax class and 75% or $109,817 in the farm tax class.

Current Value

28In support of the increased assessment, Ms. McRoberts presented costing data for the subject property along with four sales.

29The first sale, 2 Iroquois Trail, Grimsby, abuts the subject property. It has 0.62 acres and is improved with a 6-bay car wash built in 2002. It sold in October 2014 for $912,000.

30The second sale, 8 Iroquois Trail, Grimsby, also abuts the subject property. It has 1.06 acres of land and is zoned for commercial and industrial uses and sold as vacant land in August 2001 for $350,000.

31Both of these sales are located on a cul-de-sac and, therefore, do not have the street exposure of the subject property. Both sales indicate that the subject property’s commercial portion is not over-assessed.

32The third sale, 4695 Bartlett Road, Beamsville has 10 acres of land and is zoned and used as industrial. It is improved with a total of 46,231 square feet of building area with 24,170 square foot pre-engineered industrial building built in 1997, a mezzanine of 1881 square feet, 2,327 square feet of office space and a warehouse addition of 20,180 square feet. It sold in August 2009 for $2,100,000. This sale does not assist me in determining the current value of the subject property as is not comparable in lot size or building size.

33The fourth sale, 4600 Victoria Avenue, Vineland has a 1.8 acres improved with a 4,238 square foot retail store and a 1,004 square foot storage building. Both were built in 1991. It sold under power of sale in March 2011 for $515,000 after some time on the market. Because it is a power of sale, one may conclude that the sale value is low relative to an open market sale and therefore supports the value MPAC is seeking for the commercial portion.

34Ms. Sgambelluri argues that Grimsby land values are higher than Lincoln’s and therefore should not be compared to the subject property. Without supporting evidence, I conclude that, although they are located in Grimsby, the two abutting sales on Iroquois Trail likely reflect market values in the vicinity of the subject property due to their proximity.

35Ms. Sgambelluri testified that she sold the subject property for $1,500,000 in September 2014 to a numbered company of which she is the sole shareholder. She stated she was not prepared to address how her lawyer(s) and accountant determined this value but she believes it was based on the original purchase price, subsequent increases in land values, an irrigation system and other improvements. Her position is that this price does not reflect the subject property’s market value and the sale occurred to accommodate estate planning and succession taxes. I appreciate that Ms. Sgambelluri was unprepared to address this sale at the hearing. However it seems reasonable that such a sale would reflect a value that is equal to or less than the market value of the subject property. Therefore, it suggests that MPAC’s new valuation is, if anything, conservative.

36The evidence presented supports MPAC’s increase in value from $583,000 to $918,000 (rounded down to reflect MPAC’s total value requested) with $451,500 in the Commercial Tax Class and $466,500 in the Farm Tax Class. See Table 1 for the details:

Table 1

Farm ($)

Commercial ($)

Buildings

1. 2416 sq. ft.

115,596

2. 6085 sq. ft.

105,908

105,908

3. 400 sq. ft.

3,910

4. 9100 sq. ft.

109,817

36,605

Land

1.67 acres

189,905

12 acres

228,072

1.33 acres

22,972

Totals

466,500 rounded

451,500 rounded

Equity

37The Assessment Act requires the Board to lower an assessment below its current value if such an adjustment is required to make the assessment equitable with the assessments of similar properties in the vicinity.

38Section 44.(3)(b) of the Assessment Act states that the Board shall “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 land.”

39The Board has not been presented with any evidence to suggest that the current value of the subject property of $794,000 requires a further adjustment in accordance with s. 44.(3)(b) of the Assessment Act.

CONCLUSION

40In conclusion, the current value of the subject property is $918,000 (rounded) for the 2013, 2014 and 2015 taxation years apportioned as follows:

• Commercial Tax Class - $451,500

• Farm Tax Class - $466,500

41No adjustment is required for the purpose of equity.

2015 DEEMED APPEAL

42An appeal for the 2015 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 2015 appeal before March 31, 2015. For that reason, this decision also applies to the 2015 taxation year.

43Section 40.(26) of the Assessment 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.