Watson v. Municipal Property Assessment Corporation, 2016 CanLII 12960

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

March 10, 2016

FILE NO.:

WR 138690

Assessed Person(s):

Scott Aaron Watson and Kimberley Dawn Watson

Appellant(s):

Scott Watson and Kimberley Watson

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 25

Respondent(s):

Municipality of Grey Highlands

Property Location(s):

146 Mary B’s Lane, Plan 835, Lot 19

Municipality(ies):

Municipality of Grey Highlands

Roll Number(s):

4208-180-006-14219-0000

Appeal Number(s):

3123690

Taxation Year(s):

2015

Hearing Event No.

611629

Legislative Authority:

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

Heard:

January 14, 2016 in Meaford, Ontario

APPEARANCES:

Parties

Counsel⁺/Representative

Scott Watson

Scott Watson

Kimberley Watson

MPAC

Crystal Brum

Municipality of Grey Highlands Municipality

No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

INTRODUCTION

1The subject property is a seasonal/recreational dwelling not on water, described as a ski chalet and located in proximity to Beaver Valley Ski Club in Grey Highlands.

2The assessment was returned at $403,000 for the taxation year commencing January 1, 2015. The Appellants seek a reduction in the current value, submitting that all properties in the neighbourhood lost value when the Talisman Ski Resort closed in 2009. Mr. Watson argued that the 2012 assessment ignored an already apparent market trend that affected many seasonal/recreational properties in the vicinity.

3The Appellants purchased the property in April 2013, for $245,000 through a power-of-sale transaction. The property had been offered for sale for three years, and had undergone at least five price reductions. The Appellants purchased the property primarily for the skiing available at the Beaver Valley Ski Club.

4There were few sales in the neighbourhood during 2011 and 2012, while there were many sales in 2013. In determining the current value of the subject property, consideration must be given to whether or not the property enjoys “ski in, ski out” convenience, and the value of the presence or lack of this amenity would have.

ISSUES

5What is the correct current value of the subject property?

6Is the current value of the subject property equitable with the assessed values of similar lands in the vicinity, and, if not, should the assessed value be reduced to make it equitable?

DECISION

7The Assessment Review Board (“Board”) finds that the current value of the subject property is $300,000.

8The Board finds that there is no evidence before it supporting the conclusion that the value of the subject property requires an adjustment in accordance with s. 44.(3)(b) of the Assessment Act (“Act”) in order to make it equitable with the assessed values of similar properties in the vicinity.

9Accordingly, the assessment of the subject property as at January 1, 2012, for the 2015 taxation year is reduced from $403,000 to $300,000.

REASONS FOR THE DECISION

10Section 44.(3)(a) of the Act requires the Board to first “determine the current value of the land.” The definition of “current value” is contained in s. 1 of the Act:

“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.

11Section 19.(1) states that:

Assessment based on current value. – The assessment of land shall be based on its current value.

12The best measure of current value is an arm’s length and market-tested sale of the subject property on or close to the valuation day - January 1, 2012. If no such transaction took place, a further measure of current value can be derived from the arm’s length and market-tested sales of comparable properties in the same vicinity and market. This measure acts as a benchmark and gauge of the correctness of the assessed value of the subject property.

13To enable an estimate of value for the subject property to be derived from an analysis of comparable property sales, there must be sufficient elements of similarity in terms of physical factors. In the case of seasonal residential properties not on water, factors for comparison will usually include lot size and topography, the number and quality of primary and secondary structures built, and access to recreational amenities. The latter factor is especially important in properties used almost exclusively for one season such as the subject property.

14Both parties presented evidence using the sales comparison approach to value. Evidence presented by Crystal Brum, a property valuation analyst for MPAC, was contained in Exhibit 1, the Valuation Report for the subject property. The chalet-style residence is located on a site measuring 16,000 square feet (“sq. ft.”). Built in 2003, the one-storey home is situated on a grade, allowing a walk-out from the basement. The main floor and basement areas are 1,193 sq. ft., with 600 sq. ft. finished in the basement. MPAC rated this property as a 6.5 out of 10 for quality of construction.

15Ms. Brum selected five comparable property sales from the immediate neighbourhood in close proximity to Beaver Valley Ski Club. Unfortunately, only one sale took place in proximity to the valuation day: Sale E (130 Beaver Trail). This property sold in October, 2012 for the amount of $550,000. The remaining comparable sales took place in 2013. Table 1 below sets out the basic information provided respecting each of the comparable properties and the subject property.

TABLE 1

Subject 146 Mary B’s Lane

(A) 155 Mary B’s Lane

(B) 104 Edgewood

(C) 103 Edgewood

(D) 115 Edgewood

(E) 130 Beaver Trail

Sale Date

2013/09

2013/04

2013/10

2013/05

2012/10

Sale Price

$445,000

$299,000

$300,000

$537,500

$550,000

Effective Site Area (sq. ft.)

16,000

32,000

15,200

15,200

24,419.20

21,037.50

Year Built (or renovated “R”)

2003

1989

1969 1999 (R)

1973

1997

1999 2007 (R)

Quality Rating

6.5

7.0

6.5

6.0

7.5

7.0

Building Total Area (sq. ft.)

1,193

1,425

1,064

768

1,317

1,132

Fin. Basement Area (sq. ft.)

600

1,270

647

225

962

960

Walkout?

Yes

No

No

Yes

No

No

Close to Club?*

No

No

Yes

Yes

Yes

Yes

16Ms. Brum considered that Sale A was the most comparable to the subject property and that Sale E set the upper limit of value. In her opinion, the only property among the six that truly offered “ski in, ski out” convenience was Sale D.

17Mr. Watson gave evidence on behalf of the Appellants. He testified that he is a realtor by profession, and he and his family are avid downhill skiers. Mr. Watson testified that the property’s utility arises from the approximately 90-day period during which the Beaver Valley Ski Club is open. He further testified that he had been seeking a property closer to the ski hill so that he and his family could access the club without using a vehicle; unfortunately the subject property does not offer “ski in, ski out” convenience and the family has to drive to the ski club. Mr. Watson gave the opinion that he would estimate the value of the “ski in, ski out” amenity at $50,000 to $75,000, while some realtors in his experience put an even higher value on it of $75,000 to $100,000.

18Mr. Watson entered Exhibits 2, 3 and 4. Exhibit 2 was a set of six real estate listings for the subject property during the years it was offered for sale under power of sale. The initial asking price was $549,000 in June 2011. In May 2012, it was offered at $449,000 and then reduced to $327,000 in October 2012. In January 2013 it was offered for $298,000, which was reduced in April, 2013 to $259,000. The Appellants purchased the property for $245,000.

19Exhibit 3 is a larger version of the Market Analysis Map showing the ski runs and location of the subject property and comparable properties for the purpose of showing the properties with “ski in, ski out” access.

20Exhibit 4 is a map of the ski club with a number of homes in the immediate vicinity shown, along with their sales prices in 2013. Mr. Watson testified that there had been few sales in the area after the closure of the Talisman Ski Resort in 2009 until 2013. In Exhibit 4, Mr. Watson outlines his argument and references other comparable sales occurring in the immediate neighbourhood. He argues that MPAC excluded a number of comparable properties because they were two storey homes. Mr. Watson’s evidence of sales lacked details relating to the sizes of lots, building sizes and amenities. However, he testified that 145 Mary B’s Lane, sold in April of 2013 for $300,000, was a property similar in size to his own and a little older, but right across the street from the subject property. Mr. Watson pointed out that, of the nine sales in the immediate vicinity of the Beaver Valley Ski Club, all occurring in 2013, six sold for $300,000 or less. Mr. Watson argued that a current value of $300,000 would more accurately reflect the value of his property in relation to comparable sales in the immediate vicinity of the subject property.

Analysis

21Given the classification of the subject property as “seasonal/recreational dwelling not located on water”, it is incumbent upon the Board to give weight to the factors that affect the property’s utility in this class. It is clear from the evidence of the Appellants that purchasers of such properties rate proximity to the recreation higher than building design. The purchase is based on the purchaser’s wish to own property in proximity to the recreational area – in this case, the Beaver Valley Ski Club. Therefore, the Board accepts the Appellants’ argument that properties in the vicinity should be compared on proximity to the ski club in addition to their other features. As Mr. Watson submitted, there were more comparable sales available than the five selected by MPAC.

22Unfortunately, Mr. Watson gave few details of four of the other five properties sold in 2013 for $300,000 or less. However, of the properties he listed, he gave sufficient details of 145 Mary B’s Lane, a property that also sold in April 2013, and which is located immediately across the street from his own. This property, while two storeys, is described by Mr. Watson as similar in size and site area, and only a little older in age. Given its location, the subject property and 145 Mary B’s Lane share the same disadvantage with respect to the absence of “ski in, ski out” convenience.

23Ms. Brum submitted that Sale A, 155 Mary B’s Lane, sold in 2013 for $445,000, was the most comparable property to the subject. Like the subject, it is not conveniently located next to the ski runs. However, unlike the subject, the site area is twice the size, the building area somewhat larger, and the finished basement twice the area of the subject property’s finished basement. While Sale A is an older building, MPAC rated its quality as 7.0 (as opposed to the subject property’s rating of 6.5). The size differences would account for the increase in value of Sale A over the subject property.

24Sales B and C are properties with similarly-sized site areas to the subject property. Sale B is rated by MPAC as the same building quality, and the age of this building following renovation in 1999 makes it close in age to the subject. The building is 129 sq. ft. smaller than the subject, although the area of the finished basement is approximately the same. This property sold in 2013 for $299,000. Sale C sold in 2013 for $300,000. It is an older and smaller residence than the subject property located on a similarly-sized lot. Like Sale B, it is closer to the ski club, although the evidence of the Appellant was that neither Sale B or C enjoyed true “ski in, ski out” convenience in respect of the ski club. However, while smaller than the subject, this property is much closer to the ski hill and this would account for its value.

25The Board finds that, based on an analysis of comparable sales in the immediate vicinity, the current value of the subject property on January 1, 2012 is $300,000.

Equity

26Once the Board has determined the current value of the land, it is required by s. 44.(3)(b) of the Act to:

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 land.

27Ms. Brum provided the Board with her Equity Analysis derived from the sales of 30 residential properties within 3.66 km of the subject property. Of the 30 sales, occurring between May 2010 and December 2012, the median assessment to sale ratio (“ASR”) was 1.01 which is an acceptable level of assessment for the Board’s purposes. Mr. Watson introduced only one example of an assessment (145 Mary B’s Lane). Having no evidence to demonstrate that equity requires an adjustment to the current value, the Board will make no adjustment.

CONCLUSION

28The Board determines that the current value of the subject property is $300,000.

29The Board finds there is no evidence before it supporting the conclusion that the value of the subject property requires an adjustment in accordance with s. 44.(3)(b) of the Act in order to make it equitable with the assessed values of similar properties in the vicinity.

30The Board therefore reduces the assessment of the subject property as at January 1, 2012, for the 2015 taxation year from $403,000 to $300,000.