Lenneard v. Tiny Township, 2016 CanLII 12961

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: March 11, 2016 FILE NO.: WR 138338

Assessed Person(s):

Paul Adrian Lenneard

Appellant(s):

Paul Adrian Lenneard

Jeannette Lenneard

Respondent(s):

Tiny Township

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”)

Region 16

Property Location(s):

West Shore Drive, Plan 839 Lot 17

Municipality(ies):

Tiny Township

Roll Number(s):

4368-000-014-10500-0000

Appeal Number(s):

2992252, 3022649 and 3087394

Taxation Year(s):

2013, 2014 and 2015

Hearing Event No.

612137

Legislative Authority:

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

Heard:

January 14, 2016 in Perkinsfield, Ontario

APPEARANCES:

Parties

Representative

Paul Adrian Lenneard

Jeannette Lenneard

Jeannette Lenneard

MPAC

Tammy Wells-Garrett

Tammy Woods

Tiny Township

Sandra Mattson (Observer)

MEMORANDUM OF ORAL DECISION DELIVERED BY VINCENT STABILE ON JANUARY 14, 2016

INTRODUCTION

1The subject property is described by MPAC as “vacant residential/recreational lot on water measuring 142.08 x 61.73”. The land is located in Tiny Township, within Simcoe County on the northern shores of Georgian Bay known as Thunder Beach.

2For the 2013 taxation year it is assessed at $640,000. For the 2014 and 2015 taxation years it is assessed at $590,000. The reduction was implemented by (“MPAC”) on the recommendation of the assessor.

3Paul Adrian Lenneard and Jeannette Lenneard (“the appellants”) reject the assessment primarily because of building restrictions affecting their property. The restrictions result from Provincial Legislation imposing a 45 metre set-back from the 178 metre water level (“178”) referred to as the 110 year flood level, as well as corresponding Municipal Zoning By-Laws to conform with the Provincial Legislation.

ISSUES

4The issues to be determined are:

(i) The current value of the subject property as of January 1, 2012, being the “valuation day”.

(ii) Whether an assessment at current value is equitable with that of similar lands in the vicinity.

DECISION

5For reasons delivered orally, and summarized below, I find:

(i) The current value for the subject property as of January 1, 2012 is $590,000 as recommended by the assessor and implemented by MPAC for the 2014 and 2015 taxation years.

(ii) The assessment at current value is not equitable with the assessments of similar lands in the vicinity.

(iii) The assessment for the 2013 taxation year is reduced from $640,000 to $472,000. For the taxation years 2014 and 2015, the assessment is reduced from $590,000 to $472,000.

MPAC’s Position

6Tammy Wells-Garrett (“assessor”) testified for MPAC. Her Valuation Report was filed and marked Exhibit 1. She stated that she used the Direct Sales Comparison Approach to value. She gave an overview of the subject and surrounding areas, all part of the shores of Georgian Bay. The subject property is within an area known as Thunder Beach. According to the assessor, Thunder Beach is one of those “hidden gems” that is very attractive and sought after areas that makes it very desirable.

7The assessor proposed sales of nine comparable properties in her Market Analysis (Appendix “A” of Exhibit 1). All of the sales had been time adjusted based on 420 sales from the same and adjacent neighbourhood(s) as the subject property from June 2009 to November 2012. The study formed part of Exhibit 1. The study showed an overall increase in the market of approximately 7.8%.

8She stated that seven of comparable properties were considered to be inferior to the subject property and two were considered to be superior to the subject property. The distinction was based strictly “on the amount of linear water frontage they each have”.

9The assessor testified that the subject property, along with many others in the vicinity, although a separate roll number, is part of another lot away from the water’s edge and across from a public road that runs along the shoreline (“rear lots”). Generally, the rear lots are used for structures, such as cottages and the front lots, fronting on water, such as the subject, are used to access the water and considered private property.

10Her evidence is that the appellants are also owners of the “rear lot” upon which their cottage is situated. She testified that sales “B”, “C” and “E” were for both ‘front and rear parcels’. Sale “D” was the front lot only, however it had an existing cottage which was torn down.

11Sale “H” has a much larger lot and although it is on Thunder Beach, it is not on a sandy beach shoreline. It has a rocky shoreline and different topography.

12Sale “I” has a much larger lot and not located in Thunder Beach and does not have the same sandy beach as the subject, accordingly would be less desirable.

13The assessor stated that Sale “A” was for ‘front lot only’ however acknowledged that it is located in Woodland Beach, far from the subject. Sales “F” and “G” were purchased as stand-alone vacant lots and remain vacant.

14The assessor submitted that sales “D”, “F” and “G” were most comparable. She stated that once she completed her analysis, as set out in Exhibit 1, she recommended that the assessment, as returned for the 2013 taxation year be reduced from $640,000 to $590,000. That value was implemented by MPAC for the 2014 and 2015 taxation years.

15On cross-examination, the assessor acknowledged that Sale “B” was purchased by two neighbours. The property had a cottage and septic system. Further, that Sales “F” and “G” were purchased by the same person who owns an adjacent property, with a large cottage, as part of a land assembly. The lots remain vacant.

16In her Valuation Report, the assessor also included an Equity Study consisting of sales of 30 properties, with a median Assessment to Sales Ratio (“ASR”) of 1.01. She stated that ASR studies are a principal tool for objectively measuring assessment performance. She also stated that MPAC standards indicate that for residential properties the median ASR should fall between 0.95 – 1.05. Since the median ASR of the study relied upon in these appeals falls within that range she submits that no further adjustments should be made. She expanded on the issue of equity by stating that equity had already been factored in her recommendation to reduce the assessment to $590,000.

Appellants’ Position

17Jeannette Lenneard represented both appellants. Her documentary evidence consists of a binder marked as Exhibit 2 (document brief), a survey and site plan of the subject property marked as Exhibit 3 and an application to the Tiny Township for a ‘sewage system’ on the subject property marked Exhibit 4.

18She confirmed that she too was using the Direct Sales Comparison Approach to value, but provided no evidence as to sales of other properties.

19She stated that the 178 metre water level legislation enacted by the Province of Ontario has effectively rendered the subject lot not suitable for building purposes, thus resulting in a decrease in value. To support her submission she filed Exhibit 3, the survey, as well as excerpts of the enabling 2005 Provincial Policy Statement from the Ministry of Municipal Affairs and Housing and Zoning By-Law 06-001 from the Tiny Township, all found in Exhibit 5.

20Further, oral testimony was heard from Shawn Persaud, Manager of Planning and Development, Tiny Township and Bill Goodale, in charge of septic inspections, Tiny Township.

21Mr. Goodale confirmed receiving an application for a septic system for the subject lot, Exhibit 4. The application was rejected as “the proposed sewage system does not meet the minimum required clearance distances”.

22On examination, both chief and cross, he testified that there is a minimum requirement for a distribution pipe of 15 metres as required by the “178” legislation. He stated that to obtain a building permit, the proposed structure must be capable of being serviced with/by a sewage system. If no plumbing is anticipated, no septic system is required. In a theoretical situation that a “composting toilet” is used, there is no set-back requirement.

23In his oral testimony, Mr. Persaud reviewed the “178” statement concerning the shoreline declarations by the Province of Ontario issued under s. 3 of the Planning Act. He confirmed that the provisions have been added to the Tiny Township Zoning By-Laws and the Official Plan as they apply for new structures, particularly on dynamic beaches, referred to in the Baird Report, all found in Exhibit 5.

24Mr. Persaud stated that presently the subject property is zoned ‘Shoreline Residential’ permitting a single detached dwelling. The area is within an Environmental Protection Zone. Upon application, the subject property could be re-zoned ‘Open Space I Zone – Private”.

25Taking all factors into consideration, Mr. Persaud opined that if the appellants applied for a building permit for a single detached dwelling, as permitted by the present zoning, it is “improbable” that a permit would be issued. Quite correctly, Mr. Persaud stated that he could not make a definitive statement on the issue as the appellants could presumably request the Committee of Adjustments to consider the matter.

26Based on the documentary evidence filed and the oral testimony received, Ms. Lennard submitted that the subject lot is not suitable for a normal single family detached residential dwelling, as such MPAC’s assessment is too high.

The Legislation

27The Board’s jurisdiction to make corrections to an assessment is found in the Assessment Act (“Act”). Section 19.(1) of the Act provides that the assessment of a property must be based upon its current value:

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

28Section 1 of 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.

29Section 19.2(1) of the Act provides:

Valuation days

19.2 (1) Subject to subsection (5), the day as of which land is valued for a taxation year is determined as follows:

1. For the 2006, 2007 and 2008 taxation years, land is valued as of January 1, 2005.

2. For the period consisting of the four taxation years from 2009 to 2012, land is valued as of January 1, 2008.

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.

Exception

(5) Subsection (1) does not apply in respect of the valuation of land for a taxation year after 2004 if the Minister prescribes a different day as of which land is valued for that year.

30Section 44.(3) 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.

31Section 45 of the Act states:

45. Powers and functions of the Assessment Review Board. – Upon an appeal with respect to an assessment, the Assessment Review Board may review the assessment and, for the purposes of the review, has all the powers and functions of the assessment corporation in making an assessment, determination or decision under this Act, and any assessment, determination or decision made on review by the Assessment Review Board shall be deemed to be an assessment,

determination or decision of the assessment corporation and has the same force and effect.

Analysis

32The best evidence of value is the sale of the subject property. There is no recent sale of the subject property to inform the Board. Thus, the Board looks to the sales of similar properties in the vicinity to determine current value.

33The Board accepts the Direct Comparison Approach to value as a valid approach. The Board also accepts a determination of current value based upon the sale values per linear foot on water for those residential/recreational properties fronting on water. The subject property is one of those properties.

Current Value

34The appellants agreed with the approach but challenged the proposed comparable sales. They did not challenge the time adjustment study.

35There was merit in the submissions made, however the comparables proposed by the assessor are the best evidence received. No comparable sales evidence was presented by the appellants. The Board accepts that the “linear water frontage” is key in determining value for the subject property. The sales evidence presented by the assessor results in a range of $3,786.83 to $13,312.56 per linear foot. The recommendation of the assessor results in a value of $4,154.92 for the subject property. This is within the range, although on the lower end. This result seems appropriate given the building restrictions, as presented by the appellants. In applying the best evidence rule, I find that the current value for the subject property as of January 1, 2012, is $590,000. The assessor has already recommended a reduction from $640,000 for the 2013 taxation year to $590,000. MPAC accepted that recommendation and implemented same for the 2014 and 2015 taxation years. Those assessments are hereby confirmed.

36This result does not mean that there is no merit to the argument and submissions of the appellants relating to the building restrictions resulting from “178”. Quite the contrary. There is clear and compelling evidence that the restrictions resulting from “178” have a negative and restrictive effect on the use of the subject property, notwithstanding its present zoning. The effective lot size has been diminished. A septic system has been denied. There is no central sewage system. Without a sewage system it is “improbable”, according to Mr. Persaud, that a building permit for a single family detached residential dwelling would be issued. The use therefore, is limited to structures that do not require plumbing and necessary set-backs according to “178”. Unfortunately, there is no evidence before the Board to quantify how the restrictions affect current value. Accordingly, the Board has accepted the recommendation of the assessor which places the value of the subject property at the lower end of the range of the comparable sales evidence presented.

Equity

37Having established the current value of the subject property, the final issue for the Board to determine is whether an adjustment should be made to the assessment of the subject property in order to make it equitable with the assessments of similar properties in the vicinity.

38The Act requires the Board to lower an assessment below current value if required to make the assessment equitable with the assessments of similar properties in the vicinity.

39The Board received an Equity Analysis from MPAC, found in Exhibit 1. This purports to be a study of sales of 30 similar (residential) properties in the vicinity. This is an analysis to measure assessment performance, an ASR. MPAC standards indicate that for residential property the median ratio should fall between 0.90 – 1.10, which would indicate that the current value assessments are reflective of sale prices in the vicinity

40The study proposed by the assessor indicates that sales in the vicinity of the subject property have a median ASR of 1.01. She submits, therefore, that similar properties in the vicinity have been assessed at their current value and are equitable. Accordingly, no equity adjustment is required to the current value of the subject property.

41I have reviewed the 30 sales proposed in the study. Surprisingly, only two of the comparable properties set out in Appendix A: Market Analysis, Exhibit 1, have been included in this study. It is difficult to reconcile how the assessor proposes certain sales as reliable comparable sales for purposes of determining current value but excludes seven out of nine from the equity study.

42It is clear that sales to be considered in the equity study is a subjective decision made by the assessor.

43A review of the ASRs of the nine comparable properties proposed by the assessor and accepted by me as the best evidence as to current value, results in an average ASR of 0.803. Only two of the proposed Sales, “A” and “G” meet the standards set by MPAC. Taking those two away would result in an average ASR of 0.74.

44Given the clear discrepancies, I reject the equity study filed by the assessor. Instead, I prefer to rely on the nine sales of the proposed comparable properties relied upon by the assessor and MPAC for current value. As already stated, I find that the sales result in an average ASR of 0.80, an over-assessment of 20%.

45The Board is mandated by s. 44.(3)(b) of the act to reduce the current value to make it equitable with other similar lands in the vicinity. Although the assessor submitted that she had already factored equity in her recommendation, I do not accept the submission as it is clearly in conflict with her narrative report.

46Accordingly, the current value of $590,000 is reduced by $118,000 (20%) to

$472,000.

CONCLUSION

47The assessment for the 2013 taxation year is reduced from $640,000 to $472,000 and the assessment for the 2014 and 2015 taxation years is reduced from $590,000 to $472,000.

48This finding covers the entire assessment cycle therefore there are no deemed appeals.