Murray Elwin Gahan v. Municipal Property Assessment Corporation, 2016 CanLII 1689

Assessment Review Board

Issue Date: January 11, 2016 File No.: WR 137786 Assessed Person(s): Murray Elwin Gahan Appellant(s): Murray Elwin Gahan Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region 4, Town of Renfrew Property Location(s): 151 Quarry Avenue Municipality(ies): Town of Renfrew Roll Number(s): 4748-000-035-13700-0000 Appeal Number(s): 3113028 Taxation Year(s): 2015 Hearing Event No.: 601744

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

Heard: November 9, 2015 in Renfrew, Ontario

Appearances

Parties	Counsel/Representative
Murray Elwin Gahan	Murray Elwin Gahan
MPAC	Tom Chisholm
Township of Renfrew	No one appeared

Decision of the Board Delivered by Garry Minnie

Issue

1Is the assessment as returned at $346,000 for the 2015 taxation year accurate, and is this assessment equitable with assessment in the vicinity?

Decision

2The Board finds the current value of the subject property is $303,000 and that an adjustment is not required to make it equitable with the assessment of similar lands in the vicinity.

3The assessment is reduced from $346,000 to $303,000 for the 2015 taxation year.

Overview

4The subject property consists of a single-family detached residence of 3,260 square feet ("sq. ft.") on a lot 18,295.2 sq. ft. located in the Town of Renfrew.

5MPAC describes the neighbourhood as having a mix of residential homes including detached, semi-detached and plex type homes (duplex, triplex) as well as freehold townhouses with building ages ranging from 1880 to newly built and with a mix of commercial, small industrial and institutional properties in "relative proximity".

6The two-and-one-half storey subject residence was built in 1898 and renovated in 2000.

7The central issue of contention between the parties revolves around the condition of this older residence and how its age and condition affect its value.

8After an inspection in June of 2015, MPAC recommended a negative adjustment of $40,000 in recognition of the condition and age of the house as well as the fact that a bathroom had been removed, resulting in a recommended value of $306,000.

9Murray Elwin Gahan does not accept this recommended value and contends that the value should be in the $270,000 to $275,000 range.

10MPAC defended the recommended value of $306,000 in the hearing.

11This issue is further complicated by the fact that the Appellant is a former town chief building official and before that a licensed carpenter and partner in a family building contractor business.

Legislation

12In determining the assessment, the Board is governed by the following sections of the Assessment Act ("Act").

13Section 19.(1) of the Act directs that:

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

14Section 1 of the Act defines current value as:

"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.

15Section 19.2(1) 3 of the Act directs that:

19.2(1) Valuation days. – Subject to subsection (5), 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.

16Section 44.(3) of the Act directs that the Board have reference to the value at which similar lands in the vicinity are assessed:

44.(3) Same, 2009 and subsequent years. - For 2009 and 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.

17The Board is required by the legislation to use the best evidence available to determine the current value of the property.

18Then the Board is required by the legislation to lower the assessment of the subject property if the assessment is not equitable with that of similar properties in the vicinity.

Analysis

Current Value

19The sale of similar properties in the neighbourhood is generally the best evidence of current value available and both parties submitted data on the sale of neighbouring properties, with one property used by both parties but with a different sale for that property.

20MPAC submitted six sales and the Appellant two, as well as a letter confirming that the subject property had been listed for sale in 2008 without selling.

21For MPAC, Tom Chisholm contended that two of his six sales were of properties "most comparable" to the subject property, and the Board agrees with him.

22These properties have residences of the same general vintage as the subject property, having been built in 1908 and 1910 respectively, while the subject residence was built in 1898.

23Like the subject property the 2008 property was renovated in 2002, while the subject was renovated in 2000, giving it an effective age of 1920 in MPAC's judgment.

24The residence built in 1910 shows no renovation in MPAC's data.

25The other four properties submitted by MPAC have residences with building dates ranging from 1953 to 1989, some with later renovations and additions and all with some finish in their basements.

26Furthermore, three have decidedly larger lots than the subject property, and one a decidedly smaller lot.

27They are simply not as useful for determining current value as the two aforementioned properties that have residences with vintages similar to that of the subject residence.

28Of these two useful properties, the one built in 1908, located at 560 Raglan Street South, is clearly superior to the subject property, as acknowledged by Mr. Chisholm and stressed by Mr. Gahan.

29The lot is larger by 8,188 sq. ft. in effective size, the house is larger by 1,028 sq. ft., and the unfinished basement is larger by 824 sq. ft.

30Like the subject, this property has a garage.

31However, unlike the subject property, it is located on a busy street.

32Mr. Gahan further pointed out that as Chief Building Officer he was well aware that this house received a very thorough "C" class renovation, which includes such major items as windows and doors as opposed to an "A" class renovation like the one done on the subject property, which involved the kitchen only.

33The photographs supplied by Mr. Chisholm indeed show that this residence on Raglan Street is a very attractive and well-appointed home in the "traditional" style, compared the equally attractive but slightly less impressive subject home.

34This property at 560 Raglan Street South sold in February 2009 for $385,000, time-adjusted to $423,229 for the valuation date of January 01, 2012.

35The property with its residence built in 1910 is in fact the most similar to the subject property, so much so that both parties submitted it, although with different sale dates.

36This property, located at 298 Barr Street, abuts the subject property.

37It has a slightly smaller lot by 1,056 sq. ft., a slightly larger residence by 436 sq. ft., and an unfinished basement 188 sq. ft. larger than the subject's unfinished basement.

38The photograph submitted by Mr. Chisholm shows an attractive brick house very much like the subject house with the minor exceptions of the style of the front door and the fact that the subject is 2 1/2 storeys while the Barr street property is 2 1/4 storeys.

39This property sold in July, 2009, for $325,000, time-adjusted by MPAC to $352,202 for the valuation date.

40The property sold again in March, 2014 for $255,000, as shown by an Ottawa Real Estate Board data sheet submitted by Mr. Gahan.

41The assessor called attention to the "Remarks" section of the listing sheet on this sale for the purpose of pointing out some "exaggeration" in the listing comments.

42He also contended that this 2014 sale was made after a divorce and that in fact this sale occurred under financial duress with bank involvement.

43Considering the limitations written into the listing regarding the timing of offers, as well as the contentions of the assessor and the fact that this sale for $255,000 in 2014 cannot be time-adjusted raise enough doubt about this sale as an "unencumbered" sale as required under s. 1 of the Act that the Board will not consider it a reliable indicator of current value for the subject property.

44The Board further rejects the March, 2014 sale of the property at 277 Barr Street as submitted by the Appellant on the grounds that the sale is not time-adjusted to the valuation date and that the property was sold as a home with "multifamily use" with "6,000 sq. ft. of living space" that included three rental units on the second floor and one "rental unit on the main floor".

45Furthermore, the Board does not find the non–sale of the subject property in 2008 despite being listed for $315,000, as confirmed by a letter from a Real Estate broker, to be a true indicator of the subject property's value.

46The fact that the property did not sell for a certain price does not establish its actual value.

47What the Board is left with for current value determination are two valid sales, one of a clearly superior property at $423,000 (rounded and time-adjusted) and one of a very similar property at $352,000 (rounded and time-adjusted).

48In addition to this evidence for current value the Board also finds that in this case it is necessary to contemplate the impact the age and condition of the subject residence have on its value in light of the fact that both parties at this hearing accepted this impact as a reality.

49Mr. Chisholm testified that he spent an hour inspecting the subject residence and concedes that it is an old, turn-of-the-century house.

50He pointed out that this resulted in a 10% obsolescence adjustment to the subject property giving it a further $40,000 reduction from its returned assessment of $346,000 for such flaws and defects as knob and tube wiring, cracking in the brick work, leaks, asbestos wrapping on pipes, the quality of the garage, as well as the removal of a bathroom necessitating its future replacement, and a previous over-assessment of the new kitchen.

51This results in his recommendation of an assessment of $306,000, notwithstanding the fact that the sales evidence from the two best comparable properties lead him to a value of $315,000 for the subject property, taking into account the fact that the comparables are slightly newer than the subject property.

52Mr. Gahan submitted ten separate packages of labelled photographs to highlight the age and deficiencies of the subject residence.

53These illustrated such issues as the following:

1. a fireplace chimney in need of an almost complete re-build
2. water supply lines for the heating radiators (in every room) that require replacement
3. a summer kitchen with walls and ceiling lacking interior finish
4. roofing and exterior woodwork needing repair and/or paint
5. an old electrical panel showing oxidization and knob and tube wiring
6. asbestos pipe wrapping
7. a stone foundation and brick walls with extensive cracking
8. exterior stairs to a porch, both requiring railings.

54Mr. Gahan contended that these deficiencies could not possibly be mitigated or bought rectified with $40,000, the obsolescence adjustment recommended by MPAC.

55Mr. Gahan also questioned the inclusion of the summer kitchen in the measurements of the first floor of the residence.

56He pointed out that the fact that the difference in square footage between first floor and the second floor means that the summer kitchen is being assessed as living area.

57The parties initially disagreed on the actual size of the summer kitchen but in the end Mr. Gahan accepted Mr. Chisholm's measurement of 198 sq. ft. with a value $2,600.

58Mr. Gahan's concluding contention was that older homes do not sell for as much money as they once did because today's buyers are better informed about the deficiencies inherent in older homes and the associated costs to bring them up to standard.

59He claimed that his two sales of properties with older residences in the neighbourhood for $255,000 and $230,000 clearly reflect this new reality.

60His request is for an assessment in the $270,000 to $275,000 range.

61The Board prefers the recommendation of the assessor.

62The sales evidence on an abutting property is certainly a good indicator of a property's value.

63Likewise, the recommendation of a $40,000 obsolescence adjustment is made by an experienced assessor who spent considerable time inspecting the property, and who acknowledges that the residence is an old edifice that needs updating.

64Is $40,000 enough for these updates?

65Mr. Gahan says it is not, and he may or may not be right.

66He is a man with considerable experience in buildings also.

67Unfortunately, he does not provide any details or third party quotations or estimates on the costs for the updates that need to be done.

68This means his request to one based on an opinion, his opinion.

69Granted, an "informed" opinion, but an opinion nevertheless, by someone with a decided interest in the matter.

70The Board finds more assurance in accepting the value determined by the assessor.

71However, the Board does accept the Appellant's request that the summer kitchen be removed from the measurement of the residence.

72The photographs show the interior of this structure to be one with no finish on the inside of the walls or roof.

73This structure has the appearance of a shed, with an exterior wall only.

74Mr. Chisholm estimated its component of the overall assessment of the residence as $2,600, so the Board finds it appropriate to reduce MPAC's recommended value from $306,000 to $303,000.

75The Board finds that the current value of the subject property is $303,000.

Equity

76Is the subject property assessed equitably with other properties in the vicinity if assessed at current value?

77Based on the evidence before it, the Board finds that the subject property is assessed equitably if assessed at its current value.

78The only evidence on equity provided at the hearing was by MPAC in the form of an "Equity Analysis".

79This report on Assessment to Sale Ratio ("ASR") was based on the sales of 30 residential properties located within 0.3 kilometres of the subject property between January 2009 and June 2012.

80All sales were time-adjusted, and a detailed chart showing the addresses of the properties as well as their selling prices and assessments was provided, in addition to a map showing their location and proximity to the subject property.

81This study showed an ASR for the vicinity of 0.99.

82From this evidence, one can only conclude that properties in the vicinity are being assessed very close to their selling values.

83The Board finds that there is no reason under s. 44.(3)(b) of the Act to reduce the assessment of the subject property from its current value as found.

Conclusion

84The Board reduces the assessment of the subject property from $346,000 to $303,000 for the 2015 taxation year.