Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE:
April 8, 2016
FILE NO.:
WR 138789
Assessed Person(s):
Reeves Realty Corporation
Appellant(s):
Reeves Realty Corporation
Respondent(s):
Municipal Property Assessment Corporation (“MPAC”) Region 23
Respondent(s):
Town of Ingersoll
Property Location(s):
See Attached Schedule “A”
Municipality(ies):
Town of Ingersoll
Roll Number(s):
See Attached Schedule “A”
Appeal Number(s):
See Attached Schedule “A” and 2016 (deemed appeals)
Taxation Year(s):
2015 and 2016 (deemed appeals)
Hearing Event No.
620457
Legislative Authority:
Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended
Heard:
February 8, 2016 in Ingersoll, Ontario
APPEARANCES:
Parties
Representative
Reeves Realty Corporation
Leonard Reeves
MPAC
William Somerville
Town of Ingersoll
No one appeared
DECISION OF THE BOARD DELIVERED BY DAN WEAGANT
INTRODUCTION
1The subject property comprises 14 residential condominium units, constructed in 2011 at 50 Garland Court in Ingersoll, Ontario. The units all feature two bedrooms and one full bathroom with a full basement. The units are single storey, attached condominiums, ranging in size from 750 square feet (“sq. ft.”) to 930 sq. ft.
2For the 2015 taxation year, two of the units are assessed at $90,000 each, eight are assessed at $91,000 each, two are assessed at $93,000 each and two are assessed at $100,000 each, with the difference in value attributed to the corresponding differences in living area of the 14 units under appeal.
3The Appellant, Dr. Reeves, believes these assessments are too high and should be reduced accordingly. The parties submitted different comparable properties in making their case. In addition, the Appellant provided detail with respect to the Canada-Ontario Affordable Housing Program (“AHP”). The subject units were developed in accordance with the AHP and Dr. Reeves believes this fact should have an impact of the determination of current value.
4There are two issues for the Assessment Review Board (“Board”) to determine in these appeals. First, the Board must decide, based on the evidence presented at the hearing, the current value of the 14 residential condominium properties under appeal. Secondly, the Board must determine, when reference is made to the assessments of similar properties in the vicinity, if the assessments of the subject properties should be reduced from the current value determined to reflect equity of assessment.
LEGISLATION
5In making its determination of these appeals, the Board must consider the Assessment Act (“Act”), and in particular, the following sections:
“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.
7Section 19.(1) of the Act states:
19.(1) Assessment based on current value. – The assessment of land shall be based on its current value.
8Section 40.(1) of the Act states:
40.(1) Appeal to Assessment Review Board. Any person, including a municipality, a school board or, in the case of land in non-municipal territory, the Minister, may appeal in writing to the Assessment Review Board,
(a) on the basis that,
(i) the current value of the person’s land or another person’s land is incorrect,
(ii) the person or another person was wrongly placed on or omitted from the assessment roll,
(iii) the person or another person was wrongly placed on or omitted from the roll in respect of school support,
(iv) the classification of the person’s land or another person’s land is incorrect, or
(v) for land, portions of which are in different classes of real property, the determination of the share of the value of the land that is attributable to each class is incorrect; or
(b) on such other basis as the Minister may prescribe.
9Section 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.
MPAC’S EVIDENCE
10In support of its determination of current value, MPAC submitted Exhibit 2, a comparison of six properties in the Town of Ingersoll. Kevin Den Harder, an Assessor with MPAC, testified that the six properties were selected owing to their comparability with the subject properties under appeal. Mr. Den Harder also explained that MPAC took the direct sale comparison approach to determining the values of the subject properties. Mr. Den Harder testified that the comparable properties were selected owing to their similarity to the subject property with respect to size of living area, location (in the Town of Ingersoll), method of construction and overall character, adding that like the subject properties, these comparables are all single storey dwellings.
11The six comparable properties are residential condominiums, and range in size from 786 sq. ft. to 1,019 sq. ft. of living area. These properties sold for $131,000 to $161,000, with sale dates ranging from January 2009 to November 2013. They were constructed in 1993, approximately 18 years prior to the construction of the subject units.
12Mr. Den Harder provided a per sq. ft. value of the sales of these six properties, resulting in a range of $138.37 to $169.69. When he applied this range of value to the living area size of the subject property, he determined a range in value of between, $103,778 to $127,492 for the two - 750 sq. ft. units, $110,696 to $135,752 for the 10 – 800 sq. ft. units and from $128,684 to $157,812 for the two - 930 sq. ft. units.
13Under cross-examination, Mr. Den Harder agreed that the comparable properties used also each have a single car, attached garage while the subject properties use a common outdoor parking lot. He made no specific adjustment for the value of the garages when comparing these six properties to the subject properties.
14Mr. Den Harder concluded, that based on his analysis of the sale values of the comparable properties in his review, the range of assessed value of the subject properties is well below his findings and as a result, he determined that the returned values of the subject properties are reasonable, correct and should be confirmed.
APPELLANT’S EVIDENCE
15Dr. Reeves submitted three alternative properties that he believes indicate the correct current value of the subject properties. These three comparable properties are located in Woodstock, within the County of Oxford, the same upper tier municipality as the subject properties. Dr. Reeves’ three comparables are connected units in the same building and like the subject properties are condominium units. They are known municipally as 772, 774 and 776 Rathbourne. The Rathbourne properties were constructed in 1989. Dr. Reeves compared the assessments of the three comparable units to the assessments of the subject properties as a means of determining current value. The Rathbourne properties are assessed at $70,000, $68,000 and $70,000 respectively. When Dr. Reeves applies a per sq. ft. assessment value to each unit, he arrived at values of $103.70, $100.74 and $99.57. By applying these values to the subject properties, Dr. Reeves submitted that the range of value for the subject properties should be between $74,678 and $77,775 for the 750 sq. ft. units, $79,656 and $82,960 for the 800 sq. ft. units and between $92,600 and $96,441 for the 930 sq. ft. units.
16Dr. Reeves called Paul Beaton, the Director of Human Services for the County of Oxford. Mr. Beaton was called to confirm the aspects of the AHP that apply to the subject units. They were constructed in 2011 under the AHP with a $1,200,000 contribution from the upper levels of government to provide affordable housing in Ingersoll. Mr. Beaton testified that the subject units are encumbered by the AHP in that, for, effectively 25 years from the date of construction, the $1,200,000 grant or loan is re-payable, at least in part, by Dr. Reeves’ company in the event that the subject units are sold to another party within the time frame stipulated by the affordable housing agreement.
17Dr. Reeves submitted that this encumbrance has an impact on the value of the condominiums, because it affects the marketability of the units and further submits that when reference is made to the definition of current value in s. 1 of the Act, this encumbrance should be taken into account when the Board makes its determination.
ANALYSIS
Current Value
18The Board must make its determination of these issues, based on the evidence at the hearing. The Board has a total of nine comparable properties submitted by the parties to consider. Comparable properties used for the purpose of determining current value need not be identical. They only have to have sufficient similarity so that reasonable comparisons can be made with the subject properties so that adjustments for size, age, location, condition and overall character can be applied.
19MPAC’s comparables provide the Board with an effective upper limit of the value to be applied to the subject properties. These six properties are 18 years older than the subject properties, are single storey dwellings, are located in the Town of Ingersoll and are of similar character. The resultant values derived from the comparable properties submitted by MPAC are significantly higher than those returned for the subject properties. The Board notes that these comparable properties each have a single car, attached garage, whereas the subject properties have parking in a common lot. While MPAC did not apply an adjustment factor for this difference, the Board finds that it is reasonable to apply a reduction for the presence of garages to use MPAC’s comparable properties to arrive at a current value for the subject properties that is lower than the comparable properties would otherwise indicate.
20The three comparable properties submitted by Dr. Reeves are somewhat smaller than the subject properties and, like the comparables used by MPAC, are significantly older (22 years) than the subject properties. Dr. Reeves’ Rathbourne properties are similar to the subject properties in that they have common parking on the site. They are located in the City of Woodstock, rather than the Town of Ingersoll where the subject properties exist.
21Neither party applied any adjustments for the differing characteristics of their respective comparables when used to compare them with the subject properties. Each party simply applied per sq. ft. of living area values derived from their respective comparables to the subject property.
22The most disparate difference is between the comparable properties used by MPAC, where those properties each have an attached single car garage with direct access for each unit to the public street. By contrast, the subject properties have a common parking area without attached garages. The Rathbourne properties used by Dr. Reeves for comparison have a similar common parking area and a single access to the public street, like the subject properties.
23Neither party made any adjustment for value with respect to age of their respective comparable properties when compared to the subject properties. The Rathbourne properties are 22 years older than the subject development and the MPAC comparables are 18 years older.
24Based on the per sq. ft. values of the comparable properties in evidence, the Board finds that the best indication of value for the subject properties is the comparison made by MPAC. Although MPAC’s comparable properties have single car garages and are older than the subject properties, the Board finds that this comparison provides the necessary sales data to determine the current value of the subject properties. By contrast, the properties in Dr. Reeves’ comparison have no sales data. In fulfilling the requirement of s. 1 of the Act, the Board must be confident that the evidence submitted speaks to current value as of the statutory valuation date. Dr. Reeves was not able to make any comparison of sale value of the Rathbourne properties to the subject properties and as a result, the Board disregards the Rathbourne properties as a means of determining current value of 50 Garland Court.
Encumbrances
25Dr. Reeves interprets s. 1 of the Act to mean that when a property is encumbered, the value of that encumbrance should be used in making a determination of current value. Mr. Somerville submitted that s. 1 should be interpreted to mean, essentially, that any “encumbrance” should be ignored when current value is being determined. Mr. Somerville cited Elgin and St. Thomas Housing Corp., v. Municipal Property Assessment Corp., Region No. 23 [2008] O.A.R.B.D. No. 222 (“Elgin”). This case was heard by the Board in September 2008. In this case, the Board said: “The Board finds that the constraints of the Social Housing Reform Act are an encumbrance against the subject property, and that the price it would realize if sold at arm’s length by a willing seller to a willing buyer should be calculated on the basis of the typical market rents it would achieve if not subject to these constraints, and not on the basis of the much lower actual rents it achieves because of the restraints.” And “If this were not so, it would result in the absurd situation of two identical buildings on identical lots, next to each other, being assessed at significantly different current values, because one is subject to the constraints of the Social Housing Reform Act, and the other is not.”
26The Board notes that in “Elgin”, the method of valuation was different, in that rental income used to make a valuation of the property. However, this panel finds that the conclusion of the Board in “Elgin” still applies in that the absurdity referred to by Member Birnie in “Elgin” applies the same way to these current appeals.
27Further, Mr. Somerville submitted that the subject properties could be sold by the owner at any time, with the stipulation that within the time period stipulated by the AHP the original grant or loan of $1,200,000 would need to be paid back. Mr. Somerville illustrated his point by indicating that to decide otherwise would create a scenario whereby the subject property could have different values, within the same assessment cycle, based on extraneous circumstances; in this case being an amount owed upon closing by the vendor. Further, Mr. Somerville submitted that the Appellant entered into the agreement with the County of Oxford and the Provincial and Federal governments with full recognition of the financial aspects involved.
28Dr. Reeves believes the values of the subject properties are affected by the $1,200,000 grant/loan and that the ongoing economic viability of the development is further eroded by the fact that the rents for the subject property are controlled at a level below normal market rents and that the units in the subject project can only be leased to seniors.
29The Board finds that the existence of the $1,200,000 funding by the Provincial and Federal governments is essentially the same as any market funding mechanism. The use of the existence of the loan or grant is no different than the existence of an open market mortgage or other charge against the title to the subject lands. The Board agrees with Mr. Somerville’s interpretation of s. 1 and the interpretation of the panel in “Elgin” and finds that the existence of the AHP is not a consideration in the determination of current value.
DECISION
30The Board finds that the current values of the subject properties range from $90,000 to $100,000 in accordance with the following:
Unit Number and Roll Number
Returned & Confirmed Value
1 – 3218-010-021-02213-0000
$90,000
2 – 3218-010-021-02214-0000
$91,000
3 – 3218-010-021-02215-0000
$91,000
4 – 3218-010-021-02216-0000
$91,000
5 – 3218-010-021-02217-0000
$91,000
6 – 3218-010-021-02218-0000
$93,000
7 – 3218-010-021-02219-0000
$93,000
8 – 3218-010-021-02220-0000
$91,000
9 – 3218-010-021-02221-0000
$91,000
10–3218-010-021-02222-0000
$91,000
11- 3218-010-021-02223-0000
$91,000
12 -3218-010-021-02224-0000
$90,000
13 -3218-010-021-02225-0000
$100,000
14 -3218-010-021-02226-0000
$100,000
31The Board also finds that it has no evidence before it to suggest a further reduction in the assessment of the subject properties is warranted for the purposes of equity.
32Accordingly, the assessments of the 14 condominium units located at 50 Garland Court are confirmed for the 2015 taxation year; all in the Residential Tax Class. This decision is deemed for the 2016 taxation year.
2016 DEEMED APPEAL
33An appeal for the 2015 taxation year is presently before the Board. Section 40.(26) of the Assessment Act 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, 2016. For that reason, this decision also applies to the 2016 taxation year.
34Section 40.(26) of the Act directs:
Deemed appeals, 2009 and subsequent years
(26) 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.
“Dan Weagant”
DAN WEAGANT
MEMBER
Assessment Review Board
A constituent tribunal of Environment and Land Tribunals Ontario
Website: www.elto.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248
Schedule “A” continues…