James Snow and Louise Snow v. Municipal Property Assessment Corporation, 2016 CanLII 19401

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 5, 2016

FILE NO.: WR 137086

Assessed Person(s): James Albert Snow, Louise Mary Snow

Appellant(s): James Snow, Louise Snow

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 25

Respondent(s): Township of Georgian Bluffs

Property Location(s): 116 Almur Drive

Municipality(ies): Township of Georgian Bluffs

Roll Number(s): 4203-620-005-05906-0000

Appeal Number(s): 3113254

Taxation Year(s): 2014

Hearing Event No.: 603451

Legislative Authority: Section 34 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: November 24, 2015 in Meaford, Ontario

APPEARANCES:

Parties Counsel+/Representative

James Snow and Louise Snow Self-represented

MPAC R. Brent Williams

Township of Georgian Bluffs No one appeared

MEMORANDUM OF ORAL DECISION DELIVERED BY DAN WEAGANT ON NOVEMBER 24, 2015

INTRODUCTION

1The subject property is a single family dwelling on a waterfront lot in the Township of Georgian Bluffs. In 2014, the owner completed construction on the subject dwelling. Prior to 2014, the property was assessed, based on the unimproved, vacant residential land classification. The addition of the dwelling initiated an investigation and reassessment by MPAC. In its subsequent review of the subject property, MPAC made a supplementary assessment to the roll to account for the additional value represented by the new dwelling constructed. MPAC sought to have this supplementary assessment become effective on August 1, 2014.

2MPAC’s supplementary assessment was returned at a value of $499,000. The appellant believes this amount is too high and that a reasonable value of the supplementary assessment should be more like $373,000 to $398,000.

3The subject property comprises a lot area of 1.09 acres, with 282 feet of frontage on Mountain Lake. The property is improved by the 2,424 square foot (“sq. ft.”) single-storey dwelling that was completed in 2014. The dwelling also has a full basement measuring 2,578 sq. ft. with a walkout, along with an attached garage.

DECISION

4The Board finds that the value of the supplementary assessment applied by MPAC, effective August 1, 2014 is reduced from $499,000 to $459,000 for the 2014 taxation year.

Legislation

5In making its determination on these appeals, the Board must consider s. 1, 19, 34, and 40 of the Act:

6Section 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.

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 34 of the Act states:

Supplementary assessments to be added to tax roll

34. (1) If, after notices of assessment have been given under section 31 and before the last day of the taxation year for which taxes are levied on the assessment referred to in the notices,

(a) an increase in value occurs which results from the erection, alteration, enlargement or improvement of any building, structure, machinery, equipment or fixture or any portion thereof that commences to be used for any purpose;

(b) land or a portion of land ceases,

(i) to be exempt from taxation,

(ii) to be farm lands the current value of which is determined in accordance with subsection 19 (5),

(iii) to be conservation land the current value of which is determined under subsection 19 (5.2),

(iii.1) to be land in the managed forests property class the current value of which is determined under subsection 19 (5.2) or (5.2.1),

(iv) to be land the current value of which is based on current use under regulations made under subsection 19 (2), or

(v) to be classified in a subclass of real property;

(c) Repealed: 1997, c. 5, s. 22 (1).

(d) a pipeline increases in value because it ceases to be entitled to the reduction provided for in subsection 25 (9), the assessor may make the further assessment that may be necessary to reflect the change, and upon receiving notice of the further assessment, the clerk of the municipality or, in the case of land in non-municipal territory, the Minister shall enter a supplementary assessment on the tax roll and the amount of taxes to be levied thereon shall be the amount of taxes that would have been levied for the portion of the taxation year left remaining after the change occurred if the assessment had been made in the usual way

9Section 40 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.

10Section 40.(19) of the Act states:

40.(19) Board to make determination- After hearing the evidence and the submissions of the parties, the Board shall determine the matter

MPAC’s Evidence

11Mr. Williams presented MPAC’s case, focusing on the value of the new dwelling in accordance with his assessment of its additional value to the subject property in 2014. Mr. Williams began by confirming that the land portion of the subject property was returned on the effective valuation date at $102,000. There is no dispute between the parties on the value of the land.

12To make a determination of the current value of the property for the 2014 taxation year, Mr. Williams undertook a valuation study which involved the comparison of the subject property to five properties that sold between June 2011 and May 2015. These properties were chosen by Mr. Williams because of their basic similarity to the subject property and their relative sale dates as compared to the valuation date of January 1, 2012.

13Mr. Williams submitted that the most comparable of the five property sales used in his study are sales A and B, summarized as follows:

• Sale A was constructed in 1984, has a smaller lot that the subject property and a quality rating of 6.0 It is a single storey structure with 1,511 sq. ft. on the main floor and a similarly sized, unfinished basement. This property sold for $535,000 in June of 2011.

• Sale B was constructed in 1988, has a smaller lot than the subject property and a quality rating of 7.0, comparable to the 7.5 quality rating applied to the subject property. Sale B has a first floor area of 1,189 sq. ft. and a small, second storey area of 200 sq. ft. Sale B has a finished basement area of 1,024 sq. ft. Sale B sold in April 2012 for $450,000.

14Neither of the two most comparable properties are of the same size as the subject property. However, Mr. Williams uses the per sq. ft. value of each to determine a range for the subject property, recognizing economy of scale may be applied to the results to more accurately reflect the value per sq. ft. of the subject property.

15The price of Sale A represents $354 per sq. ft. For Sale B this figure is $323 per sq. ft. This creates a range of $782,952 to $858,096; both figures being well beyond the value suggested by either party. When the sale values of all five comparable properties are used, the range starts at $253 per sq. ft. which when applied to the subject property results in a value of $613,272.

16Mr. Williams relied on his experience as an assessor to analyze the findings of the five comparable properties in his valuation report. He believes that when adjustments are made between the subject property’s characteristics and those of the comparable properties, the range of $590,000 to $620,000 for the total current value of the subject property is reasonable and therefore correct.

17Examples of these disparate characteristics include, quality rating (the subject property has the highest among the sample); waterfront (the subject property is described as ‘weedy/algae whereas the comparables are ‘rocky’ (2), ‘sandy’ (2) or weedy/algae (1); three have an attached garage; two have detached garages; one comparable has an additional boathouse; three of the comparables have a basement walkout. Mr. Williams considers all five of the properties used in his comparison to be inferior in value when compared to the subject property.

Appellant’s Evidence

18Mr. Snow purchased the property in 2000 with a view to building a single-storey retirement home on it in the future. The construction of a new dwelling was completed in 2014 and the Snows have since moved in.

19Mr. Snow believes the property is over-assessed with the new, supplementary value added for the house and exterior improvements to the land. He testified that he has experienced a bit of buyer’s remorse. While the view in the evenings is most pleasurable, Mr. Snow indicated that the quality of the lake for recreational purposes is not adequate and given that he and Mrs. Snow host grandchildren and others to the property regularly, the limited use of the lake is a disappointment. His point is that, regardless of what the additional cost of the house was, the full value of the improvement is not actually realized in its final value after its full development. Mr. Snow believes that the subject property, if it were to be sold from a willing seller to a willing buyer, without encumbrances on January 1 2012, the total value would be closer to $490,000, leading to an increase reflected by the supplementary assessment of $388,000 more or less, accounting for the value of the land at $102,000.

20To support his opinion of the value of the improvements, Mr. Snow submitted two things. Firstly, he provided a valuation opinion, authored by Ms. R. Bonterre, a local real estate broker with knowledge of the market in the vicinity of the subject property. Secondly, Mr. Snow submitted recent listings of properties for sale in the area. Combined, Mr. Snow believes this evidence suggests that a value lower than that returned by MPAC is reasonable.

21Ms. Bonterre, in her letter report cites the sales of several properties that she deems as comparable to and of assistance in determining the value of the subject property. One of these, 127 Lakeview, was also included in the MPAC comparable property selection. The remaining properties in Ms. Bonterre’s market analysis do not have water frontage as one of their characteristics. Ms. Bonterre concluded that there are a number of reasons why the market value of the subject property would be less than $500,000. Firstly, the subject property has a gravel driveway, an unfinished basement, only three bedrooms and the location on Mountain Lake. Depending on water views or water frontage, Ms. Bonterre believes that the market for properties on Mountain Lake is between $379,000 and $500,000.

22Mr. Snow also relied on several real estate listings for properties he deems to be of sufficient similarity to the subject property for value comparison. These properties are listed from between $369,000 and $525,000 and are for properties in the larger county-wide area. Mr. Snow’s opinion was that the range of listed values presented should be an indication of the broader market and the values that can be expected when these properties are sold at or near their listing price.

23Mr. Snow concludes that the market in the vicinity of the subject property is well below the assessed value of the subject property and as a result, the assessment should be reduced to be in keeping with the values of the surrounding area.

CONCLUSION

24The Board must determine the value of the supplementary assessment that is returned at $499,000 by MPAC for the for the 2014 taxation year; effective August 1, 2014. This supplementary assessment was added by MPAC to reflect the additional value represented by the appellants’ new home construction that took place at the property.

25In making this determination, the Board has to effectively decide the total current value for 2014, based on the January 1, 2012 valuation date, then adjust this amount by the assessed value of the land to come up with the value of the supplementary assessment. The Board must also decide if the current value determined is equitable with the assessments of similar properties in the vicinity.

26The Board has opinion evidence from Mr. Williams, Mr. Snow and Ms. Bonterre. Ms. Bonterre was not present at the hearing and Mr. Williams is quite right that her evidence, in the form of a report submitted by Mr. Snow, must be given less weight than the other evidence as a result. The comparable properties used in her analysis appear to be for properties that do not have waterfrontage, which in the case of the subject property is an important characteristic. The Board finds that the shortcomings in Ms. Bonterre’s conclusions are that they are not clearly connected to the findings of her comparative analysis. In addition, it is not clear how she equates current value, as defined in the Act to her term “market value.”

27Both Mr. Williams and Mr. Snow sought to make comparisons with other properties to come up with their opinions of value of the subject property. Sales of comparable properties are the most indicative of value and as Mr. Snow submitted, “What was paid is the best indicator of a property’s value.”

28The Board disregards the real estate listings in Mr. Snow’s evidence, as there is too much conjecture and assumption required to make direct comparisons between the listed properties and the subject property. While the listing price may be a starting point for negotiations between a willing buyer and a willing seller, it cannot be relied upon to reflect current value as it does not reflect the price at which the property is sold, which is the best indication of value.

29In considering the documentary evidence submitted the Board notes that Ms. Bonterre used three sales to make her determination. Only the property at 127 Lakeview is considered relevant by the Board, as this is the only sale of the three that has a waterfront lot, which is a significant determination of value. 127 Lakeview is also included in MPAC’s evidence. 127 Lakeview sold in 2013 for $477,000 or $336 per square foot of living area. By applying this value to the square footage of the subject property, the Board arrives at a value of $813,000 which is far above any value suggested by the parties.

30When the Board examines MPAC’s sales evidence, it finds a median per square foot value of $324. When applied to the subject property, the result is a value of $785,400 which is again much higher than what MPAC has returned. The Board notes that the lowest value per square foot in Mr. Williams’s sales is Sale D at $253 per square foot. When this value is applied, the subject property is valued at $613,272 which is within the range of value determined by Mr. Williams. The Board finds this range to be reasonable in the circumstances, particularly with evidence to suggest much higher values.

31What is not clear is how or why the range of value determined by Mr. Williams was selected. His range starts at $590,000 and ends at $620,000. Without specific evidence supporting these particular values, the Board accepts $590,000 as the correct current value of the subject property for the 2014 taxation year. This is in the absence of any direct documentary evidence submitted by the appellant that contradicts MPAC’s findings. The Board selects the lower end of the range for no reason except to apply the value in evidence that is most fair to Mr. Snow.

32With respect to equity, the Board finds that the similar properties on the vicinity are regularly assessed at a value below their TAS values which represent market value on the valuation date. MPAC’s evidence included a median ASR of 0.95, derived from the sales of thirty similar properties in the vicinity and their corresponding assessments. By applying this median ASR to the current value determined, the Board finds that the assessment of the fully developed property in 2014 is $561,000 ($590,000 as determined x 0.95).

33By making the adjustment for the value of land in the total assessed value determined of $102,000 the Board finds that the value of the supplementary assessment, effective August 1, 2014 is reduced from $499,000 to $459,000.