Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 12, 2016

FILE NO.: WR 139092

Assessed Person(s): Marilyn Ruth Willis and Roland John Willis

Appellant(s): Marilyn Ruth Willis and Roland John Willis

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 15

Respondent(s): Town of Milton

Property Location(s): 6063 Fifth Line

Municipality(ies): Town of Milton

Roll Number(s): 2409-090-090-03700-0000

Appeal Number(s): 3062127, 3085666 and 3053841 (deemed 2016 appeal)

Taxation Year(s): 2014, 2015 and 2016 (deemed appeal)

Hearing Event No.: 618930

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

Heard: February 25, 2016 in Milton, Ontario

APPEARANCES:

Parties	Representative
Marilyn Ruth Willis and Roland John Willis	Roland John Willis
MPAC	D. Bernacik
Town of Milton	S. Radenic

DECISION OF THE BOARD DELIVERED BY SONIA LIGHT

ISSUE

1The subject property comprises a farm covering 103.3 acres. It contains a single-family detached residence built in 1878 and renovated in 1998, five barns and a shed built between 1880 and 1900 and another shed built in the year 2000 normally used in September and October as a fruit stand to sell apples, raspberries and pumpkins grown onsite.

2MPAC returned the total assessment for the 2014 taxation year at a value of $1,811,000. Of this total assessment MPAC classified $18,300 as being in the commercial tax class.

3The representative for the Appellants argues that MPAC should not have classified any of his property as being in the commercial tax class and that the $18,300 of his assessment so classified should be removed from this classification and be added to the farm land classification now comprising $1,617,600 of the assessed value. The parties do not dispute the assessment and classification of the single family detached home at $159,237.

4The Assessment Review Board (“Board”) must determine whether the commercial classification of one acre of the Appellant’s land and the shed assessed in the amount of $18,300 is correct.

DECISION

5For the reasons stated below and as directed by s. 44.(3)(a) of the Assessment Act (“Act”) the Board finds that the classification as commercial of one acre of the Appellants’ land and the shed constructed in the year 2000 is correct.

6Accordingly, the relevant commercial classification of a portion of the Appellants land with a current value of $18,300 comprising one acre of farmland and a shed assessed at $2,371 is confirmed.

REASONS FOR DECISION

Legislation

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 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.

9Section 19.2(1)2 states:

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.

10Section 19.(5) of the Act states:

19.(5) Farm lands and buildings. – For the purposes of determining the current value of farm lands used only for farm purposes by the owner or used only for farm purposes by a tenant of the owner and buildings thereon used solely for farm purposes, including the residence of the owner or tenant and of the owner’s or tenant’s employees and their families on the farm lands,

(a) consideration shall be given to the current value of the lands and buildings for farm purposes only;

(b) consideration shall not be given to sales of lands and buildings to persons whose principal occupation is other than farming; and

(c) the Minister may, by regulation, define “farm lands” and “farm purposes”.

11Section 19.(5.0.1) of the Act states:

Land and buildings to be valued as farms

(5.0.1) Land or buildings or both, as prescribed by the Minister, shall be valued as described under subsection (5). 2000, c. 25, s. 5 (2).

12Ontario Regulation 282/98 44.(1) and (2) states:

44.(1) A building is prescribed for the purposes of subsection 19 (5) of the Act if,

(a) the building is used primarily to sell farm produce that consists of or includes produce from the farm lands the building is located on or to process such farm produce or manufacture anything from it; or

(b) the building is used to manufacture wine from grapes grown on the farm lands the building is located on, even if the building is not used primarily for that purpose. O. Reg. 282/98, s. 44 (1).

(2) This section applies with respect to the 1998 and subsequent taxation years. O. Reg. 282/98, s. 44 (2).

13Section 44.(3) 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.

14Section 40.(26) of the Act directs:

40.(26) Deemed appeals, 2009 and subsequent years. – 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.

Analysis

15Kirsten Alves is a property valuation analyst with MPAC. She was called by Mr. D. Bernacik as the witness for MPAC at this hearing. Ms. Alves explained MPAC’s policy respecting the assessment and classification of farm lands where there are commercial activities on the property.

16Ms. Alves indicated that MPAC first would determine the nature of the farm operation and categorize it as either “dual use” or “value added.” A farm is considered dual use if any of the products sold on the farm are brought in from outside. A farm is considered “value added” if the only products sold on the farm are grown on the farm, as is the case on the subject property.

17In the subject case, MPAC determined the farm to be of the “value added” category. Where the farm property is considered “value added” the assessed value of the land continues to be based on its value as a farm land as required by s.19.(5) of the Act and the related Ontario Regulation 282/98 cited above. The only relevant change to the assessment roll would be to reclassify an acre of the land and the building used for selling produce to commercial. In this case MPAC considered the relevant current value of the acre of land and the shed to be $18,300 and determined that this amount should be subject to taxation at the commercial rate.

18Roland John Willis for the Appellants argues that his farm is being subjected to discriminatory treatment. He presented photographs of a number of other farms (Exhibit 4) which he testified are carrying on similar operations without any portion being classified as commercial by MPAC. However, as Mr. Bernacik argued, it would be impossible for MPAC to catch all commercial activities located on farms just as it is impossible for MPAC to be aware of property renovations in general. Furthermore, Ms. Alves testified that when inspectors become aware of these activities they will investigate the situation and apply a commercial classification as required. There is also no evidence to suggest that the Appellant’s farm was targeted in a discriminatory fashion. In fact the commercial activities on the subject farm had gone unnoticed by MPAC since the early 1990s when the Appellants started to sell produce from the farm.

19Mr. Willis also argued that the equity considerations in s. 44.(3)(b) of the Act are applicable and therefore the Board should remove the commercial classification to ensure that the subject property is assessed equitably in relation to similar properties in the vicinity. However, since this appeal relates to the classification of the property and not the assessment of current value, this section is not relevant or applicable. The subsection does not authorize the Board to change the classification of a property on account of equity, only to reduce the assessment where the assessment of similar properties in the vicinity is demonstrated to be inequitable.

20Mr. Willis also argues on the basis of Bousefield v. Ontario Property Assessment Corp., Region No. 15 [2000] O.A.R.B.D. No. 815 (“Bousefield”) that where a farmer sells only produce grown on his/her property, no commercial classification attaches to the land. However, the Bousefield case dealt with a “dual use” farm property and not a “value added” farm property as in the subject case. Therefore, this reference about the non-applicability of a commercial classification to a “value added’ property would be incidental to the Board’s finding that the Ontario Property Assessment Corporation’s (“OPAC”) policy respecting the assessment and classification of “dual use” farm properties was reasonable.

21Similarly, the Board finds in the present situation that MPAC’s current policy respecting assessment and classification for “value added” farm properties is also reasonable. The actual assessment is determined based on farm values and the commercial classification applies to just an acre of property and the structure associated with the commercial retail use. The Board also agrees with the analysis in Bousefield that, “in the case of small commercial operations, it would not be reasonable to expect OPAC to calculate exactly how much of one acre is actually utilized commercially. The benefit of such a calculation to a property owner in terms of tax burden would be small.”

22Mr. Willis also submitted a letter (Exhibit 5) he wrote to Les Aberdeen, an assessor at MPAC, confirming a previous telephone conversation with him of May 27, 2013 and his understanding that the commercial classification subsequently resulting in an increase of $125.85 in property taxes was supposed to be reversed. Mr. Willis argued that Mr. Aberdeen’s alleged failure to respond to this letter makes its contents binding on MPAC. However, although Mr. Willis apparently believed this matter had been settled, no settlement had in fact been approved in accordance with MPAC procedures. Furthermore, there was no onus on MPAC to respond to the letter to avoid it having a binding effect.

23Accordingly, the Board confirms the assessment and relevant classifications as returned by MPAC in the 2014 and 2015 taxation years.

2016 DEEMED APPEAL

24An 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.

25Section 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.