Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: January 19, 2016

FILE NO.: WR 137386

Assessed Person(s): Bonnie Louise Dean

Appellant(s): Bonnie Louise Dean and Matthew Dean

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 16

Respondent(s): Severn Township

Property Location(s): 5311 Claresbridge Lane

Municipality(ies): Severn Township

Roll Number(s): 4351-010-009-68000-0000

Appeal Number(s): 3043525, 3043523, 3043524 (3134727, 3134728 deemed appeals)

Taxation Year(s): 2011, 2012, 2013, (2014, 2015 deemed appeals)

Hearing Event No. 602034

Legislative Authority: Sections 33 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: November 20, 2015 in Severn Township, Ontario

APPEARANCES:

Parties Representative

Bonnie Louise Dean Matthew Dean Matthew Dean Self-represented

MPAC Tammy Woods

Severn Township No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

INTRODUCTION

1Claresbridge Lane is located on a small island located in the Severn River near the Town of Washago. It is accessible by a one-lane bridge. The Appellants own a residential lot on the south shore of the island measuring 22,651 square feet (“sq. ft.”) with 150.31 feet of waterfront and a depth of 160.25 feet. The original cottage located on the lot was built in 1920. However, in 2008 the Appellants demolished the original cottage and built a slightly larger cottage on the site of the old one. The old cottage had been a single storey structure of 771 sq. ft. while the new cottage has a first floor area of 651 sq. ft., a small second storey measuring 169 sq. ft., and a full basement of 820 sq. ft. A second cottage or cabin of 422 sq. ft. also existed on the lot from 1920 to the present. It was not assessed previously and its value was not included in earlier assessments. However, in the period 2011 through 2013, currently under appeal, the older cabin has been added to the assessment. The Appellants also constructed a deck, which was then included in the assessment. MPAC concluded that the omitted assessments for 2011, 2012 and 2013 included the new cottage, the older cottage and the new deck.

2The effect of the omitted assessments was to increase the total current value of the subject property as returned as follows:

Tax Year	Base Year	Returned Assessment	OMIT Value	Omit Effective Date	Total Current Value
2011	2008	$140,000	$102,000	2011/01/01	$242,000
2012	2008	$140,000	$102,000	2012/01/01	$242,000
2013	2012	$134,000	$97,000	2013/01/01	$231,000

3The Appellants appeal the omitted assessment values on the ground that they are too high. They submit that MPAC failed to use appropriate comparable properties in that MPAC selected sales from the north shore, described as the “big-water open side”, as opposed to the south shore where the subject property is located. They also argue that the value of the new cottage is inflated and that extensive damage to the shoreline retaining wall would adversely affect the current value – a factor not taken into consideration by MPAC.

4Matthew Dean testified on behalf of the Appellants.

ISSUES

5What is the correct value of the omitted assessments for the subject property for 2011, 2012 and 2013?

6What is the correct current value of the land including the omitted assessments for 2011, 2012 and 2013?

7What is the correct deemed current value of the land for 2014 and 2015?

8Having reference to the value at which similar lands in the vicinity are assessed, does the assessment of the subject property require adjustment in order to make it equitable with the assessments of similar lands in the vicinity?

DECISION

9The Assessment Review Board (“Board”) finds that the current value of the omitted assessment for the subject property in 2011 and 2012 is $84,000, decreased from $102,000. The total current assessment for 2011 and 2012 is therefore reduced from $242,000 to $224,000.

10The Board confirms the current value of the omitted assessment for the subject property in 2013 as $97,000. The total current assessment for 2013 is therefore reduced from $234,000 to $231,000.

11The Board reduces the total current assessment for 2014 from $287,000 to $231,000.

12The Board reduces the total current assessment for 2015 from $235,000 to $231,000.

13The Board finds that there is no evidence before it supporting the conclusion that the value of the subject property requires an adjustment in accordance with s. 44.(3)(a) of the Act in order to make it equitable with the assessed values of similar properties in the vicinity.

REASONS FOR THE DECISION

14In analyzing the evidence presented, the Board must be mindful of the following sections of the Assessment Act (“Act”):

15Section 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.

16Section 19.(1) of the Act states:

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

17Section 19.2(1)2 of the Act states:

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

18Section 33 of the Act states:

33.(1) Assessment omitted from collector’s roll. – If any land liable to assessment, has been in whole or in part omitted from the tax roll for the current year or for any part or all of either or both of the next two preceding years, and no taxes have been levied for the assessment omitted, the assessor shall make any assessment necessary to rectify the omission and the clerk of the municipality upon notification thereof shall enter the assessment on the tax roll and the taxes that would have been payable if the assessment had not been omitted shall be levied and collected.

19In this case, there are two assessment cycles involved, with valuation days on January 1, 2008 (for 2011 and 2012) and January 1, 2012 (for 2013).

Evidence and Analysis

20Tammy Woods presented evidence for MPAC. Her Valuation Report for both assessment cycles is contained in Exhibit 1. Exhibit 5 filed by Ms. Woods consists of a map and information on five comparable properties located on the north shore of the small island on which the subject property is located. Ms. Wells pointed out that her assessment information contained an inaccuracy with respect to the source of water for the subject property, which draws its water from the lake, not from a well. She noted that the mistake had not affected the value in any way.

21Ms. Woods testified that the new cottage had not been assessed when built in 2008 due to an oversight. Therefore, the first year for the omitted assessment was 2011. The structure is slightly larger than the previously-existing cottage, with the addition of a kitchen and bathroom on the back. A deck had also been added to the older cabin situated on the property. MPAC recommends an 18% market reduction of the value of the subject property in 2015 as a result of local sales and equity. The recommended reduction would reduce the value of the property to $235,000 in 2015.

22Ms. Woods presented two market studies. First, she described the original assessment or the “before” picture of the subject property. The main cabin, built in 1920, was in poor condition (quality ranking 3.0) consisting of 771 sq. ft. The secondary cabin was not assessed. The current value was determined to be $134,000 prior to renovation. This property, located on the Severn River, has a rocky and steep shoreline, a factor affecting its value both in the earlier period and following the renovations.

2008 Base Year

23Ms. Woods’s evidence included five comparable sales in the vicinity occurring in 2007 and 2008. All properties were single family detached homes on water. Ms. Woods determined that the new cabin on the subject property would be ranked Quality 5.0. Four of her five comparable sales are between quality ranking 4.5 and 5.5, while one (4708 Severn Street) was a quality ranking 3.0 in her opinion. While none of these sales occurred on Claresbridge Lane, all were in the same homogeneous neighbourhood as the subject property: R10. The following Table 1 sets out the relevant information about these properties and the subject property, including sales amounts.

Table 1: Comparable Sales 2007 - 2008

	Subject	4708 Severn	4808 Severn	4880 Severn	4940 Severn	4268 Whippoorwill
Frontage (ft.)	150.31	88.88	106.54	101.68	96.41	145.47
Site Area (sq. ft.)	22,651	25,265	17,424	14,375	12,632	35,719
Sale Date		2008/01	2007/04	2007/10	2008/09	2007/05
Sale Price		$162,000	$240,000	$295,000	$280,000	$305,000
Res. Area	771	412	1,077	975	1,402	986
Eff. Yr. Built	1920	1965	1976	1973	1976	1935
Outbuildings	Cabin		Detached Garage	Detached Garage	Detached Garage	Detached Garage
MPAC Quality Rating	3.0	3.0	5.5	5.5	5.5	4.5

24Ms. Woods testified that the five comparable sales support the 2011 and 2012 omitted assessment for the reason that four of five of the sales were for greater values than the assessment on the subject property. The site area of the subject is just over half an acre, and the property has 150 feet of frontage on the Severn River. The new cabin is one and half storeys in height with a full basement. Ms. Woods originally recommended an increase of $102,000 in respect of the new cabin value, for a total assessment of $242,000. However, she now recommends reducing the omitted assessment to $84,000 for 2011 and 2012. When added to the returned assessment of $140,000, a total assessment of $224,000 is obtained for 2011 and 2012.

25With regard to the 2012 assessment cycle, with a valuation day of January 1, 2012, Ms. Woods used another five comparable sales to confirm her assessment. The salient details of these comparable properties is contained in Table 2 below:

Table 2: Comparable Sales 2010 to 2012 (All Addresses on Claresbridge Lane)

	Subject	5305 (A)	5363 (B)	5358 (C)	5338 (D)	5294 (E)
Frontage	150.31	110.73	208.26	74.04	101.23	200.00
Site Area (sf.)	22,651	15,257	18,295	12,632	15,246	20,473
Sale Date		2012/10	2010/09	2012/07	2011/10	2010/03
Sale Price		$148,000	$175,900	$212,500	$200,000	$267,500
Res. Area (sf.)	820	785	796	590	895	978
Eff. Yr. Built	2008	1968	1925	1968	1935	2001
Outbuildings	Cabin		Det. Garage	Cabin, Bsmt. Garage		Det. Garage
MPAC Quality Rating	5.0	4.0	3.5	3.0	4.5	6.0

26Ms. Woods submitted that the five comparable sales, all on the island, support a value for the omitted assessment of $97,000 in 2013 (base year 2012). When added to the returned assessment of $134,000, the total value of the property is $231,000.

27Ms. Woods pointed out that the returned assessment for 2014 and 2015 had been in the amount of $287,000 for 2014 and then reduced to $235,000 for 2015. She recommends that the total assessment be reduced to $235,000 for both years.

28Matthew Dean filed Exhibit 2 setting out his evidence respecting comparable sales and assessments. He testified that properties on the “river side” (north side) of the island are more valuable than properties on the “creek side” (south side) where his cottage is located. The north side of the island is deeper and wider, permitting a larger variety of watercraft to use the area. The south side is narrow and shallow, limiting its utility. Mr. Dean filed Exhibit 6, an aerial photograph of the island and the Severn River, which showed the watercourse clearly and the distinction between the north channel and the south channel around the island. Not all properties located on the south side of the island were “creek” properties because the river splits on the southeast side of the island, providing deeper water to three or four lots located on the southeast side of the island. The properties located to the west of the split had frontage on a much narrower channel, the “creek side”. Mr. Dean explained that this factor should have an important affect on property values; however, he provided no particulars in this regard.

29Mr. Dean also provided comparable sales evidence from the south side of the island. He withdrew one property, 5363 Claresbridge Lane, because it was located on the southeastern side of the island next to a large bay created by the bend in the Severn River. Because of this, Mr. Dean did not think that the lot was truly comparable to the subject property. While Mr. Dean argued that only south side sales would be truly comparable, the only property sales within five years were 5305 Claresbridge and 5319 Claresbridge. The latter property was sold through power of sale proceedings. The Board will not generally consider transfers under power of sale or foreclosure to be transactions between a “willing seller” and “willing buyer” as required by the definition of “current value” above.

305305 Claresbridge Lane was contained in MPAC’s Market Analysis as Sale A (Table 2, “A”, above). This property sold in October, 2012, for $148,000. It was a smaller property overall, with 40 feet less frontage, a 7,400 sq. ft. smaller lot, and a building 35 sq. ft. smaller than the subject property. It lacked any outbuildings. The effective year built was 1968, and the quality of the structure was deemed lower than the quality of the subject property according to Ms. Woods. Ms. Woods introduced evidence confirming that not all properties on the “creek side” of Claresbridge Lane are assessed at under $200,000. Unfortunately, there are no sales of the four properties outlined on Exhibit 5: 5321, 5335, 5345 and 5357 Claresbridge Lane. The assessed values of these four properties ranged from $222,000 to $326,000.

31Mr. Dean also introduced photographs and evidence relating to the cost to repair the damaged retaining wall. He testified that he had obtained three estimates. He filed an estimate dated April 13, 2015 by Claudio Scetto O/A Scetto Construction, and testified that this was the least expensive of the three. The estimate for removal of the old structure, clearly damaged and deteriorating in the photographs, and installation of 100 feet of a new shore wall, complete with fill and a top cap, was for $52,000 plus HST. Ms. Woods submitted that the retaining wall added no value to the assessment under appeal.

Analysis

32Both parties did an excellent job of highlighting the particular difficulties inherent in assessing a unique seasonal recreational property on water. The Board is assisted by their careful and thorough presentations, and by the fact that the comparable properties are all located in the same neighbourhood.

33As is usual in residential assessment, determining a value requires a comparison of the subject property with similar properties in the vicinity which have sold as near as possible to the valuation day. In this case we are dealing with two valuation days: January 1, 2008 and January 1, 2012.

34In both cases, using the comparable sales provided by MPAC, the sales values support the current value established by MPAC. The five sales occurring in 2007 and 2008 (Table 1 above) are not located on the island, but close to it along the Severn River between the island and Highway 11. Only one of these comparable sales is valued lower than the subject (Property 1, 4308 Severn Street). This property sold for $162,000 in January, 2008. It is a low quality construction (3.0) and has approximately half the frontage on the river when compared to the subject property. The structure is only 412 sq. ft. and there are no secondary structures on this property. While the lot is approximately 3,000 sq. ft. larger than the subject, this property is clearly less valuable than the subject property with the new cottage in place. The other properties in Table 1 sold for more than MPAC’s recommended current value for the subject property. Three are assessed as a half-class better in respect of construction, and all have secondary structures in the form of detached garages. All have less frontage on the Severn River than the subject property. These five sales support MPAC’s recommended current value assessment.

35In respect of the 2012 valuation day comparable sales, Mr. Dean argues that the sales occurring on the north side of the island are not directly comparable due to the fact that they are located on the main channel of the Severn River as opposed to the “creek side”. The evidence provided does not support the hypothesis. There were inadequate sales available to provide a distinction between the north and south sides of the island. Information respecting the neighbouring property, 5305 Claresbridge Lane (MPAC Sale A – a “creek side” property) in 2012 shows a distinctly smaller lot with an older, slightly smaller cottage of lower quality construction than the subject property, and no additional outbuildings. The frontage for this comparable is also approximately 40 feet less than the subject property’s shoreline. These factors would account for the lower sales price of this property when compared to the others.

36Similarly, the sale of 5338 Claresbridge Lane in October, 2011, reflects the sale of a property on the north shore for $200,000. The frontage is almost 50 feet less than the subject property’s frontage, and the site area 7,400 sq. ft. smaller. The older cottage, while only 75 feet smaller than the subject property’s cottage, was built in 1935 and is the only structure on the lot. Despite being located on the north shore, the smaller frontage and lot size, combined with the absence of additional outbuildings, would make this property less valuable than the subject property.

37In contrast, Sale E (5294 Claresbridge Lane), taking place in March, 2010, for $267,000, is a more valuable property by virtue of its higher quality construction, approximately 50 feet more waterfront, 158 sq. ft. larger cottage, and 726 sq. ft. detached garage. The lot size is 2,178 sq. ft. smaller. It is also located on the north side of the island, but the additional factors described would account for its greater value.

38Mr. Dean argued that the repairs required to the retaining wall at the shoreline will cost $52,000, a factor that should be taken into consideration to reduce the value of the property. Ms. Woods argued that this factor does not form part of the assessment. Had the Board sufficient information as to how much the condition of the retaining wall would affect the selling price of the subject property, it would have been taken into consideration. Unfortunately, while Mr. Dean provided an estimate respecting the repairs, and photographs of the state of the current retaining wall, he did not provide evidence as to the effect its poor condition would have on the selling price of the property in the event it was sold “as is”. While the cost of construction was in evidence, no evidence was provided to lead the Board to conclude that the devaluation of the subject property due to the presence of the damaged retaining wall would in fact reduce the property’s current value by $52,000 or 22.5%.

39Ms. Woods concluded her evidence by recommending a reduction in the assessed value of the subject property on the ground that her comparable sales supported a reduced value, particularly when the subject was compared to the superior property described as Sale E. Ms. Woods testified that the omitted value of the cottage had been reduced to $97,000 in 2013, which, when added to the assessment returned in the amount of $134,000, resulted in a total current value of $231,000. The assessment as returned for 2014 was for $287,000; however, given the superiority of Sale E and other adjustments to her data, Ms. Woods recommended that this assessment be reduced to $235,000, which is the same amount as the assessed value of the property in 2015. Ms. Woods did not adequately explain the $4,000 increase occurring in 2014 and 2015. The Board finds that the current value of $231,000 accurately reflects the original value of the property plus the addition of the omitted assessment of $97,000 for the new cottage.

Equity

40Once the Board has determined the current value of the land, it is required by s. 44.(3)(b) of the Act to consider whether the assessment is equitable with the assessments of similar lands in the vicinity. 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 land.

41Ms. Woods included her Equity Analysis as part of Exhibit 1. She used 30 residential sales occurring in 2010, 2011 and 2012 within 3.39 kilometers of the subject property and calculated the Assessment to Sale Ratios (“ASR”) of the sales. In her sample, the median ASR was 1.02, which has been held by this Board to be an acceptable level of appraisal. Mr. Dean provided no evidence on this issue.

42While the evidence shows that many properties in this vicinity have been assessed over their sales values, approximately the same number have been under-assessed. In the absence of evidence requiring an adjustment on the ground of equity, the Board makes none.

CONCLUSION

43The Board finds that the current value of the omitted assessment for the subject property in 2011 and 2012 is $84,000, decreased from $102,000. The total current assessment for 2011 and 2012 is therefore reduced from $242,000 to $224,000.

44The Board confirms the current value of the omitted assessment for the subject property in 2013 as $97,000. The total current assessment for 2013 is therefore reduced from $234,000 to $231,000.

45The Board reduces the total current assessment for 2014 from $287,000 to $231,000.

46The Board reduces the total current assessment for 2015 from $235,000 to $231,000.

47The Board finds that there is no evidence before it supporting the conclusion that the value of the subject property requires an adjustment in accordance with s. 44.(3)(a) of the Act in order to make it equitable with the assessed values of similar properties in the vicinity.

2014 and 2015 DEEMED APPEALS

48Appeals for the 2013 and 2014 taxation years are presently before the Board. Section 40.(26) 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 2013 and 2014 appeals before March 31, 2014 and March 31, 2015. For that reason, this decision also applies to the 2014 and 2015 taxation years.

49Section 40.(26) of the Act directs:

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 sections 32, 33 or 34, before the 90th day after the notice of assessment was mailed.