Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: June 1, 2016

FILE NO.: WR 140442

Assessed Person(s): Brent James Franklin and Sherrell Jeanette Franklin

Appellant(s): Brent James Franklin and Sherrell Jeanette Franklin

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 02

Respondent(s): Township of Tay Valley

Property Location(s): 115 Christie Lake Lane

Municipality(ies): Township of Tay Valley

Roll Number(s): 0911-914-020-55000-0000

Appeal Number(s): 3124732

Taxation Year(s): 2015

Hearing Event No. 625267

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

Heard: May 12, 2016 in Tay Township, Ontario

APPEARANCES:

Parties	Representative
Brent James Franklin and Sherrell Jeanette Franklin	Andy Haydon
MPAC	Christina Smith
Township of Tay Valley	No one appeared

DECISION OF THE BOARD DELIVERED BY DONALD WHITEHURST

INTRODUCTION

1The subject property ("SP") is a single family waterfront residence built in 1983 and situated on a 4.4 acre lot. The SP's assessment was returned at $331,000 for the 2015 taxation year using the sales comparison approach to value.

2Christina Smith appeared on behalf of MPAC. She recommended that the returned assessment be reduced to $267,000 because, during an inspection of the SP, certain revisions of MPAC's records were noted. The inspection also revealed ongoing repairs/renovations which impacted the SP's returned assessment for the 2016 taxation year.

3Andy Haydon appeared on behalf of the appellants. He testified that the returned assessment should be reduced to $160,000. Mr. Haydon stated that MPAC places too much emphasis on the lot size when determining current value for a waterfront property. He believes the market value of a waterfront property is largely determined by frontage on the lake. Using frontage information extracted from MPAC's sales comparables (Exhibit 2), Mr. Haydon estimated the SP's was worth $160,000.

4Mr. Haydon also stated that the June 2014 estate sale of the SP in the amount of $174,000 supports his estimate of current value. He submitted that the estate sale was a valid sale for the purposes of determining current value because the facts associated with the sale indicates the seller (the estate) was a "willing" seller.

ISSUE

5The Assessment Review Board (“Board”) has to determine the SP's current value for the 2015 taxation year and ensure that it is equitable with the assessments of similar lands in the vicinity.

DECISION

6The Board finds that the SP's current value is $267,000 for the 2015 taxation year and that amount is equitable with the assessment of similar lands in the vicinity. Consequently, the SP's returned assessment is reduced from $331,000 to $267,000 for the 2015 taxation year.

REASONS FOR DECISION

The Legislation

7Section 1 of the Assessment Act (“Act”) defines current value as follows:

“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.

8Section 19.(1) of the Act states:

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

9Section 19.2(1) of the Act 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 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 Position

11Ms. Smith submitted a report (Exhibit 1) in support of her recommendation to confirm the assessment at $267,000. She compared the characteristics of five sales comparables to that of the SP. Like the SP, all the comparables are waterfront residential properties.

12Ms. Smith submitted that the Board should accept the recommended assessment ($267,000) because the five sales comparables "test the reasonableness of the current assessment of the subject property", (Exhibit 1, at page 4).

Appellants’ Position

13Mr. Haydon submitted that the SP's current value should be lowered to approximately $160,000. Mr. Haydon's current value estimate was arrived at by multiplying the SP's total frontage (44 feet) by the average per foot frontage time adjusted sale ("TAS") price for Sales B and D ($3,563). This equates to $156,813 calculated as follows: 44 feet x [($213,036 ÷ 52 feet) + ($197,019 ÷ 65 feet)] ÷ 2]. Mr. Haydon utilized the frontage data from Sales B and D because those sales have the small frontages (52 feet and 65 feet), which are similar to the SP (44 feet). He submitted that his estimate of current value is better than MPAC's because frontage has a significant influence on the market value of waterfront properties.

14Mr. Haydon also submitted that the 2014 estate sale of the SP in the amount of $174,000 is a valid indication of current value because the length of time the property was on the market indicates that the SP was sold at market value.

Board's Analysis - Current Value

Estate Sale

15The Board is of the view that all sales, including estate sales, are valid unless the evidence indicates that on a balance of probabilities the sale is not a current value sale as defined by the Act. Ms. Smith offered no evidence to support her opinion that the SP estate sale does not represent current value. On the other hand, Mr. Haydon submitted that although there is an inference that an estate seller is not "Willing Seller" as defined by the Act, the sale was at market value because the SP was on the market for two and one half years. The Board need not address Mr. Haydon's submission because MPAC did not submit any evidence to refute the validity of the sale. Consequently, the Board finds that estate sale is a valid sale.

16The Board believes that under normal circumstances the best evidence of current value is the sale of the SP ($174,000) on or near the valuation date. When no such sale occurs, the Board looks to the recent sale of other similar properties in the vicinity to determine current value. In this case, because MPAC stated that estate sales do not accurately reflect current value and, Mr. Haydon stated that there is an inference that an estate seller may not be a "Willing Seller" as defined by the Act, the Board finds it prudent to examine all the evidence before deciding whether or not an estate sale is the best evidence of current value. The Board did that and, as explained in paragraph 20 below, finds that the estate sale is not the best evidence of current value.

Waterfront Frontage

17The Board agrees with Mr. Haydon that frontage is important in determining the current value of waterfront property. However, the Board is of the view that other characteristics such as quality and structure size also influence current value. Since Mr. Haydon only used frontage in his current value estimate (See paragraph 13 above), the Board believes that Mr. Haydon's approach is not the best method to determine current value because MPAC's Exhibit 1 cataloged several characteristics that the Board ought to consider when making a current value finding.

18Table 1 below lists the characteristics that the Board considers important in determining current value in this case. The characteristics are listed in descending order of influence on current value. The Board believes that frontage has the greatest influence on current value and other structures have the least influence.

19The Board carefully examined the contents of Table 1 to ascertain whether the sale comparables are Inferior, Relatively Comparable ("RC") or Superior to the SP. The sales comparables' correlation to the SP as shown in the last column of Table 1, establishes the SP's current value range as illustrated in Figure 1 below.

Table 1

	TAS Price	Frontage	Quality	Total Sq. Ft.	Year Built	Lot Size (Acres)	Other Structures & Basement	Inferior, RC or Superior to the SP
SP	$174,000	44 (Feet)	5.5	974	1983	4.4	Garage & Basement
Sale A	$369,411	125	5.5	1,589	1987	0.88	Garage	Superior
Sale B	$213,036	51.5	4.0	998	1970	0.20		Inferior
Sale C	$281,047	100	4.5	745	1967	0.26	Boathouse	RC
Sale D	$197,019	65	3.5	980	1930	0.22	Shed	Inferior
Sale E	$310,243	175	3.5	763	1960	1.31	Boathouse	RC

Figure 1

SP Estate Sale <-$174,000

Sale B & D Inferior Comparables <-$197,019 $213,036 ->

Sale C & E SP's Current Value Range <- $213,036 $369,411 ->

Sale A Superior Comparable <-$369,411

20The Board notes that the SP's estate sale price is lower than the lowest TAS price of the Inferior Comparables and the highlighted current value range. This is a clear indication that the estate sale is not the best evidence because the sale price is well below the SP's current value range.

21The SP's current value range is located between the high end of the TAS price of the Inferior comparables ($213,036) and the low end of TAS price of the Superior Comparable ($369,411). MPAC's recommended assessment ($267,000) appears to be fair and reasonable because it is slightly below the mid-point ($291,223) of the SP's current value range and the TAS price of the RC sales (Sale C and E). Consequently, the Board finds that MPAC's recommendation is the best evidence of current value. The Board therefore reduces the SP's returned assessment from $331,000 to $267,000 for the 2015 taxation year.

Board's Analysis - Equity

22The Board reviewed the evidence and finds the SP's current value is $267,000 and it is equitable with the assessment of similar lands in the vicinity.

CONCLUSION

23The Board finds that the SP's current value is $267,000 for the 2015 taxation year. The Board also finds that the SP's current value is equitable with the assessment of similar lands in the vicinity. Consequently, the Board reduces the SP's returned assessment from $331,000 to $267,000 for the 2015 taxation year. Since the SP underwent some renovations in 2015, and the evidence indicates that the renovations are not reflected in the Board's 2015 current value finding, the Board directs that the results of this decision are not deemed for the 2016 taxation year.