Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: June 13, 2016

FILE NO.: WR 139394

Assessed Person(s): Heliocol Canada Inc.

Appellant(s): Heliocol Canada Inc. and Ken Tait

Respondent(s): Municipal Property Assessment Corporation (“MPAC”), Region 1

Respondent(s): Township of South Glengarry

Property Location(s): 20600 24th Avenue

Municipality(ies): Township of South Glengarry

Roll Number(s): 0101-001-006-04100-0000

Appeal Number(s): 3120927 and 3143613 (deemed 2016 appeal)

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

Hearing Event No.: 620130

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

Heard: March 10, 2016 in South Glengarry, Ontario

APPEARANCES:

Parties	Representative
Heliocol Canada Inc.	Kenneth Tait
MPAC	Michelle Gravelle
Township of South Glengarry	No one appeared

DECISION OF THE BOARD DELIVERED BY TERRY DENISON

INTRODUCTION

1The subject property is a seasonal dwelling on the St. Lawrence River approximately three kilometre to the east of the Village of Lancaster. It was built in 1969, has a total building area of 1,268 square feet (“sq. ft.”) on one level with three bedrooms and a bathroom. The lot has a site area of 42,688.80 sq. ft., with effective frontage of 234.34 feet (“ft.”) along the river and a depth of 182.17 ft. For the 2015 taxation year, using a valuation day of January 1, 2012, MPAC returned the assessment of the property with a current value of $321,000 in the residential property class. Kenneth Tait, the owner of the property, has appealed the assessment for the 2015 taxation year, having first followed the request for reconsideration process under s. 39.1 of the Assessment Act (the “Act”).

ISSUES

2The Act requires the Assessment Review Board (“Board”), on an appeal under s. 40 of the Act, to determine the correct current value of the property, and then to consider if the assessment is equitable with the assessment of other similar properties in the vicinity as required in s. 44.(3)(b).

Legislation

3The Act states that assessment shall be based on current value:

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

4Current value is defined in s. 1 to mean:

“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.

5Section 40 of the Act sets out when an appeal of an assessment can be made, by whom it may be made, and the procedures to be followed by parties and the Board on an appeal. The following excerpts from the Act are relevant to the appeal in this hearing.

6Appeal to Assessment Review Board

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,

7Precondition of appeal

40.(3) Precondition of appeal. – For 2009 and subsequent taxation years, if a property is in the residential, farm or managed forests property class, or in such other circumstances as the Minister may prescribe, no appeal may be brought to the Assessment Review Board under subsection (1) by a person who is entitled to make a request for reconsideration under section 39.1 in respect of the property, if the person has not made the request within the time required under that section.

8Board to make determination

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

9Once the Board has determined the correct current value, s. 44.(3) of the Act requires the Board to consider if an adjustment is necessary to make the assessment equitable with similar lands in the vicinity.

10Same, 2009 and subsequent years

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.

DECISION

11Based on the evidence in this hearing and an application of the provisions of the Act, the Board finds that the correct current value of the subject property for a valuation day of January 1, 2012 is $321,000. There is no need to adjust the assessment further for the purpose of achieving equity with other assessments.

MPAC’s Evidence

12Michelle Gravelle, an experienced Property Valuation Analyst with MPAC, provided evidence to support the assessment, as returned on the roll. She filed a “Valuation Report” as Exhibit 1 in the hearing. The report provided information typically found in MPAC valuation reports for residential properties:

• a description of the property
• a market analysis based on the direct comparison approach to value and relying on five sales of comparable properties in the vicinity which occurred close to the valuation day
• an equity analysis

13The Valuation Report also included photographs of the subject property together with a site map from the municipal zoning by-law and aerial photographs showing the location of buildings in relation to the shoreline. This indicates the location of flood plain and building area above the flood plain. Similar information was provided for the comparable properties referred to in the market analysis.

14In addition to the foregoing information Ms. Gravelle’s Valuation Report also included information on recent sales of vacant land fronting on the St. Lawrence River in the vicinity. This information was adduced in anticipation of the Appellant’s intention of leading evidence to support a valuation based on a cost approach to valuation.

15The five comparable properties selected by Ms. Gravelle all had waterfront on the St. Lawrence River, and were in whole or in part within the municipality’s Flood Plain-Holding zone.

16Ms. Gravelle noted that while all of the comparables had structures on them that the value of the properties were primarily attributable to the land. Each of the properties had smaller lots than the subject property and all of the properties had seasonal residences of comparable size and age to the subject property. She considered the quality of the structures to be lower than average although some were better and some were worse than the subject property.

17As an additional step Ms. Gravelle searched for sales of vacant residential waterfront properties in the vicinity of the subject property and influenced by the municipality’s Flood Plain-Holding zone. She found two: one that sold for $250,000 in June of 2011 (time adjusted to $253,059), and a second that sold for $215,000 in September of 2009 (time adjusted to $228,829). These had effective site areas of 19,166.40 sq. ft. and 16,117.20 sq. ft. respectively, compared to the subject property’s site area of 42,688.80 sq. ft., and both were entirely in the municipality’s Flood Plain-Holding Zone. She included these to demonstrate that properties in the Flood Plain-Holding Zone were marketable and transacted. She also concluded that as the subject property had a site area of more than double these two vacant parcels, the larger subject would have a higher value than these two smaller parcels if the subject was valued as a vacant parcel and that this supported the returned current value of $321,000.

18Information from the comparable sales used by Ms. Gravelle in her analysis is summarized in this chart.

	Subject Property	Sale A	Sale B	Sale C	Sale D	Sale E
	20600 24th Avenue	6281 164th Avenue	6331 78th Avenue	19254 County Road 2	18238 County Road 2	18160 County Road 2
Effective frontage (ft.)	234.34	85.61	130.00	51.15	82.16	140.88
Effective depth (ft.)	182.17	125.65	113.93	51.15	28.76	95.85
Site area (sq. ft.)	42,688.80	10,890.00	14,810.40	76.65	3,049.20	29,185.20
Effective year built	1969	1973	1965	1972	1959	1940
Building area	1,268	1,185	1,522	1,128	1,004	1,1424
Time Adjusted Sale price		$300,444	$270,750	$206,249	$284,820	$386,931
Comparability to Subject Property		Relatively Comparable	Relatively Comparable	Inferior	Inferior	Relatively Comparable

19Based on her analysis of relevant comparable sales, Ms. Gravelle concluded that the correct current value of the subject property was $321,000 as returned on the roll and that there was sufficient evidence to show that it was not necessary to adjust the assessment to achieve equity.

20Ms. Gravelle also carried out an equity analysis for the purpose of addressing s. 43.(3)(b) of the Act. For this purpose she compared the returned assessment and time adjusted sale amount of 30 similar residential properties within 1.97 kilometres of the subject property which sold between January 2010 and December 2012. She found the median assessment to sales ratio (“ASR”) for this group of properties to be 0.99.

Evidence of the Appellant

21Mr. Tait filed as Exhibit 2 a document titled “Valuation Appeal, dated March 1, 2016”, which he prepared for this hearing. It contained photographs of the subject property and copies of information about other properties that he obtained from MPAC’s “My Neighbourhood Properties of Interest” service. It also included aerial photographs of the subject property taken from Google Maps, an excerpt of a map from the Raison River Conservation Authority showing floodplain mapping for the subject property and adjacent properties, as well as a site plan sketch of the subject locating the structures and a floor plan of the residence.

22Mr. Tait did not claim to have any special training or experience in valuation of property but gave his evidence as an ordinary citizen and as the owner of the subject property.

23Mr. Tait rejected the Direct Sales Comparison Approach to Value used by MPAC stating is was “flawed for this property”. He favoured using the Cost Approach to value his property.

24In his approach to calculating the value of his property Mr. Tait determined that vacant land in the vicinity of the subject property had an average per acre value of $148,759, and therefore since his property had an area of 0.98 acres it would have a land value of $145,784. He stated that all of his land was in the Flood Plain Holding zone and that as 40% to 50% of his land was below the flood plain elevation of 47.3 metres, that portion would have no value as it was not usable for construction or filling.

25Mr. Tait’s method of discerning the value of vacant land consisted of examining the information he obtained from MPAC’s “My Neighbourhood Properties of Interest” service. He found three properties that were vacant land residential land on water in the vicinity of his property and took their assessed value and their lot areas to arrive at a value per acre, which was $148,759. None of the three properties he used included sales information, as none of them had sold in the previous five years, so he used the assessed values to determine the value of vacant land. This is problematic in attempting to arrive at the correct current value of a property as required by the Act. The statutory definition of current value is premised on an actual market transaction, a sale, not on a prior assessment or the assessment of other properties.

ANALYSIS AND CONCLUSIONS

26Both Ms. Gravelle, for MPAC, and Mr. Tait, for the Appellant, filed documents which clearly explained their positions, what data they had utilized, and how they had arrived at their respective, but differing, conclusions about the value of the subject property.

27The Act requires that MPAC as the assessor return an assessed value on the roll for the subject property that conforms to the statutory definition of current value. The Act does not direct what valuation methodology is to be used to determine the value. If a property sold in an arms length market transaction on the valuation day then the sales price would be its current value. In most cases that does not occur and some valuation methodology must be used to make a reasonable estimate of what price a property would sell for on the valuation day. All standard methodologies are based on consideration of sales data for other properties. MPAC typically uses the Direct Comparison Approach to Value for residential properties. It would be possible to use other methods, provided there were sufficient data available to make reasonable estimates of what a property would sell for at a particular point in time. The key is that the valuator must be able to demonstrate by some means what a property would transact for on the valuation day based on market data.

28Mr. Tait rejected use of the Direct Sales Comparison Approach to valuation, which MPAC used to support a current value of $321,000 for the subject property. His reasoning for doing so was that he felt that most of the properties in the Lancaster area were once summer residences which have now been renovated as single family dwellings used all year round. He felt that “this diversity of structures, usage, lot size and location requires numerous assumptions to be made.” He felt that the Direct Sales Comparison Approach was better suited to value “newer homogeneous residential areas where clear comparisons can be made.”

29Mr. Tait made assumptions that the value of his property was in the land and that the structure and land may have less value together because the structure was an older seasonal building that would likely be demolished. This assumption was not based on any evidence and does not take into account the fact that the existing structure would have some value because of the legal non-conforming rights attributable to it under the zoning by-law and flood plain control in the event that re-development was to be undertaken.

30Mr. Tait used the assessment values and site areas of nearby vacant parcels to calculate a price per acre of vacant land, arriving at a value of $148,759 per acre. None of the three properties he used included sales information, as none of them had sold in the previous five years, so he used the assessed values to determine the value of vacant land. This is problematic in attempting to arrive at the correct current value of a property as required by the Act. The statutory definition of current value is premised on an actual market transaction, a sale, not on a prior assessment or the assessment of other properties.

31If one applied the same method of calculation to the two sales of vacant land given in evidence by MPAC the sales price per acre would be $596,795 and even if this was averaged with Mr. Tait’s calculation of land value the result would greatly exceed the current value returned on the roll and supported by MPAC’s evidence using a Direct Sales Comparison Approach to value. The Board concludes this is because there was inadequate sales data lead in evidence to accurately determine the value of vacant land. Without an accurate valuation of the land component it is not possible to determine the current value of the subject by using a Cost Approach to Value.

32Because of the problem in finding a reliable value for the land component it is not necessary to consider the other part of the Cost Approach, namely how to value the structures on the land.

33The Board disagrees that there is a problem using the Direct Sales Comparison Approach to value the subject property. That might have been so if there were no sales of comparable properties to be found. But that is not the case. Ms. Gravelle found five sales of waterfront properties in the vicinity all with similarly sized and aged structures, although the lot sizes were smaller than the subject property lot size. Comparable properties do not have to be identical to the subject property to be useful in reaching a conclusion of value. They must be similar and any differences close enough to the subject property that reasonable adjustments can be made by an experienced valuator who possesses sufficient data to make the adjustments and to explain how the adjustment was determined. Ms. Gravelle provided these explanations in her report and oral evidence. Her evidence and analysis are a reasonable basis to conclude that the correct current value of the subject is $321,000.

34The Board prefers the evidence and conclusions of Ms. Gravelle. She was able to find sales information for five comparable properties which actually transacted reasonably close to the statutory valuation day. Her explanations of why the properties were similar or how they differed from the subject property were straightforward and supported her conclusion of the current value of $321,000 for the subject property. The Board finds that $321,000 is the correct current value of the subject property.

35Ms. Gravelle also provided an equity analysis in her report which found an ASR of 0.99. Mr. Tait did not challenge this, and the Board accepts that having determined the correct current value of the subject property there is no need to make any further adjustment to the assessment to achieve equity with the assessments of similar lands in the vicinity.

36The Board commends both Mr. Tait and Ms. Gravelle for presenting their materials in concise reports that set out their respective positions clearly. The Board appreciates the effort and thought that each put into their presentations to the Board. The photographs of the subject property and the comparable properties assisted the Board to visualize the subject property and comparable properties and to understand their differences and similarities.

37The correct current value of the subject property for the valuation day of January 1, 2012 is $321,000. There is no evidence to support any further adjustment of the assessment to achieve equity with the assessment of similar properties in the vicinity.

2016 DEEMED APPEAL

38An 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.

39Section 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.