Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: June 13, 2016

FILE NO.: WR 135787

Assessed Person(s): Drennan Farms Ltd., Phillip Shawn Drennan

Appellant(s): Drennan Farms Ltd., Phillip Shawn Drennan

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 24

Respondent(s): Township of Ashfield-Colborne-Wawanosh

Property Location(s): 84805 Tower Line and 36222 Glen’s Hill Road

Municipality(ies): Township of Ashfield-Colborne-Wawanosh

Roll Number(s): 4070-640-007-01600-0000 and 4070-640-007-01900-0000

Appeal Number(s): 3057134, 3091634, 3057135, 3091635 and 3158937, 3158915 (deemed 2016 appeals)

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

Hearing Event No. 597538 and 604130

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

Heard: September 16 to 18, 2015 and October 13, 2015 in Ashfield-Colborne-Wawanosh, Ontario

APPEARANCES:

Parties

Counsel⁺/Representative

Drennan Farms Ltd. and

Phillip Shawn Drennan

Phillip Shawn Drennan

MPAC

Donald G. Michell⁺ and Joanne Greidanus

Township of Ashfield-Colborne-Wawanosh

No one appeared

DECISION OF THE BOARD DELIVERED BY SCOTT McANSH AND RICHARD LIMOGES

INTRODUCTION

1The only issue in this appeal is the impact of electrical infrastructure, including a large electrical switching station and wind turbines, on the value of the Drennan family farm. The properties before us are two parcels that together form an approximately 300 acre ‘L’ shaped hog and cash crop farm that has been occupied and cultivated by the Appellant, Mr. Drennan, and his family for over a century (the “Drennan farms”).

2In the late 1980s a series of towers for a 500 Kilovolt (“KV”) transmission line, forming a part of the grid that serves large portions of both Canada and the United States, was installed bisecting the Drennan farms. The high-voltage power lines serve the needs of a large population and their location became strategic decades later when, in 2009, the Province adopted the Green Energy Act to encourage the use of renewable energy sources. The legislation removes barriers to the establishment of such facilities and the related Feed-in Tariff (“FIT”) program also guarantees long term profitable pricing for generators of energy from renewable sources.

3Notwithstanding the vocal and determined objections of the Drennan family and their neighbours, many of whom respectfully attended this hearing, the area around the Drennan farms has since become home to about 140 large, 2.3 Megawatt (“MW”), wind turbines. Many wind turbines now exist near the Drennan farms. The Drennan farms also surround a 100 acre parcel, which used to be a farm and residence. That parcel has been converted into a huge, 270 MW, transformer and switching station, said to be the largest in the Province, which connects the local wind turbines to the power grid. The high-voltage transmission towers, the massive cement and steel industrial transformer and switching station and numerous towering wind turbines now dominate the landscape surrounding the Drennan farms.

4Mr. Drennan argues that this infrastructure negatively impacts the value of his property. MPAC argues that there is no evidence of such an impact.

ISSUES

5As noted above, the only issue is the impact of the electrical infrastructure surrounding the Drennan farms. There are two properties before us. The property at 84805 Tower Line has an assessed value of $563,000 in the farm property class and $255,000 in the residential property class, for a total value of $818,000. The property at 36222 Glen’s Hill Road has an assessed value of $1,079,500 in the farm property class and $47,500 in the residential property class, for a total value of $1,127,000. The total assessed value of the two parcels is $1,945,000.

6Mr. Drennan does not dispute the returned assessments, per se, in fact suggesting a slightly higher total value of $2,110,000. Rather, he argues that the electrical infrastructure, including the wind turbines, the high-voltage transmission line and the transformer and switching station, impact the value of the Drennan farms. The impacts he described include noise, flooding, vibration, visual pollution, exposure to electromagnetic fields, and the imposition of easements, safety setbacks and ‘no fly’ or ‘no build’ zones to large portions of the Drennan farms. Mr. Drennan argues that the assessments of the properties should be significantly reduced. MPAC argues that there is no evidence to support a reduction in value.

DECISION

7For the reasons set out below, we agree that the large transformer and switching station adjacent to the Drennan farms has a negative impact on the residential aspects of current value. We do not have adequate evidence before us on which to reduce the current value. However, we find that a reduction of 50% to the residential portions of the Drennan farms is appropriate in order to make the assessment equitable with the property before another panel of this Board in Thompson v. Municipal Property Assessment Corp., Region No. 22 [2008] O.A.R.B.D. No. 223 (“Thompson”), which is the only similar land presented at this hearing. We therefore reduce the assessment of the property at 84805 Tower Line from $818,000, with $563,000 in the farm property class and $255,000 in the residential property class, to $690,500, with $563,000 in the farm property class and $127,500 in the residential property class. We reduce the assessment of the property 36222 Glen’s Hill Road from $1,127,000, with $1,079,500 in the farm property class and $47,500 in the residential property class, to $1,103,250, with $1,079,500 in the farm property class and $23,750 in the residential property class.

REASONS FOR DECISION

Legislation

8Section 44.(3)(a) of the Assessment Act (“Act”) requires us to “determine the current value of the land.” Current value is defined in s. 1 as “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.” That is, we must determine what the Drennan farms would have sold for in an arm’s length transaction on the January 1, 2012 valuation day set for the 2014 and 2015 taxation years.

9Section 44.(3)(b) of the Act requires that the Assessment Review Board (“Board”) “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.”

Preliminary Issues

10At the outset of the hearing, Mr. Drennan requested that his supporter, who also claims status as a member of the press, be allowed to video record the hearing. The parties had agreed prior to the hearing to have a court reporter present, at MPAC’s expense. MPAC agreed to share any transcript that it orders, but indicated that it does not intend to order any transcripts unless there is an appeal of this decision. Mr. Drennan still insisted on recording the proceedings for posterity and we approved that request at the hearing subject to the following conditions: the recording will not interfere with the proceedings; a copy will be provided to the other parties; it will not be used in any other proceeding or tribunal; and that it would remain for personal use only. We trust that Mr. Drennan has complied with those conditions.

11Mr. Drennan also raised concerns on the objectivity of the panel. He alleged a reasonable apprehension of bias relating to both Member McAnsh and Member Limoges. Those applications have been dismissed in reasons accompanying this decision, specifically DM 136587 and DM 136586.

12Finally, Mr. Drennan objected to MPAC being entitled to present previous decisions of this Board as evidence. His main objection was that, as an unrepresented party, he did not have similar access to that kind of information. We explained to Mr. Drennan that these ‘authorities’ were not taken as evidence in the hearing but rather used as guidance based on previous decisions and relevant circumstances. While it is unfortunate that parties are not always equally able to access information that is useful at a hearing of this Board, we cannot bar relevant information from being submitted. MPAC’s counsel has an obligation to present cases which he deems relevant to the decision, even if they do not support his position. We see no injustice in permitting MPAC to submit those authorities.

Current Value

13The Drennan farms are 84805 Tower Line and 36222 Glen’s Hill Road. 84805 Tower Line is a 100 acre farm with a single family, single storey detached home, built in 2009, and six secondary structures including sheds, barns, a milking centre and a bulk feed tank. 36222 Glen’s Hill Road is a 200 acre farm with a single family detached structure built in 1870 and 13 secondary structures related to the farm.

14We accept MPAC’s valuation of those properties as the value they would have sold for if the infrastructure surrounding the properties had no impact on their value. We note that Mr. Drennan’s expert, Ben Lansink, did not object to MPAC’s valuation in a meaningful way, suggesting a slightly higher value.

15To address the primary issue, the impact of the adjacent electrical infrastructure on that value, MPAC put forward six suggested comparable sales occurring in 2014 and 2015. They argued that those sales show that sale prices are increasing despite the wind turbine project in the area being complete, or nearly so. When compared to the 2012 assessed values, the more recent sales show assessment to sale ratios (“ASR”) ranging from 58% to 87% with an average of 71%. This shows that the sale prices of local farms are increasing, notwithstanding the wind turbine development.

16We accept this evidence of a general upward trend in the sales of farms in the area. While Mr. Drennan disputed the extent to which MPAC’s suggested comparable sales were impacted by wind turbine infrastructure, he did not demonstrate declining sale prices in the area.

17Mr. Drennan entered a great number of documents to support his claim of the harmful impacts of wind turbines. We have carefully reviewed those documents and cannot properly draw conclusions from them on the impacts wind turbines have on the value of nearby land. The health, and other impacts, of wind turbines is not the issue we are asked to determine. The Act requires that we determine the current value of land. On the evidence before us, we cannot conclude that wind turbine infrastructure, in general, impacts the value of land.

18Mr. Drennan also called Greg Schmaltz, who claimed expertise in noise, based on his experience with a wind turbine in his own neighbourhood. He claimed that MPAC had applied reductions in assessments as high as 25% due to the noise impacts of wind turbines. We put very little weight on Mr. Schmaltz’s evidence. His experience involved a single turbine which was older, noisier and closer to residential areas than those near Mr. Drennan’s property.

19While we cannot conclude, based on the evidence before us, that nearby wind turbines impact value, the Drennan farms is impacted by far more than wind turbines. It surrounds one of the largest transformer and switching stations in Ontario and is bisected by a high-voltage power corridor. Mr. Lansink outlined various impacts the infrastructure would have on value. He was of the opinion that the 550 metre building setback from wind turbines amounts to an uncompensated expropriation. Mr. Lansink also argued that the helicopter “no fly zone” imposed on the properties by neighbouring wind turbines causes a loss of productivity by forcing the owner to use other spray methods. While these impacts may be real, we were provided with no evidence on the cost differential, or land value impacts, of those limitations.

20Mr. Lansink suggested that the health and other concerns do not need to be proven to impact value. Mr. Lansink was of the opinion that perception becomes reality in land valuation, so a perceived health impact affects value. He attempted to quantify the impact on value in two ways: (1) the decision of a different panel of this Board in Thompson; and (2) a study of the impacts of wind turbines on residential properties in Melancton, Ontario.

Thompson

21In Thompson, the Board reduced the assessed value of the property before it by 50% due to the impact and nuisance of noise from a generating station across the street. The reduction was based on the judgment of the Member rendering that decision. While MPAC and the Appellant agreed, in that case, that the generating station impacted value, they could not agree how to quantify that impact. They asked for the Member to exercise her discretion, which she did. Mr. Lansink suggests that the reduction granted there was reasonable, and that a similar adjustment should be made here.

22We agree with the panel of this Board in McGregor v. Municipal Property Assessment Corp., Region No. 28 [2012] O.A.R.B.D. No. 5, that Thompson “was based upon entirely different circumstances, where the parties agreed that the noise nuisance impacted the value of the subject property, but neither party could assist the Board in quantifying the nuisance.” The Member in Thompson selected 50% without supporting data. We have an obligation to determine current value on the best evidence before us. The opinion of the Member in Thompson is of no assistance in making that determination.

Melancton

23Mr. Lansink presented a study he conducted in 2009 on home sales in Melancton, Ontario. In Melancton, a wind turbine company had purchased nearby properties and sold them sometime later with a restrictive covenant on title. That instrument limited a future purchaser’s right to complain about listed potential impacts from the nearby wind turbines. It appears that this technique has not been repeated elsewhere.

24Mr. Lansink looked at the difference in value between what the company paid for the homes and what they sold for with the restrictive covenant on title. He excluded farms in his analysis, and found that there was approximately a 50% reduction in value. That study is of limited assistance due to the confounding factors that Mr. Lansink failed to account for. The limitation on title alone would have a severe impact on value and is not present on the Drennan farms. We also find that the only plausible explanation for the initial purchase of these properties is to limit complaints. It is likely that limiting complaints had value to the company, which would be an incentive to overpay for land, potentially from unwilling sellers. Later the company clearly valued the protections it placed on title and likely would have sold below market value as a result. All of that would tend to increase the gap between the purchase price and the sale price.

25We also agree with MPAC that there are procedural concerns with the study and its application to the Drennan farms. Specifically, the study used a small sample size and applied only to residential properties. We do not find that the Melancton study provides any compelling evidence that the existence of nearby wind turbines had any impact on the decrease in value observed.

Impacts

26While the general market trends and the evidence on the general impact on value of wind turbines do not support an adjustment in value, we find the evidence of an adverse impact on the Drennan farms from the transformer and switching station to be overwhelming. The noise, traffic, and concerns regarding electrical contamination, would certainly deter some potential purchasers and thereby lower the value of the land. The difficulty we are faced with is quantifying those impacts. There are no directly comparable properties to the Drennan farms in the immediate vicinity. No other property similarly abuts a large transformer and switching station and is bisected by a high-voltage power line.

27This, of course, was the issue directly before the Member in Thompson. MPAC conceded an impact on value in Thompson, while we find an impact on value, although difficult to measure, based on the evidence before us.

28It is essential to tax fairness that we decide current value on the evidence presented to us. The evidence here was less than satisfactory. We do have the expert opinion of Mr. Lansink that the various impacts on the Drennan farms would result in a 50% reduction in value. However, that opinion was based on Thompson and his Melancton study, both of which we find less than convincing. We find that the impact on the Drennan farms is real, and that reduction is likely warranted, but do not have compelling evidence of what that reduction would be. Without compelling evidence with which to determine an appropriate quantification of that value, we cannot reduce the current value.

Equity

29We are required, pursuant to s. 44.(3)(b), to consider the assessments of similar properties in the vicinity and to determine if the current value we have established is equitable with those assessments. Mr. Drennan did not present any evidence on the equity of the assessment when compared to similar properties.

30In its summation, MPAC conceded that a 50% reduction to the residential property class could be applied in order to make the assessment equitable with the assessment granted by this Board in Thompson. We agree that the property there, near major electrical infrastructure, would qualify as a similar property to the Drennan farms. While we acknowledge that an equity adjustment based on the value of one similar property is less than ideal, we see some merit in this approach. As noted above, we find the evidence of an impact from the adjacent large transformer and switching station to be significant, but have no evidence on which to base an adjustment. Similarly, the Member in Thompson was presented with consent on an impact from a nearby transformer, but no evidence on which to base an adjustment.

31In accordance with s. 44.(3)(b) we apply a similar reduction to that applied in Thompson. We would not, however, apply that reduction to the farmland. In Hemingway v. Municipal Property Assessment Corp., Region 24 [2015] O.A.R.B.D. No. 223, a different panel of this Board held that all of the evidence before them on the impact of wind turbines on land value was limited “to residential properties only.” Mr. Drennan essentially agreed with this proposition, stating that “there is not an impact if nobody is living there and farmland has value without the residence.” We agree.

32The evidence before us does not support a reduction to farmland. Mr. Lansink also excluded farm properties from his Melancton study and MPAC’s evidence is clear that farms in the area continue to increase in value. Finally, the property in Thompson was residential. We would therefore limit the 50% reduction for equity to the residential portions of the Drennan farms.

33As noted above, the property at 84805 Tower Line has an assessed value of $563,000 in the farm property class and $255,000 in the residential property class, while the property at 36222 Glen’s Hill Road has an assessed value of $1,079,500 in the farm property class and $47,500 in the residential property class. We find that equity supports a 50% reduction to the values in the residential property class.

34We find that the assessment of the property at 84805 Tower Line is $690,500, with $563,000 in the farm property class and $127,500 in the residential property class. We find that the assessment of the property 36222 Glen’s Hill Road is $1,103,250, with $1,079,500 in the farm property class and $23,750 in the residential property class.

CONCLUSION

35We find that the current value of the property at 84805 Tower Line is as returned, $818,000, with $563,000 in the farm property class and $255,000 in the residential property class. We find that equity requires a 50% reduction to the value in the residential property class. We therefore reduce the assessment of the property at 84805 Tower Line from $818,000, $563,000 in the farm property class and $255,000 in the residential property class, to $690,500, with $563,000 in the farm property class and $127,500 in the residential property class.

36We further find that the current value of the property 36222 Glen’s Hill Road is as returned, $1,127,000, with $1,079,500 in the farm property class and $47,500 in the residential property class. We find that equity requires a 50% reduction to the value in the residential property class. We therefore reduce the assessment of the property 36222 Glen’s Hill Road from $1,127,000, with $1,079,500 in the farm property class and $47,500 in the residential property class, to $1,103,250, with $1,079,500 in the farm property class and $23,750 in the residential property class.

2016 DEEMED APPEALS

37Appeals for the 2015 taxation year are 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 appeals before March 31, 2016. For that reason, this decision also applies to the 2016 taxation year.

38Section 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.