Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: July 5, 2016

FILE NO.: WR 138236

Assessed Person(s): Brian Quinn’s Meats Ltd.

Appellant(s): Brian Quinn’s Meats Ltd. and Brian William Quinn

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 5

Respondent(s): Township of Stone Mills

Property Location(s): 3987 County Road 1

Municipality(ies): Township of Stone Mills

Roll Number(s): 1124-030-030-01900-0000

Appeal Number(s): 3000064, 3018349, 3073197 and 3145651 (deemed 2016 appeal)

Taxation Year(s): 2013, 2014, 2015 and 2016 (deemed appeal)

Hearing Event No.: 597431

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

Heard: September 18, 2015 in Centreville, Ontario

APPEARANCES:

Parties	Representative
Brian Quinn’s Meats Ltd. and Brian William Quinn	Brian Quinn
MPAC	Rox-Anne Poulain
Township of Stone Mills	Christina Beaushaw

DECISION OF THE BOARD DELIVERED BY CRISTINA MARQUES

ISSUE

1The subject property is located on the East side of County Road 1 between the village of Camden East and the village of Yarker. The immediate area consists of residential homes and farm properties. The lot is 1.47 acres with 150 feet frontage. It is improved with a 6,772 square foot (“sq. ft.”) building that is used as an abattoir. The building was constructed in stages between 1991 and 2013.

2The assessment was returned at $459,000 for the 2013, 2014, and 2015 taxation years, and the property is classified in the Industrial Property Class (“IT”). Rox-Anne Poulain, appearing as advocate for MPAC, stated that at the rear of the property there is a 768 sq. ft. barn and a 384 sq. ft. shed that are used for personal storage by the owner which are not included in the assessed value.

3Marsha Blakely, appearing as witness for MPAC, testified that an inspection of the subject property, on July 23, 2015, resulted in the following corrections:

• Changed the perimeters, and abattoir height.
• Added overhead doors and windows.
• Added metal liner in the abattoir wall and ceiling.
• Added 40 sq. ft. smoke house addition to the abattoir.
• Removed stainless steel finish from 2004 addition.
• Removed barn mezzanine.
• Removed electrical in the shed.

4The corrections resulted in an increase of $21,000 for a new value of $480,000. Ms. Poulain stated that MPAC is not looking to increase the assessment as returned at $459,000 for the valuation day of January 1, 2012.

5Brian Quinn, the owner of the subject property, submits that a better value for the property is approximately $345,000. In addition Mr. Quinn feels that the current IT classification of the subject property is onerous, and that classifying his property in the Commercial Property Class (“CT”) would greatly decrease his tax burden. The appellant also believes that the subject property is not equitably assessed in relation to other abattoirs in the region.

6Christina Beaushaw, Treasurer of the Township of Stone Mills (the “Township”), appeared to submit a letter from the Township in support of changing MPAC’s classification of the subject property from Industrial (IT) to Commercial (CT).

7The Assessment Review Board (“Board”) must determine whether the subject property is correctly classified in the IT property class; the correct current value for the 2013, 2014 and 2015 taxation years; and whether that value is equitable, having reference to the assessments of similar lands in the vicinity.

DECISION

8The Board finds that the property is correctly classified in the IT property class; that the correct current value of the property is $433,000; and that no further reduction is required to make this value equitable with that of similar lands in the vicinity. T the Board reduces the assessment of the subject property from $459,000 to $433,000 for the 2013, 2014 and 2015 taxation years, and for the deemed 2016 taxation year.

REASONS FOR DECISION

Legislation

9The Board must have regard to s. 6(1) of O. Reg. 282/98, as amended, when determining if the subject property is correctly classified in the IT property class:

Industrial Property Class

6. (1) The industrial property class consists of the following:

7. Land used for or in connection with,

i. manufacturing, producing or processing anything,

ii. research or development in connection with manufacturing, producing or processing anything,

iii. storage, by a manufacturer, producer or processor, of anything used or produced in such manufacturing, production or processing if the storage is at the site where the manufacturing, production or processing takes place, or

iv. retail sales by a manufacturer, producer or processor of anything produced in manufacturing, production or processing, if the retail sales are at the site where the manufacturing, production or processing takes place but are not on land to which section 44 applies.

10The Board must have regard to s. 1, s. 19.(1), s. 19.2(1), s. 40.(19), s. 44.(3)(a) and (b), and s. 45 of the Assessment Act, R.S.O. 1990, c. A.31, as amended (“Act”) when determining if the assessment under appeal is correct.

11Section 1 of the 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.

12Section 19.(1) of the Act states:

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

13Section 19.2(1) of the Act provides:

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.

14Section 40.(19) of the Act states:

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

15Section 44.(3)(a) and (b) 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.

16Section 45 of the Act states:

45. Powers and functions of the Assessment Review Board. – Upon an appeal with respect to an assessment, the Assessment Review Board may review the assessment and, for the purposes of the review, has all the powers and functions of the assessment corporation in making an assessment, determination or decision under this Act, and any assessment, determination or decision made on review by the Assessment Review Board shall be deemed to be an assessment, determination or decision of the assessment corporation and has the same force and effect.

Board’s Analysis

Classification

17The classification of real property in O. Reg. 282/98 is determined by specific use of the property. Ms. Blakely presented a list of six abattoir properties, and testified that she relied on this list to show that properties operating as abattoirs are all assessed in the industrial class Exhibit 1. She also testified that the subject property by the mere fact that it is an abattoir it processes meat, and following from that the subject property can only be valued in the industrial property.

18As the subject property is used to process meat it is correctly classified as IT. The CT property class is a residual class reserved for land that does not fall into any other class. The Board finds that MPAC has correctly classified the subject property in the IT property class.

Current Value

19The best indicator of current value is an arm’s length and market-tested sale of a property on the valuation date, January 1, 2012, or close to it. Since the subject property did not sell, the Board relies upon the sale of similar properties in the vicinity on or close to the valuation day.

20Ms. Blakely testified that MPAC values properties like the subject property using the cost approach. In this methodology an estimate is made of the investment that would be required under current market conditions to construct improvements of equal utility to those of the subject property. From the reproduced cost new, an estimated loss in value due to depreciation is deducted and an estimated land value is then added.

21Ms. Blakely, in support of the assessment as returned, presented Exhibit 1 consisting of an MPAC report which included location and current value study map, photographs of the subject property and of the suggested comparables, a property details report, current value study, and a list with six abattoir properties.

22The assessor identified three sales, and testified that the three properties are not comparable to the subject property in their physical attributes, but that they were chosen to demonstrate the relationship between MPAC’s costing and the sales in the marketplace. The sales also show the accuracy of MPAC’s method of valuation through the cost approach.

• Sale 1 – 443 Milligan Lane, Napanee Total building area 2,720 sq. ft. Lot size 18,295.20 sq. ft. Sold for $250,000 / $91.91 sq. ft. – June 2013 Assessed at $200,000 - 0.80 Assessment to Sales Ratio (“ASR”)

• Sale 2 - 11 Concession Street South, Village of Tamworth Total building area 750 sq. ft. Lot size 10,890 sq. ft. Sold for $105,000 / $140 sq. ft. – June 2010 Assessed at $74,000 - 0.705 ASR

• Sale 3 – 1014 Johnston Lane, Sydenham Total building area 2,204 sq. ft. Lot size 1.02 acres Sold for $180,000 / $81.67 sq. ft. – February 2012 Assessed at $181,000 – 1.006 ASR

23Ms. Blakely stated the sale prices for the suggested comparable properties establish a range of value between $81.67 and $140 per sq. ft. of building size, with an average of $104.52 per sq. ft. The subject property‘s assessed value is below that range at $67.78 per sq. ft., supporting a CVA as returned at $459,000. Mr. Quinn disagreed with the assessor; in his view the sales presented by MPAC are not comparable to the subject property. He argued that MPAC fails to recognize that the subject property is modest in comparison to the suggested comparable properties, because they are all of much better quality.

24He argued that the subject property’s marketability is negatively impacted because it has no municipal services, and the hydro service is single phase. Mr. Quinn also argued that the abattoir related odours have penetrated into the buildings rendering their conversion to any other uses virtually impossible. The abattoir license is not transferable and therefore the sale of the business is not viable.

25Mr. Quinn testified that the current use on the subject property is considered legal non-conforming because the business existed prior to the passing of the current zoning by-law. This designation limits the expansion potential and alternate uses, and places restrictions on rebuilding in the event of destruction.

26Mr. Quinn called Mr. Rayner, a qualified appraiser as a witness, whom Ms. Poulain agreed is qualified to express opinions in regards to the subject property.

27Mr. Rayner, in support of his position that the subject property is over-assessed, presented Exhibit 2, consisting of a S. Rayner & Associates Ltd. appraisal report, which he authored, and values the property at $345,000, and an analysis of the abattoir properties presented by MPAC.

28Mr. Rayner is of the opinion that the highest and best use of the subject property is rural residential, as there is essentially no demand for industrial or commercial properties in the subject property’s vicinity because it is a rural designation. It is therefore extremely difficult to compare it to other abattoirs or to other types of industrial and commercial properties because the subject is a uniquely located.

29Mr. Rayner referred to an appraisal report for the subject property, prepared by S. Rayner and Associates Ltd, with ten comparable properties.

• Sale 1 - 4309 County Road 8, Picton Lot - 23.07 acres – Rural area Improvements – 5,056 sq. ft. Sale $300,000 / $59.33 per sq. ft. on November 2013 sold under power of sale

• Sale 2 - 5568 Highway 62, Rossmore Lot – 5.19 acres – Rural area Improvements – 6,830 sq. ft. Sale $350,000 / $51.24 per sq. ft. on June 2013 Ms. Poulain suggested that this sale was non-arms length, and Mr. Rayner did not dispute the argument.

• Sale 3 - 29397 Highway 28, Bancroft Lot – 1.15 acres – Commercial area Improvements – 3,200 sq. ft. Sale $155,000 / $48.43 per sq. ft. on April 2013

• Sale 4 - 445 County Road 29, Toledo Lot - 2.52 acres – General Industrial area Improvements – 7,450 sq. ft. Sale $265,000 / $33.57 per sq. ft. on December 2012

• Sale 5 - 1325 Old Highway 2, Quinte West Lot – 2.12 acres – Commercial area Improvements – 9,350 sq. ft. Sale $475,000 / $50.80 per sq. ft. on April 2012

• Sale 6 - 102 Pinegrove Road Arnprior Lot – 1.33 acres – General Industrial area Improvements – 4,760 sq. ft. Sale $240,000 / $50.42 per sq. ft. on January 2012

• Sale 7 - 1014 Johnson Lane, Sydenham Lot – 1.03 acres – Urban Commercial area Improvements – 2,230 sq. ft. Sale $180,000 / $80.71 per sq. ft. on January 2012 *Also MPAC’s comparable

• Sale 8 - 80 Richmond Boulevard Napanee Lot – 0.84 acres – Business Area Improvements – 7,706 sq. ft. Sale $450,000 / $58.39 per sq. ft. on Jue 2011 Ms. Poulain suggested that this sale was non-arms length, and Mr. Rayner did not dispute the argument.

• Sale 9 - 6 Rosemay Lane, Picton Lot – 1.89 acres – General Industrial area Improvements – 11,928 sq. ft. Sale $500,000 / $41.91 per sq. ft. on May 2011

• Sale 10 - 246 South Gower Drive, Heckston Lot – 0.30 acres – Commercial area Improvements – 4,240 sq. ft. Sale $157,100 / $37.05 per sq. ft. on May 2011

30Mr. Rayner agrees with MPAC that there are few truly similar small rural industrial type properties that have sold in recent years. He testified that the chosen comparables are all in rural locations, most were designed for specific owner use, and that they sold as vacant properties or as part of the sale of the business. In his view the best approach to value is the direct comparison approach which leads to the valuation of the subject property at $345,000, based on the appraisal report that he prepared and the ten suggested comparables he analyzed.

31For the purpose of a current value analysis the Board rejects as good comparables the following appellant sales: Sale 1 because it sold under the stress of power of sale. Also rejected are sales 2 and 8, there evidence these sales may not be arms-length transactions.

32The Board is left with nine properties: MPAC’s three sales and the appellant’s sales 3, 4, 5, 6, 9, and 10 (MPAC sale 3 is the same property as the appellant’s sale 7). The average sale price per sq. ft. for the nine properties is $63.97 per sq. ft. The Board can adjust the value of the subject by applying the average value per square foot of the comparables accepted by the Board, that being $63.97. This value per square foot applied to the subject property results in a CVA of ($63.97x6,772) = $433,000 (rounded).

33The Board determines the current value of the subject property to be $433,000.

Equity

34Section 44.(3)(b) mandates and directs that after determining current value, the Board shall have reference to the value at which similar lands in the vicinity are assessed. The ASR is a tool often used to determine if an equity adjustment is required. An ASR is determined by dividing the assessment as returned with the time adjusted sale price. An ASR falling below 1.0 is an indication that MPAC’s valuation methodology may be resulting in assessments below values determined in the market place. Conversely, an ASR falling above 1.0 is an indication that MPAC’s valuation methodology may be resulting in assessments above values determined in the market place.

35MPAC did present any equity evidence.

36Mr. Rayner testified that the six abattoirs presented by MPAC are a good indication that the subject property is over assessed. The six properties are:

• Property 1 - 63 Addison Road As per MPAC - ASR 0.28

• Property 2 - 223 McWatty Road As per MPAC - ASR 2.48

• Property 3 - 570 Moira Road As per MPAC - ASR 1.09

• Property 4 - 2553 Crookston Road No valid sale

• Property 5 - 1948 Asphodel 7th Line No valid sale

• Property 6 - 2043 Drummond Lane No valid sale

37Mr. Rayner testified that the properties operating as abattoirs have an average assessment of $41.71 per square foot, which is a value lower than the value MPAC attributes to the subject property. The Board notes that of the six properties only three had valid sales and they show a median ASR of 1.09.

38For the Board to make an equity adjustment the ASR should be less than 1.00, and the Board will not make an equity decision based on a small sample of properties. that are not within the vicinity of the subject property.

CONCLUSION

39The Board finds that the subject property is correctly classified as Industrial, and determines the current value of subject property to be $433,000. There is not enough evidence to support an adjustment for equity with similar lands in the vicinity. The Board reduces the assessment of the subject property from $459,000 to $433,000 for the 2013, 2014 and 2015 taxation years.

2016 DEEMED APPEAL

40An 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.

41Section 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.