Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: August 11, 2016

FILE NO.: WR 141693

Assessed Person(s): John Pittens and Brenda Pittens

Appellant(s): John Pittens and Brenda Pittens

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 07

Respondent(s): Municipality of Trent Lakes

Property Location(s): 128 Hill Drive

Municipality(ies): Municipality of Trent Lakes

Roll Number(s): 1542-010-301-09300-0000

Appeal Number(s): 3113042 and 3146042

Taxation Year(s): 2015 and 2016

Hearing Event No.: 632064

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

Heard: July 27, 2016 in Trent Lakes, Ontario

APPEARANCES:

Parties

Representative

John Pittens Brenda Pittens

Brenda Pittens

MPAC

Ron Donneley

Municipality of Trent Lakes

No one appeared

DECISION OF THE BOARD DELIVERED BY SCOTT McANSH

INTRODUCTION

1The property before me is a lakefront all season cottage on Buckhorn Lake in the Municipality of Trent Lakes (the “Property”). John Pittens and Brenda Pittens (the “Pittens”) bring these appeals as they are of the opinion that the Property is assessed too high. Specifically, they complain that properties in the area like theirs are listed for sale at lower prices than their assessment, and that properties in the vicinity are assessed at a rate below the assessment of the Property.

2For the reasons set out below, I find that the current value of the Property is $413,000 and that no adjustment is required to make that amount equitable with the assessments of similar properties in the vicinity. As such, I reduce the assessment for the 2015 taxation year from $435,000 to $413,000 and I confirm the assessment for the 2016 taxation year at $413,000.

ISSUES

3The Property has 100 feet of frontage on a weedy, shallow, bay of Buckhorn Lake, and an effective depth of approximately 200 feet. The cottage on the Property was constructed in 2011 and is a single story with a building area of 1,503 square feet and no basement. The Property also contains a detached garage.

4For the 2015 taxation year MPAC returned an assessment of $435,000. The Pittens filed a request for reconsideration, after which MPAC reduced its opinion of value to $413,000. MPAC returned an assessment of $413,000 for the 2016 taxation year. At the hearing before me MPAC suggested that $413,000 was the correct assessment for the Property for both taxation years.

Legislation

5Section 44.(3)(a) of the Assessment Act (“Act”) requires that I “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, I must determine what the Property would have sold for in an arm’s length transaction on the relevant valuation day, set pursuant to s. 19.3 of the Act, as January 1, 2012 for the 2015 and 2016 taxation years.

6Once I have determined the current value, s. 44.(3)(b) requires that I “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” but only if that adjustment would result in a reduction of the assessment.

Current Value

7MPAC supported its opinion of value primarily with the assessments of five properties that are, in its opinion, comparable to the Property. The assessed value of other properties will almost never be the best evidence of value. In relying on the assessments of other property, MPAC is suggesting that the assessments of other properties in the area are accurate. I am not prepared to rely on that assumption in determining current value. The best evidence of current value is the sale of properties similar to the Property on or near the valuation day of January 1, 2012. The assessments of similar properties is not an adequate substitute.

8The Pittens did not offer me sales as their primary evidence on current value either. The Pittens entered six listings for sale of cottages which they found in the June 2015 edition of a local property advertising magazine. They did not know if those properties had sold. It is possible that those properties sold for far different values than advertised, or did not sell at all. Without sales evidence I cannot rely on those listing as an indication of market activity. Further, those listed properties would have sold in late 2015, nearly four years from the valuation day of January 1, 2012. The further removed in time sales are from the valuation day, the less useful they are in determining the state of the market on the valuation day.

9Each party did, however, enter one sale into evidence. Thus, I have two sales in evidence before me. First, MPAC described the sale of 103 Island Drive, which sold for $525,000 in September 2012. That property is very close to the Property. It has slightly more frontage on a superior shoreline and is slightly larger, with a finished basement. While the property is 10 years older than the Property, this is clearly a superior property to the Property. This evidence indicates that the Property would have sold for less than $525,000 on January 1, 2012.

10The Pittens entered into evidence the sale of a vacant lot adjacent to the Property, which was sold by the municipality on January 31, 2014 for $79,000. The lot is similar in size to the Property on the same shoreline. It was, however, zoned OS, and required a rezoning, at the owner’s expense, before it could be used for residential purposes. The lot was also vacant. The Property is clearly superior to the lot. This evidence indicates that the Property would have sold for much more than $79,000 on January 1, 2012.

11The sales evidence indicates that the current value of the Property is between $79,000 and $525,000 and closer to the higher end of that range. MPAC’s opinion of value is $413,000, which is supported by this evidence. The evidence would, in my opinion, also support a higher current value, but I have no means of quantifying what that current value would be. The best evidence that I have supports the only opinion of current value I was provided: MPAC’s suggested current value of $413,000.

12I find that the current value for the 2015 and 2016 taxation years in $413,000.

Equity

13Once I have determined the current value of the land I must determine if that value is equitable with the assessments of similar properties in the vicinity. The bulk of the evidence at this hearing related to equity.

14MPAC presented five properties that are slightly superior to the Property and demonstrated that all of those were assessed at a higher value than the Property. MPAC also presented the assessment to sale ratios (“ASR”) of six properties in the area. I would add to those the ASR of 103 Island Drive, which had an assessment of $435,000 and a sale price of $525,000 near the valuation day. This is an ASR of 0.83. Adding that to the six ASRs provided by MPAC yields a median ASR of 0.93 and a mean ASR of 0.92. This evidence indicates that properties in the area are being assessed approximately 7% lower than their sale prices.

15The Pittens presented the assessments of five properties near the Property, which contain cottages that are 22 to 43 years older than the cottage on the Property. These are assessed $40,000 to $96,000 lower than the Property. I do not find these to be comparable enough to the Property to conduct a side to side assessment comparison. It seems clear to me that the assessments of these properties are lower because the properties are inferior to the Property. There is no requirement that properties near each other be assessed at the same value. Rather, the Act requires that assessments of similar properties in the vicinity be equitable with the assessment of the Property. There is nothing inequitable in inferior properties having lower assessments.

16The best evidence on the equity of assessments is how assessments in a particular area compare to sales values. If assessments match sales values, there is equity. Where there is evidence that MPAC is consistently under-assessing property in the area it would only be fair to reduce the current value of the subject property by a similar amount.

17Here, the ASR indicates that MPAC is, on average, under assessing properties in the area by 7%. However, I do not think that a reduction of 7% from the current value of $413,000 would be appropriate. The evidence supporting that current value is sparse, and it relies primarily on MPAC’s opinion of value. An assessment 7% higher, $441,910, is also amply supported by the sales evidence before me. I note that the reduction in the assessments of the Property between the 2015 and 2016 taxation years is 5%. This was after MPAC had taken a second look at the Property and determined the lower assessment. This is an indication that the returned assessment was slightly too high. It was in a similar situation to that of other properties in the vicinity. The evidence indicates that the current value of $413,000 already accounts for the over-assessment in the original assessment of $435,000.

18In those circumstances I am not convinced that a further reduction is necessary to make the assessment equitable with the assessments of similar properties in the vicinity.

CONCLUSION

19I find that the current value of the Property is $413,000 for the 2015 and 2016 taxation years. I further find that no adjustment is required to make the assessment equitable with the assessment of similar properties in the vicinity. I therefore reduce the assessment for the 2015 taxation year form $435,000 to $413,000 and confirm the assessment for the 2016 taxation year at $413,000.