Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: August 11, 2016

FILE NO.: ID 141642

Assessed Person(s): Jay Martin Siegel Richard Allen Siegel

Appellant(s): Jay Siegel

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 02 Township of Leeds and the Thousand Islands

Property Location(s): 301 Ivy Lea Road

Municipality(ies): Township of Leeds and the Thousand Islands

Roll Number(s): 0812-812-025-22000-0000

Appeal Number(s): 2995136, 3002882, 3070499 and 3143805

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

Hearing Event No.: 623230

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

Heard: July 14, 2016 in the Landsdowne, Ontario

APPEARANCES:

Parties	Representative
MPAC	Christina Smith
Jay Siegel	Self-represented
Township of Leeds and the Thousand Islands	No one appeared

INTERIM DECISION OF THE BOARD DELIVERED BY S. McANSH

INTRODUCTION

1The property before me is a large summer cottage on the shore of the St. Lawrence River (“the Property”). Jay Siegel brings these appeals as he is of the opinion that the Property is assessed too high. Specifically, he complains that MPAC did not adequately account for the sale of neighboring property, or for the various easements and encroachments impacting the Property.

2For the reasons set out below, I find that the assessment is $763,000, less the value properly attributed to the easement across the land in accordance with s. 9 of the Assessment Act (“Act”). If the parties are unable to agree on the value attributable to that easement they may make further submissions on that point.

Issues

3The Property has 56.25’ feet (“ft.”) of frontage along the St. Lawrence and is irregularly shaped, with an effective depth of 230 ft. The cottage on the Property was constructed in 2007 and is a split level with a total building area of 2,265 ft. The Property also has a boathouse, with a small residential unit above it, and a detached garage. MPAC returned an assessment of $736,000 for the 2013 and 2014 taxation years. In 2015 MPAC returned an assessment of $770,000, due to observations made during an inspection. In 2016 MPAC returned an assessment of $769,000.

4MPAC is now suggesting that the correct assessment of the Property is $763,000 for the 2013, 2014, 2015, and 2016 taxation years. They acknowledge, however, that they have not submitted a notice of higher assessment, as required by the Assessment Review Board’s Rules of Practice and Procedure, and therefore suggest that values less than $763,000 be confirmed.

Legislation

5Section 44.(3)(a) of the 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 subject property would have sold for in an arms-length transaction on the relevant valuation day, set pursuant to s. 19.2(1)3 of the Act, as January 1, 2012 for the 2013, 2014, 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.

7The role of easements is important for these appeals and is set out in s. 9.(1) of the Act, which states that land that is “subject to the easement shall be reduced accordingly.”

Current Value

8MPAC supported its opinion of value with five sales of the other properties in the vicinity of the Property.

9162 Golf Club Lane is the furthest from the Property. It has a very similar sized lot with very similar frontage on the St. Lawrence. The house is slightly larger and built at approximately the same time. It sold for $800,000 in December 2012. The Property is very similar to this property.

1031 Chisamore Point Road is also some distance from the Property. It has a much larger lot with more than twice the frontage, though on a weedy shore. The house is similar in size and is over 20 years older than the cottage on the Property. It sold for $757,000 in May 2011. The Property is relatively comparable to this property because the larger lot size of this property is offset by the older cottage.

1137 Ivy Lea Road is close to the Property. It has a much larger lot with almost four times the frontage, though on a weedy shore. The house is slightly larger and was renovated in 2012. It sold for $1,115,000 in May 2010. The Property is inferior to this property due to the much larger frontage on this property.

12213 Ivy Lea Road is close to the Property. It is on a much smaller lot than the Property, with less frontage. The house is almost half the size and over 65 years old. It sold for $475,000 in May 2010. The Property is clearly superior to this property because the Property has a larger lot, more frontage, and much newer and larger cottage than this property.

13Finally, 235 Ivy Lea Road is close to the Property. It is on much smaller lot, though with similar frontage. The house is less than half the size and nearly a century old. It sold for $435,000 in April 2011. The Property is clearly superior to this property because the Property has a larger lot and much newer and larger cottage than this property.

14These sales support MPAC’s suggested current value of $763,000. The Property is superior to 213 and 235 Ivy Lea Road, which indicates a current value above $475,000. The Property is inferior to 37 Ivy Lea Road, which indicates a current value below $1,115,000. 31 Chisamore Point Road and 162 Golf Club are similar to the Property and indicate a current value in the range of $757,000 to $800,000. MPAC’s suggested current value of $763,000 is supported by this evidence, as it falls within that range.

15Mr. Siegel suggested that the current value of the Property was $550,000. He supported this through adjustments to MPAC’s assessment model. Mr. Siegel also argued that the property adjacent to the Property should be considered in the valuation. Finally, Mr. Siegel argued that encumbrances and encroachments on the Property negatively impact value. I will address each of these arguments in turn.

MPAC Assessment Model

16Mr. Siegel parsed the valuation model provided by MPAC to support a lower assessed value. He argued that changes were required for the frontage, bathrooms and the split level nature of the Property. I do not accept the parsing of MPAC’s assessment model to be a reliable manner to determine the current value of residential property.

17MPAC is required to value nearly all land in Ontario, see s. 14 of the Act. It is understandable that MPAC uses models and algorithms to achieve that task. However, the Act requires that I determine current value. I find that the sales evidence before me is far more compelling than the MPAC model. I must rely on the best evidence before me in determining current value and I therefore put no weight on Mr. Siegel’s adjustments to MPAC’s model.

297 Ivy Lea Road

18Mr. Siegel put a great deal of weight on the sale of the property directly adjacent, 297 Ivy Lea Road. It is a much smaller lot and contains a smaller cottage built in 1920, which has been divided into three units. It sold for $210,000 in November 2013.

19Mr. Siegel acknowledges that the Property is superior to 297 Ivy Lea Road, but argues that it is an indication of value that should be considered. He also takes the position that it shows an extreme overvaluation of cottages in the area. MPAC suggests that it is not comparable as it has a different use, as a triplex, to the Property.

20I agree with MPAC that a multi-use property is not generally comparable to a single family home. I also note that, as an inferior property, 297 Ivy Lea Road is only strong evidence that the Property would have sold for more than $210,000. The other sales are helpful in determining how much more it would have sold for, and support MPAC’s suggested current value of $763,000.

Encumbrances

21Mr. Siegel outlined a number of encumbrances on the Property. There is a right-of-way across the Property for access to 295 Ivy Lea Road, as well as parking for three cars. The easement also includes access for septic tank services for 295 and 297 Ivy Lea Road. There is also a dispute developing over a right-of-way to access the Property, which Mr. Siegel claims “casts a shadow” on title. Finally, Mr. Siegel notes that he received an opinion that the deck off of 295 Ivy Lea Road may encroach onto the Property, though that has never been confirmed with a survey. Mr. Siegel states that all of these factors have a negative impact on value.

22I have no doubt that a right granted to others to cross over and park cars on land would negatively impact the value of that land. I am not, however, convinced that brewing disputes with neighbours or suspected encroachments have an impact on value. I therefore only consider the impact the easements have on value. I must determine if the consideration of these encumbrances is appropriate in light of the definition of “current value”, and if those encumbrances can be considered, what impact they have on value.

23“Current value” is defined in s. 1 of the Act in relation to the “fee simple, if unencumbered.” The easements are clearly an encumbrance on title, as defined by the Supreme Court of Canada in Wotherspoon v. Canadian Pacific Ltd., 1987 CanLII 2807 (SCC), [1987] 1 SCR 952, at 1021: “…every right to or interest in the land which may subsist in a third person to the diminution of the value of the land, but consistent with the passing of the fee by the conveyance.”

24The Act, however, has limited the application of the term “if unencumbered” in the definition of “current value”. The Act does so through specific directions, in s. 9, on how to approach easements, rights-of-way, and restrictive covenants. I find that s. 9(1) is applicable here, which states:

9(1) Where an easement is appurtenant to any land, it shall be assessed in connection with and as part of the land at the added value it gives to the land as the dominant tenement, and the assessment of the land that, as the servient tenement, is subject to the easement shall be reduced accordingly.

25The easements here require a reduction to the assessment of the Property. They clearly serve the neighbouring properties at the expense of the Property. I note that the reduction is to the “assessment”, not the current value. As such, I find that the current value is $763,000, but that the assessment must be reduced in accordance with s. 9(1).

26However, I have no evidence before me on the appropriate reduction for the easement. Mr. Siegel simply stated that the impact is “difficult to quantify” and MPAC claimed there was no impact on value. As such, I have no basis on which to approach the proper value attributable to the easement pursuant to s. 9(1). I find, however, that some reduction in value is required. I therefore direct the parties to address the value of the easement between themselves. If they cannot agree on the value of the easements they can arrange to make further submissions on the point.

Current Value Conclusion

27The sales evidence indicates that the current value of the Property for the 2013, 2014, 2015, and 2016 taxation years is $763,000. However, a reduction is required to account for the easements over the land.

Equity

28Once 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.

29Mr. Siegel put a great deal of emphasis on the sale of 297 Ivey Lea Road, which was assessed at $619,000 when it sold for $210,000 in November 2013. He also notes that 55% of the properties MPAC presented were assessed higher than their sale prices. This, however, means that 45%, or nearly half, were assessed below their sale values. MPAC presented a report that shows that, on average, properties in the area are assessed 3% higher than their sale price.

30I accept this evidence that assessments in the area are slightly higher than sales values, but I can make no adjustment on that basis. Section 44.(3)(b) only permits an adjustment “if such an adjustment would result in a reduction of the assessment of land.” If most people have higher assessments than current values, it would be equitable to make the assessment here higher than its current value, as it would then be like the other properties. But that would require an increase in the assessment and s. 44.(3)(b) prohibits such an adjustment.

31Therefore, no adjustment is required to make the assessment equitable with the assessment of similar lands in the vicinity.

CONCLUSION

32I find that the current value of the Property is $763,000 for the 2013, 2014, 2015, and 2016 taxation years. I further find that the current value must be reduced to account for the easement, in accordance with s. 9(1). Finally, no adjustment is required to make the assessment equitable with the assessment of similar properties in the vicinity.

33The parties shall attempt to come to an agreement on the value of the easements. If no agreement can be reached, the parties are to contact the registrar, within 60 days of the release of these reasons, to set a time for further submissions before me on the value of the adjustment in relation to s. 9(1).