McNeil v. Municipal Property Assessment Corporation, 2016 CanLII 53155

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

August 10, 2016

FILE NO.:

WR 140243

Assessed Person(s):

Martha McNeil

Appellant(s):

Martha NcNeil and Glenn Allan McNeil

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”)

Region 26

Respondent(s):

Municipality of Lambton Shores

Property Location(s):

9717 Army Camp Road

Municipality(ies):

Municipality of Lambton Shores

Roll Number(s):

3845-460-050-30100-0000

Appeal Number(s):

3115534 and 3159423 (deemed 2016 appeal)

Taxation Year(s):

2015 and 2016 (deemed appeal)

Hearing Event No.:

620829

Legislative Authority:

Sections 32 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard:

April 15, 2016 in Grand Bend, Ontario

APPEARANCES:

Parties

Counsel⁺/Representative

Glenn McNeil and Martha McNeil

Glenn McNeil

MPAC

Don Mitchell⁺

Municipality of Lambton Shores

No one appeared

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1The subject property is a six-unit motel at 9717 Army Camp Road in the Municipality of Lambton Shores. The site is 30,314 square feet (“sq. ft.”) and has a building with a total floor area of 3,688 sq. ft. The property was renovated in 2012 to repair fire damage.

2For the 2015 taxation year, MPAC has returned a current value assessment of $229,000. MPAC based their valuation partly on a sale of the subject property in 2010, along with adjustments to measurements made of the residential portion of the building, after the renovations. The assessment is apportioned as follows:

• Commercial Property Class - $173,100

• Residential Property Class - $55,900

3The Appellant believes the assessment is too high, owing to the ongoing disputes between various levels of government and local First Nations communities over the use and ownership of lands in the area; most notably the lands formerly known as Ipperwash Provincial Park.

4The Board is required to decide two things in these appeals. First, the Board must determine the current value of the subject property, as of the valuation date for the 2015 taxation year, which is January 1, 2012. Secondly, the Board must decide if, when reference is made to the assessments of similar properties in the vicinity, the assessment of the subject property should be reduced to be equitable.

DECISION

5The Board finds that the current value of the subject property at 9717 Army Camp Road is reduced from $229,000 to $224,000. When reference is made to the assessments of similar properties in the vicinity, the Board finds that the value is reduced further to $205,000 to make the assessment equitable.

6Accordingly, the assessment of the subject property is reduced from $229,000 to $205,000, apportioned as follows:

• Commercial Tax Class - $140,000

• Residential Tax Class - $65,000

LEGISLATION

7In making its determination of these appeals, the Board must consider the relevant sections of the Assessment Act (“Act”).

8Section 1 of the Act states:

“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.

9Section 19.(1) of the Act states:

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

10Section 40 of the Act states:

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,

(ii) the person or another person was wrongly placed on or omitted from the assessment roll,

(iii) the person or another person was wrongly placed on or omitted from the roll in respect of school support,

(iv) the classification of the person’s land or another person’s land is incorrect, or

(v) for land, portions of which are in different classes of real property, the determination of the share of the value of the land that is attributable to each class is incorrect; or

(b) on such other basis as the Minister may prescribe.

11Section 44.(3) 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.

MPAC’S EVIDENCE

12Ms. Sokol-Kennedy testified that MPAC took two approaches to determine the value of the subject property. The first was the cost approach whereby a determination is made of the cost to replace the subject commercial/residential building, which is then adjusted for factors like obsolescence and location. In addition, MPAC carried out a review of the subject property using the income approach to value which uses the income produced by the subject property and applies a Gross Income Multiplier (“GIM”) to the income revenue to arrive at a value.

13Ms. Sokol-Kennedy compared similar findings on four comparable properties that sold between September 2005 and May 2015. Three of those properties are motels and the fourth is described as a variety store and arcade. Ms. Sokol-Kennedy chose these properties as they are all in the commercial tax class, like the subject property. The cost approach to value was also used on all four comparable properties.

14The building sizes of the four comparables are all larger than the subject property and range from 4,891 sq. ft. to 8,181 sq. ft. The data from these four comparable properties and the subject properties is summarized as follows:

Subject Property

Comp. 1 – 8788 Lakeshore Road

Comp. 2 – 9612 West Ipperwash Road

Comp. 3 – 7545 Riverside Drive

Comp. 4 – 7502 Arkona Road

Lot Area (sq. ft.)

30,314

85,813

34,847

10,890

77,101

Building Area (sq. ft.)

3,688

8,181

5,351

4,891

5,608

2012 CVA

$229,000

$203,000

$227,000

$165,000

$312,000

2012 CVA/ sq. ft. of Building area

$62.09

$24.81

$42.42

$33.74

$55.63

15The median assessment per square foot of building area of the four comparable properties is $38.08. Ms. Sokol-Kennedy also advised the Board that the sale price of the subject property included vacant residential land, which is different from the composition of the properties used for comparison. The value attributed to the residential land is $65,000, with the remaining $164,000 attributed to the commercial component.

16In her income investigation, Ms. Sokol-Kennedy used an average annual revenue of $55,075 for the motel operation. She also included what would be considered fair market rental revenue for the residential unit within the building of $7,896 per year. Each of these revenue figures is multiplied by a different GIM to reflect the differing costs in operations and maintenance between a residential rental unit and a motel unit. The income analysis presented by Ms. Sokol-Kennedy suggests a value for the motel of $173,000 and a value for the residence of $57,000 for a total value of $230,000, which she suggests is a further indicator that the current value returned of $229,000 is reasonable, as these two figures do not include the value for the land portion of the property of $65,000.

APPELLANT’S EVIDENCE

17Glenn McNeil testified that the subject property is suffering from lower guest revenues because of the ongoing unrest between various levels of government and the local First Nation community that lies across Army Camp Road from his motel. In 2014, the motel generated $78,000 in revenue. In 2015, this revenue dropped to $32,000. Mr. McNeil explained that during the winter of 2014 - 2015, barriers were removed from the Ipperwash Beach area that separated public vehicle traffic from the beach.

18Mr. McNeil believes that the removal of these barriers and an increase in hunting activity on the former Ipperwash Provincial Park lands is an indicator of unrest in the area. This unrest leads to a stigma about the area as a tourist destination according to Mr. McNeil and as a result, his business has shown a decrease in financial success. He further testified that more beach front properties are for rent, during the summer months in particular, when the beach is traditionally at its busiest. These additional rentals are impacting his business. Family vacation motel use has dropped significantly according to Mr. McNeil.

19Under cross-examination from Mr. Mitchell, Mr. McNeil clarified a few points he made in his testimony:

• As far as he knows, the Ipperwash ‘stigma’ has been an ongoing issue for many years before he purchased the subject property.

• His motel was a stop-over point for construction workers who were working on wind turbine projects in the past and this revenue has also fallen in 2015.

• He purchased the property in 2012 for $224,000, with $65,000 attributable to the vacant residential lot and the rest attributable to the motel and residential unit building and associated land area.

ANALYSIS

20The Board must decide the current value of the subject property from the evidence presented at the hearing. The only specific evidence with respect to current value in evidence is that of MPAC. Although Mr. McNeil asserted that the events of the past few years were having an impact on his property, he did not provide any documentary evidence to support a value lower than the value returned by MPAC. From the evidence, the Board finds that the absence of construction work in the area would have at least a similar impact on revenue as the impact of changes in use of the adjacent First Nations lands. The Board considers this kind of variance in revenue to be a part of the motel business.

21The Board turns its attention to MPAC’s evidence. The assessments of the properties submitted as comparable were provided by MPAC, in addition to the sale price of the subject property in 2012. The sale values attributed to the four comparable properties in the sales analysis were not time adjusted and were removed by as much as 6 ½ years from the valuation date.

22The Board did not hear any evidence as to why the sale of the subject property on March 29 2012, 87 days after the valuation date, should not be accepted as the current value. The Board finds that the current value of the subject property is $224,000, consistent with the sale price. The Board does not find MPAC’s submissions to be compelling enough to support an increase of $5,000 in current value, as there was no back up information or data included in the analysis to determine the source of the cost approach valuation.

23With respect to equity, the Board has the current value assessments of four similar properties in the vicinity in evidence. Their assessments range from $165,000 to $312,000. When these assessments are expressed as per sq. ft. values, the range is $24.81 to $55.63, with a median of $38.08. The Board notes that these values apply to commercial properties; the value of the subject vacant residential land is not taken into account. When the $65,000 is subtracted from the sale price of the subject property, the value remaining is $159,000. When this resultant commercial value is divided by the square footage of the subject building, the value for sq. ft. is $43.11, indicating that when reference is made to the assessments of similar properties in the vicinity, the subject property is over-assessed by $5.03 per sq. ft. When this difference is applied to the commercial portion of the property, the value indicated is $140,439.

24No comparable properties were in evidence with respect to the value of the vacant residential land portion. The Board accepts the value in evidence of $65,000 for the residential lands.

25The Board finds that, for the commercial component of the subject property, the median per sq. ft. value of the comparable properties in evidence is the best indicator of equitable assessment of similar properties in the vicinity. Accordingly, the Board finds that the assessment of the commercial component of the subject property is reduced from $159,000 to $140,000 (rounded).

DECISION

26The Board finds that the current value of the subject property at 9717 Army Camp Road is reduced from $229,000 to $224,000. When reference is made to the assessments of similar properties in the vicinity, the Board finds that the value is reduced further to $205,000 to make the assessment equitable.

27Accordingly, the assessment of the subject property is reduced from $229,000 to $205,000, apportioned as follows:

• Commercial Tax Class - $140,000

• Residential Tax Class - $65,000

2016 DEEMED APPEALS

28An 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.

29Section 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.