Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: February 5, 2016 FILE NO.: WR 137841

Assessed Person(s): Christina Binert-Miller and Gerald Rolf Miller Appellant(s): Christina Binert-Miller and Gerald Rolf Miller Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 7 Respondent(s): Township of Algonquin Highlands Property Location(s): 1018 Barneymiller Trail Municipality(ies): Township of Algonquin Highlands Roll Number(s): 4621-001-000-71800-0000 Appeal Number(s): 3102938, 3102939, 3116452, and 3116453 Taxation Year(s): 2013, 2014 and 2015 Hearing Event No. 607830

Legislative Authority: Sections 33 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: December 8, 2015 in Minden, Ontario

APPEARANCES:

Parties	Representative
Christina Binert-Miller and Gerald Rolf Miller	Gerald Rolf Miller
MPAC	Mary Hennessey
Township of Algonquin Highlands	No one appeared

DECISION OF THE BOARD DELIVERED BY MARILYN SHARMA

INTRODUCTION

1The subject property is a single family detached seasonal/recreational dwelling – First Tier on Water.

2The subject property is located at 1018 Barneymiller Trail in Algonquin Highlands.

3The subject property is situated on a lot with a water frontage of 117 feet and a depth of 398.37 feet for an effective site area of 46,610 square feet (“sq. ft.”).

4The dwelling was constructed in 2007 and has a boathouse that was constructed in 1991 and a detached garage of 1,860 sq. ft. which was constructed in 2013.

5The Appellants have the following appeals before the Assessment Review Board (“Board”):

i. The assessment of the newly constructed garage at $65,000 for the taxation year 2013; ii. The assessment of the dwelling at $833,000 and the garage at $65,000 for the taxation year 2014 for a total assessment of $898,000; and iii. The assessment in the amount of $898,000 for the taxation year 2015.

6The Appellants argue that pursuant to a Request for Reconsideration (“RFR”) for the taxation year 2013, MPAC conducted an inspection of the property in August 2013 and MPAC reduced the assessment of the property from $925,000 to $833,000.

7The Appellants believe that MPAC has acted in ‘bad faith’ in their negotiations during the RFR process. They argue that the garage had municipal inspection in the spring of 2013 and that MPAC’s inspection of his property occurred in August 2013 at which time the garage was in full use. They were at a loss to understand why the Assessor would not have identified and included the garage as part of her inspection.

ISSUE

8The issues before the Board are:

i. To determine the current value of the newly constructed garage as of June 14, 2013; ii. To determine whether the revised assessment of subject property includes the value of the garage and iii. To determine whether the assessment of the subject property as a whole is too high.

DECISION

9The Board finds as follows:

• The current value of the subject property as of the valuation date January 1, 2012 is $1,077,141 (rounded).
• The Board confirms that for the taxation year 2013 commencing June 14, 2013 and for the taxation year 2014 commencing January 1st 2014 the omitted assessment in the amount of $65,000.

10The Board finds no adjustment is required for equity purposes under s. 44.(3)(b) of the Assessment Act (“Act”).

11The Board notes that the current value as determined above is at a higher level than the assessment as returned on the roll for the subject property. No party has given notice of a request for an increase in the assessment of the subject property.

12Accordingly, as at the valuation day, January 1, 2012, the assessment of the subject property for the 2014 and 2015 taxation years is confirmed in the amount of $898,000 which for the 2014 taxation year includes the omitted assessment of $65,000.

REASONS FOR DECISION

The Legislation

13For the 2013 taxation year, in determining the value at which land shall be assessed, the Board must have regard to the following provisions of the Act:

14Section 1 of the Act defines “current value” as:

“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.

15Section 19.(1) of the Act states:

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

16Section 19.2(1)3 of the Act states:

Section 19.2 of the Act states:

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.

17Section 33 states:

33.(1) Change re land omitted from tax roll – The following rules apply if land liable to assessment has been in whole or in part omitted from the tax roll for the current year or for all or part of either or both of the last two preceding years, and no taxes have been levied for the assessment omitted:

1. The assessment corporation shall make any assessment necessary to correct the omission.
2. If the land is located in a municipality, the clerk of the municipality shall alter the tax roll upon receiving notice of the change, and the municipality shall levy and collect the taxes that would have been payable if the assessment had not been omitted.
3. If the land is located in non-municipal territory, the Minister shall alter the tax roll upon receiving notice of the change, and shall collect the taxes that would have been payable if the assessment had not been omitted.

18Section 40.(17) of the Act states:

40.(17) Burden of proof. – For 2009 and subsequent taxation years, where value is a ground of appeal, the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.

19Section 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.

20Section 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.

Analysis

21Under the Act the Board is required to do three things:

(1) Find the current value of the property; (2) Make reference to the value at which similar lands in the vicinity are assessed; and (3) Adjust the assessment of the subject property if the adjustment would result in a reduction in the assessment.

MPAC’s Evidence – Newly Constructed Garage

22The Assessor provided the following details regarding the construction of a two-storey detached garage having an area of 1,800 sq. ft.:

i. A work permit was issued in June 2012 for its construction; ii. The value of the work permit was in the amount of $112,000; iii. Completion of garage occurred in early Spring of 2013; iv. Township Building inspection completed and occupancy permit issued by the Township in April 2013; v. Use/occupancy of garage permitted as of May 2013.

23The Assessor informed the Board that MPAC assigned a current value in the amount of $65,000 for the newly constructed garage effective June 2013.

24The Assessor further stated that the omitted assessment for the garage in the amount of $65,000 was applied to the subject property starting June 14, 2013 and for the taxation year 2014.

Appellant’s Evidence – Newly Constructed Garage

25The Appellant, Gerald Rolf Miller, agreed with the Assessor’s evidence regarding the sequence of activities pertaining to the construction of the garage on the subject property.

26The Appellant stated that he had no objections to the value of $65,000 that MPAC has assigned to the garage. However he believes that it should have been included in the overall value of the property derived as a result of the RFR process and subsequent inspection.

Board’s Analysis – Value of the Newly Constructed Garage

27The Board accepts the construction details, inspection activities and the respective timeline of activities regarding the construction of the garage on the subject property.

28The Board notes that the Appellant, Mr. Miller, stated that he accepts MPAC’s value of $65,000 for constructing the garage. The Board therefore confirms that value of the garage at $65,000.

MPAC’s Evidence – Omitted Assessment 2013 (RFR 2013)

29The Assessor stated that the Appellants filed a RFR for the taxation year 2013. The assessment of the subject property for the 2013 taxation year was $925,000.

30The Assessor informed the Board that the inspection of the subject property on August 28, 2013 was solely undertaken to deal with the Appellants’ RFR.

31The Assessor stated that her inspection of the subject property was not to establish a new assessment but was undertaken in support of the Appellants’ on-going RFR application and that the only structures that were under this RFR application were the dwelling and the boathouse.

32The Assessor pointed out that contrary to the Appellants’ assumption, MPAC had no prior knowledge of the inspection conducted by the Township Inspector nor was it advised of its purpose or outcome.

33The Assessor also informed the Board that there is no arrangement or co-ordination between MPAC and the Township regarding the activities of municipal inspections and the results of same.

34The Assessor conceded that at the time she undertook her inspection of the subject property the garage was already constructed. She however stated that the purpose of her inspection was not to establish a new assessment but to facilitate the on-going RFR. She informed the Board that the offer to reduce the assessment by 10% per cent (from $925,000 to $833,000) related only to the two structures in existence at that time which were the dwelling and boathouse.

35The assessed value of the garage at $65,000 was levied as an “omitted assessment” on the subject property for the taxation year 2013.

36The Assessor stated that the assessed value of the subject property for the period June 14, 2013 to January 1, 2014 is ($833,000 + $65,000) $898,000.

Appellants’ Evidence – Omitted Assessment 2013 (RFR 2013)

37The Appellant, Mr. Miller confirmed that an inspection of their property was undertaken by MPAC on August 28, 2013 pursuant to their filing of a RFR of the assessment of his property for the 2013 taxation year.

38The Appellant stated that because the construction of the garage was completed in the spring of 2013 and inspected by the Township in April 2013, they were of the view that MPAC’s inspection regarding their RFR covered their entire property – dwelling, boathouse and garage.

39The Appellant further informed the Board that they are unconvinced that the MPAC inspector could visit their property and not see the garage because it is a four car two-storey structure.

40The Appellant, Mr. Miller explained that when they signed-off on the revised assessment of $833,000 resulting from the RFR process the garage was completed and they were not advised nor did they have reason to believe that the assessment did not include everything on the site including the garage.

41The Appellant believes that MPAC has reneged on its revised assessed value by excluding the garage and levying an omitted assessment.

Board’s Analysis – Omitted Assessment and RFR 2013

42The Board has deliberated on the submission of MPAC and finds that given the separation of functions between the Township and MPAC, the Board accepts the Assessor’s explanation that MPAC was not knowledgeable of and had no prior knowledge regarding the series of events and activities pertaining to the construction of the garage on the subject property.

43The Board also agrees with the Assessor that the information on which MPAC proceeded to undertake an inspection contained the dwelling and boathouse as the only structures existing and had no reference to any planned construction, namely a new garage because:

(a) MPAC was not aware that the Township had inspected the completed garage in April 2013; (b) MPAC was not aware that a use/occupancy permit had been issued to the Appellant in respect of the completed construction;

44The Board is unable to give credence to the Appellants’ claim that MPAC changed its position after they had signed-off on the revised assessment for 2013 because Mr. Miller produced no evidence to show that the details of the agreement between himself and MPAC indicated anything to the contrary.

45The Board notes that the Appellant agreed with the sum of $65,000 assigned as the value of the newly constructed garage.

46The Board is satisfied with the Assessor’s explanation that at the time of the signing of the settlement minutes pursuant to the completion of the RFR, the value of the newly constructed garage on the subject property was not part of the settlement and therefore constituted an omitted assessment for the 2013 taxation year.

47The Board therefore accepts and confirms:

i. the omitted assessment in the amount of $65,000 for the taxation years 2013 and 2014 commencing June 14, 2013 as being applicable to the subject property.

Current Value

48The best measure of current value is an arm’s length and market tested sale of the subject property on the valuation date of January 1, 2012, or close to it. If no such transaction took place, a further measure of current value is the arm’s length and market tested sales of comparable properties in the same vicinity and market. This measure acts as a benchmark and gauge of the correctness of the assessed value of the subject property. The onus for establishing the correctness of the current value lies with MPAC.

MPAC’s Evidence

49MPAC submitted four suggested comparable properties and their respective details are presented in Table 1.

Table 1 MPAC’s Suggested Comparable Properties

Address	Lot Frontage (Ft.)	Lot Depth (Ft.)	Bldg. Size (Sq. Ft.)	Year Built	Time Adjusted Sale Amt.	Sale Date
1018 Barneymiller Trail (subject property)	117	398.37	2,769	2007
1168 Oliver Road	130	208.00	2,439	1963	$649,165	01/2012
1050 Parasol Drive	100	330.00	1,750	2008	$535,739	07/2012
1185 Canopy Lane	75	280.00	1,385	2006	$546,085	09/2012
1170 Vista Road	145	380.00	1,767	1996	$1,041,825	06/2012

50The Assessor contends that the above four suggested properties were selected as comparable properties for the following reasons:

i. The properties are all located in the same municipality; ii. The properties are all located on water; iii. All the properties are similar water frontages; iv. All properties are single family detached dwellings.

51The Assessor informed the Board that there are no sales of high end properties on the lake (Beech Lake) on which the subject property is located. However, she indicated that the locations of the suggested comparable properties are on lakes/rivers within the same municipality as the subject property.

52The Assessor stated that she considers the four suggested comparable properties submitted by MPAC as being inferior to the subject property for the following reasons:

i. The building size of all four are smaller; ii. Two of the four are 11 and 44 years older than the subject property while one of the remaining two is one year older and the other is one year newer; iii. All four have property classifications that are lower; iv. All four have garages (3 attached, 1 car port) ranging from 240, 682, 728, 1,028 sq. ft. and are considerably smaller than the subject’s two-storey, four car garage at 1,860 sq. ft.

53The Assessor pointed out that in her opinion, the property located at 1170 Vista Road provides the best indication that the subject property’s current value at $898,000 is correct and provides the following to corroborate her opinion;

i. This property (1170 Vista Road) is located on a small bay with similar frontage and depth as the subject property; ii. It has a building area that is 1,000 sq. ft. smaller than that of the subject property, iii. It has a small carport and small basement garage; and iv. It has a lower quality class than that of the subject property.

54The Assessor pointed out to the Board that for the above reasons she considers the suggested comparable property at 1170 Vista Road inferior to the subject property yet this property was sold in June 2012 for sum of $1,050,000.

55The Assessor concluded that because the 1170 Vista Road property is 11 years older, 1,000 sq. ft. smaller, has a small car port of 240 sq. ft.; has a lower quality class then the subject property and was sold for $1,050,000, the subject property which is superior in all the categories described above and valued at $898,000 is reasonable.

Appellants’ Evidence

56The Appellant, Mr. Miller stated that the lake on which their property is located is not in what he described as a “navigable chain” and that this presents difficulties in navigating in and out. He believes this has a negative impact on the value of their property which has not been taken into account by MPAC.

57Mr. Miller stated that he was not satisfied that the choice of suggested comparable properties submitted by MPAC was acceptable because they were located on different lakes and at significant distances apart and therefore does not provide a fair comparison because they are not, in his opinion, located in the same neighbourhood.

58Mr. Miller pointed out that in his opinion, the properties suggested by MPAC do not reflect the value of properties in the vicinity of their property and that the lake on which they are located does not support that type of pricing shown by the MPAC suggested comparable properties.

59Mr. Miller submitted the property located 1294 North Shore Road as being comparable to their property and provided the following details:

Address	Lot Frontage (Ft.)	Lot Depth (Ft.)	Bldg. Size (Sq. Ft.)	Year Built	Sale Amt.	Sale Date
1018 Barneymiller Trail (subject property)	117.00	398.37	2,769	2007
1294 North Shore Road	105.00	680.00	3,458	1968 (with renovations in 1995)	$542,500	05/2009

60Mr. Miller suggests that their suggested comparable property by virtue of being located on the same lake and having similar characteristics such as building size, lot size, effective age having been renovated in 1995 and similar lake frontage is the most comparable property against which the value of their property should be established.

61Mr. Miller submitted the Multiple Listing Service (“MLS®”) listing of properties located at 1050 Howard Thompson Road and 1147 Canopy Lane to support their argument that the lake on which the subject property is located could not support the type of pricing on other more prestigious and desirable lakes. In the case of the first property Mr. Miller indicated that it was listed for over 1 million dollars but was eventually sold for $750,000. In the case of the second property, he indicated that it was listed for $799,000 but was never sold.

Analysis of Evidence

Analysis of MPAC’s Evidence

62The Board has reviewed the property details pertaining to the four suggested comparable properties submitted by MPAC. The Board accepts the four properties as comparable to the subject property because:

i. All have a water frontage which is comparable in size to the subject property; ii. All four have sufficiently similar comparable building and lot size; iii. They are located within the same municipality; and iv. They are all seasonal/recreational type properties.

63The Board notes that each of the four suggested comparable properties submitted by MPAC has a valid sale and therefore accepts them for comparative purposes.

64The Board accepts as reasonable the analysis presented by the Assessor in which she pointed out that even though the property that she submitted as being most comparable to the subject property was inferior to the subject property in several key attributes yet it was sold for a significantly higher price than the assessed value of the subject property. She concludes that the value of the subject property has to be higher than its assessed value.

Analysis of Appellants’ Evidence

65The Board considered the Appellants’ claim that the lake on which his property is located is not considered navigable waters (navigable chain) in that it presents difficulties for access in and out and he also contends that it is not conducive to extensive boating. He suggests that there is a value to this and that MPAC’s model has failed to take this into account. The Board is unable to consider Mr. Miller’s argument because the Board was not presented with expert evidence to impute the sailing/boating conditions on the lake on which the subject property is located nor was it presented with an evaluation as to the extent of negative or positive value that can be attributed to such lakes.

66Mr. Miller suggested that the selection of comparable properties obtained by MPAC was unfair for the purpose of comparison with the subject property because they were not located on the same lake as his property and by extension not within the same neighborhood. Mr. Miller went on to point out that neighbourhood is an important consideration and cited a hypothetical example to support his claim. The Board agrees that neighborhood is an important factor in establishing comparability but also recognizes that it is not always practical or possible to find sales of comparable properties that are identical or similar in all respects. Particularly in the case of seasonal and or recreational type properties, where there are no sales on the same lake, the very nature of their uniqueness means that in order to find reasonable comparable properties it is sometimes necessary to expand the neighborhood. The Board finds no evidence to support the Appellants’ claim that the properties used by MPAC will be unfair for comparative purposes.

67The Board is unable to give consideration to the sale of the suggested comparable property submitted at 1294 North Shore Road to determine the current value of the subject property because the sale of this property occurred in 2009 and is considered too far removed from the valuation date of January 1, 2012.

68The Board noted the details in the MLS® listings regarding the sales information of two properties located at Thompson Road and Canopy Lake to support his argument that the lake chain on which they are located would not support the kind of pricing associated with lakes like Maple Lake etc. The Board is however unable to consider this particular argument because of a lack of expert analysis or evidentiary material to support this argument as well as the fact that the MLS® listings state that the information “may be incorrect”.

Determination of Current Value

69The Board agrees that the best method to determine the current value of the subject property is based on the sales of similar properties in the neighbourhood.

70The Board finds that the four suggested comparable properties submitted by MPAC, each having a valid sale, is sufficiently similar to the subject property and is therefore suitable for determining the current value of the subject property. The average sale value per square foot of the four suggested comparable properties is $389 (rounded).

71When the average sale value per square foot of $389 is applied to the subject property, it results in a current value of $1,077,141.

72The Board finds that the current value of the subject property is $1,077,141 (rounded).

73The Board is required under s. 44.(3) sub-paragraph (b) of the Act, to 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. For purposes of establishing equity, properties do not need to be comparable; they need to be of a similar nature and within a reasonable proximity. To determine equity the Board may look at the Assessment to Sales Ratio (“ASR”).

74The ASR is a ratio of a property’s assessment to its sale price. If sales are in the same homogeneous neighborhood, the Board may infer that MPAC has used the same assessment methodology for the subject property as it did with comparable properties presented. Therefore, the review of ASRs may indicate whether MPAC has been under or over-assessing properties in the area.

75The Appellant presented no evidence on equity. MPAC presented the sales of 30 properties within 3.41 kilometers of the subject property which occurred between January 2011 and December 2012. For the purpose of establishing equity the Board considers the sales between January 2011 and December 2012 as valid sales. The median ASR of the 30 valid sales is 0.9. A value within five percentage points is usually considered an acceptable value. In this case the median ASR of 0.9 indicates that MPAC’s methodology may be producing assessments close to sales. The Board therefore finds that no adjustment is required for equity in accordance with s. 44.(3)(b) of the Act.

CONCLUSION

76The Board finds as follows:

• The current value of the subject property as of the valuation date January 1, 2012 is $1,077,141 (rounded).
• The omitted assessment for the taxation years 2013 commencing June 14, 2013 and for the taxation year 2014 commencing January 1, 2014 in the amount of $65,000 is confirmed.

77The Board finds no adjustment is required for equity purposes under s. 44.(3)(b) of the Act.

78The Board notes that the current value as determined above is at a higher level than the assessment as returned on the roll for the subject property. No party has given notice of a request for an increase in the assessment of the subject property.

79Accordingly, as at the valuation day, January 1, 2012, the assessment of the subject property for the 2014 and 2015 taxation years is confirmed in the amount of $898,000 which for the 2014 taxation year includes the omitted assessment of $65,000.