Robert Secor and Inge Secor v. Municipal Property Assessment Corporation, 2016 CanLII 5575

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: February 2, 2016 FILE NO.: WR 137636

Assessed Person(s): Robert Secor and Inge Secor Appellant(s): Robert Secor and Inge Secor Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 07 Respondent(s): Township of Minden Hills

Property Location(s): Con 4 PT Lot 8 RP 19R5089 Municipality(ies): Township of Minden Hills Roll Number(s): 4616-030-000-70900-0000 Appeal Number(s): 3104036 Taxation Year(s): 2015 Hearing Event No. 608029

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

Heard: December 7, 2015 in Minden, Ontario

APPEARANCES:

Parties	Counsel+/Representative
Robert Secor and Inge Secor	Self-represented
MPAC	Mary Hennessey
Township of Minden Hills	No one appeared

DECISION OF THE BOARD DELIVERED BY MARILYN SHARMA

INTRODUCTION

1The subject property is a vacant residential/recreational parcel of land on water located in Minden Hills.

2The subject property is situated on a lot with a water frontage of 390 feet and a depth of 999.99 feet for an effective site area of 9.31 acres.

3The assessment of the subject property for the taxation year 2015 is $154,000.

4As a result of a Request for Reconsideration (“RFR”), the assessment was reduced from $154,000 to $138,000 to take into account the presence of a Hydro One corridor easement on the property.

5The Appellant argues that the 10 per cent adjustment assigned by MPAC for the Hydro Easement does not adequately account for the impact that the Hydro easement has on the value of his property.

ISSUE

6The issue before the Assessment Review Board (“Board”) is to determine whether the subject property has been assessed too high.

DECISION

7The Board finds that the current value of the subject property for the 2015 taxation year is $177,450 (rounded).

8The Board finds no adjustment is required for equity purposes under s. 44.(3)(b) of the Act.

9The current value established by the Board of $177,450 is higher than the assessment of $154,000 determined by MPAC. During the RFR process MPAC agreed to reduce the assessment from $154,000 to $138,000 to take into account the impact of the Hydro One corridor. The Board accepts MPAC’s recommendation and reduces the assessment from $154,000 to $138,000 for the 2015 taxation year.

REASONS FOR DECISION

The Legislation

10For the 2012 taxation year, in determining the value at which land shall be assessed, the Board must have regard to the following provisions of the Assessment Act (“Act”):

11Section 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.

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)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.

14Section 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.

15Section 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.

16Section 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.

Analysis

17Under 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.

(3) Adjust the assessment of the subject property if the adjustment would result in a reduction in the assessment.

Current Value

18The 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 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

19The assessor provided five suggested comparable properties as shown in Table 1.

Table 1 MPAC’s Suggested Comparable Properties

Address	Lot Frontage (Ft.)	Lot Depth (Ft.)	Time Adjusted Sale Amt.	Sale Date
Con 4 PT Lot 8 RP 19R5089 (Subject Property)	390.00	999.99
1062 Renown Drive	95.00	280.00	$335,767	09/2012
Roll No. 46-16-442-000-06300	107.00	265.00	$174,330	05/2012
Shaws Lane	104.00	999.90	$226,155	07/2011
1156 Greg Knight Trail	475.00	5,954.67	$216,066	04/2012
Roll No. 46-16-052-000-67110	180.00	130.00	$153,095	09/2011

20The Assessor contends that the above five suggested properties in the vicinity of the subject property are 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 situated on vacant lands.

iv. All properties are classed as residential/recreational land.

21The Assessor informed the Board that there were no valid sales of vacant residential/recreational lands on the lake on which the subject property is located (Lake Minden).

22The Assessor stated that the five suggested comparable properties submitted by MPAC are located on lakes that are smaller than Lake Minden and are considered comparable to the subject property.

23The Assessor pointed out that MPAC applied a reduction of 10 per cent to the assessment of the subject property to take into account the impact of the Hydro One easement on the value of the subject property. She further informed the Board that the reduction of 10 per cent is the standard adjustment applied by MPAC for such easements and believes that no further reduction is warranted.

24The Assessor concluded that the current value of the subject property falls below any of the sales of the five suggested comparable properties presented by MPAC. She further stated that the downward adjustment applied to the subject property adequately accounts for any potential negative impact on its value and that the current value of $138,000 is reasonable.

Appellant’s Evidence

25The Appellant, Mr. Secor, submitted the following information:

i. Exhibit 3 – Copy of the RFR submitted to MPAC for the taxation year 2015.

ii. Exhibit 3 – Letter of Opinion from Mr. T. Tempest, Broker, Re-Max North Country Realty.

iii. Exhibit 3 – Photograph of the subject property.

iv. Exhibit 3 – Map showing Hydro One easement and subject property.

v. Exhibit 4 - Copy of document titled Zoning By-Law 06-10 Quick Reference Guide.

26The Appellant argues that the Hydro One easement restricts his ability to build and has a significant negative impact on the use of his property for lakefront cottage development. To support his argument, he submitted Exhibit 4 to demonstrate that he is unable to develop his property because the Hydro One easement compromises the usage in such a manner as to prevent development because of the distance limitations imposed by the by-law in Exhibit 4.

27Mr. Secor informed the Board that he does not have any objection to the original assessed value of $154,000. He however stated that in his opinion the reduction of 10 per cent is not adequate to take into account the inability to build near the lakefront due to the presence of the Hydro One corridor.

28Mr. Secor submitted a letter of opinion from Mr. Tempest of Re Max North Country Realty in which he states that because of the presence of the Hydro One corridor through the property, the value of the subject property is $120,000.

29The Appellant claims that because of the restrictions on the development of the lakefront due to the Hydro One corridor, combined with the opinion of Mr. Tempest of Re-Max North Realty, the adjustment applied by MPAC is insufficient to compensate for the negative impact of the Hydro One corridor. He believes that the value of $120,000 is a realistic and reasonable value of the subject property.

Analysis of Evidence

Analysis of MPAC’s Evidence

30The Board has reviewed the property details pertaining to the five suggested comparable properties submitted by MPAC. The Board accepts only the property located at 1156 Greg Knight Trail as comparable to the subject property because:

i. It has a lake frontage which is comparable in size to the subject property.

ii. It is located within the same municipality as the subject property.

iii. Like the subject property, it is a parcel of vacant residential/recreational land.

31The Board rejects the remaining four suggested comparable properties submitted by MPAC as being comparable to the subject property because all have lake frontages that are considerably smaller than the subject property.

32The Board notes that as stated by the Assessor, in the case of lakefront residential/recreational properties, the lake frontage is generally accepted as a major determinant of value. The subject property has a lake frontage of 390 feet which is significantly more than the suggested comparable properties – except the property at 1156 Greg Knight Trail - and would tend to attract a higher value than a property with the smaller lake frontage.

33The Board accepts the Assessor’s explanation that the downward adjustment of 10 per cent to take into account any diminution of value due to the presence of the Hydro One corridor on the Appellant’s property as reasonable in view of the fact that such adjustment is consistently applied by MPAC in similar situations as with the subject property.

Analysis of Appellant’s Evidence

34The Board considered the three main arguments advanced by the Appellant that:

i. The presence of the Hydro One corridor compromises any lakefront development on his property. The Board was unable to place any weight on this argument since insufficient evidence was presented to demonstrate the impact of the by-law on the subject property.

ii. The 10 per cent adjustment to the assessment of the subject property is inadequate to compensate for the negative impact the Hydro One corridor. Mr. Secor presented no evidence to support a higher adjustment. In the absence of any credible evidence to the contrary, the Board accepts the application of a downward adjustment of 10 per cent as reasonable because as stated by the Assessor, it is the standard adjustment applied by MPAC for easements such as the one on the subject property.

iii. The level of downward adjustment is not adequate as stated in the letter of opinion from Mr. Tempest of Re-max North Country Realty which states that in his opinion, the value of the subject property should be $120,000. The Board places no weight on the letter of opinion from Mr. Tempest because he provided no credible basis as to how he arrived at the value of $120,000 and he was not present to be cross-examined.

Determination of Current Value

35The 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 neighborhood.

36The Board finds that the only suggested comparable property submitted by MPAC located at 1156 Greg Knight Trail and having a valid sale is sufficiently similar to the subject property and is therefore suitable for determining the current value of the subject property.

37The sale value per linear foot of the lake frontage of this property is $455 (rounded).

38When the sale value per linear foot of $455 is applied to the subject property, it results in a current value of $177,450.

39The Board finds that the current value of the subject property is $177,450 (rounded).

Equity with Similar Lands in the Vicinity

40The 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”).

41The 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.

42The representative for the Appellant presented no evidence on equity. MPAC presented the sales of 17 properties within 18.87 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 17 valid sales is 1.03. A value within five percentage points is usually considered an acceptable value. In this case the median ASR of 1.03 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

43The Board finds that the current value of the subject property for the 2015 taxation year is $177,450 (rounded).

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

45The current value established by the Board of $177,450 is higher than the assessment of $154,000 determined by MPAC. During the RFR process MPAC agreed to reduce the assessment from $154,000 to $138,000 to take into account the impact of the Hydro One corridor. The Board accepts MPAC’s recommendation and reduces the assessment from $154,000 to $138,000 for the 2015 taxation year.